AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
EXHIBIT (d)(5)
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
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
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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
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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
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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 nonactions 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.)
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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 |
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| By: | ||||
| Title: | ||||
| Sterling Capital Management LLC |
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| By: | ||||
| Title: | ||||
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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
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 |
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| By: | ||||
| Title: | ||||
| * | All fees are computed daily and paid monthly. |
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