EXPENSE CAP/REIMBURSEMENT AGREEMENT
This Agreement is entered into as of the 25th day of July,
2002 between Badgley, Xxxxxx and Xxxx, Inc. (the "Adviser") and Badgley Funds,
Inc. (the "Company") on behalf of the Badgley Growth Fund (the " Growth Fund")
and the Badgley Balanced Fund (the "Balanced Fund") (collectively, the "Funds").
WHEREAS, the Adviser desires to contractually agree to waive a
portion of its advisory fee or reimburse certain of the Fund's operating
expenses to ensure that the Fund's total operating expenses do not exceed the
level described below.
NOW THEREFORE, the parties agree as follows:
The Adviser agrees that until September 30, 2003, it will
reduce its compensation as provided for in the Investment Advisory Agreement
between the Company and the Adviser dated June 23, 1998, and/or assume expenses
for the Fund to the extent necessary to ensure that the Growth Fund's total
operating expenses (on an annual basis) do not exceed 1.50% of the Growth Fund's
average daily net assets and that the Balanced Fund's total operating expenses
(on an annual basis) do not exceed 1.30% of the Balanced Fund's average daily
net.
The Adviser shall be entitled to recoup such amounts for a
period of up to three (3) years following the fiscal year in which the Adviser
reduced its compensation and/or assumed expenses for the Fund, provided that the
total operating expenses including this recoupment do not exceed the established
cap on expenses for that year.
BADGLEY, XXXXXX AND XXXX, INC.
By: /s/ J. Xxxxx Xxxxxxxxx
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J. Xxxxx Xxxxxxxxx, Managing Director
BADGLEY FUNDS, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, President
