Exhibit 99.h.1
FUND ADMINISTRATION 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 providing
fund administration services for the benefit of its customers; and
WHEREAS, the Trust desires to retain USBFS to provide fund
administration services for 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 Administrator
The Trust hereby appoints USBFS as administrator 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 administration services for the
Trust and the Funds, including but not limited to:
A. General Fund Management:
(1) Act as liaison among all Fund service providers.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in USBFS's
or its affiliate's own offices).
c. Non-investment-related statistical and
research data as needed.
(3) Coordinate the Trust's Board of Trustees' (the "Board
of Trustees" or the "Trustees") communications, such
as:
a. Establish meeting agendas.
b. Prepare reports for the Board of Trustees
based on financial and administrative data.
c. Evaluate independent auditor.
d. Secure and monitor fidelity bond and
director and officer liability coverage, and
make the necessary Securities and Exchange
Commission (the "SEC") filings relating
thereto.
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e. Prepare minutes of meetings of the Board of
Trustees and Fund shareholders.
f. Recommend dividend declarations to the Board
of Trustees, prepare and distribute to
appropriate parties notices announcing
declaration of dividends and other
distributions to shareholders.
g. Provide personnel to serve as officers of
the Trust if so elected by the Board of
Trustees, attend Board of Trustees meetings
and present materials for Trustees' review
at such meetings.
(4) Audits:
a. Prepare appropriate schedules and assist
independent auditors.
b. Provide information to the SEC and
facilitate audit process.
c. Provide office facilities.
(5) Assist in overall operations of the Funds.
(6) Pay Fund expenses upon written authorization from the
Trust.
(7) Monitor arrangements under shareholder services or
similar plans.
B. Compliance:
(1) Regulatory Compliance:
a. Monitor compliance with the 1940 Act
requirements, including:
(i) Asset diversification tests.
(ii) Total return and SEC yield
calculations.
(iii) Maintenance of books and records under
Rule 31a-3.
(iv) Code of Ethics requirements for the
disinterested Trustees.
b. Monitor Funds' compliance with the policies
and investment limitations of the Funds as
set forth in their current prospectus (the
"Prospectus") and statement of additional
information (the "SAI").
c. Maintain awareness of applicable regulatory
and operational service issues and recommend
dispositions.
(2) Blue Sky Compliance:
a. Prepare and file with the appropriate state
securities authorities any and all required
compliance filings relating to the
qualification of the securities of the
Trust, each Fund, or class of shares of the
Funds, as applicable, so as to enable the
Trust to make a continuous offering of its
shares in all states.
b. Monitor status and maintain registrations in
each state.
c. Provide information regarding material
developments in state securities regulation.
(3) SEC Registration and Reporting:
a. Assist Trust counsel in updating the
Prospectus and SAI and in preparing proxy
statements and Rule 24f-2 notices.
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b. Prepare and file annual and semiannual
reports, Form N-SAR filings and Rule 24f-2
notices.
c. Coordinate the printing, filing and mailing
of publicly disseminated Prospectuses and
reports, and amendments and supplements
thereto.
d. File fidelity bond under Rule 17g-1.
e. File shareholder reports under Rule 30b2-1.
f. Monitor sales of each Fund's shares and
ensure that such shares are properly
registered or qualified, as applicable, with
the SEC and the appropriate state
authorities.
(4) IRS Compliance:
a. Monitor each Fund's status as a regulated
investment company under Subchapter M,
including without limitation, review of the
following:
(i) Asset diversification requirements.
(ii) Qualifying income requirements.
(iii) Distribution requirements.
b. Calculate required distributions (including
excise tax distributions).
C. Financial Reporting:
(1) Provide financial data required by the Prospectus and SAI.
(2) Prepare financial reports for officers, shareholders, tax
authorities, performance reporting companies, the Board of
Trustees, the SEC, and independent auditors.
(3) Supervise the Trust's custodian and fund accountants in the
maintenance of the Trust's general ledger and in the
preparation of the Fund's financial statements, including
oversight of expense accruals and payments, of the
determination of net asset value of the Trust's net assets and
of the Trust's shares, and of the declaration and payment of
dividends and other distributions to shareholders.
(4) Compute the yield, total return and expense ratio of each
class of each Fund, and each Fund's portfolio turnover rate.
(5) Monitor the expense accruals and notify the Trust's management
of any proposed adjustments.
(6) Prepare monthly financial statements, which include without
limitation the following items:
a. Schedule of Investments.
b. Statement of Assets and Liabilities.
c. Statement of Operations.
d. Statement of Changes in Net Assets.
e. Cash Statement.
f. Schedule of Capital Gains and Losses.
(7) Prepare quarterly broker security transaction summaries.
D. Tax Reporting:
(1) Prepare and file on a timely basis appropriate federal and
state tax returns including, without limitation, Forms
1120/8610 with any necessary schedules.
(2) Prepare state income breakdowns where relevant.
(3) File Form 1099 Miscellaneous for payments to Trustees and
other service providers.
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(4) Monitor wash sale losses.
(5) Calculate eligible dividend income for corporate shareholders.
E. Miscellaneous
(1) Cooperate with the Trust's Chief Compliance Officer in
complying with the requirements of Rule 38a-1 under the 1940
Act.
3. 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.
4. 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.
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.
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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 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. 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.
5. 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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6. 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
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.
7. 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.
8. 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.
9. 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.
10. 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.
11. Data Necessary to Perform Services
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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.
12. 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.
13. 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
Fund Administration Servicing Agreement
Fund Names
Separate Series of PRIMECAP Odyssey Funds
Name of Series Date Added
PRIMECAP Odyssey Growth Fund 10/19/04
PRIMECAP Odyssey Aggressive Growth Fund 10/19/04
PRIMECAP Odyssey Stock Fund 10/19/04
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Exhibit B
to the
Fund Administration Servicing Agreement
Fee Schedule
The parties hereby agree that the following fee schedule shall remain in place
and not change for a period of three years from the effective date of this
Agreement (unless this Agreement is earlier terminated), after which time it may
be amended by agreement between the parties.
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FUND ADMINSTRATION
ANNUAL FEE SCHEDULE
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Fund Complex Fee Schedule Fund Administration Out-of-Pockets
------------------------- ----------------------------------
8 basis points on the first $250 million
5 basis points on the next $750 million Postage, Stationery
3 basis points on the balance Programming, Special Reports
Annual Complex Minimum: $96,000 Proxies, Insurance
Retention of records
Federal and state regulatory filing fees
Plus out-of-pockets Certain insurance premiums
Expenses from board of directors meetings
Multiple Classes Auditing and legal expenses
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Each additional CUSIP: $7,500.
Included in Complex Fee Schedule:
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