AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT made the 1st day of May, 1999, 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;
WHEREAS, XXXXXXXXXXX AGGRESSIVE GROWTH FUND/VA (the "Fund") is a series of
the Trust having a separate portfolio, investment policies
and investment restrictions; and
WHEREAS, the Trust and Xxxxxxxxxxx Management Corporation have entered
into an Investment Advisory Agreement for the Fund dated
September 1, 1994 (the "Prior Agreement").
WHEREAS, the Trust and OFI have agreed, at a meeting of the Board of
Trustees held on December 15, 1998, to pay OFI an annual
management fee rate of 0.58% on average annual net assets of the Fund in
excess of $1.5 billion, and to replace the Prior Agreement
with this Agreement.
WHEREAS, since the Prior Agreement, OFI changed its name from "Xxxxxxxxxxx
Management Corporation" to "OppenheimerFunds, Inc." and
the Fund changed its name from "Xxxxxxxxxxx Capital Appreciation Fund" to
"Xxxxxxxxxxx Aggressive Growth Fund/VA".
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.
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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 for services under this Agreement 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: .75% of the first $200 million of average
annual net assets; .72% of the next $200 million; .69% of the next $200
million; .66% of the next $200 million; .60% of the next $700
million; and .58% of average annual net assets in excess of $1.5 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 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,
whereupon it replaces the Prior Agreement. Unless earlier
terminated pursuant to paragraph 10 hereof, this Agreement shall continue
in effect until December 31, 1999, 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 Trust and
the Trust'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.
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 in the
Investment Company Act.
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
on behalf of XXXXXXXXXXX AGGRESSIVE
GROWTH FUND/VA
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Title: Vice President and Secretary
OPPENHEIMERFUNDS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
Title: Executive Vice President
