EXHIBIT (e)(2)
UNDERWRITING AGREEMENT
THIS AGREEMENT is made as of ______________, 2007 by and among BB&T AM
Distributors, Inc., a Delaware corporation ("Distributor"), BB&T FUNDS, a
Massachusetts business trust (the "Trust") and BB&T ASSET MANAGEMENT, INC., an
investment adviser registered with the Securities and Exchange Commission (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and is currently offering units of beneficial interest (such units of all series
are hereinafter called the "Shares"), representing interests in investment
portfolios of the Trust identified on Exhibit A hereto (the "Funds") which are
registered with the Securities and Exchange Commission (the "SEC") pursuant to
the Trust's Registration Statement on Form N-1A (the "Registration Statement");
and
WHEREAS, the Trust wishes to retain Distributor to serve as principal
underwriter and distributor for the Funds to provide for the sale and
distribution of the Shares of the Funds identified on Exhibit A and for such
additional classes or series as the Trust may issue, and Distributor wishes to
furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. As used in this Agreement:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of the Trust and any other
person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written
Instructions on behalf of the Trust. An Authorized Person's scope of
authority may be limited by setting forth such limitation in a written
document signed by both parties hereto.
(d) "NASD" means the National Association of Securities Dealers, Inc.
(e) "Oral Instructions" mean oral instructions received by Distributor
from an Authorized Person or from a person reasonably believed by
Distributor to be an Authorized Person. Distributor may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic mail
as Oral Instructions.
(f) "Registration Statement" means any Registration Statement, including
the Prospectus and Statement of Additional Information relating to the
Trust filed with the SEC on Form N-1A and any amendments or
supplements thereto then in effect.
(g) "Securities Laws" mean the 1933 Act, the 1934 Act, and the 0000 Xxx.
(h) "Written Instructions" mean (i) written instructions signed by an
Authorized Person and received by Distributor or (ii) trade
instructions transmitted (and received by Distributor) by means of an
electronic transaction reporting system access to which requires use
of a password or other authorized identifier. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. As of the date first set forth above, the Trust hereby
appoints Distributor to serve as the principal underwriter and distributor
of its Shares for each of the Fund(s) identified on Exhibit A in accordance
with the terms set forth in this Agreement. Distributor accepts such
appointment and agrees to furnish such services. The Trust
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understands that Distributor is now, and may in the future be, the
underwriter and distributor of the shares of several investment companies
or series (collectively, the "Investment Entities"), including Investment
Entities having investment objectives similar to those of the Trust. The
Trust further understands that investors and potential investors in the
Trust may invest in shares of such other Investment Entities. The Trust
agrees that Distributor's duties to such Investment Entities shall not be
deemed in conflict with its duties to the Trust under this Agreement. For
clarification, Distributor has no, nor shall it be deemed to have,
responsibility under this Agreement with respect to the Shares of any
investment portfolios of the Trust not listed on Exhibit A.
3. COMPLIANCE WITH RULES AND REGULATIONS. Distributor undertakes to comply
with all applicable laws, rules and regulations, including, without
limitation, applicable requirements of the Securities Laws and all
applicable rules and regulations promulgated by the SEC thereunder, and all
applicable rules and regulations by any securities association registered
under the 1934 Act. Except as specifically set forth herein, Distributor
assumes no responsibility for such compliance by the Trust or any other
entity.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, Distributor shall act
only upon Oral Instructions or Written Instructions.
(b) Distributor shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives from an Authorized Person (or from a
person reasonably believed by Distributor to be an Authorized Person)
pursuant to this Agreement. Distributor may assume that any Oral
Instruction or Written Instruction received hereunder is not in any
way inconsistent with the provisions of organizational
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documents or of any vote, resolution or proceeding of the Trust's
Board of Trustees or of the Trust's shareholders, unless and until
Distributor receives Written Instructions to the contrary.
(c) The Trust agrees to forward to Distributor Written Instructions
confirming Oral Instructions so that Distributor receives the Written
Instructions by the close of business on the same day that such Oral
Instructions are received. The fact that such confirming Written
Instructions are not received by Distributor or differ from the Oral
Instructions shall in no way invalidate the transactions or
enforceability of the transactions authorized by the Oral Instructions
or Distributor's ability to rely upon such Oral Instructions.
5. RIGHT TO RECEIVE ADVICE.
(a) Advice of the Trust. If Distributor is in doubt as to any action it
should or should not take, Distributor may request Written
Instructions from the Trust.
(b) Advice of Counsel. If Distributor shall be in doubt as to any question
of law pertaining to any action it should or should not take with
respect to the Trust, Distributor may (i) upon prior written notice to
and after receiving written approval from the Trust, request advice
from the Trust's counsel ("Trust Counsel") at the Trust's expense; or
(ii) upon prior notice to the Trust, request advise from Distributor's
counsel ("Distributor Counsel") at Distributor's own expense.
(c) Conflicting Advice. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions Distributor
receives from the Trust and the advice Distributor receives from Trust
Counsel, Distributor may, in good faith, rely upon and follow the
advice of such Trust Counsel, provided that
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reasonable prior written notice has been given to the Trust. In the
event of a conflict between directions or advice or Oral Instructions
or Written Instructions Distributor receives from the Trust and the
advice Distributor receives from Distributor Counsel, Distributor
shall notify the Trust in writing regarding such conflict. The Trust
shall, within a reasonable period of time after receipt of such
notice, notify Distributor in writing of its agreement or disagreement
to any actions or any omissions to act Distributor proposes to take
pursuant to Distributor Counsel's advice. If the Trust (i) does not
respond to Distributor within a reasonable period of time; or (ii)
responds with agreement to Distributor's proposed actions or omissions
Distributor proposes to take pursuant to Distributor Counsel's advice;
then Distributor may, in good faith, rely upon and follow the advice
of Distributor Counsel. However, in the event where the Trust has
timely notified Distributor in writing of its disagreement with
Distributor's proposed actions or omissions, Distributor and the Trust
shall consult with each other in good faith to reach agreement on the
actions or omissions that are the subject of the Trust's objection.
If, after such consultations, Distributor and the Trust are unable to
agree on the actions or omissions in question, Distributor and the
Trust shall consult independent counsel reasonably acceptable to both
parties ("Independent Counsel"), the expense of such Independent
Counsel to be split 50/50 between Distributor and the Trust, and
Distributor may, after such advice is delivered to Distributor and the
Trust, follow and rely upon the advice of such Independent Counsel.
(d) Protection of Distributor. Distributor shall be indemnified by the
Trust and without liability for any action Distributor takes or does
not take in reliance upon
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directions or advice or Oral Instructions or Written Instructions it
receives from or on behalf of the Trust or from Trust Counsel or, if
Distributor follows and acts in accordance with the provisions of
paragraph (c) hereof, Distributor Counsel or Independent Counsel, as
applicable; provided Distributor believes, in good faith, that such
action or inaction is consistent with those directions or advice and
Oral Instructions or Written Instructions. Nothing in this section
shall be construed so as to impose an obligation upon Distributor (i)
to seek such directions or advice or Oral Instructions or Written
Instructions, or (ii) to act in accordance with such directions or
advice or Oral Instructions or Written Instructions unless, under the
terms of other provisions of this Agreement, the same is a condition
of Distributor's properly taking or not taking such action.
6. RECORDS; VISITS. The books and records pertaining to the Trust, which are
in the possession or under the control of Distributor, shall be the
property of the Trust. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable securities
laws, rules and regulations. The Trust and Authorized Persons shall have
access to such books and records at all times during Distributor's normal
business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided by Distributor to the Trust or to
an Authorized Person, at the Trust's expense. Any such books or records may
be maintained in the form of electronic media and stored on any magnetic
disk or tape or similar recording method, and in such case copies of such
books and records will, upon request from the Trust, be provided to the
Trust or an Authorized Person in such form of electronic media. Distributor
will return all such books and records to the Trust upon termination of
this Agreement, and the Trust will reimburse Distributor for the reasonable
actual out-of-pocket expenses
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incurred by Distributor to return all such books and records to the Trust.
Distributor may retain copies as are required by applicable law or
customary archival purposes. If Distributor is required by law to retain
copies of certain documents and the Trust demands the return of applicable
original documents, then Distributor may make such copies, and the Trust
will reimburse Distributor for the reasonable actual out-of-pocket expenses
incurred by Distributor in making such copies.
7. DISASTER RECOVERY. Distributor shall enter into with appropriate parties
and shall maintain in effect (i) one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available, and (ii) emergency data recovery
policies and procedures (a "Disaster Recovery Plan"), which is commercially
reasonable in light of the services to be provided. In the event of
equipment failures, Distributor shall, at no expense to the Trust, take
reasonable steps to minimize service interruptions. Distributor shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure, provided such loss or interruption is not
caused by Distributor's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or obligations under this
Agreement.
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8. CONFIDENTIALITY.
(a) Each party shall keep confidential any information relating to the
other party's business ("Confidential Information"). Confidential
Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the
public, including, but not limited to, information about investments,
investment strategies, investment research, research and portfolio
management methodologies, product plans, marketing strategies,
finances, operations, customer relationships, customer profiles
(including nonpublic financial and other information relating to
customers), customer lists, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Trust or Distributor, their respective
subsidiaries and affiliated companies; (b) any scientific or technical
information, design, process, procedure, formula, or improvement that
is commercially valuable and secret in the sense that its
confidentiality affords the Trust or Distributor a competitive
advantage over its competitors; (c) all confidential or proprietary
concepts, documentation, reports, data, specifications, computer
software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential.
Notwithstanding the foregoing: information shall not be Confidential
Information and shall not be subject to such confidentiality
obligations if it: (1) is already known to the receiving party at the
time it is obtained; (2) is or becomes publicly known or available
through no wrongful act of the receiving party; (3) is rightfully
received from a third party who, to the best of the receiving party's
knowledge, is not under a duty of confidentiality; or (4) is released
by the
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protected party to a third party without restriction. Confidential
Information may be disclosed by the receiving party (the party that
received the Confidential Information from the protected party) where
the Confidential Information (1) is required to be disclosed by the
receiving party pursuant to a court order, subpoena, governmental or
regulatory agency request or order made pursuant to applicable law,
provided that the receiving party has provided the protected party
prior written notice of the same, to the extent such notice is not
prohibited by law; or (2) is reasonably relevant to the defense of any
claim or cause of action asserted against the receiving party;
provided that the receiving party has provided the protected party
prior written notice of the same, to the extent such notice is not
prohibited by law; (3) is Trust information provided by Distributor in
connection with an independent third party compliance or other review;
provided that the recipient is bound by a duty of confidentiality; or
(4) release of such information by Distributor is necessary in
connection with the provision of services under this Agreement,
provided that the recipient is bound by a duty of confidentiality. The
provisions of this Section 8 shall survive termination of this
Agreement for a period of three (3) years after such termination.
(b) Notwithstanding any provision herein to the contrary, each party
hereto agrees that any Nonpublic Personal Information, as defined
under Section 248.3(t) of Regulation S-P ("Regulation S-P"),
promulgated under the Xxxxx-Xxxxx-Xxxxxx Act (the "Act"), disclosed by
a party hereunder is for the specific purpose of permitting the other
party to perform the services set forth in this Agreement. Each party
agrees that, with respect to such information, it will comply with
Regulation S-P and the Act and that it will not disclose any Nonpublic
Personal
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Information received in connection with this Agreement to any other
party, except to the extent as necessary to carry out the services set
forth in this Agreement or as otherwise permitted by Regulation S-P or
the Act.
(c) Distributor shall have in place and maintain physical, electronic and
procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access
to or use of, records and information relating to customers of the
Funds.
9. COMPENSATION.
(a) As compensation for services rendered by Distributor during the term
of this Agreement, Distributor will be entitled to the compensation as
may be agreed to from time to time in writing by the Trust and
Distributor (the "Fee Letter"). If the Funds have a plan of
distribution under Rule 12b-1 under the 1940 Act approved by the Funds
and in effect (collectively, the "Distribution Plan") that permits and
authorizes them to compensate Distributor, and the required board
approvals have been given, then the Funds shall be responsible for all
such compensation or such portions of it as have been permitted and
authorized under the Distribution Plan. If the Funds are not permitted
and authorized to compensate Distributor in full in accordance with
the Distribution Plan, the Adviser shall compensate Distributor in
accordance with the Fee Letter to the extent that the Funds are not so
permitted or authorized. The Adviser shall also reimburse Distributor
for any expenses reimbursable to Distributor under this Agreement to
the extent that the Funds are not authorized to reimburse Distributor
in full in accordance with the Fee Letter.
10. INDEMNIFICATION.
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(a) The Trust agrees to indemnify, defend and hold harmless Distributor,
its officers, directors, employees, agents and any person who controls
Distributor within the meaning of Section 15 of the 1933 Act
(collectively, "Distributor Indemnitees") from all expenses, claims
and liabilities (including, reasonable attorneys' fees) arising
directly or indirectly from any action or omission to act which
Distributor takes in connection with the provision of services to the
Trust, unless as a result of the willful misfeasance, bad faith, gross
negligence or reckless disregard of Distributor.
(b) The Trust agrees to indemnify, defend and hold harmless the
Distributor Indemnitees (a) from and against any and all claims,
costs, expenses (including reasonable attorneys' fees) losses,
damages, charges, payments and liabilities of any sort or kind which
the Distributor Indemnitees, under any other statute, at common law or
otherwise, arising out of or based upon: (i) any untrue statement, or
alleged untrue statement, of a material fact contained in the Trust's
Registration Statement, Prospectus, Statement of Additional
Information, or sales literature (including amendments and supplements
thereto), or (ii) any omission, or alleged omission, to state a
material fact required to be stated in the Trust's Registration
Statement, Prospectus, Statement of Additional Information or sales
literature (including amendments or supplements thereto), necessary to
make the statements therein not misleading; provided, however, that
insofar as losses, claims, damages, liabilities or expenses arise out
of or are based upon (A) any such untrue statement or omission or
alleged untrue statement or omission made in reliance on and in
conformity with information furnished to the Trust by Distributor or
its affiliated persons for use in the Trust's Registration Statement,
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Prospectus, or Statement of Additional Information or sales literature
(including amendments or supplements thereto), or (B) the willful
misfeasance, bad faith or gross negligence of Distributor in the
performance of its duties or the reckless disregard of its obligations
and duties under the Agreement, such indemnification is not
applicable; and (b) from and against any and all such claims, demands,
liabilities and expenses (including such costs and counsel fees) which
you, your officers and directors, or such controlling person, may
incur in connection with this Agreement or Distributor's performance
hereunder (but excluding such claims, demands, liabilities and
expenses (including such costs and counsel fees) arising out of or
based upon any untrue statement, or alleged untrue statement, of a
material fact contained in any Registration Statement or any
Prospectus or arising out of or based upon any omission, or alleged
omission, to state a material fact required to be stated in either any
Registration Statement or any Prospectus or necessary to make the
statements in either thereof not misleading), unless such claims,
demands, liabilities and expenses (including such costs and counsel
fees) arise by reason of Distributor's willful misfeasance, bad faith
or gross negligence in the performance of Distributor's duties
hereunder. The Trust acknowledges and agrees that in the event that
Distributor, at the request of the Trust, is required to give
indemnification comparable to that set forth in this paragraph to any
broker-dealer selling Shares of the Trust or servicing agent servicing
the shareholders of the Trust and such broker-dealer or servicing
agent shall make a claim for indemnification against Distributor,
Distributor shall make a similar claim for indemnification against the
Trust.
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(c) Distributor agrees to indemnify, defend and hold harmless the Trust,
its several officers, Trustees, employees, agents, the Adviser and
each person, if any, who controls a Fund within the meaning of Section
15 of the 1933 Act (the "Trust Indemnitees") against any and all
claims, costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or kind
which the Trust Indemnitees may incur under the 1933 Act, under any
other statute, at common law or otherwise, arising out of or based
upon any untrue statement, or alleged untrue statement, of a material
fact contained in the Trust's Registration Statement, Prospectus or
Statement of Additional Information or sales literature (including
amendments and supplements thereto), or any omission, or alleged
omission, to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such
statement or omission was reasonable and made in good faith reliance
upon information furnished by or confirmed in writing to the Trust by
Distributor or its affiliated persons (as defined in the 1940 Act).
The foregoing rights of indemnification shall be in addition to any
other rights to which the Trust or any such person shall be entitled
to as a matter of law.
(d) In any case in which one party hereto (the "Indemnifying Party") may
be asked to indemnify or hold the other party hereto (the "Indemnified
Party") harmless, the Indemnified Party will notify the Indemnifying
Party promptly after identifying any situation which it believes
presents or appears likely to present a claim for indemnification (an
"Indemnification Claim") against the Indemnifying Party, although the
failure to do so shall not prevent recovery by the Indemnified Party
(except to the extent the Indemnifying Party shows that the delay
prejudiced the
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defense of the action), and shall keep the Indemnifying Party advised
with respect to all developments concerning such situation. The
Indemnifying Party may participate in the defense against, and shall
have the option to defend the Indemnified Party against, any
Indemnification Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so
elects to assume the defense, such defense shall be conducted by
counsel chosen by the Indemnifying Party and satisfactory to the
Indemnified Party, and thereupon the Indemnifying Party shall take
over complete defense of the Indemnification Claim and the Indemnified
Party shall sustain no further legal or other expenses in respect of
such Indemnification Claim (except for reasonable investigation
costs). In the event that the Indemnifying Party does not elect to
assume the defense of any such suit within 15 days of its receipt of
notice of the Indemnification Claim, or in case the Indemnified Party
reasonably does not approve of counsel chosen by the Indemnifying
Party, or in case there is a conflict of interest between the
Indemnifying Party or the Indemnified Party, the Indemnifying Party
will reimburse the Indemnified Party for the fees and expenses of any
counsel retained by the Indemnified Party. Each party agrees promptly
to notify the other of the commencement of any litigation or
proceedings against it or any of its officers or directors in
connection with the issue and sale of any Shares. The Indemnified
Party will not confess to any Indemnification Claim or make any
compromise in any case in which the Indemnifying Party will be asked
to provide indemnification, except with the Indemnifying Party's prior
written consent (which shall not be unreasonably withheld, delayed or
conditioned); provided that if the Indemnifying Party fails to
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participate in or assume the defense within 15 days after receiving
notice of the action, the Indemnifying Party is bound by any
determination made in the action or by any compromise or settlement
made by the other party.
(e) The provisions of this Section 10 shall survive termination of this
Agreement.
11. RESPONSIBILITY OF DISTRIBUTOR.
(a) Distributor shall be under no duty to take any action hereunder on
behalf of the Trust except as specifically set forth herein or as may
be specifically agreed to by Distributor and the Trust in a written
amendment hereto. Distributor shall be obligated to exercise care and
diligence in the performance of its duties hereunder and to act in
good faith in performing services provided for under this Agreement.
Distributor shall be liable only for any damages arising out of
Distributor's failure to perform its duties under this Agreement to
the extent such damages arise out of Distributor's willful
misfeasance, bad faith, or gross negligence of Distributor in the
performance of its obligations or duties under this Agreement,
Distributor's reckless disregard of its obligations or duties under
this Agreement, or from Distributor's failure to comply with the laws,
rules and regulations applicable to it in connection with its
activities hereunder.
(b) Distributor shall not be liable for losses, delays, failures, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation: acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion; interruption,
loss or malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature; or
non-performance by a third party (unless such
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third party was engaged by Distributor); provided that Distributor has
adopted and implemented a commercially reasonable Disaster Recovery
Plan; and (ii) Distributor shall not be under any duty or obligation
to inquire into and shall not be liable for the validity or invalidity
of authority or lack thereof, or truthfulness or accuracy or lack
thereof, of any instruction, direction, notice, instrument or other
information which Distributor reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, neither
Distributor nor its affiliates shall be liable for any consequential,
special or indirect losses or damages, whether or not the likelihood
of such losses or damages was known by Distributor or its affiliates.
(e) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(f) The provisions of this Section 10 shall survive termination of this
Agreement.
12. DUTIES AND OBLIGATIONS OF THE FUND.
(a) The Trust represents to Distributor that all Registration Statements
and Prospectuses filed by the Trust with the SEC under the 1933 Act
with respect to the Shares have been prepared in conformity with the
requirements of the 1933 Act and the rules and regulations of the SEC
thereunder. Except as to information included in the Registration
Statement in good faith reliance upon information provided to the
Trust by Distributor or any affiliate of Distributor, the Trust
represents and warrants to Distributor that any Registration
Statement, when such Registration Statement becomes effective, will
contain statements required to be stated therein in conformity with
the 1933 Act and the rules and regulations of the SEC; that all
statements of fact contained in any such Registration Statement will
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be true and correct when such Registration Statement becomes
effective; and that no Registration Statement when such Registration
Statement becomes effective will include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to
a purchaser of the Shares. Distributor may but shall not be obligated
to propose from time to time such amendment or amendments to any
Registration Statement and such supplement or supplements to any
Prospectus as, in the light of future developments, may, in the
opinion of the Distributor's counsel, be necessary or advisable.
Distributor shall promptly notify the Trust of any advice given to it
by its counsel regarding the necessity or advisability of amending or
supplementing such Registration Statement. If the Trust shall not
propose such amendment or amendments and/or supplement or supplements
within fifteen days after receipt by the Trust of a written request
from Distributor to do so, Distributor may, at its option, terminate
this Agreement. The Trust shall not file any amendment to any
Registration Statement or supplement to any Prospectus without giving
Distributor reasonable notice thereof in advance; provided, however,
that nothing contained in this Agreement shall in any way limit the
Trust's right to file at any time such amendments to any Registration
Statements and/or supplements to any Prospectus, of whatever
character, as the Trust may deem advisable, such right being in all
respects absolute and unconditional. The Trust authorizes Distributor
to use any Prospectus or Statement of Additional Information in the
form furnished from time to time in connection with the sale of the
Shares.
(b) The Trust represents and warrants to Distributor that the Trust is an
investment
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company registered under the 1940 Act and the Shares sold by each Fund
are, and will be, registered under the 1933 Act.
(c) The net asset value of the Shares shall be determined in the manner
provided in the then current Prospectus and Statement of Additional
Information relating to the Shares, and when determined shall be
applicable to all transactions as provided in the Prospectus. The net
asset value of the Shares shall be calculated by the Trust or by
another entity on behalf of the Trust. Distributor shall have no duty
to inquire into, or liability for, the accuracy of the net asset value
per Share as calculated.
(d) Whenever in its judgment such action is warranted by unusual market,
economic or political conditions or abnormal circumstances of any
kind, the Trust may upon reasonable notice instruct Distributor to
decline to accept any orders for, or make any sales of, the Shares
until such time as the Trust deems it advisable to accept such orders
and to make such sales, and the Trust advises Distributor promptly of
such determination.
(e) The Trust agrees to execute any and all documents and to furnish any
and all information and otherwise to take all actions that may be
reasonably necessary in connection with the qualification of the
Shares for sale in such states as Distributor may request. The Trust
shall notify Distributor in writing of the states in which the Shares
may be sold and shall notify Distributor in writing of any changes to
the information contained in the previous notification.
13. DUTIES AND OBLIGATIONS OF DISTRIBUTOR.
(a) Distributor will act on behalf of the Trust for the distribution of
the Shares covered by the Registration Statement under the 1933 Act
and provide the
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distribution services outlined below and as follows: (i) preparation
and execution of sales or servicing agreements, (ii) preparation of
quarterly 12b-1 Reports to the Board, (iii) literature review,
recommendations and submission to the NASD and (iv) providing the
services listed on Exhibit B.
(b) Distributor agrees to use efforts deemed appropriate by Distributor to
solicit orders for the sale of the Shares and will undertake such
advertising and promotion as it believes reasonable in connection with
such solicitation. To the extent that Distributor receives fees under
any plan adopted by the Trust pursuant to Rule 12b-1 under the 1940
Act, Distributor agrees to furnish and/or enter into arrangements with
others for the furnishing of marketing or sales services with respect
to the Shares as may be required pursuant to such plan. To the extent
that Distributor receives shareholder services fees under any
shareholder services plan adopted by the Trust, Distributor agrees to
furnish and/or enter into arrangements with others for the furnishing
of, personal and/or account maintenance services with respect to the
relevant shareholders of the Trust as may be required pursuant to such
plan. It is contemplated that Distributor will enter into sales or
servicing agreements with securities dealers, financial institutions
and other industry professionals, such as investment advisers,
accountants and estate planning firms. Distributor will require each
dealer with whom Distributor has a selling agreement to conform to the
applicable provisions of the Prospectus, with respect to the public
offering price of the Shares, and Distributor shall not cause the
Trust to withhold the placing of purchase orders so as to make a
profit thereby.
(c) Distributor shall not utilize any materials in connection with the
sale or offering of Shares except the Trust's Prospectus and Statement
of Additional Information
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and such other materials as the Trust shall provide or approve. The
Trust agrees to furnish Distributor with sufficient copies of any and
all: agreements, plans, communications with the public or other
materials which the Trust intends to use in connection any sales of
Shares, in adequate time for Distributor to file and clear such
materials with the proper authorities before they are put in use.
Distributor and the Trust may agree that any such material does not
need to be filed subsequent to distribution. In addition, the Trust
agrees not to use any such materials until so filed and cleared for
use, if required, by appropriate authorities as well as by
Distributor.
(d) Distributor will transmit any orders received by it for purchase or
redemption of the Shares to the transfer agent for the Trust.
Distributor will have no liability for payment for the purchase of
Shares sold pursuant to this Agreement or with respect to redemptions
or repurchases of Shares.
(e) No Shares shall be offered by either Distributor or the Trust under
any of the provisions of this Agreement and no orders for the purchase
or sale of Shares hereunder shall be accepted by the Trust if and so
long as effectiveness of the Registration Statement then in effect or
any necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a current Prospectus
as required by Section 5(b)(2) of the 1933 Act is not on file with the
SEC; provided, however, that nothing contained in this paragraph shall
in any way restrict or have any application to or bearing upon the
Trust's obligation to redeem Shares tendered for redemption by any
shareholder in accordance with the provisions of the Trust's
Registration Statement, Declaration of Trust, or bylaws.
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14. DURATION AND TERMINATION. This Agreement shall become effective on the date
first written above and, unless sooner terminated as provided herein, shall
continue for an initial one (1) year term and thereafter shall be renewed
for successive one-year terms, provided such continuance is specifically
approved at least annually by (i) the Trust's Board of Trustees or (ii) by
a vote of a majority (as defined in the 1940 Act and Rule 18f-2 thereunder)
of the outstanding voting securities of the Trust, provided that in either
event the continuance is also approved by a majority of the Trustees who
are not parties to this Agreement and who are not interested persons (as
defined in the 0000 Xxx) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable without penalty, on at least sixty (60) days'
written notice, by the Trust's Board of Trustees, by vote of a majority (as
defined in the 1940 Act and Rule 18f-2 thereunder) of the outstanding
voting securities of the Trust, or by Distributor. This Agreement will also
terminate automatically in the event of its assignment (as defined in the
1940 Act and the rules thereunder). In the event the Trust gives notice of
termination, all reasonable, documented expenses associated with movement
(or duplication) of records and materials and conversion thereof to a
successor transfer agent or other service provider will be borne by the
Trust.
15. NOTICES. Notices shall be addressed (a) if to Distributor, at 000 Xxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President (or such other
address as Distributor may inform the Trust in writing); (b) if to the
Trust, 000 Xxxxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxx, XX 00000, Attention:
President (or such other address as the Trust may inform Distributor in
writing) or (c) if to neither of the foregoing, at such other address as
shall have been given by like notice to the sender of any such notice or
other communication by the other party. If notice is sent by confirming
telegram, cable, telex or facsimile
21
sending device, it shall be deemed to have been given immediately. If
notice is sent by first-class mail, it shall be deemed to have been given
three days after it has been mailed. If notice is sent by messenger, it
shall be deemed to have been given on the day it is delivered.
16. AMENDMENTS. No amendment to this Agreement shall be valid unless made in
writing and executed by both parties hereto.
17. NON-SOLICITATION. During the term of this Agreement and for one year
thereafter, the Trust shall not knowingly solicit or recruit for employment
or hire any of Distributor's employees. To "knowingly" solicit, recruit or
hire within the meaning of this provision does not include, and therefore
does not prohibit, solicitation, recruitment or hiring of a Distributor
employee by the Trust if the Distributor employee was identified by such
entity solely as a result of the Distributor employee's response to a
general advertisement by such entity in a publication of trade or industry
interest or other similar general solicitation by such entity.
18. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
19. FURTHER ACTIONS. Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
20. MISCELLANEOUS.
(a) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect
22
to delegated duties.
(b) No Changes that Materially Affect Obligations. Notwithstanding
anything in this Agreement to the contrary, the Trust agrees not to
make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of Distributor hereunder without the prior written
approval of Distributor, which approval shall not be unreasonably
withheld or delayed.
(c) No Representations or Warranties. Except as expressly provided in this
Agreement, Distributor hereby disclaims all representations and
warranties, express or implied, made to the Trust, Advisor or any
other person, including, without limitation, any warranties regarding
quality, suitability, merchantability, fitness for a particular
purpose or otherwise (irrespective of any course of dealing, custom or
usage of trade), of any services or any goods provided incidental to
services provided under this Agreement. Distributor disclaims any
warranty of title or non-infringement except as otherwise set forth in
this Agreement.
(d) Captions. 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.
(e) Information. The Trust will provide such information and documentation
as Distributor may reasonably request in connection with services
provided by Distributor to the Trust.
(f) Governing Law. This Agreement shall be deemed to be a contract made in
Massachusetts and governed by Massachusetts law, without regard to
principles of conflicts of law.
23
(g) Partial Invalidity. 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.
(h) Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(i) Facsimile Signatures. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(j) Customer Identification Program Notice. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify, and
record certain information that identifies each person who initially
opens an account with that financial institution on or after October
1, 2003. Consistent with this requirement, Distributor will request
(or already has requested) the Fund's name, address and taxpayer
identification number or other government-issued identification
number, and, if such party is a natural person, that party's date of
birth. Distributor may also ask (and may have already asked) for
additional identifying information, and Distributor may take steps
(and may have already taken steps) to verify the authenticity and
accuracy of these data elements.
(k) Anti-Money Laundering Compliance.
(i) Each of Distributor and the Trust acknowledge that it is a
financial institution subject to the USA Patriot Act of 2001 and
the Bank Secrecy Act (collectively, the "AML Acts"), which
require, among other things, that financial institutions adopt
compliance programs to guard against
24
money laundering. Each represents and warrants to the other that
it is in compliance with and will continue to comply with the
AML Acts and applicable regulations in all relevant respects.
The Distributor shall also provide written notice to each person
or entity with which it entered an agreement prior to the date
hereof with respect to the sale of the Trust's Shares, such
notice informing such person of anti-money laundering compliance
obligations applicable to financial institutions under
applicable laws and, consequently, under applicable contractual
provisions requiring compliance with laws.
(ii) Distributor shall include specific contractual provisions
regarding anti-money laundering compliance obligations in
agreements entered into by Distributor with any dealer that is
authorized to effect transactions in Shares of the Trust.
(iii) Each of Distributor and the Trust agrees that it will take such
further steps and cooperate with the other as may be reasonably
necessary, to facilitate compliance with the AML Acts, including
but not limited to the provision of copies of its written
procedures, policies and controls related thereto ("AML
Operations"). Distributor undertakes that it will grant to the
Trust, the Trust's anti-money laundering compliance officer and
regulatory agencies, reasonable access to copies of
Distributor's AML Operations, books and records pertaining to
the Trust only. It is expressly understood and agreed that the
Trust and the Trust's compliance officer shall have no access to
any of Distributor's AML Operations, books or records pertaining
to other clients of Distributor.
25
(l) Matters Relating to the Trust as a Massachusetts Business Trust. It is
expressly agreed that the obligations of the Trust hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this
Agreement have been authorized by the Trustees, and this Agreement has
been signed and delivered by an authorized officer of the Trust,
acting as such, and neither such authorization by the Trustees nor
such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on
them personally, but shall bind only the trust property of the Trust
as provided in the Trust's Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BB&T AM DISTRIBUTORS, INC.
By:
------------------------------------
Title:
---------------------------------
BB&T FUNDS
By:
------------------------------------
Title:
---------------------------------
BB&T ASSET MANAGEMENT, INC.
By:
------------------------------------
Title:
---------------------------------
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EXHIBIT A
THIS EXHIBIT A, dated as of _________, 2007 is Exhibit A to that certain
Underwriting Agreement dated as of _________, 2007, between BB&T AM
Distributors, Inc., BB&T Funds and BB&T Asset Management, Inc.
FUNDS
BB&T Equity Index Fund
BB&T Large Cap Fund
BB&T Mid Cap Value Fund
BB&T Mid Cap Growth Fund
BB&T Small Cap Fund
BB&T International Equity Fund
BB&T Special Opportunities Equity Fund
BB&T Equity Income Fund
BB&T Short U.S. Government Fund
BB&T Intermediate U.S. Government Fund
BB&T Total Return Bond Fund
BB&T Kentucky Intermediate Tax-Free Fund
BB&T Maryland Intermediate Tax-Free Fund
BB&T North Carolina Intermediate Tax-Free Fund
BB&T South Carolina Intermediate Tax-Free Fund
BB&T Virginia Intermediate Tax-Free Fund
BB&T West Virginia Intermediate Tax-Free Fund
BB&T National Tax-Free Money Market Fund
BB&T Prime Money Market Fund
BB&T U.S. Treasury Money Market Fund
BB&T Capital Manager Conservative Growth Fund
BB&T Capital Manager Moderate Growth Fund
BB&T Capital Manager Growth Fund
BB&T Capital Manager Equity Fund
27
EXHIBIT B
THIS EXHIBIT B, dated as of _________, 2007, is Exhibit B to that certain
Underwriting Agreement dated as of _________, 2007, between BB&T AM
Distributors, Inc., BB&T Funds and BB&T Asset Management, Inc.
ADDITIONAL DISTRIBUTION SERVICES
1. Basic Distribution Services. Providing the distribution entity and related
infrastructure and platform, including requisite registrations and
qualifications, premises, personnel, compliance, ordinary fund board meeting
preparation, maintenance of selling agreements, clearance of advertising and
sale literature with regulators, filing appropriate documentation for advisory
representatives to qualify as registered representatives of Distributor
(provided that the Adviser is solely responsible for its representatives'
meeting examination requirements) and their related registrations and fees,
ordinary supervisory services and overhead.
2. Special Distribution Services. For special distribution services requested by
the Trust, such as additional personnel, registrations, printing and
fulfillment, proprietary distribution expertise for particular circumstances,
and any other services in addition to the basic distribution services covered by
Paragraph 1 to this Exhibit B, Distributor shall be reimbursed promptly upon
invoicing its expenses for such services, including: (a) all costs to support
additional personnel; (b) regulatory fees including NASD CRD costs associated
with marketing materials; and (c) printing, postage and fulfillment costs, and
(d) amounts payable under additional agreements to which Distributor is a party.
3. Special Conduit Situations. If the Distribution Plan, or any other Fund plans
of distribution under Rule 12b-1 that contemplate up front and/or recurring
commission and/or service payments to broker-dealers, retirement plan
administrators or others by Distributor with respect to back-end loads, level
loads, or otherwise, unless expressly agreed otherwise in writing between the
parties, all such payments shall be made by Distributor, which shall act as a
conduit for making such payments to such broker-dealers, retirement plan
administrators or others; provided, however, Distributor's obligation to advance
the commissions and/or service payments to broker-dealers, retirement plan
administrators or others is contingent upon Distributor entering into a
financing arrangement with S.G. Constellation L.L.C ("SGC") at the request of
the Trust or the Adviser to the Trust. If the financing arrangement with SGC is
terminated, Distributor is not required to continue to advance commissions or
service payments to such broker-dealers, retirement plan administrators or
others. If SGC does not provide financing for an existing or new Fund issued by
the Trust, Distributor is not obligated to advance commissions or service
payments in connection with sales of the existing or new Fund.
The services rendered by the Distributor under this Section for which it is
entitled to compensation shall be deemed to have been completed at the time such
payments were made to such broker-dealers, retirement plan administrators or
others. It is expressly agreed and
28
understood by the parties that Distributor shall be reimbursed for all fees,
costs and other expenses it incurs in connection with financing arrangements it
provides, has entered into, or enters into at the request of the Trust or the
Adviser to the Trust, including without limitation, financing arrangements with
SGC and all payments made in connection therewith. The Trust's or Adviser's
obligation to reimburse the Distributor for these payments shall be absolute and
unconditional. Such reimbursement obligation shall survive any expiration or
termination of this Agreement, as it is expressly understood and acknowledged
that Distributor's obligations pursuant to such financing arrangements may
continue and survive beyond the expiration or termination of this Agreement.
In consideration of the Distributor's service as a conduit for up front and/or
recurring commission and/or service payments to broker-dealers, retirement plan
administrators or others, recognizing that the Adviser has authorized the
Distributor to enter into a financing arrangement with SGC, the Adviser agrees
to indemnify and hold harmless the Distributor from and against any and all
liabilities that may be incurred by or asserted or awarded against the
Distributor arising out of, relating to or by reason of any agreement entered
into by the Distributor with SGC for the purpose of acting as such conduit,
except to the extent such liabilities arise from the Distributor's own willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties or
obligations under this Agreement or any of the SGC financing documents.
4. Other Payments by Distributor. If Distributor is required to make any
payments to third parties in respect of distribution, which payments are
contemplated by the parties to the Underwriting Agreement or otherwise arise in
the ordinary course of business, Distributor shall be promptly reimbursed for
such payments upon invoicing them.
5. Wholesale Personnel Services. Wholesaling personnel may be external
wholesalers and/or internal wholesalers. Services include soliciting support of
the Funds with selling broker dealers, participating in promotional meetings,
presentations, conferences and other and forums; identifying high potential
personnel of the Adviser and selling broker dealers; and assisting with mail
solicitations and literature fulfillment. It is expressly agreed and understood
by the parties that Distributor shall be reimbursed for all fees, costs and
other expenses it incurs in connection with wholesale personnel services it
provides at the request of the Trust or the Adviser to the Trust.
29
