Exhibit (h)(1)(ii)
FORM OF
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this [_____] day of [___________], by and
between BB&T Funds, a Massachusetts business trust (the "Company"), having its
principal place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and BB&T
Asset Management, Inc. (the "Administrator"), a North Carolina corporation
having its principal place of business at 000 Xxxxxxxxxxxx Xxxxxx Xxxx, Xxxxxxx,
Xxxxx Xxxxxxxx 00000.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest or common
stock ("Shares"); and
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
each series of the Company, all as now or hereafter may be established from time
to time ("Portfolios"), on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. Retention of the Administrator. The Company hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company.
ARTICLE 2. Administrative Services. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Company,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Company with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Company with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including Facilities for Shareholders' and Trustees') for handling the affairs
of the Portfolios and such other services as the Administrator shall, from time
to time, determine to be necessary to perform its obligations
under this Agreement. In addition, at the request of the Trustees, the
Administrator shall make reports to the Company's Trustees concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Company expenses and control all disbursements
for the Company, and as appropriate, compute the Company's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar weighted maturity;
(b) assist Company counsel with the preparation of prospectuses,
statements of additional information, registration statements and proxy
materials;
(c) prepare such reports, notice filing forms and other documents
(including reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities law) as may
be necessary or desirable to make notice filings relating to the Company's
Shares with state securities authorities, monitor the sale of Company
Shares for compliance with state securities laws, and file with the
appropriate state securities authorities the registration statements and
reports for the Company and the Company's Shares and all amendments
thereto, as may be necessary or convenient to qualify and keep effective
the Company and the Company's Shares with state securities authorities to
enable the Company to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Company's investment
adviser and independent auditors, communications to Shareholders,
including the semi-annual and annual reports to Shareholders;
(e) supervise the Company's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(f) calculate performance data of the Portfolios for dissemination to
information services covering the investment company industry;
(g) coordinate and supervise the preparation and filing of the Company's
tax returns;
(h) examine and review the operations and performance of the various
organizations providing services to the Company or any Portfolio of the
Company, including, without Stations the Company's investment adviser,
distributor, custodian, fund accountant, transfer agent, outside legal
counsel and independent public accountants, and at the request of the
Trustees, report to the Board on the performance of organizations;
(i) assist with the design, development, and operation of the Portfolios
including new classes, investment objectives, policies and structure;
(j) provide individuals reasonably acceptable to the Company's Trustees to
serve as officers of the Company, who will be responsible for the
management of certain of the Company's affairs as determined by the
Company's Trustees;
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(k) advise the Company and its Trustees on matters concerning the Company
and its affairs;
(l) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Company's
Trustees;
(m) monitor and advise the Company and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(n) perform all administrative services and functions of the Company and
each Portfolio to the extent administrative services and functions are not
provided to the Company or such Portfolio pursuant to the Company's or
such Portfolio's investment advisory agreement, distribution agreement,
custodian agreement, transfer agent agreement and fund accounting
agreement;
(o) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Company and the
Administrator shall determine desirable; and
(p) prepare and file with the SEC the semi-annual report for the Company
on Form N-SAR and all required notices pursuant to Rule 24f-2; and
(q) assist in monitoring and developing compliance procedures for each
Portfolio which will include, among other matters, procedures to monitor
compliance with each Portfolio's investment objective, policies,
restrictions, tax matters and applicable laws and regulations;
(r) provide legal support to the Company with respect to regulatory
matters including: monitoring regulatory and legislative developments
which may affect the Company and assisting in the strategic response to
such developments, assisting the Company in routine regulatory
examinations or investigations of the Company, and working closely with
outside counsel to the Company in response to any litigation or
non-routine regulatory matters; and
(s) assist the Company in preparing for Board meetings by (i) coordinating
board book production and distribution, (ii) assisting in the preparation
of Board agendas, (iii) attending Board meetings, (iv) preparing the
Administrator section of Board materials, (v) preparing Board meeting
materials, including but not limited to, materials relating to annual
contract approvals and 12b-1 plan approvals, as agreed upon by the
parties,
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The Administrator shall perform such other services for the Company that
are mutually agreed upon by the parties from time to time for such additional
fees, if any, that are agreed upon by the parties.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all Trustees of the
Company who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Trustees of the
Company to perform services on behalf of the Company.
(B) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Trustees who are not
affiliated persons of the Administrator or the Investment Adviser to the Company
or any affiliated corporation of the Administrator or the Investment Adviser,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers to the
Company.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Company shall pay to the Administrator compensation at an annual
rate of twelve one-hundredths of one percent (0.12%) of the Company's daily net
assets up to $5 billion and an annual rate of eight one-hundredths of one
percent (0.08%) of the Company's daily net assets over $5 billion, computed
daily and paid monthly. In addition to paying the Administrator the fees set
forth in this Agreement, the Company shall also reimburse the Administrator for
its reasonable out-of-pocket expenses, including but not limited to the travel
and lodging expenses incurred by officers and employees of the Administrator in
connection with attendance at Board meetings.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month shall
be made promptly.
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(B) Survival of Compensation Rights. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
partners, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence and
without negligence, the Company assumes full responsibility and shall indemnify
the Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any and
all losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of the Administrator's actions taken or
nonactions with respect to the performance of services hereunder. The indemnity
and defense provisions set forth herein shall indefinitely survive the
termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Company, but failure to do so in good faith shall not affect the rights
hereunder.
The Company shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to the Administrator, whose approval shall not be
unreasonably withheld. In the event that the Company elects to assume the
defense of any suit and retain counsel, the Administrator shall bear the fees
and expenses of any additional counsel retained by it. If the Company does not
elect to assume the defense of a suit, it will reimburse the Administrator for
the reasonable fees and expenses of any counsel retained by the Administrator.
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The Administrator may apply to the Company at any time for instructions
and may consult counsel for the Company or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Company until receipt of written notice thereof from the Company.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and Shareholders of the Company are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of the Administrator and its counsel are or may be or become
similarly interested in the Company, and that the Administrator may be or become
interested in the Company as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall be
as specified in Schedule A hereto.
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 9. Amendments. This Agreement, or any term thereof, may be
modified only by a written amendment, signed by the party against whom
enforcement of such modification is sought.
ARTICLE 10. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
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In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.
ARTICLE 11. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the following address: if to the Company, at 0000 Xxxxxxx Xxxx, Xxxxxxxx,
Xxxx 00000; and if to the Administrator, at 000 Xxxxxxxxxxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxx Xxxxxxxx 00000, or at such other address as such party may from
time to time specify in writing to the other party pursuant to this Section.
ARTICLE 13. Governing Law and Matters Relating to the Company as a
Massachusetts Business Trust. This Agreement 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 Company created and the Trustees, as trustees
but not individually or personally, acting from time to time under an Amended
and Restated Agreement and Declaration of Trust dated as of May 17, 1999 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 Company personally, but bind
only the assets of the Company, and all persons dealing with any series of
shares of the Company must look solely to the assets of the Company belonging to
such series for the enforcement of any claims against the Company.
ARTICLE 14. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BB&T FUNDS
By:_________________________
Title:______________________
BB&T ASSET MANAGEMENT, INC.
By:_________________________
Title:______________________
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF [_______________]
BETWEEN
BB&T FUNDS
AND
BB&T ASSET MANAGEMENT, INC.
Portfolios: This Agreement shall apply to all Portfolios of the Company, either
now or hereafter created. The current Portfolios of the Company are
set forth below:
BB&T U.S. Treasury Money Market Fund
BB&T Short U. S. Government Fund
BB&T Intermediate U. S. Government Fund
BB&T Large Company Value Fund
BB&T North Carolina Intermediate Tax-Free Fund
BB&T Balanced Fund
BB&T Small Company Growth Fund
BB&T International Equity Fund
BB&T Capital Manager Conservative Growth Fund
BB&T Capital Manager Moderate Growth Fund
BB&T Capital Manager Growth Fund
BB&T Prime Money Market Fund
BB&T Large Company Growth Fund
BB&T South Carolina Intermediate Tax-Free Fund
BB&T Virginia Intermediate Tax-Free Fund
BB&T Equity Index Fund
BB&T Intermediate Corporate Bond Fund
BB&T West Virginia Intermediate Tax-Free Fund
BB&T Mid Cap Growth Fund
BB&T Mid Cap Value Fund
BB&T Capital Manager Equity Fund
BB&T Small Company Value Fund
BB&T Georgia Intermediate Tax-Free Fund
BB&T Kentucky Intermediate Tax-Free Fund
BB&T Maryland Intermediate Tax-Free Fund
BB&T Special Opportunities Equity Fund
BB&T Equity Income Fund
Term: Pursuant to Article 7, the term of this Agreement shall commence on
[________________] and shall remain in effect through [___________]
("Initial Term"). Thereafter, unless otherwise terminated as
provided herein, this Agreement shall be renewed automatically for
successive one-year periods ("Rollover Periods"). This Agreement may
be terminated without penalty (i) by
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provision of a notice of nonrenewal in the manner set forth below,
(ii) by mutual agreement of the parties or (iii) for "cause," as
defined below, upon the provision of sixty (60) days advance written
notice by the party alleging cause. Written notice of nonrenewal
must be provided at least sixty (60) days prior to the end of the
Initial Term or any Rollover Period, as the case may be.
For purposes of this Agreement, "cause" shall mean (a) a material breach
of this Agreement that has not been remedied for thirty (30) days
following written notice of such breach from the non-breaching party; (b)
a final, unappealable judicial, regulatory or administrative ruling or
order in which the party to be terminated has been found guilty of
criminal or unethical behavior in the conduct of its business; or (c)
financial difficulties on the part of the party to be terminated which are
evidenced by the authorization or commencement of, or involvement by way
of pleading, answer, consent or acquiescence in, a voluntary or
involuntary case under Title 11 of the United States Code, as from time to
time is in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or
to the modification or alteration of the rights of creditors.
Notwithstanding the foregoing, after such termination for so long as the
Administrator, with the written consent of the Company, in fact continues
to perform any one or more of the services contemplated by this Agreement
or any schedule or exhibit hereto, the provisions of this Agreement,
including without limitation the provisions dealing with indemnification,
shall continue in full force and effect. Compensation due the
Administrator and unpaid by the Company upon such termination shall be
immediately due and payable upon and notwithstanding such termination. The
Administrator shall be entitled to collect from the Company, in addition
to the compensation described in this Agreement, the amount of all of the
Administrator's cash disbursements for services in connection with the
Administrator's activities in effecting such termination, including
without limitation, the delivery to the Company and/or its designees of
the Company's property, records, instruments and documents.
If, for any reason other than nonrenewal, mutual agreement of the parties
or "cause," as defined above, the Administrator is replaced as
administrator, or if a third party is added to perform all or a part of
the services provided by the Administrator under this Agreement (excluding
any sub-administrator appointed by the Administrator as provided in
Article 7 hereof), then the Company shall make a one-time cash payment, in
consideration of the fee structure and services to be provided under this
Agreement, and not as a penalty, to the Administrator in accordance with
the following schedule: (i) if the one-time cash payment becomes due and
payable at any time during years one through four of the Initial Term,
such payment shall be equal to the balance due for one-half of the period
remaining until the end of the Initial Term and (ii) if such payment
becomes due and payable at any time during year five of the Initial Term,
such payment shall be equal to the balance due for the entire period
remaining until the end of the Initial Term. For purposes of calculation
of the payment, it shall be assumed that the balance due shall be based
upon the average amount of the Company's assets for the twelve months
prior to the date the Administrator is replaced or a third party is added.
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In the event the Funds are merged into another legal entity in part or in
whole pursuant to any form of business reorganization or is liquidated in
part or in whole prior to the expiration of the then-current term of this
Agreement, the parties acknowledge and agree that the liquidated damages
provision set forth above shall be applicable in those instances in which
the Administrator is not retained to provide administration services
consistent with this Agreement. The one-time cash payment referenced above
shall be due and payable on the day prior to the first day in which the
Administrator is replaced or a third party is added.
The parties further acknowledge and agree that, in the event the
Administrator is replaced, or a third party is added, as set forth above,
(i) a determination of actual damages incurred by the Administrator would
be extremely difficult, and (ii) the liquidated damages provision
contained herein is intended to adequately compensate the Administrator
for damages incurred and is not intended to constitute any form of
penalty.
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