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Exhibit (d)(3)
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Form of Sub-Advisory Agreement between BB&T Asset Management, LLC and Blackrock
International, Ltd.
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FORM OF
SUB-ADVISORY AGREEMENT
(International Equity Fund)
AGREEMENT made as of February 1, 2001 between BB&T ASSET MANAGEMENT,
LLC., a North Carolina corporation with an office in Raleigh, North Carolina
(the "Adviser"), and BLACKROCK INTERNATIONAL LIMITED, a U.K. corporation
registered under the U.S. Investment Advisers Act of 1940, as amended, and a
member of the Investment Management Regulatory Organization ("IMRO") and
regulated by IMRO in the conduct of its affairs ("Sub-Adviser").
WHEREAS, BB&T Funds, a Massachusetts business trust (the "Trust"), is
registered as an open-end, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to the
Trust's International Equity Fund (the "Fund");
WHEREAS, the Adviser desires to retain Sub-Adviser to assist it in the
provision of a continuous investment program for the Fund and Sub-Adviser is
willing to furnish such services upon the terms and conditions herein set forth;
and
WHEREAS, the Board of Directors of the Fund has approved this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Adviser hereby appoints Sub-Adviser to act as
sub-adviser to the Fund as permitted by the Adviser's Advisory
Agreement with the Trust pertaining to the Fund. Intending to be
legally bound, Sub-Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein
provided.
(b) Adviser acknowledges that the services to be provided by
Sub-Adviser hereunder will be provided on the basis that the Fund is a
non-private customer as defined in the rules of IMRO.
2. SUB-ADVISORY SERVICES. Subject to the supervision of the
Trust's Board of Directors, Sub-Adviser will assist the Adviser in providing a
continuous investment program for the Fund, including research and management
with respect to all securities and investments and cash equivalents in the Fund.
Sub-Adviser will provide services under this Agreement in accordance with the
Fund's investment objective, policies and restrictions as stated in the Fund's
prospectuses and resolutions of the Trust's Board of Directors applicable to the
Fund. Adviser hereby undertakes to provide Sub-Adviser with copies of such
prospectuses and resolutions as the same become available from time to time.
Without limiting the generality of the foregoing, Sub-Adviser further
agrees that it will:
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(a) prepare, subject to the Adviser's approval, lists of
foreign countries for investment by the Fund and determine from time to
time what securities and other investments will be purchased, retained
or sold for the Fund, including, with the assistance of the Adviser,
the Fund's investments in futures and forward currency contracts;
PROVIDED, HOWEVER, that Sub-Adviser shall not be responsible for taking
action with respect to any proxies, notices, reports or other
communications relating to any of the Fund's portfolio securities;
(b) manage in consultation with the Adviser the Fund's
temporary investments in securities;
(c) place orders for the Fund either directly with the
issuer or with any broker or dealer;
(d) provide, at Sub-Adviser's expense, using one or more
pricing services believed by Sub-Adviser to be reliable, the value of
the portfolio securities and other assets of the Fund in accordance
with the 1940 Act, the Fund's current prospectuses and applicable
resolutions of the Board of Directors of the Trust on each day that the
Fund's assets are required to be valued; such information to be
transmitted by telephone, telecopy or other transmission as soon as
possible and in any event within 24 hours of the time of valuation to
the Fund's accountant, or to such other person(s) as the Adviser may
direct for the benefit of the Fund;
(e) manage the Fund's overall cash position, and determine
from time to time what portion of the Fund's assets will be held in
different currencies;
(f) provide the Adviser with foreign broker research, a
quarterly review of international economic and investment developments,
and occasional "White Papers" on international investment issues;
(g) attend regular business and investment-related meetings
with the Trust's Board of Directors and the Adviser if requested to do
so by the Trust and/or the Adviser; and
(h) maintain books and records with respect to the securities
transactions for the Fund, furnish to the Adviser and the Trust's Board
of Directors such periodic and special reports as they may request with
respect to the Fund, and provide in advance to the Adviser all reports
to the Board of Directors for examination and review within a
reasonable time prior to the Trust's Board meetings. Adviser hereby
undertakes to provide Sub-Adviser with at least fourteen days prior
written notice of the date, time and location of all of the Trust's
Board meetings pertaining to the Fund.
3. SUBCONTRACTORS. It is understood that Sub-Adviser may from
time to time engage or associate itself with such person or persons as
Sub-Adviser may believe to be particularly fitted to assist Sub-Adviser in the
performance of certain ministerial or administrative services required by this
Agreement; PROVIDED, HOWEVEr, that such person or persons shall have been
approved by the Board of Directors of the Trust, that the compensation
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of such person or persons shall be paid by Sub-Adviser and that Sub-Adviser
shall be as fully responsible to the Adviser and the Trust for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
4. COVENANTS BY SUB-ADVISER. Sub-Adviser agrees with respect to
the services provided to the Fund that it:
(a) will conform with all Rules and Regulations of the
Securities and Exchange Commission ("SEC") applicable to it and will
also conform with all Rules and Regulations of IMRO;
(b) will telecopy trade information to the Adviser on the
first business day following the day of the trade and cause broker
confirmations to be sent directly to the Adviser; and
(c) will treat confidentially and as proprietary information
of the Trust all records and other information relative to the Fund and
prior, present or potential shareholders, and will not use such records
and information for any purpose other then performance of its
responsibilities and duties hereunder (except after prior notification
to and approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld and will be deemed
granted where Sub-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by
the Trust).
5. SERVICES NOT EXCLUSIVE.
(a) The services furnished by Sub-Adviser hereunder are deemed
not to be exclusive, and nothing in this Agreement shall (i) prevent
Sub-Adviser or any affiliated person (as defined in the 0000 Xxx) of
Sub-Adviser from acting as investment adviser or manager for any other
person or persons, including other management investment companies with
investment objectives and policies the same as or similar to those of
the Fund or (ii) limit or restrict Sub-Adviser or any such affiliated
person from buying selling or trading any securities or other
investments (including any securities or other investments which the
Fund is eligible to buy) for its or their own accounts or for the
account of others for whom it or they may be acting; PROVIDED, HOWEVER,
that Sub-Adviser agrees that it will not undertake any activities
which, in its reasonable judgement, will adversely affect the
performance of its obligations to the Fund under this Agreement.
(b) Nothing contained herein, however, shall prohibit
Sub-Adviser from advertising or soliciting the public generally with
respect to products or services, regardless of whether such
advertisement or solicitation may include prior, present or potential
shareholders of the Trust.
6. PORTFOLIO TRANSACTIONS. Investment decisions for the Fund
shall be made by Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by Sub-Adviser. The Fund and such
investment companies and accounts may, however, invest in the same securities.
When a purchase or sale of the same security is made at
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substantially the same time on behalf of the Fund and/or another investment
company or account, the transaction will be averaged as to price, and available
investments allocated as to amount, in a manner which Sub-Adviser believes to be
equitable to the Fund and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained or sold by the Fund.
To the extent permitted by law, Sub-Adviser may aggregate the securities to be
sold or purchased for the Fund with those to be sold or purchased for other
investment companies or accounts in order to obtain best execution.
Sub-Adviser shall place orders for the purchase and sale of
portfolio securities and will solicit broker-dealers to execute transactions in
accordance with the Fund's policies and restrictions regarding brokerage
allocations. Sub-Adviser shall place orders pursuant to its investment
determination for the Fund either directly with the issuer or with any broker or
dealer selected by Sub-Adviser. In executing portfolio transactions and
selecting brokers or dealers, Sub-Adviser shall use its reasonable best efforts
to seek the most favorable execution of orders, after taking into account all
factors Sub-Adviser deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. Consistent
with this obligation, Sub-Adviser may, to the extent permitted by law, purchase
and sell portfolio securities to and from brokers and dealers who provide
brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) to or for the benefit of the Fund and/or other
accounts over which Sub-Adviser or any of its affiliates exercises investment
discretion. Sub-Adviser is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if
Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Sub-Adviser's overall responsibilities to the Fund and to the Trust. In no
instance will portfolio securities be purchased from or sold to Sub-Adviser, or
the Fund's principal underwriter, or any affiliated person thereof except as
permitted by the Securities and Exchange Commission.
7. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, Sub-Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request;
PROVIDED, HOWEVER, that the Sub-Adviser may take and retain photocopies of such
records in order to comply with applicable regulatory requirements. Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the Act.
8. EXPENSES. During the term of this Agreement, Sub-Adviser
will pay all expenses incurred y it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
9. COMPENSATION. For the services provided and the expenses
assumed with respect to the Fund pursuant to this Agreement, Sub-Adviser will be
entitled to a fee, computed
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daily and payable quarterly, from the Adviser, calculated at the annual rate of
.50% of the Fund's first $50 million of average daily net assets; .45% of the
Fund's next $50 million of average daily net assets; and .40% of the Fund's
average daily net assets in excess of $100 million. If the fee payable to the
Sub-Adviser pursuant to this paragraph begins to accrue after the beginning of
any calendar quarter or if this Agreement terminates before the end of any
calendar quarter, the fee for the period from such date to the end of such
calendar quarter or from the beginning of such calendar quarter to the date of
termination, as the case may be, shall be prorated according to the proportion
which such period bears to the full calendar quarter in which such effectiveness
or termination occurs. For purposes of calculating fees, the value of a Fund's
net assets shall be computed in the manner specified in the Prospectus and the
Trust's Declaration of Trust for the computation of the value of the Fund's net
assets in connection with the determination of the net asset value of the Fund's
shares. Payment of said compensation shall be the sole responsibility of the
Adviser and shall in no way be an obligation of the Fund or of the Trust.
10. LIMITATION OF LIABILITY.
(a) The Sub-Adviser shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Adviser, the Trust
or the Fund in connection with the matters to which this Agreement relates,
except that Sub-Adviser shall be liable to the Adviser for a loss resulting from
a breach of fiduciary duty by Sub-Adviser under the 1940 Act with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of Sub-Adviser in the
performance of its duties or from reckless disregard by it of its obligations or
duties under this Agreement. In no case shall the Sub-Adviser be liable for
actions taken or non-actions with respect to the performance of services under
this Agreement based upon specific information, instructions or requests given
or made to the Sub-Adviser by the Adviser.
(b) The Adviser shall be responsible at all times for
supervising the Sub-Adviser, and this Agreement does not in any way limit the
duties and responsibilities that the Adviser has agreed to under the Advisory
Agreement.
11. REFERENCE TO SUB-ADVISER. Neither the Adviser not any
affiliate or agent of it shall make reference to or use the name of Sub-Adviser
or any of its affiliates, or any of their clients, except references concerning
the identity of any services provided by Sub-Adviser to the Fund, which
references shall not differ in substance from those included in the current
registration statement pertaining to the Fund, this Agreement and the Advisory
Agreement between the Adviser and the Trust with respect to the Fund, in any
advertising or promotional materials without the prior approval of Sub-Adviser,
which approval shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause the Trust and any affiliate
thereof to satisfy the foregoing obligation.
12. DURATION AND TERMINATION. Unless sooner terminated, this
Agreement shall continue until September 30, 2001 and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by the Trust's Board of Directors or
vote the lesser of (a) 67% of the shares of the Fund represented at a meeting if
holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of the Fund,
provided that in either event its continuance also is approved by a majority of
the Trust's Directors who are not
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"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 at any time without penalty, on
60 days' prior written notice, by Adviser, Sub-Adviser or the Trust's Board of
Directors or by vote of the lesser of (a) 67% of the shares of the Fund
represented at a meeting if holders of more than 50% of the outstanding shares
of the Fund are present in person or by proxy or (b) more than 50% of the
outstanding shares of the Fund. This Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act).
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement shall be effective with respect to the Fund until approved by the vote
of a majority of the outstanding voting securities of the Fund.
14. NOTICE. Any notice, advice or report to be given pursuant to
this Agreement shall be delivered or mailed:
To Sub-Adviser at:
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0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX0 0XX
Xxxxxx Xxxxxxx
To the Adviser at:
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000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
To the Trust at:
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0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
15. MISCELLANEOUS; COMPLAINTS.
(a) The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
(b) This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and shall be governed by Massachusetts law.
(c) The names "BB&T Funds" and "Trustees of BB&T
Funds" refer respectively to the Trust created and the Trustees, as
trustees but not individually or
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personally, acting from time to time under an Agreement and Declaration
of Trust dated as of October 1, 1987 to which reference is hereby made
and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and elsewhere as required by law, and to
any and all amendments thereto so filed or hereafter filed. The
obligations of "BB&T Funds" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of
the Trustees, shareholders or representatives of the Trust personally,
but bind only the assets of the Trust, and all persons dealing with any
series of shares of the Trust must look solely to the assets of the
Trust belonging to such series for the enforcement of any claims
against the Trust.
(d) All formal complaints should in the first
instance be made in writing to the Sub-Adviser's Compliance Officer at
0 Xxxxxx Xxxxxx, Xxxxxxxxx, XX0 0XX, Xxxxxx Xxxxxxx, fax number 44 131
6248151. In addition, Adviser has the right to complain directly to
IMRO.
16. 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
BB&T ASSET MANAGEMENT, LLC
BY:__________________
Name:
Title:
BLACKROCK INTERNATIONAL
LIMITED
BY:____________________
Name:
Title:
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