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Exhibit 99(g)
MUTUAL FUND CUSTODY AGREEMENT
THIS AGREEMENT is made as of October 16, 1998, by and between The
Victory Variable Insurance Funds, a Delaware business trust (the "Trust"), which
may issue one or series of shares of beneficial interest (each a "Fund"), and
Key Trust Company of Ohio, N.A., a bank chartered under the laws of the United
States, having its principal office at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000-0000 (the "Custodian").
W I T N E S S E T H:
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WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Custodian to serve as the
Trust's custodian and the Custodian is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust, on behalf of each Fund, separately and not
jointly, hereby appoints the Custodian to act as custodian of the securities,
cash and other property of each Fund listed on Attachment A hereto, as it may be
amended from time to time, on the terms set forth in this Agreement. The
Custodian accepts such appointment and agrees to furnish the services herein set
forth in return for the compensation as provided in Paragraph 27 of this
Agreement.
2. DELIVERY OF DOCUMENTS. The Trust has furnished The Custodian with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Custodian as custodian of the securities, cash and other
property of each Fund of the Trust and approving this Agreement;
(b) Incumbency and signature certificates identifying and containing
the signatures of the Trust's officers and/or the persons authorized to sign
Proper Instructions, as hereinafter defined, on behalf of the Trust;
(c) The Trust's Certificate of Trust filed with the Secretary of State
of the State of Delaware and the Trust's Trust Instrument is filed with the
Secretary of the Trust (such Certificate of Trust and Trust Instrument, as
currently in effect and as they shall from time to time be amended, are herein
together called the "Certificate");
(d) The Trust's Bylaws and all amendments thereto (such Bylaws, as
currently in effect and as they shall from time to time be amended, are herein
called the "Bylaws");
(e) Resolutions of the Trust's Board of Trustees and/or the Trust's
shareholders
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approving the Investment Advisory Agreements between the Trust on behalf of
various Funds and Key Asset Management Inc. dated August 28, 1998;
(f) The Administration Agreement between the Trust and BISYS Fund
Services Limited Partnership ("BISYS") dated October 16, 1998;
(g) The Distribution Agreement between the Trust and BISYS dated
October 16, 1998;
(h) The Trust's current Registration Statement on Form N-1A under the
1940 Act and the Securities Act of 1933, as amended ("the Securities Act") as
filed with the Securities and Exchange Commission ("SEC"); and
(i) The Trust's most recent prospectuses including all amendments and
supplements thereto (the "Prospectus").
The Trust will furnish the Custodian from time to time with copies of
all amendments of or supplements to the foregoing, if any. The Trust will also
furnish the Custodian with a copy of the opinion of counsel for the Trust with
respect to the validity of the statements issued by the Trust ("Shares") and the
status of such Shares under the Securities Act filed with the SEC, and any other
applicable federal law or regulation.
3. DEFINITIONS.
(a) "AUTHORIZED PERSON". As used in this Agreement, the term
"Authorized Person" means the Trust's President, Vice-President, Treasurer and
any other person, whether or not any such person is an officer or employee of
the Trust, duly authorized by Trustees of the Trust to give Proper Instructions
on behalf of the Trust and the Funds listed on Attachment A which may be amended
from time to time.
(b) "BOOK-ENTRY SYSTEM". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees.
(c) "INVESTMENT ADVISER" means each investment adviser of Funds of the
Trust.
(d) "PROPERTY". The term "Property", as used in this Agreement, means:
(i) any and all securities, cash, and other property
of the Trust which the Trust may from time to time deposit, or
cause to be deposited, with the Custodian or which the
Custodian may from time to time hold for the Trust;
(ii) all income, dividends, or distributions of any
kind in respect of any other such securities or other
property;
(iii) all proceeds of the sales, repurchase,
redemptions (or otherwise)of any of such securities or other
property; and
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(iv) all proceeds of the sale of securities issued by
the Trust, which are received by the Custodian from time to
time from or on behalf of the Trust.
(e) "SECURITIES DEPOSITORY". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the SEC or its successor or successors and its
nominee or nominees; and shall also mean any other registered clearing agency,
its successor or successors specifically identified in a certified copy of a
resolution of the Trust's Board of Trustees delivered to the Custodian and
specifically approving deposits by the Custodian therein.
(f) "PROPER INSTRUCTIONS". Means instructions
(i) delivered by mail; telegram, cable; telex;
facsimile sending device; DTC "ID" or "IID" system or any
similar system; and any Trade Order Entry System acceptable to
the parties; and received by the Mutual Funds Custody Division
of the Custodian, signed by two Authorized Persons or by
persons reasonably believed by the Custodian to be Authorized
Persons; or
(ii) transmitted electronically through the Custodian
Asset Management System or any similar electronic instruction
system acceptable to the Custodian; or
(iii) previously agreed to in writing by the Trust
and the Custodian or provided orally by the Trust in form
satisfactory to the Custodian and promptly followed by written
instructions signed by an Authorized Person.
4. WARRANTIES AND REPRESENTATIONS.
(a) The Trust warrants and represents that:
(i) It is a business trust organized under the
laws of Delaware;
(ii) It is registered as an investment company
under the 1940 Act; and
(iii) It is duly authorized to enter into this
Agreement and the Agreement is a valid and binding obligation
of the Trust.
(b) the Custodian warrants and represents that:
(i) It is a national bank duly organized under
the laws of the United States;
(ii) It is duly authorized to enter into this
Agreement and the Agreement is a valid and binding obligation
of the Bank; and
(iii) It is under no regulatory restriction that
would materially affect its ability to carry out its
obligations under this Agreement.
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5. DELIVERY AND REGISTRATION OF THE PROPERTY. (a) The Trust will
deliver or cause to be delivered to the Custodian all Property owned by it, at
any time during the period of this Agreement, except for securities and monies
to be delivered to any Subcustodian appointed pursuant to Paragraph 11 hereof.
The Custodian will not be responsible for such securities and such monies until
actually received by it. All securities delivered to the Custodian or to any
such subcustodian (other than in bearer form) shall be registered in the name of
the Trust or in the name of a nominee of the Trust or in the name of the
Custodian or any nominee of the Custodian (with or without indication of
fiduciary status) or in the name of any subcustodian or any nominee of such
subcustodian appointed pursuant to Paragraph 11 hereof or shall be properly
endorsed and in form for transfer satisfactory to the Custodian.
(b) The Custodian shall at all times hold securities of the Trust
either: (i) by physical possession of the share certificates or other
instruments representing such securities in registered or bearer form; or (ii)
in the Book-Entry System, or (iii) in a Securities Depository or (iv) a
Sub-Custodian (as herein defined) of the Custodian.
(c) The Custodian shall at all times hold securities of the Trust in
the name of the Custodian, the Trust or any nominee of either of them, unless
otherwise directed by Proper Instructions; provided that, in any event, all
securities and other assets of the Trust shall be held in an account of the
Custodian containing only the securities and assets of the Trust, or only
securities and assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian shall
indicate at all times the Trust or other customer for which such securities and
other assets are held in such account and the respective interests therein.
6. VOTING RIGHTS. It is the Custodian's responsibility to deliver to
the Trust or the Investment Adviser of the relevant Fund, via overnight mail if
necessary, all forms of proxies, all notices of meetings, and any other notices
or announcements materially affecting or relating to securities owned by the
Trust that are received by the Custodian, any Subcustodian (as hereinafter
defined), or any nominee of either of them, and upon receipt of Proper
Instructions, the Custodian shall execute and deliver, or use its best efforts
to cause such Subcustodian or nominee to execute and deliver, such proxies or
other authorizations as may be required. Where warrants, options, tenders or
other securities have fixed expiration dates, the Trust understands that in
order for the Custodian to act, the Custodian must receive the instructions of
the Trust or the Investment Adviser at its offices in Cleveland, addressed as
the Custodian may from time to time request, by no later than noon (Eastern
time) at least one business day prior to the last scheduled date to act with
respect thereto (or such earlier date or time as the Custodian may reasonably
notify the Trust). Absent the Custodian's timely receipt of such instructions,
such instruments will expire without liability to the Custodian.
7. EXERCISE OF RIGHTS; TENDER OFFERS. Upon receipt of Proper
Instructions, the Custodian shall: (a) deliver warrants, puts, calls, rights or
similar securities to the issuer or trustee thereof, or to the agent of such
issuer or trustee, for the purpose of exercise or sale; and (b) deposit
securities upon invitations for tenders thereof, provided that the consideration
for such securities is to be paid or delivered to the Custodian, or the tendered
securities included in
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the Proper Instructions that are received in exchange for the tendered
securities are to be returned to the Custodian. Notwithstanding any provision of
this Agreement to the contrary, the Custodian shall take all action as directed
in Proper Instructions to comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions, or similar rights of security ownership,
and shall promptly notify the Trust or the Investment Adviser of such action in
writing by facsimile transmission or in such manner as the Trust may designate
in writing.
8. OPTIONS. Upon receipt of Proper Instructions, the Custodian shall:
(a) receive and retain confirmations or other documents, if any, evidencing the
purchase or writing of an option on a security or securities index by the Trust;
(b) deposit and maintain in a segregated account, securities (either physically
or by book entry in a Securities Depository), cash or other assets; and/or (c)
pay, release and/or transfer such securities, cash, or other assets in
accordance with notices or other communications evidencing the expiration,
termination or exercise of such options furnished by the Options Clearing
Corporation, the securities or options exchange on which such options are traded
or such other organization as may be responsible for handling such option
transactions. The Trust and the broker-dealer shall be responsible for the
sufficiency of assets held in any segregated account established in compliance
with applicable margin maintenance requirements and the performance of other
terms of any option contract, and shall promptly upon notice from the Custodian
bring such accounts into compliance with such terms or requirements.
9. FUTURES CONTRACTS. Upon receipt of Proper Instructions, the
Custodian shall: (a) receive and retain confirmation, if any, evidencing the
purchase or sale of a futures contract or an option on a futures contract by a
Fund; (b) deposit and maintain in a segregated account, cash, securities and
other assets designated as initial, maintenance or variation "margin" deposits
intended to secure the Trust's performance of its obligations under any futures
contracts purchased or sold or any options on futures contracts written by the
Trust, regarding such margin deposits; and (c) release assets from and/or
transfer assets into such margin accounts only in accordance with any such
Proper Instructions. The Trust shall be responsible for the sufficiency of
assets held in the segregated account in compliance with applicable margin
maintenance requirements and the performance of any futures contract or option
on a futures contract in accordance with its terms, and shall promptly upon
notice act to bring such accounts into compliance with such terms or
requirements.
10. RECEIPT AND DISBURSEMENT OF MONEY.
(a) The Custodian shall open and maintain a custody account for the
Trust, and shall hold in such account, subject to the provisions hereof, all
cash received by it from or for the Trust. The Custodian shall make payments of
cash to, or for the account of, the Trust from such cash only (i) for the
purchase of securities for the Trust as provided in paragraph 16 hereof; (ii)
upon receipt of Proper Instructions, for the payment of dividends or for the
payment of interest, taxes, administration, distribution or advisory fees or
expenses which are to be borne by the Trust under the terms of this Agreement,
any advisory agreement, any distribution agreement, or any administration
agreement; (iii) upon receipt of Proper Instructions for payments in connection
with the conversion, exchange or surrender of securities owned or subscribed to
by the Trust and
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held by or to be delivered to the Custodian; (iv) to a subcustodian pursuant to
Paragraph 11 hereof; or (v) upon receipt of Proper Instructions for other
corporate purposes.
(b) The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as custodian
for the Trust.
11. RECEIPT OF SECURITIES.
(a) Except as provided by Paragraph 12 hereof, the Custodian shall hold
all securities and non-cash Property received by it for the Trust. All such
securities and non-cash Property are to be held or disposed of by the Custodian
for the Trust pursuant to the terms of this Agreement. In the absence of Proper
Instructions, the Custodian shall have no power or authority to withdraw,
deliver, assign, hypothecate, pledge or otherwise dispose of any such securities
and non-cash Property, except in accordance with the express terms provided for
in this Agreement. In no case may any trustee, officer, employee or agent of the
Trust, acting as individuals, withdraw any securities or non-cash Property.
12. SUBCUSTODIAN AGREEMENTS. In connection with its duties under this
Agreement, the Custodian may, at its own expense, enter into subcustodian
agreements with other banks or trust companies for the receipt of certain
securities and cash to be held by the Custodian for the account of the Trust
pursuant to this Agreement; provided that each such bank or trust company has an
aggregate capital, surplus and undivided profits, as shown by its last published
report, of not less then twenty million dollars ($20,000,000) and that such bank
or trust company agrees with the Custodian to comply with all relevant
provisions of the 1940 Act and applicable rules and regulations thereunder. The
Custodian will be liable for acts or omissions of any such subcustodian.
(a) Promptly after the close of business on each day the Custodian
shall furnish the Trust with system access to review a summary of all transfers
to or from the account of the Trust during said day. Where securities are
transferred to the account of the Trust established at a Securities Depository
or the Book Entry System pursuant to Paragraph 13 hereof, the Custodian shall
use the Securities Depository or Book Entry System to identity as belonging to
such Trust the securities in a commingled group of securities registered in the
name of the Custodian (or its nominee) or shown in the Custodian's account on
the books of a Securities Depository or the Book-Entry System. At least monthly
and from time to time, the Custodian shall furnish the Trust with a detailed
statement of the Property held for the Trust under this Agreement.
(b) Notwithstanding any other provision of this agreement, no provision
of this Section 12, and no provision of this agreement relating to
subcustodians, shall apply to any agreement entered into by the Custodian for
the purpose of facilitating repurchase transactions by the Fund ("Tri-party
Agreements"), except that (i) the indemnification obligations owed to the
Custodian by the Fund and set forth in Sections 28(a) and (b) shall apply to
such Tri-party Agreements without qualification; and (ii) the Fund's rights
contained in Section 30 of this Agreement shall apply to such Tri-party
Agreements. All actions taken by the Custodian in connection with such Tri-party
Agreements shall be taken solely for the purpose of providing and accepting
instructions at the Fund's request and on the Fund's behalf.
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13. USE OF SECURITIES DEPOSITORY OR THE BOOK-ENTRY SYSTEM. The Trust
shall deliver to the Custodian a certified resolution of the Board of Trustees
of the Trust approving, authorizing and instructing the Custodian on a
continuous and ongoing basis until instructed to the contrary by Proper
Instructions actually received by the Custodian (i) to deposit in a Securities
Depository or the Book-Entry System all securities of the Trust eligible for
deposit therein and (ii) to utilize a Securities Depository or the Book-Entry
System to the extent possible in connection with the performance of its duties
hereunder, including without limitation settlements of purchases and sales of
securities by the Trust, and deliveries and returns of securities collateral in
connection with borrowings. Without limiting the generality of such use, it is
agreed that the following provisions shall apply thereto:
(a) Securities and any cash of the Trust deposited in a Securities
Depository or the Book-Entry System will at all times be segregated from any
assets and cash controlled by the Custodian in other than a fiduciary or
custodial capacity but may be commingled with other assets held in such
capacities. The Custodian will effect payment for securities, in the place where
the transaction is settled, unless the Trust has given the Custodian Proper
Instructions to the contrary.
(b) All Books and records maintained by the Custodian which relate to
the Trust participation in a Securities Depository or the Book-Entry System will
at all times during the Custodian's regular business hours be open to the
inspection of the Trust's duly authorized employees or agents, and the Trust
will be furnished with all information in respect of the services rendered to it
as it may require.
14. INSTRUCTIONS CONSISTENT WITH THE CERTIFICATE, ETC.
The Custodian shall act only upon Proper Instructions. The Custodian
may assume that any Proper Instructions received hereunder are not in any way
inconsistent with any provision of the Certificate or Bylaws of the Trust or any
vote or resolution of the Trust's Board of Trustees, or any committee thereof.
The Custodian shall be entitled to rely upon any Proper Instructions actually
received by the Custodian pursuant to this Agreement. The Trust agrees that the
Custodian shall incur no liability in acting upon Proper Instructions given to
the Custodian. In accordance with instructions from the Trust, advances of cash
or other Property made by the Custodian, arising from the purchase, sale,
redemption, transfer or other disposition of Property of the Trust, or in
connection with the disbursement of trusts to any party, or in payment of fees,
expenses, claims or liabilities owed to the Custodian by the Trust, or to any
other party which has secured judgment in a court of law against the Trust which
creates an overdraft in the accounts or over-delivery of Property shall be
deemed a loan by the Custodian to the Trust, to the extent permitted under
applicable law. Such loans shall be payable on demand, bearing interest at such
rate customarily charged by the Custodian for similar loans or such other rate
agreed to by the parties. The Trust agrees that test arrangements,
authentication methods or other security devices to be used with respect to
instructions which the Trust may give by telephone, telex, TWX, facsimile
transmission, bank wire or through an electronic instruction system, shall be
processed in accordance with terms and conditions for the use of such
arrangements, methods or devices as the Custodian may put into effect and modify
from time to time. The Trust shall safeguard any
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test keys, identification codes or other security devices which the Custodian
makes available to the Trust and agrees that the Trust shall be responsible for
any loss, liability or damage incurred by the Custodian or by the Trust as a
result of the Custodian's acting in accordance with instructions from any
unauthorized person using the proper security device unless such loss, liability
or damage was incurred as a result of the Custodian's negligence or willful
misconduct. The Custodian may electronically record, but shall not be obligated
to so record, any instructions given by telephone and any other telephone
discussions with respect to the Account. In the event that the Trust uses the
Custodian's Asset Management System, the Trust agrees that the Custodian is not
responsible for the consequences of the failure of that system to perform for
any reason, beyond the reasonable control of the Custodian, or the failure of
any communications carrier, utility, or communications network. In the event
that system is inoperable, the Trust agrees that it will accept the
communication of transaction instructions by telephone, facsimile transmission
on equipment compatible to the Custodian's facsimile receiving equipment or by
letter, at no additional charge to the Trust.
15. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. The Custodian is
authorized to take the following action without Proper Instructions:
(a) COLLECTION OF INCOME AND OTHER PAYMENTS. The Custodian shall:
(i) collect and receive for the account of the Trust,
all income and other payments and distributions, including
(without limitation) stock dividends, rights, warrants and
similar items, included or to be included in the Property of
the Trust, and promptly advise the Trust of such receipt and
shall credit such income, as collected, to the Trust. From
time to time, the Custodian may elect to credit, but shall not
be so obligated, the account with interest, dividends or
principal payments on payable or contractual settlement date,
in anticipation of receiving same from a payor, central
depository, broker or other agent employed by the Trust or the
Custodian. Any such crediting and posting shall be at the
Trust's sole risk, and the Custodian shall be authorized to
reverse any such advance posting after making every reasonable
attempt to collect, in the event it does not receive good
funds from any such payor, central depository, broker or agent
of the Customer.
(ii) with respect to securities of foreign issue,
effect collection of dividends, interest and other income, and
to notify the Trust of any call for redemption, offer of
exchange, right of subscription, reorganization, or other
proceedings materially affecting such securities, or any
default in payments due thereon. It is understood, however,
that the Custodian shall be under no responsibility for any
failure or dealing in effecting such collections or giving
such notice with respect to securities of foreign issue,
regardless of whether or not the relevant information is
published in any financial service available to it unless such
failure or delay is due to its negligence or willful
misconduct; however, this sub-paragraph (ii) shall not be
construed as creating any such responsibility with respect to
securities of non-foreign issue. Collections of income in
foreign
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currency are, to the extent possible, to be converted into
United States dollars unless otherwise instructed by Proper
Instructions, and in effecting such conversion the Custodian
may use such methods or agencies as it may see fit. All risk
and expenses incident to such collection and conversion is for
the account of the Trust and the Custodian shall have no
responsibility for fluctuations in exchange rates affecting
any such conversion.
(iii) endorse and deposit for collection in the name
of the Trust, checks, drafts, or other orders for the payment
of money on the same day as received;
(iv) receive and hold for the account of the Trust
all securities received by the Trust as a result of a stock
dividend, share split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of rights
or similar securities issued with respect to any portfolio
securities of the Trust held by the Custodian hereunder;
(v) present for payment and collect the amount
payable upon all securities which may mature or be called,
redeemed or retired, or otherwise become payable on the date
such securities become payable;
(vi) take any action which in the opinion of the
Custodian may be necessary and proper in connection with the
collection and receipt of such income and other payments and
the endorsements for collection of checks, drafts and other
negotiable instruments;
(vii) with respect to domestic securities, to
exchange securities in temporary form for securities in
definitive form, to effect an exchange of the shares where the
par value of stock is changed, and to surrender securities at
maturity or when advised of earlier call for redemption,
against payment therefor in accordance with accepted industry
practice. The Trust understands that the Custodian subscribes
to one or more nationally recognized services that provide
information with respect to calls for redemption of bonds or
other corporate actions. The Custodian shall not be liable for
failure to redeem any called bond or take other action if
notice of such call or action was not provided by any service
to which it subscribes provided that the Custodian shall have
acted in good faith without negligence or willful misconduct.
The Custodian shall have no duty to notify the Trust of any
rights, duties, limitations, conditions or other information
set forth in any security (including mandatory or optional
put, call and similar provisions), but the Custodian shall
forward to the Trust or the appropriate Investment Adviser any
notices or other documents subsequently received in regard to
any such security. When fractional shares of stock of a
declaring corporation are received as a stock distribution,
unless specifically instructed to the contrary in writing, the
Custodian is authorized to sell the fraction received and
credit the Trust's account. Unless specifically instructed to
the contrary in writing, the Custodian is authorized to
exchange securities in bearer form for
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securities in registered form. If any Property registered in
the name of a nominee of the Custodian is called for partial
redemption by the issue of such Property, the Custodian is
authorized to allot the called portion to the respective
beneficial holders of the Property in such manner deemed to be
fair and equitable by the Custodian in its sole discretion.
(b) DEPOSITS OF PROCEEDS OF ISSUANCE OF SHARES. The Custodian shall
collect and receive for the account of the Fund all payments received in payment
for shares of such Fund issued by the Trust.
(c) REDEMPTIONS. Upon receipt of notice by the Fund's transfer agent
stating that such transfer agent is required to redeem shares and specifying the
number and class of shares which such transfer agent is required to redeem and
the date and time the request or requests for redemption were received by the
Fund's distributor, the Custodian shall either (i) pay to such transfer agent,
for distribution to the redeeming shareholder, the amount payable to such
shareholder upon the redemption of such shares as determined in the manner
described in the then current Prospectus, or (ii) arrange for the direct payment
of such redemption proceeds by the Custodian to the redeeming shareholder in
accordance with such procedures and controls as are mutually agreed upon from
time to time by and among the Custodian, the Trust and the Trust's transfer
agent.
(d) MISCELLANEOUS TRANSACTIONS. The Custodian is authorized to deliver
or cause to be delivered Property against payment or other consideration or
written receipt therefor in the following cases:
(i) for examination by a broker selling for the
account of the Trust;
(ii) for the exchange of interim receipts or
temporary securities for definitive securities;
(iii) for transfer of securities into the name of the
Trust or the Custodian or a nominee of either, or for exchange
of securities for a different number of bonds, certificates,
or other evidence, representing the same aggregate face amount
or number of units bearing the same interest rate, maturity
date and call provisions, if any; provided that, in any such
case, the new securities are to be delivered to the Custodian.
16. TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Proper
Instructions and not otherwise, the Custodian, directly or through the use of a
Securities Depository or the Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated in such
Proper Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Trust as owner of any securities may be
exercised;
(b) Deliver any securities held for the Trust against receipt of other
securities or cash
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issued or paid in connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or the exercise of
any conversion privilege;
(c) Deliver any securities held for the Trust to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, against receipt of such certificates or deposit,
interim receipts or other instruments or documents as may be issued to it to
evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Trust and
take such other steps as shall be stated in said instructions to be for the
purpose of effectuating any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust;
(e) Release securities belonging to the Trust to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Trust; and pay such loan upon redelivery to it of the securities pledged
or hypothecated therefore and upon surrender of the note or notes evidencing the
loan;
(f) Deliver any securities held for the Trust upon the exercise of a
covered call option written by the Trust on such securities; and
(g) Deliver securities held for the Trust pursuant to separate security
lending agreements.
(h) Regarding dividends and distributions, the Trust shall furnish the
Custodian with appropriate evidence of action by the Trust's Board of Trustees
declaring and authorizing the payment of any dividends and distributions to the
shareholders of the particular Fund. Upon receipt by the Custodian of Proper
Instructions with respect to dividends and distributions declared by the Trust's
Board of Trustees and payable to the shareholders of the Fund who have elected
in the proper manner to receive their distributions and/or dividends in cash,
and in conformance with procedures mutually agreed upon by the Custodian, the
Trust, and the Trust's transfer agent, the Custodian shall pay to the Trust's
transfer agent, as agent for the shareholders, an amount equal to the amount
indicated in said Proper Instructions as payable by the Trust to such
shareholders for distribution in cash by the transfer agent to such
shareholders. In lieu of paying the Trust's transfer agent cash dividends and
distributions, the Custodian may arrange for the direct payment of cash
dividends and distributions to shareholders by the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time by
and among the Trust, the Custodian and the Trust's transfer agent.
17. PURCHASE OF SECURITIES. Promptly after each purchase of securities,
the Trust or the appropriate Investment Adviser shall deliver to the Custodian
(as Custodian) Proper Instructions specifying with respect to each such
purchase: (a) the name of the issuer and the title of the securities, (b) the
number of shares of the principal amount purchased and accrued interest, if any,
(c) the dates of purchase and settlement, (d) the purchase price per unit, (e)
the total amount payable upon such purchase, (f) the name of the person from
whom or the broker
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through whom the purchase was made and (g) the Fund for which the purchase was
made. The Custodian shall upon receipt of securities purchased by or for the
Trust pay out of the moneys held for the account of such Trust the total amount
payable to the person from whom or the broker through whom the purchase was
made, if and only if the same conforms to the total amount payable as set forth
in such Proper Instructions.
18. SALES OF SECURITIES. Promptly after each sale of securities, the
Trust or the appropriate Investment Adviser shall deliver to the Custodian
Proper Instructions, specifying with respect to each such sale: (a) the name of
the issuer and the title of the security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Trust upon such sale, (f)
the name of the broker through whom or the person to whom the sale was made and
(g) the Fund for which the sale was made. The Custodian shall deliver the
securities upon receipt of the total amount payable to the Trust upon such sale,
if and only if the same conforms to the total amount payable as set forth in
such Proper Instructions.
19. RECORDS. The books and records pertaining to the Trust which are in
the possession of the Custodian shall be the property of the Trust. Such books
and records shall be prepared and maintained as required by the 1940 Act, as
amended; other applicable federal and state securities laws and rules and
regulations; and, any state or federal regulatory body having appropriate
jurisdiction. The Trust, or the Trust's authorized representative, shall have
access to such books and records at all times during the Custodian's normal
business hours, and such books and records shall be surrendered to the Trust
promptly upon request. Upon reasonable request of the Trust, copies of any such
books and records shall be provided by the Custodian to the Trust or the Trust's
authorized representative.
20. REPORTS. The Custodian shall furnish the Trust the following
reports:
(a) such periodic and special reports as the Trustees may reasonably
request;
(b) a monthly statement summarizing all transactions and entries for
the account of each Fund;
(c) a monthly report of Fund securities belonging to each Fund showing
the adjusted amortized cost of the issues and the market value at the end of the
month;
(d) a monthly report of the cash account of each Fund showing
disbursements; and
(e) such other information as may be agreed upon from time to time
between the Trustees and the Custodian.
21. COMPLIANCE WITH RULE 17F-2. The Custodian shall comply with the
requirements of Rule 17f-2 under the 1940 Act and will permit access to the
Fund's securities only in compliance with the requirements of Rule 17f-2.
22. COOPERATION WITH ACCOUNTANTS. The Custodian shall cooperate with
the Trust's
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independent certified public accountants and shall take all reasonable action in
the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression
of their unqualified opinion, including but not limited to the opinion included
in the Trust's semiannual report on the Trust's Form N-SAR.
23. CONFIDENTIALITY. The Custodian agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the
Trust all records and other information relative to the Trust and its prior,
present or potential Shareholders and relative to the advisors and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where the
Custodian may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. Nothing contained herein,
however, shall prohibit the Custodian from advertising or soliciting the public
generally with respect to other products or services, regardless of whether such
advertisement or solicitation may include prior, present or potential
Shareholders of the Trust provided that, in no event, will any information
obtained as custodian be used in any such solicitation or advertisement.
24. EQUIPMENT FAILURES. In the event of the failure of certain
equipment including but not limited to data processing equipment,
telecommunications equipment, or power generators located at the Custodian, at a
designated Subcustodian or nominee, or at a third party contracted to for
certain securities processing services, the Custodian shall, at no additional
expense to the Trust, take reasonable steps to minimize service interruptions
but shall not have liability with respect thereto. The Custodian shall enter
into and shall maintain in effect with appropriate parties one or more
agreements making reasonable provision for backup emergency use of electronic
data processing equipment to the extent appropriate equipment is available.
25. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF TRUST. If the Custodian shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall promptly receive,
clarification or advice from the Trust.
(b) ADVICE OF COUNSEL. If the Custodian shall be in doubt as to any
question of law involved in any action to be taken or omitted by the Custodian,
it may request advice at its own cost from counsel of its own choosing (who may
be counsel for the Trust or the Custodian, at the option of the Custodian).
(c) CONFLICTING ADVICE. In case of conflict between directions or
advice received by the Custodian pursuant to subparagraph (a) of this paragraph
and advice received by the Custodian pursuant to subparagraph (b) of this
paragraph, the Custodian shall be entitled to rely on and follow the advice
received pursuant to the latter provision alone.
(d) PROTECTION OF THE CUSTODIAN. The Custodian shall be protected in
any action or inaction which it takes or omits to take in reliance on any
directions or advice received pursuant to subparagraph (a) of this section.
However, nothing in this paragraph shall be construed as
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imposing upon the Custodian any obligation (i) to seek such directions or
advice, or (ii) to act in accordance with such directions or advice when
received. Nothing in this subparagraph shall excuse the Custodian when an action
or omission on the part of the Custodian constitutes willful misfeasance or
negligence by the Custodian of its duties under this Agreement.
26. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The Trust
assumes full responsibility for insuring that the contents of each Prospectus of
the Trust complies with all applicable requirements of the Securities Act, the
1940 Act, and any laws, rules and regulations of governmental authorities having
jurisdiction.
27. COMPENSATION. As compensation for the services described within
this agreement and rendered by the Custodian during the term of this Agreement,
the Trust shall pay to the Custodian the fees provided on Attachment B hereto,
as it may be amended from time to time. In addition, the Trust agrees to
reimburse the Custodian for any out-of-pocket expenses described in Attachment B
to this Agreement, incurred in providing the services contained within this
Agreement.
28. INDEMNIFICATION. (a) The Trust, on behalf of each Fund individually
and not jointly, as sole owner of the Property, agrees, to the extent permitted
by applicable law, to indemnify and hold harmless the Custodian and its nominees
from all taxes, charges, expenses, assessments, claims, and liabilities
(including, without limitation, liabilities arising under the Securities Act,
the Securities Exchange Act of 1934, the 1940 Act, and any state and foreign
securities and blue sky laws, all as or to be amended from time to time) and
expenses, including (without limitation) reasonable attorney's fees and
disbursements, arising directly or indirectly (a) from the fact that securities
included in the Property are registered in the name of any such nominee or (b)
without limiting the generality of the foregoing clause (a) from any action or
thing which the Custodian takes or does or omits to take or do (i) at the
request or on the direction of or in reliance on the advice of the Trust given
in accordance with the terms of this Agreement, or (ii) upon Proper
Instructions, provided, that neither the Custodian nor any of its nominees or
subcustodian shall be indemnified against any liability to the Trust or to its
Shareholders (or any expenses incident to such liability) (x) arising out of the
Custodian's or such nominee's or subcustodian's own willful misfeasance or
negligence of its duties under this Agreement or any agreement between the
Custodian and any nominee or subcustodian, or (y) constituting any incidental or
consequential damages. In the event of any advance of cash for any purpose made
by the Custodian resulting from Proper Instructions of the Trust, or in the
event that the Custodian or its nominee or subcustodian shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's or subcustodian's own negligence or willful misfeasance,
the Trust shall promptly reimburse the Custodian for such advance of cash or
such taxes, charges, expenses, assessments, claims or liabilities.
(b) Subject to the limitations set forth in this Agreement, the Trust,
on behalf of each Fund individually, and not jointly, agrees to indemnify and
hold harmless the Custodian and its nominees from all loss, damage and expense
(including reasonable attorney's fees) suffered or incurred by the Custodian or
its nominee caused by or arising from actions taken by the
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Custodian in reliance upon Proper Instructions; provided, however, that such
indemnity shall not apply to (x) loss, damage or expense occasioned by or
resulting from the negligence or willful misfeasance of the Custodian or its
nominee or any material breach of this Agreement by the Custodian or its nominee
or (y) incidental or consequential damages. In addition, the Trust agrees to
indemnify the Custodian against any liability incurred by reason of taxes
assessed to the Custodian, or other loss, damage or expenses incurred by such
person, resulting solely from the fact that securities and other property of the
Trust is registered in the name of such person; provided, however, that in no
event shall such indemnification be applicable to income, franchise or similar
taxes which may be imposed or assessed against the Custodian.
29. NOTICE OF LITIGATION, RIGHT TO PROSECUTE. The Custodian shall
promptly inform the Trust in writing of the commencement of any litigation or
proceeding in respect of which indemnity may be sought under the above paragraph
28. The Trust shall be entitled to participate in any such litigation or
proceeding and, after written notice from the Trust to the Custodian, the Trust
may assume the defense of such litigation or proceeding with counsel of its
choice at its own expense. The Custodian shall not consent to the entry of any
judgment or enter into any settlement in any such litigation or proceeding
without providing the Trust with adequate notice of any such settlement or
judgment. The Custodian shall submit written evidence to the Trust with respect
to any cost or expense for which it is seeking indemnification in such form and
detail as the Trust may reasonably request.
30. TRUST'S RIGHT TO PROCEED. Notwithstanding anything to the contrary
contained herein, the Trust shall have, at its election upon reasonable notice
to the Custodian, the right to enforce, to the extent permitted by any
applicable agreement and applicable law, the Custodian's rights against any
Subcustodian or Securities Depository for loss, damage or expense caused the
Custodian or the Trust by such Subcustodian or Securities Depository and shall
be entitled to enforce the rights of the Custodian with respect to any claim
against such Subcustodian or Securities Depository which the Custodian may have
as a consequence of such loss, damage or expense, if and to the extent that the
Trust has not been made whole for any such loss or damage. The Custodian agrees
to cooperate with the Trust and take all actions reasonably requested by the
Trust in connection with the Trust's enforcement of any rights of the Custodian.
The Trust agrees to reimburse the Custodian for all reasonable out-of-pocket
expenses incurred by the Custodian in connection with the fulfillment of its
obligations as long as the Custodian has not otherwise breached the terms of
this Agreement.
31. RESPONSIBILITY OF THE CUSTODIAN. The Custodian shall not be
required to take any action except as specifically set forth herein. The
Custodian shall be responsible for its own negligent failure or that of any
subcustodian it shall appoint to perform its duties under this Agreement.
Without limiting the generality of the foregoing or of any other provision of
this Agreement, the Custodian in connection with its duties under this Agreement
shall not be under any duty or obligation to inquire into and shall not be
liable for or in respect of (a) the validity or invalidity or authority or lack
thereof of any advice, direction, notice or other instrument which conforms to
the applicable requirements of this Agreement, if any, and which the Custodian
believes to be genuine, (b) the validity of the issue of any securities
purchased or sold by the Trust, the legality of the purchase or sale thereof or
the propriety of the amount paid or received
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therefore, (c) the legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor, (d) the legality of the
redemption of any Shares, or the propriety of the amount to be paid therefore,
(e) the legality of the declaration or payment of any dividend or distribution
on Shares, or (f) delays or errors or loss of data occurring by reason of
circumstances beyond the Custodian's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown (except as provided in Paragraph 24), flood or catastrophe, acts of
God, insurrection, war, riots, or failure of the mail, transportation,
communication or power supply. In no event will the Custodian be liable for
special, indirect or consequential damages or lost profits or loss of business,
which may be suffered by the Trust or any third party, even if previously
informed of the possibility of such damages.
32. COLLECTION. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping thereof
upon receipt by the Custodian) shall be at the sole risk of the Trust. In any
case in which the Custodian does not receive any payment due the Trust within a
reasonable time after the Custodian has made proper demands for the same, it
shall so notify the Trust in writing, including copies of all demand letters,
any written responses thereto, and memoranda of all oral responses thereto, and
to telephonic demands, and await instructions from the Trust. the Custodian
shall not be obliged to take legal action for collection unless and until
reasonably indemnified to its satisfaction. The Custodian shall also notify the
Trust as soon as reasonably practicable whenever income due on securities is not
collected in due course.
33. DURATION AND TERMINATION. This Agreement shall be effective as of
the date hereof and shall continue until termination by the Trust or by the
Custodian on 60 day's written notice. Upon any termination of this Agreement,
pending appointment of a successor to the Custodian or a vote of the
Shareholders of the Trust to dissolve or to function without a custodian of its
cash, securities or other property, the Custodian shall not deliver cash,
securities or other property of the Trust to the Trust, but may deliver them to
a bank or trust company designated by the Trust or, failing that, to a bank or
trust company of the Custodian's selection, having aggregate capital, surplus
and undivided profits, as shown by its last published report of not less than
twenty million dollars ($20,000,000) as a successor custodian for the Trust to
be held under terms similar to those of this Agreement, provided, however, that
the Custodian shall not be required to make any such delivery or payment until
full payment shall have been made by the Trust of all liabilities constituting a
charge on or against the properties then held by the Custodian or on or against
the Custodian and until full payment shall have been made to the Custodian of
all of its fee, compensation, costs and expenses, subject to the provisions of
Paragraph 26 of this Agreement. The termination by the Trust of a particular
Series or Fund within the Trust that does not result in the closure of the Trust
does not constitute termination of this Agreement.
34. NOTICES. Notices shall be addressed,
If to the Trust: The Victory Variable Insurance Funds
c/o BISYS Fund Services
0000 Xxxxxxx Xxxx
00
00
Xxxxxxxx, Xxxx 00000-0000
Attention: President
With a copy to: Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx
If to the Custodian: Key Trust Company of Ohio, N.A.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000 -1306
Attention: Division Head
Master Trust Division
or, if the address is to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication. If the location of the sender of a Notice and the address of the
addressee thereof are, at the time of sending, more than 100 miles apart, the
Notice may be sent by first-class mail, in which case it shall be deemed to have
been given three days after it is sent, or if sent by confirming telegram,
cable, telex or facsimile sending device, it shall be deemed to have been given
immediately, and, if the location of the sender of a Notice and the address of
the addressee thereof are, at the time of sending, not more than 100 miles
apart, the Notice may be sent by first-class mail, in which case it shall be
deemed to have been given two days after it is sent, or if sent by messenger, it
shall be deemed to have been given on the day it is delivered, or if sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately. All postage, cable, telegram, telex and
facsimile sending device charges arising from the sending of a Notice hereunder
shall be paid by the sender.
35. APPLICABILITY OF AGREEMENT TO FUNDS INDIVIDUALLY, NOT JOINTLY. The
Trust has entered into this Agreement on behalf of each Fund listed on
Attachment A individually, and not jointly. The rights and obligations of the
Trust described in this Agreement apply to each individual Fund. No Fund shall
have any liability for any costs or expenses incurred by any other Fund. In
seeking to enforce a claim against any Fund, the Custodian shall look to the
assets only of that Fund and not to the assets of any other Fund.
36. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
37. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
38. LIABILITY OF TRUSTEES AND SHAREHOLDERS. A copy of the Certificate
of Trust of the Fund is on file with the Secretary of the State of Delaware, and
notice is hereby given that this instrument is executed on behalf of the
trustees of the Fund as trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees or shareholders
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individually but are binding only upon the assets and property of the Fund.
39. MISCELLANEOUS. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the parties hereto. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. 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. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
KEY TRUST COMPANY OF OHIO, N.A.
Attest: __________________ By:_________________________
Name: Name:
Title: Vice President
THE VICTORY VARIABLE INSURANCE
FUNDS, on behalf of each Fund listed on
Attachment A, individually and not jointly
Attest: __________________ By:_________________________
Name: Name:
Title: Title:
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ATTACHMENT A
As of October 16, 1998
NAME OF FUND
- Investment Quality Bond Fund
- Diversified Stock Fund
- Small Company Value Fund
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ATTACHMENT B
Custody Service Fees
For the services as described in this Agreement, each Fund of the Trust listed
on Attachment A hereto shall pay a custody safekeeping fee and custody
transaction fees as follows:
DOMESTIC CUSTODY SAFEKEEPING FEES
- .018% (1.8 Basis Points) on the assets of the Funds
DOMESTIC CUSTODY TRANSACTION FEES
- $15.00 per DTC or Fed Book Entry transaction
- $25.00 per physical transaction
- $40.00 per future or option wire
- $15.00 per Government Paydown
- $8.00 per wire transfer
GLOBAL CUSTODY SAFEKEEPING FEES
- .15% on first $250,000,00 in assets per Fund
- .12% on assets in excess of $250,000,000 per Fund
GLOBAL CUSTODY TRANSACTION FEES (BY COUNTRY)
GROUP I GROUP II
--------------------------------- ---------------------------------
Austria Australia
Belgium Canada
Denmark France
Finland Hong Kong
Germany Italy
Japan Netherlands
Norway Singapore/Malaysia
Sweden Spain
Switzerland United Kingdom
CEDEL/Euroclear Eligible Fixed Other Fixed Income
Income
--------------------------------- ---------------------------------
$40.00 PER TRANSACTION $80.00 PER TRANSACTION
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