MASTER AGREEMENT
FOR
ADMINISTRATION SERVICES
AGREEMENT made as of APRIL 7, 2000 by and between the FLAG INVESTORS FUNDS,
INC. as may be amended from time to time, having its principal office and place
of business at Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the "Investment
Company"), on behalf of the portfolios (individually referred to herein as a
"Fund" and collectively as "Funds") of the Investment Company, and INVESTMENT
COMPANY CAPITAL CORP., a Maryland corporation, having its principal office and
place of business at Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, on behalf of
itself and its subsidiaries (the "Company").
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), with authorized and issued shares of capital stock or beneficial
interest ("Shares");
WHEREAS, the Fund is a Spoke(R) in a Hub(R) and Spoke(R) investment
structure which requires that the Fund recognize and operate in accordance with
complex operational and regulatory requirements;
WHEREAS, the Investment Company desires that the Company assist the
Fund in addressing these novel, complex issues and hereby desires to appoint the
Company as its agent to perform all of the requisite services for the
administration of the Fund and to compensate the Company for such services in
addition to those out-of-pocket and third party expenses incurred by the
Company. Such services shall include: developmental support , administrative,
and transfer agency, (all herein defined) ; provided however, that such services
shall not include advisory, shareholder, custody or distribution services; and
the Company desires to accept such appointment.
WHEREAS, from time to time the Investment Company may desire and may
instruct the Company to subcontract for the performance of certain of its duties
and responsibilities hereunder to another agent (the "Agent").
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:
SECTION ONE: DEVELOPMENTAL SUPPORT SERVICES
ARTICLE 1. APPOINTMENT
The Investment Company hereby appoints the Company to provide, or cause to
be provided, to the Fund(s) those developmental support services that are
necessary to establish and operate the Fund within a Hub and Spoke(R) investment
structure. The Company accepts such appointment and agrees to provide, or cause
to be provided those services set forth in Article 2 of this Agreement in return
for the compensation set forth in Article 12 of this Agreement.
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ARTICLE 2. THE COMPANY'S DUTIES
Subject to the supervision and control of the Investment Company's Board of
Directors ("Board"), and in furtherance of the Investment Company's desire to
have the Company assist the Fund in adapting to the complexities of the Hub and
Spoke(R) investment structure, the Company undertakes and agrees to provide, or
cause to be provided, to the Fund(s) developmental, organizational,
administrative, and compliance and allied services that are unique to the Hub
and Spoke(R) investment structure, such services to be provided within the scope
of applicable Federal and State regulations.
The foregoing, along with any additional services that the Company shall
from time to time agree to provide for the Investment Company under this Section
One shall hereinafter be referred to as "Developmental Support Services."
SECTION TWO: ADMINISTRATIVE SERVICES.
ARTICLE 3. APPOINTMENT.
The Investment Company hereby appoints the Company as Administrator for the
period and on the terms and conditions set forth in this Agreement. The Company
accepts such appointment and agrees to furnish the services set forth in Article
4 of this Agreement in return for the compensation set forth in Article 12 of
this Agreement.
ARTICLE 4. THE COMPANY'S DUTIES.
As Administrator, and subject to the supervision and control of the Board,
the Company will provide facilities, equipment, and personnel to carry out the
following administrative services for operation of the business and affairs of
the Investment Company and the Funds and/or their classes:
A. following the organization of the Investment Company, prepare, file,
and maintain the Investment Company's governing documents and any
amendments thereto, including the Articles of Incorporation (which
have already been prepared and filed), the By-laws and minutes of
meetings of the Board and Shareholders;
B. following the Investment Company's effectiveness with the Securities
and Exchange Commission, prepare the registration statements for the
Investment Company and the Investment Company's Shares and all
amendments thereto, submit the registration statements to the Hub Fund
for approval, and file the registration statements with the Securities
and Exchange Commission and the appropriate state securities
authorities;
C. prepare and file reports to regulatory authorities and shareholders,
prospectuses, proxy statements, and such other documents all as may be
necessary to enable the Investment Company to make a continuous
offering of its Shares;
D. plan and prepare for meetings of the Investment Company's Board,
including maintaining the Board's agenda, preparing materials for the
Board's review and consideration and distributing such materials to
the Board in advance of Board meetings;
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E. attend in person, and record the minutes of meetings of, the
Investment Company's Board;
F. plan and prepare for meetings of the Investment Company's shareholders
and record the minutes of such meetings;
G. maintain the Investment Company's calendar of reporting and filing
obligations;
H. prepare expense projections for the Funds and provide such projections
to the Fund's portfolio accountant; monitor expenses incurred by the
Funds; forward invoices to the Investment Company's Treasurer for
payment authorization;
I. monitor the declaration and payment of dividends and other
distributions;
J. monitor and supervise the collection of tax reclaims;
K. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
L. perform internal audit examinations;
M. obtain EIN and CUSIP number for each Fund;
N. consult with the Fund and its Board on matters concerning the Fund and
its affairs; and
O. coordinate the activities of all service providers to the Investment
Company. By way of example, the Company will, in conjunction with item
(G) above, communicate to the other service providers to the
Investment Company lists of information and materials needed for
filing obligations, as well as deadlines for the receipt of such
materials. The Company does not take responsibility for the failure of
other service providers to provide such materials to the Investment
Company in a timely fashion or for the performance of functions for
which other service providers are responsible.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Fund under this Section Two, shall hereafter
be referred to as "Administrative Services."
ARTICLE 5. RECORDS.
The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the Investment Company Act of
1940 and the rules thereunder, as the same may be amended from time to time,
pertaining to the Administrative Services performed by it and not otherwise
created and maintained by another party pursuant to contract with the Investment
Company. Where applicable, such records shall be maintained by the Company for
the periods and in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Investment Company which are in the
possession of the Company shall be the property of the Investment Company. The
Investment Company, or the Investment Company's authorized representatives,
shall have access to such books and records at all times during the Company `s
normal business hours. Upon the reasonable request of the Investment Company,
copies of any such books and records shall be provided promptly by the Company
to the Investment Company or the Investment Company's authorized
representatives.
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ARTICLE 6. DUTIES OF THE FUND.
The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all applicable
requirements of the 1940 Act, the Internal Revenue Code, and any other laws,
rules and regulations of government authorities having jurisdiction.
ARTICLE 7. RESPONSIBILITY OF ADMINISTRATOR.
A. The Company shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Investment Company in
connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
The Company shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant
to such advice. Any person, even though also an officer, director,
trustee, partner, employee or agent of the Company, who may be or
become an officer, director, trustee, partner, employee or agent of
the Investment Company, shall be deemed, when rendering services to
the Investment Company or acting on any business of the Investment
Company (other than services or business in connection with the duties
of the Company hereunder) to be rendering such services to or acting
solely for the Investment Company and not as an officer, director,
trustee, partner, employee or agent or one under the control or
direction of the Company even though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and be
without liability for any action taken or thing done by it in
performing the Administrative Services in accordance with the above
standards. In order that the indemnification provisions contained in
this Article 7 shall apply, however, it is understood that if in any
case the Investment Company may be asked to indemnify or save the
Company harmless, the Investment Company shall be fully and promptly
advised of all pertinent facts concerning the situation in question,
and it is further understood that the Company will use all reasonable
care to identify and notify the Investment Company promptly concerning
any situation which presents or appears likely to present the
probability of such a claim for indemnification against the Investment
Company. The Investment Company shall have the option to defend the
Company against any claim which may be the subject of this
indemnification. In the event that the Investment Company so elects,
it will so notify the Company and thereupon the Investment Company
shall take over complete defense of the claim, and the Company shall
in such situation initiate no further legal or other expenses for
which it shall seek indemnification under this Article. The Company
shall in no case confess any claim or make any compromise in any case
in which the Investment Company will be asked to indemnify the Company
except with the Investment Company's written consent.
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SECTION THREE: TRANSFER AGENCY SERVICES.
ARTICLE 8. TERMS OF APPOINTMENT.
The Investment Company hereby appoints the Company to act as transfer agent
and dividend disbursing agent for each Fund's Shares, and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of any Fund ("Shareholder(s)"), including without limitation any
periodic investment plan or periodic withdrawal program.
ARTICLE 9. DUTIES OF THE COMPANY.
The Company shall perform the following services in accordance with Proper
Instructions (as defined in Article 13) as may be provided from time to time by
the Investment Company as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate documentation
therefor to the custodian of the relevant Fund (the "Custodian").
The Company shall notify the Fund, the Administrator for the Fund
and the Custodian on a daily basis of the total amount of orders
and payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate to
the Shareholder at its address as set forth on the transfer books
of the Funds, and/or Classes, subject to any Proper Instructions
regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to its
account upon receipt of the check or other order, promptly mail a
debit advice to the Shareholder, and notify the Fund and/or Class
of its action. In the event that the amount paid for such Shares
exceeds proceeds of the redemption of such Shares plus the amount
of any dividends paid with respect to such Shares, the Fund
and/the Class or its distributor will reimburse the Company on
the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the provisions
of its governing document and the then-current Prospectus of the
Fund. The Company shall prepare and mail or credit income,
capital gain, or any other payments to Shareholders. As the
Dividend Disbursing Agent, the Company shall, on or before the
payment date of any such distribution, notify the Custodian and
the Fund's Administrator of
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the estimated amount required to pay any portion of said
distribution which is payable in cash and request the Custodian
to make available sufficient funds for the cash amount to be paid
out. The Company shall reconcile the amounts so requested and the
amounts actually received with the Custodian and the Fund's
Administrator on a daily basis. If a Shareholder is entitled to
receive additional Shares by virtue of any such distribution or
dividend, appropriate credits shall be made to the Shareholder's
account, for certificated Funds and/or Classes, delivered where
requested; and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Investment Company, each Fund and Class and
its Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall notify
the Fund and the Fund's Administrator on a daily basis of the
total amount of redemption requests processed and monies paid to
the Company by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to procedures
described in the then-current Prospectus of the Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor, and
shall effect such redemption at the price applicable to the date
and time of receipt of documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual basis
and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the total
number of Shares of the Fund and/or Class which are authorized,
based upon data provided to it by the Fund, and issued and
outstanding. The Company shall also provide the Fund on a regular
basis or upon reasonable request with the total number of Shares
which are authorized and issued and outstanding, but shall have
no obligation when recording the issuance of Shares, except as
otherwise set forth herein, to monitor the issuance of such
Shares or to take cognizance of any laws relating
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to the issue or sale of such Shares, which functions shall be the
sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Investment Company or the Fund to include a record for each
Shareholder's account of the following:
(a) name, address and tax identification number (and
whether such number has been certified);
(b) number of Shares held;
(c) historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) any stop or restraining order placed against the
account;
(e) information with respect to withholding in the case of
a foreign account or an account for which withholding
is required by the Internal Revenue Code;
(f) any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) certificate numbers and denominations for any
Shareholder holding certificates; and
(h) any information required in order for the Company to
perform the calculations contemplated or required by
this Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such record
retention shall be at the expense of the Company, and such
records may be inspected by the Investment Company and the Fund
at reasonable times. The Company may, at its option at any time,
and shall forthwith upon the Fund's demand, turn over to the Fund
and cease to retain in the Company's files, records and documents
created and maintained by the Company pursuant to this Agreement,
which are no longer needed by the Company in performance of its
services or for its protection. If not so turned over to the
Investment Company or the Fund, such records and documents will
be retained by the Company for six years from the year of
creation, during the first two of which such documents will be in
readily accessible form. At the end of the six year period, such
records and documents will either be turned over to the
Investment Company or the Fund or destroyed in accordance with
Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Investment Company or the Fund
periodically the following information:
(a) a copy of the transaction register;
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(b) dividend and reinvestment blotters;
(c) the total number of Shares issued and outstanding in
each state for "blue sky" purposes as determined
according to Proper Instructions delivered from time to
time by the Fund to the Company;
(d) Shareholder lists and statistical information;
(e) payments to third parties relating to distribution
agreements, allocations of sales loads, redemption
fees, or other transaction- or sales-related payments;
and
(f) such other information as may be agreed upon from time
to time.
(2) The Company shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and, if
required, mail to Shareholders, such notices for reporting
dividends and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are required to be
withheld under applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) perform all of the customary services of a transfer agent,
dividend disbursing agent 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: maintaining all Shareholder accounts, mailing
Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other
conformable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and
providing Shareholder account information; and
(b) provide a system which will enable the Investment Company to
monitor the total number of Shares of each Fund and/or Class
sold in each state ("blue sky reporting"). The Investment
Company shall by Proper Instructions (i) identify to the
Company those transactions and assets to be treated as
exempt from the blue sky reporting for each state and (ii)
verify the classification of transactions for each state on
the system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's and/or Class's state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts with
regard to blue sky compliance and the reporting of such
transactions and accounts to the Investment Company as
provided above.
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F. Other Duties
(1) The Company shall answer correspondence from Shareholders relating to
their Share accounts and such other correspondence as may from time to
time be addressed to the Company.
(2) The Company shall prepare Shareholder meeting lists, mail proxy cards
and other material supplied to it by the Fund in connection with
Shareholder Meetings of each Fund; receive, examine and tabulate
returned proxies, and certify the vote of the Shareholders.
(3) The Company shall establish and maintain facilities and procedures for
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for
keeping account of, such certificates, forms and devices.
(4) Mail information, such as prospectuses or reports, to prospective
shareholders or third party financial intermediaries.
All of the foregoing as described in this Article 9, along with any
additional services that the Company shall agree in writing to perform for the
Investment Company under this Section Three, shall hereafter be referred to as
"Transfer Agency Services."
ARTICLE 10. DUTIES OF THE INVESTMENT COMPANY.
A. Compliance
The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of its own and/or its Classes'
Prospectuses and for complying with all applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act and
any laws, rules and regulations of government authorities having
jurisdiction.
B. Share Certificates
If the Investment Company has authorized the issuance of share
certificates, the Investment Company shall supply the Company with a
sufficient supply of blank Share certificates and from time to time
shall renew such supply upon request of the Company. Such blank Share
certificates shall be properly signed, manually or by facsimile, if
authorized by the Investment Company and shall bear the seal of the
Investment Company or facsimile thereof; and notwithstanding the
death, resignation or removal of any officer of the Investment Company
authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile signature
of such officer until otherwise directed by the Investment Company
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
ARTICLE 11. REPRESENTATIONS.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter into
this arrangement and to provide the services contemplated in Section Three of
this Agreement.
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SECTION FOUR: GENERAL PROVISIONS.
ARTICLE 12. COMPENSATION AND EXPENSES.
A. The Funds will compensate the Company for the Developmental Support
Services, Administrative Services, and Transfer Agency Services in
accordance with the fees agreed upon between the parties hereto on the
applicable schedule. Such fees do not include out-of-pocket and other
third party disbursements of the Company for which the Funds shall
reimburse the Company separately. Examples of out-of-pocket expenses
are included as exhibits to this Agreement. The Company shall be
responsible for expenses incurred in providing office space,
equipment, and personnel as may be necessary or convenient to provide
the Administrative Services to the Fund, including the compensation of
the Company employees who serve as officers of the Investment Company.
The Investment Company shall be responsible for all other reasonable
and documented expenses incurred by the Company on behalf of the
Investment Company, including without limitation postage and courier
expenses, printing expenses, travel expenses, registration fees,
filing fees, fees of outside counsel and independent auditors or other
professional services, organizational expenses, insurance premiums,
fees payable to persons who are not the Company employees, trade
association dues, and other expenses properly payable by the Funds
and/or Classes.
B. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the
full month period. Upon any termination of this Agreement before the
end of any month, the fee for such period shall be prorated according
to the proportion which such period bears to the full month period.
C. The Company, in its sole discretion, may from time to time subcontract
to, employ or associate with itself such person or persons as the
Company may believe to be particularly suited to assist it in
performing any of the services under this Agreement. Such person or
persons may be affiliates of the Company, third-party service
providers, or they may be officers and employees who are employed by
both the Company and the Investment Company; provided, however, that
the Company shall be as fully responsible to each Fund for the acts
and omissions of any such subcontractor as it is for its own acts and
omissions. Except as herein provided, the compensation of such person
or persons shall be paid by the Company and no obligation shall be
incurred on behalf of the Investment Company, the Funds, or the
Classes in such respect.
ARTICLE 13. PROPER INSTRUCTIONS.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed to
be Proper Instructions if (a) the Company reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give such
instructions with respect to the transaction involved, and (b) the Investment
Company, or the Fund, and the Company promptly cause such oral instructions to
be confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or
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electronic devices provided that the Investment Company, or the Fund, and the
Company are satisfied that such procedures afford adequate safeguards for the
Fund's assets. Proper Instructions may only be amended in writing.
ARTICLE 14. ASSIGNMENT.
Except as provided below, neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by either party without the
written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Transfer Agency Services, the Company may without
further consent on the part of the Investment Company subcontract for
the performance of Transfer Agency Services with its subsidiary,
Federated Shareholder Service Company, a Delaware business trust,
which is duly registered as a transfer agent pursuant to Section
17A(c)(1) of the Securities Exchange Act of 1934, as amended, or any
succeeding statute ("Section 17A(c)(1)").
The Company shall be as fully responsible to the Investment Company
for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
C. With regard to Administrative Services the Company may without further
consent on the part of the Investment Company subcontract for the
performance of such services with Federated Administrative Services, a
wholly-owned subsidiary of the Company. The Company shall be as fully
responsible to the Investment Company for the acts and omissions of
any subcontractor as it is for its own acts and omissions.
D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement with
an Agent selected by the Investment Company, other than as described
in B. and C. above; provided, however, that the Company shall in no
way be responsible to the Investment Company for the acts and
omissions of the Agent.
ARTICLE 15. DOCUMENTS.
A. In connection with the appointment of the Company under this
Agreement, the Investment Company shall file with the Company the
following documents:
(1) a copy of the Charter and By-Laws of the Investment Company and
all amendments thereto;
(2) a copy of the resolution of its Board authorizing this Agreement;
(3) specimens of all forms of outstanding Share certificates of the
Investment Company or the Funds in the forms approved by the
Board of the Investment Company with a certificate of the
Secretary of the Investment Company as to such approval;
(4) all account application forms and other documents relating to
Shareholders' accounts; and
(5) a copy of the current Prospectus for each Fund.
B. The Investment Company will also furnish from time to time the
following documents:
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(1) each resolution of the Board authorizing the original issuance of
each Fund's, and/or Class's Shares;
(2) each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to the
sale of Shares of any Fund, and/or Class;
(3) a certified copy of each amendment to the governing document and
the By-Laws of the Investment Company;
(4) certified copies of each vote of the Board authorizing persons to
give Proper Instructions;
(5) specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such forms;
(6) such other certificates, documents or opinions which the Company
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties; and
(7) revisions to the Prospectus of each Fund.
ARTICLE 16. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Investment Company that:
(1) it is a corporation duly organized and existing and in good
standing under the laws of the State of Maryland;
(2) It is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the State of Maryland;
(3) it is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement;
(4) all requisite corporate proceedings, including obtaining
necessary licenses, have been taken to authorize it to enter into
and perform its obligations under this Agreement;
(5) 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
(6) it is in compliance with federal securities law requirements and
in good standing as a transfer agent.
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) it is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) it is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
Flag Investors Funds, Inc. Page 12
(3) all corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) the Investment Company is an open-end investment company
registered under the 1940 Act; and
(5) a registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each Fund
being offered for sale.
ARTICLE 17. STANDARD OF CARE AND INDEMNIFICATION.
A. Standard of Care
With regard to Sections One and Three, the Company shall be held to a
standard of reasonable care in carrying out the provisions of this
Contract. The Company shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Investment Company) on
all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice, provided that such action is
not in violation of applicable federal or state laws or regulations,
and is in good faith and without negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment Company or
Fund shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents employees and affiliates,
harmless against any and all losses, damages, costs, counsel fees, and
liabilities (collectively, "Losses") arising out of or attributable
to:
(1) the acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Investment Company
or Fund;
(2) the good faith reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or subcontractors
and furnished to it by or on behalf of the Fund, its
Shareholders or investors regarding the purchase, redemption
or transfer of Shares and Shareholder account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds;
(c) are received by the Company or its agents or subcontractors
from Advisers, Sub-advisers or other third parties
contracted by or approved by the Investment Company of Fund
for use in the performance of services under this Agreement;
or
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company;
Flag Investors Funds, Inc. Page 13
(3) the reliance on, or the carrying out by the Company or its agents
or subcontractors of Proper Instructions of the Investment
Company or the Fund; or
(4) the offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in
such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
Provided, however, that the Company shall not be protected by this
Article 17.B from liability for any losses resulting from the
Company's willful misfeasance, bad faith, negligence or reckless
disregard of its duties or failure to meet the standard of care set
forth in 17.A above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions, and may consult with legal counsel
with respect to any matter arising in connection with the services to
be performed by the Company under this Agreement, and the Company and
its agents or subcontractors shall not be liable and shall be
indemnified by the Investment Company or the appropriate Fund for any
action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such action
is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures
of the officers of the Investment Company or the Fund, and the proper
countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this Article
19 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The party who may be required to
indemnify shall have the right to assume the defense of such claim.
The party seeking indemnification shall in no case confess any claim
or make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior written
consent.
ARTICLE 18. TERM AND TERMINATION OF AGREEMENT.
The initial term of this Agreement shall commence on the date hereof, and
extend for a period of three years following the date of the commencement of the
public offering of the Fund's shares. Following the initial term of this
Agreement, the Agreement will be terminable on not less than 90 days' notice by
either the Company or the Investment Company, subject to the payment of all
deferred expenses and unamortized expenses. In the event, however, of willful
misfeasance, bad faith, negligence or reckless disregard of its duties by the
Company, the Investment Company has the right to terminate the Agreement upon 30
days written notice, if Company has not cured such willful misfeasance, bad
faith, negligence or reckless
Flag Investors Funds, Inc. Page 14
disregard of its duties within that same 30 days. The termination date for all
original or after-added Investment companies which are, or become, a party to
this Agreement shall be coterminous. Investment Companies that merge or dissolve
during the Term, shall cease to be a party on the effective date of such merger
or dissolution.
Should the Investment Company exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of records and
materials will be borne by the Investment Company or the appropriate Fund.
Additionally, the Company reserves the right to charge for any other reasonable
expenses associated with such termination unless such termination is caused by
the Company's willful misfeasance, bad faith, negligence or reckless disregard
of its duties. The provisions of Articles 7 and 17 shall survive the termination
of this Agreement.
ARTICLE 19. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by a written agreement executed by both parties.
ARTICLE 20. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, PROVIDED that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the organizational documents. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
ARTICLE 21. GOVERNING LAW.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
ARTICLE 22. NOTICES.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Investment Company Xxx Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, with a copy to Deutsche Fund Management, Inc.
at Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attn: President; or to the
Company at Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or to such other address
as the Investment Company or the Company may hereafter specify, shall be deemed
to have been properly delivered or given hereunder to the respective address.
ARTICLE 23. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
ARTICLE 24. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.
ARTICLE 25. SUCCESSOR AGENT.
If a successor agent for the Investment Company shall be appointed by the
Investment Company, the Company shall upon termination of this Agreement deliver
to such successor
Flag Investors Funds, Inc. Page 15
agent at the office of the Company all properties of the Investment Company held
by it hereunder. If no such successor agent shall be appointed, the Company
shall at its office upon receipt of Proper Instructions deliver such properties
in accordance with such instructions.
With regard to Sections Two and Three, in the event that no written order
designating a successor agent or Proper Instructions shall have been delivered
to the Company on or before the date when such termination shall become
effective, then the Company shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $2,000,000, all properties held by the
Company under this Agreement. Thereafter, such bank or trust company shall be
the successor of the Company under this Agreement.
ARTICLE 26. FORCE MAJEURE.
The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Fund as a result of work stoppage,
natural disaster, governmental action, loss or malfunction of utilities or other
impossibility of performance.
ARTICLE 27. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party. Such consent may not be unreasonably
withheld. However, either party may assign all of or a substantial portion of
its business to a successor, or to a party controlling, controlled by, or under
common control with such party. Nothing in this Article 27 shall prevent the
Company from delegating its responsibilities to another entity to the extent
provided herein.
ARTICLE 28. SEVERABILITY.
In the event any provision of this Agreement or any interpretive additional
provisions described in Article 20 are held illegal, void or unenforceable, the
balance shall remain in effect.
ARTICLE 29. PROPERTY OF THE INVESTMENT COMPANY AND CONFIDENTIALITY.
The Investment Company's records, including all those maintained hereunder
by the Company, whether in magnetic media, hard copy, film form or other format,
shall be the Investment Company's property for all purposes, and the Company
shall treat confidentially and as proprietary information of the Investment
Company all such records and other information relative to the Investment
Company and its shareholders which is not independently available to the Company
or in the public domain and, in the case of a shareholder list, shall have not
interest therein and shall use such records only in connection with the
performance of its duties hereunder and for no other purpose. In particular, the
Company agrees:
(a) that all information and data so acquired by it or its employees,
agents or contractors under this Agreement, or in contemplation thereof, shall
be and shall remain the Investment Company's exclusive property;
(b) to inform its employees, agents or contractors engaged in handling
such information and data of the confidential nature of such information and
data;
(c) to limit access to such information and data to authorized
employees, agents or contractors of the Company and the Investment Company who
have a need to know and use such information and data in connection with this
Agreement and the services to be supplied herein;
(d) to keep, and have their employees, agents and contractors keep, any
and all such information and data confidential;
Flag Investors Funds, Inc. Page 16
(e) not to copy or publish or disclose such information and data to
others or authorize their employees, agents, contractors or anyone else, to copy
or publish or disclose such information and data to others without the other
party's written approval except if required by a State or Federal court or
agency and in such an event prompt written notice of such disclose requirement
shall be provided to the other party if permitted by law; and
(f) that upon termination of this Agreement, all records and other
confidential information of the Investment Company in the possession of the
Company shall be returned to the Investment Company or its designated successor
transfer agent, administrator, or distributor, as provided in Article 27.
The confidentiality provisions noted above will survive termination of
this Agreement for a period of 5 years.
ARTICLE 30. RELIEF.
The Company recognizes that the property and proprietary information of the
Investment Company is unique, and that the Investment Company cannot be fully
compensated by money damages and would be irreparably harmed by the disclosure
of its confidential information and data in violation of the provisions of
Article 29. The Company therefore agrees that the Investment Company may seek
immediate relief at equity for any failure to company with Article 29 of this
Agreement, in addition to any other remedies the Investment Company may have in
law or in equity.
ARTICLE 31. SERVICE LEVEL STANDARDS.
Subject to the non-occurrence of an event of force majeure and the
performance of the Investment Company's obligations described in this Agreement,
the Company agrees that the services will be provided in accordance with the
service level standards specified in Schedule A. The Company's fees will be
adjusted based upon performance-based reductions as described in Schedule A,
aggregated up to a maximum of 10% of all fees billed for the period indicated.
The Company shall provide in reasonable detail to the Investment Company's fund
accountant and to Deutsche Fund Management, Inc., the calculation of the
performance-based fee reductions and all amounts reduced thereunder. It will be
the Company's sole responsibility to compile the statistical information
necessary to monitor the performance standards enumerated in Schedule A.
Flag Investors Funds, Inc. Page 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
FLAG INVESTORS FUNDS, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Name: Xxx X. Xxxxxx
Title: Assistant Secretary
INVESTMENT COMPANY CAPITAL CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
Flag Investors Funds, Inc. page 18
ADMINISTRATIVE OR OPERATIONAL AGENCY SERVICES
OUT-OF-POCKET EXPENSES SCHEDULE
- Cost of preparing, printing and mailing stock certificates, prospectuses,
sales literature, proxies, reports and notices.
- Interest on borrowed money
- Taxes and fees payable to Federal, state and other governmental agencies
- Fees of Trustees of the Funds
- Outside auditing and legal expenses
- Travel expenses incurred by employees of Investment Company Capital Corp.
and its affiliates in connection with such employees' attendance at Fund
Board meetings or in performance of Internal Audit Department functions
- Insurance premiums
- Trade association dues
- Other expenses which may be properly payable by a Fund, as applicable
Flag Investors Funds, Inc. Page 19
TRANSFER AGENCY SERVICES
FEE SCHEDULE
BASE FEE* Annual fee per fund, class or other subdivision. $18,000 (Class A Shares)
--------- $18,000 (Class B Shares)
$16,000 (Class C Shares)
$18,000 (Offshore Spokes)
ACCOUNT FEE* Annual account charge( includes system access
and funds control and reconcilement)
- Daily dividend fund $16.00
Non-daily dividend fund $10.00
- Contingent deferred sales charge( monthly and quarterly
funds only) $ 5.00
FULL SERVICE* Annual fee per domestic fund, class or other subdivision. $2,000
-----------
This fee includes the first 400 accounts. Additional accounts
are $5.00 per account. (Full service includes servicing broker/dealers,
financial planners, registered investment advisors, third party intermediaries).
*All fees are annualized and will be prorated on a monthly basis for billing
purposes. Out of pocket expenses are not covered by these fees.
FLAG INVESTORS FUNDS, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Name: Xxx X. Xxxxxx
Title: Assistant Secretary
INVESTMENT COMPANY CAPITAL CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
Flag Investors Funds, Inc. Page 20
TRANSFER AGENCY SERVICES
OUT-OF-POCKET EXPENSES SCHEDULE
OUT-OF-POCKET EXPENSES INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING:
- POSTAGE (INCLUDING OVERNIGHT COURIER SERVICE)
- STATEMENT STOCK
- ENVELOPES
- TELEPHONES
- TELECOMMUNICATION CHARGES (INCLUDING FAX AND DEDICATED LINE CHARGES)
- VRU APPLICATION
- CLOSED ACCOUNT CHARGES
- 12B-1 PROCESSING FEES
- THIRD PARTY EXPENSES (I.E., NSCC FEES)
- FIDUCIARY SUBACCOUNTING FEE
- TRAVEL (SUBJECT TO PRIOR APPROVAL BY THE FUND)
- DUPLICATING
- FORMS
- SUPPLIES
- MICROFICHE
- COMPUTER ACCESS CHARGES
- CUSTOMIZED PROGRAMMING AND REPORTING
- DISASTER RECOVERY
- OTHER AS INCURRED
Flag Investors Funds, Inc. Page 21
SERVICES AS AGENT FOR
RECORD SHAREHOLDERS
BASE FEE* Annual fee per fund, class or other subdivision. $18,000
---------
ACCOUNT FEE* Annual account charge( includes system access
and funds control and reconcilement)
- Daily dividend fund $16.00
- Non-daily dividend fund $10.00
- Contingent deferred sales charge( monthly and quarterly
funds only) $ 5.00
FULL SERVICE* Annual fee per fund, class or other subdivision. $2,000
------------
This fee includes the first 400 accounts. Additional accounts
are $5.00 per account. (Full service includes servicing broker/dealers,
financial planners, registered investment advisors, third party intermediaries).
*All fees are annualized and will be prorated on a monthly basis for billing
purposes. Out of pocket expenses are not covered by these fees.
OFFSHORE SPOKES
Flag Investors Funds, Inc. Page 22
SERVICES AS AGENT FOR
RECORD SHAREHOLDERS
OUT-OF-POCKET EXPENSES SCHEDULE
OUT-OF-POCKET EXPENSES INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING:
- POSTAGE (INCLUDING OVERNIGHT COURIER SERVICE)
- STATEMENT STOCK
- ENVELOPES
- TELEPHONES
- TELECOMMUNICATION CHARGES (INCLUDING FAX AND DEDICATED LINE CHARGES)
- VRU APPLICATION
- CLOSED ACCOUNT CHARGES
- 12B-1 PROCESSING FEES
- THIRD PARTY EXPENSES (I.E., NSCC FEES)
- FIDUCIARY SUBACCOUNTING FEE
- TRAVEL (SUBJECT TO PRIOR APPROVAL BY THE FUND)
- DUPLICATING
- FORMS
- SUPPLIES
- MICROFICHE
- COMPUTER ACCESS CHARGES
- CUSTOMIZED PROGRAMMING AND REPORTING
- DISASTER RECOVERY
- OTHER AS INCURRED
OFFSHORE SPOKES
Flag Investors Funds, Inc. Page 23
ADMINISTRATIVE OR OPERATIONAL AGENCY SERVICES
FEE SCHEDULE
HUB PORTFOLIOS 3.5 basis points per Hub
(minimum fee of $60,000 per Hub)
DOMESTIC SPOKES
First $200 million 6.5 basis points per Spoke
(minimum fee of $75,000 per Spoke)
Assets over $200 million 5.25 basis points per Spoke
(minimum fee of $75,000 per Spoke)
OFFSHORE SPOKES 2.5 basis points per Spoke
(minimum fee of $35,000 per Spoke)
The minimum fee per Hub and Spoke cluster (Hub with two Spokes, three classes of
shares on each domestic Spoke) for the first year of the contract will be
$75,000. The minimum fee per Hub and Spoke cluster in the second year of the
contract will be $125,000. The minimum fee is payable by the Hub with respect to
each Hub and Spoke cluster.
FLAG INVESTORS FUNDS, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Name: Xxx X. Xxxxxx
Title: Assistant Secretary
INVESTMENT COMPANY CAPITAL CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
Flag Investors Funds, Inc. Page 24
SCHEDULE A
SERVICE LEVEL STANDARDS
The percentages set forth herein relate to all Investment Companies for
which the Company serves or in the future may serve as transfer agent,
administrator, cash management procurement agent and/or distributor, and which
are sponsored, advised, sub-advised or administered by Deutsche Fund Management,
Inc., or any of its affiliates, and do not relate individually to any one
specific Investment Company, except for service level standard numbers 2 and 4.
All fee credits are to be aggregated where there are instances of not meeting
objectives in respect of two or more different service level standards. A
waiver, whether partial, total, or conditional, of any fee credits, or right to
terminate this Agreement in a particular instance, does not constitute a waiver
in any other instance.
A monthly document evidencing the Company's performance with respect to the
service levels set forth below will be delivered to the Investment Company by
the Company, with a copy to Deutsche Fund Management, Inc., by the fifteenth
business day of the following month, or as soon thereafter as is reasonably
practicable. Such document shall be signed by a senior officer of the Company.
For purposes of this Article, the term "business day" shall mean each day
that the Investment Company is open for business as described in its prospectus.
For calculation purposes, a week is considered to be the period beginning on
Monday at 12:00 a.m., Eastern time, and concluding on the following Sunday at
11:59:59 p.m., Eastern time. When a month ends during the week, that entire
week's performance will be applied to the previous month.
Flag Investors Funds, Inc. Page 25
SERVICE LEVEL STANDARD 1: MANUAL DATA ENTRY(BY THE COMPANY)
SERVICE DESCRIPTION
In some situations the Company will provide a manual data entry service to the
Investment Company for establishing new investor accounts, or for making file
corrections to existing account records, providing that information is presented
in a clear, standard English format. The Investment Company places great
importance on the accuracy of name, xxxxxx xxxxxxx, xxxx, xxxxx, zip code, and
taxpayer identification number (the "Critical Data"), and all other information
that the Company data enters to its shareholder accounting system. A monthly
report will be prepared by the Company indicating the total number of manual
data entry errors in comparison to the total number of manual data entries.
OBJECTIVE
The Company's objective is to establish new accounts with a Data Accuracy Rate
(as defined below) of 100%, 98% of the time. The standard would apply if the
manual data entry processing exceeded on average 50 items a day.
METHOD OF CALCULATION
The Company will calculate the Data Accuracy Rate for each calendar month by
subtracting from 100% the result of dividing (1) the total account record error
corrections with respect to the Critical Data received during the current month
for data entry errors made during the preceding 90 calendar days, by (b) the
total new accounts established by manual data entry during the preceding 90
calendar days (not including new accounts input in the current calendar month).
The Data Accuracy Rate will be compared to the schedule below to determine the
total percentage credit to total Transfer Agency fees(excluding out of pocket
expenses) billed to all Investment Companies for the month. This credit
information would also be passed to the Investment Company's Fund Accountant for
allocation against fees to be paid hereunder.
FEE CREDITS MANUAL DATA ENTRY ACCURACY RATE
Less Than 98% 97% 96% 95% 94%
Credit to Transfer
Agency Fees 1.0% 2.0% 3.0% 4.0% 5.0%
(excluding out of pocket expenses)
Flag Investors Funds, Inc. Page 26
SERVICE LEVEL STANDARD 2: ACCURACY AND TIMELINESS OF STATEMENTS
SERVICE DESCRIPTION
The Company will produce and mail periodic statements to all shareholders of the
Investment Company who are legally required to receive statements. For offshore
funds, "mailing" or "mailed" is defined as packaging and shipping the statements
in bulk to the fund's principal office located offshore or to another offshore
location designated by the fund. The Company will provide the Investment Company
with a mailing report from its mailing operation which will indicate the date on
which all shareholder statements were mailed. Year-end mailings are excluded
from this standard.
OBJECTIVE
The Company's objective is to manage this service so that 99% of all statements
are accurate and are mailed no later than five (5) business days (excluding
weekend days) after statement rendition date.
METHOD OF CALCULATION
Failure to meet this objective will result in a credit to the total cost of the
mailings, excluding postage, billed to the Investment Company affected by the
delay for the period. Using the mailing report, the Company will add the number
of days past the objective. That number would be compared to the schedule below
to determine the total percentage credit to the cost of the mailings, excluding
postage, billed to the Investment Company for that period.
FEE CREDITS
BUSINESS DAYS PAST STATEMENT RENDITION DATE
-------------------------------------------
6 7 8 9
but less but less but less but less 10
than 7 than 8 than 9 than 10 or more
------ ------ ------ ------- -------
Credit to the cost
of the mailing, 1% 2% 3% 4% 5%
excluding postage
Flag Investors Funds, Inc. Page 27
SERVICE LEVEL STANDARD 3: ACCURACY AND TIMELINESS OF DAILY ADVICES
SERVICE DESCRIPTION
The Company will produce and mail, deliver or distribute an advice to Investment
Company shareholders ,who are legally required to receive advices, whenever a
financial transaction is posted to the shareholder's account, except where
suppressed pursuant to instructions received from the Investment Company. For
offshore funds, "mailing" or "mailed" is defined as packaging and shipping the
advices in bulk to the fund's principal office located offshore or to another
offshore location designated by the fund. The Company will provide the
Investment Company with a mailing report from its mailing operation which will
indicate the date on which all advices were mailed from such operation.
OBJECTIVE
The Company's objective is to manage this service so that 99% of such advices
are accurate and are mailed by the fifth business day following the date of
transaction, except where suppressed pursuant to instructions received from the
Investment Company.
METHOD OF CALCULATION
Should the Company fail to meet this objective, it would result in a credit to
the total cost of the mailing excluding postage billed to the Investment Company
for the month. The Company will calculate each week a weighted average percent
of the total daily advices produced that are mailed or sent late. For purposes
of such calculation the Company shall deem inaccurate advices to have been
mailed on the sixth business day past transaction date, summing the products,
and dividing the result by the total number of advices produced. This percentage
will then be compared to the schedule below to determine the total percentage
credit to the total cost of the mailing excluding postage billed to the
Investment Company for that month. This credit information would also be passed
to the Investment Company's Fund Accountant for allocation against fees to be
paid hereunder.
FEE CREDITS
Weighted Avg. Average Weekly Performance for Each Week Within the Month
OF Late Advices Wk. 1 Wk. 2 Wk. 3 Wk. 4 Wk. 5
--------------- ----- ----- ----- ----- -----
1.01% to 2.00% 1.0% 1.5% 2.0% 2.5% 3.0%
2.01% to 3.00% 1.5% 2.0% 2.5% 3.0% 3.5%
3.01% to 4.00% 2.0% 2.5% 3.0% 3.5% 4.0%
4.01% or more 2.5% 3.0% 3.5% 4.0% 5.0%
Flag Investors Funds, Inc. Page 28
SERVICE LEVEL STANDARD 4: TIMELINESS OF DISTRIBUTION CHECKS AND
DIVIDEND MAILINGS
SERVICE DESCRIPTION
Periodically, the Company will create and mail checks to certain Investment
Company's shareholders. For offshore funds, "mailing" or "mailed" is defined as
packaging and shipping the checks and dividend mailings in bulk to the fund's
principal office located offshore or to another offshore location designated by
the fund. The Company will provide the Investment Company with a mailing report
from its mailing operation, indicating the date on which all dividend or
distribution checks were mailed.
OBJECTIVE
The Company's objective is to manage this service so that 99% of all checks are
mailed no more than five (5) business days from the payable date of the check.
METHOD OF CALCULATION
Should the Company fail to meet this objective, it would result in a credit to
total cost of the mailing billed to the Investment Company affected by the
delay. Using the mailing report, the Company will calculate an average number of
business days past payable date for all late checks during the month for the
Investment Company. This average shall be determined by multiplying each late
advice by the number of business days pays payable date, summing those products,
and dividing the result by the total number of late checks. That number will be
compared to the schedule below to determine the percentage credit to the total
cost of the mailing, excluding postage, billed to the Investment Company for the
month. This fee credit information would also be passed to the Investment
Company's Fund Accountant for allocation against the fees to be paid hereunder.
FEE CREDITS
BUSINESS DAYS PAST DATE OF CHECK
6 7 8
but less but less but less
than 7 than 8 than 9 10 or more
------ ------ ------ ----------
Credit to the 1.0% 2.5% 4.0% 5.0%
total cost of the mailing,
excluding postage
Flag Investors Funds, Inc. Page 29
SERVICE LEVEL STANDARD 5: TELEPHONE RESPONSIVENESS
SERVICE DESCRIPTION
The Company will provide a 12-hour telephone answering service for shareholders'
agents or brokers and possibly shareholders of the Investment Company. Telephone
transactions may include, without limitation, exchanges and redemptions,
purchases where authorized, balance inquiries, N.A.V. and yield quotations, and
others. The percentage of calls answered by service representatives to calls
directed to the services representatives for the month represents the Company's
service level.
OBJECTIVE
The Company's objective is to manage this service to a performance level of 98%
calls answered to calls received, and for purposes of the calculation method
below, shall omit any call terminated within 15 seconds.
METHOD OF CALCULATION
Using data from its Automated Call Distribution system ("ACD"), the Company will
prepare a report for the Investment Company calculating the average telephone
responsiveness for each week. Calls directed to the automated voice response
system will not be included in the calculation. Such number will be compared to
the schedule below to determine the total percentage credit to Transfer Agency
fees, excluding out of pocket expenses, billed to the Investment Company for the
month. This credit information would also be passed to the Investment Company's
Fund Accountant for allocation against fees to be paid hereunder.
FEE CREDITS
% of Calls
Answered Average Performance Level for Each Week Within the Period
Less Than Wk. 1 Wk. 2 Wk. 3 Wk. 4 Wk. 5
--------- ----- ----- ----- ----- -----
98% 1.0% 1.5% 2.0% 2.5% 3.0%
97% 1.5% 2.0% 2.5% 3.0% 3.5%
96% 2.0% 2.5% 3.0% 3.5% 4.0%
95% 2.5% 3,0% 3.5% 4.0% 5.0%
Flag Investors Funds, Inc. Page 30
