INVESTMENT SUBADVISORY AGREEMENT
between
KEYCORP MUTUAL FUND ADVISERS, INC.
and
SOCIETY ASSET MANAGEMENT, INC.
AGREEMENT made as of the 1st day of January, 1996 by and between KeyCorp Mutual
Fund Advisers, Inc., an Ohio corporation (the "Adviser"), and Society Asset
Management, Inc., an Ohio corporation (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 January 1, 1996 (the "Advisory Agreement"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment subadvisory services in connection with the series of the Company
listed on Schedule A (each, a "Fund" and collectively, the "Funds"), 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.
(a) General. The Adviser hereby appoints the Sub-Adviser to act as
investment subadviser to the Funds 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.
(b) Employees of Affiliates. The Sub-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 subadviser to the Funds under applicable laws and are under
the control of KeyCorp, the indirect parent of the Sub-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 Sub-Adviser.
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;
(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; and
(f) the currently effective Prospectuses and Statements of Additional
Information of the Funds.
3. Investment Advisory Services.
(a) Management of the Funds. The Sub-Adviser hereby undertakes to act as
investment subadviser to the Funds. The Sub-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) 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' 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 each Fund;
(iii) furnish a continuous investment program for each Fund;
(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 each Fund; and
(v) take, on behalf of each 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) each 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 a Fund and provided to
the Sub-Adviser in writing. The Sub-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 Company's Board of Trustees. The management of the Funds 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 each Fund's books and records required to be maintained by, or on
behalf of, the Funds with respect to subadvisory services rendered
hereunder. The Sub-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 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 Funds and in connection with the
Sub-Adviser's services hereunder as the Adviser and/or the Company's
Board of Trustees may request from time to time or as the Sub-Adviser
may otherwise deem to be reasonably necessary. The Sub-Adviser shall
make recommendations to the Adviser and the Company's Board of
Trustees with respect to the Company'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.
(e) Purchase and Sale of Securities. The Sub-Adviser shall place all
orders for the purchase and sale of portfolio securities for each 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 Funds. The Sub-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 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 any Fund on any particular
transaction, nor shall the Sub-Adviser be under any duty to execute
any order in a fashion either preferential to any 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, the Funds, 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 a 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
Funds and their reasonableness in relation to their benefits to the
Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a 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 the State of Ohio 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 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 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 effort to the Adviser 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 Ohio 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.
(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, with respect to
each Fund, the Adviser shall pay to the Sub-Adviser (or cause to be paid by the
Company directly to the Sub-Adviser) a fee, which shall be accrued daily and
paid in arrears on the first business day of each month, at the annual rate set
forth for the Fund on Schedule A, as a percentage of the average daily net
assets of the Fund during the preceding month (computed in the manner set forth
in the Fund's most recent Prospectus and Statement of Additional Information).
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 shall be calculated on a proportionate basis, based upon
average daily net assets for such partial month. 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 Sub-Adviser will bear such
excess in an amount which bears the same ratio to the amount of such excess that
the Adviser bears as the amount of sub-advisory fees payable pursuant to
Schedule A hereof bears to the amount of advisory fees payable to the Adviser by
the Company under the Advisory Agreement, except: (i) the Sub-Adviser shall not
be required to bear such excess to an extent greater than the compensation due
to the Sub-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 Sub-Adviser shall not be required to bear the expenses of the Fund
to an extent which would result in the Fund's or Company's inability to qualify
as a regulated investment company under the provisions of the Code.
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 its activities under this Agreement other than the cost of
securities (including brokerage commissions) purchased for or sold by the Funds.
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 Funds, the Company or the Adviser for providing additional services to
the Funds, the Company or the Adviser 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 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 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 Adviser, the Company, 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 on January 1, 1996, 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, 1997.
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 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 non-material 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, either
party hereto may terminate this Agreement as to any Fund(s) at any
time on sixty (60) days' prior written notice to the other, without
payment of any penalty. A termination of the
Sub-Adviser may be effected as to any particular Fund 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.
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 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 a Fund.
13. Structure of Agreement. The Adviser and Sub-Adviser are entering into
this Agreement with regard to the respective Funds severally and not jointly.
The responsibilities and benefits set forth in this Agreement shall be deemed to
be effective as between the Adviser and Sub-Adviser in connection with each Fund
severally and not jointly. This Agreement is intended to govern only the
relationships 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 any Fund, or (ii) the relationships among
the respective Funds.
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. 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.
16. 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: W. Xxxxxxxxxxx Xxxxxxx; with a copy to Xxx Xxxxx Xxxxx, Esq., or at
such other address or to such individual as shall be so specified by the Adviser
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 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000,
Attention: Xxxxxx X. Xxxxxx; with a copy to Xxx Xxxxx Xxxxx, Esq., 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.
SOCIETY ASSET MANAGEMENT, INC. KEYCORP MUTUAL FUND ADVISERS,
INC.
By: By:
------------------- -------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Chairman, CEO, and President Title: CEO and Chairman of the Board
Schedule A
----------
For the Victory Balanced Fund, Diversified Stock Fund, Growth Fund, Stock Index
Fund and Value Fund:
Net Assets in Millions Rate of Sub-Advisory Fee*
---------------------- ------------------------
up to $10 .65%
next $15 .50
next $25 .40
above $50 .35
For the Xxxxxxx Xxxxxxxxxxxxx Growth Fund, Ohio Regional Stock Fund and Special
Value Fund:
Net Assets in Millions Rate of Sub-Advisory Fee*
---------------------- ------------------------
up to $10 .90%
next $15 .70
next $25 .55
above $50 .45
For the Victory Intermediate Fund, Investment Quality Bond Fund, Limited Term
Income Fund, Ohio Municipal Bond Fund, Governmental Bond Fund, Government
Mortgage Fund, National Municipal Bond Fund and New York Tax-Free Fund:
Net Assets in Millions Rate of Sub-Advisory Fee*
---------------------- ------------------------
up to $10 .40%
next $15 .30
next $25 .25
above $50 .20
For the Victory Prime Obligations Fund, Tax-Free Money Market Fund, U.S.
Government Obligations Fund, Financial Reserves Fund, Institutional Money Market
Fund and Ohio Municipal Money Market Fund:
Net Assets in Millions Rate of Sub-Advisory Fee*
---------------------- ------------------------
up to $10 .25%
next $15 .20
next $25 .15
above $50 .125
---------------------
* As a percentage of average daily net assets. Note, however, that 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 will be irrevocable and determined in advance of rendering sub-
investment advisory services by the Sub-Adviser, and shall be in writing
and signed by the parties hereto.
i
INVESTMENT ADVISORY AGREEMENT
between
THE VICTORY PORTFOLIOS
and
KEYCORP MUTUAL FUND ADVISERS, INC.
AGREEMENT made as of the 1st day of January, 1996, by and between The Victory
Portfolios, a Delaware business trust which may issue one or more series of
shares of beneficial interest (the "Company"), and KeyCorp Mutual Fund Advisers,
Inc., an Ohio corporation (the "Adviser").
WHEREAS, the Company is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Company desires to retain the Adviser to furnish investment
advisory services to the funds listed on Schedule A (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 Company 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 Company 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.
(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 Company
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
Company and (ii) the shareholders of the relevant Fund if required
under any applicable provisions of the 1940 Act. The Adviser will
review, monitor and report to the Company'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 and
without further shareholder approval, to the extent consistent with
the 1940 Act. A Sub-Adviser may be an affiliate of the Adviser.
2. Delivery of Documents. The Company 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 Company's Trust Instrument;
(b) the By-Laws of the Company;
(c) resolutions of the Board of Trustees of the Company authorizing the
execution and delivery of 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; 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 Company and each
Fund;
2
(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' 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 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
Company, 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 Company's Board of
Trustees.
(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)
each 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 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
Company's Board of Trustees. The management of the Funds by the
Adviser shall at all times be subject to the review of the Company'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.
3
(d) Reports, Evaluations and other Services. The Adviser shall furnish
reports, evaluations, information or analyses to the Company with
respect to the Funds and in connection with the Adviser's services
hereunder as the Company'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 Company's Board of Trustees
with respect to Company 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 Company'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
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 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 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 Trustees of the
Company regarding overall commissions paid by the Funds and their
reasonableness in relation to the benefits to the Funds.
4
(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 Company'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 Company as follows:
(i) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Ohio 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 Company in carrying out the Adviser's obligations
hereunder.
(b) The Company hereby represents and warrants to the Adviser as follows:
(i) The Company 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 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
5
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 each 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) the Adviser shall not be
required to bear the expenses of the Fund to an extent which would result in the
Fund's or Company'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 Company 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 Company.
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 Company'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
6
Company's Board of Trustees; (xii) association membership dues authorized by the
Company'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 Company is a party (or to which the Funds' assets are subject) and
any legal obligation for which the Company may have to provide indemnification
to the Company'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 Company for providing additional services to the Funds and the Company
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
Company, 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 Company, 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 on January 1, 1996, 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, 1997.
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 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 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
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, 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 Company may be effected severally
as to any particular Fund, and shall be
7
effected as to any Fund by 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.
10. Limitation of Liability of Trustees and Shareholders. The Adviser
acknowledges the following limitation of liability:
The terms "The Victory Portfolios" 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 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 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. Service Xxxx. The service xxxx of the Company and the name "Victory"
(and derivatives thereof) have been licensed to the Company by KeyCorp, through
its subsidiary Key Trust Company ("Key Trust"), an affiliate of the Adviser,
pursuant to a License Agreement dated June 21, 1993, 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 Company.
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 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 a Fund.
14. Structure of Agreement. The Company 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:
8
(a) any breach of any term of this Agreement regarding the Company 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 Company
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 Company 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 Company 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 Company 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: Xxxxxx X. Xxxxxxxx,
Esq.; with a copy to Kramer, Levin, Naftalis, Nessen, Xxxxx & 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 Company to
the Adviser. Notices of any kind to be given to the Adviser hereunder by the
Company 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: W.
Xxxxxxxxxxx Xxxxxxx with a copy to Xxx Xxxxx Xxxxx, Esq., or at such other
address or to such individual as shall be so specified by the Adviser to the
Company. Notices shall be effective upon delivery.
9
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 PORTFOLIOS KEYCORP MUTUAL FUND ADVISERS, INC.
By: By:
------------------------- -------------------------
Name: Xxxxx X. Xxxxxxxxx Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Secretary Title: CEA and Chairman of the Board
10
Schedule A
Name of Fund Fee*
------------ ----
1. The Victory Balanced Fund 1.00%
2. The Victory Diversified Stock Fund .65%
3. The Victory Government Mortgage Fund .50%
4. The Victory Growth Fund 1.00%
5. The Victory Intermediate Income Fund .75%
6. The Xxxxxxx Xxxxxxxxxxxxx Growth Fund 1.10%
7. The Victory Investment Quality Bond Fund .75%
8. The Victory Limited Term Income Fund .50%
9. The Victory Ohio Municipal Bond Fund .60%
10. The Victory Ohio Regional Stock Fund .75%
11. The Victory Prime Obligations Fund .35%
12. The Victory Special Value Fund 1.00%
13. The Victory Stock Index Fund .60%
14. The Victory Tax-Free Money Market Fund .35%
15. The Victory U.S. Government Obligations Fund .35%
16. The Victory Value Fund 1.00%
17. The Victory Financial Reserves Fund .50%
18. The Victory Fund for Income .50%
19. The Victory Government Bond Fund .55%
20. The Victory Institutional Money Market Fund .25%
21. The Victory National Municipal Bond Fund .55%
22. The Victory New York Tax-Free Fund .55%
23. The Victory Ohio Municipal Money Market Fund .50%
24. The Victory Special Growth Fund 1.00%
--------------------
* 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.
12
THE VICTORY PORTFOLIOS
BYLAWS
DECEMBER 6, 1995
THE VICTORY PORTFOLIOS
BYLAWS
These Bylaws of The Victory Portfolios (the "Trust"), a Delaware business
trust, are subject to the Trust Instrument of the Trust, dated December 6, 1995,
as from time to time amended, supplemented or restated (the "Trust Instrument").
Capitalized terms used herein which are defined in the Trust Instrument are used
as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in Cleveland, Ohio or
such other location as the Trustees may, from time to time, determine. The
Trust may establish and maintain such other offices and places of business as
the Trustees may, from time to time, determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
Section 2.01 Officers. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers as the Trustees may from time to
time elect. The Trustees may delegate to any officer or committee the power to
appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or other officer to be a holder of Shares in the Trust.
Section 2.02 Election of Officers. The Treasurer and Secretary shall be
chosen by the Trustees. The President shall be chosen by and from the Trustees.
Two or more offices may be held by a single person except the offices of
President and Secretary. Subject to the provisions of Section 3.13 hereof the
President, the Treasurer and the Secretary shall each hold office until their
successors are chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees.
Section 2.03 Resignations. Any officer of the Trust may resign,
notwithstanding Section 2.02 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
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Section 3.01 Management of the Trust. The business and affairs of the Trust
shall be managed by, or under the direction of the Trustees, and they shall have
all powers necessary and desirable to carry out their responsibilities, so far
as such powers are not inconsistent with the laws of the State of Delaware, the
Trust Instrument or with these Bylaws.
Section 3.02 Executive And Other Committees. The Trustees may elect from
their own number an executive committee, which shall have any or all of the
powers of the Board of Trustees while the Board of Trustees is not in session.
The Trustees may also elect from their own number other committees from time to
time. The number composing such committees and the powers conferred upon the
same are to be determined by vote of a majority of the Trustees. All members of
such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
Section 3.03 Compensation. Each Trustee and each committee member may
receive such compensation for his services and reimbursement for his expenses as
may be fixed from time to time by resolution of the Trustees.
Section 3.04 Chairman Of The Trustees. The Trustees may appoint from among
their number a Chairman who shall serve as such at the pleasure of the Trustees.
When present, he shall preside at all meetings of the Shareholders and the
Trustees, and he may, subject to the approval of the Trustees, appoint a Trustee
to preside at such meetings in his absence. He shall perform such other duties
as the Trustees may from time to time designate.
Section 3.05 President. The President shall be the chief executive officer
of the Trust and, subject to the direction of the Trustees, shall have general
administration of the business and policies of the Trust. Except as the
Trustees may otherwise order, the President shall have the power to grant,
issue, execute or sign such powers of attorney, process, agreements or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust or any Series thereof. He shall also have the power to
employ attorneys, accountants and other advisors and agents and counsel for the
Trust. The President shall perform such duties additional to all of the
foregoing as the Trustees may from time to time designate.
Section 3.06 Treasurer. The Treasurer shall be the principal financial and
accounting officer of the Trust. He shall deliver all funds and securities of
the Trust which may
-2-
come into his hands to such company as the Trustees shall employ as Custodian in
accordance with the Trust Instrument and applicable provisions of law. He shall
make annual reports regarding the business and condition of the Trust, which
reports shall be preserved in Trust records, and he shall furnish such other
reports regarding the business and condition of the Trust as the Trustees may
from time to time require. The Treasurer shall perform such additional duties as
the Trustees may from time to time designate.
Section 3.07 Secretary. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at their
respective meetings. He shall have the custody of the seal of the Trust. The
Secretary shall perform such additional duties as the Trustees may from time to
time designate.
Section 3.08 Vice President. Any Vice President of the Trust shall perform
such duties as the Trustees or the President may from time to time designate.
At the request or in the absence or disability of the President, the Vice
President (or, if there are two or more Vice Presidents, then the senior of the
Vice Presidents) present and able to act may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 3.09 Assistant Treasurer. Any Assistant Treasurer of the Trust
shall perform such duties as the Trustees or the Treasurer may from time to time
designate, and, in the absence of the Treasurer, the senior Assistant Treasurer,
present and able to act, may perform all the duties of the Treasurer and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Treasurer.
Section 3.10 Assistant Secretary. Any Assistant Secretary of the Trust
shall perform such duties as the Trustees or the Secretary may from time to time
designate, and, in the absence of the Secretary, the senior Assistant Secretary,
present and able to act, may perform all the duties of the Secretary and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Secretary.
Section 3.11 Subordinate Officers. The Trustees from time to time may
appoint such officers or agents as they may deem advisable, each of whom shall
have such title, hold office for such period, have such authority and perform
such duties as the Trustees may determine. The Trustees from time to time may
delegate to one or more officers or committees of Trustees the power to appoint
any such subordinate officers or agents and to prescribe their respective terms
of office, authorities and duties.
-3-
Section 3.12 Surety Bonds. The Trustees may require any officer or agent
of the Trust to execute a bond (including without limitation, any bond required
by the 1940 Act and the rules and regulations of the Commission) to the Trust in
such sum and with such surety or sureties as the Trustees may determine,
conditioned upon the faithful performance of his duties to the Trust including
responsibility for negligence and for the accounting of any of the Trust's
property, funds or securities that may come into his hands.
Section 3.13 Removal. Any officer may be removed from office, with or
without cause, whenever in the judgment of the Trustees the best interest of the
Trust will be served thereby, by the vote of a majority of the Trustees given at
any regular meeting or any special meeting of the Trustees. In addition, any
officer or agent appointed in accordance with the provisions of Section 3.10
hereof may be removed, either with or without cause, by any officer upon whom
such power of removal shall have been conferred by the Trustees.
Section 3.14 Remuneration. The salaries or other compensation, if any, of
the officers of the Trust shall be fixed from time to time by resolution of the
Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 4.01 Special Meetings. A special meeting of the shareholders shall
be called by the Secretary whenever (a) ordered by the Trustees or (b) requested
in writing by the holder or holders of at least 10% of the Outstanding Shares
entitled to vote. If the Secretary, when so ordered or requested, refuses or
neglects for more than 30 days to call such special meeting, the Trustees or the
Shareholders so requesting may, in the name of the Secretary, call the meeting
by giving notice thereof in the manner required when notice is given by the
Secretary. If the meeting is a meeting of the Shareholders of one or more
Series or classes of Shares, but not a meeting of all Shareholders of the Trust,
then only special meetings of the Shareholders of such one or more Series or
classes shall be called and only the shareholders of such one or more Series or
classes shall be entitled to notice of and to vote at such meeting.
Section 4.02 Notices. Except as provided in Section 4.01, notices of any
meeting of the Shareholders shall be given by the Secretary by delivering or
mailing, postage prepaid, to each Shareholder entitled to vote at said meeting,
written or printed notification of such meeting at least ten (10) days before
the meeting, to such address as may be registered with the Trust by the
Shareholder. Notice of any Shareholder meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the records of such meeting, or to any Shareholder who
shall attend such
-4-
meeting in person or by proxy. Notice of adjournment of a Shareholder's meeting
to another time or place need not be given, if such time and place are announced
at the meeting or reasonable notice is given to persons present at the meeting
and the adjourned meeting is held within a reasonable time after the date set
for the original meeting.
Section 4.03 Voting-Proxies. Subject to the provisions of the Trust
Instrument, shareholders entitled to vote may vote either in person or by proxy,
provided that either (a) an instrument authorizing such proxy to act is executed
by the Shareholder in writing and dated not more than eleven (11) months before
the meeting, unless the instrument specifically provides for a longer period or
(b) the Trustees adopt by resolution an electronic, telephonic, computerized or
other alternative to execution of a written instrument authorizing the proxy to
act, which authorization is received not more than eleven (11) months before the
meeting. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the holder thereof to
vote at any adjournment of a meeting. A proxy purporting to be exercised by or
on behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden or proving invalidity shall rest on the
challenger. At all meetings of the Shareholders, unless the voting is conducted
by inspectors, all questions relating to the qualifications of voters, the
validity of proxies, and the acceptance or rejection of votes shall be decided
by the Chairman of the meeting. Except as otherwise provided herein or in the
Trust Instrument, as these Bylaws or such Trust Instrument may be amended or
supplemented from time to time, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Trust were a Delaware corporation and the Shareholders were
shareholders of a Delaware corporation.
Section 4.04 Place of Meeting. All special meetings of the Shareholders
shall be held at the principal place of business of the Trust or at such other
place in the United States as the Trustees may designate.
Section 4.05 Action Without a Meeting. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting of the
-5-
Shareholders held at the principal place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
Section 5.01 Special Meetings. Special meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or any two
other Trustees.
Section 5.02 Regular Meetings. Regular meetings of the Trustees may be
held at such places and at such times as the Trustees may from time to time
determine; each Trustee present at such determination shall be deemed a party
calling the meeting and no call or notice will be required to such Trustee
provided that any Trustee who is absent when such determination is made shall be
given notice of the determination by the Chairman or any two other Trustees, as
provided for in Section 4.04 of the Trust Instrument.
Section 5.03 Quorum. A majority of the Trustees shall constitute a quorum
for the transaction of business at any meeting and an action of a majority of
the Trustees in attendance constituting a quorum shall constitute action of the
Trustees.
Section 5.04 Notice. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the party calling the meeting to each
of the Trustees, as provided for in Section 4.04 of the Trust Instrument. A
written notice may be mailed, postage prepaid, addressed to him at his address
as registered on the books of the Trust or, if not so registered, at his last
known address.
Section 5.05 Place of Meeting. All special meetings of the Trustees shall
be held at the principal place of business of the Trust or such other place as
the Trustees may designate. Any meeting may adjourn to any place.
Section 5.06 Special Action. When all the Trustees shall be present at any
meeting however called or wherever held, or shall assent to the holding of the
meeting without notice, or shall sign a written assent thereto filed with the
records of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.
Section 5.07 Action by Consent. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the Trustees and
filed with the records of the Trustees' meeting. Such consent shall be treated,
for all purposes, as a vote at a meeting of the Trustees held at the principal
place of business of the Trustees.
-6-
Section 5.08 Participation in Meetings By Conference Telephone. Except
when presence in person is required at a meeting under the 1940 Act or other
applicable laws, Trustees may participate in a meeting of Trustees by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting. Any meeting conducted by
telephone shall be deemed to take place at and from the principal office of the
Trust.
ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT
Section 6.01 Fiscal Year. The fiscal year of the Trust and of each Series
of the Trust shall end on October 31 of each year; provided that the last fiscal
year of the Trust and each Series shall end on the date on which the Trust or
each such Series is terminated, as applicable; and further provided that the
Trustees by resolution and without a Shareholder vote may at any time change the
fiscal year of the Trust and of any or all Series (and the Trust and each Series
may have different fiscal years as determined by the Trustees).
Section 6.02 Registered Office and Registered Agent. The initial
registered office of the Trust in the State of Delaware shall be located at 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The registered agent of the
Trust at such location shall be Delaware Corporation Organizers, Inc.; provided
that the Trustees by resolution and without a Shareholder vote may at any time
change the Trust's registered office or its registered agent, or both.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and regulations the
accounts and books of the Trust or any of them shall be open to the inspection
of the Shareholders; and no Shareholder shall have any right to inspect any
account or book or document of the Trust except as conferred by law or otherwise
by the Trustees or by resolution of the Shareholders.
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ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any Covered
Person (as defined in Section 10.02 of the Trust Instrument) or employee of the
Trust, including any Covered Person or employee of the Trust who is or was
serving at the request of the Trust as a Trustee, officer or employee of a
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and claimed by him in any such capacity or
arising out of his status as such, whether or not the Trustees would have the
power to indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance that protects
or purports to protect any Trustee or officer of the Trust against any liability
to the Trust of its Shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
ARTICLE IX
SEAL
The seal of the Trust shall be circular in form bearing the inscription:
"THE VICTORY PORTFOLIOS, DECEMBER 21, 0000
XXX XXXXX XX XXXXXXXX"
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TABLE OF CONTENTS
ARTICLE I
PRINCIPAL OFFICE........................................... 1
ARTICLE II
OFFICERS AND THEIR ELECTION................................ 1
Section 2.01 Officers................................. 1
Section 2.02 Election of Officers..................... 1
Section 2.03 Resignations............................. 1
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES................. 1
Section 3.01 Management of the Trust.................. 1
Section 3.02 Executive And Other Committees........... 2
Section 3.03 Compensation............................. 2
Section 3.04 Chairman Of The Trustees................. 2
Section 3.05 President................................ 2
Section 3.06 Treasurer................................ 2
Section 3.07 Secretary................................ 2
Section 3.08 Vice President........................... 3
Section 3.09 Assistant Treasurer...................... 3
Section 3.10 Assistant Secretary...................... 3
Section 3.11 Subordinate Officers..................... 3
Section 3.12 Surety Bonds............................. 3
Section 3.13 Removal.................................. 3
Section 3.14 Remuneration............................. 3
ARTICLE IV
SHAREHOLDERS' MEETINGS..................................... 4
Section 4.01 Special Meetings......................... 4
Section 4.02 Notices.................................. 4
Section 4.03 Voting-Proxies........................... 4
Section 4.04 Place of Meeting......................... 5
Section 4.05 Action Without a Meeting................. 5
ARTICLE V
TRUSTEES' MEETINGS......................................... 5
Section 5.01 Special Meetings......................... 5
Section 5.02 Regular Meetings......................... 5
Section 5.03 Quorum................................... 5
Section 5.04 Notice................................... 5
Section 5.05 Place of Meeting......................... 5
Section 5.06 Special Action........................... 5
Section 5.07 Action by Consent........................ 6
Section 5.08 Participation in Meetings By Conference
Telephone........................................ 6
ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT........ 6
Section 6.01 Fiscal Year.............................. 6
Section 6.02 Registered Office and Registered Agent... 6
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ARTICLE VII
INSPECTION OF BOOKS............................................... 6
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES AND EMPLOYEES..................... 6
ARTICLE IX
SEAL.............................................................. 7
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To the Shareholders and Board of Trustees of
The Victory Portfolios
In planning and performing our audit of the financial statements of The Victory
Portfolios for the year ended October 31, 1996, we considered its internal
control structure, including procedures for safeguarding securities, in order
to determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and to comply with the requirements of Form N-SAR,
not to provide assurance on the internal control structure.
The management of The Victory Portfolios is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. Two objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and transactions
are executed in accordance with management's authorization and recorded properly
to permit preparation of financial statements in conformity with generally
accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and may not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
October 31, 1996.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
COOPERS & XXXXXXX, L.L.P.
Columbus, Ohio
December 13, 1996
