Exhibit 99.h.1
FORM OF AGREEMENT
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st 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
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.
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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.
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 Fund.
(6) Pay Fund expenses upon written authorization from the
Trust.
(7) Monitor arrangements under shareholder services or similar
plan.
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 of the Fund.
b. Monitor Fund's compliance with the policies and
investment limitations of the Trust as set forth in its
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 a Fund, 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.
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(3) SEC Registration and Reporting:
a. Assist Fund counsel in updating the Prospectus and SAI
and in preparing proxy statements and Rule 24f-2
notices.
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 the Trust'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 Fund's 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.
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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.
(4) Monitor wash sale losses.
(5) Calculate eligible dividend income for corporate
shareholders.
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. With the exception of any fee or
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.
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.
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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 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.
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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.
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. 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.
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11. 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.
12. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other party.
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:
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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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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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Exhibit B
to the
Fund Accounting Servicing Agreement
Fee Schedule
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