AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 1st day of January, 2005, by and between XXXXXXXXXXX
INTEGRITY FUNDS (the "Trust") and OPPENHEIMERFUNDS, INC., formerly XXXXXXXXXXX
MANAGEMENT CORPORATIONS (hereinafter referred to as "OFI").
WHEREAS, the Trust is an open-end, diversified series 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 an investment adviser registered as
such with the Commission under the Investment Advisers Act of 1940;
WHEREAS, the Trust desires that OFI shall act as its investment adviser
pursuant to this Agreement, which amends and restates the Investment Advisory
Agreement dated July 10, 1995, as amended on February 26, 2002, by and between
the Trust and OFI; and
WHEREAS, XXXXXXXXXXX BOND FUND (the "Fund") is a series of the Trust
having a separate portfolio, investment policies and investment restrictions;
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 Trust 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 Trust'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 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 portfolio securities of the Fund which are
either not registered for public sale or not traded on any securities market.
(b) At its option, OFI may appoint a sub-adviser (which may be affiliated with
OFI) 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 Trust, 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) ofany such person, cast in person at a meeting
called for the purpose of voting on such approval, and, to the extent necessary,
the shareholders of the Fund. OFI agrees to give the Trust 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 Trust's Board of
Trustees, (i) supervise and monitor 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; (ii) subject to subsection (i) hereof, regularly
provide investment advice and recommendations to the Fund with respect to its
investments, investment policies and the purchase and sale of securities; 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 Fund's portfolio.
(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 and shall
not 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 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 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 Trust 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, by a sub-adviser under any Sub-Advisory 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) insurance premiums for fidelity and other coverage requisite
to its operations; (iv) compensation and expenses of the Trust's trustees other
than those 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; (ix) fees and
expenses, other than as hereinabove provided, incident to the registration under
federal and state "blue sky" 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 Fund shall not receive any compensation from the Fund for their services.
The expenses with respect to any two or more series of the Trust shall be
allocated in proportion to the net assets of the respective series except where
allocations of direct expenses can be made.
5. Compensation of OFI.
The Trust agrees to pay OFI and OFI agrees to accept as full
compensation for the performance of all functions and duties 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 at
the following annual rate:
0.60% of the first $200 million of average annual net assets; 0.57% of
the next $200 million; 0.54% of the next $200 million; 0.51% of the
next $200 million; 0.45% of the next $200 million; and 0.35% of average
annual net assets in excess of $1 billion.
6. Use of Name "Xxxxxxxxxxx."
OFI hereby grants to the Trust a royalty-free, non-exclusive license to
use the name "Xxxxxxxxxxx" 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" under applicable law, such license shall allow OFI to inspect and,
subject to control by the Trust'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 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" in the name of
the Trust and the Fund or otherwise. The name "Xxxxxxxxxxx" 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 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 7, 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
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 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 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 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 for the Fund so long as it is lawful for it so to
act; (ii) may be a major recipient of brokerage commissions paid by the
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.
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 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 sixty days' written notice to the Trust (which notice may be waived by the
Trust); or (ii) by the Trust 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 Trust shall be directed or approved by the vote of a majority
of all of the Trustees of the Trust 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 the "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. Disclaimer of Shareholder or Trustee Liability.
OFI understands and agrees that the obligations of the Trust or the
Fund under this Agreement are not binding upon any trustee or shareholder of the
Trust or the Fund personally, but bind only the Trust and the Trust's property.
OFI represents that it has notice of the provisions of the Declaration of Trust
of the Trust disclaiming shareholder or trustee liability for acts or
obligations of the Trust.
12. Definitions.
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions contained in
the Investment Company Act.
XXXXXXXXXXX INTEGRITY FUNDS,
on behalf of its series,
XXXXXXXXXXX BOND FUND
By: /s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Vice President & Secretary
OPPENHEIMERFUNDS, INC.
By: /s/Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Chairman, President and Chief Executive Officer
