Exhibit 99.h.2
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 19th day of October,
2004, by and between PRIMECAP Odyssey Funds, a Delaware 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 administering
transfer and dividend disbursing agent functions for the benefit of its
customers; and
WHEREAS, the Trust desires to retain USBFS to provide transfer and
dividend disbursing agent 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 Transfer Agent
The Trust hereby appoints USBFS as transfer agent 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 perform all of the customary services of a transfer agent
and dividend disbursing agent for the Funds, and as relevant, agent in
connection with accumulation, open account or similar plans (including
without limitation any periodic investment plan or periodic withdrawal
program), including but not limited to:
A. Receive and process all orders for the purchase, exchange,
and/or redemption of shares in accordance with Rule 22c-1 of
the Investment Company Act of 1940 ("the 1940 Act").
B. Process purchase orders with prompt delivery, where
appropriate, of payment and supporting documentation to the
Trust's custodian, and issue the appropriate number of
uncertificated shares with such uncertificated shares being
held in the appropriate shareholder account.
C. Arrange for issuance of shares obtained through transfers of
funds from Fund shareholders' accounts at financial
institutions and arrange for the exchange of
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shares for shares of other eligible investment companies, when
permitted by, and in accordance with, each Fund's current
prospectus (a "Prospectus").
D. Process redemption requests received in good order in
accordance with each Fund's Prospectus (including without
limitation the imposition of any redemption fees set forth
therein) and, where relevant, deliver appropriate
documentation to the Trust's custodian.
E. Assist the Trust with its compliance with any policies and
procedures related to market timing activity, including
providing the Trust with reasonable reports designed to
identify market timing activity and assisting the Trust with
taking actions against any shareholder engaged in market
timing activity in violation of the Trust's policies and
procedures.
F. Pay monies upon receipt from the Trust's custodian, where
relevant, in accordance with the instructions of redeeming
shareholders.
G. Process transfers of shares in accordance with the Prospectus
and the shareholder's instructions.
H. Process exchanges in accordance with the Prospectus between
Funds and/or classes of shares of Funds both within the same
family of funds and with a First American Money Market Fund,
if applicable.
I. Prepare and transmit payments for dividends and distributions
declared by the Trust with respect to each Fund, after
deducting any amount required to be withheld by any applicable
laws, rules and regulations and in accordance with shareholder
instructions.
J. Make changes to shareholder records, including, but not
limited to, address changes in plans (e.g., systematic
withdrawal, automatic investment, dividend reinvestment).
K. Record the issuance of shares of the Fund and maintain,
pursuant to Rule 17Ad-10(e) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), a
record of the total number of shares of the Fund which are
authorized, issued and outstanding.
L. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies.
M. Mail shareholder reports and Prospectuses to current
shareholders.
N. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders.
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O. Provide shareholder account information upon request and
prepare and mail confirmations and statements of account to
shareholders for all purchases, redemptions and other
confirmable transactions as agreed upon with the Trust.
P. Mail requests for shareholders' certifications under penalties
of perjury and pay on a timely basis to the appropriate
federal authorities any taxes to be withheld on dividends and
distributions paid by the Trust, all as required by applicable
federal tax laws and regulations.
Q. Provide a Blue Sky system that will enable the Trust to
monitor the total number of shares of the Fund sold in each
state. In addition, the Trust or its agent, including USBFS,
shall identify to USBFS in writing those transactions and
assets to be treated as exempt from the Blue Sky reporting for
each state. The responsibility of USBFS for the Trust's Blue
Sky state registration status is solely limited to the initial
compliance by the Trust and the reporting of such transactions
to the Trust or its agent.
R. Answer correspondence from shareholders, securities brokers
and others relating to USBFS's duties hereunder and such other
correspondence as may from time to time be mutually agreed
upon between USBFS and the Trust.
S. Reimburse the Fund each month for all material losses
resulting from "as of" processing errors for which USBFS is
responsible in accordance with the "as of" processing
guidelines set forth on Exhibit C hereto.
T. Achieve "Best In Class" standards (as defined by National
Quality Review ("NQR")) for telephone call quality, financial
transaction accuracy rates and for non-financial transaction
accuracy rates as measured by NQR or a similar methodology
developed by the Trust.
U. Answer telephone calls with an in-person operator in an
average time of 6-8 seconds, in a median time of 7-9 seconds
and in no more than 5 minutes for a six month period.
V. Annually provide the Trust with copies of its latest SAS-70
audit results.
W. Cooperate with the Trust's Chief Compliance Officer in
complying with the requirements of Rule 38a-1 under the 1940
Act.
3. Representations of USBFS
USBFS represents and warrants to the Trust that:
A. It is a limited liability corporation duly organized, existing
and in good standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act.
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C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to
authorize it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the
Securities Act of 1933, as amended, and the Exchange Act, the
1940 Act, and any laws, rules, and regulations of governmental
authorities having jurisdiction.
4. Representations of the Trust
The Trust represents and warrants to USBFS that:
A. The Trust is an open-end investment company under the 1940
Act;
B. The Trust is a business trust organized, existing, and in good
standing under the laws of Delaware;
C. The Trust is empowered under applicable laws and by its
Declaration of Trust and Bylaws to enter into and perform this
Agreement;
D. All necessary proceedings required by the Declaration of Trust
have been taken to authorize it to enter into and perform this
Agreement;
E. The Trust will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental authorities having
jurisdiction; and
F. A registration statement under the Securities Act will be made
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all shares of the Trust being offered
for sale.
5. 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.
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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.
6. 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) which USBFS may sustain or incur or which 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 of the Trust
(the "Board of Trustees" or "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 emergency use of electrical data
processing equipment to the extent appropriate equipment is
available. Representatives of the Trust shall be entitled to
inspect
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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.
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.
The 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.
7. 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 (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 after being 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 with any third party unless specifically directed
by the Trust or allowed under one of the exceptions noted under the
Act.
8. Anti-Money Laundering Program
The Trust acknowledges that it has had an opportunity to review,
consider and comment upon the procedures provided by USBFS describing
various tools designed 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
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Procedures"), together referred to as the "Procedures," and the Trust
has determined that the Procedures, as part of the Trust'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.
Based on this determination, the Trust hereby instructs and directs
USBFS to implement the Procedures on the Trust's behalf, as such may be
amended or revised from time to time.
It is contemplated that these Procedures will be amended from time to
time by the parties as additional regulations are adopted and/or
regulatory guidance is provided relating to the Trust's anti-money
laundering responsibilities.
USBFS agrees to provide to the Trust:
(a) Prompt written notification of any transaction or combination of
transactions that USBFS believes, based on the Procedures, evidence
money laundering activity in connection with the Trust or any
shareholder of the Fund;
(b) Prompt written notification of any customer(s) that USBFS
reasonably believes, based upon the Procedures, to be engaged in
money laundering activity, provided that the Trust agrees not to
communicate this information to the customer;
(c) Any reports received by USBFS from any government agency or
applicable industry self-regulatory organization pertaining to
USBFS's anti-money laundering monitoring on behalf of the Trust;
(d) Prompt written notification of any action taken in response to
anti-money laundering violations as described in (a), (b) or (c);
and
(e) A certified annual report of its monitoring and customer
identification activities on behalf of the Trust. USBFS shall
provide such other reports on the monitoring and customer
identification activities conducted at the direction of the Trust
as may be agreed to from time to time by USBFS and the Trust.
The Trust hereby directs, and USBFS acknowledges, that USBFS shall (i)
permit federal regulators access to such information and records
maintained by USBFS and relating to USBFS's implementation of the
Procedures on behalf of the Trust, as they may request, and (ii) permit
such federal regulators to inspect USBFS's implementation of the
Procedures on behalf of the Trust.
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. During
the initial three-year term, this Agreement may be terminated at any
time by the Trust on behalf of one or more Funds upon giving ninety
(90) days prior written notice to USBFS. Subsequent to the initial
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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. 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 Trust shall pay any expenses associated with
transferring the data 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.
11. 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. Further, federal examiners shall have access to information
and records relating to anti-money laundering activities performed by
USBFS hereunder and USBFS consents to any inspection authorized by law
or regulation in connection thereof.
12. 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 Securities and Exchange Commission thereunder.
13. Data Necessary to Perform Services
The Trust or its agent, which may be USBFS, 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.
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14. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other party.
15. Obligations of the Trust
This Agreement is executed by and on behalf of the Trust and no
obligation hereunder is binding upon any of the trustees, officers or
shareholders of the Trust individually. The obligations of the Trust
hereunder with respect to each Fund are binding only upon the assets
and property of such Fund and shall not be binding upon the assets or
property of any other Fund.
16. 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
and notice to the Trust shall be sent to:
PRIMECAP Odyssey Funds
Attn: Secretary
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000-0000
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: /s/ Xxxx X. Xxxxx By: /s/ Xxx Xxxxxxx
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Title: Co-Chief Executive Officer Title: President
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Exhibit A
to the
Transfer Agent 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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Exhibit B
to the
Transfer Agent Servicing Agreement
Fee Schedule
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TRANSFER AGENT & SHAREHOLDER SERVICES
ANNUAL FEE SCHEDULE
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Out-of-pocket Costs- Including but not limited to:
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Service Charges to the Fund Telephone toll-free lines, call transfers, etc.
Shareholder Annual Account Fee Mailing, sorting and postage
No Load Open Accounts: Stationery, envelopes
If the fund group is under 10,000 open accounts - Programming, special reports
$15.00 per account Insurance, record retention, microfilm/fiche
If the fund group is over 10,000 open accounts - Proxies, proxy services
$8.00 per account ACH fees, NSCC charges
Closed Accounts - $1.50 /account All other out-of-pocket expenses
Annual Base Fee Per CUSIP Lost shareholder search
$12,000 Development/Programming
File Transmissions - subject to requirements
Custom processing, re-processing
Activity Charges Included in annual Base Fee Per CUSIP:
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Shareholder Calls - $.50/call for the first VRU Set Up Fees
40,000 calls per month, $.25 per call thereafter VRU Monthly Maintenance Fee
Financial Transactions - $.50/trans. for the Fund Group Set Up Fee
first 100,000 calls per month, $.25 per call thereafter Report Source (on-line report viewing tool)
Maintenance Transactions - $.50/trans. for the New Account Fees
first 100,000 calls per month, $.25 per call thereafter
$.35 /voice response call
Fees are billed monthly.
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Exhibit C
to the
Transfer Agent Servicing Agreement
As Of Processing Policy
USBFS will reimburse each Fund 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 on the daily share sheet of any losses for which the advisor
may be held accountable.
