DISTRIBUTION AGREEMENT
between
THE VICTORY VARIABLE INSURANCE FUNDS
and
BISYS FUND SERVICES LIMITED PARTNERSHIP
This DISTRIBUTION AGREEMENT is made as of this 1st day of April, 2002
between The Victory Variable Insurance Funds, a Delaware business trust (herein
called the "Trust"), and BISYS Fund Services Limited Partnership, an Ohio
limited partnership (herein called the "Distributor").
WHEREAS, the Trust is an open-end management investment company and is so
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust desires to retain the Distributor as Distributor for
each of the Trust's separate portfolios set forth on Schedule I hereto, as such
Schedule may be revised from time to time (individually known as a "Fund" and
collectively as the "Funds") to provide for the sale and distribution of shares
of beneficial interest of the Funds (herein collectively called "Shares"), and
the Distributor is willing to render such services;
NOW THEREFORE, in consideration of the premises and mutual convenants set
forth herein the parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
The Trust has delivered to the Distributor copies of each of the following
documents and will deliver to it all future amendments and supplements thereto,
if any:
(a) The Trust's Certificate of Trust and all amendments thereto
(such Certificate of Trust, as presently in effect and as it shall from
time to time be amended, herein called the "Trust's Certificate");
(b) The Bylaws of the Trust (such Bylaws, as presently in effect and
as they shall from time to time be amended, herein called the "Bylaws");
(c) Resolutions of the Board of Trustees of the Trust (the "Board")
authorizing the execution and delivery of this Agreement;
(d) The Trust's most recent Post-Effective Amendment to its
Registration Statement under the Securities Act of 1933, as amended ( the
"1933 Act"), and under the 1940 Act, on Form N-1A as filed with the
Securities and Exchange Commission (the "Commission") and all subsequent
amendments thereto (said Registration Statement, as presently in effect
and as amended or supplemented from time to time, is herein called the
"Registration Statement");
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as
filed with the Commission; and
() A Prospectus and Statement of Additional Information of the
Funds (such prospectus and statement of additional information, as
presently filed with the Securities and Exchange Commission (the "SEC")
and as they shall from time to time be amended and supplemented herein
called individually the "Prospectus" and collectively the "Prospectuses").
II. DISTRIBUTION
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as Principal Distributor of the Funds' Shares and the Distributor
hereby accepts such appointment and agrees to render the services and duties set
forth in this Section II.
2. Services and Duties.
(a) The Trust agrees to sell through the Distributor, as agent, from
time to time during the term of this Agreement, Shares of the Funds
(whether authorized but unissued or treasury shares, in the Trust's sole
discretion) upon the terms and at the current offering price as described
in the Prospectus. It is understood that the Shares are offered only
through variable annuity contracts and variable life policies issued by
the insurance companies that have entered into Participation Agreements
with the Trust or its affiliates. The Distributor shall not be obligated
to sell any certain number of Shares. Each Fund reserves the right to
issue Shares in connection with any merger or consolidation of the Trust
or any Fund with any other investment company or personal holding company
or in connection with offers of exchange exempted from Section 11(a) of
the 1940 Act.
(b) In all matters relating to the sale and redemption of Shares,
the Distributor will act in conformity with the Trust's Certificate,
Bylaws, and Prospectus and with the instructions and directions of the
Board and will conform to and comply with the requirements of the
Securities Act, the 1940 Act, the regulations of the National Association
of Securities Dealers, Inc. and all other applicable federal or state laws
and regulations. In connection with such sales, the Distributor
acknowledges and agrees that it is not authorized to provide any
information or make any representations other than as contained in the
Trust's Registration Statement and Prospectus and any sales literature
specifically approved by the Trust. The Trust shall not be responsible in
any way for any information, statements or representations given or made
by the Distributor or its representatives or agents other than such
information, statements or representations contained in the Prospectus or
other financial statements of the Trust or in any sales literature or
advertisements specifically approved by the Trust.
(c) The Distributor will bear the cost of (i) printing and
distributing any Prospectus (including any supplement thereto) to persons
who are not either shareholders or counsel, independent accountants or
other persons providing similar services to the Trust, and (ii) preparing,
printing and distributing any literature, advertisement or
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material which is primarily intended to result in the sale of the Shares;
provided, however, that the Distributor shall not be obligated to bear the
expenses incurred by the Trust in connection with the preparation and
printing of any amendment to any Registration Statement or Prospectus
necessary for the continued effective registration of the Shares under the
Securities Act; and provided further, that each Fund will bear the
expenses incurred and other payments made in accordance with the
provisions of this Agreement and any plan now in existence or hereafter
adopted with respect to such Fund, or any class or classes of shares of
such Fund, pursuant to Rule 12b-1 under the 1940 Act (collectively, the
"Plans").
(d) The Distributor agrees to be responsible for implementing and/or
operating the Plans in accordance with the terms thereof.
(e) All Shares of the Funds offered for sale by the Distributor
shall be offered for sale at a price per Share (the "offering price")
equal to their net asset value (determined in the manner set forth in the
Trust's Certificate and then current Prospectuses) plus any applicable
sales charge as set forth in the then current Prospectuses. The offering
price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent.
(f) If any Shares sold by the Distributor under the terms of this
Agreement are redeemed or repurchased by the Trust or by the Distributor
as agent or are tendered for redemption within seven business days after
the date of confirmation of the original purchase of said Shares, the
Distributor shall forfeit the amount (if any) of the net asset value
received by it in respect of such Shares, provided that the portion, if
any, of such amount (if any) re-allowed by the Distributor from the
broker-dealers or other persons shall be repayable to the Trust only to
the extent recovered by the Distributor from the broker-dealer or other
person concerned. The Distributor shall include in the forms of agreement
with such broker-dealers and other persons a corresponding provision for
the forefeiture by them of their concession with respect to Shares sold by
them or their principals and redeemed or repurchased by the Trust or by
the Distributor as agent (or tendered for redemption) within seven
business days after the date of confirmation of such intial purchases.
3. Sales and Redemptions.
(a) The Trust shall pay all costs and expenses in connection with
the registration of the Shares under the Securities Act, and all expenses
in connection with maintaining facilities for the issue and transfer of
the Shares and for supplying information, prices and other data to be
furnished by the Trust hereunder, and all expenses in connection with
preparing, printing and distributing the Prospectuses except as set forth
in subsection 2(c) of Section II hereof.
(b) The Trust shall execute all documents, furnish all information
and otherwise take all actions which may be reasonably necessary in the
discretion of the Trust's officers in connection with the qualification of
the Shares for sale in such states as
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the Distributor may designate to the Trust and the Trust may approve, and
the Trust shall pay all filing fees which may be incurred in connection
with such qualification. The Distributor shall pay all expenses connected
with its qualification as a dealer under state or federal laws and, except
as otherwise specifically provided in this Agreement, all other expenses
incurred by the Distributor in connection with the sale of the Shares as
contemplated in this Agreement. It is understood that certain advertising,
marketing, shareholder servicing, administration and/or distribution
expenses to be incurred in connection with the Shares will be paid by the
Funds as provided in this Agreement and in the Plans relating thereto.
(c) The Trust shall have the right to suspend the sale of Shares of
any Fund at any time in response to conditions in the securities markets
or otherwise, and to suspend the redemption of Shares of any Fund at any
time permitted by the 1940 Act or the rules of the SEC ("Rules").
(d) The Trust reserves the right to reject any order for Shares.
4. Payments to Service Providers. The Funds may pay the Distributor an
amount under a Plan. The Distributor may pay such amounts to service providers,
some of whom may be affiliates of the Trust or affiliates of affiliates of the
Trust, in connection with, among other things, the distribution of variable
contracts funded by Shares of the Funds, or other services provided to contract
owners.
III. LIMITATION OF LIABILITY
The Distributor shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust or any Fund in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
IV. CONFIDENTIALITY
The Distributor will treat confidentially and as proprietary information
of the Trust all records and other information relative to the Trust, to the
Trust's prior or present shareholders and to those persons or entities who
respond to the Distributor's inquiries concerning investment in the Trust, and
except as provided below, will not use such records and information for any
purpose other than the performance of its responsibilities and duties hereunder
or the performance of its responsibilities and duties with regard to sales of
the shares of any Fund which may be added to the Trust in the future. Any other
use by the Distributor of the information and records referred to above may be
made only after prior notification to and approval in writing by the Trust. Such
approval shall not be unreasonably withheld and may not be withheld where (i)
the Distributor may be exposed to civil or criminal contempt proceedings for
failure to divulge such information; (ii) the Distributor is requested to
divulge such
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information by duly constituted authorities; or (iii) the Distributor is so
requested by the Trust.
V. REPRESENTATIONS AND INDEMNIFICATION
1. Trust Representations. The Trust represents and warrants to the
Distributor that at all times the Registration Statement and Prospectuses will
in all material respects conform to the applicable requirements of the
Securities Act and the Rules and will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation or warranty
in this subsection shall apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Trust by or on
behalf of and with respect to the Distributor expressly for use in the
Registration Statement or Prospectuses.
2. Distributor Representations. The Distributor represents and warrants to
the Trust that it is duly organized as an Ohio Limited Partnership and is and at
all times will remain duly authorized and licensed to carry out its services as
contemplated herein.
3. Trust Indemnification. The Trust will indemnify and hold harmless the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the Securities Act, from and
against any losses, claims, damages or liabilities, joint or several, to which
any of them may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses or in any application or other document executed by
or on behalf of the Trust, or arise out of, or are based upon, information
furnished by or on behalf of the Trust filed in any state in order to qualify
the Shares under the securities or blue sky laws thereof ("Blue Sky
Application"), or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the Securities Act, for any
legal or other expenses reasonably incurred by any of them in investigating,
defending, or preparing to defend any such action, proceeding or claim;
provided, however, that the Trust shall not be liable in any case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, any
untrue statement, alleged untrue statement, or omission or alleged omission made
in the Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust in reliance
upon and in conformity with written information furnished to the Trust by or on
behalf of and with respect to the Distributor specifically for inclusion
therein.
The Trust shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or negligence in
5
the performance of his duties, or his reckless disregard of obligations and
duties, under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of a quorum of trustees of the Trust who are neither
"interested persons" of the Trust (as defined in the 0000 Xxx) nor parties to
the proceeding, or by an independent legal counsel in a written opinion.
Each Fund shall advance attorney's fees and other expenses incurred by any
person in defending any claim, demand, action or suit which is the subject of a
claim for indemnification pursuant to this subsection 3, so long as: (i) such
person shall undertake to repay all such advances unless it is ultimately
determined that he is entitled to indemnification hereunder; and (ii) such
person shall provide security for such undertaking, or the Fund shall be insured
against losses arising by reason of any lawful advances, or a majority of a
quorum of the disinterested, non-party trustees of the Trust (or an independent
legal counsel in a written opinion) shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry) that there is reason
to believe that such person ultimately will be found entitled to indemnification
hereunder.
4. Distributor Indemnification. The Distributor will indemnify and hold
harmless the Trust, the Trust's several officers and trustees and any person who
controls the Trust within the meaning of Section 15 of the Securities Act, from
and against any losses, claims, damages or liabilities, joint or several, to
which any of them may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect hereof) arise out of, or are based upon, any breach of
its representations and warranties in subsection 2 hereof or its agreements in
subsection 2 of Section II hereof, or which arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, which
statement or omission or alleged statement or alleged omission was made in
reliance upon or in conformity with information furnished in writing to the
Trust or any of its several officers and trustees by or on behalf of and with
respect to the Distributor specifically for inclusion therein, and will
reimburse the Trust, the Trust's several officers and trustees, and any person
who controls the Trust within the meaning of Section 15 of the Securities Act,
for any legal or other expenses reasonably incurred by any of them in
investigating, defending or preparing to defend any such action, proceeding or
claim.
5. General Indemnity Provisions. No indemnifying party shall be liable
under its indemnity agreement contained in subsection 3 or 4 hereof with respect
to any claim made against such indemnifying party unless the indemnified party
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the indemnified party (or after the
indemnified party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve it from any liability which it may otherwise have to the indemnified
party. The
6
indemnifying party will be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if the indemnifying party elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the indemnified party. In the event the indemnifying party
elects to assume the defense of any such suit and retain such counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by the indemnified party.
VI. DURATION AND TERMINATION
This Agreement shall become effective as of the date first above written,
and, unless sooner terminated as provided herein, shall continue until March 31,
2004. Thereafter, if not terminated, this Agreement shall continue automatically
for successive terms of one year, provided that such continuance is specifically
approved at least annually (a) by a majority of those members of the Board who
are not parties to this Agreement or "interested persons" of any such party (the
"Disinterested Trustees"), pursuant to a vote cast in person at a meeting called
for the purpose of voting on such approval, and (b) by the Board or by vote of a
"majority of the outstanding voting securities" of the Trust. Notwithstanding
anything to the contrary contained in this Section VI, this Agreement may be
terminated by the Trust at any time with respect to any Fund, without the
payment of any penalty, by vote of a majority of the Disinterested Trustees or
by vote of a "majority of the outstanding voting securities" of such Fund on 60
days' written notice to the Distributor, or by the Distributor at any time,
without the payment of any penalty, on 60 days' written notice to the Trust.
This Agreement will automatically terminate in the event of its "assignment."
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the 1940 Act.)
VII. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.
VIII. NOTICES
Notices of any kind to be given to the Trust hereunder by the Distributor
shall be in writing and shall be duly given if mailed or delivered to the Trust
c/o Victory Capital Management, Inc., Investment Products Xxxxx,000 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attn: Xxxxxxxx X. Xxxxxx, President with a copy
to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx, Xxxx
00000, Attention: Xxx X. Xxxxx, Esquire, or at such other address or to such
individual as shall be so specified by the Trust to the Distributor. Notices of
any kind to be given to the Distributor hereunder by the Trust shall be in
writing and shall be duly given if mailed or delivered to the Distributor at
0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attention: President, or at such other
address or to such individual as shall be so specified by the Distributor to the
Trust.
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IX. COMPENSATION
The Distributor shall not receive compensation with respect to the
provision of distribution services under this Agreement; provided, however, that
the Distributor shall be entitled to receive payments, if any, under the Plans
in accordance with the terms thereof and payments, if any, of sales charges as
set forth in the Trust's Prospectuses. The Trust is entering into this Agreement
on behalf of the Funds listed on Schedule I severally and not jointly. The
responsibilities and benefits set forth in this Agreement shall refer to each
Fund severally and not jointly. No individual Fund shall have any responsibility
for any obligation, if any, with respect to any other Fund arising out of this
Agreement.
X. MISCELLANEOUS
1. Construction. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section VI hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation of the SEC thereunder.
2. Names. The names "The Victory Variable Insurance Funds" and "Trustees
of The Victory Variable Insurance Funds" refer respectively to the Trust created
and the Trustees, as trustees but not individually or personally, acting from
time to time under a Certificate of Trust filed February 11, 1998, as amended
October 15, 1998, at the office of the Secretary of State of the State of
Delaware which is hereby referred to and is also on file at the principal office
of the Trust. The obligations of the Trust entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders or representatives of the Trust personally, but bind only
the Trust property, and all persons dealing with any class of shares of the
Trust must look solely to the Trust property belonging to such class for the
enforcement of any claims against the Trust.
3. Privacy. Nonpublic personal financial information relating to consumers
or customers of the Funds provided by, or at the direction of, Trust to the
Distributor, or collected or retained by the Distributor to perform its duties
as distributor, shall be considered confidential information. The Distributor
shall not disclose or otherwise use nonpublic financial information relating to
present or former shareholders of the Funds other than for the purposes for
which that information was disclosed to the Distributor, including use under an
exception in sections 248.14 ir 248.15 of Securities and Exchange Commission
Regulation S-P in the ordinary course of business to carry out those purposes.
The Distributor shall have in place and maintain physical, electronic and
procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of the Funds. Trust represents to the Distributor
that it has adopted a Statement of its privacy policies and practices as
required by Securities and Exchange Commission Regulation
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S-P and agree to provide the Distributor with a copy of that statement annually.
4. Anti-Money Laundering Program. Each of Distributor and the Trust
acknowledges that it is a financial institution subject to the USA Patriot Act
of 2001 and the Bank Secrecy Act, which require among other things, that
financial institutions adopt compliance programs to guard against money
laundering. Each of Distributor and the Trust agrees that it will take such
further steps, and cooperate with the other to facilitate such compliance. The
Distributor acknowledges that it is a "Covered Service Provider" as defined in
the Fund's Anti- Money Laundering Program (Fund AML Program) and shall assume
responsibility for the implementation of the requirements of the Fund AML
Program with respect to the services provided under this Agreement. The
Distributor represents and warrants that it has adopted policies and procedures
reasonably designed to detect and prevent money laundering activities in
compliance with applicable laws, regulations and regulatory interpretations. The
Distributor undertakes that it shall (a) conduct its operations in accordance
with the provisions of the Fund AML Program and applicable laws, regulations and
regulatory interpretations; (b) provide access to its books, records and
operations relating to its anti-money laundering compliance only with respect to
the Funds, by appropriate regulatory authorities, the Funds, and the Fund's
anti-money laundering Compliance Officer (the Trust's Compliance Officer shall
have no access to any of Distributor's anti-money laundering operations, books
or records pertaining to other clients of Distributor); (c) certify, in writing,
no less frequently than annually, that it is in compliance with applicable
anti-money laundering laws, rules, regulations and regulatory interpretations
with respect to the services provided under this Agreement; (d) upon request,
provide a copy of its anti-money laundering program (or a summary of its
program) to the Fund's anti-money laundering Compliance Officer; (e) provide
periodic reports to the Fund's Board of Trustees concerning anti-money
laundering activities and compliance exceptions, as the parties may agree from
time to time; and (f) ensure that selling group agreements require selling group
members to adopt, as applicable, reasonable anti-money laundering procedures and
otherwise comply with applicable anti-money laundering regulations and
regulatory interpretations with respect to the sale and redemption of Fund
shares. The Trust represents and warrants that it will conduct its operations in
accordance with the provisions of the Fund AML Program and applicable laws,
regulations and regulatory interpretations.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE VICTORY VARIABLE INSURANCE FUNDS
By: /s/ Xxxxxxxx X Xxxxxx
---------------------------------
Name: Xxxxxxxx X Xxxxxx
Title: President
Attest: _________________
Name:
BISYS FUND SERVICES LIMITED PARTNERSHIP,
d/b/a BISYS FUND SERVICES
By: BISYS Fund Services, Inc.,
Its General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------------
Name:
Title:
Attest: _________________
Name:
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SCHEDULE I
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FUNDS
-----
Name of Portfolio
-----------------
1.Victory Variable Insurance Investment Quality Bond Fund
2.Victory Variable Insurance Diversified Stock Fund
3.Victory Variable Insurance Small Company Opportunity Fund
