BB&T FUNDS
BB&T Mid Cap Growth Fund and
BB&T Mid Cap Value Fund
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, having been
approved by the Board of Trustees of BB&T Funds, is made as
of December 16, 2009 between BB&T Funds, on behalf of its
series BB&T Mid Cap Growth Fund and BB&T Mid Cap Value
Fund, and Sterling Capital Management LLC ("Sterling") (the
"Plan"). The capitalized terms used herein shall have the
meaning ascribed to them in this Plan.
1. Overview of Plan of Reorganization.
(a) BB&T Mid Cap Growth Fund ("Mid Cap Growth Fund")
will sell, assign, convey, transfer and deliver to BB&T Mid
Cap Value Fund ("Mid Cap Value Fund"), and Mid Cap Value
Fund will acquire, on the Exchange Date (as defined in
Section 7 of this Plan), all of the properties and assets
existing at the Valuation Time (as defined in Section 4 of
this Plan) in Mid Cap Growth Fund, subject to liabilities.
In consideration therefor, Mid Cap Value Fund shall, on
the Exchange Date, assume all of the liabilities of Mid Cap
Growth Fund existing at the Valuation Time and transfer to
Mid Cap Growth Fund a number of full and fractional units
of beneficial interest ("Shares") (such Shares being
Institutional, Class A, Class B or Class C Shares) of Mid
Cap Value Fund having an aggregate net asset value equal to
the value of the assets of Mid Cap Growth Fund transferred
to Mid Cap Value Fund on such date less the value of all of
the liabilities of Mid Cap Growth Fund assumed by Mid Cap
Value Fund on that date. It is intended that the
reorganization described in this Plan shall be a tax-free
reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
(b) Upon consummation of the transaction described in
paragraph 1(a) of this Plan, Mid Cap Growth Fund in
complete liquidation shall distribute to its respective
shareholders of record as of the Exchange Date the Mid Cap
Value Fund Shares received by it, each shareholder being
entitled to receive that number of such Mid Cap Value
Fund Shares equal to the total of (i) the proportion which
the number of Shares of Mid Cap Growth Fund held by such
shareholder bears to the number of such Shares of Mid Cap
Growth Fund outstanding on such date multiplied by (ii) the
total number of Mid Cap Value Fund Shares received by the
Mid Cap Growth Fund, as of the Exchange Date. Mid Cap
Growth Fund shareholders of record holding Institutional,
Class A, Class B or Class C Shares will receive
Institutional, Class A, Class B or Class C Shares,
respectively, of Mid Cap Value Fund.
2. Representations and Warranties of BB&T Funds. Each of
BB&T Funds, Mid Cap Value Fund and Mid Cap Growth Fund
warrant to and agree that:
(a) BB&T Funds is a business trust duly established and
validly existing under the laws of the Commonwealth of
Massachusetts and has power to carry on its business as it
is now being conducted and to carry out this Plan. Each of
BB&T Funds, Mid Cap Growth Fund and Mid Cap Value Fund is
not required to qualify as a foreign association in any
jurisdiction. Each of BB&T Funds, Mid Cap Growth Fund and
Mid Cap Value Fund has all necessary federal, state and
local authorizations to own all of its properties and
assets and to carry on business as now being conducted and
to fulfill the terms of this Plan, except as set forth in
Section 2(k).
(b) BB&T Funds is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company, and such
registration has not been revoked or rescinded and is in
full force and effect.
(c) The statements of assets and liabilities, statements
of operations, statements of changes in net assets and
schedules of investments (indicating their market values)
for each of Mid Cap Growth Fund and Mid Cap Value Fund for
the fiscal year ended September 30, 2009, fairly present
the financial position of each of Mid Cap Growth Fund and
Mid Cap Value Fund as of such date, and said statements of
operations and changes in net assets and financial
highlights fairly reflect the results of operations,
changes in net assets and financial highlights for the
periods covered thereby in conformity with generally
accepted accounting principles.
(d) The prospectuses of each of Mid Cap Growth Fund and
Mid Cap Value Fund dated February 1, 2009, as amended, as
filed with the Securities and Exchange Commission (the
"Commission") (the "Prospectuses") and the Statement of
Additional Information for BB&T Funds, dated February 1,
2009, as amended (the "Statement of Additional
Information"), as filed with the Commission, did not as of
such date contain any 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, in
light of the circumstances under which they were made, not
misleading. As of the Exchange Date, the Prospectuses and
Statement of Additional Information then in effect will not
contain any 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, in light of the
circumstances under which they were made, not misleading.
(e) There are no material legal, administrative or other
proceedings pending or, to the knowledge of BB&T Funds, Mid
Cap Growth Fund or Mid Cap Value Fund, overtly threatened
against BB&T Funds, Mid Cap Growth Fund or Mid Cap Value
Fund, which assert liability on the part of BB&T Funds, Mid
Cap Growth Fund or Mid Cap Value Fund.
(f) There are no material contracts outstanding to which
BB&T Funds, Mid Cap Growth Fund or Mid Cap Value Fund is a
party, other than as disclosed in the currently effective
BB&T Funds registration statement on Form N-1A (which
includes the Prospectuses, Statement of Additional
Information and Part C of Form N-1A), or in the
registration statement on Form N-14 of BB&T Funds on behalf
of Mid Cap Value Fund (which contains the prospectus of Mid
Cap Value Fund and the proxy statement of Mid Cap Growth
Fund relating to the transactions described herein, the
"Registration Statement").
(g) Mid Cap Growth Fund has no known liabilities of a
material nature, contingent or otherwise, other than those
shown on its statement of assets and liabilities as of
September 30, 2009, referred to above and those incurred in
the ordinary course of the business of BB&T Funds as an
investment company or Mid Cap Growth Fund since such date.
Prior to the Exchange Date, Mid Cap Growth Fund will advise
Mid Cap Value Fund of all known material liabilities,
contingent or otherwise, incurred by it subsequent to
September 30, 2009, whether or not incurred in the ordinary
course of business.
(h) BB&T Funds and each of Mid Cap Growth Fund and Mid
Cap Value Fund have filed all federal and other tax returns
which have been required to be filed by Mid Cap Growth Fund
or Mid Cap Value Fund, respectively, and have paid or will
pay all federal and other taxes shown to be due on such
returns or on any assessments received by Mid Cap Growth
Fund or Mid Cap Value Fund, respectively. Each of Mid Cap
Growth Fund and Mid Cap Value Fund (i) has adequately
provided for all tax liabilities on its books, (ii) has not
had any tax deficiency or liability asserted against it, or
question with respect thereto raised, and (iii) is not
under audit by the Internal Revenue Service or by any state
or local tax authority for taxes in excess of those already
paid.
(i) As used in this Plan, the term "Investments" shall
mean the Mid Cap Growth Fund's investments shown on the
schedule of its portfolio investments as of September 30,
2009, referred to in Section 2(c) hereof, as supplemented
with such changes as BB&T Funds or the Mid Cap Growth Fund
shall make after September 30, 2009, which changes shall be
disclosed to BB&T Funds and the Mid Cap Value Fund, and
changes resulting from stock dividends, stock split-ups,
mergers and similar corporate actions.
(j) Each of Mid Cap Growth Fund and Mid Cap Value Fund
has elected to qualify and has qualified as, and has met
the requirements of subchapter M of the Code for treatment
as a "regulated investment company" within the meaning of
Section 851 of the Code in respect of each taxable year
since the commencement of operations, and will continue to
so qualify and meet such requirements at all times through
the Exchange Date. Neither Mid Cap Growth Fund nor Mid Cap
Value Fund has at any time since its inception been liable
(nor is it now liable) for any material income or excise
tax pursuant to Section 852 or 4982 of the Code. Each of
Mid Cap Growth Fund and Mid Cap Value Fund is in compliance
in all material respects with applicable regulations of the
Internal Revenue Service pertaining to the reporting of
dividends and other distributions on
and redemptions of its capital stock and to withholding in
respect of dividends and other distributions to
shareholders, and is not liable for any material penalties
which could be imposed thereunder.
(k) No consent, approval, authorization or order of any
governmental authority is required for the consummation by
BB&T Funds, Mid Cap Growth Fund or Mid Cap Value Fund of
the transaction contemplated by this Plan, except such as
may be required under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of
1934, as amended (the "1934 Act"), the 1940 Act, state
securities or Blue Sky laws or the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976.
(l) As of both the Valuation Time and the Exchange Date
and otherwise as described in Section 2(i), BB&T Funds on
behalf of Mid Cap Value Fund will have full right, power
and authority to purchase the Investments and any other
assets and assume the liabilities of Mid Cap Growth Fund to
be transferred to Mid Cap Value Fund pursuant to this Plan.
(m) As of the effective date of the Registration
Statement, the Registration Statement: (i) will comply in
all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) will not contain any 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, in light of the circumstances in which
they were made, not misleading; provided, however, that
none of the representations and warranties in this
subsection shall apply to statements in or omissions from
the Registration Statement made in reliance upon and in
conformity with information furnished by Mid Cap Growth
Fund or Mid Cap Value Fund for use in the Registration
Statement.
(n) Mid Cap Value Fund Shares to be issued to
shareholders of Mid Cap Growth Fund have been duly
authorized and, when issued and delivered pursuant to this
Plan and the Registration Statement, will be legally and
validly issued and will be fully paid and nonassessable by
BB&T Funds and no shareholder of BB&T Funds will have any
preemptive right of subscription or purchase in respect
thereof.
(o) The issuance of Mid Cap Value Fund Shares pursuant
to this Plan will be in compliance with all applicable
federal and state securities laws.
3. Reorganization. (a) Subject to the requisite approval
of the shareholders of Mid Cap Growth Fund (in respect of
the Mid Cap Growth Fund Reorganization, as hereafter
defined) and to the other terms and conditions contained
herein (including Mid Cap Growth Fund's obligation
described in Section 9(j) hereof to distribute to its
respective shareholders all of its undistributed investment
company taxable income (as defined in Section 852 of the
Code), if any, and net capital gain (as defined in
Section 1222 of the Code)), Mid Cap Growth Fund will agree
to sell, assign, convey, transfer and deliver to Mid Cap
Value Fund, and Mid Cap Value Fund will agree to acquire
from Mid Cap Growth Fund, on the Exchange Date all of the
Investments and all of the cash and other assets of Mid Cap
Growth Fund, subject to liabilities, in exchange for that
number of Shares of Mid Cap Value Fund provided for in
Section 4 and the assumption by Mid Cap Value Fund of all
of the liabilities of Mid Cap Growth Fund. Pursuant to this
Plan, Mid Cap Growth Fund will, as soon as practicable
after the Exchange Date, distribute in liquidation all of
the Mid Cap Value Fund Shares received by it to its
shareholders in exchange for their respective Shares of Mid
Cap Growth Fund.
(b) BB&T Funds, on behalf of Mid Cap Growth Fund, will
pay or cause to be paid to Mid Cap Value Fund any interest
and cash dividends received by it on or after the Exchange
Date with respect to the Investments transferred to Mid Cap
Value Fund hereunder. BB&T Funds, on behalf of Mid Cap
Growth Fund, will transfer to Mid Cap Value Fund any
rights, stock dividends, or other securities received by
Mid Cap Growth Fund after the Exchange Date as stock
dividends or other distributions on or with respect to the
Investments transferred, which rights, stock dividends, and
other securities shall be deemed included in the assets
transferred to Mid Cap Value Fund at the Exchange Date and
shall not be separately valued, in which case any such
distribution that remains unpaid as of the Exchange Date
shall be included in the determination of the value of the
assets of Mid Cap Growth Fund acquired by Mid Cap Value Fund.
4. Exchange Date; Valuation Time. On the Exchange Date,
Mid Cap Value Fund will deliver to Mid Cap Growth Fund a
number of Mid Cap Value Fund Shares having an aggregate net
asset value equal to the value of the assets attributable
to each corresponding class of Shares of Mid Cap Growth
Fund acquired by Mid Cap Value Fund, less the value of the
liabilities of Mid Cap Growth Fund assumed, determined as
hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of Mid Cap
Growth Fund's net assets will be computed as of the
Valuation Time using the valuation procedures for Mid Cap
Value Fund set forth in the Prospectuses and the Statement
of Additional Information. In no event shall the same
security held by the Mid Cap Growth Fund and another series
of BB&T Funds be valued at different prices.
(b) Subject to Section 4(d) hereof, the net asset value
of a Share of Mid Cap Value Fund will be determined to the
nearest full cent as of the Valuation Time, using the
valuation procedures set forth in the Prospectuses and the
Statement of Additional Information for Mid Cap Value Fund.
(c) Subject to Section 4(d), the Valuation Time shall be
4:00 p.m. Eastern Standard time on January 29, 2010, or
such earlier or later days as may be established by the
proper officers of BB&T Funds (the "Valuation Time").
(d) No formula will be used to adjust the net asset
value of Mid Cap Growth Fund or Mid Cap Value Fund to take
into account differences in realized and unrealized gains
and losses.
(e) Mid Cap Value Fund shall issue its Shares to Mid Cap
Growth Fund on one share deposit receipt registered in the
name of Mid Cap Growth Fund. Mid Cap Growth Fund shall
distribute in liquidation the Mid Cap Value Fund Shares
received by it hereunder pro rata to its shareholders by
redelivering such share deposit receipt to BB&T Funds'
transfer agent which will as soon as practicable set up
open accounts for each Mid Cap Growth Fund shareholder, in
accordance with written instructions furnished by Mid Cap
Growth Fund.
(f) Mid Cap Value Fund shall assume all liabilities of
Mid Cap Growth Fund, whether accrued or contingent, in
connection with the acquisition of assets and subsequent
dissolution of Mid Cap Growth Fund or otherwise, except
that recourse for assumed liabilities relating to Mid Cap
Growth Fund will be limited to Mid Cap Value Fund.
5. Expenses, Fees, etc. (a) All fees and expenses
incurred by Mid Cap Growth Fund, Mid Cap Value Fund, BB&T
Asset Management, Inc. ("BB&TAM") (the investment adviser
of both Mid Cap Growth Fund and Mid Cap Value Fund) and/or
Sterling (the sub-adviser of Mid Cap Value Fund) directly
in connection with the consummation of the transaction
contemplated by this Plan will be borne by Sterling,
including the costs of proxy materials, proxy solicitations
and legal expenses. All such fees and expenses incurred and
so borne by Sterling will be solely and directly related to
the transaction contemplated by this Plan and will be paid
directly by Sterling to the relevant providers of services
or other payees, in accordance with the principles set
forth in Revenue Ruling 73-54, 1973-1 C.B. 187. Fees and
expenses not incurred directly in connection with the
consummation of the transaction contemplated by this Plan
will be paid by the party directly incurring such expenses.
Notwithstanding any of the foregoing, fees and expenses
shall in any event be paid by the party directly incurring
such fees and expenses if and to the extent that the
payment by Sterling of such fees and expenses would result
in the disqualification of such party as a regulated
investment company within the meaning of Section 851 of the
Code. Mid Cap Growth Fund shareholders will pay their
respective expenses, if any, incurred in connection with
the transaction contemplated by this Plan. Neither BB&TAM
nor Sterling nor Mid Cap Growth Fund nor Mid Cap Value Fund
will pay Mid Cap Growth Fund shareholders' expenses.
(b) Notwithstanding any other provisions of this Plan,
if for any reason the transaction contemplated by this Plan
is not consummated, no party shall be liable to another
party for any damages resulting therefrom, including
without limitation consequential damages.
6. Permitted Assets. BB&T Funds and Mid Cap Growth Fund
will agree to review the assets of Mid Cap Growth Fund to
ensure that at any time prior to the Exchange Date the
assets of Mid Cap Growth Fund do not include any assets
that Mid Cap Value Fund is not permitted, or reasonably
believes to be unsuitable for it, to acquire, including
without limitation any security that, prior to its
acquisition by Mid Cap Growth Fund, is unsuitable for Mid
Cap Value Fund to acquire.
7. Exchange Date. Delivery of the assets of Mid Cap
Growth Fund to be transferred, assumption of the
liabilities of Mid Cap Growth Fund to be assumed, and the
delivery of Mid Cap Value Fund Shares to be issued shall be
made at the offices of BB&T Funds, 000 Xxxxxxxxxxxx Xxxxxx
Xxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx Xxxxxxxx, 00000, at
9:00 a.m. Eastern standard time on February 1, 2010, or at
such other times and dates established by the proper
officers of BB&T Funds, the date and time upon which such
delivery is to take place being referred to herein as the
"Exchange Date."
8. Special Meeting of Shareholders; Dissolution. Mid Cap
Growth Fund agrees to call a special meeting of the
shareholders as soon as is practicable after the effective
date of the Registration Statement for the purpose of
considering the sale of all of the assets of Mid Cap Growth
Fund to and the assumption of all of the liabilities of Mid
Cap Growth Fund by Mid Cap Value Fund as herein provided,
and approving this Plan, and it shall be a condition to the
obligations of each of the parties hereto that the holders
of the Shares of Mid Cap Growth Fund shall have approved
this Plan and the transaction contemplated herein in the
manner required by law and BB&T Funds' Declaration of Trust
and Bylaws at such a meeting on or before the Valuation Time.
9. Conditions to Be Met Regarding the Transaction. The
consummation by the Mid Cap Growth Fund and Mid Cap Value
Fund of the reorganization of the Mid Cap Growth Fund with
and into the Mid Cap Value Fund shall be subject to the
following conditions:
(a) This Plan shall have been adopted and the
transaction contemplated hereby shall have been approved by
the shareholders of Mid Cap Growth Fund in the manner
required by law.
(b) Mid Cap Growth Fund shall have furnished to Mid Cap
Value Fund a statement of each of Mid Cap Growth Fund's
assets and liabilities, with values determined as provided
in Section 4 of this Plan, together with a list of
Investments with their respective tax costs, all as of the
Valuation Time, certified on Mid Cap Growth Fund's behalf
by its President (or any Vice President) and Treasurer, and
a certificate of both such officers, dated the Exchange
Date, to the effect that as of the Valuation Time and as of
the Exchange Date there has been no material adverse change
in the financial position of Mid Cap Growth Fund since
September 30, 2009, other than changes in the Investments
since that date or changes in the market value of the
Investments, or changes due to net redemptions of Shares of
Mid Cap Growth Fund, dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange
Date, all representations and warranties of BB&T Funds, Mid
Cap Value Fund and Mid Cap Growth Fund made in Section 2 of
this Plan are true and correct in all material respects as
if made at and as of such dates, Mid Cap Growth Fund has
complied with all requirements of this Plan to be performed
or satisfied at or prior to each of such dates, and Mid Cap
Growth Fund shall have furnished to Mid Cap Value Fund a
statement, dated the Exchange Date, signed by BB&T Funds'
President (or any Vice President) and Treasurer certifying
those facts as of such dates.
(d) There shall not be any material litigation pending
with respect to the matters contemplated by this Plan.
(e) BB&T Funds shall have received an opinion of Ropes &
Xxxx LLP dated the Exchange Date to the effect that:
(i) BB&T Funds is a business trust duly established and
validly existing under the laws of the Commonwealth of
Massachusetts, and neither BB&T Funds, Mid Cap Growth Fund
nor Mid Cap Value Fund is, to the knowledge of such
counsel, required to qualify to do business as a foreign
association in any jurisdiction; (ii) BB&T Funds and Mid
Cap Growth Fund have power to sell, assign, convey,
transfer and deliver the Investments and other assets
contemplated hereby and, upon consummation of the
transaction contemplated hereby in accordance with the
terms of this Plan, BB&T Funds and Mid Cap Growth Fund will
have duly sold, assigned, conveyed, transferred and
delivered such Investments and other assets to Mid Cap
Value Fund; (iii) the adoption of this Plan did not, and
the consummation of the transaction contemplated hereby
will not, violate BB&T Funds' Declaration of Trust or
Bylaws, as amended, or any provision of any agreement known
to such counsel to which BB&T Funds is a party or by which
it is bound; (iv) no consent, approval, authorization or
order of any court or governmental authority is required
for the consummation by BB&T Funds of the transaction
contemplated hereby, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act; (v) this
Plan has been duly authorized by BB&T Funds and is a valid
and binding obligation of BB&T Funds; and (vi) the Shares
of Mid Cap Value Fund to be delivered to Mid Cap Growth
Fund as provided for by this Plan are duly authorized and
upon such delivery will be validly issued and will be fully
paid and nonassessable by BB&T Funds and no shareholder of
BB&T Funds has any preemptive right to subscription or
purchase in respect thereof.
(f) BB&T Funds, on behalf of Mid Cap Growth Fund and
Mid Cap Value Fund shall have received an opinion of
Ropes & Xxxx LLP addressed to Mid Cap Growth Fund and Mid
Cap Value Fund and dated the Exchange Date (which opinion
will be based upon certain factual representations and
subject to certain qualifications) to the effect that,
although not free from doubt, on the basis of the existing
provisions of the Code, Treasury Regulations, current
administrative rules and court decisions, generally for
federal income tax purposes, except as noted below: (i) the
transaction contemplated by this Plan will constitute a
reorganization within the meaning of Section 368(a) of the
Code, and Mid Cap Value Fund and Mid Cap Growth Fund will
each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) under Section 1032 of the
Code, no gain or loss will be recognized by Mid Cap Value
Fund upon the receipt of the assets of Mid Cap Growth Fund
in exchange for Mid Cap Value Fund Shares and the
assumption by Mid Cap Value Fund of the liabilities of Mid
Cap Growth Fund; (iii) under Section 362(b) of the Code,
the basis in the hands of Mid Cap Value Fund of the assets
of Mid Cap Growth Fund transferred to Mid Cap Value Fund in
the transaction contemplated by this Plan will be the same
as the basis of such assets in the hands of Mid Cap Growth
Fund immediately prior to the transfer; (iv) under
Section 1223(2) of the Code, the holding periods of the
assets of Mid Cap Growth Fund in the hands of Mid Cap Value
Fund will include the periods during which such assets were
held by Mid Cap Growth Fund; (v) under Section 361 of the
Code, no gain or loss will be recognized by Mid Cap Growth
Fund upon the transfer of Mid Cap Growth Fund's assets to
Mid Cap Value Fund in exchange for Mid Cap Value
Fund Shares and the assumption by Mid Cap Value Fund of the
liabilities of Mid Cap Growth Fund, or upon the
distribution of Mid Cap Value Fund Shares by Mid Cap Growth
Fund to its shareholders in liquidation; (vi) under
Section 354 of the Code, no gain or loss will be recognized
by Mid Cap Growth Fund shareholders upon the exchange of
their Mid Cap Growth Fund Shares for Mid Cap Value
Fund Shares; (vii) under Section 358 of the Code, the
aggregate tax basis of Mid Cap Value Fund Shares a Mid Cap
Growth Fund shareholder receives in connection with the
transaction contemplated by this Plan will be the same as
the aggregate tax basis of his or her Mid Cap Growth
Fund Shares exchanged therefor; (viii) under
Section 1223(1) of the Code, a Mid Cap Growth Fund
shareholder's holding period for his or her Mid Cap Value
Fund Shares will be determined by including the period for
which he or she held the Mid Cap Growth Fund Shares
exchanged therefor, provided that he or she held such Mid
Cap Growth Fund Shares as capital assets; and (ix) Mid Cap
Value Fund will succeed to and take into account the items
of Mid Cap Growth Fund described in Section 381(c) of the
Code, subject to the conditions and limitations specified
in Sections 381, 382, 383 and 384 of the Code and the
Treasury Regulations thereunder. The opinion will express
no view with respect to the effect of the reorganization on
any transferred asset as to which any unrealized gain or
loss is required to be recognized under federal income tax
principles (i) at the end of a taxable year (or the
termination thereof), or (ii) upon the transfer of such
asset, without reference to whether such a termination or
transfer would otherwise be a taxable transaction.
(g) The assets of Mid Cap Growth Fund to be acquired by
Mid Cap Value Fund will include no assets which Mid Cap
Value Fund, by reason of limitations contained in its
Declaration of Trust or of investment restrictions
disclosed in the Prospectuses or the Statement of
Additional Information in effect on the Exchange Date, may
not properly acquire. BB&T Funds shall not change BB&T
Funds' Declaration of Trust or Prospectuses so as to
restrict permitted investments for Mid Cap Value Fund
except as required by the Commission or any state
regulatory authority.
(h) The Registration Statement shall have become
effective under the 1933 Act and applicable Blue Sky
provisions, and no stop order suspending such effectiveness
shall have been instituted or, to the knowledge of BB&T
Funds, contemplated by the Commission or any state
regulatory authority.
(i) BB&T Funds shall have received from the Commission
such order or orders as Ropes & Xxxx LLP deems reasonably
necessary or desirable under the 1933 Act, the 1934 Act, or
the 1940 Act in connection with the transaction
contemplated hereby, and all such orders shall be in full
force and effect.
(j) Prior to the Exchange Date, the Mid Cap Growth Fund
shall have declared a dividend or dividends which, together
with all previous such dividends, shall have the effect of
distributing to its shareholders (a) all of the excess of
(x) its investment income excludable from gross income
under Section 103 of the Code over (y) its deductions
disallowed under Section 265 and 171 of the Code, (b) all
of its investment company taxable income (computed without
regard to any deduction for dividends paid), and (c) all of
its net capital gain realized (after reduction for any
capital loss carryover), in each case for both the current
taxable year (which will end on the Exchange Date) and the
immediately preceding taxable year.
(k) Mid Cap Growth Fund shall have furnished to Mid Cap
Value Fund a certificate, signed by the President (or any
Vice President) and the Treasurer of BB&T Funds, as to the
tax cost to Mid Cap Growth Fund of the securities delivered
to Mid Cap Value Fund pursuant to this Plan, together with
any such other evidence as to such tax cost as Mid Cap
Value Fund may reasonably request.
(l) BB&T Funds shall have received from the custodian of
BB&T Funds a certificate identifying all of the assets of
Mid Cap Growth Fund held by such custodian as of the Valuation Time.
(m) The transfer agent of BB&T Funds shall have provided
to BB&T Funds (i) a record specifying the number of Shares
of Mid Cap Growth Fund outstanding as of the Valuation Time
and (iii) a record specifying the name and address of each
holder of record of any such Shares of Mid Cap Growth Fund
and the number of Mid Cap Growth Fund Shares held of record
by each such shareholder as of the Valuation Time. Mid Cap
Growth Fund's transfer agent shall also have provided BB&T
Funds with a certificate confirming that the acts specified
in the preceding sentence have been taken and that the
information so supplied is complete and accurate to the
best knowledge of the transfer agent.
(n) BB&T Funds, on behalf of Mid Cap Value Fund, shall
have executed and delivered an Assumption of Liabilities
dated as of the Exchange Date pursuant to which Mid Cap
Value Fund will assume all of the liabilities of Mid Cap
Growth Fund existing at the Valuation Time in connection
with the transaction contemplated by this Plan, other than
liabilities pursuant to this Plan.
(o) BB&T Funds, on behalf of Mid Cap Growth Fund, shall
have executed and delivered an instrument of transfer
("Transfer Document") and any other certificates or
documents BB&T Funds may deem necessary or desirable to
transfer Mid Cap Growth Fund's entire right, title and
interest in and to the Investments and all other assets of
Mid Cap Growth Fund.
10. No Broker, etc. There is no person who has dealt
with BB&T Funds, Mid Cap Growth Fund or Mid Cap Value Fund
who by reason of such dealings is entitled to any broker's
or finder's or other similar fee or commission arising out
of the transaction contemplated by this Plan.
11. Termination. BB&T Funds may, by consent of its
Trustees, terminate this Plan, and BB&T Funds, after
consultation with counsel and consent of its Trustees, may
modify this Plan in any manner deemed necessary or desirable.
12. Covenants, etc. Deemed Material. All covenants,
agreements, representations and warranties made under this
Plan and any certificates delivered pursuant to this Plan
shall be deemed to have been material and relied upon by
each of the parties, notwithstanding any investigation made
by them or on their behalf.
13. Sole Plan; Amendments. This Plan supersedes all
previous correspondence and oral communications between the
parties regarding the subject matter hereof, constitutes
the only understanding with respect to such subject matter,
may be changed only as provided in Section 11 and shall be
construed in accordance with and governed by the laws of
the Commonwealth of Massachusetts.
14. Rule 145. Pursuant to Rule 145 under the
1933 Act, Mid Cap Value Fund will, in connection with the
issuance of any Mid Cap Value Fund Shares to any person who
at the time of the transaction contemplated hereby is
deemed to be an affiliate of a party to the transaction
pursuant to Rule 145(c), cause to be affixed upon the
certificates issued to such person (if any) such legends as
may be reasonably believed by counsel to Mid Cap Value Fund
to be required by law, and, further, Mid Cap Value Fund
will issue stop transfer instructions to its transfer agent
with respect to such Mid Cap Value Fund Shares. Mid Cap
Growth Fund shall provide Mid Cap Value Fund on the
Exchange Date with the name of any Mid Cap Growth
Fund Shareholder who is to the knowledge of Mid Cap Growth
Fund an affiliate of Mid Cap Growth Fund on such date.
15. BB&T Funds' Declaration of Trust. BB&T Funds is
a business trust organized under Massachusetts law and
under a Declaration of Trust, 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 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, officers, employees or agents are
made not individually, but in such capacities, and are not
binding upon any of the Trustees, officers, employees,
agents or shareholders of BB&T Funds personally, but bind
only the assets of BB&T Funds and all persons dealing with
any series or funds of BB&T Funds, including Mid Cap Growth
Fund and Mid Cap Value Fund, must look solely to the assets
of BB&T Funds belonging to such series or funds for the
enforcement of any claims against BB&T Funds.
BB&T FUNDS
on behalf of its series BB&T Mid Cap Growth Fund
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
BB&T FUNDS
on behalf of its series BB&T Mid Cap Value Fund
By: /s/ E.G. Xxxxxxx, III
Name: E.G. Xxxxxxx, III
Title: President
STERLING CAPITAL MANAGEMENT LLC
with respect to Section 5 only
By: /s/ Xxxxxxxxx X. XxXxxxxxx
Name: Xxxxxxxxx X. XxXxxxxxx
Title: Chief Executive Officer
[PAGE BREAK]
BB&T FUNDS
BB&T Small Cap Fund and
Sterling Capital Small Cap Value Fund
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, having been
approved by the Board of Trustees of BB&T Funds, is made as
of December 16, 2009 between BB&T Funds, on behalf of its
series BB&T Small Cap Fund and Sterling Capital Small Cap
Value Fund, and Sterling Capital Management LLC
("Sterling") (the "Plan"). The capitalized terms used
herein shall have the meaning ascribed to them in this
Plan.
1. Overview of Plan of Reorganization.
(a) BB&T Small Cap Fund ("Small Cap Fund") will sell,
assign, convey, transfer and deliver to Sterling Capital
Small Cap Value Fund ("Small Cap Value Fund"), and Small
Cap Value Fund will acquire, on the Exchange Date (as
defined in Section 7 of this Plan), all of the properties
and assets existing at the Valuation Time (as defined in
Section 4 of this Plan) in Small Cap Fund, subject to
liabilities.
In consideration therefor, Small Cap Value Fund shall,
on the Exchange Date, assume all of the liabilities of
Small Cap Fund existing at the Valuation Time and transfer
to Small Cap Fund a number of full and fractional units of
beneficial interest ("Shares") (such Shares being
Institutional, Class A, Class B or Class C Shares) of Small
Cap Value Fund having an aggregate net asset value equal to
the value of the assets of Small Cap Fund transferred to
Small Cap Value Fund on such date less the value of all of
the liabilities of Small Cap Fund assumed by Small Cap
Value Fund on that date. In connection with the
reorganization described herein, effective on the Exchange
Date, (i) Class A, Class B, and Class C Shares of the Small
Cap Value Fund will commence operations and be issued to
the respective shareholders of Class A, Class B, and Class
C Shares of the Small Cap Fund, and (ii) Sterling Shares
of the Small Cap Value Fund will be renamed Institutional
Shares and will be issued to the shareholders of
Institutional Shares of Small Cap Fund. It is intended
that the reorganization described in this Plan shall be a
tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transaction described in
paragraph 1(a) of this Plan, Small Cap Fund in complete
liquidation shall distribute to its respective shareholders
of record as of the Exchange Date the Small Cap Value Fund
Shares received by it, each shareholder being entitled to
receive that number of such Small Cap Value Fund Shares
equal to the total of (i) the proportion which the number
of Shares of Small Cap Fund held by such shareholder bears
to the number of such Shares of Small Cap Fund outstanding
on such date multiplied by (ii) the total number of Small
Cap Value Fund Shares received by the Small Cap Fund, as of
the Exchange Date. Small Cap Fund shareholders of record
holding Institutional, Class A, Class B or Class C Shares
will receive Institutional, Class A, Class B or Class C
Shares, respectively, of Small Cap Value Fund.
2. Representations and Warranties of BB&T Funds. Each of
BB&T Funds, Small Cap Value Fund and Small Cap Fund warrant
to and agree that:
(a) BB&T Funds is a business trust duly established
and validly existing under the laws of the Commonwealth of
Massachusetts and has power to carry on its business as it
is now being conducted and to carry out this Plan. Each of
BB&T Funds, Small Cap Fund and Small Cap Value Fund is not
required to qualify as a foreign association in any
jurisdiction. Each of BB&T Funds, Small Cap Fund and Small
Cap Value Fund has all necessary federal, state and local
authorizations to own all of its properties and assets and
to carry on business as now being conducted and to fulfill
the terms of this Plan, except as set forth in Section 2(k).
(b) BB&T Funds is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company, and such
registration has not been revoked or rescinded and is in
full force and effect.
(c) The statements of assets and liabilities,
statements of operations, statements of changes in net
assets and schedules of investments (indicating their
market values) for each of Small Cap Fund and Small Cap
Value Fund for the fiscal year ended September 30, 2009,
fairly present the financial position of each of Small Cap
Fund and Small Cap Value Fund as of such date, and said
statements of operations and changes in net assets and
financial highlights fairly reflect the results of
operations, changes in net assets and financial highlights
for the periods covered thereby in conformity with
generally accepted accounting principles.
(d) The prospectuses of each of Small Cap Fund and
Small Cap Value Fund dated February 1, 2009, as amended, as
filed with the Securities and Exchange Commission (the
"Commission") (each, a "Prospectus", and collectively, the
"Prospectuses"), the Statements of Additional Information
of each of Small Cap Fund and Small Cap Value Fund dated
February 1, 2009, as amended, as filed with the Commission
(each, a "Statement of Additional Information", and
collectively, the "Statements of Additional Information")
did not as of such date contain any 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, in light of the circumstances under which they
were made, not misleading. As of the Exchange Date, the
Prospectuses and Statements of Additional Information then
in effect will not contain any 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, in light of the circumstances under which they
were made, not misleading.
(e) There are no material legal, administrative or
other proceedings pending or, to the knowledge of BB&T
Funds, Small Cap Fund or Small Cap Value Fund, overtly
threatened against BB&T Funds, Small Cap Fund or Small Cap
Value Fund, which assert liability on the part of BB&T
Funds, Small Cap Fund or Small Cap Value Fund.
(f) There are no material contracts outstanding to
which BB&T Funds, Small Cap Fund or Small Cap Value Fund is
a party, other than as disclosed in the currently effective
BB&T Funds registration statement on Form N-1A (which
includes the Prospectuses, Statements of Additional
Information and Part C of Form N-1A), or in the
registration statement on Form N-14 of BB&T Funds on behalf
of Small Cap Value Fund (which contains the prospectus of
Small Cap Value Fund and the proxy statement of Small Cap
Fund relating to the transactions described herein, the
"Registration Statement").
(g) Small Cap Fund has no known liabilities of a
material nature, contingent or otherwise, other than those
shown on its statement of assets and liabilities as of
September 30, 2009, referred to above and those incurred in
the ordinary course of the business of BB&T Funds as an
investment company or Small Cap Fund since such date.
Prior to the Exchange Date, Small Cap Fund will advise
Small Cap Value Fund of all known material liabilities,
contingent or otherwise, incurred by it subsequent to
September 30, 2009, whether or not incurred in the ordinary
course of business.
(h) BB&T Funds and each of Small Cap Fund and Small
Cap Value Fund have filed all federal and other tax returns
which have been required to be filed by Small Cap Fund or
Small Cap Value Fund, respectively, and have paid or will
pay all federal and other taxes shown to be due on such
returns or on any assessments received by Small Cap Fund or
Small Cap Value Fund, respectively. Each of Small Cap Fund
and Small Cap Value Fund (i) has adequately provided for
all tax liabilities on its books, (ii) has not had any tax
deficiency or liability asserted against it, or question
with respect thereto raised, and (iii) is not under audit
by the Internal Revenue Service or by any state or local
tax authority for taxes in excess of those already paid.
(i) As used in this Plan, the term "Investments"
shall mean the Small Cap Fund's investments shown on the
schedule of its portfolio investments as of September 30,
2009, referred to in Section 2(c) hereof, as supplemented
with such changes as BB&T Funds or the Small Cap Fund shall
make after September 30, 2009, which changes shall be
disclosed to BB&T Funds and the Small Cap Value Fund, and
changes resulting from stock dividends, stock split-ups,
mergers and similar corporate actions.
(j) Each of Small Cap Fund and Small Cap Value Fund
has elected to qualify and has qualified as, and has met
the requirements of subchapter M of the Code for treatment
as a "regulated investment company" within the meaning of
Section 851 of the Code in respect of each taxable year
since the commencement of operations, and will continue to
so qualify and meet such requirements at all times through
the Exchange Date. Neither Small Cap Fund nor Small Cap
Value Fund has at any time since its inception been liable
(nor is it now liable) for any material income or excise
tax pursuant to Section 852 or 4982 of the Code. Each of
Small Cap Fund and Small Cap Value Fund is in compliance in
all material respects with applicable regulations of the
Internal Revenue Service pertaining to the reporting of
dividends and other distributions on and redemptions of its
capital stock and to withholding in respect of dividends
and other distributions to shareholders, and is not liable
for any material penalties which could be imposed thereunder.
(k) No consent, approval, authorization or order of
any governmental authority is required for the consummation
by BB&T Funds, Small Cap Fund or Small Cap Value Fund of
the transaction contemplated by this Plan, except such as
may be required under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of
1934, as amended (the "1934 Act"), the 1940 Act, state
securities or Blue Sky laws or the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976.
(l) As of both the Valuation Time and the Exchange
Date and otherwise as described in Section 2(i), BB&T Funds
on behalf of Small Cap Value Fund will have full right,
power and authority to purchase the Investments and any
other assets and assume the liabilities of Small Cap Fund
to be transferred to Small Cap Value Fund pursuant to this Plan.
(m) As of the effective date of the Registration
Statement, the Registration Statement: (i) will comply in
all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) will not contain any 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, in light of the circumstances in which
they were made, not misleading; provided, however, that
none of the representations and warranties in this
subsection shall apply to statements in or omissions from
the Registration Statement made in reliance upon and in
conformity with information furnished by Small Cap Fund or
Small Cap Value Fund for use in the Registration Statement.
(n) Small Cap Value Fund Shares to be issued to
shareholders of Small Cap Fund have been duly authorized
and, when issued and delivered pursuant to this Plan and
the Registration Statement, will be legally and validly
issued and will be fully paid and nonassessable by BB&T
Funds and no shareholder of BB&T Funds will have any
preemptive right of subscription or purchase in respect
thereof.
(o) The issuance of Small Cap Value Fund Shares
pursuant to this Plan will be in compliance with all
applicable federal and state securities laws.
(p) Effective on the Exchange Date, Class A, Class B,
and Class C Shares of the Small Cap Value Fund will
commence operations and Sterling Shares of the Small Cap
Value Fund will be renamed Institutional Shares.
3. Reorganization. (a) Subject to the requisite
approval of the shareholders of Small Cap Fund (in respect
of the Small Cap Fund Reorganization, as hereafter defined)
and to the other terms and conditions contained herein
(including Small Cap Fund's obligation described in Section
9(j) hereof to distribute to its respective shareholders
all of its undistributed investment company taxable income
(as defined in Section 852 of the Code), if any, and net
capital gain (as defined in Section 1222 of the Code)),
Small Cap Fund will agree to sell, assign, convey, transfer
and deliver to Small Cap Value Fund, and Small Cap Value
Fund will agree to acquire from Small Cap Fund, on the
Exchange Date all of the Investments and all of the cash
and other assets of Small Cap Fund, subject to liabilities,
in exchange for that number of Shares of Small Cap Value
Fund provided for in Section 4 and the assumption by Small
Cap Value Fund of all of the liabilities of Small Cap Fund.
Pursuant to this Plan, Small Cap Fund will, as soon as
practicable after the Exchange Date, distribute in
liquidation all of the Small Cap Value Fund Shares received
by it to its shareholders in exchange for their respective
Shares of Small Cap Fund.
(b) BB&T Funds, on behalf of Small Cap Fund, will pay
or cause to be paid to Small Cap Value Fund any interest
and cash dividends received by it on or after the Exchange
Date with respect to the Investments transferred to Small
Cap Value Fund hereunder. BB&T Funds, on behalf of Small
Cap Fund, will transfer to Small Cap Value Fund any rights,
stock dividends, or other securities received by Small Cap
Fund after the Exchange Date as stock dividends or other
distributions on or with respect to the Investments
transferred, which rights, stock dividends, and other
securities shall be deemed included in the assets
transferred to Small Cap Value Fund at the Exchange Date
and shall not be separately valued, in which case any such
distribution that remains unpaid as of the Exchange Date
shall be included in the determination of the value of the
assets of Small Cap Fund acquired by Small Cap Value Fund.
4. Exchange Date; Valuation Time. On the Exchange
Date, Small Cap Value Fund will deliver to Small Cap Fund a
number of Small Cap Value Fund Shares having an aggregate
net asset value equal to the value of the assets
attributable to each corresponding class of Shares of Small
Cap Fund acquired by Small Cap Value Fund, less the value
of the liabilities of Small Cap Fund assumed, determined as
hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of
Small Cap Fund's net assets will be computed as of the
Valuation Time using the valuation procedures for Small Cap
Value Fund set forth in the Prospectuses and the Statements
of Additional Information. In no event shall the same
security held by the Small Cap Fund and another series of
BB&T Funds be valued at different prices.
(b) Subject to Section 4(d) hereof, the net asset
value of a Share of Small Cap Value Fund will be determined
to the nearest full cent as of the Valuation Time, using
the valuation procedures set forth in the Prospectus and
the Statement of Additional Information for Small Cap Value Fund.
(c) Subject to Section 4(d), the Valuation Time shall
be 4:00 p.m. Eastern Standard time on January 29, 2010, or
such earlier or later days as may be established by the
proper officers of BB&T Funds (the "Valuation Time").
(d) No formula will be used to adjust the net asset
value of Small Cap Fund or Small Cap Value Fund to take
into account differences in realized and unrealized gains
and losses.
(e) Small Cap Value Fund shall issue its Shares to
Small Cap Fund on one share deposit receipt registered in
the name of Small Cap Fund. Small Cap Fund shall
distribute in liquidation the Small Cap Value Fund Shares
received by it hereunder pro rata to its shareholders by
redelivering such share deposit receipt to BB&T Funds'
transfer agent which will as soon as practicable set up
open accounts for each Small Cap Fund shareholder, in
accordance with written instructions furnished by Small Cap Fund.
(f) Small Cap Value Fund shall assume all liabilities
of Small Cap Fund, whether accrued or contingent, in
connection with the acquisition of assets and subsequent
dissolution of Small Cap Fund or otherwise, except that
recourse for assumed liabilities relating to Small Cap Fund
will be limited to Small Cap Value Fund.
5. Expenses, Fees, etc. (a) All fees and expenses
incurred by Small Cap Fund, Small Cap Value Fund, BB&T
Asset Management, Inc. ("BB&TAM") (the investment adviser
of Small Cap Fund) and/or Sterling (the investment adviser
of Small Cap Value Fund) directly in connection with the
consummation of the transaction contemplated by this Plan
will be borne by Sterling, including the costs of proxy
materials, proxy solicitations and legal expenses. All
such fees and expenses incurred and so borne by Sterling
will be solely and directly related to the transaction
contemplated by this Plan and will be paid directly by
Sterling to the relevant providers of services or other
payees, in accordance with the principles set forth in
Revenue Ruling 73-54, 1973-1 C.B. 187. Fees and expenses
not incurred directly in connection with the consummation
of the transaction contemplated by this Plan will be paid
by the party directly incurring such expenses.
Notwithstanding any of the foregoing, fees and expenses
shall in any event be paid by the party directly incurring
such fees and expenses if and to the extent that the
payment by Sterling of such fees and expenses would result
in the disqualification of such party as a regulated
investment company within the meaning of Section 851 of the
Code. Small Cap Fund shareholders will pay their
respective expenses, if any, incurred in connection with
the transaction contemplated by this Plan. Neither BB&TAM
nor Sterling nor Small Cap Fund nor Small Cap Value Fund
will pay Small Cap Fund shareholders' expenses.
(b) Notwithstanding any other provisions of this
Plan, if for any reason the transaction contemplated by
this Plan is not consummated, no party shall be liable to
another party for any damages resulting therefrom,
including without limitation consequential damages.
6. Permitted Assets. BB&T Funds and Small Cap Fund
will agree to review the assets of Small Cap Fund to ensure
that at any time prior to the Exchange Date the assets of
Small Cap Fund do not include any assets that Small Cap
Value Fund is not permitted, or reasonably believes to be
unsuitable for it, to acquire, including without limitation
any security that, prior to its acquisition by Small Cap
Fund, is unsuitable for Small Cap Value Fund to acquire.
7. Exchange Date. Delivery of the assets of Small
Cap Fund to be transferred, assumption of the liabilities
of Small Cap Fund to be assumed, and the delivery of Small
Cap Value Fund Shares to be issued shall be made at the
offices of BB&T Funds, 000 Xxxxxxxxxxxx Xxxxxx Xxxx, 0xx
Xxxxx, Xxxxxxx, Xxxxx Xxxxxxxx, 00000, at 9:00 a.m. Eastern
standard time on February 1, 2010, or at such other times
and dates established by the proper officers of BB&T Funds,
the date and time upon which such delivery is to take place
being referred to herein as the "Exchange Date."
8. Special Meeting of Shareholders; Dissolution.
Small Cap Fund agrees to call a special meeting of the
shareholders as soon as is practicable after the effective
date of the Registration Statement for the purpose of
considering the sale of all of the assets of Small Cap Fund
to and the assumption of all of the liabilities of Small
Cap Fund by Small Cap Value Fund as herein provided, and
approving this Plan, and it shall be a condition to the
obligations of each of the parties hereto that the holders
of the Shares of Small Cap Fund shall have approved this
Plan and the transaction contemplated herein in the manner
required by law and BB&T Funds' Declaration of Trust and
Bylaws at such a meeting on or before the Valuation Time.
9. Conditions to Be Met Regarding the Transaction.
The consummation by the Small Cap Fund and Small Cap Value
Fund of the reorganization of the Small Cap Fund with and
into the Small Cap Value Fund shall be subject to the
following conditions:
(a) This Plan shall have been adopted and the
transaction contemplated hereby shall have been approved by
the shareholders of Small Cap Fund in the manner required by law.
(b) Small Cap Fund shall have furnished to Small Cap
Value Fund a statement of each of Small Cap Fund's assets
and liabilities, with values determined as provided in
Section 4 of this Plan, together with a list of
Investments with their respective tax costs, all as of the
Valuation Time, certified on Small Cap Fund's behalf by its
President (or any Vice President) and Treasurer, and a
certificate of both such officers, dated the Exchange Date,
to the effect that as of the Valuation Time and as of the
Exchange Date there has been no material adverse change in
the financial position of Small Cap Fund since September
30, 2009, other than changes in the Investments since that
date or changes in the market value of the Investments, or
changes due to net redemptions of Shares of Small Cap Fund,
dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange
Date, all representations and warranties of BB&T Funds,
Small Cap Value Fund and Small Cap Fund made in Section 2
of this Plan are true and correct in all material respects
as if made at and as of such dates, Small Cap Fund has
complied with all requirements of this Plan to be performed
or satisfied at or prior to each of such dates, and Small
Cap Fund shall have furnished to Small Cap Value Fund a
statement, dated the Exchange Date, signed by BB&T Funds'
President (or any Vice President) and Treasurer certifying
those facts as of such dates.
(d) There shall not be any material litigation
pending with respect to the matters contemplated by this Plan.
(e) BB&T Funds shall have received an opinion of
Ropes & Xxxx LLP dated the Exchange Date to the effect
that: (i) BB&T Funds is a business trust duly established
and validly existing under the laws of the Commonwealth of
Massachusetts, and neither BB&T Funds, Small Cap Fund nor
Small Cap Value Fund is, to the knowledge of such counsel,
required to qualify to do business as a foreign association
in any jurisdiction; (ii) BB&T Funds and Small Cap Fund
have power to sell, assign, convey, transfer and deliver
the Investments and other assets contemplated hereby and,
upon consummation of the transaction contemplated hereby in
accordance with the terms of this Plan, BB&T Funds and
Small Cap Fund will have duly sold, assigned, conveyed,
transferred and delivered such Investments and other assets
to Small Cap Value Fund; (iii) the adoption of this Plan
did not, and the consummation of the transaction
contemplated hereby will not, violate BB&T Funds'
Declaration of Trust or Bylaws, as amended, or any
provision of any agreement known to such counsel to which
BB&T Funds is a party or by which it is bound; (iv) no
consent, approval, authorization or order of any court or
governmental authority is required for the consummation by
BB&T Funds of the transaction contemplated hereby, except
such as have been obtained under the 1933 Act, the 1934 Act
and the 1940 Act; (v) this Plan has been duly authorized by
BB&T Funds and is a valid and binding obligation of BB&T
Funds; and (vi) the Shares of Small Cap Value Fund to be
delivered to Small Cap Fund as provided for by this Plan
are duly authorized and upon such delivery will be validly
issued and will be fully paid and nonassessable by BB&T
Funds and no shareholder of BB&T Funds has any preemptive
right to subscription or purchase in respect thereof.
(f) BB&T Funds, on behalf of Small Cap Fund and Small
Cap Value Fund shall have received an opinion of Ropes &
Xxxx LLP addressed to Small Cap Fund and Small Cap Value
Fund and dated the Exchange Date (which opinion will be
based upon certain factual representations and subject to
certain qualifications) to the effect that, although not
free from doubt, on the basis of the existing provisions of
the Code, Treasury Regulations, current administrative
rules and court decisions, generally for federal income tax
purposes, except as noted below: (i) the transaction
contemplated by this Plan will constitute a reorganization
within the meaning of Section 368(a) of the Code, and Small
Cap Value Fund and Small Cap Fund will each be a "party to
a reorganization" within the meaning of Section 368(b) of
the Code; (ii) under Section 1032 of the Code, no gain or
loss will be recognized by Small Cap Value Fund upon the
receipt of the assets of Small Cap Fund in exchange for
Small Cap Value Fund Shares and the assumption by Small Cap
Value Fund of the liabilities of Small Cap Fund; (iii)
under Section 362(b) of the Code, the basis in the hands of
Small Cap Value Fund of the assets of Small Cap Fund
transferred to Small Cap Value Fund in the transaction
contemplated by this Plan will be the same as the basis of
such assets in the hands of Small Cap Fund immediately
prior to the transfer; (iv) under Section 1223(2) of the
Code, the holding periods of the assets of Small Cap Fund
in the hands of Small Cap Value Fund will include the
periods during which such assets were held by Small Cap
Fund; (v) under Section 361 of the Code, no gain or loss
will be recognized by Small Cap Fund upon the transfer of
Small Cap Fund's assets to Small Cap Value Fund in exchange
for Small Cap Value Fund Shares and the assumption by Small
Cap Value Fund of the liabilities of Small Cap Fund, or
upon the distribution of Small Cap Value Fund Shares by
Small Cap Fund to its shareholders in liquidation; (vi)
under Section 354 of the Code, no gain or loss will be
recognized by Small Cap Fund shareholders upon the exchange
of their Small Cap Fund Shares for Small Cap Value Fund
Shares; (vii) under Section 358 of the Code, the aggregate
tax basis of Small Cap Value Fund Shares a Small Cap Fund
shareholder receives in connection with the transaction
contemplated by this Plan will be the same as the aggregate
tax basis of his or her Small Cap Fund Shares exchanged
therefor; (viii) under Section 1223(1) of the Code, a Small
Cap Fund shareholder's holding period for his or her Small
Cap Value Fund Shares will be determined by including the
period for which he or she held the Small Cap Fund Shares
exchanged therefor, provided that he or she held such Small
Cap Fund Shares as capital assets; and (ix) Small Cap Value
Fund will succeed to and take into account the items of
Small Cap Fund described in Section 381(c) of the Code,
subject to the conditions and limitations specified in
Sections 381, 382, 383 and 384 of the Code and the Treasury
Regulations thereunder. The opinion will express no view
with respect to the effect of the reorganization on any
transferred asset as to which any unrealized gain or loss
is required to be recognized under federal income tax
principles (i) at the end of a taxable year (or the
termination thereof), or (ii) upon the transfer of such
asset, without reference to whether such a termination or
transfer would otherwise be a taxable transaction.
(g) The assets of Small Cap Fund to be acquired by
Small Cap Value Fund will include no assets which Small Cap
Value Fund, by reason of limitations contained in its
Declaration of Trust or of investment restrictions
disclosed in the Prospectuses or the Statements of
Additional Information in effect on the Exchange Date, may
not properly acquire. BB&T Funds shall not change BB&T
Funds' Declaration of Trust or Prospectuses so as to
restrict permitted investments for Small Cap Value Fund
except as required by the Commission or any state
regulatory authority.
(h) The Registration Statement shall have become
effective under the 1933 Act and applicable Blue Sky
provisions, and no stop order suspending such effectiveness
shall have been instituted or, to the knowledge of BB&T
Funds, contemplated by the Commission or any state
regulatory authority.
(i) BB&T Funds shall have received from the
Commission such order or orders as Ropes & Xxxx LLP deems
reasonably necessary or desirable under the 1933 Act, the
1934 Act, or the 1940 Act in connection with the
transaction contemplated hereby, and all such orders shall
be in full force and effect.
(j) Prior to the Exchange Date, the Small Cap Fund
shall have declared a dividend or dividends which, together
with all previous such dividends, shall have the effect of
distributing to its shareholders (a) all of the excess of
(x) its investment income excludable from gross income
under Section 103 of the Code over (y) its deductions
disallowed under Section 265 and 171 of the Code, (b) all
of its investment company taxable income (computed without
regard to any deduction for dividends paid), and (c) all of
its net capital gain realized (after reduction for any
capital loss carryover), in each case for both the current
taxable year (which will end on the Exchange Date) and the
immediately preceding taxable year.
(k) Small Cap Fund shall have furnished to Small Cap
Value Fund a certificate, signed by the President (or any
Vice President) and the Treasurer of BB&T Funds, as to the
tax cost to Small Cap Fund of the securities delivered to
Small Cap Value Fund pursuant to this Plan, together with
any such other evidence as to such tax cost as Small Cap
Value Fund may reasonably request.
(l) BB&T Funds shall have received from the
custodian of BB&T Funds a certificate identifying all of
the assets of Small Cap Fund held by such custodian as of
the Valuation Time.
(m) The transfer agent of BB&T Funds shall have
provided to BB&T Funds (i) a record specifying the number
of Shares of Small Cap Fund outstanding as of the Valuation
Time and (iii) a record specifying the name and address of
each holder of record of any such Shares of Small Cap Fund
and the number of Small Cap Fund Shares held of record by
each such shareholder as of the Valuation Time. Small Cap
Fund's transfer agent shall also have provided BB&T Funds
with a certificate confirming that the acts specified in
the preceding sentence have been taken and that the
information so supplied is complete and accurate to the
best knowledge of the transfer agent.
(n) BB&T Funds, on behalf of Small Cap Value Fund,
shall have executed and delivered an Assumption of
Liabilities dated as of the Exchange Date pursuant to which
Small Cap Value Fund will assume all of the liabilities of
Small Cap Fund existing at the Valuation Time in connection
with the transaction contemplated by this Plan, other than
liabilities pursuant to this Plan.
(o) BB&T Funds, on behalf of Small Cap Fund, shall
have executed and delivered an instrument of transfer
("Transfer Document") and any other certificates or
documents BB&T Funds may deem necessary or desirable to
transfer Small Cap Fund's entire right, title and interest
in and to the Investments and all other assets of Small Cap Fund.
10. No Broker, etc. There is no person who has dealt
with BB&T Funds, Small Cap Fund or Small Cap Value Fund who
by reason of such dealings is entitled to any broker's or
finder's or other similar fee or commission arising out of
the transaction contemplated by this Plan.
11. Termination. BB&T Funds may, by consent of its
Trustees, terminate this Plan, and BB&T Funds, after
consultation with counsel and consent of its Trustees, may
modify this Plan in any manner deemed necessary or desirable.
12. Covenants, etc. Deemed Material. All covenants,
agreements, representations and warranties made under this
Plan and any certificates delivered pursuant to this Plan
shall be deemed to have been material and relied upon by
each of the parties, notwithstanding any investigation made
by them or on their behalf.
13. Sole Plan; Amendments. This Plan supersedes all
previous correspondence and oral communications between the
parties regarding the subject matter hereof, constitutes
the only understanding with respect to such subject matter,
may be changed only as provided in Section 11 and shall be
construed in accordance with and governed by the laws of
the Commonwealth of Massachusetts.
14. Rule 145. Pursuant to Rule 145 under the 1933
Act, Small Cap Value Fund will, in connection with the
issuance of any Small Cap Value Fund Shares to any person
who at the time of the transaction contemplated hereby is
deemed to be an affiliate of a party to the transaction
pursuant to Rule 145(c), cause to be affixed upon the
certificates issued to such person (if any) such legends as
may be reasonably believed by counsel to Small Cap Value
Fund to be required by law, and, further, Small Cap Value
Fund will issue stop transfer instructions to its transfer
agent with respect to such Small Cap Value Fund Shares.
Small Cap Fund shall provide Small Cap Value Fund on the
Exchange Date with the name of any Small Cap Fund
Shareholder who is to the knowledge of Small Cap Fund an
affiliate of Small Cap Fund on such date.
15. BB&T Funds' Declaration of Trust BB&T Funds is a
business trust organized under Massachusetts law and under
a Declaration of Trust, 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 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, officers, employees or agents are
made not individually, but in such capacities, and are not
binding upon any of the Trustees, officers, employees,
agents or shareholders of BB&T Funds personally, but bind
only the assets of BB&T Funds and all persons dealing with
any series or funds of BB&T Funds, including Small Cap Fund
and Small Cap Value Fund, must look solely to the assets of
BB&T Funds belonging to such series or funds for the
enforcement of any claims against BB&T Funds.
BB&T FUNDS
on behalf of its series BB&T Small Cap Fund
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
BB&T FUNDS
on behalf of its series Sterling Capital Small Cap Value Fund
By: /s/ E.G. Xxxxxxx, III
Name: E.G. Xxxxxxx, III
Title: President
STERLING CAPITAL MANAGEMENT LLC
with respect to Section 5 only
By: /s/ Xxxxxxxxx X. XxXxxxxxx
Name: Xxxxxxxxx X. XxXxxxxxx
Title: Chief Executive Officer
