PORTFOLIO MANAGEMENT AGREEMENT
BETWEEN
KEY ASSET MANAGEMENT INC.
AND
INDOCAM INTERNATIONAL INVESTMENT SERVICES, S.A.
AGREEMENT made as of the 1st day of June, 1998 by and between Key Asset
Management Inc., a New York corporation (the "Adviser"), and IndoCam
International Investment Services, S.A., a corporation organized under the laws
of France (the "Sub-Adviser").
WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Adviser provides investment advisory services to the
series of The Victory Portfolios, a Delaware business trust (the "Company"),
which is registered as an open-end, management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), pursuant to an
Investment Advisory Agreement dated June 1, 1998 (the "Advisory Agreement"); and
WHEREAS, the Sub-Adviser is a registered investment adviser under the
Advisers Act; and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment subadvisory services in connection with The Xxxxxxx Xxxxxxxxxxxxx
Growth Fund (the "Fund"), a series of the Company, and the Sub-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. The Adviser hereby appoints the Sub-Adviser to act as a
non-exclusive investment sub-adviser to the Fund for the period and on the terms
set forth in this Agreement. The Sub-Adviser accepts such appointment and agrees
to furnish the services herein set forth for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Adviser has delivered to the Sub-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 Company's Trust Instrument;
(b) the By-Laws of the Company;
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(c) resolutions of the Board of Trustees of the Company authorizing
the execution and delivery of the Advisory Agreement and this
Agreement;
(d) the most recent Post-Effective Amendment to the Company's
Registration Statement under the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act, on Form N-1A as filed
with the Securities and Exchange Commission (the "Commission");
(e) Notification of Registration of the Company under the 1940 Act on
Form N-8A as filed with the Commission;
(f) the currently effective Prospectus and Statement of Additional
Information of the Fund; and
(g) a copy of all applicable orders granted to the Company by the
Securities and Exchange Commission or any no-action letter or
similar correspondence concerning the Company or any of its Funds
including an order under section 6(c) of the 1940 Act dated
December 31, 1996 granting the Fund an exemption from (1) the
shareholder voting requirements of Section 15(a) and Rule 18f-2;
and (2) the disclosure requirements under various rules and forms
(the "Manager of Managers Order").
3. INVESTMENT ADVISORY SERVICES.
(a) Management of the Fund. The Sub-Adviser hereby undertakes to act
as investment sub-adviser to the Fund. The Sub-Adviser shall
regularly provide investment advice to the Fund and continuously
supervise the investment and reinvestment of cash, securities and
other property composing the assets of the Fund and, in
furtherance thereof, shall:
(i) obtain and evaluate pertinent economic, statistical and
financial data, as well as other significant events and
developments, which affect the economy generally, the Fund's
investment programs, and the issuers of securities included
in the Fund's portfolios and the industries in which they
engage, or which may relate to securities or other
investments which the Sub-Adviser may deem desirable for
inclusion in a Fund's portfolio;
(ii) determine which issuers and securities shall be included in
the portfolio of the Fund;
(iii) furnish a continuous investment program for the Fund;
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(iv) in its discretion, and without prior consultation, buy,
sell, lend and otherwise trade any stocks, bonds and other
securities and investment instruments on behalf of the Fund;
and
(v) take, on behalf of the Fund, all actions the Sub-Adviser may
deem necessary in order to carry into effect such investment
program and the Sub-Adviser's functions as provided above,
including the making of appropriate periodic reports to the
Adviser and the Company's Board of Trustees.
(b) Covenants. The Sub-Adviser shall carry out its investment
subadvisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in:
(i) the Fund's Prospectus and Statement of Additional Information
as revised and in effect from time to time; (ii) the Company's
Trust Instrument, By-Laws or 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 Company or
the Adviser with respect to the Fund and provided to the
Sub-Adviser in writing. The Sub-Adviser agrees to use reasonable
efforts to manage the Fund so that it will qualify, and continue
to qualify, as a regulated investment company under Sub-chapter 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 Company's Board of Trustees. The management
of the Fund by the Sub-Adviser shall at all times be subject to
the review of the Adviser and the Company's Board of Trustees.
(c) Books and Records. Pursuant to applicable law, the Sub-Adviser
shall keep the Fund's books and records required to be maintained
by, or on behalf of, the Fund with respect to subadvisory
services rendered hereunder. The Sub-Adviser agrees that all
records which it maintains for the Fund are the property of the
Fund and it will promptly surrender any of such records to the
Fund upon the Fund's request. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records of the Fund required to be preserved by such
Rule.
(d) Reports, Evaluations and other Services. The Sub-Adviser shall
furnish reports, evaluations, information or analyses to the
Adviser and the Company with respect to the Fund and in
connection with the Sub-Adviser's services hereunder as the
Adviser and/or the Company's Board of Trustees may reasonably
request from time to time or as the Sub-Adviser may otherwise
deem to be reasonably necessary. The Sub-Adviser may make
recommendations to the Adviser and the Company's Board of
Trustees with respect to the Fund's policies, and shall carry out
such policies as are adopted by the Board of Trustees. The
Sub-Adviser may, subject to review by the Adviser, furnish such
other services as the Sub-Adviser shall from time to time
determine to be necessary or useful to perform its obligations
under this Agreement.
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(e) Purchase and Sale of Securities. The Sub-Adviser shall place all
orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by the Sub-Adviser, which
may include brokers or dealers affiliated with the Adviser or the
Sub-Adviser to the extent permitted by the 1940 Act and the
Company's policies and procedures applicable to the Fund and
provided to the Sub-Adviser. The Sub-Adviser shall, except as
contemplated below, use its best efforts to seek to execute
portfolio transactions at prices which, under the circumstances,
result in total costs, proceeds and execution being the most
favorable to the Fund. In assessing the best overall terms
available for any transaction, the Sub-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 Sub-Adviser, and the reasonableness of
the commission, if any, both for the specific transaction and on
a continuing basis. In no event shall the Sub-Adviser be under
any duty to obtain the lowest commission or the best net price
for the Fund on any particular transaction, nor shall the
Sub-Adviser be under any duty to execute any order in a fashion
either preferential to the Fund relative to other accounts
managed by the Sub-Adviser or otherwise materially adverse to
such other accounts.
(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 Sub-Adviser and/or the other
accounts over which the Sub-Adviser exercises investment
discretion. The Sub-Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the
Sub-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 Sub-Adviser with respect to accounts over
which it exercises investment discretion. The Sub-Adviser shall
report to the Board of Trustees of the Company regarding overall
commissions paid by the Fund and their reasonableness in relation
to their benefits to the Fund. Any transactions for the Fund that
are effected through an affiliated broker-dealer on a national
securities exchange of which such broker-dealer is a member will
be effected in accordance with Section 11(a) of the Securities
Exchange Act of 1934, as amended, and the regulations promulgated
thereunder, including Rule 11a2-2(T). The Fund hereby authorizes
any such broker or dealer to retain commissions for effecting
such transactions and to pay out of such retained commissions any
compensation due to others in connection with effectuating those
transactions.
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(g) Aggregation of Securities Transactions. In executing portfolio
transactions for the Fund, the Sub-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
Sub-Adviser's reasonable judgment, such aggregation (i) will
result in an overall economic benefit to the Fund, 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 Company's registration statement and the Fund's
Prospectus and Statement of Additional Information. In such
event, the Sub-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 Fund and such other clients.
4. REPRESENTATIONS AND WARRANTIES.
(a) The Sub-Adviser hereby represents and warrants to the Adviser as
follows:
(i) The Sub-Adviser is a corporation duly organized and in good
standing under the laws of France and is fully authorized to
enter into this Agreement and carry out its duties and
obligations hereunder.
(ii) The Sub-Adviser is registered as an investment adviser with
the Commission under the Advisers Act and is registered or
licensed as an investment adviser under the laws of all
applicable jurisdictions. The Sub-Adviser shall maintain
such registrations or licenses in effect at all times during
the term of this Agreement.
(iii)The Sub-Adviser at all times shall provide its best
judgment and efforts in carrying out the Sub-Adviser's
obligations hereunder.
(b) The Adviser hereby represents and warrants to the Sub-Adviser 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 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 Company has been duly organized as a business trust
under the laws of the State of Delaware.
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(iv) The Company is registered as an investment company with the
Commission under the 1940 Act, and shares of each Fund are
registered for offer and sale to the public under the 1933
Act 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 Sub-Adviser
is to provide or cause to be provided pursuant to Paragraph 3, the Adviser shall
pay to the Sub-Adviser (or cause to be paid by the Company directly to the
Sub-Adviser) an annual fee equal to 0.55% of the Fund's average daily net assets
during the preceding month (computed in the manner set forth in the Fund's most
recent Prospectus and Statement of Additional Information), which shall be
accrued daily and paid in arrears on the first business day of the subsequent
month. Average daily net assets shall be based upon determinations of net assets
made as of the close of business on each business day throughout such month. The
fee for any partial month under this Agreement shall be calculated on a
proportionate basis, based upon average daily net assets for such partial month.
The Sub-Adviser shall have the right, but not the obligation, to voluntarily
waive any portion of the sub-advisory fee from time to time. Any such voluntary
waiver shall be in writing and signed by the parties hereto.
6. INTERESTED PERSONS. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and shareholders of the Company or
the Adviser are or may be or become interested in the Sub-Adviser as directors,
officers or otherwise and that directors, officers and shareholders of the
Sub-Adviser are or may be or become similarly interested in the Company or the
Adviser.
7. EXPENSES. The Sub-Adviser will pay all expenses incurred by it in
connection with the performance of its services under this Agreement. The
Sub-Adviser shall not be required to pay any expenses that this Agreement does
not expressly state shall be payable by the Sub-Adviser. Without limiting the
generality of the foregoing, the Sub-Adviser shall not pay any Fund expenses or
reimburse the Adviser for any expense the Adviser is required to pay.
8. NON-EXCLUSIVE SERVICES; LIMITATION OF SUB-ADVISER'S LIABILITY. The
services of the Sub-Adviser hereunder are not to be deemed exclusive, and the
Sub-Adviser may render similar services to others and engage in other
activities. The Sub-Adviser and its affiliates may enter into other agreements
with the Fund, the Company or the Adviser for providing additional services to
the Fund, the Company or the Adviser which are not covered by this Agreement,
and to receive additional compensation for such services. In addition, it is
understood by the Sub-Adviser, that the Adviser may retain one or more
additional Sub-Advisers with respect to portions of the Fund's assets. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Sub-Adviser, or
a breach of fiduciary duty with respect to receipt of compensation, neither the
Sub-Adviser nor any of its directors, officers, shareholders, agents, or
employees shall be liable or responsible to the Adviser, the Company, the Fund
or to any shareholder of the Fund for any error of judgment or mistake of law or
for any act or
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omission in the course of, or connected with, rendering services hereunder or
for any loss suffered by the Adviser, the Company, the Fund, or any shareholder
of the Fund 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 in accordance with the
Manager of Managers Order. The Sub-Adviser understands and agrees that its
receipt of compensation hereunder shall be without the protection accorded by
shareholder approval under Section 36(b) of the 1940 Act.
(a) This initial term of this Agreement shall be for two years.
Thereafter, this Agreement shall continue in effect 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 Company 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 of Trustees of the
Company or a majority of the outstanding voting securities of the
Fund.
(b) The modification of any of the terms of this Agreement may be
approved by a vote of a majority of those Trustees of the Company
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, The
Adviser of the Company may terminate this Agreement at any time
on 60 days' prior written notice to the Sub-Adviser, without
payment of any penalty. The Sub-Adviser may terminate this
Agreement at any time upon 90 days' prior written notice to the
Adviser, without payment of any penalty. A termination of the
Sub-Adviser may be effected by the Adviser, by a vote of the
Company's Board of Trustees, or by vote of a majority of the
outstanding voting securities of the Fund. This Agreement shall
terminate automatically in the event of its assignment or in the
event of an assignment of the Adviser's Agreement with the Fund.
10. LIMITATION OF LIABILITY OF TRUSTEES AND SHAREHOLDERS. The
Sub-Adviser acknowledges the following limitation of liability:
The terms "The Victory Portfolios" and "Trustees of The Victory
Portfolios" 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 Portfolios" 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 Company personally, but
bind only the
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assets of the Company, and all persons dealing with the Company or a Fund must
look solely to the assets of the Company or Fund for the enforcement of any
claims against the Company or Fund.
11. 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.
12. INDEPENDENT CONTRACTOR. The Sub-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 of Trustees of the Company
from time to time, have no authority to act for or represent a Fund in any way
or otherwise be deemed an agent of the Fund.
13. STRUCTURE OF AGREEMENT. This Agreement is intended to govern only
the relationship between the Adviser, on the one hand, and the Sub-Adviser, on
the other hand, and is not intended to and shall not govern (i) the relationship
between the Adviser or Sub-Adviser and the Fund or any series of the Company, or
(ii) the relationships among the respective series of the Company.
14. 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.
15. JURISDICTION. Adviser and Sub-Adviser each consents to the
exclusive jurisdiction of the courts of the State of New York and the Federal
courts of the United States of America located in such state; agrees that any
legal action, suit or proceeding arising out of or relating to this Agreement
may be brought in such courts; and waives, and agrees not to assert, as a
defense in any such action, suit or proceeding that it (i) is not subject
thereto, (ii) that such action, suit or proceeding may not be brought or is not
maintainable in such courts or (iii) that this Agreement may not be enforced in
or by such courts. Final judgment against the Adviser or Sub-Adviser in any
action, suit or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment, a certified copy of which shall be
conclusive evidence of the fact and amount of indebtedness arising from such
judgment.
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 Adviser hereunder
by the Sub-Adviser 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
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to the Sub-Adviser. Notices of any kind to be given to the Sub-Adviser hereunder
by the Adviser shall be in writing and shall be duly given if mailed or
delivered to the Sub-Adviser at 00 Xxxxxxxxx Xxxxxxx, 00000 Xxxxx Xxxxx 00,
Xxxxxx, Attention: Xxxx-Xxxxxx Xxxxxxxxxx, or at such other address or to such
individual as shall be so specified by the Sub-Adviser to the Adviser. 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.
INDOCAM INTERNATIONAL KEY ASSET MANAGEMENT INC.
INVESTMENT SERVICES, S.A.
By: /s/Xxxx-Xxxxxx Xxxxxxxxxx By: /s/Xxxxxxxx X. Xxxxxx
------------------------- ---------------------
Name: Xxxx-Xxxxxx Xxxxxxxxxx Name: Xxxxxxxx X. Xxxxxx
Title: Chairman and C.E.O. Title: Senior Managing Director
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