FORM OF
AMENDMENT TO TRANSFER AGENT SERVICING AGREEMENT
THIS AMENDMENT, dated as of July 24, 2002, amends the Transfer Agent Servicing
Agreement dated ________, 1998, as amended June 23, 2003 by and between U.S.
Bancorp Fund Services, LLC (the "Transfer Agent") and Badgley Funds, Inc. (the
"Fund") (the "Agreement").
WHEREAS, Section 352 of the USA Patriot Act (the "Act") and the Interim Final
Rule (Section 103.130) adopted by the Department of the Treasury's Financial
Crimes Enforcement Network (the "Rule") require the Fund to develop and
implement an anti-money laundering program and monitor the operation of the
program and assess its effectiveness;
WHEREAS, Section 326 of the Act, as proposed, requires the Fund to develop and
implement a Customer Identification Program ("CIP") as part of the Fund's
overall anti-money laundering program to ensure, among other things, that the
Fund obtains certain information from each of its customers and to be reasonably
sure it knows each of its customers;
WHEREAS, the Transfer Agent provides transfer agency and related services to the
Fund and has developed a CIP that is in compliance with the Act, the Rules and
all applicable regulations, and is designed together with the Transfer Agent's
Anti-Money Laundering Program incorporated into the Fund's Anti-Money Laundering
Program, to promote the detection and reporting of potential money laundering
activity by monitoring certain aspects of shareholder activity (the "Monitoring
Procedures") as well as written procedures for verifying a customer's identity
(the "Customer Identification Procedures"), collectively referred to as the
"Procedures";
WHEREAS, the Fund acknowledges that it has had an opportunity to review, and
believes, based on such review and the representations made herein by the
Transfer Agent, that the Procedures provided by the Transfer Agent as part of
the Fund's overall anti-money laundering program, are reasonably designed to
prevent the Fund from being used for money laundering or the financing of
terrorist activities and to achieve compliance with the applicable provision of
the Bank Secrecy Act and the implementing regulations thereunder; and
WHEREAS, the Fund desires to implement the Procedures as part of their overall
anti-money laundering program and, subject to the terms of the Act and the Rule,
delegate to the Transfer Agent the day-to-day operation of the Procedures on
behalf of the Fund.
NOW THEREFORE, the parties agree, and the Agreement is hereby amended, as
follows:
1. Transfer Agent agrees that it shall implement the Procedures on the Fund's
behalf, as such may be amended or revised from time to time upon written
agreement of the Fund and the Transfer Agent.
2. The Transfer Agent, in addition to its representations and warranties in
the Agreement, hereby represents and warrants to the Fund that (i) the
Procedures comply in all material
respects with the all applicable laws and regulations including, but not
limited to, the Act (ii) that the Transfer Agent's anti-money laundering
program is reasonably designed to prevent money laundering and the
Procedures, as adopted into the Fund's anti-money laundering program, will
meet the obligations of the Fund in all material respects under the rules
and regulations promulgated under the Act.
3. The Transfer Agent agrees to provide to the Fund (a) prompt written
notification of any transaction or combination of transactions that the
Transfer Agent believes, based on the Procedures, evidence money laundering
activity in connection with the Fund or any shareholder of the Fund, (b)
prompt written notification of any customer(s) that the Transfer Agent
reasonably believes or has reason to believe, based upon the Procedures, to
be engaged in money laundering activity, provided that the Fund agrees not
to communicate this information to the customer to the extent prohibited by
law, (c) any reports received by the Transfer Agent from any government
agency or applicable industry self-regulatory organization pertaining to
the Transfer Agent's anti-money laundering monitoring on behalf of the Fund
as provided in this Amendment, (d) prompt written notification of any
action taken in response to anti-money laundering violations as described
in (a), (b) or (c), (e) an annual report of its monitoring and customer
identification activities on behalf of the Fund. The Transfer Agent shall
provide such other reports, including on the monitoring and customer
identification activities conducted at the direction of the Fund, as may be
reasonably requested from time to time by the Fund in connection with the
Fund's obligation under the Act and regulations adopted thereunder.
4. The Fund hereby directs, and the Transfer Agent acknowledges, that the
Transfer Agent shall (a) permit federal regulators access to such
information and records maintained by the Transfer Agent and relating to
the Transfer Agent's implementation of the Procedures on behalf of the
Fund, as they may lawfully request, and (b) permit such federal regulators
to inspect the Transfer Agent's implementation of the Procedures on behalf
of the Fund as required under applicable law; provided however that the
Transfer Agent shall provide prompt notice thereof in the manner specified
in the Agreement.
5. Fees and expenses (other than those already set forth in the Agreement) for
services to be provided by the Transfer Agent hereunder shall be set forth
in the fee schedule which is attached hereto.
6. This Amendment including the As Of Processing Policy attached hereto as
Exhibit B, hereby becomes a part of the Agreement but shall not effect any
other provision of the Agreement which shall remain in full force and
effect.
IN WITNESS HEREOF, the undersigned have executed this Amendment as of the date
and year first above written.
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Badgley Funds, Inc. U.S. Bancorp Fund Services, LLC
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By: By:
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Authorized Officer Authorized Officer
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EXHIBIT B
U.S. BANCORP FUND SERVICES, LLC AS OF PROCESSING POLICY
U.S. Bancorp Fund Services, LLC (USBFS) will reimburse the Fund(s) for
any net material loss that may exist on the Fund(s) books and for which USBFS is
responsible, at the end of each calendar month. "Net Material Loss" shall be
defined as any remaining loss, after netting losses against any gains, which
impacts a Fund's net asset value per share by more than 1/2 cent. Gains and
losses will be reflected on the Fund's daily share sheet, and the Fund will be
reimbursed for any net material loss on a monthly basis. USBFS will reset the as
of ledger each calendar month so that any losses which do not exceed the
materiality threshold of 1/2 cent will not be carried forward to the next
succeeding month. USBFS will notify the advisor to the Fund(s) on the daily
share sheet of any losses for which the advisor may be held accountable.
