FORM OF
EXPENSE LIMITATION AGREEMENT
Between
THE VICTORY INSTITUTIONAL FUNDS
and
VICTORY CAPITAL MANAGEMENT INC.
EXPENSE LIMITATION AGREEMENT, effective as of August 2, 2004, by and
between THE VICTORY INSTITUTIONAL FUNDS (the "Trust") and Victory Capital
Management Inc. ("VCM"), on behalf of each series of the Trust set forth in
Schedule A attached hereto (each a "Fund" and collectively, the "Funds.")
WHEREAS, the Trust is a business organized under the laws of the State of
Delaware, and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management company of the series type, and each
Fund is a series of the Trust; and
WHEREAS, the Trust and VCM have entered into an Investment Advisory
Agreement ("Advisory Agreement"), pursuant to which VCM provides investment
advisory services to each Fund listed in Schedule A, which may be amended from
time to time, for compensation based on the value of the average daily net
assets of each such Fund; and
WHEREAS, the Trust and VCM have determined that it is appropriate and in
the best interests of each Fund and its shareholders to maintain the expenses of
each Fund, and, therefore, have entered into this Expense Limitation Agreement
(the "Agreement"), in order to maintain each Fund's expense ratios at the levels
specified in Schedule A attached hereto; and
NOW THEREFORE, the parties hereto agree that the Agreement provides as
follows:
1. Expense Limitation.
1.1 Applicable Expense Limit. To the extent that the aggregate expenses
incurred by a Fund in any fiscal year, including but not limited to investment
advisory fees of VCM (but excluding interest, taxes, brokerage commissions,
other expenditures that are capitalized in accordance with generally accepted
accounting principles, other extraordinary expenses not incurred in the ordinary
course of such Fund's business) ("Fund Operating Expenses"), exceed the
Operating Expense Limit, as defined in Section 1.2 below, such excess amount
(the "Excess Amount") shall be the liability of VCM.
1.2 Operating Expense Limit. The maximum Operating Expense Limit in any
year with respect to each Fund shall be the amount specified in Schedule A based
on a percentage of the average daily net assets of each Fund.
2. Term and Termination of Agreement.
2.1 This Agreement with respect to the Funds shall continue in effect
until the respective dates of termination set forth in the Attachment.
3. Miscellaneous.
3.1 Captions. The captions in this Agreement are included for
convenience of reference only and in no other way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
3.2 Interpretation. Nothing herein contained shall be deemed to require
the Trust or the Funds to take any action contrary to the Trust's Trust
Instrument or by-laws, or any applicable statutory or regulatory requirement to
which it is subject or by which it is bound, or to relieve or deprive the
Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Funds.
3.3 Definitions. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the investment advisory fee, the
computations of net asset values, and the allocation of expenses, having a
counterpart in or otherwise derived from the terms and provisions of the
Advisory Agreement or the 1940 Act, shall have the same meaning as and be
resolved by reference to such Advisory Agreement or the 1940 Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
THE VICTORY INSTITUTIONAL FUNDS
By:_______________________
Name:
Title:
VICTORY CAPITAL MANAGEMENT INC.
By:_______________________
Name:
Title:
2
SCHEDULE A
TO EXPENSE LIMITATION AGREEMENT
between
THE VICTORY INSTITUTIONAL FUNDS
and
VICTORY CAPITAL MANAGEMENT INC.
OPERATING EXPENSE LIMITS AS OF [ ]
Maximum Operating
Name of Fund and Class Expense Limit Date of Termination
---------------------- ------------- -------------------
Institutional Liquid Reserves Fund 0.20% February 28, 2005
Adopted: May 18, 2004
Acknowledged:
The Victory Institutional Funds Victory Capital Management Inc.
By: ____________________________ By: _____________________________
Name Name
Title Title
