DISTRIBUTION AGREEMENT
between
THE VICTORY PORTFOLIOS
and
BISYS FUND SERVICES LIMITED PARTNERSHIP
This DISTRIBUTION AGREEMENT is made as of this 1st day of April, 2002
between The Victory Portfolios, a Delaware business trust (herein called the
"Trust"), and BISYS Fund Services Limited Partnership, an Ohio limited
partnership (herein called the "Distributor").
WHEREAS, the Trust is an open-end management investment company and is so
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust desires to retain the Distributor as Distributor for
each of the Trust's separate portfolios set forth on Schedule I hereto, as such
Schedule may be revised from time to time (individually known as a "Fund" and
collectively as the "Funds") to provide for the sale and distribution of shares
of beneficial interest of the Funds (herein collectively called "Shares"), and
the Distributor is willing to render such services;
NOW THEREFORE, in consideration of the premises and mutual convenants set
forth herein the parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
The Trust has delivered to the Distributor copies of each of the
following documents and will deliver to it all future amendments and supplements
thereto, if any:
(a) The Trust's Certificate of Trust and all amendments thereto
(such Certificate of Trust, as presently in effect and as it shall from
time to time be amended, herein called the "Trust's Certificate");
(b) The Bylaws of the Trust (such Bylaws, as presently in
effect and as they shall from time to time be amended, herein called the
"Bylaws");
(c) Resolutions of the Board of Trustees of the Trust (the
"Board") authorizing the execution and delivery of this Agreement;
(d) The Trust's most recent Post-Effective Amendment to its
Registration Statement under the Securities Act of 1933, as amended ( the
"Securities Act"), and under the 1940 Act, on Form N-1A as filed with the
Securities and Exchange Commission (the "Commission") and all subsequent
amendments thereto (said Registration Statement, as presently in effect
and as amended or supplemented from time to time, is herein called the
"Registration Statement");
(e) Notification of Registration of the Trust under the 1940
Act on Form N-8A as filed with the Commission; and
(f) A Prospectus and Statement of Additional Information of the
Funds (such prospectus and statement of additional information, as
presently filed with the Securities and Exchange Commission (the "SEC")
and as they shall from time to time be amended and supplemented herein
called individually the "Prospectus" and collectively the
"Prospectuses").
II. DISTRIBUTION
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as Principal Distributor of the Funds' Shares and the Distributor
hereby accepts such appointment and agrees to render the services and duties set
forth in this Section II.
2. Services and Duties.
(a) The Trust agrees to sell through the Distributor, as agent,
from time to time during the term of this Agreement, Shares of the Funds
(whether authorized but unissued or treasury shares, in the Trust's sole
discretion) upon the terms and at the current offering price as described
in the Prospectus. The Distributor will act only in its own behalf as
principal in making agreements with selected dealers or others for the
sale and redemption of Shares, and shall sell Shares only at the offering
price thereof as set forth in the applicable Prospectus. The Distributor
shall not be obligated to sell any certain number of Shares. Each Fund
reserves the right to issue Shares in connection with any merger or
consolidation of the Trust or any Fund with any other investment company
or personal holding company or in connection with offers of exchange
exempted from Section 11(a) of the 1940 Act.
(b) In all matters relating to the sale and redemption of
Shares, the Distributor will act in conformity with the Trust's
Certificate, Bylaws, and Prospectus and with the instructions and
directions of the Board and will conform to and comply with the
requirements of the Securities Act, the 1940 Act, the regulations of the
National Association of Securities Dealers, Inc. and all other applicable
federal or state laws and regulations. In connection with such sales, the
Distributor acknowledges and agrees that it is not authorized to provide
any information or make any representations other than as contained in
the Trust's Registration Statement and Prospectus and any sales
literature specifically approved by the Trust. The Trust shall not be
responsible in any way for any information, statements or representations
given or made by the Distributor or its representatives or agents other
than such information, statements or representations contained in the
Prospectus or other financial statements of the Trust or in any sales
literature or advertisements specifically approved by the Trust.
(c) The Distributor will bear the cost of (i) printing and
distributing any Prospectus (including any supplement thereto) to persons
who are not either shareholders or counsel, independent accountants or
other persons providing similar services to the Trust, and (ii)
preparing, printing and distributing any literature, advertisement or
material which is primarily intended to result in the sale of the Shares;
provided, however, that the Distributor shall not be obligated to bear
the expenses incurred by the Trust in connection with the preparation and
printing of any amendment to any
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Registration Statement or Prospectus necessary for the continued
effective registration of the Shares under the Securities Act; and
provided further, that each Fund will bear the expenses incurred and
other payments made in accordance with the provisions of this Agreement
and any plan now in existence or hereafter adopted with respect to such
Fund, or any class or classes of shares of such Fund, pursuant to Rule
12b-1 under the 1940 Act (collectively, the "Plans").
(d) The Distributor agrees to be responsible for implementing
and/or operating the Plans in accordance with the terms thereof.
(e) All Shares of the Funds offered for sale by the Distributor
shall be offered for sale at a price per Share (the "offering price")
equal to their net asset value (determined in the manner set forth in the
Trust's Certificate and then current Prospectuses) plus any applicable
sales charge as set forth in the then current Prospectuses. The offering
price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent.
(f) If any Shares sold by the Distributor under the terms of
this Agreement are redeemed or repurchased by the Trust or by the
Distributor as agent or are tendered for redemption within seven business
days after the date of confirmation of the original purchase of said
Shares, the Distributor shall forfeit the amount (if any) of the net
asset value received by it in respect of such Shares, provided that the
portion, if any, of such amount (if any) re-allowed by the Distributor
from the broker-dealers or other persons shall be repayable to the Trust
only to the extent recovered by the Distributor from the broker-dealers
or other person concerned. The Distributor shall include in the forms of
agreement with such broker-dealers and other persons a corresponding
provision for the forefeiture by them of their concession with respect to
Shares sold by them or their principals and redeemed or repurchased by
the Trust or by the Distributor as agent (or tendered for redemption)
within seven business days after the date of confirmation of such intial
purchases.
3. Sales and Redemptions.
(a) The Trust shall pay all costs and expenses in connection
with the registration of the Shares under the Securities Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of the Shares and for supplying information, prices and other
data to be furnished by the Trust hereunder, and all expenses in
connection with preparing, printing and distributing the Prospectuses
except as set forth in subsection 2(c) of Section II hereof.
(b) The Trust shall execute all documents, furnish all
information and otherwise take all actions which may be reasonably
necessary in the discretion of the Trust's officers in connection with
the qualification of the Shares for sale in such states as the
Distributor may designate to the Trust and the Trust may approve, and the
Trust shall pay all filing fees which may be incurred in connection with
such qualification. The Distributor shall pay all expenses connected with
its qualification as a dealer under state or federal laws and, except as
otherwise specifically provided in this Agreement, all other
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expenses incurred by the Distributor in connection with the sale of the
Shares as contemplated in this Agreement. It is understood that certain
advertising, marketing, shareholder servicing, administration and/or
distribution expenses to be incurred in connection with the Shares will
be paid by the Funds as provided in this Agreement and in the Plans
relating thereto.
(c) The Trust shall have the right to suspend the sale of Shares
of any Fund at any time in response to conditions in the securities
markets or otherwise, and to suspend the redemption of Shares of any Fund
at any time permitted by the 1940 Act or the rules of the SEC ("Rules").
(d) The Trust reserves the right to reject any order for Shares.
4. Payments to Service Providers. The Funds may pay the Distributor
an amount under a Plan. The Distributor may pay such amounts to service
providers, some of whom may be affiliates of the Trust or affiliates of
affiliates of the Trust, in connection with, among other things, the
distribution of variable contracts funded by Shares of the Funds, or other
services provided to contract owners.
III. LIMITATION OF LIABILITY
The Distributor shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust or any Fund in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
IV. CONFIDENTIALITY
The Distributor will treat confidentially and as proprietary information
of the Trust all records and other information relative to the Trust, to the
Trust's prior or present shareholders and to those persons or entities who
respond to the Distributor's inquiries concerning investment in the Trust, and
except as provided below, will not use such records and information for any
purpose other than the performance of its responsibilities and duties hereunder
or the performance of its responsibilities and duties with regard to sales of
the shares of any Fund which may be added to the Trust in the future. Any other
use by the Distributor of the information and records referred to above may be
made only after prior notification to and approval in writing by the Trust. Such
approval shall not be unreasonably withheld and may not be withheld where (i)
the Distributor may be exposed to civil or criminal contempt proceedings for
failure to divulge such information; (ii) the Distributor is requested to
divulge such information by duly constituted authorities; or (iii) the
Distributor is so requested by the Trust.
V. REPRESENTATIONS AND INDEMNIFICATION
1. Trust Representations. The Trust represents and warrants to the
Distributor that at all times the Registration Statement and Prospectuses will
in all material respects conform to
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the applicable requirements of the Securities Act and the Rules and will not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, except
that no representation or warranty in this subsection shall apply to statements
or omissions made in reliance upon and in conformity with written information
furnished to the Trust by or on behalf of and with respect to the Distributor
expressly for use in the Registration Statement or Prospectuses.
2. Distributor Representations. The Distributor represents and
warrants to the Trust that it is duly organized as an Ohio Limited Partnership
and is and at all times will remain duly authorized and licensed to carry out
its services as contemplated herein.
3. Trust Indemnification. The Trust will indemnify and hold harmless
the Distributor, its several officers and directors, and any person who controls
the Distributor within the meaning of Section 15 of the Securities Act, from and
against any losses, claims, damages or liabilities, joint or several, to which
any of them may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses or in any application or other document executed by
or on behalf of the Trust, or arise out of, or are based upon, information
furnished by or on behalf of the Trust filed in any state in order to qualify
the Shares under the securities or blue sky laws thereof ("Blue Sky
Application"), or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the Securities Act, for any
legal or other expenses reasonably incurred by any of them in investigating,
defending, or preparing to defend any such action, proceeding or claim;
provided, however, that the Trust shall not be liable in any case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, any
untrue statement, alleged untrue statement, or omission or alleged omission made
in the Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust in reliance
upon and in conformity with written information furnished to the Trust by or on
behalf of and with respect to the Distributor specifically for inclusion
therein.
The Trust shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or negligence in the performance of
his duties, or his reckless disregard of obligations and duties, under this
Agreement ("disabling conduct") or, in the absence of such a decision, a
reasonable determination (based upon a review of the facts) that such person was
not liable by reason of disabling conduct has been made by the vote of a
majority of a quorum of trustees of the Trust who are neither "interested
persons" of the Trust (as defined in the 0000 Xxx) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
5
Each Fund shall advance attorney's fees and other expenses incurred by any
person in defending any claim, demand, action or suit which is the subject of a
claim for indemnification pursuant to this subsection 3, so long as: (i) such
person shall undertake to repay all such advances unless it is ultimately
determined that he is entitled to indemnification hereunder; and (ii) such
person shall provide security for such undertaking, or the Fund shall be insured
against losses arising by reason of any lawful advances, or a majority of a
quorum of the disinterested, non-party trustees of the Trust (or an independent
legal counsel in a written opinion) shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry) that there is reason
to believe that such person ultimately will be found entitled to indemnification
hereunder.
4. Distributor Indemnification. The Distributor will indemnify and
hold harmless the Trust, the Trust's several officers and trustees and any
person who controls the Trust within the meaning of Section 15 of the Securities
Act, from and against any losses, claims, damages or liabilities, joint or
several, to which any of them may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect hereof) arise out of, or are based upon, any breach of
its representations and warranties in subsection 2 hereof or its agreements in
subsection 2 of Section II hereof, or which arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, which
statement or omission or alleged statement or alleged omission was made in
reliance upon or in conformity with information furnished in writing to the
Trust or any of its several officers and trustees by or on behalf of and with
respect to the Distributor specifically for inclusion therein, and will
reimburse the Trust, the Trust's several officers and trustees, and any person
who controls the Trust within the meaning of Section 15 of the Securities Act,
for any legal or other expenses reasonably incurred by any of them in
investigating, defending or preparing to defend any such action, proceeding or
claim.
5. General Indemnity Provisions. No indemnifying party shall be
liable under its indemnity agreement contained in subsection 3 or 4 hereof with
respect to any claim made against such indemnifying party unless the indemnified
party shall have notified the indemnifying party in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the indemnified party (or after
the indemnified party shall have received notice of such service on any
designated agent), but failure to notify the indemnifying party of any such
claim shall not relieve it from any liability which it may otherwise have to the
indemnified party. The indemnifying party will be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, and if the indemnifying party elects
to assume the defense, such defense shall be conducted by counsel chosen by it
and reasonably satisfactory to the indemnified party. In the event the
indemnifying party elects to assume the defense of any such suit and retain such
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by the indemnified party.
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VI. DURATION AND TERMINATION
This Agreement shall become effective as of the date first above written,
and, unless sooner terminated as provided herein, shall continue until March 31,
2004. Thereafter, if not terminated, this Agreement shall continue automatically
for successive terms of one year, provided that such continuance is specifically
approved at least annually (a) by a majority of those members of the Board who
are not parties to this Agreement or "interested persons" of any such party (the
"Disinterested Trustees"), pursuant to a vote cast in person at a meeting called
for the purpose of voting on such approval, and (b) by the Board or by vote of a
"majority of the outstanding voting securities" of the Trust. Notwithstanding
anything to the contrary contained in this Section VI, this Agreement may be
terminated by the Trust at any time with respect to any Fund, without the
payment of any penalty, by vote of a majority of the Disinterested Trustees or
by vote of a "majority of the outstanding voting securities" of such Fund on 60
days' written notice to the Distributor, or by the Distributor at any time,
without the payment of any penalty, on 60 days' written notice to the Trust.
This Agreement will automatically terminate in the event of its "assignment."
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the 1940 Act.)
VII. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.
VIII. NOTICES
Notices of any kind to be given to the Trust hereunder by the Distributor
shall be in writing and shall be duly given if mailed or delivered to the Trust
c/o Victory Capital Management, Inc., Investment Products Xxxxx,000 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attn: Xxxxxxxx X. Xxxxxx, President with a copy
to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx, Xxxx
00000, Attention: Xxx X. Xxxxx, Esquire, or at such other address or to such
individual as shall be so specified by the Trust to the Distributor. Notices of
any kind to be given to the Distributor hereunder by the Trust shall be in
writing and shall be duly given if mailed or delivered to the Distributor at
0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attention: President, or at such other
address or to such individual as shall be so specified by the Distributor to the
Trust.
IX. COMPENSATION
The Distributor shall not receive compensation with respect to the
provision of distribution services under this Agreement; provided, however, that
the Distributor shall be entitled to receive payments, if any, under the Plans
in accordance with the terms thereof and payments, if any, of sales charges as
set forth in the Trust's Prospectuses. The Trust is entering into this Agreement
on behalf of the Funds listed on Schedule I severally and not jointly. The
responsibilities and benefits set forth in this Agreement shall refer to each
Fund severally and not
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jointly. No individual Fund shall have any responsibility for any obligation, if
any, with respect to any other Fund arising out of this Agreement.
X. MISCELLANEOUS
1. Construction. 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. 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. Subject to the provisions of Section VI hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation of the SEC thereunder.
2. Names. The names "The Victory Portfolios" and "Trustees of The
Victory Variable Insurance Funds" 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 December 21, 1995, at the office of
the Secretary of State of the State of Delaware which is hereby referred to and
is also on file at the principal office of the Trust. The obligations of the
Trust entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders or representatives of the
Trust personally, but bind only the Trust property, 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.
3. Privacy. Nonpublic personal financial information relating to
consumers or customers of the Funds provided by, or at the direction of, Trust
to the Distributor, or collected or retained by the Distributor to perform its
duties as distributor, shall be considered confidential information. The
Distributor shall not disclose or otherwise use nonpublic financial information
relating to present or former shareholders of the Funds other than for the
purposes for which that information was disclosed to the Distributor, including
use under an exception in sections 248.14 ir 248.15 of Securities and Exchange
Commission Regulation S-P in the ordinary course of business to carry out those
purposes. The Distributor shall have in place and maintain physical, electronic
and procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of the Funds. Trust represents to the Distributor
that it has adopted a Statement of its privacy policies and practices as
required by Securities and Exchange Commission Regulation S-P and agree to
provide the Distributor with a copy of that statement annually.
4. Anti-Money Laundering Program. Each of Distributor and the Trust
acknowledges that it is a financial institution subject to the USA Patriot Act
of 2001 and the Bank Secrecy Act, which require among other things, that
financial institutions adopt compliance programs to guard against money
laundering. Each of Distributor and the Trust agrees that it will take such
further steps, and cooperate with the other to facilitate such compliance. The
Distributor acknowledges that it is a "Covered Service Provider" as defined in
the Fund's Anti-Money Laundering Program (Fund AML Program) and shall assume
responsibility for the
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implementation of the requirements of the Fund AML Program with respect to the
services provided under this Agreement. The Distributor represents and warrants
that it has adopted policies and procedures reasonably designed to detect and
prevent money laundering activities in compliance with applicable laws,
regulations and regulatory interpretations. The Distributor undertakes that it
shall (a) conduct its operations in accordance with the provisions of the Fund
AML Program and applicable laws, regulations and regulatory interpretations; (b)
provide access to its books, records and operations relating to its anti-money
laundering compliance only with respect to the Funds, by appropriate regulatory
authorities, the Funds, and the Fund's anti-money laundering Compliance Officer
(the Trust's Compliance Officer shall have no access to any of Distributor's
anti-money laundering operations, books or records pertaining to other clients
of Distributor); (c) certify, in writing, no less frequently than annually, that
it is in compliance with applicable anti-money laundering laws, rules,
regulations and regulatory interpretations with respect to the services provided
under this Agreement; (d) upon request, provide a copy of its anti-money
laundering program (or a summary of its program) to the Fund's anti-money
laundering Compliance Officer; (e) provide periodic reports to the Fund's Board
of Trustees concerning anti-money laundering activities and compliance
exceptions, as the parties may agree from time to time; and (f) ensure that
selling group agreements require selling group members to adopt, as applicable,
reasonable anti-money laundering procedures and otherwise comply with applicable
anti-money laundering regulations and regulatory interpretations with respect to
the sale and redemption of Fund shares. The Trust represents and warrants that
it will conduct its operations in accordance with the provisions of the Fund AML
Program and applicable laws, regulations and regulatory interpretations.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE VICTORY PORTFOLIOS
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President
Attest: _________________
Name:
BISYS FUND SERVICES LIMITED PARTNERSHIP,
d/b/a BISYS FUND SERVICES
By: BISYS Fund Services, Inc.,
Its General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title:
Attest: _________________
Name:
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SCHEDULE I
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Name of Portfolio
-----------------
1.Victory Balanced Fund 19. Victory Federal Money Market Fund
2.Victory Diversified Stock Fund 20. Victory Convertible Fund
3.Victory Growth Fund 21. Victory LifeChoice Conservative Investor Fund
4.Victory Intermediate Income Fund 22. Victory LifeChoice Growth Investor Fund
5.Xxxxxxx Xxxxxxxxxxxxx Growth Fund 23. Victory LifeChoice Moderate Investor Fund
6.Victory Ohio Municipal Bond Fund 24. Victory Gradison Government Reserves Fund
7.Victory Prime Obligations Fund 25. Victory Small Company Opportunity Fund
8.Victory Real Estate Investment Fund 26. Victory Established Value Fund
9.Victory Special Value Fund 27. Victory Nasdaq 100 Index Fund
10.Victory Stock Index Fund
11.Victory Tax-Free Money Market Fund
12.Victory Value Fund
13.Victory Financial Reserves Fund
14.Victory Fund for Income
15.Victory Institutional Money Market Fund
16.Victory National Municipal Bond Fund
17.Victory New York Municipal Bond Fund
18.Victory Ohio Municipal Money Market Fund
