THE VICTORY VARIABLE INSURANCE FUNDS
CONTRACT OWNER ADMINISTRATIVE SERVICES AGREEMENT
June 1, 1999
Xxxxxx Investors Life Insurance Company
0 Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This letter sets forth the agreement between The Victory Variable Insurance
Funds (the "Trust"), on behalf of its series of portfolios (each a "Fund")
listed on Schedule B, as amended from time to time, and Xxxxxx Investors Life
Insurance Company ("KILICO") concerning certain administrative services to be
provided by KILICO which will benefit the Funds.
1. Introduction. The Trust is an open-end management investment company
organized under the laws of the State of Delaware. The Trust issues shares
of beneficial interest ("Shares") of the Funds. The Trust may offer its
Shares to life insurance companies (each, a "Life Company") to be held by
certain of their separate accounts ("Accounts") established for the
purpose of funding variable annuity contracts and variable life insurance
policies (collectively referred to herein as "Variable Contracts"). The
Shares of each Fund may be issued in multiple classes. In this agreement,
the beneficial owners of the Variable Contracts are referred to as the
"Contract Owners."
2. Administrative Services and Expenses. KILICO is responsible for providing
administrative services to its accounts ("Accounts") that invest in the
Funds and for purchasers of Variable Contracts, pursuant to a
participation agreement among the Trust, KILICO and others (the
"Participation Agreement"). The Trust is responsible for providing
administrative services to the Funds in which the Accounts invest, and for
purchasers of Shares.
Notwithstanding the foregoing, KILICO has agreed to assist the Trust, as
the Trust may request from time to time, with the provision of certain
administrative services ("Administrative Services") to the Funds, among
those set forth in Schedule A hereto, as may relate to the investment in
the Funds by the Accounts.
3. Administrative Expense Payments. In consideration of the anticipated
administrative expense savings resulting from the arrangements set forth
in this letter agreement, the Trust, on behalf of each Fund, individually
and not jointly, agrees to pay KILICO on a quarterly basis an amount set
forth in Schedule B to this agreement.
For purposes of computing the payment to KILICO under this Paragraph 3 for
each quarterly period, the total of the average daily net assets of each
Class of Shares in which
the Accounts invest shall be multiplied by the rate shown in Schedule B
multiplied by the actual number of days in the period divided by 365.
The Trust will calculate the expense payment contemplated by this
Paragraph 3 at the end of each quarter and will pay KILICO within 30 days
thereafter on a pro-rata basis. Payment will be accompanied by a statement
showing the calculation of the quarterly amount payable by the Trust and
such other supporting data as KILICO may reasonably request.
4. Nature of Payments. The Trust and KILICO recognize and agree that payments
made by the Trust to KILICO relate to Administrative Services only and do
not constitute payment in any manner for administrative services provided
by KILICO to the Accounts or to the Variable Contracts, for investment
advisory servies or for costs of distribution of Variable Contracts or of
Shares of the Funds, and that these payments are not otherwise related to
the investment advisory or distribution services or expenses. The amount
of administrative expense payments made by the Trust to KILICO pursuant to
Paragraph 3 of this agreement shall not be deemed to be conclusive with
respect to actual administrative expenses or savings of the Trust.
5. Term. This agreement shall become effective as of the date first above
written, and, unless sooner terminated in accordance with Paragraph 6 of
this letter agreement, shall continue until December 31, 2000. Thereafter,
if not terminated, this agreement shall continue automatically as to a
particular Fund or Class for successive one year terms so long as the
assets of the Funds are attributable to amounts invested by the Accounts
under the Participation Agreement, and provided that a majority of the
Trust's Trustees, including a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940, as
amended) of the Trust (the "Disinterested Trustees") specifically approve
this agreement at least annually.
6. Termination. Either the Trust or KILICO may terminate this agreement upon
60 days advance written notice or immediately upon termination of the
Participation Agreement or upon mutual agreement in writing. This
agreement may terminate immediately upon either party's determination
(with the advice of counsel) that the payment of the expense payments are
in conflict with applicable law.
7. Representations. KILICO represent that it will maintain and preserve all
records as required by law to be maintained and preserved in connection
with providing the Administrative Services, and will otherwise comply with
all laws, rules and regulations applicable to the Administrative Services.
KILICO also represents, warrants and agrees that: (i) the fact that it
receives compensation in connection with the administrative services
provided with respect to the Accounts' assets in the Funds will be
disclosed to the Contract Owners; and (ii) the Administrative Services it
provides under this agreement will in no event be primarily intended to
result in the sale of Shares of the Funds.
2
The Trust represents and warrants that any payment pursuant to this
agreement made directly or indirectly to KILICO constitutes compensation
for legitimate services required by the Trust related to the Funds,
consistent with the services rendered or the cost savings resulting from
the arrangement, and is not in any way intended to compensate any party
for the purchase of Fund Shares.
8. Subcontractors. KILICO may, with the consent of the Trust, contract with
or establish relationships with other parties to provide the
Administrative Services or other activities required of KILICO by this
agreement, provided that KILICO shall be fully responsible for the acts
and omissions of such other parties.
9. Authority. This agreement shall in no way limit the authority of the Trust
to take any action it may deem appropriate or advisable in connection with
all matters relating to the operations of the Trust and/or sale of its
Shares.
10. Indemnification. This letter agreement will be subject to the
indemnification provisions of the Participation Agreement.
11. Miscellaneous. This agreement may be amended only upon mutual agreement of
the parties hereto in writing. This agreement may not be assigned (as that
term is defined in the Investment Company Act of 1940) by any party
without the prior written approval of the other party, which approval will
not be unreasonably withheld. This agreement, including Schedule A and
Schedule B, constitutes the entire agreement between the Trust and KILICO
with respect to the matters dealt with herein, and supersedes any previous
agreements and documents with respect to such matters. This agreement may
be executed in counterparts, each of which shall be deemed an original but
all of which shall together constitute one and the same instrument. KILICO
agrees to notify the Trust promptly if for any reason you are unable to
perform fully and promptly any of your obligations under this agreement.
12. Notices. Any notices required to be sent hereunder shall be sent in
accordance with the Participation Agreement.
13. Choice of Law. This letter agreement will be construed in accordance with
the laws of the State of Delaware.
14. Board Approval. This letter agreement has been approved by a vote of a
majority of the Board of Trustees of the Trust, including a majority of
the Disinterested Trustees.
15. Non-Exclusivity. The Trust and KILICO may enter into other similar
servicing agreements with any other person or persons.
16. Organization; Limitation of Liability. The names "The Victory Variable
Insurance Funds" and the "Board of Trustees" refer respectively to the
Trust created, and the Trustees, as trustees but not individually or
personally, acting from time to time under, a Certificate of Trust filed
at the office of the Secretary of the State of Delaware on February 11,
1998, as amended as of October 5, 1998.
3
The obligations of "The Victory Variable Insurance Funds" entered into in
the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually but in such capacities, and are not
binding upon any of the Trustees, agents or representatives of the Trust
personally, but bind only the "Trust Property" (as defined in the Trust
Instrument of the Trust), and all persons dealing with any class of Shares
of the Trust must look solely to the Trust Property belonging to such
class for the enforcement of any claims against the Trust.
If this agreement reflects KILICO's understanding, please sign below and return
a signed copy to the Trust.
Very truly yours,
THE VICTORY VARIABLE INSURANCE FUNDS,
on behalf of each Fund listed on
Schedule B, individually and not
jointly
/s/ J. Xxxxx Xxxxx
-------------------------------------
Name: J. Xxxxx Xxxxx
Title: Vice President
Acknowledged and Agreed:
XXXXXX INVESTORS LIFE INSURANCE COMPANY
/s/ J. Xxxx X. Xxxxxx, Xx.
-------------------------------------
Name: J. Xxxx X. Xxxxxx, Xx.
Title:
Attachment: Schedule A
Schedule B
4
SCHEDULE A
ADMINISTRATIVE SERVICES PROVIDED
WITH RESPECT TO
THE VICTORY VARIABLE INSURANCE FUNDS
Maintenance of Books and Records
o Assist as necessary to maintain book entry records on behalf of the Fund
regarding issuance to, transfer within (via net purchase orders) and
redemption by an Account of Fund Shares.
o Maintain general ledgers regarding each Account's holdings of Fund Shares,
coordinate and reconcile information, and coordinate maintenance of
ledgers by financial institutions and other contract owner service
providers.
Communication with the Fund
o Serve as the designee of the Fund for receipt of purchase and redemption
orders from each Account and to transmit such orders, and payment
therefor, to the Fund.
o Coordinate with the Fund's agents respecting daily valuation of the Fund's
Shares and an Account's units.
Purchase Orders
o Determine net amount available for investment in the Fund.
o Deposit receipts at the Fund's custodians (generally by wire transfer).
o Notify the custodians of the estimated amount required to pay dividend or
distribution.
Redemption Orders
o Determine net amount required for redemptions by the Fund.
o Notify the custodian and Fund of cash required to meet payments.
o Purchase and redeem Shares of the Portfolios on behalf of each Account at
the then-current price in accordance with the terms of the Fund's
then-current prospectus.
o Assist in routing and revising sales and marketing materials in
incorporate or reflect the comments made on behalf of the Fund or its
underwriter.
o Assist in enforcing procedures adopted on behalf of the Fund to reduce,
discourage, or eliminate market timing transactions in the Fund's Shares
in order to reduce or eliminate adverse effects on the Fund or its
shareholders.
Processing Distributions from the Funds
o Process ordinary dividends and capital gains.
o Reinvest the Fund's distributions.
Reports
o Periodic information reporting to the Fund, including, but not limited to,
furnishing registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales or
promotional materials and any other SEC filings with respect to the
Accounts invested in the Fund, as not otherwise provided for.
o Periodic information reporting about the Fund, including any necessary
delivery of the Fund's prospectus and annual and semi-annual reports to
contract owners, as not otherwise provided for.
Fund-related Contract Owner Services
o Provide general information with respect to Fund inquiries (not including
information about performance or related to sales).
o Provide information regarding performance of the Fund and the subaccounts
of the Accounts.
o Oversee and assist the solicitation, counting and voting or contract owner
voting interests in the Fund pursuant to Fund proxy statements.
Other Administrative Support
o Provide other administrative and legal compliance support for the Fund as
mutually agreed upon by the Company and the Fund to the extent permitted
or required under applicable statutes.
o Relieve the Funds of other usual or incidental administrative services
provided to individual owners of Variable Insurance Products.
SCHEDULE B
THE VICTORY VARIABLE INSURANCE FUNDS
COMPENSATION UNDER THE
CONTRACT OWNER ADMINISTRATIVE SERVICES AGREEMENT
The Victory Variable Insurance Funds agrees to pay the following quarterly
amounts calculated as a percentage of the average daily net assets of the
relevant Fund and Class thereof held in the Accounts:
Fund Class A
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Investment Quality Bond Fund 20%
Diversified Stock Fund 20%
Small Company Opportunity Fund 20%
Dated as of June 1, 1999
