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Exhibit 99(d)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE VICTORY VARIABLE INSURANCE FUNDS
AND
KEY ASSET MANAGEMENT INC.
This INVESTMENT ADVISORY AGREEMENT made as of the 16th day of October,
1998, by and between The Victory Variable Insurance Funds (the "Trust"), on
behalf of the Funds listed in Schedule A (each a "Fund" and collectively, the
"Funds"), a Delaware business trust which may issue one or more series of shares
of beneficial interest, and Key Asset Management Inc., a New York corporation
(the "Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services to the Funds and the Adviser represents that it is willing and
possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) General. The Trust hereby appoints the Adviser to act as
investment adviser to the Funds for the period and on the
terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion,
provide such services through its own employees or the
employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Trust under
applicable laws and are under the control of KeyCorp, the
indirect parent of the Adviser; provided that (i) all persons,
when providing services hereunder, are functioning as part of
an organized group of persons, and (ii) such organized group
of persons is managed at all times by authorized officers of
the Adviser.
2. DELIVERY OF DOCUMENTS. The Trust has delivered to the Adviser copies
of each of the following documents along with all amendments thereto through the
date hereof, and will promptly deliver to it all future amendments and
supplements thereto, if any:
(a) the Trust's Trust Instrument;
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(b) the Bylaws of the Trust;
(c) resolutions of the Board of Trustees of the Trust (the
"Board") authorizing the execution and delivery of this
Agreement;
(d) Notification of Registration of the Trust under the 1940 Act
on Form N-8A as filed with the Securities and Exchange
Commission (the "Commission"); and
(e) the currently effective Prospectus and Statement of Additional
Information of the Trust.
3. INVESTMENT ADVISORY SERVICES.
(a) Management of the Funds. The Adviser hereby undertakes to act
as investment adviser to the Funds. The Adviser shall
regularly provide investment advice to the Funds and
continuously supervise the investment and reinvestment of
cash, securities and other property composing the assets of
the Funds and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the Trust
and the Funds;
(ii) obtain and evaluate pertinent economic, statistical
and financial data, as well as other significant
events and developments, which affect the economy
generally, the Funds' investment programs, and the
issuers of securities included in the Funds'
investment portfolios and the industries in which
they engage, or which may relate to securities or
other investments which the Adviser may deem
desirable for inclusion in the Funds' investment
portfolios;
(iii) determine which issuers and securities shall be
included in each of the Funds;
(iv) furnish a continuous investment program for the
Funds;
(v) in its discretion and without prior consultation with
the Trust, buy, sell, lend and otherwise trade any
stocks, bonds and other securities and investment
instruments on behalf of the Funds; and
(vi) take, on behalf of the Funds, all actions the Adviser
may deem necessary in order to carry into effect such
investment program and the Adviser's functions as
provided above, including the making of appropriate
periodic reports to the Board.
(b) Covenants. The Adviser shall carry out its investment advisory
and supervisory responsibilities in a manner consistent with
the investment objectives, policies, and restrictions provided
in: (i) the Funds' Prospectus and Statement of Additional
Information in effect from time to time; (ii) the Trust's
Trust Instrument, Bylaws or
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other governing instruments, as amended from time to time;
(iii) the 1940 Act; (iv) other applicable laws; and (v) such
other investment policies, procedures and/or limitations as
may be adopted by the Trust with respect to the Funds and
provided to the Adviser in writing. The Adviser agrees to use
reasonable efforts to manage the Funds so that it will
qualify, and continue to qualify, as a regulated investment
company under Subchapters L and M of the Internal Revenue Code
of 1986, as amended, and regulations issued thereunder (the
"Code"), except as may be authorized to the contrary by the
Board. The management of the Funds by the Adviser shall at all
times be subject to the review of the Board.
(c) Books and Records. Pursuant to applicable law, the Adviser
shall keep the Funds' books and records required to be
maintained by, or on behalf of, the Funds with respect to
advisory services rendered hereunder. The Adviser agrees that
all records which it maintains for the Funds are the property
of the Funds and it will promptly surrender any of such
records to the Funds upon the Funds' request. The Adviser
further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any such records of the Funds
required to be preserved by such Rule.
(d) Reports, Evaluations and other Services. The Adviser shall
furnish reports, evaluations, information or analyses to the
Trust with respect to the Funds and in connection with the
Adviser's services hereunder as the Board may request from
time to time or as the Adviser may otherwise deem to be
desirable. The Adviser shall make recommendations to the Board
with respect to Trust policies, and shall carry out such
policies as are adopted by the Board. The Adviser shall,
subject to review by the Board, furnish such other services as
the Adviser shall from time to time determine to be necessary
or useful to perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Adviser shall place all
orders for the purchase and sale of Fund securities for the
Funds with brokers or dealers selected by the Adviser, which
may include brokers or dealers affiliated with the Adviser to
the extent permitted by the 1940 Act and the Trust's policies
and procedures applicable to the Funds. The Adviser shall use
its best efforts to seek to execute Fund transactions at
prices which, under the circumstances, result in total costs
or proceeds being the most favorable to the Funds. In
assessing the best overall terms available for any
transaction, the Adviser shall consider all factors it deems
relevant, including the breadth of the market in the security,
the price of the security, the financial condition and
execution capability of the broker or dealer, research
services provided to the Adviser, and the reasonableness of
the commission, if any, both for the specific transaction and
on a continuing basis. In no event shall the Adviser be under
any duty to obtain the lowest commission or the best net price
for the Funds on any particular transaction, nor shall the
Adviser be under any duty to execute any order in a fashion
either preferential to the Funds relative to other accounts
managed by the Adviser or otherwise materially adverse to such
other accounts.
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(f) Selection of Brokers or Dealers. In selecting brokers or
dealers qualified to execute a particular transaction, brokers
or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) to the Adviser, the
Funds and/or the other accounts over which the Adviser
exercises investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and
research services a commission for executing a Fund
transaction for the Funds which is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good
faith that the total commission is 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 responsibilities of the
Adviser with respect to accounts over which it exercises
investment discretion. The Adviser shall report to the Board
of the Trust regarding overall commissions paid by the Funds
and their reasonableness in relation to the benefits to the
Funds.
(g) Aggregation of Securities Transactions. In executing Fund
transactions for the Funds, the Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of other Funds or its other clients if, in the
Adviser's reasonable judgment, such aggregation (i) will
result in an overall economic benefit to the Funds, taking
into consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading
requirements, and (ii) is not inconsistent with the policies
set forth in the Trust's registration statement and the Funds'
Prospectus and Statement of Additional Information. In such
event, the Adviser will allocate the securities so purchased
or sold, and the expenses incurred in the transaction, in an
equitable manner, consistent with its fiduciary obligations to
the Funds and such other clients.
4. REPRESENTATIONS AND WARRANTIES.
(a) The Adviser hereby represents and warrants to the Trust as
follows:
(i) The Adviser is a corporation duly organized and in
good standing under the laws of the State of New York
and is fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
(ii) The Adviser is registered as an investment adviser
with the Commission under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), and is
registered or licensed as an investment adviser under
the laws of all applicable jurisdictions. The Adviser
shall maintain such registrations or licenses in
effect at all times during the term of this
Agreement.
(iii) The Adviser at all times shall provide its best
judgment and effort to the Trust in carrying out the
Adviser's obligations hereunder.
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(b) The Trust hereby represents and warrants to the Adviser as follows:
(i) The Trust has been duly organized as a business trust
under the laws of the State of Delaware and is
authorized to enter into this Agreement and carry out
its terms.
(ii) The Trust is registered as an investment company with
the Commission under the 1940 Act and shares of the
Funds are registered for offer and sale to the public
under the Securities Act of 1933 and all applicable
state securities laws where currently sold. Such
registrations will be kept in effect during the term
of this Agreement.
5. COMPENSATION. As compensation for the services which the Adviser is
to provide or cause to be provided pursuant to Paragraph 3, the Funds shall pay
to the Adviser out of Funds assets an annual fee, computed and accrued daily and
paid in arrears on the first business day of every month, at the rate set forth
opposite the Funds' name on Schedule A, which shall be a percentage of the
average daily net assets of the Funds (computed in the manner set forth in the
Funds' most recent Prospectus and Statement of Additional Information)
determined as of the close of business on each business day throughout the
month. The fee for any partial month under this Agreement shall be calculated on
a proportionate basis. In the event that the total expenses of the Funds exceed
the limits on investment company expenses imposed by any statute or any
regulatory authority of any jurisdiction in which shares of such Funds are
qualified for offer and sale, the Adviser will bear the amount of such excess,
except: (i) the Adviser shall not be required to bear such excess to an extent
greater than the compensation due to the Adviser for the period for which such
expense limitation is required to be calculated unless such statute or
regulatory authority shall so require, and (ii) the Adviser shall not be
required to bear the expenses of the Funds to an extent which would result in
the Funds' or Trust's inability to qualify as a regulated investment company
under the provisions of Subchapter M of the Code.
6. INTERESTED PERSONS. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and shareholders of the Trust are
or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and shareholders of the Adviser are or
may be or become similarly interested in the Trust.
7. EXPENSES. As between the Adviser and the Funds, the Funds will pay
for all their expenses other than those expressly stated to be payable by the
Adviser hereunder, which expenses payable by the Funds shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other costs
in connection with the purchase or sale of securities and other investment
instruments, which the parties acknowledge might be higher than other brokers
would charge when the Funds utilize a broker which provides brokerage and
research services to the Adviser as contemplated under Paragraph 3 above; (iii)
fees and expenses of the Trust's Trustees that are not employees of the Adviser;
(iv) legal and audit expenses; (v) administrator, custodian, pricing and
bookkeeping, registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Funds' shares for
distribution under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy
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material to shareholders, unless otherwise required; (viii) all other expenses
incidental to holding meetings of shareholders, including proxy solicitations
therefor, unless otherwise required; (ix) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements thereto;
(x) expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; (xi)
insurance premiums for fidelity bonds and other coverage to the extent approved
by the Board; (xii) association membership dues authorized by the Board; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Trust is a party
(or to which the Funds' assets are subject) and any legal obligation for which
the Trust may have to provide indemnification to the Trust's Trustees and
officers.
8. NON-EXCLUSIVE SERVICES; LIMITATION OF ADVISER'S LIABILITY. The
services of the Adviser to the Funds are not to be deemed exclusive and the
Adviser may render similar services to others and engage in other activities.
The Adviser and its affiliates may enter into other agreements with the Funds
and the Trust for providing additional services to the Funds and the Trust which
are not covered by this Agreement, and to receive additional compensation for
such services. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Adviser, or a breach of fiduciary duty with respect to receipt of
compensation, neither the Adviser nor any of its directors, officers,
shareholders, agents, or employees shall be liable or responsible to the Trust,
the Funds or to any shareholder of the Funds for any error of judgment or
mistake of law or for any act or omission in the course of, or connected with,
rendering services hereunder or for any loss suffered by the Trust, the Funds or
any shareholder of the Funds in connection with the performance of this
Agreement.
9. EFFECTIVE DATE; MODIFICATIONS; TERMINATION. This Agreement shall
become effective as of the date of execution hereof, provided that it shall have
been approved by a majority of the outstanding voting securities of the Funds,
in accordance with the requirements of the 1940 Act, or such later date as may
be agreed by the parties following such shareholder approval.
(a) The initial term of this Agreement shall be for two years.
Thereafter, this Agreement shall continue in effect as to the
Funds for successive annual periods, provided such continuance
is specifically approved at least annually (i) by a vote of
the majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting
on such approval and (ii) by a vote of the Board or a majority
of the outstanding voting shares of the Funds.
(b) The modification of any of the non-material terms of this
Agreement may be approved by a vote of a majority of those
Trustees of the Trust 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.
(c) Notwithstanding the foregoing provisions of this Paragraph 9,
either party hereto may terminate this Agreement at any time
on sixty (60) days' prior written notice to the other, without
payment of any penalty. Such a termination by the Trust shall
be
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effected to the Funds by vote of the Board or by vote of a
majority of the outstanding voting securities of the Funds.
This Agreement shall terminate automatically in the event of
its assignment.
10. LIMITATION OF LIABILITY OF TRUSTEES AND SHAREHOLDERS. The Adviser
acknowledges the following limitation of liability:
The terms "The Victory Variable Insurance Funds" and "Trustees" refer,
respectively, to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Trust Instrument,
to which reference is hereby made and a copy of which is on file at the office
of the Secretary of State of the State of Delaware, such reference being
inclusive of any and all amendments thereto so filed or hereafter filed. The
obligations of "The Victory Variable Insurance Funds" 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 assets of the Trust, and all persons dealing with the Trust or the Funds
must look solely to the assets of the Trust or Funds for the enforcement of any
claims against the Trust or Funds.
11. SERVICE XXXX. The service xxxx of the Trust and the name "The
Victory Variable Insurance Funds" (and derivatives thereof) have been licensed
to the Trust by KeyCorp, through its subsidiary Key Trust Company ("Key Trust"),
an affiliate of the Adviser, pursuant to a License Agreement dated
________________, and their continued use is subject to the right of Key Trust
to withdraw this permission under the License Agreement in the event the Adviser
or another subsidiary of KeyCorp is not the investment adviser to the Trust.
12. CERTAIN DEFINITIONS. The terms "vote of a majority of the
outstanding voting securities," "assignment," "control," and "interested
persons," when used herein, shall have the respective meanings specified in the
1940 Act. References in this Agreement to the 1940 Act and the Advisers Act
shall be construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
13. INDEPENDENT CONTRACTOR. The Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board from time to time, have no authority
to act for or represent the Funds in any way or otherwise be deemed an agent of
the Funds.
14. STRUCTURE OF AGREEMENT. The Trust is entering into this Agreement
on behalf of the respective Funds severally and not jointly. The
responsibilities and benefits set forth in this Agreement shall refer to the
Funds severally and not jointly. No Fund shall have any responsibility for any
obligation of any other Fund arising out of this Agreement. Without otherwise
limiting the generality of the foregoing:
(a) any breach of any term of this Agreement regarding the Trust
with respect to any one Fund shall not create a right or
obligation with respect to any other Fund;
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(b) under no circumstances shall the Adviser have the right to set
off claims relating to the Funds by applying property of any
other Fund; and
(c) the business and contractual relationships created by this
Agreement, consideration for entering into this Agreement, and
the consequences of such relationship and consideration relate
solely to the Trust and the particular Fund to which such
relationship and consideration applies.
This Agreement is intended to govern only the relationships between the
Adviser, on the one hand, and the Trust and the Funds, on the other hand, and
(except as specifically provided above in this Paragraph 14) is not intended to
and shall not govern (i) the relationship between the Trust and any Fund or (ii)
the relationships among the respective Funds.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or the Advisers Act.
16. SEVERABILITY. 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 and, to this extent, the provisions
of this Agreement shall be deemed to be severable.
17. NOTICES. Notices of any kind to be given to the Trust hereunder by
the Adviser shall be in writing and shall be duly given if mailed or delivered
to 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000-0000, Attention: Xxxxxxx X. Xxxxxxxx;
with a copy to Kramer, Levin, Naftalis & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, Attention: Xxxx Xxxxxxxxxx, Esq., or at such other address or
to such individual as shall be so specified by the Trust to the Adviser. Notices
of any kind to be given to the Adviser hereunder by the Trust shall be in
writing and shall be duly given if mailed or delivered to the Adviser at 000
Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000, Attention: Xxxxxxx X. Xxxxxx with a
copy to Xxxxxxx X. Xxxxx, Esq., or at such other address or to such individual
as shall be so specified by the Adviser to the Trust. Notices shall be effective
upon delivery.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
written above.
THE VICTORY VARIABLE INSURANCE KEY ASSET MANAGEMENT INC.
FUNDS
By:_________________________ By: _________________________
Xxxxxxx X. Xxxxxxxx Xxxxxxxx X. Xxxxxx
Secretary Senior Managing Director
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SCHEDULE A
Name of Fund Fee*
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1. Investment Quality Bond Fund 0.20%
2. Diversified Stock Fund 0.30%
3. Small Company Value Fund 0.30%
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* As a percentage of average daily net assets. Note, however, that the
Adviser shall have the right, but not the obligation, to voluntarily
waive any portion of the advisory fee from time to time. Any such
voluntary waiver will be irrevocable and determined in advance of
rendering investment advisory services by the Adviser, and shall be in
writing and signed by the parties hereto.
