SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this 12th day of February 2002
among OppenheimerFunds, Inc., a Colorado corporation (the "Adviser"), and
Cornerstone Real Estate Advisers, Inc., a Massachusetts corporation (the
"SubAdviser")
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇▇▇▇▇▇ Real Estate Fund (the "Fund") which is registered with
the Securities and Exchange Commission (the "SEC") as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") and is engaged
in the business of rendering investment advice;
WHEREAS, the Adviser has, pursuant to an Advisory Agreement with the Fund
dated as of February 12, 2002 (the "Advisory Agreement") been retained to act as
investment adviser for the Fund;
WHEREAS, the Advisory Agreement permits the Adviser, at its option, subject
to approval by the Fund's Board of Trustees and, to the extent necessary,
shareholders of the Fund, to delegate certain of its duties under the Advisory
Agreement to other investment advisers, subject to the requirements of the 1940
Act;
WHEREAS, SubAdviser is a registered investment adviser under the Advisers
Act and is engaged in the business of rendering investment advice; and
WHEREAS, the Adviser desires to retain SubAdviser to assist it in the
provision of a continuous investment program for the Fund's assets, and
SubAdviser is willing to render such services subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as SubAdviser. The Adviser hereby retains the SubAdviser to
act as SubAdviser of the Fund to provide investment advice to the Fund as
hereinafter set forth, subject to the supervision of the Adviser and the Board
of Trustees of the Fund and subject to the terms of this Agreement; and the
SubAdviser hereby accepts such employment.
2. Duties of SubAdviser.
(a) Investments. The SubAdviser is hereby authorized and directed and
hereby agrees, subject to the stated investment policies and restrictions of the
Fund as set forth in the Fund's prospectus and Statement of Additional
Information as currently in effect and as supplemented or amended from time to
time (collectively referred to hereinafter as the "Prospectus") and subject to
the directions of the Adviser and the Fund's Board of Trustees, to (i) regularly
provide investment advice and recommendations to the Fund with respect to the
Fund's investments, investment policies and the purchase and sale of securities
and other investments; (ii) supervise and monitor the investment program of the
Fund and the composition of its portfolio to determine what securities and other
investments shall be purchased or sold by the Fund; and (iii) arrange, subject
to the provisions of paragraph (d) below, 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 Adviser agrees to provide the SubAdviser
with such assistance as may be reasonably requested by the SubAdviser in
connection with its activities under this Agreement, including, without
limitation, information concerning the Fund, its funds available, or to become
available, for investment and generally as to the conditions of the Fund or the
Fund's affairs.
(b) Compliance with Applicable Laws and Governing Documents. In the
performance of its duties and obligations under this Agreement or otherwise, the
SubAdviser shall act in conformity with the Fund's Declaration of Trust,
By-Laws, procedures and policies adopted by the Board of the Fund and/or by the
Adviser and the Prospectus and with the instructions and directions received in
writing from the Adviser or the Trustees of the Fund and will conform to and
comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986,
as amended (the "Code"), and all other applicable federal and state laws and
regulations necessary to allow the Fund to qualify as a "regulated investment
company" as defined in Subchapter M of the Code (which currently requires that,
at the close of each quarter of the taxable year, (A) at least 50 percent of the
value of the Fund's total assets is represented by (i) cash and cash items
[including receivables], Government securities and securities of other regulated
investment companies, and (ii) other securities for purposes of this calculation
limited in respect of any one issuer to an amount not greater in value than 5
percent of the value of the total assets of the Fund and to not more than 10
percent of the outstanding voting securities of such issuer, and (B) not more
than 25 percent of the value of its total assets is invested in the securities
]other than Government securities or the securities of other regulated
investment companies] of any one issuer). Notwithstanding the foregoing, the
Adviser shall, subject to the SubAdviser's compliance with its obligations,
remain responsible for the Fund's overall compliance with the 1940 Act, the Code
and all other applicable federal and state laws and regulations. The Adviser
will provide the SubAdviser with a copy of those portions of the minutes of the
meetings of the Board of Trustees of the Fund to the extent they may materially
affect the duties of the SubAdviser, and with the copies of any financial
statements or reports made by the Fund to its shareholders, and any further
materials or information which the SubAdviser may reasonably request to enable
it to perform its functions under this Agreement.
The Adviser will provide the SubAdviser with advance notice of any change
in the Fund's investment objectives, policies and restrictions as stated in the
Prospectus or in any procedures and policies adopted by the Board of the Fund
and/or the Adviser, and the SubAdviser shall, in the performance of its duties
and obligations under this Agreement, manage the Fund's portfolio investments in
compliance with such changes, provided the SubAdviser has received prompt notice
of the effectiveness of such changes from the Fund or the Adviser. In addition
to such notice, the Adviser shall provide to the SubAdviser a copy of a modified
Prospectus reflecting such changes. The Adviser acknowledges and agrees that,
provided that the SubAdviser has provided the Adviser with complete, accurate
and timely information regarding the SubAdviser's activities relating to the
Fund, the Prospectus will at all times be in compliance with all disclosure
requirements under all applicable federal and state laws and regulations
relating to the Fund, including, without limitation, the 1940 Act, and the rules
and regulations thereunder, and that the SubAdviser shall have no liability in
connection therewith, except as to the accuracy of material information
furnished in writing by the SubAdviser to the Fund or to the Adviser
specifically for inclusion in the Prospectus, or information which was provided
to the SubAdviser to review and which SubAdviser approved as to the accuracy of
such information or if the SubAdviser does not promptly respond will be deemed
to have approved the accuracy of such information as described below. The
SubAdviser hereby agrees to provide to the Adviser in a timely manner such
information relating to the SubAdviser and its relationship to, and actions for,
the Fund as may be required to be contained in the Prospectus or in the Fund's
registration statement on Form N-1A. The SubAdviser shall have seven (7)
business days to review all disclosure about the Fund and the SubAdviser
contained in the Fund's Prospectus and Statement of Additional Information and
certain advertisements for accuracy and shall approve or disapprove of such
disclosure within seven (7) business days of receiving such disclosure. After
the expiration of seven (7) business days, the Adviser shall provide the
SubAdviser an additional five (5) business days to respond, such additional five
(5) business days to commence upon written notice from the Adviser. The
SubAdviser's failure to respond within such time shall be deemed to constitute
SubAdviser's approval of such disclosure.
(c) Voting of Proxies. Absent specific written instructions to the contrary
provided to the SubAdviser by the Adviser, the SubAdviser shall vote, either in
person or by proxy, all securities in which the Fund may be invested from time
to time in accordance with the Fund's proxy voting procedures.
(d) Brokerage. The SubAdviser is authorized, subject to the supervision of
the Adviser and the Fund's Board of Trustees, to establish and maintain accounts
on behalf of the Fund with, and place orders for the purchase and sale of the
Fund's portfolio securities with or through, such persons, brokers (including,
to the extent permitted by applicable law and by the Fund, the Fund or the
Adviser, any broker affiliated with the SubAdviser) or dealers ("brokers") as
SubAdviser may elect and negotiate commissions to be paid on such transactions.
Upon obtaining consent of the Adviser or the Fund's Board of Trustees, the
SubAdviser may effect the purchase and sale of securities in private
transactions on such terms and conditions as shall be approved by the Adviser.
The SubAdviser shall place orders for the purchase and sale of portfolio
investments for the Fund's account with brokers or dealers selected by the
SubAdviser. In the selection of such brokers or dealers and the placing of such
orders, the SubAdviser shall seek to obtain for the Fund the most favorable
price and execution available, except to the extent it may be permitted to pay
higher brokerage commissions for brokerage and research services, as provided
below. In using its reasonable efforts to obtain for the Fund the most favorable
price and execution available, the SubAdviser, bearing in mind the best
interests of the Fund at all times, shall consider all factors it deems
relevant, including price, the size of the transaction, the breadth and nature
of the market for the security, the difficulty of the execution, the amount of
the commission, if any, the timing of the transaction, market prices and trends,
the reputation, experience and financial stability of the broker or dealer
involved, and the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Trustees may determine, or as may
be mutually agreed to by the Adviser and the SubAdviser, the SubAdviser shall
not be deemed to have acted unlawfully or to have breached any duty created by
this Agreement or otherwise solely by reason of its having caused the Fund to
pay a broker that provides brokerage and research services (within the meaning
of Section 28(e) of the Securities Exchange Act of 1934) to the SubAdviser an
amount of commission for effecting the Fund's investment transaction that is in
excess of the amount of commission that another broker would have charged for
effecting that transaction if, but only if, the SubAdviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of either that particular transaction or the overall responsibility of the
SubAdviser with respect to the accounts as to which it exercises investment
discretion. It is recognized that the services provided by such brokers may be
useful to the SubAdviser in connection with the SubAdviser's services to other
clients.
On occasions when the SubAdviser deems the purchase or sale of a security
to be in the best interests of the Fund as well as other clients of the
SubAdviser, the SubAdviser, to the extent permitted by applicable laws and
regulations and subject to the allocation procedures approved by the Fund's
Board or Adviser, may, but shall be under no obligation to, aggregate the
securities to be sold or purchased in order to obtain the most favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of securities so sold or purchased, as well as the expenses incurred
in the transaction, will be made by the SubAdviser in accordance with the
procedures approved by the Trustees or the Adviser, which currently require
unfulfilled allocations to be filled first followed by pro-rata allocations
based on the size of the client's portfolio.
(e) Securities Transactions. The SubAdviser and any affiliated person of
the SubAdviser will not purchase securities or other instruments from or sell
securities or other instruments to the Fund; provided, however, the SubAdviser
or any affiliated person of the SubAdviser may purchase securities or other
instruments from or sell securities or other instruments to the Fund if such
transaction is permissible under applicable laws and regulations, including,
without limitation, the 1940 Act and the Advisers Act and the rules and
regulations promulgated thereunder and is permitted by the procedures adopted by
the Fund.
The SubAdviser, including its Access Persons (as defined in subsection (e)
of Rule 17j-1 under the 1940 Act), agrees to observe and comply with Rule 17j-1
and the SubAdviser's and the Fund's Code of Ethics (which shall comply in all
material respects with Rule 17j-1), as the same may be amended from time to
time. On at least a quarterly basis, the SubAdviser will comply with the
reporting requirements of Rule 17j-1, which may include either (i) certifying to
the Adviser that the SubAdviser and its Access Persons have complied with the
SubAdviser's and the Fund's Code of Ethics with respect to the Fund or (ii)
identifying any violations which have occurred with respect to the Fund.
(f) Books and Records. The SubAdviser shall maintain separate detailed
records of all matters pertaining to the Fund (the "Fund's Records"), including,
without limitation, brokerage and other records of all securities transactions.
The SubAdviser acknowledges that the Fund's Records are property of the Fund.
The Fund's Records shall be available to the Fund or the Adviser and their
respective agents at any time upon reasonable request during normal business
hours and shall be available for telecopying without delay to the Adviser during
any day that the Fund is open for business.
(g) Information Concerning the Fund and SubAdviser. From time to time as
the Adviser or the Fund may request, the SubAdviser will furnish the requesting
party information and reports on portfolio transactions and reports on Fund
assets held in the portfolio, all in such detail, form and frequency as the
Adviser or the Fund may reasonably request.
The SubAdviser will (i) make appropriate persons, including the Fund's
portfolio manager(s), available for the purpose of reviewing with
representatives of the Adviser and/or the Fund's Board of Trustees on a regular
basis the management of the Fund, including, without limitation, review of the
general investment strategy of the Fund, economic considerations and general
conditions affecting the marketplace; (ii) on a continuing basis, (A) provide
the distributor of the Fund (the "Distributor") with assistance in the
distribution and marketing of the Fund in such amount and form as the Fund's
distributor may reasonably request from time to time, and (B) upon reasonable
notice from the Fund's distributor, use reasonable efforts to cause the
portfolio manager or other person who manages or is responsible for overseeing
the management of the Fund's portfolio (the "Portfolio Manager") to provide
marketing and distribution assistance to the Distributor, including, without
limitation, conference calls, meetings and road trips, provided that each
portfolio manager shall not be required to devote more than 10% of his or her
time to such marketing and distribution activity (in this regard, the Adviser
undertakes to reimburse the SubAdviser for its reasonable out-of-pocket
expenses, provided that, such expenses are related to a request for marketing or
distribution assistance by a duly authorized employee of the Adviser); (iii) use
reasonable efforts (A) to retain the services of the Portfolio Manager who
manages the portfolio of the Fund, from time to time or (B) to promptly obtain
the services of a Portfolio Manager acceptable to the Adviser if the services of
the Portfolio Manager are no longer available to the SubAdviser; (iv) from time
to time, assure that each Portfolio Manager is acceptable to the Adviser; (v)
obtain the written approval of the Adviser prior to designating a new Portfolio
Manager; provided, however, that, if the services of a Portfolio Manager are no
longer available to the SubAdviser due to circumstances beyond the reasonable
control of the SubAdviser (e.g., voluntary resignation, death or disability),
the SubAdviser may designate an interim Portfolio Manager who (A) shall be
reasonably acceptable to the Adviser and (B) shall function for a reasonable
period of time until the SubAdviser designates an acceptable permanent
replacement; (vi) promptly notify the Adviser of any anticipated changes in the
Portfolio Manager, portfolio management, any anticipated changes in the
ownership or management of the SubAdviser, or of material changes in the control
of the SubAdviser, or any other material matter that may require disclosure to
the Trustees, shareholders of the Fund or dealers.
The SubAdviser will also provide the Adviser with notice and analysis of
events that may affect or relate to the valuation of the Fund's portfolio
securities.
(h) Custody Arrangements. The SubAdviser shall on each business day provide
the Adviser, the Fund and the Fund's custodian such information as the Adviser,
the Fund and the Fund's custodian may reasonably request relating to all
transactions and portfolio holdings of the Fund.
(i) Historical Performance Information. To the extent agreed upon by the
parties, the SubAdviser will provide the Fund and the Adviser with historical
performance information with respect to SubAdviser's similarly managed
investment companies or other accounts, to be included in the Prospectus or for
any other uses permitted by applicable law and to the extent available.
3. Independent Contractor. In the performance of its duties hereunder, the
SubAdviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund or the Adviser in any way or
otherwise be deemed an agent of the Fund or the Adviser.
4. Expenses. During the term of this Agreement, SubAdviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased or sold
for the Fund. The SubAdviser shall, at its sole expense, employ or associate
itself with such persons or firms as it believes to be particularly fitted to
assist it in the execution of its duties under this Agreement. Except as
otherwise provided in this Agreement or by law, the SubAdviser shall not be
responsible for the Fund's or Adviser's expenses, which shall include, but not
be limited to, organizational and offering expenses (which include out-of-pocket
expenses, but not overhead or employee costs of the SubAdviser); expenses for
legal, accounting and auditing services; taxes and governmental fees; dues and
expenses incurred in connection with membership in investment company
organizations; costs of printing and distributing shareholder reports, proxy
materials, prospectuses, stock certificates and distribution of dividends;
charges of the Fund's custodians and sub-custodians, administrators and
sub-administrators, registrars, transfer agents, dividend disbursing agents and
dividend reinvestment plan agents; payment for portfolio pricing services to a
pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission (the "SEC"); expenses of registering or qualifying
securities of the Fund for sale in the various states; freight and other charges
in connection with the shipment of the Fund's portfolio securities; fees and
expenses of non-interested Trustees; salaries of shareholder relations
personnel; costs of shareholders meetings; insurance; interest; brokerage costs;
and litigation and other extraordinary or non-recurring expenses. The Fund or
the Adviser, as the case may be, shall reimburse the SubAdviser for any expenses
of the Fund or the Adviser as may be reasonably incurred as specifically
provided for in this Agreement or as specifically agreed to beforehand by
Adviser. The SubAdviser shall keep and supply to the Fund and the Adviser
reasonable records of all such expenses.
5. Compensation. For the services provided and the expenses assumed with
respect to the Fund pursuant to this Agreement, the SubAdviser will be entitled
to the fee listed for the Fund on Exhibit A. Such fee will be computed daily and
payable no later than the tenth (10th) business day following the end of each
month, from the Adviser, calculated as described in Exhibit A.
The method of determining net assets of the Fund for purposes hereof shall
be the same as the method of determining net assets for purposes of establishing
the offering and redemption price of the shares as described in the Fund's
Prospectus. If this Agreement shall be effective for only a portion of a month,
the aforesaid fee shall be prorated for the portion of such month during which
this Agreement is in effect.
The SubAdviser agrees that during any period in which the SubAdviser serves
as a subadviser to any other registered investment company and provides the same
or substantially similar services to such investment company at a lower rate,
the SubAdviser shall charge the Adviser and the Fund no more than the lowest
rate then in effect unless otherwise specifically agreed by the Adviser and
SubAdviser in writing.
In the event that the investment advisory fee rate paid to the Adviser by
the Fund is reduced, the compensation paid to the SubAdviser hereunder shall be
reduced by the same percentage.
6. Representations and Warranties of SubAdviser. The SubAdviser represents
and warrants to the Adviser and the Fund as follows:
(a) The SubAdviser is registered as an investment adviser under the
Advisers Act;
(b) The SubAdviser is registered as a Commodity Trading Adviser under the
Commodity Exchange Act (the "CEA") with the Commodity Futures Trading Commission
(the "CFTC"), or is not required to register pursuant to an applicable
exemption;
(c) The SubAdviser is a corporation duly organized and properly registered
and operating under the laws of the Commonwealth of Massachusetts with the power
to own and possess its assets, perform its obligations under this Agreement, and
to carry on its business as it is now being, and to be, conducted;
(d) The execution, delivery and performance by the SubAdviser of this
Agreement are within the SubAdviser's powers and have been duly authorized by
all necessary action and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the SubAdviser
for the execution, delivery and performance by the SubAdviser of this Agreement,
and the execution, delivery and performance by the SubAdviser of this Agreement
do not contravene or constitute a default under (i) any provision of applicable
law, rule or regulation, (ii) the SubAdviser's governing instruments, or (iii)
any agreement, judgment, injunction, order, decree or other instrument binding
upon the SubAdviser;
(e) The Form ADV of the SubAdviser previously provided to the Adviser and
all amendments to the SubAdviser's Form ADV to be provided to Adviser is or will
be a true and complete copy of the form as currently filed or as then filed with
the SEC and the information contained therein is accurate and complete in all
material respects and does not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
7. Representations and Warranties of Adviser. The Adviser represents and
warrants to the SubAdviser as follows:
(a) The Adviser is registered as an investment adviser under the Advisers
Act;
(b) The Adviser has filed a notice of exemption pursuant to Rule 4.14 under
the CEA with the CFTC and the National Futures Association or is not required to
file such exemption;
(c) The Adviser is a corporation duly organized and validly existing under
the laws of the State of Colorado with the power to own and possess its assets,
perform its obligations under this Agreement, and to carry on its business as it
is now being, and to be, conducted;
(d) The execution, delivery and performance by the Adviser of this
Agreement are within the Adviser's powers and have been duly authorized by all
necessary action, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the Adviser for
the execution, delivery and performance by the Adviser of this Agreement, and
the execution, delivery and performance by the Adviser of this Agreement do not
contravene or constitute a default under (i) any provision of applicable law,
rule or regulation, (ii) the Adviser's governing instruments, or (iii) any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Adviser;
(e) The Adviser acknowledges that it received a copy of the SubAdviser's
Form ADV prior to the execution of this Agreement;
(f) The Adviser and the Fund have duly entered into the Advisory Agreement
pursuant to which the Fund authorized the Adviser to enter into this Agreement;
and
(g) The Adviser will take such steps as are necessary to ensure that the
Fund's shares are duly authorized and registered for sale to the extent that
such shares are offered for sale.
8. Delivery of Documents to the Adviser. The SubAdviser has furnished the
Adviser with true, accurate and complete copies of the following:
(a) The SubAdviser's Form ADV as filed with the Commission, as of the date
hereof;
(b) Separate lists of persons who the SubAdviser wishes to have authorized
to give written and oral instructions to custodian(s) of the Fund; and
(c) The Code of Ethics of the SubAdviser, as in effect on the date hereof.
The SubAdviser will furnish the Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing.
9. Survival of Representations and Warranties; Duty to Update Information.
All representations and warranties made by the SubAdviser and the Adviser
pursuant to Sections 6 and 7, respectively, shall survive the termination of
this Agreement. The parties hereto shall promptly notify each other in writing
upon becoming aware that any of the foregoing representations and warranties are
no longer true and the SubAdviser shall promptly update all information and
documents which the SubAdviser is required to provide to the Adviser hereunder.
10. Liability and Indemnification.
(a) Liability. The SubAdviser shall exercise its best judgment in rendering
the services in accordance with the terms of this Agreement. In the absence of
willful misfeasance, bad faith or gross negligence on the part of the SubAdviser
or a reckless disregard of its duties hereunder, the SubAdviser, each of its
affiliates and all respective partners, officers, Trustees and employees
("Affiliates") and each person, if any, who within the meaning of the Securities
Act controls the SubAdviser ("Controlling Persons") shall not be liable for any
error of judgment or mistake of law and shall not be subject to any expenses or
liability to the Adviser, the Fund or the Fund or any of the Fund's
shareholders, in connection with the matters to which this Agreement relates.
Except as set forth in (c) below, the absence of willful misfeasance, bad faith
or gross negligence on the part of the Adviser or a reckless disregard of its
duties hereunder, the Adviser, any of its Affiliates and each of the Adviser's
Controlling Persons, if any, shall not be subject to any liability to the
SubAdviser, for any act or omission in the case of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of Fund assets; provided, however, that nothing herein shall
relieve the Adviser and the SubAdviser from any of their obligations under
applicable law, including, without limitation, the federal and state securities
laws and the CEA.
(b) The SubAdviser agrees to indemnify and hold harmless the Adviser, its
Affiliates and Controlling Persons and their respective officers, Trustees and
employees, against any and all losses, claims, damages, liabilities or
litigation (including reasonable attorneys' fees), to which the Adviser or such
Affiliates or Controlling Persons of the Adviser or their respective officers,
Trustees and employees may become subject under the 1940 Act, the 1933 Act, the
Advisers Act, or any other statute, law, rule or regulation, arising directly
out of the SubAdviser's responsibilities hereunder (1) to the extent of and as
result of the willful misfeasance, bad faith, or gross negligence by the
SubAdviser, any of the SubAdviser's employees or representatives or any other
affiliate of or any person acting on behalf of the SubAdviser, or (2) as a
result of any untrue statement of a material fact contained in the Fund's
registration statement, including any amendment thereof or any supplement
thereto, or the omission of a material fact required to be stated in such
registration statement necessary to make the statements therein not misleading,
if such a statement or omission was made in reliance upon and in conformity with
written information furnished by the SubAdviser to the Fund or written
information furnished by the Adviser to the SubAdviser for review and such
information is approved or deemed approved by the SubAdviser; provided, however,
that in no case is the SubAdviser's indemnity hereunder deemed to protect a
person against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.
(c) The Adviser agrees to indemnify and hold harmless the SubAdviser, its
Affiliates and each Controlling Person of the SubAdviser, if any, and their
respective officers, Trustees and employees against any and all losses, claims,
damages, liabilities or litigation (including reasonable attorneys' fees), to
which the SubAdviser or such Affiliates or Controlling Person of the SubAdviser
or their respective officers, Trustees and employees may become subject under
the Act, the 1933 Act, the Advisers Act, or any other statute, law, rule or
regulation, arising out of the Adviser's responsibilities as investment manager
of the Fund or the Adviser's obligations hereunder (1) to the extent of and as a
result of the willful misfeasance, bad faith, or gross negligence by the
Adviser, any of the Adviser's employees or representatives or any affiliate of
or any person acting on behalf of the Adviser, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in the Fund's
registration statement, including any amendment thereof or any supplement
thereto, or the omission of or alleged omission to state a material fact in such
registration statement necessary to make the statements therein not misleading;
provided, however, that in no case shall the Adviser's indemnity hereunder be
deemed to protect a person against any liability to which any such person would
otherwise be subject 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.
11. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement shall continue until
December 31, 2003, and thereafter shall continue automatically for successive
annual periods, provided such continuance is specifically approved at least
annually by the Fund's Board of Trustees or vote of the lesser of (a) 67% of the
shares of the Fund represented at a meeting if holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (b) more
than 50% of the outstanding shares of the Fund; provided that in either event
its continuance also is approved by a majority of the Fund's Trustees who are
not "interested persons" (as defined in the ▇▇▇▇ ▇▇▇) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval.
(b) Termination. Notwithstanding whatever may be provided herein to the
contrary, this Agreement may be terminated at any time, without payment of any
penalty:
(i) By vote of a majority of the Fund's Board of Trustees, or by vote of a
majority of the outstanding voting securities of the Fund, or by the Adviser, in
each case, upon at least 60 days' written notice to the SubAdviser;
(ii) By the non-defaulting party immediately upon receipt of written notice
from the non-defaulting party to the defaulting party in the event of a breach
of any provision of this Agreement by the defaulting party; or
(iii) By the SubAdviser upon at least 60 days' written notice to the
Adviser and the Fund. If SubAdviser terminates this Agreement pursuant to this
sub-paragraph (iii), SubAdviser is hereby prohibited from using any performance
information with respect to the Fund for any purpose for a period of one (1)
year from the effective date of termination under this sub-paragraph (iii). This
restriction shall not apply to any mutual fund that SubAdviser managed prior to
the date of this Agreement.
The notice provided for in (i) and (iii) above may be waived by the party
required to be notified.
This Agreement shall not be assigned (as such term is defined in the ▇▇▇▇
▇▇▇) and shall terminate automatically in the event of its assignment or upon
the termination of the Advisory Agreement. In the event of an assignment that
occurs solely due to the change of control of the SubAdviser, any necessary
approvals will be obtained at the sole expense of the SubAdviser.
(c) Transactions in Progress Upon Termination. The Adviser and SubAdviser
will cooperate with each other to ensure that portfolio or other transactions in
progress at the date of termination of this Agreement shall be completed by the
SubAdviser in accordance with the terms of such transactions, and to this end
the SubAdviser shall provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the SubAdviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Fund.
13. Reference to Adviser and SubAdviser.
(a) Neither the Adviser nor any Affiliate or agent of it shall make
reference to or use the name of SubAdviser or any of its Affiliates, or any of
their clients, except as provided herein and except for references concerning
the identity of and services provided by the SubAdviser to the Fund, which
references shall not differ in substance from those included in the Prospectus
and this Agreement, in any advertising or promotional materials without the
prior approval of SubAdviser, which approval shall not be unreasonably withheld
or delayed. The Adviser hereby agrees to make all reasonable efforts to cause
the Fund and any Affiliate thereof to satisfy the foregoing obligation.
(b) Neither the SubAdviser nor any Affiliate or agent of it shall make
reference to or use the name of the Fund, the Adviser or any of their respective
Affiliates, or any of their clients, except references concerning the identity
of the Fund or the Adviser, which references shall not differ in substance from
those included in the Prospectus and this Agreement, in any advertising or
promotional materials without the prior approval of SubAdviser, which approval
shall not be unreasonably withheld or delayed. The SubAdviser hereby agrees to
make all reasonable efforts to cause the Fund and any Affiliate thereof to
satisfy the foregoing obligation.
14. Amendment. This Agreement may be amended only by mutual consent of the
parties, provided that the terms of any material amendment shall be approved by:
a) the Fund's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Fund (as required by the ▇▇▇▇ ▇▇▇) and b) the vote of a
majority of those Trustees of the Fund who are not "interested persons" of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval, if such approval is required by applicable law.
15. Confidentiality. Subject to the duties of the SubAdviser to comply with
applicable law, including any demand of any regulatory or taxing authority
having jurisdiction, the SubAdviser shall treat as confidential all information
pertaining to the Fund and the actions of the SubAdviser, the Adviser and the
Fund in respect thereof.
16. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the SubAdviser:
Cornerstone Real Estate Advisers Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Managing Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Adviser:
OppenheimerFunds, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Such notice shall be deemed effective when provided in accordance with this
section 16.
17. Jurisdiction. This Agreement shall be governed by and construed
consistent with the Advisory Agreement and in accordance with substantive laws
of the State of New York without reference to choice of law principles thereof
and in accordance with the 1940 Act. In the case of any conflict, the 1940 Act
shall control.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
19. Certain Definitions. For the purposes of this Agreement and except as
otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
20. Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
21. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision or applicable law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.
22. Survival. The provisions of Sections 2(f), 9, 10, 11(c), 13, 15 and 16
will survive termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
ADVISER
OppenheimerFunds, Inc.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President & Acting
General Counsel
SUBADVISER
Cornerstone Real Estate Advisers, Inc.
By:_________________________________
Name:
Title:
EXHIBIT A TO
SUBADVISORY AGREEMENT
SubAdvisory Fee
The Adviser will pay the SubAdviser a fee equal to 40% of the investment
management fee collected by the Adviser from the Fund, which shall be calculated
after any investment management fee waivers (i) required by the Fund's Board of
Trustees or (ii) voluntarily agreed to by the Adviser with the SubAdviser's
concurrence. Notwithstanding the foregoing, if the Adviser, without demand from
the Fund's Board of Trustees, agrees, without the SubAdviser's concurrence, to
voluntarily waive a portion of the investment management fee the Fund is
required to pay to the Adviser, the SubAdviser's fee hereunder shall be based
upon the investment management fee the Fund would have paid but for any such
waiver agreed to by the Adviser in its sole discretion.