Exhibit h.2
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
23rd day of June, 1998, by and between Badgley Funds,
Inc., a Maryland corporation (hereinafter referred to
as the "Company"), and Firstar Trust Company, a
corporation organized under the laws of the State of
Wisconsin (hereinafter referred to as "FTC").
WHEREAS, the Company is an open-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio;
WHEREAS, FTC is a trust company and, among other
things, is in the business of providing fund
administration services for the benefit of its
customers; and
WHEREAS, the Company desires to retain FTC to act
as Administrator for the Badgley Growth Fund (the
"Growth Fund"), the Badgley Balanced Fund (the
"Balanced Fund") and for each additional series of the
Company listed on Exhibit A attached hereto (each, a
"Fund"), as may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and FTC agree as
follows:
1. Appointment of Administrator
The Company hereby appoints FTC as Administrator
of the Company on the terms and conditions set forth in
this Agreement, and FTC hereby accepts such appointment
and agrees to perform the services and duties set forth
in this Agreement in consideration of the compensation
provided for herein.
2. Duties and Responsibilities of FTC
A. General Fund Management
1. Act as liaison among all Fund service providers
2. Coordinate board communication by:
a. Assisting Company counsel in
establishing meeting agendas
b. Preparing board reports based on
financial and administrative data
c. Evaluating independent auditor
d. Securing and monitoring fidelity bond
and director and officer liability
coverage, and making the necessary
SEC filings relating thereto
e. Preparing minutes of meetings of the
board and shareholders
3. Audits
a. Prepare appropriate schedules and
assist independent auditors
b. Provide information to SEC and
facilitate audit process
c. Provide office facilities
4. Assist in overall operations of the Fund
5. Pay Fund expenses upon written
authorization from the Company
B. Compliance
1. Regulatory Compliance
a. Monitor compliance with 1940 Act
requirements, including:
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of Ethics for the disinterested directors of the
Fund
b. Monitor Fund's compliance with the
policies and investment limitations
of the Company as set forth in its
Prospectus and Statement of Additional Information
2. Blue Sky Compliance
a. Prepare and file with the appropriate
state securities authorities any
and all required compliance filings
relating to the registration of the
securities of the Company so as to
enable the Company to make a
continuous offering of its shares
in all states
b. Monitor status and maintain
registrations in each state
3. SEC Registration and Reporting
a. Assist Company counsel in updating
Prospectus and Statement of
Additional Information and in
preparing proxy statements and
Rule 24f-2 notices
b. Prepare annual and semiannual reports
c. Coordinate the printing of publicly
disseminated Prospectuses and reports
d. File fidelity bond under Rule 17g-1
e. File shareholder reports under Rule 30b2-1
4.IRS Compliance
a. Monitor Company's status as a
regulated investment company under
Subchapter M through review of the
following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Calculate required distributions (including excise tax
distributions)
C. Financial Reporting
1. Provide financial data required by Fund's
Prospectus and Statement of Additional Information
2. Prepare financial reports for shareholders,
the board, the SEC, and independent auditors
3. Supervise the Company's Custodian and
Company Accountants in the maintenance
of the Company's general ledger and in
the preparation of the Fund's financial
statements, including oversight of
expense accruals and payments, of the
determination of net asset value of the
Company's net assets and of the
Company's shares, and of the declaration
and payment of dividends and other
distributions to shareholders
D. Tax Reporting
1. Prepare and file on a timely basis
appropriate federal and state tax
returns including Forms 1120/8610 with
any necessary schedules
2. Prepare state income breakdowns where relevant
3. File Form 1099 Miscellaneous for payments
to directors and other service providers
4. Monitor wash losses
5. Calculate eligible dividend income for
corporate shareholders
3. Compensation
The Company, on behalf of the Fund, agrees to pay
FTC for the performance of the duties listed in this
Agreement, the fees and out-of-pocket expenses as set
forth in the attached Exhibit A.
These fees may be changed from time to time,
subject to mutual written Agreement between the Company
and FTC.
The Company agrees to pay all fees and
reimbursable expenses within ten (10) business days
following the receipt of the billing notice.
4. Performance of Service; Limitation of Liability
A. FTC shall exercise reasonable care in the
performance of its duties under this Agreement. FTC
shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company
in connection with matters to which this Agreement
relates, including losses resulting from mechanical
breakdowns or the failure of communication or power
supplies beyond FTC's control, except a loss resulting
from FTC's refusal or failure to comply with the terms
of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of
its duties under this Agreement. Notwithstanding any
other provision of this Agreement, the Company shall
indemnify and hold harmless FTC from and against any
and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or
law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or
which may be asserted against FTC by any person arising
out of any action taken or omitted to be taken by it in
performing the services hereunder (i) in accordance
with the foregoing standards, or (ii) in reliance upon
any written or oral instruction provided to FTC by any
duly authorized officer of the Company, such duly
authorized officer to be included in a list of
authorized officers furnished to FTC and as amended
from time to time in writing by resolution of the Board
of Directors of the Company.
FTC shall indemnify and hold the Company
harmless from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the
Company may sustain or incur or which may be asserted
against the Company by any person arising out of any
action taken or omitted to be taken by FTC as a result
of FTC's refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or willful
misconduct.
In the event of a mechanical breakdown or
failure of communication or power supplies beyond its
control, FTC shall take all reasonable steps to
minimize service interruptions for any period that such
interruption continues beyond FTC's control. FTC will
make every reasonable effort to restore any lost or
damaged data and correct any errors resulting from such
a breakdown at the expense of FTC. FTC agrees that it
shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision
for emergency use of electrical data processing
equipment to the extent appropriate equipment is
available.
Representatives of the Company shall be
entitled to inspect FTC's premises and operating
capabilities at any time during regular business hours
of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the
right to reprocess and correct administrative errors at
its own expense.
B. In order that the indemnification provisions
contained in this section shall apply, it is understood
that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the
indemnitor shall be fully and promptly advised of all
pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will
use all reasonable care to notify the indemnitor
promptly concerning any situation which presents or
appears likely to present the probability of a claim
for indemnification. The indemnitor shall have the
option to defend the indemnitee against any claim which
may be the subject of this indemnification. In the
event that the indemnitor so elects, it will so notify
the indemnitee and thereupon the indemnitor shall take
over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification
under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior written
consent.
5. Proprietary and Confidential Information
FTC agrees on behalf of itself and its directors,
officers, and employees to treat confidentially and as
proprietary information of the Company all records and
other information relative to the Company and prior,
present, or potential shareholders of the Company (and
clients of said shareholders), and not to use such
records and information for any purpose other than the
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where FTC 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
Company.
6. Data Necessary to Perform Services
The Company or its agent, which may be FTC, shall
furnish to FTC the data necessary to perform the
services described herein at times and in such form as
mutually agreed upon.
7. Term of Agreement
This Agreement shall become effective as of the
date hereof and, unless sooner terminated as provided
herein, shall continue automatically in effect for
successive annual periods. The Agreement may be
terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties.
However, this Agreement may be amended by mutual
written consent of the parties.
8. Notices
Notices of any kind to be given by either party to
the other party shall be in writing and shall be duly
given if mailed or delivered as follows: Notice to FTC
shall be sent to:
Firstar Trust Company
Attn.: Mutual Fund Services
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Company shall be sent to:
Badgley Funds, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Corporate Secretary
9. Duties in the Event of Termination
In the event that, in connection with termination,
a successor to any of FTC's duties or responsibilities
hereunder is designated by the Company by written
notice to FTC, FTC will promptly, upon such termination
and at the expense of the Company, transfer to such
successor all relevant books, records, correspondence,
and other data established or maintained by FTC under
this Agreement in a form reasonably acceptable to the
Company (if such form differs from the form in which
FTC has maintained, the Company shall pay any expenses
associated with transferring the data to such form),
and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance
from FTC's personnel in the establishment of books,
records, and other data by such successor.
10. Governing Law
This Agreement shall be construed and the
provisions thereof interpreted under and in accordance
with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange
Commission thereunder.
11. Records
FTC shall keep records relating to the services to
be performed hereunder, in the form and manner, and for
such period as it may deem advisable and is agreeable
to the Company but not inconsistent with the rules and
regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules
thereunder. FTC agrees that all such records prepared
or maintained by FTC relating to the services to be
performed by FTC hereunder are the property of the
Company and will be preserved, maintained, and made
available in accordance
with such section and rules of
the 1940 Act and will be promptly surrendered to the
Company on and in accordance with its request.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer in one or more counterparts as of the day and
year first written above.
BADGLEY FUNDS, INC. FIRSTAR TRUST COMPANY
By: /s/ Xxxx X. Xxxxx III By: /s/ Xxxxxx Xxxxxxxxx
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Attest: /s/ Xxxx X. Xxxxxx Attest: /s/ Xxxxxxxxx X. Xxxxxxxx
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Fund Administration and Compliance
Annual Fee Schedule - Domestic Funds
Exhibit A
Separate Series of Badgley Funds, Inc.
Name of Series Date Added
Badgley Growth Fund June 23, 1998
Badgley Balanced Fund June 23, 1998
Annual fee based upon average assets per Fund
6 basis points on the first $200 million
5 basis points on the next $500 million
3 basis points on the balance
Minimum annual fee:$30,000 per Fund
Plus out-of-pocket expense reimbursements, including but not limited to:
Postage
Programming
Stationery
Proxies
Retention of records
Special reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses
If out-of-pocket expenses exceed $5,000 in any month,
such expenses must be pre-approved by the Company.
Fees and out-of-pocket expense reimbursements are billed monthly.
