1
EXHIBIT (8)(B)
Form of Custody Agreement between the
Registrant and Star Bank.
2
CUSTODY AGREEMENT
-----------------
Agreement made as of the _____ day of October, 1992, between
BB&T MUTUAL FUNDS GROUP, (the "Trust"), a business trust organized under the
laws of Massachusetts and having its office at 0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000 and Star Bank, N.A. (the "Custodian"), a national banking
association having its principal office and place of business at Star Bank
Center, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000, which Agreement provides for
the furnishing of custodian services to the Fund.
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth the
Trust and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
1. "Authorized Person" shall be deemed to include the Chairman,
President, Secretary, Treasurer, and the Vice Presidents, or any other person,
whether or not any such person is an officer or employee of the Trust, duly
authorized by the Board of Trustees of the Trust to give Oral Instructions and
Written Instructions for the accounts of the investment portfolios of the Trust
and listed in the Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to time, subject in
each case to any limitations on the authority of such person as set forth in
Appendix A or any such Certificate.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its successor
or successors and its nominee or nominees, provided the Custodian has received a
certified copy of a resolution of Board of Trustees of the Trust specifically
approving deposits in the Book-Entry System.
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is signed by an officer of the Trust and is actually
received by the Custodian.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee
Page -1
3
or nominees. The term "Depository" shall further mean and include any other
person or clearing agency authorized to act as a depository under the Investment
Company Act of 1940, its successor or successors and its nominee or nominees,
provided that the Custodian has received a certified copy of a resolution of the
Board of Trustees of the Trust specifically approving such other person or
clearing agency as a depository.
5. "Dividend and Transfer Agent" shall mean the dividend and transfer
agent active, from time to time, in such capacity pursuant to a written
agreement with the Trust, changes in which the Trust shall immediately report to
the Custodian in writing.
6. "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and/or
interest by the government of the United States or agencies or instrumentalities
thereof, commercial paper, obligations (including certificates of deposit,
bankers' acceptances, repurchase and reverse repurchase agreements with respect
to the same) and bank time deposits of domestic banks that are members of
Federal Deposit Insurance Corporation, and short-term corporate obligations
where the purchase and sale of such securities normally require settlement in
federal funds or their equivalent on the same day as such purchase or sale.
7. "Officers" shall be deemed to include the Chairman, the President,
the Secretary, the Treasurer, and Vice Presidents of the Trust listed in the
Certificate annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
8. "Oral Instructions" shall mean oral instructions actually received
by the Custodian from an Authorized Person (or from a person which the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions from Authorized Persons in such manner so that such Written
Instructions are received by the Custodian on the next business day.
9. "Prospectus" shall mean the currently effective prospectuses for the
Trust and statement of additional information, as filed with and declared
effective by the Securities and Exchange Commission.
10. "Security or Securities" shall mean Money Market Securities, common
or preferred stocks, options, bonds, debentures, corporate debt securities,
notes, mortgages or other obligations, and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase or subscribe
Page -2
4
for the same, or evidencing or representing any other rights or interest
therein, or any property or assets.
11. "Written Instructions" shall mean communication actually received
by the Custodian from one Authorized Person or from one person which the
Custodian reasonably believes in good faith to be an Authorized Person in
writing or by telex or any other such system whereby the receiver of such
communication is able to verify by codes or otherwise with a reasonable degree
of certainty the authenticity of the senders of such communication.
Page -3
5
ARTICLE II
APPOINTMENT OF CUSTODIAN
------------------------
1. The Trust hereby constitutes and appoints the Custodian as custodian
of all the Securities and monies of each investment portfolio of the Trust
identified on Appendix B hereto (a "Fund"); such securities and monies at any
time owned by a Fund during the period of this Agreement are defined as "Fund
Assets".
2. The Custodian hereby accepts appointment as such Custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
DOCUMENTS TO BE FURNISHED BY THE TRUST
--------------------------------------
The Trust hereby agrees to furnish to the Custodian the following
documents:
1. A copy of its Agreement and Declaration of Trust (the
"Declaration of Trust") and any amendments thereto, certified by its Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. A copy of the resolution of its Board of Trustees
appointing the Custodian certified by its Secretary.
4. A copy of the most recent Prospectus of the Trust.
5. A Certificate of the President and Secretary setting forth
the names and signatures of the present officers of the Trust.
Page -4
6
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
------------------------------
1. The Trust will deliver or cause to be delivered to the
Custodian all Fund Asset, including cash received for the issuance of its
shares, at any time during the period of this Agreement. The Custodian will not
be responsible for such Fund Assets until actually received by it. Upon such
receipt, the Custodian shall hold in safekeeping and physically segregate at all
times from the property of any other persons, firms or corporations all Fund
Assets received by it from or for the account of a Fund. The Custodian will be
entitled to reverse any credits made on a Fund's behalf where such credits have
been previously made and monies are not finally collected within 90 days of the
making of such credits. The Custodian is hereby authorized by the Trust to
actually deposit any Fund Assets in the Book-Entry System or in a Depository,
provided, however, that the Custodian shall always be accountable to the Trust
for the Fund Assets so deposited. Fund Assets deposited in the BookEntry System
or the Depository will be represented in accounts which include only assets held
by the Custodian for customers, including but not limited to accounts in which
the Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account or accounts in the
name of a Fund all monies received by it for the account of a Fund, and shall
disburse the same only:
(a) In payment for Securities purchased for the account
of a Fund, as provided in Article V;
(b) In payment of dividends or distributions, as
provided in Article VI hereof;
(c) In payment of original issue or other taxes, as
provided in Article VII hereof;
(d) In payment for shares of a Fund redeemed by it, as
provided in Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and setting
forth the name and address of the person to whom the payment is to be made, the
amount of such payment and the purpose for which payment is to be made (the
Custodian not being required to question such direction) or (ii) if reserve
requirements are established for the Trust by law or by valid regulation,
directing the Custodian to deposit a specified amount of collected funds in the
form of U.S. dollars at a specified Federal Reserve Bank and stating the purpose
of such deposit;
Page -5
7
(f) In reimbursement of the expenses and liabilities of
the Custodian, as provided in paragraph 10 of Article IX hereof; or
(g) For transfer to a demand or time deposit account
of a Fund in any bank, whether domestic or foreign, or in any savings and loan
association.
3. Promptly after the close of business on each day the Trust is open
and valuing its portfolios, the Custodian shall furnish the Trust with a
detailed statement of monies held for the Trust under this Agreement and with
confirmations and a summary of all transfers to or from the account of the Funds
during said day. Where Securities are transferred to the account of the Funds
without physical delivery, the Custodian shall also identify as belonging to a
Fund a quantity of Securities in a fungible bulk of Securities registered in the
name of the Custodian (or its nominee) or shown on the Custodian's account on
the books of the Book-Entry System or the Depository. At least monthly and from
time to time, the Custodian shall furnish the Trust with a detailed statement of
the Securities held for the Funds under this Agreement.
4. All Securities held for a Fund, which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for a Fund may
be registered in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Trust agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository,
any Securities which it may hold for the account of a Fund and which may from
time to time be registered in the name of the Funds. The Custodian shall hold
all such Securities which are not held in the Book-Entry System by the
Depository or a Sub-Custodian in a separate account or accounts in the name of
each Fund segregated at all times from those of any other Fund maintained and
operated by the Trust and from those of any other person or persons. The
Custodian shall have no power or authority to assign, hypothecate, pledge or
otherwise dispose of any Securities held for the Trust, except pursuant to Oral
or Written Instructions or a Certificate, or as otherwise
Page -6
8
provided herein and only for the account of a Fund as provided herein.
5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian shall with respect to all Securities held for a Fund in accordance
with this Agreement:
(a) Collect all income due or payable to the Fund with
respect to the Fund Assets;
(b) Present for payment and collect the amount payable
upon all Securities which may mature or be called, redeemed, or retired, or
otherwise become payable;
(c) Surrender Securities in temporary form for
definitive Securities;
(d) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of the
Fund all rights and similar securities issued with respect to any Securities
held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian
directly or through the use of the Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of a Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for a Fund in exchange for
other Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the account of a Fund to
any protective committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of a Fund
and take such other steps as shall be stated in said Certificate to be for the
purpose of effectuating any duly
Page -7
9
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of a Fund.
7. The Custodian shall promptly deliver to the Trust all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by a Fund. The Custodian shall not vote or authorize the voting
of any Securities or give any consent, waiver or approval with respect thereto
unless so directed by a Certificate or Written Instruction.
8. The Custodian shall promptly deliver to the Trust all material
received by the Custodian and pertaining to Securities held by a Fund with
respect to tender or exchange offers, calls for redemption or purchase,
expiration of rights, name changes, stock splits and stock dividends, or any
other activity involving ownership rights in such Securities.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
---------------------------------------------
1. Promptly after each purchase of Securities by a Fund,
the Trust shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate or Written
Instructions, and (ii) with respect to each purchase of Money Market Securities,
Written Instructions, a Certificate or Oral Instructions, specifying with
respect to each such purchase: (a) the name of the issuer and the title of the
Securities, (b) the principal amount purchased and accrued interest, if any, (c)
the date of purchase and settlement, (d) the purchase price per unit, (e) the
total amount payable upon such purchase and (f) the name of the person from whom
or the broker through whom the purchase was made. The Custodian shall upon
receipt of Securities purchased by or for a Fund, pay out of the monies held for
the account of such Fund the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Written Instructions
or Oral Instructions.
2. Promptly after each sale of Securities by the Trust for the account
of a Fund, the Trust shall deliver to the Custodian (i) with respect to each
sale of Securities which are not Money Market Securities, a Certificate or
Written Instructions, and (ii) with respect to each sale of Money Market
Securities, Written Instructions, a Certificate or Oral Instructions, specifying
with respect to each such sale: (a) the name of the issuer and the title of the
Security, (b) the principal amount
Page -8
10
sold, and accrued interest, if any, (c) the date of sale, (d) the sale price per
unit, (e) the total amount payable to such Fund upon such sale and (f) the name
of the broker through whom or the person to whom the sale was made. The
Custodian shall deliver the Securities upon receipt of the total amount payable
to such Fund upon such sale, provided that the same conforms to the total amount
payable as set forth in such Certificate, Written Instructions or Oral
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
3. Promptly after the time as of which a Fund, either -
(a) writes an option on Securities or writes a covered
put option in respect of a Security, or
(b) notifies the Custodian that its obligations in respect of
any put or call option, as described in the Prospectus, require that the Fund
deposit Securities or additional Securities with the Custodian, specifying the
type and value of Securities required to be so deposited, or
(c) notifies the Custodian that its obligations in respect of
any other Security, as described in the Prospectus, require that the Fund
deposit Securities or additional Securities with the Custodian, specifying the
type and value of Securities required to be so deposited, the Custodian will
cause to be segregated or identified as deposited, pursuant to the Fund's
obligations as set forth in the Prospectus, Securities of such kinds and having
such aggregate values as are required to meet the Fund's obligations in respect
thereof.
The Trust will provide to the Custodian, as of the end of each
trading day, the market value of each Fund's option liability and the market
value of its portfolio of common stocks.
4. Subject to the above provisions of Article V, on contractual
settlement date, the account of the Fund will be charged for all purchases
settling on that day, regardless of whether or not delivery is made. On
contractual settlement date, sale proceeds will likewise be credited to the
account of the Fund irrespective of delivery.
In the case of "sale fails", the Custodian may request the
assistance of the Fund in making delivery of the failed Security.
Page -9
11
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
-------------------------------------
1. The Trust shall furnish to the Custodian a copy of the
resolution of the Board of Trustees, certified by the Secretary, either (i)
setting forth the date of the declaration of any dividend or distribution in
respect of shares of a Fund, the date of payment thereof, the record date as of
which Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date and the total
amount to be paid by the Dividend and Transfer Agent of the Fund on the payment
date, or (ii) authorizing the declaration of dividends and distributions in
respect of shares of a Fund on a daily basis and authorizing the Custodian to
rely on Written Instructions or a Certificate setting forth the date of the
declaration of any such dividend or distribution, the date of payment thereof,
the record date as of which Fund shareholders entitled to payment shall be
determined, the amount payable per share to Fund shareholders of record as of
that date and the total amount to be paid by the Dividend and Transfer Agent on
the payment date.
2. Upon the payment date specified in such resolution, Written
Instructions or Certificate, as the case may be, the Custodian shall arrange for
such payments to be made by the Dividend and Transfer Agent out of monies held
for the account of a Fund.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF THE FUNDS
------------------------------------------
1. The Custodian shall receive and credit to the account
of a Fund such payments for shares of the Fund issued or sold from time to time
as are received from the distributor for the Fund's shares, from the Dividend
and Transfer Agent of the Fund, or from the Trust.
2. Upon receipt of Written Instructions, the Custodian shall arrange
for payment of redemption proceeds to be made by the Dividend and Transfer Agent
out of the monies held for the account of a Fund in the total amount specified
in the Written Instructions.
3. Notwithstanding the above provisions regarding the redemption of any
shares of a Fund, whenever shares of a Fund which is marked by an asterisk on
Appendix B, are redeemed pursuant to any check redemption privilege which may
from time to time be offered by the Fund, the Custodian, unless otherwise
subsequently instructed by Written Instructions shall, upon
Page -10
12
receipt of any Written Instructions setting forth that the redemption is in good
form for redemption in accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out of the money held
in the account of such Fund for such purposes.
ARTICLE VIII
INDEBTEDNESS
------------
In connection with any borrowings, the Trust will cause to be
delivered to the Custodian by a bank or broker (including the Custodian, if the
borrowing is from the Custodian), requiring Securities as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank or broker setting forth the amount which such bank or broker will loan to a
Fund against delivery of a stated amount of collateral. The Trust shall promptly
deliver to the Custodian a Certificate specifying with respect to each such
borrowing: (a) the name of the bank or broker, (b) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Trust, acting on behalf of the Fund, or
other loan agreement, (c) the date and time, if known, on which the loan is to
be entered into, (d) the date on which the loan becomes due and payable, (e) the
total amount payable to a Fund on the borrowing date, (f) the market value of
Securities collateralizing the loan, including the name of the issuer, the title
and the number of shares or the principal amount of any particular Securities
and (g) a statement that such loan conforms with the Investment Company Act of
1940 and the then current Prospectus. The Custodian shall deliver on the
borrowing date specified in a Certificate the specified collateral and the
executed promissory note, if any, against delivery by the lending bank or broker
of the total amount of the loan payable provided that the same conforms to the
total amount payable as set forth in the Certificate. The Custodian may, at the
option of the lending bank or broker, keep such collateral in its possession,
but such collateral shall be subject to all rights therein given the lending
bank or broker, by virtue of any promissory note or loan agreement. The
Custodian shall deliver in the manner directed by the Trust from time to time
such Securities as additional collateral as may be specified in a Certificate to
collateralize further any transaction described in this paragraph. The Trust
shall cause all Securities released from collateral status to be returned
directly to the Custodian and the Custodian shall receive from time to time such
return of
Page -11
13
collateral as may be tendered to it. In the event that the Trust fails to
specify in a Certificate or Written Instructions the name of the issuer, the
title and number of shares or the principal amount of any particular Securities
to be delivered as collateral by the Custodian, the Custodian shall not be under
any obligation to deliver any Securities. The Custodian may require such
reasonable conditions with respect to such collateral and its dealings with
third-party lenders as it may deem appropriate.
ARTICLE IX
CONCERNING THE CUSTODIAN
------------------------
1. Except as otherwise provided herein, the Custodian
shall not be liable for any loss or damage, including counsel fees, resulting
from its action or omission to act or otherwise, except for any such loss or
damage arising out of its own negligence, bad faith or willful misconduct. The
Trust, on behalf of a Fund and only from Fund Assets (or insurance purchased by
the Trust with respect to its liabilities on behalf of a Fund hereunder), shall
defend, indemnify and hold harmless the Custodian and its directors, officers,
employees and agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Trust's duties with respect to a Fund hereunder or any other
action or inaction of the Trust or its Directors, officers, employees or agents,
except such as may arise from the negligent action, omission or willful
misconduct of the Custodian, its directors, officers, employees or agents. The
Custodian shall defend, indemnify and hold harmless the Trust and its Trustees,
officers, employees or agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Custodian's duties with respect to a Fund hereunder or any other
action or inaction of the Custodian or its directors, officers, employees,
agents, nominees or Sub-Custodians, except such as may arise from the negligent
action, omission or willful misconduct of the Trust, its Trustees, officers,
employees or agents. The Custodian may, with respect to questions of law apply
for and obtain the advice and opinion of counsel to the Trust at the expense of
a Fund, or of its own counsel at its own expense, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
the advice or opinion of counsel to the Trust, and shall be similarly protected
with respect to anything done or omitted by it in good faith in conformity with
advice or opinion of its counsel, unless counsel
Page -12
14
to the Trust shall, within a reasonable time after being notified of legal
advice received by the Custodian, have a differing interpretation of such
question of law. The Custodian shall be liable to the Trust for any proximate
loss or damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence, misfeasance or misconduct on the part of
the Custodian or any of its employees, agents, nominees or Sub-Custodians but
not for any special, incidental, consequential, or punitive damages; provided,
however, that nothing contained herein shall preclude recovery by the Trust of
principal and of interest to the date of recovery on, Securities incorrectly
omitted from a Fund's account or penalties imposed on the Trust for any failures
to deliver Securities.
In any case in which one party hereto may be asked to
indemnify the other or hold the other harmless, the party from whom
indemnification is sought (the "Indemnifying Party") shall be advised of all
pertinent facts concerning the situation in question, and the party claiming a
right to indemnification (the "Indemnified Party") will use reasonable care to
identify and notify the Indemnifying Party promptly concerning any situation
which presents or appears to present a claim for indemnification against the
Indemnifying Party. The Indemnifying Party shall have the option to defend the
Indemnified Party against any claim which may be the subject of the
indemnification, and in the event the Indemnifying Party so elects, such defense
shall be conducted by counsel chosen by the Indemnifying Party and satisfactory
to the Indemnified Party and the Indemnifying Party will so notify the
Indemnified Party and thereupon such Indemnifying Party shall take over the
complete defense of the claim and the Indemnifying Party shall sustain no
further legal or other expenses in such situation for which indemnification has
been sought under this paragraph, except the expenses of any additional counsel
retained by the Indemnified Party. In no case shall any party claiming the right
to indemnification confess any claim or make any compromise in any case in which
the other party has been asked to indemnify such party (unless such confession
or compromise is made with such other party's prior written consent).
The obligations of the parties hereto under this paragraph
shall survive the termination of this Agreement.
2. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation to
inquire into, and shall not be liable for:
Page -13
15
(a) The validity of the issue of any Securities
purchased by or for the account of a Fund, the legality of the purchase
thereof, or the propriety of the amount paid therefor;
(b) The legality of the sale of any Securities by or
for the account of a Fund, or the propriety of the amount for which the same
are sold;
(c) The legality of the issue or sale of any shares of
a Fund, or the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of a
Fund, or the propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any
dividend by the Trust in respect of shares of a Fund;
(f) The legality of any borrowing by the Trust, on
behalf of a Fund, using Securities as collateral;
(g) The sufficiency of any deposit made pursuant to a
Certificate described in clause (ii) of paragraph 2(e) of Article IV hereof,
3. The Custodian shall not be liable for any money or collected funds
in U.S. dollars deposited in a Federal Reserve Bank in accordance with a
Certificate described in clause (ii) of paragraph 2(e) of Article IV hereof, nor
be liable for or considered to be the Custodian of any money, whether or not
represented by any check, draft, or other instrument for the payment of money,
received by it on behalf of a Fund until the Custodian actually receives and
collects such money directly or by the final crediting of the account
representing a Fund's interest at the Book-Entry System or Depository.
4. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to a Fund from the Dividend and
Transfer Agent nor to take any action to effect payment or distribution by the
Dividend and Transfer Agent of any amount paid by the Custodian to the Dividend
and Transfer Agent in accordance with this Agreement.
5. Income due or payable to a Fund with respect to Fund
Assets will be credited to the account of the Fund as follows:
(a) Dividends will be credited on the first business
day following payable date irrespective of collection.
(b) Interest on fixed rate municipal bonds and debt securities
issued or guaranteed as to principal and/or interest by the government of the
United States or agencies or instrumentalities thereof (excluding securities
issued by the Government National Mortgage Association) will be credited on
Page -14
16
payable date irrespective of collection.
(c) Interest on fixed rate corporate debt securities will be
credited on the first business day following payable date irrespective of
collection.
(d) Interest on variable and floating rate debt securities and
debt securities issued by the Government National Mortgage Association will be
credited upon the Custodian's receipt of funds.
(e) Proceeds from options will be credited upon the
Custodian's receipt of funds.
6. Notwithstanding paragraph 5 of this Article IX, the Custodian shall
not be under any duty or obligation to take action on behalf of any Fund of the
Trust to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it. The Custodian will, however, promptly notify the Trust in
writing of such default and refusal to pay.
7. The Custodian may appoint one or more financial or banking
institutions, as Depository or Depositories or as Sub-Custodian or
Sub-Custodians, provided, however, that any such Depository or Sub-Custodian be
eligible to act as such under the Investment Company Act of 1940, including, but
not limited to, banking institutions located in foreign countries, of Securities
and monies at any time owned by a Fund, upon terms and conditions approved in a
Certificate. Current Depository(s) and Sub-Custodian(s) are noted in Appendix
C. The Custodian shall not be relieved of any obligation or liability under this
Agreement in connection with the appointment or activities of such Depositories
or Sub-Custodians.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
a Fund are such as properly may be held by the Fund under the provisions of the
Declaration of Trust and the Trust's By-Laws.
9. The Custodian shall treat all records and other information relating
to the Trust, the Funds and the Fund Assets as confidential and shall not
disclose any such records or information to any other person unless (a) the
Trust shall have consented thereto in writing or (b) such disclosure is
compelled
Page -15
17
by law.
10. The Custodian shall be entitled to receive and the Trust agrees to
pay to the Custodian, for a Fund's account from Fund Assets only, such
compensation as shall be determined pursuant to Appendix D attached hereto, or
as shall be determined pursuant to amendments to such Appendix approved by the
Custodian and the Trust. The Custodian shall be entitled to charge against any
money held by it for the account of a Fund the amount of any loss, damage,
liability or expense, including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement as determined by agreement
of the Custodian and the Trust or by the final order of any court or arbitrator
having jurisdiction and as to which all rights of appeal shall have expired. The
expenses which the Custodian may charge against the account of a Fund include,
but are not limited to, the expenses of Sub-Custodians incurred in settling
transactions involving the purchase and sale of Securities of the Fund.
11. The Custodian shall be entitled to rely upon any Certificate. The
Custodian shall be entitled to rely upon any Oral Instructions and any Written
Instructions actually received by the Custodian pursuant to Article IV or V
hereof. The Trust agrees to forward to the Custodian Written Instructions from
Authorized Persons confirming Oral Instructions in such manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
telex or otherwise, on the first business day following the day on which such
Oral Instructions are given to the Custodian. The Trust agrees that the fact
that such confirming instructions are not received by the Custodian shall in no
way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Trust. The Trust agrees that the Custodian
shall incur no liability to the Trust in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions.
12. The Custodian will (a) set up and maintain proper books of account
and complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Trust
under the Investment Company Act of 1940, with particular attention to Section
31 thereof and Rules 31 a-1 and 31 a-2 thereunder, and (b) preserve for the
periods prescribed by applicable Federal statute or regulation all records
required to be so preserved. All books and records shall be the property of the
Trust and shall be open to inspection and audit at reasonable times and with
prior notice
Page -16
18
by Officers and auditors employed by the Trust.
13. The Custodian and its Sub-Custodians shall promptly send to the
Trust, for the account of the Funds, any report received on the systems of
internal accounting control of the Book-Entry System or the Depository and with
such reports on their own systems of internal accounting control as the Trust
may reasonably request from time to time.
14. The Custodian performs only the services of a custodian and shall
have no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Funds. The Custodian is not a selling
agent for shares of the Funds and performance of its duties as a custodial agent
shall not be deemed to be a recommendation to the Custodian's depositors or
others of shares of a Fund as an investment.
ARTICLE X
TERMINATION
-----------
1. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date
of giving of such notice. If such notice is given by the Trust, it shall be
accompanied by a copy of a resolution of the Board of Trustees of the Trust,
certified by the Secretary or any Assistant Secretary, electing to terminate
this Agreement and designating a successor custodian or custodians, each of
which shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits and which shall be eligible to act as a
Custodian under the Investment Company Act of 1940. In the event such notice is
given by the Custodian, the Trust shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of its Board of Trustees,
certified by the Secretary, designating a successor custodian or custodians. In
the absence of such designation by the Trust, the Custodian may designate a
successor custodian which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus, and undivided profits and which shall be
eligible to act as a Custodian under the Investment Company Act of 1940. Upon
the date set forth in such notice this Agreement shall terminate, and the
Custodian, provided that it has received a notice of acceptance by the successor
custodian, shall deliver, on that date, directly to the successor custodian all
Securities and monies then owned by a Fund and held by it as Custodian. Upon
termination of this Agreement, the Trust shall pay to the
Page -17
19
Custodian such compensation as may be due as of the date of such termination.
The Trust agrees that the Custodian shall be reimbursed for its reasonable costs
in connection with the termination of this Agreement.
2. If a successor custodian is not designated by the Trust or by the
Custodian in accordance with the preceding paragraph, or the designated
successor cannot or will not serve, the Trust shall upon the delivery by the
Custodian to the Trust of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Trust) and monies then owned
by a Fund, other than monies deposited with a Federal Reserve Bank pursuant to a
Certificate described in clause (ii) of paragraph 2(e) of Article IV, be deemed
to be the custodian for a Fund, and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement, other than the duty
with respect to Securities held in the Book-Entry System which cannot be
delivered to the Trust to hold such Securities hereunder in accordance with this
Agreement.
Page -18
20
ARTICLE XI
MISCELLANEOUS
-------------
1. Appendix A sets forth the names and the signatures of all Authorized
Persons. The Trust agrees to furnish to the Custodian, a new Appendix A in form
similar to the attached Appendix A, if any present Authorized Person ceases to
be an Authorized Person or if any other or additional Authorized Persons are
elected or appointed. Until such new Appendix A shall be received, the Custodian
shall be fully protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Authorized Persons as set forth
in the last delivered Appendix A.
2. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer,
Director, past, present or future as such, of the Trust or of any predecessor or
successor, either directly or through the Trust or any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or be the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations
thereunder are enforceable solely against Fund Assets, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, Officers, Trustees of the Trust or of any predecessor
or successor, or any of them as such, because of the obligations contained in
this Agreement or implied therefrom and that any and all such liability is
hereby expressly waived and released by the Custodian as a condition of, and as
a consideration for, the execution of this Agreement.
3. The names "BB&T Mutual Funds Group" and "The Trustees of BB&T Mutual
Funds Group" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated as of October 1, 1987, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto filed or hereafter filed. The obligations of "BB&T Mutual
Funds Group" entered into in the name or on behalf of 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
Page -19
21
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.
4. Such provisions of the Prospectus of the Fund and any other
documents (including advertising material) specifically mentioning the Custodian
(other than merely by name and address) shall be reviewed with the Custodian by
the Trust.
5. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 000 Xxxxxx Xxxxxx, X. X. 0000, Xxxxxxxxxx, Xxxx 00000, attention
Trust Custody Services Department, or at such other place as the Custodian may
from time to time designate in writing.
6. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Trust shall be sufficiently given when
delivered to the Trust or on the second business day following the time such
notice is deposited in the U.S. mail postage prepaid and addressed to the Trust
at its office at 0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, or at
such other place as the Trust may from time to time designate in writing.
7. This Agreement with the exception of Appendices A, B and C may not
be amended or modified in any manner except by a written agreement executed by
both parties with the same formality as this Agreement, and authorized and
approved by a resolution of the Board of Trustees of the Trust.
8. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust or by the Custodian, and no
attempted assignment by the Trust or the Custodian shall be effective without
the written consent of the other party hereto.
9. This Agreement shall be construed in accordance with the laws
of the State of Ohio.
10. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto duly authorized
as of the day and year first above written.
Page -20
22
ATTEST: BB&T Mutual Funds Group
-------------------------------
By:
----------------------
ATTEST: Star Bank, N.A.
-------------------------------
By:
----------------------
By:
-----------------
Page -21
23
APPENDIX A
Board of Trustees
-----------------
Authorized Persons Specimen Signatures
------------------ -------------------
President:
----------------------- -------------------------
Secretary:
----------------------- -------------------------
Treasurer:
----------------------- -------------------------
Vice President:
----------------------- -------------------------
Adviser Employees: *
----------------------- -------------------------
*
----------------------- -------------------------
*
----------------------- -------------------------
*Authority restricted; does not include: (i) authority to sign checks on Fund
accounts or make other withdrawals or distributions of Fund monies or (ii) such
other authority as may be withheld or limited by a Certificate or Written
Instructions signed by two Officers of the Trust and delivered to the Custodian.
Page -22
24
APPENDIX B
NAME OF FUND
*The BB&T U. S. Treasury Money Market Fund
The BB&T Short-Intermediate U. S. Government Income Fund
The BB&T Intermediate U. S. Government Bond Fund
The BB&T North Carolina Intermediate Tax-Free Fund
The BB&T Growth and Income Stock Fund
The BB&T Capital Manager Growth Fund
The BB&T Capital Manager Moderate Growth Fund
The BB&T Capital Manager Conservative Growth Fund
Page -23
25
APPENDIX C
The following Depository(s) and Sub-Custodian(s) are employed
currently by Star Bank, N.A. for securities processing and control . . .
The Depository Trust Company (New York)
0 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
APPENDIX D
CUSTODY COMPENSATION SCHEDULE
Star Bank, N.A. as Custodian, will receive monthly compensation
for services according to the terms of the following schedule:
I. PORTFOLIO TRANSACTION FEES:
-------------------------------
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve $10.00
(c) For each portfolio transaction processed through
Page -24
26
our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $40.00
(f) For each GNMA Prin/Int Paydown, GNMA Sales $ 8.00
(g) For each option/future contract written,
exercised or expired $25.00
(h) For each disbursement (Fund expenses only) $5.00
(i) Wires:
(PC-customer (Telephone
initiated) initiated) ECDA
---------- ----------- ----
Incoming (with notification) $8.00 $5.50
Outgoing (Repetitive) $8.00 $6.75
Outgoing (Non-repetitive) $8.00 Not yet available
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange.
II. MONTHLY BASE FEE PER ACCOUNT $400.00
III. OUT-OF-POCKET EXPENSES
The only out-of-pocket expenses charged to your account will be
shipping fees or transfer fees.
IV. XXX DOCUMENTS
Per Shareholder/year to hold each XXX Document $8.00
V. EARNINGS CREDITS
Page -25
27
On a monthly basis any earnings credits generated from uninvested
custody balances will be first applied against any cash management service
fees and then to custody transaction fees (as referenced in item #1 above).
Earnings credits are based on the average yield on the 91 day U.S. Treasury
Xxxx for the preceding thirteen weeks less the 10% reserve.
All compensation is payable monthly.
Page-26
