INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 14th day of February, 2008, by and between XXXXXXXXXXX TRANSITION
2040 FUND (the "Fund"), and OPPENHEIMERFUNDS, INC. ("OFI").
WHEREAS, the Fund is an open-end, non-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 will not pay a management fee but rather OFI will collect indirect
management fees from investments in the Underlying Funds.
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.
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 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 Fund's
Board of Trustees, including the vote of the majority of the trustees of the Fund 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 Fund's Board of
Trustees.
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 Transition 2040 Fund
By: __/s/ Xxxxxx X. Zack__________________
Vice President & Secretary
OppenheimerFunds, Inc.
By: __/s/ Xxxx X. Murphy__________________
Chairman, President and Chief Executive Officer
