FORM OF AGREEMENT
VICTORY CAPITAL ADVISERS, INC.
_________ ____, ________ [Date]
_______________________ [Name]
_______________________ [Address]
_______________________ [Address]
Re: The Victory Variable Insurance Funds -- Distribution
and Service Agreement
------------------------------------------------------
Ladies and Gentlemen:
This letter sets forth the agreement between Victory Capital Advisers,
Inc.. (the "Distributor"), the distributor of the Class A shares of beneficial
interest ("Shares") of each series portfolio (each a "Fund") of The Victory
Variable Insurance Funds (the "Trust") listed on Schedule A, as amended from
time to time, and ___________________________ ("you"), concerning payment in
connection with the distribution of the Shares and certain administrative
services to be provided by you that will benefit the Funds.
1. Introduction. The Trust is an open-end management investment company
organized as a statutory trust under the laws of the State of
Delaware. The Trust may offer its Shares to life insurance companies
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, "Contracts"). In this
Agreement, the beneficial owners of the Contracts are referred to as
the "Contract Owners."
Pursuant to a Distribution and Service Plan with respect to the Shares,
dated as of January 1, 2003 (the "Plan"), adopted by the Board of Trustees
of the Trust (the "Board") and approved by each Fund's shareholders in
accordance with Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"), each Fund may pay to the Distributor a
distribution and service fee at the annual rate of up to 0.25% of the
average daily net assets of its Shares (the "Fee").
2. Payments under the Plan.
From time to time during the term of this Agreement, the Distributor may
make payments to you pursuant to the Plan in consideration of your
furnishing Services (as defined in Section 3 of this Agreement), as set
forth in this Agreement. We have no obligation to make any such payments
and you agree to waive any such payments unless and until we receive
payment of the Fee from the Trust, nor shall we make any such payments in
excess of the amount of the Fee we receive from the Trust.
Any such Rule 12b-1 payments shall be as described in each Fund's current
prospectus and Statement of Additional Information. Payments will be based
on the dollar amount of Shares that are owned by those Accounts to whose
Contract Owners you provide services, an calculated in accordance with
Section 3 hereof.
Distribution and Administrative Services. Pursuant to the Plan, the
Distributor may pay you for activities primarily intended to result in the
sale of Shares for the purpose of funding Contracts, and the Distributor
also may pay you to provide administrative services to Contract Owners
whose Contracts are funded with Shares, which services are not otherwise
provided by you and paid for with fees charged by you. These distribution
and administrative services include, but are not limited to:
1. providing personal services to Contract Owners;
2. providing administrative support services to the Fund in
connection with the distribution of Shares for use in funding
Contracts;
3. paying costs incurred in conjunction with advertising and
marketing Shares, such as the expense incurred of preparing,
printing and distributing promotional or sales literature in
connection with the funding of Contracts with Shares;
4. printing and distributing prospectuses, statements of
additional information and reports of the Fund to prospective
Contract Owners;
5. holding seminars and sales meetings designed to promote the
distribution of Contracts funded with Shares, to the extent
permitted by applicable laws, rules or regulations;
6. training your sales personnel regarding the Funds; and
7. financing any other activity that the Board determines is
primarily intended to result in the sale of Shares and support
of related services.
3. Distribution and Administrative Services Payments. In consideration of the
anticipated distribution and administrative services set forth in this
Agreement (the "Services"), the Distributor agrees to pay you on a monthly
basis the amount set forth in Schedule A to this Agreement.
For purposes of computing the payment to you under this Section 3 for each
month, the total of the average daily net assets of the Shares in which
the Accounts invest shall be multiplied by the rate shown in Schedule A
multiplied by the actual number of days in the period divided by 365.
The Distributor will calculate the payment contemplated by this Section 3
at the end of each month and will pay you within 30 days of that date on a
pro-rata basis. Payment will be accompanied by a statement showing the
calculation of the monthly amount payable by the Distributor and such
other supporting data as you may reasonably request.
4. Nature of Payments. Each of the parties recognizes and agrees that
payments made by the Distributor to you relate to Services only and do
not constitute payment in any manner for administrative services
provided by you to the Accounts or to the Contracts or for investment
advisory services, and that these payments are not otherwise related to
the
2
Funds' investment advisory services or expenses. The amount of payments
that the Distributor makes to you pursuant to Section 3 of this Agreement
shall not be deemed to be conclusive with respect to actual
Services-related expenses or savings of the Trust.
5. Term. This agreement shall become effective as of the date first above
written and shall continue in effect until terminated in accordance
with Section 7 of this Agreement; provided that this Agreement is
approved at least annually by a vote of a majority of the Board,
including a majority of the Trustees who are not "interested persons"
(as defined in the 0000 Xxx) of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in this
Agreement (the "Qualified Trustees"), cast in person at a meeting
called for the purpose of voting on this Agreement.
6. Reports. At the end of each month, you shall furnish to the Distributor a
written report or invoice detailing all amounts payable to you pursuant to
this Agreement and the purpose for which such amounts were expended. In
addition, you shall furnish the Distributor with such other information as
shall reasonably be requested by the Board with respect to the fees paid
to you pursuant to this Agreement.
7. Termination. This Agreement may be terminated with respect to a Fund
by either party, without penalty, upon ten days' written notice to the
other party, and it also may be terminated by the vote of a majority of
either (a) the Fund's shareholders, or (b) the Qualified Trustees, on
60 days' written notice, without payment of any penalty. This
Agreement also will terminate upon written notice following termination
or assignment of the Participation Agreement by and among you, the
Trust and the Distributor. In addition, this Agreement will be
terminated by any act that terminates the Plan and shall terminate
automatically in the event of its assignment or if the Distributor's
Distribution Agreement with the Trust terminates.
Notwithstanding the termination of this Agreement, the Distributor will
continue to remit to you the payments required under Section 3 of this
Agreement as long as net assets of the Funds remain invested within the
Accounts, the Distributor continues to serve in that capacity for the
Funds and you continue to perform Services. This Agreement may terminate
immediately upon either party's determination (with the advice of counsel)
that payments described in this Agreement are in conflict with applicable
law.
8. Representations. You represent that you are duly registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC")
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and you agree to maintain this registration for the duration of
this Agreement. You further represent that you are a member of NASD
and you agree to maintain this membership for the duration of this
Agreement and abide by all of the rules and regulations of NASD,
including, without limitation, its Rules of Fair Practice. You agree
to notify us immediately in the event of: (a) the termination or
suspension of your SEC broker-dealer registration; (b) your expulsion
or suspension from NASD; or (c) your violation of any applicable
federal or state law, rule or regulation arising out of or in
connection with this Agreement or that may otherwise affect in any
material way your ability to act in accordance with this Agreement.
The termination of your SEC broker-dealer registration or your
expulsion from NASD will automatically
3
terminate this Agreement immediately without notice. The suspension of
your SEC broker-dealer registration or your NASD membership for violation
of any applicable federal or state law, rule or regulation will terminate
this Agreement effective immediately upon our written notice to you of
termination.
You also represent that you will maintain and preserve all records as
required by law to be maintained and preserved in connection with
providing the Services, and will otherwise comply with all laws, rules and
regulations applicable to the Services.
You also represent, warrant and agree that the fact that you receive
compensation in connection with the Services provided with respect to the
Accounts' assets in the Funds will be disclosed to the Contract Owners.
You also represent, warrant and agree that all activities conducted under
this Agreement will be conducted in accordance with the Plan, as well as
all applicable state and federal laws, including the 1940 Act, the
Exchange Act, the Securities Act of 1933, as amended (the "Securities
Act"), and any applicable NASD rules.
9. Subcontractors. You may, with the consent of the Distributor, contract
with or establish relationships with other parties to provide the Services
or other activities required of you by this Agreement, provided that you
shall be fully responsible for the acts and omissions of such other
parties.
10. Authority. This Agreement shall in no way limit the authority of the
Distributor to take any action it may deem appropriate or advisable in
connection with all matters relating to its services to the Trust and/or
sale of its Shares.
11. Indemnification.
(a) The Distributor agrees to indemnify, defend and hold you, your
several officers and directors, and any person who controls you within the
meaning of Section 15 of the Securities Act ("Your Indemnified Persons"),
free and harmless for and against any and all claims, demands, liabilities
and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) that Your Indemnified Persons may incur under the Securities
Act, or under common law or otherwise, arising out of or based upon any
failure by the Distributor to perform its obligations as set forth in this
Agreement.
The Distributor's agreement to Your Indemnified Persons is expressly
conditioned upon the Distributor's being notified of any action brought
against such Persons, such notification to be given by letter or by telex,
telegram or similar means of same day delivery received by the Distributor
at its address as specified in Section 13 of this Agreement within seven
(7) days after the summons or other first legal process shall have been
served. The failure to so notify the Distributor of any such action shall
not relieve it from any liability that it may have to the person against
whom such action is brought, other than on account of the Distributor's
indemnity agreement contained in this Section 11(a).
4
The Distributor will be entitled to assume the defense of any suit
brought to enforce any such claim, demand, liability or expense. In the
event that the Distributor elects to assume the defense of any such suit
and retain counsel, all of Your Indemnified Persons named in such suit
shall bear the fees and expenses of any additional counsel retained by any
of them; but in case the Distributor does not elect to assume the defense
of any such suit, the Distributor will reimburse such Persons for the fees
and expenses of any counsel retained by you or them.
The Distributor indemnification agreement contained in this Section
11(a) shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of Your Indemnified Persons, and
shall survive the delivery of any Shares and termination of this
Agreement. This agreement of indemnity will inure exclusively to the
benefit of Your Indemnified Persons and their respective estates,
successors or assigns.
(b) You agree to indemnify, defend and hold the Distributor and its
several officers and directors, and the Trust and its several officers and
Trustees, and any person who controls the Distributor and/or the Trust or
a Fund within the meaning of Section 15 of the Securities Act (the
"Distributor Indemnified Persons"), free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that the Distributor
Indemnified Persons may incur under the Securities Act, or under common
law or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you in this Agreement: or
(ii) any failure by you to perform your obligations as set forth in this
Agreement.
Your agreement to indemnify the Distributor Indemnified Persons is
expressly conditioned upon your being notified of any action brought
against any person or entity entitled to indemnification under this
Agreement, such notification to be given by letter or by telex, telegram
or similar means of same day delivery received by you at your address as
specified in Section 11 of this Agreement within seven (7) days after the
summons or other first legal process shall have been served. The failure
to so notify you of any such action shall not relieve you from any
liability that you may have to the Distributor Indemnified Persons, other
than on account of our indemnity agreement contained in this Section
11(b).
You shall have the right to control the defense of such action, with
counsel of your own choosing satisfactory to the Distributor and the
Trust, if such action is based solely upon such alleged misstatement or
omission on your part and in any other event each person or entity
entitled to indemnification under this Agreement shall have the right to
participate in the defense or preparation of the defense of any such
action.
Your indemnification agreements contained in this Section 11(b)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Distributor Indemnified Persons,
and shall survive the delivery of any Shares and termination of this
Agreement. Such agreements of indemnity will inure exclusively to
5
the benefit of the Distributor Indemnified Persons and their respective
estates, successors or assigns.
12. Miscellaneous. The parties may amend this Agreement only upon their
written mutual agreement. This Agreement, including Schedule A,
constitutes the entire agreement between the parties with respect to
the matters dealt with in this Agreement, 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. You agree to notify the Distributor promptly if for any
reason you are unable to perform fully and promptly any of your
obligations under this Agreement.
13. Notices. Unless otherwise notified in writing, all notices to the
Distributor shall be given or sent to the Distributor at its offices,
located at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attention:
____________ ____________; and all notices to you shall be given or sent
to you at the following address: ________________________________________
_____________________________________, Attention: ______________________.
14. Choice of Law. This Agreement will be construed in accordance with the
laws of the State of Ohio.
15. Board Approval. This Agreement has been approved by a vote of a majority
of the Board, including a majority of the Qualified Trustees, cast in
person at a meeting called for the purpose of voting on this Agreement.
16. Non-Exclusivity. The Distributor may enter into other similar distribution
and servicing agreements with any other person or persons.
If this agreement reflects your understanding, please sign below and
return a signed copy to the Distributor.
Very truly yours, Acknowledged and Agreed:
VICTORY CAPITAL ADVISERS, INC. [Broker-Dealer]
By: _______________________________ By: ______________________________
Name: ________________________ Name: _______________________
Title: _______________________ Title: ______________________
6
SCHEDULE A
VICTORY CAPITAL ADVISERS, INC.
COMPENSATION UNDER THE
VICTORY VARIABLE INSURANCE FUNDS
DISTRIBUTION AND SERVICE AGREEMENT
The Distributor agrees to pay the following amounts on a monthly basis,
calculated as an annual percentage of the average daily net assets of the
relevant Fund and Class thereof held in the Accounts:
Fund Class A
---- -------
Diversified Stock Fund 0.25%
Investment Quality Bond Fund 0.25%
Small Company Opportunity Fund 0.25%
