AMENDMENT TO
TRANSFER AGENCY AGREEMENT
AMENDMENT made as of the 24th day of July, 2002, between THE VICTORY
PORTFOLIOS (the "Trust"), a Delaware business trust having its principal place
of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, on behalf of its various
investment funds, individually and not jointly; and BISYS FUND SERVICES OHIO,
INC. ("BISYS"), an Ohio corporation having its principal place of business at
0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, to that certain Transfer Agency
Agreement dated April 1, 2002, under which BISYS performs transfer agency
services for the Trust (as amended and in effect on the date hereof, the
"Agreement").
WHEREAS, under the Agreement BISYS is designated as the Trust's
transfer agent and performs the transfer agency services for the Trust that are
enumerated in the Agreement or a Schedule thereto;
WHEREAS, the Agreement provides that BISYS shall perform such
additional services as are mutually agreed upon and provided in an amendment to
the Agreement or its schedules, in consideration of such fees as the parties may
agree upon;
WHEREAS, the Trust desires that BISYS perform certain additional
services for the Trust related to anti-money laundering and fraud prevention;
WHEREAS, BISYS is willing to perform the services enumerated in this
Amendment on the terms and conditions set forth in this Amendment (the "AML
Services"); and
WHEREAS, BISYS and Trust wish to enter into this Amendment to the
Agreement in order to set forth the terms under which BISYS will perform the AML
Services enumerated herein on behalf of the Trust, and to supplement and clarify
certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the covenants herein contained,
the Trust and BISYS hereby agree as follows:
1. Compliance with Laws / Delegation to BISYS.
The Trust acknowledges that it is a financial institution subject to
the law entitled Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism ("U.S.A. Patriot") Act of
2001 and the Bank Secrecy Act (collectively, the "AML Acts") and shall comply
with the AML Acts and applicable regulations adopted thereunder (collectively,
the "Applicable AML Laws") in all relevant respects, subject to the delegation
of certain responsibilities to BISYS, as provided in the next paragraph below.
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The Trust hereby delegates to BISYS the performance, on behalf of
the Trust, of the AML Services set forth in Schedule B to this Amendment as
concerns the shareholder accounts maintained by BISYS pursuant to the Agreement
(including direct accounts; accounts maintained through FUND/SERV and
Networking, to the extent provided below; and omnibus accounts, to the extent
provided below). BISYS agrees to the foregoing delegation and agrees to perform
the delegated services in accordance with the anti-money laundering program that
has been adopted by the Trust (the "AML Program"). In connection therewith,
BISYS agrees to maintain policies and procedures, and related internal controls,
that are consistent with the Trust's AML Program and the requirement that the
Trust employ procedures reasonably designed to achieve compliance with the
Applicable AML Laws, including the requirement to have policies and procedures
that can be reasonably expected to detect and cause the reporting of
transactions under Section 5318 of the Bank Secrecy Act. BISYS' obligations
under this delegation shall be subject to Sections 5 and 6 of this Amendment,
which require that the AML Program adopted by the Trust and any material
amendments thereto be submitted to BISYS.
The Trust agrees and acknowledges that, notwithstanding the
delegation provided for in the foregoing paragraph, the Trust maintains full
responsibility for ensuring that its AML Program is, and shall continue to be,
reasonably designed to ensure compliance with the Applicable AML Laws, in light
of the particular business of the Trust, taking into account factors such as its
size, location, activities and risks or vulnerabilities to money laundering.
In connection with the foregoing delegation, the Trust also
acknowledges that the performance of the anti-money laundering services
enumerated in Schedule B involves the exercise of discretion, which in certain
circumstances may result in consequences to the Trust and its shareholders (such
as in the case of the reporting of suspicious activities and the freezing of
shareholder accounts). In this regard, (i) under circumstances in which the AML
Program authorizes the taking of certain actions, BISYS is granted the
discretion to take any such action as may be authorized, and consultation with
the Trust shall not be required in connection therewith unless expressly
required by the AML Program, and (ii) the Trust instructs BISYS that it may
avail the Trust of any safe harbor from civil liability that may be available
under Applicable AML Laws for making a disclosure or filing a report thereunder.
As concerns Networking Level III accounts and omnibus accounts, the
AML Services performed by BISYS are subject to a more limited scope, as
contemplated under the interim final rule of the Department of the Treasury, 31
CFR 103, effective April 24, 2002 (the "Interim Final Rule") and the performance
by the Trust of the risk-based evaluation of entities holding such accounts, as
contemplated under the Interim Final Rule.
The provisions of the Agreement concerning recordkeeping and
confidentiality are subject to the provisions of this Section.
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2. Reimbursement of Expenses and Miscellaneous Service Fees.
In addition to all fees, expenses and miscellaneous fees or charges
provided for under the Agreement, BISYS shall be entitled to receive from the
Trust the amounts set forth on Exhibit C hereto, reflecting the amounts charged
by BISYS for the performance of delegated services under this Amendment with
respect to the Trust's AML Program.
3. Bank Accounts.
BISYS is hereby granted such power and authority as may be necessary
to establish one or more bank accounts for the Trust with such bank or banks as
are selected or approved by the Trust, as may be necessary or appropriate from
time to time in connection with the services performed by BISYS. The Trust shall
be deemed to be the customer of such Bank or Banks for all purposes in
connection with such accounts. To the extent that the performance of such
services hereunder shall require BISYS to disburse amounts from such accounts in
payment of dividends, redemption proceeds or for other purposes, the Trust shall
provide such bank or banks with all instructions and authorizations necessary
for BISYS to effect such disbursements.
4. Instructions / Procedures.
The Trust acknowledges and agrees that deviations from BISYS'
written transfer agent compliance procedures may involve a substantial risk of
loss. In the event an authorized representative of the Trust requests that an
exception be made from any written compliance or transfer agency procedures
adopted by BISYS, or adopted by the Trust and approved by BISYS (including any
requirements of the Trust's AML Program), BISYS may in its sole discretion
determine whether to permit such exception. In the event BISYS determines to
permit such exception, the same shall become effective when set forth in a
written instrument executed by an authorized representative of the Trust (other
than an employee of BISYS) and delivered to BISYS (an "Exception"); provided
that an Exception concerning the requirements of the Trust's AML Program shall
be authorized by the Trust's anti-money laundering compliance officer ("AML
Compliance Officer"). An Exception shall be deemed to remain effective until the
relevant instrument expires according to its terms (or if no expiration date is
stated, until BISYS receives written notice from the Trust that such instrument
has been terminated and the Exception is no longer in effect). Notwithstanding
any provision of the Agreement or this Amendment that expressly or by
implication provides to the contrary, as long as BISYS acts in good faith and
without willful misconduct, BISYS shall have no liability for any loss,
liability, expenses or damages to the Trust resulting from the Exception.
Victory Capital Management will provide indemnity to BISYS for losses,
liabilities, or expenses that may be suffered or incurred by BISYS due to an
Exception, pursuant to the terms of a separate Indemnification Agreement between
such parties.
The Trust acknowledges receipt of a copy of BISYS' policy related to
the acceptance of trades for prior day processing (the "BISYS As-Of Trading
Policy"). BISYS may amend the BISYS As-of Trading Policy from time to time in
its sole discretion. A copy of any such amendments shall be delivered to the
Trust upon taking effect. BISYS may apply the
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BISYS As-Of Trading Policy whenever applicable, unless BISYS agrees in writing
to process trades according to such other as-of trading policy as may be adopted
by the Trust and furnished to BISYS by the Trust.
The parties may amend any procedures adopted, approved or set forth
under the Agreement by mutual written agreement as may be appropriate or
practical under the circumstances. BISYS may conclusively assume that any
special procedure which has been approved by an executive officer of the Trust
(other than an officer or employee of BISYS) does not conflict with or violate
any requirements of the Trust's Declaration of Trust, By-Laws or then-current
prospectuses, or any rule, regulation or requirement of any regulatory body.
5. Representations and Warranties.
The Trust represents and warrants that (a) the Trust has adopted the
written AML Program that has been submitted to BISYS pursuant to Section 6, and
has appointed the Trust's AML Compliance Officer, who is, or who will be
appointed at the next regularly scheduled meeting of the Board of Trustees of
the Trust (the "Board"), an officer of the Trust; (b) the AML Program and the
designation of the AML Officer have been approved by the Board; (c) the
delegation of certain services thereunder to BISYS, as provided in Section 1 of
this Amendment, has been approved by the Board; and (d) the Trust will submit
any material amendments to the AML Program to BISYS for BISYS' review. Any
amendment that would have a material impact upon the AML Services to be rendered
by BISYS or the responsibilities of BISYS shall be subject to approval by BISYS
prior to adoption. The Trust's AML Compliance Officer need not be an officer of
the Trust if not required by applicable laws and regulations.
BISYS represents and warrants to the Trust that it has adopted and
will maintain a written program concerning the anti-money laundering services it
provides to its various clients, and that its policies and procedures are
reasonably adequate for it to provide the AML Services and comply with its
obligations under this Amendment.
6. Information to be Furnished by the Trust.
The Trust has furnished to BISYS the following, as amended and
current as of the date of this Amendment:
(a) A list of all officers of the Trust, with the Trust's AML
Compliance Officer included among the officers therein, and
any other persons (who may be associated with the Trust or its
investment advisor), together with specimen signatures of
those officers and other persons who (except as otherwise
provided herein to the contrary) shall be authorized to
instruct BISYS in all matters.
(b) A copy of the Trust's written AML Program, as defined in
Section 1 of this Amendment, including related Policies and
Procedures.
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7. Information Furnished by BISYS.
BISYS has furnished to the Trust the following:
(a) The currently effective BISYS "As-of" Trading Policy.
(b) The written program concerning anti-money laundering services
rendered by BISYS to its various clients.
8. Privacy.
Nonpublic personal financial information relating to consumers or
customers of the Trust provided by, or at the direction of the Trust to BISYS,
or collected or retained by BISYS in the course of performing its transfer
agency duties, shall be considered confidential information. BISYS shall not
give, sell or in any way transfer such confidential information to any person or
entity, other than affiliates of BISYS except at the direction of the Trust or
as required or permitted by law (including Applicable AML Laws). BISYS
represents, warrants and agrees that it has in place and will maintain physical,
electronic and procedural safeguards reasonably designed to protect the
security, confidentiality and integrity of, and to prevent unauthorized access
to or use of records and information relating to consumers or customers of the
Trust. The Trust represents to BISYS that it has adopted a Statement of its
privacy policies and practices as required by the Securities and Exchange
Commission's Regulation S-P and agrees to provide BISYS with a copy of that
statement annually.
9. Access to be Provided.
BISYS shall grant reasonable access to each of the Trust, the AML
Compliance Officer, and regulators having jurisdiction over the Trust, to the
books and records maintained by BISYS as the same relates to the services
performed hereunder on behalf of the Trust. Records may be edited or redacted to
maintain confidentiality of materials related to other clients of BISYS. BISYS
shall make its relevant personnel available to meet with the Board concerning
the AML Services at least annually or at such other internals as may be
reasonably necessary or appropriate.
10. Reports to be Furnished to the Trust.
At least quarterly, BISYS shall provide a report to the Trust
containing the information listed on Schedule D hereto.
12. Miscellaneous.
(a) This Amendment supplements and amends the Agreement. The
provisions set forth in this Amendment supersede all prior
negotiations, understandings and agreements bearing upon the
subject matter covered herein, including any conflicting
provisions of the Agreement or any
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provisions of the Agreement that directly cover or indirectly
bear upon matters covered under this Amendment.
(b) Each reference to the Agreement in the Agreement (as it
existed prior to this Amendment) and in every other agreement,
contract or instrument to which the parties are bound, shall
hereafter be construed as a reference to the Agreement as
amended by this Amendment. Except as provided in this
Amendment, the provisions of the Agreement remain in full
force and effect (including, without limitation, the term of
the Agreement). No amendment or modification to this Amendment
shall be valid unless made in writing and executed by both
parties hereto.
(c) Paragraph headings in this Amendment are included for
convenience only and are not to be used to construe or
interpret this Amendment.
(d) This Amendment may be executed in counterparts, each of which
shall be an original but all of which, taken together, shall
constitute one and the same agreement.
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* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed all as of the day and year first above written.
THE VICTORY PORTFOLIOS
By: /s/ Xxxxxxxx X. Xxxxxx
--------------------------
Title: President
BISYS FUND SERVICES OHIO, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
--------------------------
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SCHEDULE B
TO THE AMENDMENT TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN
THE VICTORY PORTFOLIOS
AND
BISYS FUND SERVICES OHIO, INC.
SERVICES
a. Verify shareholder identity upon opening new accounts.
b. Monitor, identify and report shareholder transactions and identify
and report suspicious activities that are required to be so
identified and reported, and provide other required reports to the
Securities and Exchange Commission, the U.S. Treasury Department,
the Internal Revenue Service or each agency's designated agent, in
each case consistent with the Trust's AML Program.
c. Place holds on transactions in shareholder accounts or freeze assets
in shareholder accounts, as provided in the Trust's AML Program.
d. Create documentation to provide a basis for law enforcement
authorities to trace illicit funds.
e. Maintain all records or other documentation related to shareholder
accounts and transactions therein that are required to be prepared
and maintained pursuant to the Trust's AML Program, and make the
same available for inspection by (i) the Trust's AML Compliance
Officer, (ii) any auditor of the Trust's AML Program or related
procedures, policies or controls that has been designated by the
Trust in writing, or (iii) regulatory or law enforcement
authorities, and otherwise make said records or other documents
available at the direction of the Trust's AML Compliance Officer.
f. Arrange for periodic reviews, at least annually, to be performed by
internal auditors or other auditors chosen by BISYS concerning the
BISYS operations related to the AML Services.
g. Perform such other related services as are required by the AML
Program.
B-1
SCHEDULE C
TO THE AMENDMENT TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN
THE VICTORY PORTFOLIOS
AND
BISYS FUND SERVICES OHIO, INC.
CHARGES FOR THE SERVICES SET FORTH
UNDER SCHEDULE B OF THIS AMENDMENT
The annual fee to be charged to each Fund will consist of the annual
account-based fees for each shareholder account in the Fund, as well as the
Fund's proportionate share of the complex fee, as set forth below.
Annual Per Account Fee:
Open Accounts $23.50
Closed Accounts $5.00
Complex Fee:
The annual complex fee will be based on the total number of classes of shares of
all Funds comprising the Victory Portfolios and Victory Variable Insurance
Funds. The aggregate complex fee to be applied will be determined by applying
the relevant dollar amount to the fund complex in the aggregate:
Total Classes Aggregate Fee
------------------ -------------
0 to 15 classes $150,000
16 to 35 classes $350,000
36 to 50 classes $475,000
51 to 65 classes $550,000
Over 65 classes $575,000
Additional Services:
C-1
Additional services such as XXX processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts and coordination of the printing and
distribution of prospectuses, annual reports and semi-annual reports are subject
to additional fees which will be quoted upon request. Programming costs or
database management fees for special reports or specialized processing will be
quoted upon request.
Multiple Classes of Shares:
Classes of shares which have different net asset values or pay different daily
dividends will be treated as separate classes, and the fee schedule above will
be applied accordingly.
The rates set forth above for the complex fees payable hereunder shall be
subject to increase annually following the first year of the Initial Term to
reflect any annual percentage increase in the Consumer Price Index published by
the U.S. Department of Labor.
C-2
SCHEDULE D
TO THE AMENDMENT TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN
THE VICTORY PORTFOLIOS
AND
BISYS FUND SERVICES OHIO, INC.
REPORTS
Following each quarterly period, BISYS will provide a report to the following
effect pertaining to the AML Services rendered by BISYS hereunder during such
quarterly period:
o performed good order review for all new and reregistered accounts;
o performed acceptance review for all monetary instruments received;
o administered signature guarantee policy in accordance with prospectus
requirements;
o administered escrow hold policy in accordance with prospectus
requirements;
o verified customer address changes;
o verified customer identification for all new accounts and all name changes
on existing accounts;
o monitored all purchase transactions made with cash equivalents totaling in
excess of $10,000, resulting in the filing of [x] Form 8300 reports during
the period. The Fund does not accept cash or currency;
o monitored all accounts for suspicious activity resulting in the filing of
[x] Form SAR reports during the period;
o reviewed shareholder names against lists of suspected terrorist and
terrorist organizations supplied by various governmental organizations,
such as the Office of Foreign Asset Control resulting in the freezing and
reporting of [x] accounts during the period;
o created the documentation necessary to provide a basis for law enforcement
authorities to trace illicit funds;
o maintained all records and other documentation related to shareholder
accounts and transactions required to be prepared and maintained pursuant
to the Fund's anti-money laundering program for all BISYS transfer agent
services;
[The following items will be provided if the Trust falls under the related USA
PATRIOT Act provisions:]
o performed the required due diligence to help prevent the opening of any
accounts for foreign shell banks during the period either directly or
through correspondent accounts; and
o performed required due diligence on any new correspondent accounts opened
during the period.
D-1
