EXHIBIT (d)(4)
Sub-Advisory Agreement between Branch Banking and
Trust Company and Federated Investment
Management Company dated October 9,
2001, including Schedules 1, 2, and 3,
is filed herewith.
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INVESTMENT SUB-ADVISORY AGREEMENT
This Subadvisory Agreement (this "Agreement") is entered into as of the 9th day
of October, 2001 by and between BB&T Asset Management LLC, a North Carolina
limited liability company (the "Adviser"), and Federated Investment Management
Company, a Delaware business trust ("FIC").
RECITALS:
A. The Adviser has entered into an advisory agreement dated February 1,
2001, as amended (the "Advisory Agreement"), with BB&T Funds, a
Massachusetts business trust (the "Company"), pursuant to which the
Adviser provides portfolio management services to certain investment
funds of the Company;
B. The Advisory Agreement provides that the Adviser may delegate any or
all of its portfolio management responsibilities under the Advisory
Agreement to one or more subadvisers; and
C. The Adviser and the Board of Trustees (the "Board") of the Company
desire to retain FIC to render portfolio management services in the
manner and on the terms set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Adviser and FIC agree as follows:
SECTION 1. APPOINTMENT OF SUBADVISER.
The Adviser hereby appoints FIC as subadviser of the investment fund of
the Company set forth on Schedule 1 to this Agreement (the "Fund") and
authorizes FIC, in its discretion and without prior consultation with the
Adviser, to invest and manage that portion, if any, of the assets of the Fund as
may be designated in writing by the Adviser to FIC from time to time in the
Adviser's sole discretion (the "FIC Managed Assets"), in accordance with the
Fund's stated investment objective to the fullest extent permitted by:
(a) the Fund's investment policies, limitations, procedures and
guidelines set forth in the documents listed on Schedules 2 and 3 to
this Agreement;
(b) any additional objectives, policies or guidelines established by
the Adviser or by the Board that have been furnished in writing to FIC;
(c) the provisions of the Investment Company Act of 1940 (the "1940
Act") and the rules and regulations thereunder applicable to the Fund;
and
(d) the provisions of Subchapter M of the Internal Revenue Code ("IRC")
applicable to "regulated investment companies."
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Subject to the foregoing policies, limitations, procedures, guidelines,
laws or regulations and the supervision of the Adviser and the Board, the
Adviser authorizes FIC to determine the structure and composition of the
portfolio of securities comprising the FIC Managed Assets, including the
purchase, retention and disposition of, and exercise of all rights pertaining
to, any such securities.
Any designation by Adviser of the portion of the Fund's assets that are
to be invested and managed by FIC hereunder shall be made in a manner mutually
acceptable to FIC and the Adviser. The portion of the Fund's assets that are to
be invested and managed by FIC hereunder may be changed at any time by Adviser
in its sole discretion.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF FIC
FIC represents and warrants to Adviser as follows:
(a) FIC is a business trust duly organized, validly existing, and in
good standing under the laws of the State of Delaware.
(b) This Agreement constitutes the legal, valid, and binding obligation
of FIC, enforceable against FIC in accordance with its terms. FIC has
the absolute and unrestricted right, power, and authority to execute
and deliver this and to perform its obligations under this Agreement.
(c) Neither the execution and delivery of this Agreement by FIC nor the
performance of any of its obligations hereunder will give any person
the right to prevent, delay, or otherwise interfere with the
performance of such obligations pursuant to:
(i) any provision of FIC's Declaration of Trust or By-Laws;
(ii) any resolution adopted by the board of trustees or the
shareholders of FIC;
(iii) any law, regulation or administrative or court order
to which FIC may be subject; or
(iv) any contract to which FIC is a party or by which FIC
may be bound.
FIC is not and will not be required to obtain any consent from
any person in connection with the execution and delivery of this
Agreement or the performance of any obligations hereunder.
(d) FIC has furnished to the Adviser true and complete copies of all
the documents listed on Schedule 3 to this Agreement.
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF THE ADVISER
The Adviser represents and warrants to FIC as follows:
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(a) The Adviser is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of North
Carolina.
(b) This Agreement constitutes the legal, valid, and binding obligation
of the Adviser, enforceable against the Adviser in accordance with its
terms. The Adviser has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and to perform its
obligations under this Agreement.
(c) Neither the execution and delivery of this Agreement by the Adviser
nor the performance of any of its obligations hereunder will give any
person the right to prevent, delay, or otherwise interfere with the
performance of such obligations pursuant to:
(i) any provision of the Adviser's Articles of Organization
or Operating Agreement;
(ii) any resolution adopted by the member or the managers
of the Adviser;
(iii) any law, regulation or administrative or court order
to which the Adviser may be subject; or
(iv) any contract to which the Adviser is a party or by
which the Adviser may be bound.
Except for the approval of the Board and of the Fund's
shareholders as required by Section 15 of the 1940 Act, the Adviser is
not and will not be required to obtain any consent from any person in
connection with the execution and delivery of this Agreement or the
performance of any obligations hereunder.
(d) The Adviser is a registered investment adviser under the Advisers
Act and is registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require it to be so
registered or licensed, except where the failure to be so licensed
would not have a material adverse effect on its business.
(e) The Adviser has furnished to FIC true and complete copies of all
the documents listed on Schedule 2 to this Agreement.
SECTION 3. CONDITIONS TO AGREEMENT.
FIC's and the Adviser's obligations under this Agreement are subject to
the satisfaction of the following conditions precedent:
(a) Receipt by FIC of a certificate of an officer of the Company
stating that (i) this Agreement and the Advisory Agreement have been
approved by the vote of a majority of the trustees, who are not
interested persons of FIC or the Adviser, cast in person at a meeting
of the Board called for the purpose of voting on such approval, and
(ii) this Agreement and the Advisory Agreement have been approved by
the vote of a majority of the outstanding voting securities of the
Company;
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(b) Receipt by FIC of certified copies of instructions from the Fund to
its custodian designating the persons specified by FIC as "Authorized
Persons" under the Fund's custody agreement;
(c) The Fund's execution and delivery of a limited power of attorney in
favor of FIC, in a form mutually agreeable to FIC, the Adviser and the
Board;
(d) Receipt by FIC of Board resolutions, certified by an officer of the
Company, adopting all procedures and guidelines listed on Schedule 3 to
this Agreement or any other exemptive rule or order that is or will
become applicable to the Fund;
(e) Receipt by FIC of complete copies, certified by an officer of the
Company, of all other policies procedures, guidelines, and codes listed
on Schedule 2 to this Agreement; and
(f) Receipt by FIC or the Adviser, as the case may be, of any other
documents, certificates or other instruments that such party may
reasonably request from the other party.
SECTION 4. COMPENSATION.
For the services provided under this Agreement, the Adviser
will pay to FIC a fee equal to the product of the applicable annual rate set
forth on Schedule 1 multiplied by the average daily net asset value of the FIC
Managed Assets. Such fee will accrue daily and will be paid monthly to FIC on or
before the last business day of the next succeeding calendar month. If this
Agreement is effective for only a portion of a month, the fee will be prorated
for the portion of such month during which this Agreement is in effect.
SECTION 5. INFORMATION AND REPORTS.
(a) The Adviser will promptly notify FIC of any material change in any
of the documents listed on Schedule 2 to this Agreement and will
provide FIC with copies of any such modified document. The Adviser will
also provide FIC with a list, to the best of the Adviser's knowledge,
of all affiliated persons of Adviser (and any affiliated person of such
an affiliated person) and will promptly update the list whenever the
Adviser becomes aware of any additional affiliated persons. For
purposes of this Agreement, the term "affiliated person" will have the
same meaning as such term has under Section 2 of the Investment Company
of 1940, as amended.
(b) FIC will maintain books and records relating to its management of
the FIC Managed Assets under its customary procedures and in compliance
with applicable regulations under the 1940 Act and the Advisers Act.
FIC will permit the Adviser to inspect such books and records at all
reasonable times during normal business hours, upon reasonable notice.
Prior to each Board meeting, FIC will provide the Adviser and the Board
with reports regarding its management of the FIC Managed Assets during
the interim period, in such form as may be mutually agreed upon by FIC
and the Adviser. FIC will also provide the Adviser with any information
regarding its management of the
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FIC Managed Assets required for any shareholder report, amended
registration statement or prospectus supplement filed by any Fund with
the SEC.
(c) FIC shall promptly notify the Adviser in writing in the event that
there is a change in any of FIC's principal managers providing services
hereunder to the Adviser.
(d) FIC shall promptly notify the Adviser in the event of a material
change in the investment strategy or objectives of FIC with respect to
the FIC Managed Assets.
SECTION 6. NONEXCLUSIVE AGREEMENT; ALLOCATION OF TRANSACTIONS.
(a) The investment management services provided by FIC hereunder are
not to be deemed to be exclusive and FIC shall be free to render
similar services to other advisers, investment companies, and other
types of clients.
(b) To the extent consistent with applicable law, FIC may aggregate
purchase or sell orders with respect to the FIC Managed Assets with
contemporaneous purchase or sell orders of other clients of FIC or its
affiliated persons. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by FIC in the manner FIC reasonably considers to be the
most equitable and consistent with its and its affiliates' fiduciary
obligations to the Fund and to such other clients. The Adviser hereby
acknowledges that such aggregation of orders may not result in a more
favorable price or lower brokerage commissions in all instances.
(c) FIC will place purchase and sell orders with respect to the FIC
Managed Assets with or through such banks, brokers, dealers, futures
commission merchants or other firms dealing in Securities ("Brokers")
as it determines, which may include brokers that are affiliated persons
of FIC, provided such orders are exempt from the provisions of Section
17(a), (d) and (e) of the 1940 Act. FIC will use its best efforts to
obtain execution of transactions for the Fund at prices which are
advantageous to the Fund and at commission rates that are reasonable in
relation to the services received. FIC may, however, select Brokers on
the basis that they provide brokerage, research or other services or
products to the Fund and/or other clients of FIC and its affiliated
persons. In selecting Brokers, FIC may also consider the reliability,
integrity and financial condition of the Broker, and the size of and
difficulty in executing the order.
(d) The scope of FIC's engagement by the Adviser hereunder is limited
to the management of certain assets, as designated by the Adviser, of
the Fund. In no event shall this Agreement be construed to give FIC an
exclusive right to manage any assets of the Fund or any other
investment funds of the Company and FIC hereby acknowledges that the
Adviser may from time to time in its sole discretion engage one or more
other persons or entities to manage all or any portion of the assets of
the Fund or any other investment fund of the Company.
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SECTION 7. LIMITATION OF LIABILITY.
(a) In the absence of willful misfeasance, bad faith or gross
negligence on the part of FIC, or of reckless disregard by FIC of its
obligations and duties hereunder, FIC shall not be subject to any
liability to the Adviser, the Fund, the Company, any shareholder of the
Fund, or to any person, firm or organization. Without limiting the
foregoing, FIC shall not have any liability whatsoever for any
investment losses incurred by the Fund, or arising from transactions by
the Fund, prior to the date on which FIC assumes responsibility for the
management of the FIC Managed Assets.
(b) The Adviser, the Company, and the Fund are hereby expressly put on
notice of the limitation of liability as set forth in the Declaration
of Trust of FIC and agree that the obligations assumed by FIC pursuant
to this Agreement will be limited in any case to FIC and its assets and
the Adviser, the Company, and the Fund shall not seek satisfaction of
any such obligation from the shareholders of FIC, the trustees of FIC,
officers, employees or agents of FIC, or any of them.
SECTION 8. TERM.
This Agreement shall begin as of the date of its execution and shall
continue in effect for a period of two years from the date hereof and thereafter
for successive periods of one year, subject to the provisions for termination
and all of the other terms and conditions hereof if such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Fund at any time, without the payment of any penalty, by the Board or by vote of
a majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the Fund, or by the Adviser or FIC at any time, without the payment of any
penalty, on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement will terminate automatically with respect to the
Fund in the event of its assignment (as defined in the 0000 Xxx) or with respect
to the Fund upon the termination of the Adviser's management agreement with the
Fund.
SECTION 9. LIMITED POWER OF ATTORNEY.
Subject to any other written instructions of the Adviser or the
Company, FIC is hereby appointed the Fund's agent and attorney-in-fact for the
limited purposes of executing account documentation, agreements, contracts and
other documents as FIC shall be requested by brokers, dealers, counter parties
and other persons in connection with its management of the FIC Managed Assets.
The Adviser hereby ratifies and confirms as good and effectual, at law or in
equity, all that FIC and its officers and employees may do in FIC's capacity as
attorney-in-fact. However, nothing herein shall be construed as imposing a duty
on FIC to act or assume responsibility for any matters in its capacity as
attorney-in-fact for the Fund. Any person, partnership, corporation or other
legal entity dealing with FIC in its capacity as attorney-in-fact hereunder for
the Fund is hereby expressly put on notice that FIC is acting solely in the
capacity as an agent of the Fund and that any such person, partnership,
corporation or other legal entity must look solely to the Fund for enforcement
of any claim against the Fund, as FIC assumes no personal liability whatsoever
for obligations of the Fund entered into by FIC in its capacity as
attorney-in-fact for the Fund.
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SECTION 10. GENERAL PROVISIONS
SECTION 10.1 NOTICES
All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
FIC: Federated Investment Management Company
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: 000-000-0000
Adviser: BB&T Asset Management, LLC
000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: E.G. Xxxxxxx, III
Facsimile No.: 000-000-0000
SECTION 10.2 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other
such further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
SECTION 10.2 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
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SECTION 10.4 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
SECTION 10.5 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this
Agreement without the prior consent of the other party. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Except as otherwise expressly provided herein, nothing contained in this
Agreement will be construed to give any person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
SECTION 10.6 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
SECTION 10.7 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
SECTION 10.8 GOVERNING LAW
This Agreement will be governed by the laws of the State of
Pennsylvania without regard to conflicts of laws principles.
SECTION 10.9 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
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IN WITNESS WHEREOF, the parties hereto have caused
this instrument to be signed on their behalf by their
duly authorized officers as of the date first above written.
BB&T Asset Management, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Title: Senior Vice President
----------------------------------
Federated Investment Management Company
By: /s/ J. Xxxxxxxxxxx Xxxxxxx
-----------------------------------
Title: President - CEO/COO
---------------------------------
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SCHEDULE 1 - FUND AND SUBADVISORY FEES
SUBADVISORY FEE ON THE PORTION
OF THE ASSETS DESIGNATED PURSUANT
NAME OF FUND TO SECTION 1
------------ ------------
BB&T Intermediate Corporate Bond Fund 0.45% first $40 million;
0.40% above $40 million, but
not exceeding $60 million;
0.30% over $60 million, but
not exceeding $75 million;
0.25% over $75 million, but
not exceeding $250 million;
0.20% over $250 million.
X-00
XXXXXXXX 0 - XXXX XXXXXXXXXXXXX
1. Company's Declaration of Trust and Bylaws.
2. Currently effective registration statement for each class of the Fund's
shares and any pending amendments to such registration statement.
3. Any supplements to any prospectus or statement of additional information
for any class of the Fund's shares.
4. Schedule of the current year's Board meetings, and the reports needed by
the Board.
5. In the event that FIC is instructed not to invest all of the Fund's
securities in the High Income Bond Portfolio of Federated Core Trust, the
Company will provide the following:
(a) All applicable procedures and guidelines adopted by the Board or the
Adviser regarding:
- Repurchase agreements,
- Evaluating the liquidity of securities, include restricted
securities, municipal leases and stripped U.S. government
securities,
- Segregation of liquid assets in connection with reverse
repurchase agreements, firm commitments, standby commitments,
short sales, options and futures agreements,
- Derivative contracts and securities, and
- Affiliated bank procedures.
(b) Any master agreements that the Company has entered into on behalf of
the Fund, including:
- Master Repurchase Agreement,
- Master Futures and Options Agreements,
- Master Foreign Exchange Netting Agreements, and
- Master Swap Agreements.
(c) CFTC Rule 4.5 letter
(d) Pricing and performance calculation entities and contact persons.
(e) All applicable procedures and checklists required by the following
exemptive rules and orders under the 1940 Act:
- Rule 10f-3 (relating to affiliated underwriting syndicates),
- Rule 17a-7 (relating to interfund transactions),
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- Rule 17e-1 (relating to transactions with affiliated Brokers),
- Rule 17f-4 (relating to securities held in securities
depositories),
- Rule 17j-1 (relating to a code of ethics),
- Release No. IC-22903 (granting an exemption for the use of "core
funds"),
- Release No. IC-22313 (granting an exemption for the purchase of
affiliated money market funds)
- Release Nos. IC-16602 and IC-19816 (granting an exemption for
certain transactions with affiliated banks), and
- Release No. IC-15243 (granting an exemption permitting the
purchase of insurance from an affiliate and the settlement of
claims therefrom).
X-00
XXXXXXXX 0 - XXXXXXXXXX XXXXXXXXXXXXX
1. Part II of FIC's Form ADV most recently filed with the SEC.
2. All exemptive orders granted by the SEC that will become applicable to the
Fund and the procedures and guidelines followed by FIC in accordance
therewith.
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