INVESTMENT ADVISORY AGREEMENT between THE VICTORY
INSTITUTIONAL FUNDS and VICTORY CAPITAL MANAGEMENT INC.
AGREEMENT made as of the 1st day of August, 2013, by and
between The Victory Institutional Funds (the "Trust"), a
Delaware statutory trust which may issue one or more series
of shares of beneficial interest, and Victory Capital
Management Inc., a New York corporation (the "Adviser").
WHEREAS, the Trust is registered as an open-end, management
investmentcompany 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 listed on Schedule
A individually and not jointly (each, a "Fund" and collectively,
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;
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.
(c) Sub-Advisers. It is understood and agreed that the Adviser
may from time to time employ or associate with such other
entities or persons as the Adviser believes appropriate to
assist in the performance of this Agreement with respect to a
particular Fund or Funds (each a "Sub-Adviser"), and that any
such Sub-Adviser shall have all of the rights and powers of the
Adviser set forth in this Agreement; provided that a Fund
shall not pay any additional compensation for any Sub-Adviser
and the Adviser shall be as fully responsible to the Trust for
the acts and omissions of the Sub-Adviser as it is for its own
acts and omissions; and provided further that the retention of
any Sub-Adviser shall be approved in advance by (i) the Board of
Trustees of the Trust and (ii) the shareholders of the relevant
Fund if required under any applicable provisions of the 1940 Act
or any exemptive relief granted thereunder. The Adviser will
review, monitor and report to the Trust's Board of Trustees
regarding the performance and investment procedures of any
Sub-Adviser. In the event that the services of any Sub-Adviser
are terminated, the Adviser may provide investment advisory
services pursuant to this Agreement to the Fund without a
Sub-Adviser or employ another Sub-Adviser without further
shareholder approval, to the extent consistent with the 1940
Act or any exemptive relief granted thereunder. A Sub-Adviser
may be an affiliate 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;
(b) the Bylaws of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing
the execution and delivery of this Agreement;
(d) the most recent Post-Effective Amendment to the Trust'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 Trust under the 1940
Act on Form N-8A as filed with the Commission; and
(f) the currently effective Prospectuses and Statements of
Additional Information of the Funds.
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 each
Fund;
(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 a Fund's investment portfolio;
(iii) determine which issuers and securities shall be included in
the portfolio of each Fund;
(iv) furnish a continuous investment program for each Fund;
(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 each Fund; and
(vi) take, on behalf of each Fund, 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 Trust's Board of Trustees. (b)
Covenants. To the extent the Fund has adopted or adopts a "manager
of managers" structure in reliance on the Manager of Managers Order,
subject to the review of the Board of Trustees, the Adviser shall
serve as the investment adviser. 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) each Fund's Prospectus and Statement of Additional
Information as revised and in effect from time to time; (ii) the Trust's
Trust Instrument, Bylaws 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 Trust with respect to a Fund and provided to the Adviser
in writing. The Adviser agrees to use reasonable efforts to manage
each Fund so that it will qualify, and continue to qualify, as a
regulated investment company under Subchapter 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 Trust's Board of
Trustees. The management of the Funds by the Adviser shall at all times
be subject to the review of the Trust's Board of Trustees.
(c) Books and Records. Pursuant to applicable law, the Adviser shall
keep each Fund's 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 a 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 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 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 Trust's Board of Trustees may request from time to time or as the
Adviser may otherwise deem to be desirable. The Adviser shall make
recommendations to the Trust's Board of Trustees with respect to Trust
policies, and shall carry out such policies as are adopted by the Board
of Trustees. The Adviser shall, subject to review by the Board of
Trustees, 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 portfolio securities for each Fund 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 portfolio
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 any Fund on any particular
transaction, nor shall the Adviser be under any duty to execute any
order in a fashion either preferential to any Fund relative to other
accounts managed by the 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 termsare 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 portfolio
transaction for a Fund 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 goodfaith 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 Trustees
of the Trust regarding overall commissions paid by the Fund and their
reasonableness in relation to their benefits to the Fund. Any transactions
for a 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 lla2-2(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.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, 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 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 Trust's
registration statement and the Fund's 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 Fund 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.
(b) The Trust hereby represents and warrants to the Adviser as
follows:
(i) The Trust has been duly organized as a statutory 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 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 Adviser
is to provide or cause to be provided pursuant to Paragraph 3, each
Fund shall pay to the Adviser out of Fund 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 such Fund's name on Schedule
A, which shall be a percentage of the average daily net assets of the Fund
(computed in the manner set forth in the Fund's most recent Prospectus and
Statement of Additional Information) determined as of the close of business
on each business day throughout the month. At the request of the Adviser,
some or all of such fee shall be paid directly to a Sub-Adviser. The fee
for any partial month under this Agreement shall be calculated on a
proportionate basis. In the event that the total expenses of a Fund exceed
the limits on investment company expenses imposed by any statute or any
regulatory authority of any jurisdiction in which shares of such Fund 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) theAdviser shall
not be required to bear the expenses of a Fund to an extent which would
result in the Fund's 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 a Fund
utilizes 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 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 Trust's
Board of Trustees; (xii) association membership dues authorized by the
Trust's Board of Trustees; 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, a Fund or any shareholder of a Fund in
connection with the performance of this Agreement.
9. Effective Date; Modifications; Termination. This Agreement shall become
effective as of the date first above written, provided that it shall have
been approved by a majority of the outstanding voting securities of each Fund,
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) This Agreement shall continue in force until December 31, 2014.
Thereafter, this Agreement shall continue in effect as to each Fund 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 of Trustees of the Trust or a majority of the
outstanding voting shares of the Fund.
(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 may be effected severally as to any particular Fund,
and shall be effected as to any Fund by vote of the Trust'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.
10. Limitation of Liability of Trustees and Shareholders. The Adviser
acknowledges the following limitation of liability:
The terms "The Victory Institutional 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 Institutional 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 a Fund must look solely to the assets of
the Trust or Fund for the enforcement of any claims against the Trust or Fund.
11. Service Xxxx. The service xxxx of the Trust and the name "Victory" (and
derivatives thereof) have been licensed to the Trust by the Adviser, pursuant
to a License Agreement, and their continued use is subject to the right of
the Adviser to withdraw this permission under the License Agreement inthe
event the Adviser or an affiliate of the Adviser 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 of Trustees of the Trust from time
to time, have no authority to act for or represent a Fund in any way or
otherwise be deemed an agent of a Fund.
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
each Fund 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;
(b) under no circumstances shall the Adviser have the right to set off
claims relating to a Fund 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 Delaware, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or the Advisers Act or any rule or
regulation of the SEC thereunder.
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: Chair
of the Board; with a copy to Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx X. Xxxxx, 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 0000 Xxxxxxxx Xxxx, 0xx Xxxxx,
Xxxxxxxx, Xxxx 00000, Attention: President, with a copy to Xxxxxxxxxxx
X. Xxxx, 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 INSTITUTIONAL FUNDS VICTORY CAPITAL MANAGEMENT INC.
On behalf of the Funds listed on Schedule A,
individually and not jointly
By: /s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxxx Xxxxx
Name: Xxxxxxx Xxxxxxxxx Name: Xxxxx Xxxxx
Title: President Title: Chief Executive Officer
SCHEDULE A
to the INVESTMENT ADVISORY AGREEMENT
between
THE VICTORY INSTITUTIONALFUNDS
and
VICTORY CAPITAL MANAGEMENT INC. (the "Adviser")
Dated August 2, 2004
Name of Fund Fee* Last Approved Must Be Approved By
Institutional Diversified 0.50% December 3, 2014 December 31, 2015
Stock Fund
Current as of December 3, 2014
THE VICTORY INSTITUTIONAL FUNDS
By: /s/ Xxxxxxxxxxx Xxxx
Name: Xxxxxxxxxxx Xxxx
Title: President
Accepted:
VICTORY CAPITAL MANAGEMENT INC.
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: CFO
*Expressed 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. In addition, the
Adviser may from time to time undertake in writing to limitthe Funds' total
expenses for a definite period of time.
