EXHIBIT (h)(1)
July 19, 2002
Xx. Xxxx X. XxXxxxx
The Preferred Group of Mutual Funds
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Dear Xx. XxXxxxx:
The Preferred Group of Mutual Funds (the "Fund") and State Street Bank and Trust
Company (the "Transfer Agent") are parties to an agreement dated as of June 23,
1992 (the "Agreement") under which the Transfer Agent performs certain transfer
agency and/or recordkeeping services for the Fund. In connection with the
enactment of the USA Patriot Act of 2001 and the regulations promulgated
thereunder, (collectively, the "Patriot Act"), the Fund has requested and the
Transfer Agent has agreed to amend the Agreement as of the date hereof in the
manner set forth below:
Whereas, the Patriot Act imposes new anti-money laundering requirements on
financial institutions, including mutual funds;
Whereas, the Fund recognizes the importance of complying with the Patriot Act
and the Fund has developed and implemented a written anti-money laundering
program, which is designed to satisfy the requirements of the Patriot Act, (the
"Fund's Program");
Whereas, the Patriot Act authorizes a mutual fund to delegate to a service
provider, including its transfer agent, the implementation and operation of
aspects of the fund's anti-money laundering program; and
Whereas, the Fund desires to delegate to the Transfer Agent the implementation
and operation of certain aspects of the Fund's Program and the Transfer Agent
desires to accept such delegation.
Now Therefore, in consideration of the foregoing and the mutual covenants and
agreements hereinafter contained, the parties hereby agree to amend the
Agreement, pursuant to the terms thereof, as follows
1. Delegation; Services
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1.1 Subject to the terms and conditions set forth in the Agreement, the
Transfer Agent agrees to perform those services that are set forth on
Exhibit A, attached hereto. The services set forth on Exhibit A may be
amended, from time to time, by
mutual agreement of the parties upon the execution by both parties of
a revised Exhibit A bearing a later date than the date hereof.
1.2 The Transfer Agent agrees to perform such services, with respect to
the ownership of shares in the Fund for which the Transfer Agent
maintains the applicable shareholder information, subject to and in
accordance with the terms and conditions of the Agreement.
2. Consent to Examination
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2.1 In connection with the performance by the Transfer Agent of the
above-delegated duties, the Transfer Agent understands and
acknowledges that the Fund remains responsible for assuring compliance
with the Patriot Act and that the records the Transfer Agent maintains
for the Fund relating to the Fund's Program may be subject, from time
to time, to examination and/or inspection by federal regulators in
order that the regulators may evaluate such compliance. The Transfer
Agent hereby consents to such examination and/or inspection and agrees
to cooperate with such federal examiners in connection with their
review. For purposes of such examination and/or inspection, the
Transfer Agent will use its best efforts to make available, during
normal business hours, all required records and information for review
by such examiners.
3. Limitation on Delegation.
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3.1 The Fund acknowledges and agrees that in accepting the delegation
hereunder, the Transfer Agent is agreeing to perform only those
services on Exhibit A, as may be amended from time to time, and is not
undertaking and shall not be responsible for any other aspect of the
Fund's Program or for the overall compliance by the Fund with the
Patriot Act. Additionally, the parties acknowledge and agree that the
Transfer Agent shall only be responsible for performing such services
with respect to the ownership of shares in the Fund for which the
Transfer Agent maintains the applicable shareholder information.
4. Miscellaneous.
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4.1 In all other regards, the terms and provisions of the Agreement shall
continue to apply with full force and effect.
4.2. Each party represents to the other that the execution and delivery of
this Amendment has been duly authorized.
In Witness Whereof, each of the parties has caused this Amendment to
be executed in its name and behalf by its duly authorized
representative as of the date first above written.
Witnessed By: STATE STREET BANK AND TRUST COMPANY
____________________________ By: ______________________________
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
Witnessed By: THE PREFERRED GROUP OF MUTUAL FUNDS
____________________________ By: ________________________________
Name: ______________________ Name: ________________________________
Title:______________________ Title: ________________________________
Exhibit A
Services
With respect to the beneficial ownership of shares in the Fund for which the
Transfer Agent maintains the applicable shareholder information, the Transfer
Agent shall:
o Follow the Fund's third party check policies (which may change from
time to time). In accordance with the Fund's current policy, reject
third party checks for new accounts or for subsequent purchases within
the Fund.
o Submit all financial and non-financial transactions through the Office
of Foreign Asset Control ("OFAC") database and the Securities and
Exchange Commission ("SEC") Control Lists.
o Review all maintenance transactions to shareholder registrations that
occur within thirty (30) days of an account being established.
o Review redemption transactions that occur within thirty (30) days of
account establishment or maintenance.
o Review wires sent to banking instructions other than those on file.
o Review a shareholder's account for unusual activity when purchases and
redemptions by the shareholder (based on social security number within
the Funds) hit the $100,000 threshold that has been set on the
"Unusual Activity Warning System."
o Review accounts to identify those established by known offenders
attempting fraud and once identified, freeze such accounts.
o Monitor and track cash equivalents under $10,000 for a rolling
twelve-month period and file Form 8300 as necessary.
o File suspicious activity reports as necessary.
o Undertake any other monitoring of suspicious or unusual transactions
set forth in the Transfer Agent's anti-money laundering program, as
amended from time to time.
STATE STREET BANK The Preferred Group of
AND TRUST COMPANY Mutual Funds
By: ________________________ By: ___________________________
Name: Xxxxxx X. Xxxxxx Name: ___________________________
Title: Executive Vice President Title: ___________________________
Date: _______________________ Date: ____________________________
