Ex. 99.h.3
FORM OF AGREEMENT
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of October,
2004, by and between PRIMECAP Odyssey Funds, a Delware statutory trust (the
"Trust") and U.S. Bancorp Fund Services, LLC, a Wisconsin limited liability
company ("USBFS").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and is authorized to issue shares of beneficial interest in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, USBFS is, among other things, in the business of providing
mutual fund accounting services to investment companies; and
WHEREAS, the Trust desires to retain USBFS to provide accounting
services to each series of the Trust listed on Exhibit A hereto (as amended from
time to time) (each a "Fund", collectively the "Funds").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Appointment of USBFS as Fund Accountant
The Trust hereby appoints USBFS as fund accountant of the Trust on the
terms and conditions set forth in this Agreement, and USBFS hereby
accepts such appointment and agrees to perform the services and duties
set forth in this Agreement.
2. Services and Duties of USBFS
USBFS shall provide the following fund accounting services for the
Funds, including but not limited to:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the
investment adviser.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Trustees of the Trust (the
"Board of Trustees" or the "Trustees") and apply those
prices to the portfolio positions. For those securities
where market quotations are not readily available, the
Board of Trustees shall approve, in good faith, procedures
for determining the fair value for such securities.
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(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identify them as
short-term or long-term; account for periodic
distributions of gains or losses to shareholders and
maintain undistributed gain or loss balances as of each
valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Trust as to methodology, rate
or dollar amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from the Trust.
(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon
by USBFS and the Trust.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share
activity as reported by the Fund's transfer agent on a
timely basis.
(2) Apply equalization accounting as directed by the Trust.
(3) Determine net investment income (earnings) for the Fund as
of each valuation date. Account for periodic distributions
of earnings to shareholders and maintain undistributed net
investment income balances as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the Fund's
Prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of Fund
operations at such time as required by the nature and
characteristics of the Fund.
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(7) Communicate, at an agreed upon time, the per share price
for each valuation date to parties as agreed upon from
time to time.
(8) Prepare monthly reports that document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolio
of the Fund to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the Fund's investment
portfolio.
(3) Calculate taxable gain/loss on security sales using the
tax lot relief method designated by the Trust.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains
distributions to the Fund's transfer agent to support tax
reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the Fund's
accounting records available to the Trust, the Securities
and Exchange Commission (the "SEC"), and the outside
auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
F. USBFS will perform the following accounting functions on a daily
basis:
(1) Reconcile cash and investment balances of each Fund with
the Fund's custodian, and provide the Fund's investment
adviser with the beginning cash balance available for
investment purposes.
(2) Transmit or mail a copy of the portfolio valuation to the
Fund's investment adviser.
(3) Review the impact of current day's activity on a per share
basis, and review changes in market value.
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FORM OF AGREEMENT
G. In addition, USBFS will:
(1) Prepare monthly security transactions listings.
(2) Supply various Trust, Fund and class statistical data as
requested by the Trust on an ongoing basis.
3. Pricing of Securities
For each valuation date, USBFS shall obtain prices from a pricing source
recommended by USBFS and approved by the Board of Trustees and apply
those prices to the portfolio positions of the Fund. For those
securities where market quotations are not readily available, the Board
of Trustees shall approve, in good faith, procedures for determining the
fair value for such securities.
If the Trust desires to provide a price that varies from the pricing
source, the Trust shall promptly notify and supply USBFS with the
valuation of any such security on each valuation date. All pricing
changes made by the Trust will be in writing and must specifically
identify the securities to be changed by CUSIP, name of security, new
price or rate to be applied, and, if applicable, the time period for
which the new price(s) is/are effective.
4. Changes in Accounting Procedures
Any resolution passed by the Board of Trustees that affects accounting
practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by USBFS.
5. Changes in Equipment, Systems, Service, Etc.
USBFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect
the service provided to the Trust under this Agreement.
6. Compensation
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit B
hereto (as amended from time to time). The Trust shall pay all fees and
reimbursable expenses within thirty (30) calendar days following receipt
of the billing notice, except for any fee or expense subject to a good
faith dispute. The Trust shall notify USBFS in writing within thirty
(30) calendar days following receipt of each invoice if the Trust is
disputing any amounts in good faith. The Trust shall settle such
disputed amounts within ten (10) calendar days of the day on which the
parties agree to the amount to be paid. With the exception of any fee or
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FORM OF AGREEMENT
expense the Trust is disputing in good faith as set forth above, unpaid
invoices shall accrue a finance charge of one and one-half percent (1
1/2%) per month, after the due date. Notwithstanding anything to the
contrary, amounts owed by the Trust to USBFS shall only be paid out of
the assets and property of the particular Fund involved.
7. Indemnification; Limitation of Liability
A. USBFS shall exercise reasonable care in the performance of its
duties under this Agreement. USBFS shall not be liable for any
error of judgment or mistake of law or for any loss suffered by
the Trust in connection with matters to which this Agreement
relates, including losses resulting from mechanical breakdowns or
the failure of communication or power supplies beyond USBFS's
control, except a loss arising out of or relating to USBFS'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, if USBFS
has exercised reasonable care in the performance of its duties
under this Agreement, the Trust shall indemnify and hold harmless
USBFS from and against any and all claims, demands, losses,
expenses, and liabilities of any and every nature (including
reasonable attorneys' fees) that USBFS may sustain or incur or
that may be asserted against USBFS by any person arising out of
any action taken or omitted to be taken by it in performing the
services hereunder, except for any and all claims, demands,
losses, expenses, and liabilities arising out of or relating to
USBFS's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence or from willful
misconduct on its part in performance of its duties under this
Agreement, (i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral instruction provided to
USBFS by any duly authorized officer of the Trust, such duly
authorized officer to be included in a list of authorized
officers furnished to USBFS and as amended from time to time in
writing by resolution of the Board of Trustees.
USBFS shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable
attorneys' fees) that the Trust may sustain or incur or that may
be asserted against the Trust by any person arising out of any
action taken or omitted to be taken by USBFS as a result of
USBFS'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, USBFS shall
take all reasonable steps to minimize service interruptions for
any period that such interruption continues beyond USBFS's
control. USBFS 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 USBFS. USBFS agrees that it shall, at
all times, have reasonable contingency plans with appropriate
parties, making reasonable provision for
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FORM OF AGREEMENT
emergency use of electrical data processing equipment to the
extent appropriate equipment is available. Representatives of the
Trust shall be entitled to inspect USBFS's premises and operating
capabilities at any time during regular business hours of USBFS,
upon reasonable notice to USBFS.
Notwithstanding the above, USBFS 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
that 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 that 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. 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.
8. Proprietary and Confidential Information
USBFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and prior,
present, or potential shareholders of the Trust (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 Trust, which approval shall not be unreasonably withheld and may not
be withheld where USBFS 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
Trust.
Further, USBFS will adhere to the privacy policies adopted by the Trust
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified
from time to time (the "Act"). Notwithstanding the foregoing, USBFS will
not share any nonpublic personal information concerning any of the
Trust's shareholders to any third party unless specifically directed by
the Trust or allowed under one of the exceptions noted under the Act.
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FORM OF AGREEMENT
9. Term of Agreement; Amendment
This Agreement shall become effective as of the date first written above
and will continue in effect for a period of three years. Subsequent to
the initial three-year term, this 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.
10. Records
USBFS 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 Trust, but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. USBFS
agrees that all such records prepared or maintained by USBFS relating to
the services to be performed by USBFS hereunder are the property of the
Trust and will be preserved, maintained, and made available in
accordance with such applicable sections and rules of the 1940 Act and
will be promptly surrendered to the Trust on and in accordance with its
request.
11. Governing Law
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin, without regard to conflicts of law principles. To
the extent that the applicable laws of the State of Wisconsin, or any of
the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control, and nothing herein shall be
construed in a manner inconsistent with the 1940 Act or any rule or
order of the SEC thereunder.
12. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
USBFS's duties or responsibilities hereunder is designated by the Trust
by written notice to USBFS, USBFS will promptly, upon such termination
and at the expense of the Trust, transfer to such successor all relevant
books, records, correspondence and other data established or maintained
by USBFS under this Agreement in a form reasonably acceptable to the
Trust (if such form differs from the form in which USBFS has maintained
the same, the Trust shall pay any expenses associated with transferring
the same to such form), and will cooperate in the transfer of such
duties and responsibilities, including provision for assistance from
USBFS's personnel in the establishment of books, records and other data
by such successor.
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FORM OF AGREEMENT
13. No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower USBFS
to act as agent for the other party to this Agreement, or to conduct
business in the name, or for the account, of the other party to this
Agreement.
14. Data Necessary to Perform Services
The Trust or its agent shall furnish to USBFS the data necessary to
perform the services described herein at such times and in such form as
mutually agreed upon. If USBFS is also acting in another capacity for
the Trust, nothing herein shall be deemed to relieve USBFS of any of its
obligations in such capacity.
15. Notification of Error
The Trust will notify USBFS of any discrepancy between USBFS and the
Trust, including, but not limited to, failing to account for a security
position in the fund's portfolio, by the later of: within three (3)
business days after receipt of any reports rendered by USBFS to the
Trust; within three (3) business days after discovery of any error or
omission not covered in the balancing or control procedure, or within
three (3) business days of receiving notice from any shareholder.
16. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other party.
17. Notices
Any notice required or permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given on the
date delivered personally or by courier service, or three (3) days after
sent by registered or certified mail, postage prepaid, return receipt
requested, or on the date sent and confirmed received by facsimile
transmission to the other party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
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FORM OF AGREEMENT
and notice to the Trust shall be sent to:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.
PRIMECAP ODYSSEY FUNDS U.S. BANCORP FUND SERVICES, LLC
By: ______________________________ By: ______________________________
Title: _____________________________ Title: _____________________________
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FORM OF AGREEMENT
Exhibit A
to the
Fund Accounting Servicing Agreement
Fund Names
Separate Series of PRIMECAP Odyssey Funds
Name of Series Date Added
PRIMECAP Odyssey Growth Fund 10/1/04
PRIMECAP Odyssey Aggressive Growth Fund 10/1/04
PRIMECAP Odyssey Stock Fund 10/1/04
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FORM OF AGREEMENT
Exhibit B
to the
Fund Accounting Servicing Agreement
Fee Schedule
