RED FLAG SERVICES AMENDMENT
EXHIBIT (h)(4)(iii)
This Red Flags Services Amendment (“Amendment”) is being entered into as of May 1, 2009
(“Effective Date”), by and between PNC Global Investment Servicing (U.S.) Inc. (formerly known as
PFPC Inc.) (“PNC”) and the undersigned investment company (the “Fund”) and amends the agreement
between PNC and the Fund pursuant to which PNC provides transfer agency services to the Fund, as
amended to date (“Existing Agreement”).
IN CONSIDERATION of the mutual covenants made herein and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties, intending to be legally bound,
hereby agree to amend the Existing Agreement as follows:
1. Modifications to Existing Agreement. The Existing Agreement shall be modified as
follows:
(a) The term “PFPC Inc.” shall be replaced each place it may occur with “PNC Global Investment
Servicing (U.S.) Inc.” and the defined term “PFPC” shall be replaced each place it may occur with
“PNC”.
(b) A new section which reads in its entirety as follows shall be added to the end of the Existing
Agreement:
Red Flag Services (the “Red Flag Section”).
(a) PNC agrees to provide the Fund with the “Red Flag Services”, which is hereby defined to mean
the following services:
(i) PNC will maintain written controls reasonably designed to detect the occurrence of Red
Flags (as defined below) in connection with (i) account opening and other account activities
and transactions conducted directly through PNC with respect to Direct Accounts (as defined
below), and (ii) transactions effected directly through PNC by Covered Persons (as defined
below) in Covered Accounts (as defined below). Such controls, as they may be revised from
time to time hereunder, are referred to herein as the “Controls”. Solely for purposes of the
Red Flag Section, the capitalized terms below will have the respective meaning ascribed to
each:
(A) “Red Flag” means a pattern, practice, or specific activity or a combination of
patterns, practices or specific activities which may indicate the possible existence of
Identity Theft (as defined below) affecting a Registered Owner (as defined below) or a
Covered Person.
(B) “Identity Theft” means a fraud committed or attempted using the identifying
information of another person without authority.
(C) “Registered Owner” means a natural person who is the owner of record of a Direct
Account on the books and records of the Fund maintained by PNC as registrar of the Fund
(the “Fund Registry”).
(D) “Covered Person” means a natural person who is the owner of record of a Covered
Account on the Fund Registry.
(E) “Direct Account” means an account holding Fund shares established directly with and
through PNC by a natural person as a registered account on the Fund Registry and through
which the owner of record has the ability to directly conduct account and transactional
activity with and through PNC.
(F) “Covered Account” means an account holding Fund shares established by a financial
intermediary for a natural person as the owner of record on the Fund Registry and through
which such owner of record has the ability to conduct transactions in Fund shares
directly with and through PNC.
(ii) PNC will provide the Fund with a printed copy of or Internet viewing access to the
Controls.
(iii) PNC will as promptly as practicable under the circumstances notify the Fund of Red
Flags which it detects and reasonably determines to indicate a significant risk of Identity
Theft to a Registered Owner or Covered Person (“Possible Identity Theft”) and assist the Fund
in determining the appropriate response of the Fund to the Possible Identity Theft.
(iv) PNC will (A) engage an independent auditing firm or other similar firm of independent
examiners to conduct an annual testing of the Controls and issue a report on the results of
the testing (the “Audit Report”), and (B) furnish a copy of the Audit Report to the Fund; and
(v) Upon Fund request, issue a certification in a form determined to be appropriate by PNC in
its reasonable discretion, certifying to PNC’s continuing compliance with the Controls after
the date of the most recent Audit Report.
(b) The Fund agrees it is responsible for complying with and determining the applicability to
the Fund of Section 114 of the Fair and Accurate Credit Transaction Act of 2003 and regulations
promulgated thereunder by the Federal Trade Commission (the “Red Flag Requirements”), the extent
to which the Red Flag Services assist the Fund in complying with the Red Flag Requirements, and
for furnishing any supplementation or augmentation to the Red Flag Services it determines to be
appropriate, and that PNC has given no advice and makes no representations with respect to such
matters. This Red Flag Section shall not be interpreted in any manner which imposes a duty on
PNC to act on behalf of the Fund or otherwise, including any duty to take any action upon the
occurrence of a Red Flag, other than as expressly provided for in this Red Flag Section. The
Controls and the Red Flag Services may be changed at any time and from time to time by PNC in
its reasonable sole discretion to include commercially reasonable provisions appropriate to the
Red Flag Requirements, as they may be constituted from time to time. PNC agrees to notify the
Fund of any material changes to the Controls or the Red Flag Services and PNC may satisfy this
obligation with respect to the Controls by posting the notice on the Internet site used for
purposes of Section (a)(ii). The Fund shall be obligated to pay, and PNC shall be entitled to
receive, the fee for Red Flag Services as established by PNC from time to time by written
notice. Other than the initial fee which shall be payable as of the Effective Date, the Fund
shall be obligated to pay any revised fee commencing thirty (30) days after the Fund’s receipt
of such written notice. The Fund’s sole remedy in the event it does not agree to a revised fee
is to terminate the Red Flag Services.
(c) Notwithstanding any other provision of the Agreement:
(i) PNC shall not be liable for any consequential, special or indirect losses or damages
resulting from or arising in connection with its obligations under Sections (a) and (b)
above, whether or not the likelihood of such losses or damages was known by PNC or its
affiliates, and PNC’s cumulative, aggregate liability to the Fund for all losses, claims,
suits, controversies, breaches or damages for any cause whatsoever and regardless of the form
of action or legal theory resulting from or arising in connection with its obligations under
Section (a) and (b) above shall not exceed the lesser of $100,000 or the fees received by PNC
for the Red Flag Services during the six (6) months immediately prior to the date of the last
such loss, claim, suit, controversy, breach or damage; and
(ii) In the event of a material breach of this Red Flag Section by PNC, the Fund shall be
entitled exclusively to terminate the Red Flag Services by complying with the notice and cure
period provisions in the Agreement applicable to a material breach of the Agreement, but
shall not be entitled to terminate the Agreement. For purposes of clarification: The
foregoing sentence of this Section (c)(ii) is intended only to limit the Fund’s termination
remedy in the event of a material breach of the Red Flags Section and is not intended, and
shall not be interpreted, to restrict the ability of the Fund to exercise any other remedy
available to it under the Agreement.
2. Remainder of Existing Agreement; Governing Law. Except as specifically modified by this
Amendment, all terms and conditions of the Existing Agreement shall remain in full force and
effect. The governing law of the Existing Agreement shall be the governing law of this Amendment.
3. Entire Agreement; Facsimile Signatures; Counterparts. This Amendment constitutes the
final, complete, exclusive and fully integrated record of the agreement of the parties with respect
to the subject matter herein and the amendment of the Existing Agreement with respect to such
subject matter. This Amendment may be executed in one or more counterparts; such execution of
counterparts may occur by manual signature, facsimile signature, manual signature transmitted by
means of facsimile transmission or manual signature contained in an imaged document attached to an
email transmission; and each such counterpart executed in accordance with the foregoing shall be
deemed an original, with all such counterparts together constituting one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly
authorized officers, as of the day and year first above written.
| PNC Global Investment Servicing (U.S.) Inc. | BB&T Funds | |||||||||||
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