EXHIBIT (h)(9)
DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 1st day of November, 2005, by and between BB&T ASSET
MANAGEMENT, INC., an investment adviser (the "Adviser"), registered with the
Securities and Exchange Commission (the "SEC"), and BB&T FUNDS DISTRIBUTOR,
INC., a Delaware corporation (the "Distributor").
WHEREAS, the Adviser (including for purposes hereof its separate asset
management divisions and subsidiaries) serves as investment adviser for the BB&T
Funds (the "Trust"), an open-end investment company registered with the SEC
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, pursuant to a distribution agreement between the Distributor and
the Trust currently in effect (the "Distribution Agreement"), the Distributor
acts as the principal underwriter and distributor of shares of the portfolios of
the Trust (the "Funds"), which shares (the "Shares") are registered under the
Securities Act of 1933, as amended; and
WHEREAS, there exist legitimate business reasons for the Adviser to make
bona fide payments to the Distributor and others, which business reasons include
efforts to grow the assets of the Funds;
WHEREAS, in consideration of Distributor's agreement to provide certain
sales and marketing services as described in the Distribution Agreement, the
Adviser has agreed to compensate the Distributor to the extent that the Funds
are not authorized to so compensate the Distributor;
NOW THEREFORE, in consideration of the covenants hereinafter contained,
the Adviser and the Distributor agree as follows:
1. Services.
Distributor will provide the Funds and the Adviser with some or all of the
marketing and sales support services set forth in the Distribution Agreement, as
the parties agree from time to time.
2. Compensation and Expenses.
(a) The Distributor shall be entitled to receive the compensation set
forth in the Distribution Agreement, based on the services selected by Funds
and/or the Adviser from time to time in addition, the Distributor shall be
reimbursed for its expenses, as set forth in the Distribution Agreement.
(b) In accordance with the Distribution Agreement, Adviser hereby agrees
that, if the Funds are not authorized to compensate or reimburse the Distributor
in full in accordance with
the Distribution Agreement, the Adviser shall compensate and reimburse the
Distributor to the extent that the Funds are not so authorized.
3. Term and Termination.
(a) This Agreement will become effective upon the date first set forth
above, will continue in effect throughout the term of the Distribution
Agreement, and will terminate automatically upon any termination of the
Distribution Agreement; provided, however, that, notwithstanding such
termination of the Distribution Agreement, the Adviser will continue to pay to
Distributor all fees to which Distributor is entitled pursuant to the
Distribution Agreement for services performed through such termination date and
any other fees payable upon such termination. In addition, notwithstanding any
termination or expiration of the Distribution Agreement or this Agreement, the
Adviser shall reimburse the Distributor for (i) any and all expenses incurred by
the Distributor in connection with the Distribution Agreement through the
termination or expiration date of the Distribution Agreement and this Agreement
and (ii) any and all expenses relating to financing arrangements (including,
without limitation, with FEP Capital, Inc.) that are incurred by the Distributor
and not reimbursed by the Trust, whether incurred prior to, or subsequent to,
the termination or expiration date of the Distribution Agreement and this
Agreement. This provision shall survive the termination of this Agreement.
(b) This Agreement will terminate immediately and automatically in the
event the Distributor is expelled as a member of the NASD, and the Adviser may
terminate this Agreement immediately upon written notice in the event the
Distributor's NASD membership is suspended.
(c) In addition, either party may immediately terminate this Agreement in
whole if the provision of services having substantially the character, form and
scope as those set forth hereunder becomes illegal or contrary to any applicable
law, or if with the service and payment model remaining substantially as
reflected herein, there exists a substantial risk that such a violation could
occur.
(d) In addition, either party may immediately terminate this Agreement if
it has "Cause" to do so, which, for these purposes is defined as being
applicable if (i) the other party materially breaches this Agreement and the
breach is not remedied within thirty (30) days after the party wishing to
terminate gives the breaching party written notice of the breach; (ii) a final
judicial, regulatory or administrative ruling or order is made in which the
party to be terminated has been found guilty of criminal or unethical behavior
in the conduct of its business; or (iii) the other party makes an assignment for
the benefit of its creditors, files a voluntary petition under any bankruptcy or
insolvency law, becomes the subject of an involuntary petition under any
bankruptcy or insolvency law that is not dismissed within 60 days, or a trustee
or receiver is appointed under any bankruptcy or insolvency law for the other
party or its property.
4. Rights and Obligations of the Adviser and the Distributor.
The Adviser shall be responsible for the accuracy, completeness and
propriety of information concerning its organization and sales channels that the
Adviser furnishes to the Distributor in connection with the performance of the
Distribution Agreement.
5. Representations and Warranties.
(a) The Adviser represents and warrants the following:
(i) this Agreement has been duly authorized by the Adviser and, when
executed and delivered, will constitute a legal, valid and binding obligation of
the Adviser, enforceable against it in accordance with its terms subject to
bankruptcy, insolvency, reorganizations, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties,
and
(ii) this Agreement has been disclosed to the Board of Directors of
the Trust (the "Board"), and the Adviser has provided all such information to
the Board as may be appropriate (or as has been requested by the Board) in
connection with the Board's review or approval of the arrangements contemplated
hereunder, including amounts expended by the Adviser hereunder.
(b) The Distributor represents and warrants the following:
(i) it is presently a duly registered broker-dealer with the NASD in
good standing and covenants that it shall remain so registered and in good
standing for the duration of this Agreement, and shall immediately notify the
Adviser should the foregoing no longer be true during the term of this
Agreement;
(ii) the Distributor also represents and warrants that it is in
material compliance with all laws, rules and regulations applicable to it,
including but not limited to the rules and regulations promulgated by the NASD;
and
(iii) this Agreement has been duly authorized by the Distributor
and, when executed and delivered, will constitute a legal, valid and binding
obligation of the Distributor, enforceable against the Distributor in accordance
with its terms subject to bankruptcy, insolvency, reorganizations, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties.
6. Confidentiality.
During the term of this Agreement, the Distributor and the Adviser 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 Adviser 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 practicable and reasonably
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 6 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.
7. Limitation of Liability; Indemnification.
(a) The Distributor retains the general rights and responsibilities
associated with its employment of wholesalers and other personnel with day to
day job responsibilities that are substantially dedicated to the activities
(including wholesaling activities) to be performed on behalf of the Adviser and
the Trust (collectively, the "Distributor-employed Distribution Services
Personnel"). With respect to any individuals who are not employed by the
Distributor, but who are registered by the Distributor on Form U-4 in order for
such individuals ("non-Distributor-employed Distribution Services Personnel"),
and together with the Distributor-employed Distribution Services Personnel
(whether or not internal or external), collectively, the "Distribution Services
Personnel") to perform activities (including wholesaling activities) on behalf
of the Adviser and the Trust, the Distributor shall have the following rights
exercisable at any time within its sole discretion: (i) to terminate the
registration by filing Form U-5 or such other necessary and appropriate
documents; (ii) to take disciplinary action, including, without limitation,
making reports to regulatory bodies and authorities; (iii) to seek damages for
actions taken or omissions of the non-Distributor-employed Distribution Services
Personnel; (iv) to receive information (including, without limitation, reports
and certifications) from the Adviser's Code Compliance Officer and/or Chief
Compliance Officer regarding the non-Distributor-employed Distribution Services
Personnel's compliance with the Adviser's Code of Ethics; and (v) to receive
periodic certification from the non-Distributor-employed Distribution Services
Personnel regarding his or her compliance with the manuals and policies of the
Distributor. In addition, the Adviser shall provide the Distributor with, and
the Distributor shall have the right to receive, copies of any reports,
complaints, documents or inquiries relating to the performance of the
non-Distributor-employed Distribution Services Personnel, and any information
that would affect the non-Distributor-employed Distribution Services Personnel's
status of, or information on, his or her Form U-4 registration. For avoidance of
confusion, it is expressly agreed and understood that all Distribution Services
Personnel, whether or not Distributor-employed Distribution Services Personnel
or non-Distributor-employed Distribution Services Personnel, are considered
"Wholesaling Personnel" for purposes of the Distribution Agreement, and the
Distributor shall be entitled to be compensated and reimbursed with respect to
such Distributor-employed Distribution Services Personnel and reimbursed with
respect to the non-Distributor-employed Distribution Services Personnel, in
accordance with the Distribution Agreement.
(b) Subject to Section 7(a), the Distributor shall not be liable to the
Adviser or the Trust for any action taken or omitted by it in the absence of bad
faith, willful misfeasance, gross negligence or reckless disregard by it (or its
agents or employees) of its obligations and duties under this Agreement or the
Distribution Agreement. For purposes of clarification, it is expressly agreed
and understood that non-Distributor-employed Distribution Services Personnel are
not agents or employees of the Distributor, and Distributor shall have no
liability for the actions taken or omitted by the non-Distributor-employed
Distribution Services Personnel even the instance of bad faith, willful
misfeasance, gross negligence or reckless disregard by such
non-Distributor-employed Distribution Services Personnel of their obligations
and duties. As long as the Distributor acts in good faith and complies with laws
and regulations applicable to it in connection with its services hereunder
and/or under the Distribution Agreement, the Adviser shall indemnify and hold
harmless the Distributor and its employees, agents, directors and officers from
and against, any and all claims, demands, actions and suits, and from and
against any and all judgments, liabilities, losses, damages, costs, charges and
reasonable counsel fees incurred in connection therewith (collectively,
"Losses") arising out of or related to the arrangement contemplated under this
Agreement and/or the Distribution Agreement, including but not limited to all
activities, actions and omissions of the Distribution Services Personnel as
registered representatives of the Distributor, except to the extent that Losses
result from (i) the Distributor's general responsibilities as employer of
Distributor-employed Distribution Services Personnel, or (ii) the bad faith,
willful misfeasance, gross negligence or reckless disregard by the Distributor
of its express obligations and duties hereunder and/or the Distribution
Agreement.
8. 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 Adviser, to it at 000 Xxxxxxxxxxxx Xxxxxx,
0xx Xxxxx, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: President 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.
9. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable
by either of the parties hereto except by the specific written consent of the
other party. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
10. Governing Law.
This Agreement shall be governed by, and interpreted in accordance with,
the laws of the State of Massachusetts.
11. Miscellaneous.
(a) Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(b) This Agreement constitutes the complete agreement of the parties
hereto 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.
(c) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if this Agreement
did not contain such part, term or provision.
(d) This Agreement may be executed in counterparts, each of which shall be
an original but all of which, taken together, shall constitute one and the same
agreement.
(e) No amendment to this Agreement shall be valid unless made in writing
and executed by both parties hereto.
(f) The Adviser acknowledges that certain FRC publications referred to in
the Distribution Agreement may be provided only to parties that have entered
into a written agreement or addendum that sets forth the terms of use of such
publications and the associated fee. The Distribution Agreement provides that
the Trust will notify the Distributor whether the Trust or the Adviser or both
will enter into such an agreement or addendum. The Adviser acknowledges that if
only one of the Trust or the Adviser enters into such agreement or addendum, the
other party will be prohibited from receiving or using such publications.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
BB&T ASSET MANAGEMENT, INC. BB&T FUNDS DISTRIBUTORS, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxx
------------------ ------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxxx Xxxxx
Title: SVP Title: UP
