DISTRIBUTION AGREEMENT
AGREEMENT
between
THE VICTORY VARIABLE INSURANCE FUNDS
and
BISYS FUND SERVICES LIMITED PARTNERSHIP
This DISTRIBUTION AGREEMENT is made as of this 1st day of July, 1999
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 with a par value of $0.001 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) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission; and
(e) 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).
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 of 1933, as amended (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 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
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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 Prospectus) plus any applicable sales charge
as set forth in the Prospectus. 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.
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 Prospectus 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 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").
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(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 affilates 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 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 Prospectus 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 Prospectus.
2. Distributor Representations. The Distributor represents and warrants to
the
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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 Prospectus 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 Prospectus, 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 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
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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 Prospectus, 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 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 September
30, 1999. 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
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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 Mutual Fund Products, KeyCorp Management Company, 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000, 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: J.
Xxxxx Xxxxx, President, or at such other address or to such individual as shall
be so specified by the Distributor to the Trust.
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 Prospectus. 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
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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.
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/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Secretary
Attest: /s/ Xxxx Xxxxx
----------------
Name: Xxxx Xxxxx
BISYS FUND SERVICES LIMITED PARTNERSHIP,
d/b/a BISYS FUND SERVICES
By: BISYS Fund Services, Inc.,
Its General Partner
By: /s/ J. Xxxxx Xxxxx
-------------------------------
Name: J. Xxxxx Xxxxx
Title: President
Attest: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxxx
SCHEDULE I
To Distribution Agreement between
The Victory Variable Insurance Funds and
Bisys Fund Services Limited Partnership
dated as of July 1, 1999
Name of Fund
-------------
Diversified Stock Fund, Class A
Small Company Opportunity Fund, Class A
Revised as of April 27, 2000
