AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made as of the 1st day of January, 2006, by and between
Oppenheimer Capital Income Fund, formerly known as Oppenheimer Equity Income
Fund (hereinafter referred to as the "Fund"), and OppenheimerFunds, Inc.
(hereinafter the "Manager").
WHEREAS, the Fund is an open-end, diversified 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 the Manager is an investment adviser registered
as such with the Commission under the Investment Advisers Act of 1940; and
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 April 16, 1998 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 the Manager and the Manager 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. The Manager 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 and 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 and in the Fund's By-Laws, or as such policies may,
from time to time, be amended by the Fund's shareholders; and (vi) the
Prospectus of the Fund in effect from time to time. The appropriate officers
and employees of the Manager shall be available upon reasonable notice for
consultations 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) The Manager 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 portfolio of the Fund. The Manager shall also
conduct investigations and research in the securities field and furnish to
the Fund's Board of Trustees statistical and other factual information and
reports on industries, businesses or corporations, to assist the Manager and
the Fund's Board of Trustees in furthering the investment policies of the
Fund; and the Manager shall compile, for its use and that of the Fund, and
furnish to the Fund's Board of Trustees, information and advice on economic
and business trends, and render such other complete investment management
services as may be necessary or appropriate to effectuate the investment of
the resources of the Fund through the acquisition, holding and disposition of
portfolio securities.
(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, the Manager 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) So long as it shall have acted with due care and in good faith, the
Manager shall not be liable for any loss sustained by reason of any
investment, the adoption of any investment policy, or the purchase, sale or
retention of any security irrespective of whether the determinations of the
Manager relative thereto shall have been based, wholly or partly, upon the
investigation or research of any other individual, firm or corporation
believed by it to be reliable. Nothing herein contained shall, however, be
construed to protect the Manager against any liability to the Fund or its
shareholders by reason of willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of its reckless disregard of
its obligations and duties under this Agreement.
(d) Nothing in this Agreement shall prevent the Manager or any officer
thereof from acting as investment adviser or performing management services
for any other person, firm or corporation and shall not in any way limit or
restrict the Manager or any of its directors, officers, shareholders 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 the Manager of its duties and obligations under this
Agreement, nor adversely affect the Fund.
3. Other Duties of the Manager.
The Manager shall, at its own expense, provide and supervise the activities
of all executive, 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, and the laws of any
state, territory or possession of the United States or any foreign country;
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 and the laws of any state,
territory or possession of the United States or any foreign country for
continuous public sale of shares of the Fund. The Manager shall, at its own
cost and expense, provide such officers for the Fund as the Fund's Board may
request and shall also provide the Fund's Trustees, at their request, with
adequate office space, and normal office equipment and secretarial assistance
as may be necessary for them to perform their functions as such, and the
Manager shall, at its own cost and expense, calculate the daily net asset
value of the Fund's shares and maintain the Fund's general accounting books
and records. The cost and expenses of the Manager set forth in this paragraph
3 do not include the transfer agent and other costs and expenses set forth in
paragraph 4 following.
4. Allocation of Expenses to the Fund.
All other costs and expenses not expressly assumed by the Manager 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) insurance premiums on fidelity
and other coverage requisite to its operations; (iv) compensation and
expenses of its Trustees except as qualified further in this paragraph 4; (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 of the Fund's shares
for public sale under federal securities laws or the laws of any state,
territory or possession of the United States or any foreign country; (x)
expenses of printing and mailing reports and notices and proxy material to
shareholders of the Fund; (xi) except as noted in paragraph 3 hereof, all
other expenses incidental to holding any meetings of the Fund's shareholders;
and (xii) such extraordinary non-recurring expenses as may arise, including
litigation, affecting the Fund and the legal obligation or right which the
Fund may have to indemnify its officers and Trustees with respect thereto
unless the Fund has the right to recover said indemnity payments from the
Manager. Any officers or employees of the Manager or any entity controlling,
controlled by or under common control with the Manager who may also serve as
officers, Trustees or employees of the Fund shall not receive any
compensation by the Fund for their services.
5. Compensation of the Manager.
The Fund agrees to pay the Manager and the Manager 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 net
asset value of the Fund as of the close of each business day and payable
monthly at the following annual rates:
0.75% of the first $100 million of net assets;
0.70% of the next $100 million;
0.65% of the next $100 million;
0.60% of the next $100 million;
0.55% of the next $100 million;
0.50% of net assets from $500 million to $5 billion; and
0.48% of net assets in excess of $5 billion.
6. Portfolio Transactions and Brokerage.
(a) The Manager will render all services for the Fund in connection with
placing orders with brokers and dealers for the purchase, sale or trade of
securities for the Fund's portfolio.
(b) The Manager is authorized, in arranging the purchase and sale of the
Fund's portfolio securities, to employ or deal with such members of
securities 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
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 the Manager of its investment management functions.
(c) The Manager 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 Manager 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 Manager 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 and 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 the Manager
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 the Manager 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 Manager's overall responsibilities
with respect to the accounts as to which it exercises investment discretion.
In reaching such determination, the Manager 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 Manager 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.
(e) The Manager 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 6.
(f) Transactions with affiliated broker-dealers are required to conform to a
number of restrictions and conditions: (1) affiliated broker-dealers may
effect portfolio transactions for the Fund only if the commissions, fees or
other remuneration received or to be received by them 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; and (2) if required by Section 11(a) of the
Securities Exchange Act of 1934, affiliated broker-dealers may not receive
compensation in connection with any portfolio transaction effected on a
national securities exchange for the Fund if the affiliated broker-dealers
are members of such exchange unless there is an effective separate written
contract between the affiliated broker-dealers and the Fund expressly
providing otherwise and which refers to said Section 11(a) and the rules
promulgated thereunder and provides that any transactions executed on an
exchange of which the affiliated broker-dealers are members must be executed
on the floor of such exchange by a member which is not an "associated person"
of the affiliated broker-dealers.
7. Duration.
This Agreement will take effect on the date first set forth above and shall
continue in effect from year to year, unless earlier terminated by operation
of law, so long as such continuance shall be approved annually by the Fund's
Board of Trustees, including the vote of a majority of the Trustees of the
Fund who are not parties to this Agreement or interested persons 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 and by such a vote of the Fund's Board of Trustees.
8. Termination.
This Agreement may be terminated (i) by the Manager at any time without
penalty by giving 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 the Manager (which notice may be waived by the Manager),
provided that such termination by the Fund shall be directed or approved by
the Board of Trustees of the Fund or by the vote of the holders of a majority
of the outstanding voting securities of the Fund.
9. Assignment or Amendment.
This Agreement may not be amended or the rights of the Manager thereunder
sold, transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the majority of the
outstanding voting securities of the Fund; this Agreement shall automatically
and immediately terminate in the event of its assignment.
10. Disclaimer of Shareholder Liability.
The Manager 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. The Manager represents that it
has notice of the provisions of the Declaration of Trust of the Fund
disclaiming Trustee and shareholder liability for acts or obligations of the
Fund.
11. Use of Name "Oppenheimer".
The Manager hereby grants to the Fund a royalty-free, non-exclusive license
to use the name "Oppenheimer" in the name of the Fund for the duration of
this Agreement and any extensions or renewals thereof. To the extent
necessary to protect the Manager's rights to the name "Oppenheimer" under
applicable law, such license shall allow the Manager to inspect and, subject
to control by the Fund's Board, control the nature and quality of services
offered by the Fund under such name. Such license may, upon termination of
this Agreement, be terminated by the Manager, 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 "Oppenheimer" in the name of the Fund
or otherwise. The name "Oppenheimer" may be used by the Manager in connection
with any of its activities, or licensed by the Manager to any other party.
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 and other applicable laws.
Xxxxxxxxxxx Capital Income Fund
/s/ Xxxxxx X. Xxxx
By:
Xxxxxx X. Xxxx
Vice President and Secretary
OppenheimerFunds, Inc.
/s/ Xxxx X. Xxxxxx
By:
Xxxx X. Xxxxxx
Chairman, President and Chief
Executive Officer
