EXHIBIT (e)(1)
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of November, 2005, between BB&T Funds (the
"Trust"), having an office at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx Xxxxxxxx
00000, and BB&T Funds Distributor, Inc. ("Distributor"), having an office at 000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Trust is an open-end management investment company, organized
as a Massachusetts business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
shares of beneficial interest ("Shares") of each series of the Trust, as listed
on Schedule A, and such series as are hereafter created (all of the foregoing
series individually referred to herein as a "Fund" and collectively as the
"Funds");
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor.
1.1 Distributor will act as agent of Trust on behalf of each Fund for the
distribution of the Shares covered by the registration statement of Trust then
in effect under the Securities Act of 1933, as amended (the "Securities Act")
and the 1940 Act. As used in this Agreement, the term "registration statement"
shall mean the registration statement of the Trust and any amendments thereto,
then in effect, including Parts A (the Prospectus), B (the Statement of
Additional Information) and C of each registration statement, as filed on Form
N-lA, or any successor thereto, with the Commission, together with any
amendments thereto. The term "Prospectus" shall mean the then- current form of
Prospectus and Statement of Additional Information used by the Funds, in
accordance with the rules of the Commission, for delivery to shareholders and
prospective shareholders after the effective dates of the above-referenced
registration statements, together with any amendments and supplements thereto.
1.2 Consistent with the understanding between the Funds and the
Distributor, Distributor may solicit orders for the sale of the Shares and may
undertake such advertising and promotion as it believes reasonable in connection
with such solicitation. The Trust understands that Distributor is now and may in
the future be the distributor of the shares of many other investment companies
or series, including investment companies having investment objectives similar
to those of the Trust. The Trust further understands that shareholders and
potential shareholders in the Trust may invest in shares of such other
investment companies. The Trust agrees that Distributor's duties to other
investment companies shall not be deemed in conflict with its duties to the
Trust under this Section 1.2.
1.3 Consistent with the understanding between the Funds and the
Distributor, and subject to the last sentence of this Section 1.3, Distributor
may engage in such activities as it deems appropriate in connection with the
promotion and sale of the Shares, which may include advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
Prospectuses to prospective shareholders other than current shareholders, and
the printing and mailing of sales literature. Distributor may enter into dealer
agreements and other selling agreements with broker-dealers and other
intermediaries; provided, however, that Distributor shall have no obligation to
make any payments to any third parties, whether as finder's fees, compensation
or otherwise, unless such payment is a front-end sales load as referenced in
Section 3.1 of this Agreement or (i) Distributor has received a corresponding
payment or will be reimbursed from the applicable Fund's Distribution Plan (as
defined in Section 2 of this Agreement), the Fund's investment adviser (the
"Adviser") or from another source as may be permitted by applicable law, and
(ii) such corresponding payment has been approved by the Trust's Board of
Trustees.
1.4 In its capacity as distributor of the Shares, all activities of the
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all applicable rules and regulations promulgated by the Commission
thereunder, and all applicable rules and regulations adopted by any securities
association registered under the Securities Exchange Act of 1934.
1.5 Whenever in their judgment such action is warranted by unusual market,
economic or political conditions or by abnormal circumstances of any kind, the
Trust's officers may upon reasonable notice instruct the Distributor to decline
to accept any orders for or make any sales of the Shares until such time as
those officers deem it advisable to accept such orders and to make such sales.
1.6 The Trust agrees to inform the Distributor from time to time of the
states in which the Fund or its administrator has registered or otherwise
qualified shares for sale, and the Trust agrees at its own expense to execute
any and all documents and to furnish any and all information and otherwise to
take all actions that may be reasonably necessary in connection with the
qualification of the Shares for sale in such states as the administrator for the
Funds may designate.
1.7 The Trust shall furnish from time to time, for use in connection with
the sale of the Shares, such supplemental information with respect to the Funds
and the Shares as Distributor may reasonably request; and the Trust warrants
that the statements contained in any such supplemental information will fairly
show or represent what they purport to show or represent. The Trust shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Trust, (b) a monthly itemized list
of the securities in the Funds, (c) monthly balance
sheets as soon as practicable after the end of each month, and (d) from time to
time such additional information regarding the financial condition of the Funds
as the Distributor may reasonably request.
1.8 The Trust represents and warrants to Distributor that all registration
statements, and each Prospectus, filed by the Trust with the Commission under
the Securities Act and the 1940 Act shall be prepared in conformity with
requirements of said Acts and rules and regulations of the Commission
thereunder. The registration statement and Prospectus shall contain all
statements required to be stated therein in conformity with said Acts and the
rules and regulations of the Commission thereunder, and all statements of fact
contained in any such registration statement and Prospectus are true and correct
in all material respects. Furthermore, neither any registration statement nor
any Prospectus includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares. The foregoing
representations and warranties shall continue throughout the term of this
Agreement and be deemed to be of a continuing nature, applicable to all Shares
distributed hereunder. The Trust may, but shall not be obligated to, propose
from time to time such amendment or amendments to any registration statement and
such supplement or supplements to any Prospectus as, in the light of future
developments, may, in the opinion of the Trust's counsel, be necessary or
advisable. If the Trust shall not propose any amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Trust of a
written request from Distributor to do so, Distributor may, at its option,
terminate this Agreement. In such case, the Distributor will be held harmless
from, and indemnified by Trust for, any liability or loss resulting from the
failure to implement such amendment. The Trust shall not file any amendment to
any registration statement or supplement to any Prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Trust's right to
file at any time such amendments to any registration statement and/or
supplements to any Prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.9 The Trust authorizes the Distributor and dealers to use any Prospectus
in the form furnished by the Trust from time to time in connection with the sale
of the Shares.
1.10 The Distributor may utilize agents in its performance of its services
and, with prior notice to the Trust, appoint in writing other parties qualified
to perform specific administration services reasonably acceptable to the Trust
(individually, a "Sub Agent") to carry out some or all of its responsibilities
under this Agreement; provided, however, that a Sub-Agent shall be the agent of
the Distributor and not the agent of the Trust, and that the Distributor shall
be fully responsible for the acts of such Sub-Agent and shall not be relieved of
any of its responsibilities hereunder by the appointment of a Sub-Agent.
1.11 The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Distributor's part in the
performance of its duties, from reckless disregard by the Distributor of its
obligations and duties under this Agreement, or from the Distributor's failure
to comply with laws, rules and regulations applicable to it in connection with
its activities hereunder. The Trust agrees to indemnify, defend and hold
harmless the Distributor, its officers, partners, employees, and any person who
controls the Distributor within the meaning of Section 15 of the Securities Act
(collectively, "Distributor Indemnitees"), from and against any and all claims,
demands, liabilities and expenses (including the reasonable cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) (collectively,
"Claims") which the Distributor Indemnitees may incur under the Securities Act
or under common law or otherwise (a) as the result of the Distributor acting as
distributor of the Funds and entering into selling agreements, participation
agreements, shareholder servicing agreements or similar agreements with
financial intermediaries on behalf of the Trust, unless as a result of the
willful misfeasance, bad faith or negligence of the Distributor; (b) arising out
of or based upon (i) any untrue statement, or alleged untrue statement, of a
material fact contained in any registration statement or any Prospectus, (ii)
any omission, or alleged omission, to state a material fact required to be
stated in any registration statement or any Prospectus or necessary to make the
statements therein not misleading, or (iii) any untrue statement, or alleged
untrue statement, of a material fact in any Trust-related advertisement or sales
literature, or any omission, or alleged omission, to state a material fact
required to be stated therein to make the statements therein not misleading, in
either case notwithstanding the exercise of reasonable care in the preparation
or review thereof by the Distributor; or (c) arising out of or based upon the
electronic processing of orders over the internet at the Trust's request;
provided, however, that the Trust's agreement to indemnify the Distributor
Indemnitees pursuant to this Section 1.11 shall not be construed to cover any
Claims (A) pursuant to subsection (b) above to the extent such untrue statement,
alleged untrue statement, omission, or alleged omission, was furnished in
writing, or omitted from the relevant writing furnished, as the case may be, to
the Trust by the Distributor for use in the registration statement or in
corresponding statements made in the Prospectus, advertisement or sales
literature; (B) pursuant to subsections (b) or (c) above arising out of or based
upon the willful misfeasance, bad faith or gross negligence of the Distributor
in the performance of its duties or the Distributor's reckless disregard of its
obligations and duties under this Agreement; or (C) arising out of or based upon
the Distributor's failure to comply with laws, rules and regulations applicable
to it in connection with its activities hereunder.
In the event of a Claim for which the Distributor Indemnitees may be
entitled to indemnification hereunder, the Distributor shall provide the Trust
with written notice of the Claim, identifying the persons against whom such
Claim is brought, promptly following receipt of service of the summons or other
first legal process, and in any event within ten (10) days of such receipt. The
Trust will be entitled to assume the defense of any suit brought to enforce any
such Claim if such defense shall be conducted by counsel
of good standing chosen by the Trust and approved by the Distributor, which
approval shall not be unreasonably withheld. In the event any such suit is not
based solely on an alleged untrue statement, omission, or wrongful act on the
Trust's part, the Distributor shall have the right to participate in the
defense. In the event the Trust elects to assume the defense of any such suit
and retain counsel of good standing so approved by the Distributor, the
Distributor Indemnitees in such suit shall bear the fees and expenses of any
additional counsel retained by any of them, but in any case where the Trust does
not elect to assume the defense of any such suit or in case the Distributor
reasonably withholds approval of counsel chosen by the Trust, the Trust will
reimburse the Distributor Indemnitees named as defendants in such suit, for the
reasonable fees and expenses of any counsel retained by them to the extent
related to a Claim covered under this Section 1.11. The Trust's indemnification
agreement contained in this Section 1.11 shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Distributor Indemnitees, and shall survive the delivery of any Shares.
1.12 The Distributor agrees to indemnify, defend and hold harmless the
Trust, its officers, Trustees, employees, and any person who controls the Trust
within the meaning of Section 15 of the Securities Act (collectively, Trust
Indemnitees), from and against any and all Claims which the Trust Indemnitees
may incur under the Securities Act or under common law or otherwise, arising out
of or based upon (a) any untrue statement, or alleged untrue statement, of a
material fact contained in any registration statement, Prospectus, or
Trust-related advertisement or sales literature, or upon any omission, or
alleged omission, to state a material fact in such materials that would be
necessary to make the information therein not misleading, which untrue
statement, alleged untrue statement, omission, or alleged omission, was
furnished in writing, or omitted from the relevant writing furnished, as the
case may be, to the Trust by the Distributor for use in the registration
statement or in corresponding statements made in the Prospectus, or
advertisement or sales literature; (b) the willful misfeasance, bad faith or
gross negligence of the Distributor in the performance of its duties, or the
Distributor's reckless disregard of its obligations and duties under this
Agreement, or (c) the Distributor's failure to comply with laws, rules and
regulations applicable to it in connection with its activities hereunder (other
than in respect of Trust-related advertisements or sales literature that fails
to comply with applicable laws notwithstanding the exercise of reasonable care
in the preparation and review thereof by the Distributor).
In the event of a Claim for which the Trust Indemnitees may be entitled to
indemnification hereunder, the Trust shall provide the Distributor with written
notice of the Claim, identifying the persons against whom such Claim is brought,
promptly following receipt of service of the summons or other first legal
process, and in any event within ten (10) days of such receipt. The Distributor
will be entitled to assume the defense of any suit brought to enforce any such
Claim if such defense shall be conducted by counsel of good standing chosen by
the Distributor and approved by the Trust, which approval shall not be
unreasonably withheld. In the event any such suit is not based solely on an
alleged untrue statement, omission, or wrongful act on the Distributor's part,
the Trust shall have the right to participate in the defense. In the event the
Distributor
elects to assume the defense of any such suit and retain counsel of good
standing so approved by the Trust, the Trust Indemnitees in such suit shall bear
the fees and expenses of any additional counsel retained by any of them, but in
any case where the Distributor does not elect to assume the defense of any such
suit or in case the Trust reasonably withholds approval of counsel chosen by the
Distributor, the Distributor will reimburse the Trust Indemnitees named as
defendants in such suit, for the reasonable fees and expenses of any counsel
retained by them to the extent related to a Claim covered under this Section
1.12. The Distributor's indemnification agreement contained in this Section 1.12
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Trust Indemnitees, and shall survive
the delivery of any Shares.
1.13 No Shares shall be offered by either the Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current Prospectus as required by Section
10(b)(2) of said Act is not on file with the Commission; provided, however,
that: (a) the Distributor will not be obligated to cease offering shares until
it has received from the Trust written notice of such events, and (b) nothing
contained in this Section 1.13 shall in any way restrict or have an application
to or bearing upon the Trust's obligation to repurchase Shares from any
shareholder in accordance with the provisions of the Trust's Prospectus,
Agreement and Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the Commission for amendments to the
registration statement or Prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration
statement or Prospectus then in effect or the initiation by
service of process on the Trust of any proceeding for that
purpose;
(c) of the happening of any event that makes untrue any statement
of a material fact made in the registration statement or
Prospectus then in effect or which requires the making of a
change in such registration statement or Prospectus in order
to make the statements therein not misleading; and
(d) of any action of the Commission with respect to any amendment
to any registration statement or Prospectus which may from
time to time be filed with the Commission, which could
reasonably be
expected to have a material negative impact upon the offering
of Shares.
For purposes of this section, informal requests by or acts of the Staff of
the Commission shall not be deemed actions of or requests by the Commission
unless they would reasonably be expected to have a material negative impact upon
the offering of Shares.
2. Fees.
2.1 Attached as Schedule B to this Agreement are all plans of distribution
under Rule 12b-l under the 1940 Act approved by the Funds and in effect
(collectively, the "Distribution Plan"). The Funds will deliver to Distributor
promptly after any changes thereto updated copies of the Distribution Plan. For
its services under this Agreement, the Distributor shall be compensated as set
forth on Schedules C and D to this Agreement. If the Funds have a Distribution
Plan that permits and authorizes them to compensate the Distributor and required
board approvals have been given, then the Funds shall be responsible for all
such compensation or such portions of it as have been permitted and authorized
under the Distribution Plan. If the Funds are not permitted and authorized to
compensate the Distributor in full in accordance with Schedules C and D, then
the Adviser shall agree with the Distributor in a separate instrument that the
Adviser shall compensate the Distributor in accordance with Schedules C and D to
the extent that the Funds are not so permitted or authorized. The Adviser shall
also reimburse the Distributor for any expenses reimbursable to the Distributor
under this Agreement to the extent that the Funds are not authorized to
reimburse the Distributor in full in accordance with Schedules C and D. The fees
set forth on Schedules C and D are subject to change by Distributor upon 30 days
advance notice.
2.2 If: (i) the Distributor properly receives fees from the Funds under
the Distribution Plan, other than for services rendered or expenses incurred,
that the Distributor is not obligated to pay to third party broker-dealers, plan
administrators or others ("Retained Fees"), and (ii) the Funds have authority
under the Distribution Plan to pay for some or all of the Distributor's services
under this Agreement ("Permitted Services"), then all of the Retained Fees will
either be (a) returned to the funds and/or (b) credited against the compensation
payable or reimbursement made by the Funds to the Distributor for Permitted
Services.
3. Sale and Payment.
3.1 Shares of a Fund may be subject to a sales load and may be subject to
the imposition of a distribution fee pursuant to the Distribution Plan referred
to above. To the extent that Shares of a Fund are sold at an offering price
which includes a sales load or subject to a contingent deferred sales load with
respect to certain redemptions (either within a single class of Shares or
pursuant to two or more classes of Shares), such Shares shall hereinafter be
referred to collectively as "Load Shares" (and in the case of Shares that are
sold with a front-end sales load, "Front-end Load Shares", or Shares that are
sold
subject to a contingent deferred sales load, "CDSL Shares"). Funds that issue
Front-End Load Shares shall hereinafter be referred to collectively as
"Front-End Load Funds." Funds that issue CDSL Shares shall hereinafter be
referred to collectively as "CDSL Funds." Front-end Load Funds and CDSL Funds
may individually or collectively be referred as "Load Funds." Under this
Agreement, the following provisions shall apply with respect to the sale of, and
payment for, Load Shares.
3.2 The Distributor shall have the right to offer Load Shares at their net
asset value, if permitted by the Prospectus, and to sell such Load Shares to the
public against orders therefor at the applicable public offering price, as
defined in Section 4 hereof. The Distributor shall also have the right to sell
Load Shares to dealers against orders therefor at the public offering price less
a concession determined by the Distributor, which concession shall not exceed
the amount of the sales charge or underwriting discount, if any, referred to in
Section 4 below.
3.3 Prior to the time of delivery of any Load Shares by a Load Fund to, or
on the order of, the Distributor, the Distributor shall pay or cause to be paid
to the Load Fund or to its order an amount in New York cleared funds equal to
the applicable net asset value of such Shares. The Distributor may retain so
much of any sales charge or underwriting discount as is not allowed by the
Distributor as a concession to dealers;
3.4 With respect to CDSL Funds, the following provisions shall be
applicable:
(a) The Distributor shall be entitled to receive all contingent
deferred sales load charges, 12b-1 payments and all
distribution and service fees set forth in the Distribution
Plan adopted by a CDSL Fund with respect to CDSL Shares
(collectively, the "CDSL Payments") with respect to CDSL
Shares. The Distributor may assign or sell to a third party (a
"CDSL Financing Entity") all or a part of the CDSL Payments on
CDSL Shares that the Distributor is entitled to receive under
this Agreement. The Distributor's right to the CDSL Payments
on such CDSL Shares, if assigned or sold to a CDSL Financing
Entity, shall continue after termination of this Agreement.
(b) The Distributor may assign or sell to a CDSL Financing Entity
all or part of the CDSL Payments the Distributor is entitled
to receive. The Distributor's right to payment of CDSL
Payments, if assigned or sold to a CDSL Financing Entity,
shall continue after termination of this Agreement. Otherwise,
(unless the Distributor is legally entitled to receive such
fees as the financing entity) the right to receive all CDSL
Payments in respect of periods subsequent to the termination
of this Agreement shall terminate upon termination of this
Agreement. In the event Distributor assigns or sells all or a
part of the CDSL Payments to a CDSL Financing Entity and this
Agreement is subsequently terminated,
Distributor shall have no obligation to assist the CDSL
Financing Entity in connection with such CDSL Financing
Entity's right to receive such CDSL Payments subsequent to
such termination.
(c) The Distributor shall not be required to offer or sell CDSL
Shares of a CDSL Fund unless and until it has received a
binding commitment from a CDSL Financing Entity (a
"Commitment") satisfactory to the Distributor which Commitment
shall cover all expenses and fees related to the offer and
sale of such CDSL Shares including, but not limited to, dealer
reallowances, financing commitment fees, and legal fees. If at
any time during the term of this Agreement the then-current
CDSL financing is terminated through no fault of the
Distributor, the Distributor shall have the right to
immediately cease offering or selling CDSL Shares until
substitute financing becomes effective.
(d) The Distributor and the Trust hereby agree that the terms and
conditions set forth herein regarding the offer and sale of
CDSL Shares may be amended upon approval of both parties in
order to comply with the terms and conditions of any agreement
with a CDSL Financing Entity to finance the costs for the
offer and sale of CDSL Shares so long as such terms and
conditions are in compliance with the Distribution Plan.
4. Public Offering Price.
The public offering price of a Load Share shall be the net asset value of
such Load Share next determined, plus any applicable sales charge, all as set
forth in the current Prospectus of the Load Fund. The net asset value of Load
Shares shall be determined in accordance with the then-current Prospectus of the
Load Fund.
5. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell Load Shares at net
asset values (a) in connection with the merger or consolidation of the Trust or
the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a pro
rata distribution directly to the holders of Shares in the nature of a stock
dividend or split; (c) upon the exercise of subscription rights granted to the
holders of Shares on a pro rata basis; (d) in connection with the issuance of
Load Shares pursuant to any exchange and reinvestment privileges described in
any then-current Prospectus of the Load Fund; and (e) otherwise in accordance
with any then-current Prospectus of the Load Fund.
6. Term, Duration and Termination.
This Agreement shall become effective with respect to each Fund as of the
date first written above (the "Effective Date") (or, if a particular Fund is not
in existence on such date, on the earlier of the date an amendment to Schedule A
to this Agreement relating to that Fund is executed or the Distributor begins
providing services under this Agreement with respect to such Fund) and, unless
sooner terminated as provided herein, shall continue through September 30, 2005.
Thereafter, if not terminated, this Agreement shall continue with respect to a
particular Fund automatically for successive one-year terms, provided that such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not parties
to this Agreement or interested persons of any such party, cast in person at a
meeting for the purpose of voting on such approval and (b) by the vote of the
Trust's Board of Trustees or the vote of a majority of the outstanding voting
securities of such Fund. This Agreement is terminable without penalty with sixty
days' prior written notice, by the Trust's Board of Trustees, by vote of a
majority of the outstanding voting securities of the Trust, or by the
Distributor. This Agreement will also terminate automatically in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as ascribed to such terms in the 1940 Act.)
7. Privacy.
Nonpublic personal financial information relating to consumers or
customers of the Funds provided by, or at the direction of, the 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 any nonpublic personal 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 Rules 13, 14 or 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, and to prevent unauthorized access to or use
of, records and information relating to consumers and customers of the Funds.
The 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 agrees to provide the Distributor with a copy of that
statement annually.
8. Anti-Money Laundering Compliance.
8.1 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
(collectively, the "AML Acts"), which require, among other things, that
financial institutions adopt compliance programs to guard against money
laundering. Each represents and warrants to the other that it is in compliance
with and will continue to comply with the AML Acts and applicable regulations in
all relevant respects. The Distributor shall also provide written notice to each
person or entity with which it entered an agreement prior to the
date hereof with respect to sale of the Trust's Shares, such notice informing
such person of anti-money laundering compliance obligations applicable to
financial institutions under applicable laws and, consequently, under applicable
contractual provisions requiring compliance with laws.
8.2 The Distributor shall include specific contractual provisions
regarding anti-money laundering compliance obligations in agreements entered
into by the Distributor with any dealer that is authorized to effect
transactions in Shares of the Trust.
8.3 Each of Distributor and the Trust agrees that it will take such
further steps, and cooperate with the other as may be reasonably necessary, to
facilitate compliance with the AML Acts, including but not limited to the
provision of copies of its written procedures, policies and controls related
thereto ("AML Operations"). Distributor undertakes that it will grant to the
Trust, the Trust's anti-money laundering compliance officer and regulatory
agencies, reasonable access to copies of Distributor's AML Operations, books and
records pertaining to the Trust only. It is expressly understood and agreed that
the Trust and the Trust's compliance officer shall have no access to any of
Distributor's AML Operations, books or records pertaining to other clients of
Distributor.
9. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Trust, to it at 000 Xxxxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: President, BB&T Funds, with copy to
the Trust at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attn: Client Services; and
if to Distributor, to it at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attn: Broker Dealer Chief Compliance Officer, with a copy to BISYS Distribution
Services, 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, attn: President, or at such
other address as such party may from time to time specify in writing to the
other party pursuant to this Section.
10. Confidentiality.
During the term of this Agreement, the Distributor and the Trust may have
access to confidential information relating to such matters as either party's
business, trade secrets, systems, procedures, manuals, products, contracts,
personnel, and clients. As used in this Agreement, "Confidential Information"
means information belonging to the Distributor or the Trust which is of value to
such party and the disclosure of which could result in a competitive or other
disadvantage to either party, including, without limitation, financial
information, business practices and policies, know-how, trade secrets, market or
sales information or plans, customer lists, business plans, and all provisions
of this Agreement. Confidential Information includes information developed by
either party in the course of engaging in the activities provided for in this
Agreement, unless: (i) the information is or becomes publicly known without
breach of this Agreement, (ii) the information is disclosed to the other party
by a third party not under an obligation
confidentiality to the party whose Confidential Information is at issue of which
the party receiving the information should reasonably be aware, or (iii) the
information is independently developed by a party without reference to the
other's Confidential Information. Each party will protect the other's
Confidential Information with at least the same degree of care it uses with
respect to its own Confidential Information, and will not use the other party's
Confidential Information other than in connection with its duties and
obligations hereunder. Notwithstanding the foregoing, a party may disclose the
other's Confidential Information if (i) required by law, regulation or legal
process or if requested by any Agency; (ii) it is advised by counsel that it may
incur liability for failure to make such disclosure; (iii) requested to by the
other party; provided that in the event of (i) or (ii) the disclosing party
shall give the other party reasonable prior notice of such disclosure to the
extent reasonably practicably and cooperate with the other party (at such other
party's expense) in any efforts to prevent such disclosure. The obligations of
confidentiality set forth in this Section 10 shall survive the termination of
this Agreement for an indefinite period with respect to customer lists and
personal non-public information regarding the Trust's customers, and for a
period of three (3) years after termination with respect to all other
Confidential Information.
10. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of Massachusetts and the applicable provisions of the 1940 Act.
11. Prior Agreements
This Agreement constitutes the complete agreement of the parties as to the
subject matter covered by this Agreement, and supersedes all prior negotiations,
understandings and agreements bearing upon the subject matter covered by this
Agreement.
12. Amendments
No amendment to this Agreement shall be valid unless made in writing and
executed by both parties hereto.
13. Matters Relating to the Trust as a Massachusetts Business Trust
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on them personally, but shall bind only the trust property of the
Trust as provided in the Trust's Declaration of Trust.
* * * * *
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 written
above.
BB&T FUNDS
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
BB&T FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx
Title: UP
Acknowledged as to payment and
reimbursement obligations set forth
in Section 2:
BB&T ASSET MANAGEMENT, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: SVP
SCHEDULE A
FUNDS
LARGE COMPANY VALUE FUND
LARGE COMPANY GROWTH FUND
MID CAP VALUE FUND
MID CAP GROWTH FUND
SMALL COMPANY VALUE FUND
SMALL COMPANY GROWTH FUND
SPECIAL OPPORTUNITIES EQUITY FUND
EQUITY INCOME FUND
SHORT U.S. GOVERNMENT FUND
INTERMEDIATE U.S. GOVERNMENT FUND
TOTAL RETURN BOND FUND
INTERNATIONAL EQUITY FUND
KENTUCKY INTERMEDIATE TAX-FREE FUND
MARYLAND INTERMEDIATE TAX-FREE FUND
NORTH CAROLINA INTERMEDIATE TAX-FREE FUND
SOUTH CAROLINA INTERMEDIATE TAX-FREE FUND
VIRGINIA INTERMEDIATE TAX-FREE FUND
WEST VIRGINIA INTERMEDIATE TAX-FREE FUND
PRIME MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
CAPITAL MANAGER CONSERVATIVE GROWTH FUND
CAPITAL MANAGER MODERATE GROWTH FUND
CAPITAL MANAGER GROWTH FUND
CAPITAL MANAGER EQUITY FUND
EQUITY FUND INDEX
SCHEDULE B
See Distribution and Shareholder Services Plan
SCHEDULE C
COMPENSATION OF THE DISTRIBUTOR
1. BASIC DISTRIBUTION SERVICES. For providing the distribution entity and
related infrastructure and platform, including requisite registrations and
qualifications, premises, personnel, compliance, ordinary fund board meeting
preparation, maintenance of selling agreements, clearance of advertising and
sales literature with regulators, filing appropriate documentation for advisory
representatives to qualify as registered representatives of the Distributor
provided that the Adviser is solely responsible for its representatives' meeting
examination requirements) and their related registrations and fees, ordinary
supervisory services, overhead, Financial Research Corporation's Mutual Fund
Views on the News and Monitor publications, and return on investment, the
Distributor shall receive an annual fee of $250,000.00, billed monthly.
2. SPECIAL DISTRIBUTION SERVICES. For special distribution services requested by
the Trust, including, without limitation, those set forth on Schedule D to this
Agreement, such as additional personnel, registrations, marketing services,
printing and fulfillment, website services, proprietary distribution expertise
for particular circumstances, and any other services in addition to the basic
distribution services covered by Paragraph 1 above, the Distributor shall be
reimbursed promptly upon invoicing its expenses for such services, including:
(a) all costs to support additional personnel; (b) regulatory fees including
NASD CRD costs associated with marketing materials; and (c) printing, postage
and fulfillment costs, and (d) amounts payable under additional agreements to
which Distributor is a party.
3. SPECIAL CONDUIT SITUATIONS. If the Distribution Plan, or any other Fund plans
of distribution under Rule 12b-1 that contemplate up front and/or recurring
commission and/or service payments to broker dealers, retirement plan
administrators or others by the Distributor with respect to back-end loads,
level loads, or otherwise, unless expressly agreed otherwise in writing between
the parties, all such payments shall be made to the Distributor, which shall act
as a conduit for making such payments to such broker- dealers, retirement plan
administrators or others. It is expressly agreed and understood by the parties
that the Distributor shall be reimbursed for all fees, costs and other expenses
it incurs in connection with financing arrangements it provides, has entered
into, or enters into at the request of the Trust or the investment adviser to
the Trust, including without limitation, financing arrangements with F.E.P.
Capital, L.P. and all payments (including, without limitation, the $75,000
annual operational fee) made in connection therewith. Such reimbursement
obligation shall survive any expiration or termination of this Agreement, as it
is expressly understood and acknowledged that the Distributor's obligations
pursuant to such financing arrangements may continue and survive beyond the
expiration or termination of this Agreement.
4. OTHER PAYMENTS BY THE DISTRIBUTOR. If the Distributor is required to make any
payments to third parties in respect of distribution, which payments are
contemplated by the parties to the Distribution Agreement or otherwise arise in
the
ordinary course of business, the Distributor shall be promptly reimbursed for
such payments upon invoicing them.
5. FEE ADJUSTMENTS. The fixed fees and other fees expressed as stated dollar
amounts in this Schedule C and in this Agreement are subject to annual
increases, as may be mutually agreed upon.
SCHEDULE D
SPECIAL DISTRIBUTION SERVICES AND FEES
SERVICES FEES
------------------------------------------- -----------------------------------------------
1. WHOLESALING PERSONNEL SERVICES WHOLESALING PERSONNEL SERVICES FEES
Wholesaling Personnel may be external For each individual constituting the
wholesalers and/or internal wholesalers. Wholesaling Personnel employed by the
Distributor pursuant to this Agreement, the
Services include soliciting support of the Distributor shall receive annually an amount
Funds with selling broker dealers; equal to the sum of:
participating in promotional meetings,
presentations, conferences and other and (i) all compensation paid annually by the
forums; identifying high potential Distributor to the employee; plus
personnel of the Adviser and selling broker
dealers; and assisting with mail (ii) a management oversight fee equal to:
solicitations and literature fulfillment.
(a) if one to four Wholesaling Personnel
are employed, 30% of the
salary compensation and 5% of
the bonus or commission
compensation, or
(b) if five or more Wholesaling Personnel
are employed, 25% of the
salary compensation and 5% of
the bonus or commission
compensation; plus
(iii) 18% of the total compensation.
In addition, the Distributor shall be
reimbursed for all related costs to support,
educate and train and maintain compliance
oversight of Wholesaling Personnel and other
personnel such as sales management personnel,
(including time and expenses, continuing
education, seminars, rent, supplies, phone,
computers, firm element, license, registration)
Upon any termination of Wholesaling Personnel
at the request of the Funds or upon termination
of this Agreement by the Funds for any reason
other than cause, the Distributor will be
reimbursed its severance costs with respect to
such terminated Wholesaling Personnel; provided
that the Distributor shall consult with the
Trust (or if directed by the Trust, the
Adviser) and give the Trust (or the Adviser)
the opportunity to pay additional amounts to
the Distributor so as to allow the Distributor
to increase the severance payments the
Distributor would otherwise have made to such
Wholesaling Personnel.
2. MARKETING AND RELATED SERVICES MARKETING AND RELATED SERVICES FEES
Marketing Execution: services include Marketing Execution: Quote available upon
identification and development of request.
appropriate marketing and communications
programs, projects and other initiatives; Performance Reporting
collaboration on initiating, researching,
developing, and delivering appropriate Monthly Reports
sales and marketing materials; and
management of marketing and advertising Monthly Updating and Typesetting -- $850 -
projects. $1,000 per sheet per month (for an All-in-One
style report)
Performance Reporting: services include
creation of templates for monthly fact Initial Design and Setup (1-time charge) --
sheets and quarterly fact sheets; $500 per sheet
populating templates with performance data
obtained from third parties; and Quarterly Reports
coordinating steps needed for final
printing and distribution. Quarterly Updating and Typesetting -- $300 -
$350 per Fund sheet per Share Class per quarter
Creative Communication and Editorial
Services: services include preparing Initial Design and Setup per Fund sheet (1-time
drafts of textual commentary and management charge) -- $500 per Fund sheet
discussion and analysis for annual; and
semi annual reports, including portfolio Annual & Semi-Annual Reports
manager interviews; providing creative
design and direction; and coordinating Coordination:
production, including typesetting (initial
composition and changes to composition), - $3,000 Initial Fee (includes
charts and ancillary items. Chairman's Letter and 1st Fund)
Production Timing: - $500 for each additional Fund
- No timing guarantees can be made NOTE: The above charges do not include the
for completion of monthly and typesetting, printing, shipping, fulfillment,
quarterly fact sheets where any of Xxxxx filing or quick-turnaround charges that
the information needed to produce may be incurred from the financial printer.
the reports is generated by The above fees are for coordinating the project
service providers other than the only.
Distributor. However, a basic
estimate of turnaround time may be Creative Communication and Editorial Services
given based upon when the unit
receives all necessary data in Quote available upon request.
good order. Under normal
conditions, the Performance
Reporting unit expects to make
proofs ready for review (either
printed or electronic PDF format)
by the 4th business day after the
final piece of
data is received. If compliance review
is necessary (e.g., when Morningstar
ratings data is used) an additional 2
days may be required for review.
- Printing turnaround (once the
factsheets are signed-off by the
client) is usually approximately
4-5 calendar days with most jobs
shipping by the 5th day.
If requested, final electronic PDF files
may be generated and e-mailed on the day
the job is signed-off on by the client.
These PDFs may be distributed and printed
as necessary until the final printed pieces
arrive.
3. FRC SERVICES FRC SERVICES FEES
FRC's program components include: Xxxx Analytics Publications: Quote available
upon request.
- Market Analytics Publications
- Advanced Research Publications Advanced Research Publications
- Analyst Support
- SME Direct Access - Topic Briefs
The Trust acknowledges that certain FRC - FRC Focus (typical cost is around $1,500)
publications may be provided only to
parties that have entered into a written White Papers - FRC Vision (typical cost is
agreement or addendum that sets forth the around $2,500)
terms of use of such publications and the
associated fee. The Trust will notify the - Research Studies (costs vary, however
Distributor whether the Trust or the typically range between $3,500 and $12,500)
Adviser or both will enter into such an
agreement or addendum. The Trust Analyst Support: Quote available upon request
acknowledges that if only one of the Trust
or the Adviser enters into such agreement SME Direct Access: Quote available upon request
or addendum, the other party will be
prohibited from receiving or using such Other FRC Fees:
publications.
- Client participation in funding FRC
Franchise Level program: $12,500
- All subsequent content and support hours
may be purchased at a 20% discount from
standard pricing.
Expenses Applicable to Basic Distribution Services. Special Conduit Situation,
and Special Distribution Services
Except as expressly set forth above, actual out-of-pocket expenses incurred by
Distributor in the performance of its services under this Agreement are not
included in the above fees. Such actual out-of-pocket expenses may include,
without limitation:
- reasonable travel and entertainment costs;
- expenses incurred by the Distributor in qualifying, registering and
maintaining the registration of the Distributor and each individual
comprising Wholesaling Personnel as a registered representative of the
Distributor under applicable federal and state laws and rules of the NASD,
e.g., CRD fees and state fees;
- sponsorships, Promotions, Sales Incentives;
- any and all compensation to be paid to a third party as paying agent for
distribution activities (platform fees, finders fees, sub-TA fees, 12b-l
pass thru, commissions, etc.);
- costs and expenses incurred for telephone service, photocopying and office
supplies;
- advertising costs;
- costs for printing, paper stock and costs of other materials, electronic
transmission, courier, talent utilized in sales materials (e.g. models),
design output, photostats, photography, and illustrations;
- packaging, shipping, postage, and photocopies; and
- taxes that are paid or payable by the Distributor or its affiliates in
connection with its services hereunder, other than taxes customarily and
actually imposed upon the income that the Distributor receives hereunder.
