AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of July 1, 2006, as amended and restated
August 28, 2007, between BB&T Funds, a Massachusetts business
trust (hereinafter called the "Trust"), and Sterling Capital
Management LLC, a subsidiary of BB&T Corporation (hereinafter
called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser
to furnish certain investment advisory and related services
described below in connection with the management of each of the
investment portfolios of the Trust identified on Schedule A
hereto (the "Funds"), and the Investment Adviser represents that
it is willing and possesses legal authority to so furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. Appointment. The Trust hereby appoints the Investment
Adviser to act as investment adviser to the Funds for the period
and on the terms set forth in this Agreement. The Investment
Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the
Investment Adviser with copies properly certified or
authenticated of each of the following documents:
(a) the Trust's Agreement and Declaration of Trust,
dated October 1, 1987, as amended, and filed with the Secretary
of State of The Commonwealth of Massachusetts, and all
amendments thereto or restatements thereof (such Agreement and
Declaration of Trust, as presently in effect and as it shall
from time to time be amended or restated, is herein called the
"Declaration of Trust");
(b) the Trust's Bylaws and amendments thereto;
(c) resolutions of the Trust's Board of Trustees
authorizing the appointment of the Investment Adviser and
approving this Agreement;
(d) the Trust's original Notification of Registration
on Form N-8A under the 1940 Act as filed with the Securities and
Exchange Commission on June 30, 1992 and all amendments thereto;
(e) the Trust's current Registration Statement on
Form N-lA under the Securities Act of 1933, as amended ("1933
Act"), and under the 1940 Act as filed with the Securities and
Exchange Commission; and
(f) the Funds' most recent prospectuses and the
Trust's Statement of Additional Information relating to the
Funds (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and
supplements thereto are herein collectively called the
"Prospectus").
The Trust will promptly furnish the Investment Adviser with
copies of all amendments of or supplements to the foregoing
documents.
3. Management. Subject to the supervision of the Trust's
Board of Trustees, the Investment Adviser will provide or cause
to be provided a continuous investment program for each Fund
identified on Schedule A hereto, including investment research
and management with respect to all securities and investments
and cash equivalents in such Funds. The Investment Adviser will
determine or cause to be determined from time to time what
securities and other investments will be purchased, retained or
sold by the Trust with respect to each Fund identified on
Schedule A hereto and will place or cause to be placed orders
for purchase and sale on behalf of the Trust with respect to
such Fund.
The Investment Adviser will provide the services under this
Agreement in accordance with each Fund's investment objective,
policies and restrictions as stated in the Prospectuses,
resolutions of the Trust's Board of Trustees, and any
undertakings with state or other regulatory authorities which
are provided by the Trust to the Investment Adviser. The
Investment Adviser further agrees that it:
(a) will use the same skill and care in providing
such services as it uses in providing services to fiduciary
accounts for which it has investment responsibilities;
(b) will comply in all material respects with all
applicable Rules and Regulations of the Securities and Exchange
Commission under the Investment Company Act of 1940 and in
addition will conduct its activities under this Agreement in
accordance with any applicable regulations pertaining to the
investment advisory activities of the Investment Adviser;
(c) will not make loans to any person to purchase or
carry units of beneficial interest ("shares") in the Trust or
make loans to the Trust;
(d) will place or cause to be placed orders for the
Funds identified on Schedule A hereto either directly with the
issuer or with any broker or dealer and, in placing orders with
brokers and dealers, the Investment Adviser will attempt to
obtain prompt execution of orders in an effective manner at the
most favorable price. Consistent with this obligation, when the
execution and price offered by two or more brokers or dealers
are comparable, the Investment Adviser may, in its discretion,
purchase and sell portfolio securities to and from brokers and
dealers who provide the Investment Adviser with research advice
and other services. In no instance will portfolio securities be
purchased from or sold to the principal distributor of the Trust
(the "Distributor"), the Investment Adviser, or any affiliated
person (as defined in the Investment Company Act of 1940) of
either the Trust, the Distributor, or the Investment Adviser.
(e) will treat confidentially and as proprietary
information of the Trust all records and other information
relative to the Trust and prior, present, or potential
shareholders of the Trust learned by, or disclosed to, the
Investment Adviser in the course of its performance of its
responsibilities and duties under this Agreement, and will not
use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may
not be withheld where the Investment Adviser may be exposed to
civil, regulatory, or criminal sanctions for failure to comply
when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust; and
(f) will maintain its policy and practice of
conducting its fiduciary functions independently. In making
investment recommendations for the Trust, the Investment
Adviser's personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase or sale
for the Trust's account are customers of the Investment Adviser,
or the parents or subsidiaries or affiliates of the Investment
Adviser unless so required by applicable law. In dealing with
its customers, the Investment Adviser and its parents,
subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by
the Trust.
4. Use of Sub-Investment Adviser. The Investment Adviser
may, subject to the approvals required under the 1940 Act,
employ a sub-investment adviser to assist the Investment Adviser
in the performance of its duties under this Agreement. Such use
does not relieve the Investment Adviser of any duty or liability
it would otherwise have under this Agreement. Compensation of
any such sub-investment adviser for services provided and
expenses assumed under any agreement between the Investment
Adviser and such sub-investment adviser permitted under this
paragraph is the sole responsibility of the Investment Adviser.
5. Compliance Certification. The Investment Adviser
shall provide a certification that its policies and procedures
are reasonably designed to prevent violations of the Advisers
Act, as is reasonably requested by the Trust. In addition, the
Investment Adviser will provide annually a written report of its
policies and procedures reasonably designed to prevent
violations of the Advisers Act to enable the Trust to fulfill
its obligations under Rule 38a-1 of the 1940 Act. The summary
report will describe the Investment Adviser's policies and
procedures as they relate to the services it provides to the
Funds, the types of compliance risks material to the Funds, and
will discuss the adequacy of the Investment Adviser's compliance
controls.
6. Services Not Exclusive. The investment management
services furnished by the Investment Adviser hereunder are not
to be deemed exclusive. Except to the extent necessary to
perform the Investment Adviser's obligations under this
Agreement, nothing herein shall be deemed to limit or restrict
the right of the Investment Adviser, or any subsidiary or
affiliate of the Investment Adviser, or any employee of the
Investment Adviser, to engage in any other business or to devote
time and attention to any other business, whether of a similar
or dissimilar nature, or to render services of any kind to any
other person. The Investment Adviser acts as adviser to other
clients and may give advice, and take action, with respect to
any of those which may differ from the advice given, or the
timing or nature of action taken, with respect to the Funds.
The Investment Adviser shall have no obligation to recommend the
purchase or sale of any securities on the basis of any
information known to it or any of its officers or employees
where the utilization of such information, might, in the
Investment Adviser's opinion, constitute a violation of any
federal or state laws, rules or regulations. The Trust
acknowledges that transactions in a specific security may not be
accomplished for all client accounts at the same time or at the
same price.
7. Books and Records. In compliance with the
requirements of Rule 3la-3 under the 1940 Act, the Investment
Adviser hereby agrees that all records which it maintains for
the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's request. The Investment Adviser further agrees to
preserve for the periods prescribed by Rule 3la-2 under the 1940
Act the records required to be maintained by Rule 3la-1 under
the 1940 Act.
8. Expenses. During the term of this Agreement, the
Investment Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than
the cost of securities (including brokerage commissions or
charges, if any) purchased for the Trust. The Trust will be
responsible for all of the Trust's expenses and liabilities.
9. Compensation. For the services provided and the
expenses assumed pursuant to this Agreement, each of the Funds
will pay the Investment Adviser and the Investment Adviser will
accept as full compensation therefor a fee computed daily and
paid monthly on the first business day of each month equal to
the lesser of (i) the fee at the applicable annual rate set
forth on Schedule A hereto or (ii) such fee as may from time to
time be agreed upon in writing by the Trust and the Investment
Adviser. If the fee payable to the Investment Adviser pursuant
to this paragraph begins to accrue after the beginning of any
month or if this Agreement terminates before the end of any
month, the fee for the period from such date to the end of such
month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to
the proportion which such period bears to the full month in
which such effectiveness or termination occurs. For purposes of
calculating fees, the value of a Fund's net assets shall be
computed in the manner specified in the Prospectus and the
Trust's Declaration of Trust for the computation of the value of
the Fund's net assets in connection with the determination of
the net asset value of the Fund's shares.
If in any fiscal year the aggregate expenses (as defined
under the securities regulations of any state having
jurisdiction over the Trust) of any of the Funds of the Trust
exceed the expense limitations of any such state, the Investment
Adviser will make payment to the Trust for a portion of such
excess expenses equal to such excess times the ratio of the
aggregate fees otherwise payable by the Fund to the Investment
Adviser under this Investment Advisory Agreement to the
aggregate fees otherwise payable by the Fund (1) to the
Investment Adviser under this Investment Advisory Agreement with
the Trust and (2) to the administrator of the Trust (the
"Administrator") under the Administration Agreement between the
Administrator and the Trust. The obligation of the Investment
Adviser to make payment to the Trust hereunder is limited in any
fiscal year to the amount of the fee received by the Investment
Adviser from the Fund for investment advisory or consulting
services for such fiscal year, provided, however, that
notwithstanding the foregoing, the Investment Adviser shall make
payment to the Trust for such proportion of such excess expenses
regardless of the amount of fees received by it during such
fiscal year to the extent that the securities regulations of any
state having jurisdiction over the Trust so require. Such
expense reimbursement, if any, will be estimated daily and
reconciled and paid on a monthly basis.
10. Limitation of Liability. The Investment Adviser shall
not be liable for any error of judgment or mistake of law or for
any loss suffered by the Funds in connection with the
performance of this Agreement, except a loss resulting from a
breach of fiduciary duty under the Investment Company Act of
1940 with respect to the receipt of compensation for services or
a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. In no case
shall the Investment Adviser be liable for actions taken or non-
actions with respect to the performance of services under this
Agreement based upon specific information, instructions, or
requests given or made to the Investment Adviser by an officer
of the Trust thereunto duly authorized. Any suggested
limitations on liability shall not relieve the Adviser from any
responsibility or liability the Adviser may have under federal
statutes.
11. Duration and Termination. This Agreement will become
effective as to a particular Fund as of the date first written
above, provided that it shall have been approved by vote of a
majority of the outstanding voting securities of such Fund, in
accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect
until October 31, 2007. Thereafter, if not terminated, this
Agreement shall continue in effect as to a particular Fund for
successive periods of twelve months each ending on October 31 of
each year, provided 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 party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of the
outstanding voting securities of such Fund. Notwithstanding the
foregoing, this Agreement may be terminated as to a particular
Fund at any time on sixty days' written notice, without the
payment of any penalty, by the Trust (by vote of the Trust's
Board of Trustees or by vote of a majority of the outstanding
voting securities of such Fund) or by the Investment Adviser.
This Agreement will immediately terminate 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 of such terms in the
1940 Act.)
12. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or
termination is sought.
13. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define
or delimit any of the provisions hereof or otherwise affect
their construction or effect.
If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors
and shall be governed by the laws of The Commonwealth of
Massachusetts.
The names "BB&T Funds" and "Trustees of BB&T Funds" refer
respectively to the Trust created and the Trustees, as trustees
but not individually or personally, acting from time to time
under an Agreement and Declaration of Trust dated as of October
1, 1987, as amended, to which reference is hereby made and a
copy of which is on file at the office of the Secretary of State
of The Commonwealth of Massachusetts and elsewhere as required
by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "BB&T Funds" entered into
in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees,
shareholders or representatives of the Trust personally, but
bind only the assets of the Trust, and all persons dealing with
any series of shares of the Trust must look solely to the assets
of the Trust belonging to such series for the enforcement of any
claims against the 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 above written.
BB&T Funds
By:_________________________
Title: _______________________
Sterling Capital Management LLC
By:_________________________
Title: _______________________
August 28, 2007
Schedule A
to the
Investment Advisory Agreement between
BB&T Funds
and Sterling Capital Management LLC
Dated July 1, 2006
As Amended and Restated August 28, 2007
Name of Fund Compensation*
Sterling Capital Small Cap
Value Fund
Annual rate of ninety one-
hundredths of one percent
(.90%) of the Sterling Capital
Small Cap Value Fund's average
daily assets.
BB&T FUNDS
By:___________________________
Title: _________________________
STERLING CAPITAL MANAGEMENT LLC
By:____________________________
Title: __________________________
* All fees are computed daily and paid monthly.
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