INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 22nd day of October 2002, by and between
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS (hereinafter referred to
as the "Trust"), and OPPENHEIMERFUNDS, INC. (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 a registered
investment adviser; and
WHEREAS, XXXXXXXXXXX VALUE FUND/VA (the "Fund") is a series
of the Trust having a separate portfolio, investment
policies and investment restrictions; and
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 Trust 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 securities are either not registered for public sale
or not 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. OFI shall not be liable for any loss sustained
by the Trust and/or the Fund in connection with matters to
which this Agreement relates, except a loss resulting by
reason of OFI's 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 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 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 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 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, 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 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; (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. 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 on behalf of the Fund 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 asset value of the Fund as of the
close of each business day and payable monthly at the
annual rate of: 0.75% of the first $200 million of average
annual net assets; 0.72% of the next $200 million; 0.69% of
the next $200 million; 0.66% of the next $200 million ; and
0.60% of average annual net assets over $800 million.
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 name 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 or 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 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 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 Trust 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 Trust over a representative period
selected by the Trust'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 Trust 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 shares of the
Fund and the other funds advised by OFI and its affiliates
as a factor in the selection of broker-dealers for its
portfolio transactions.
8. Duration.
This Agreement will take effect on the date first set
forth above. Unless earlier terminated pursuant to
paragraph 10 hereof, this Agreement shall remain in effect
until 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. Disclaimer of Trustee or Shareholder Liability.
OFI understands and agrees 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 Fund and 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 and the Fund.
10. 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).
11. 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 Trust. This Agreement
shall automatically and immediately terminate in the event
of its "assignment," as defined as stated below.
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 VARIABLE ACCOUNT FUNDS
for XXXXXXXXXXX VALUE FUND/VA
By:
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Xxxxx X. Xxxxxxx
Assistant Secretary
OPPENHEIMERFUNDS, INC.
By:
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Xxxxx X. Xxxxxxx
Vice President
