OPERATIONS AGENCY
AGREEMENT
AGREEMENT made as of September 28, 1997, by and between DEUTSCHE
PORTFOLIOS having its principal office and place of business at Cardinal Avenue,
Grand Cayman, Cayman Islands (the "Investment Company"), on behalf of the
portfolios (individually referred to herein as a "Fund" and collectively as
"Funds") of the Investment Company, and FEDERATED SERVICES COMPANY, a
Pennsylvania Corporation, having its principal office and place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, 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 beneficial interests ("Interest(s)");
WHEREAS, the Fund is a Hub(R) in a Hub(R) and Spoke(R) investment
structure; and
WHEREAS the Investment Company may desire to appoint the Company as its
operations agent to provide it with operations agency services (as herein
defined) and the Company desires to accept such appointment; and
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: OPERATIONS AGENCY SERVICES.
ARTICLE 1. APPOINTMENT The Investment Company hereby appoints the Company
as Operations Agent 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 2 of this Agreement in return for the compensation
set forth in Article 6 of this Agreement.
ARTICLE 2. THE COMPANY'S DUTIES. As Operations Agent, and subject to the
supervision and control of the Board, and in accordance with Proper Instructions
(as defined hereafter) from the Investment Company the Company will provide
facilities, equipment, and personnel to carry out the following operations
agency services for operation of the business and affairs of the Investment
Company and each of its portfolios:
(1) following the organization of the Investment Company, prepare
the Investment Company's governing documents and any amendments thereto,
including the Charter (which has already been prepared and filed), the By-laws
and minutes of meetings of the Board and Investors;
(2) following the Investment Company's effectiveness with the
Securities and Exchange Commission, prepare the registration statements for the
Fund and all amendments thereto, reports to regulatory authorities and
Investors, offering documents, proxy and/or information statements, and such
other documents all as may be necessary to enable the Investment Company to make
a private offering of its shares;
(3) conduct compliance training sessions for the benefit of the
investment advisers of the Funds;
(4) maintain the Investment Company's calendar of reporting and
filing obligations
(5) perform internal audit examinations ;
(6) monitor and supervise the collection of tax reclaims;
(7) plan and prepare for meetings of the Investment Company's Board,
including maintaining the Board's agenda and preparing materials for the Board's
review and consideration;
(8) attend in person, and record the minutes of meetings of, the
Investment Company's Board;
(9) consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs;
(10) prepare materials necessary for shareholder meetings and record
the minutes of shareholder meetings;
(11) prepare expense projections for the Funds;
(12) coordinate the activities of all service providers to the
Investment Company. By way of example, the Company will, in conjunction with
item (4) 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 One, shall hereafter
be referred to as "Operations Agency Services."
ARTICLE 3. RECORDS.
The Company shall maintain a set of 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 Operations Agency 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 Fund. 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.
ARTICLE 4. 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 the 1940 Act, the Internal Revenue Code, and any other laws, rules
and regulations of government authorities having jurisdiction.
ARTICLE 5. EXPENSES.
The Company shall be responsible for expenses incurred in providing office
space, equipment, and personnel as may be necessary or convenient to provide the
Operations Agency Services to the Fund, including the compensation of the
Company employees who serve as officers of the Fund. The Fund shall be
responsible for all other reasonable and documented expenses incurred by the
Company on behalf of the Fund, 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.
ARTICLE 6. COMPENSATION.
For the Operations Agency Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation for
its services rendered hereunder an operations agency fee at an annual rate per
portfolio of the Investment Company's shares as specified on Exhibit A.
The compensation and out-of-pocket expenses attributable to the Fund shall
be accrued by the Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket expenses
by the Fund.
ARTICLE 7. RESPONSIBILITY OF OPERATIONS AGENT.
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 Operations A gency Services in accordance with the above standards. In order
that the indemnification provisions contained in this Article 10 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 right 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.
SECTION TWO: GENERAL PROVISIONS.
ARTICLE 8. 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 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 9. 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 Operations Agency 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.
C. 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. 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 10. DOCUMENTS.
A. In connection with the appointment of the Company under this Agreement,
the Investment Company shall file with the Company the following documents
relating to it:
(1) a copy of its Charter and By-Laws and all amendments
thereto;
(2) a copy of the resolution of its Board authorizing this
Agreement;
(3) all documents relating to the Fund or Investor accounts;and
(4) a copy of its current offering document.
B. The Investment Company will also furnish from time to time the following
documents relating to it:
(1) a resolution of its Board authorizing the original offering
of its Interests;
(2) a Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect
to the sale of its Interests;
(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) such other documents or opinions which the Company may, in
its discretion, deem necessary or appropriate in the proper
performance of its duties; and
(6) revisions to the offering document for each Fund.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;
(2) it is duly qualified to carry on its business in the
Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;
(4) all requisite corporate proceedings 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;
(6) it is in compliance with federal securities law requirements
and in good standing as an administrator and fund
accountant; and
(7) it has obtained all required approvals from all government
or regulatory authorities necessary to enter into this
arrangement and to provide the services contemplated herein.
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 ByLaws to enter into and perform its obligations under
this Agreement;
(3) all corporate proceedings required by said Declaration of
Trust and By-Laws have been taken to authorize it to enter
into and perform its obligations under this Agreement; and
(4) it is an open-end investment company registered under the
1940 Act.
ARTICLE 12. STANDARD OF CARE AND INDEMNIFICATION.
A. Standard of Care
With regard to section One, the Company shall be held to a standard
of reasonable care in carrying out the provisions of this Agreement. The Company
shall be entitled to rely on and may act upon advice of Fund counsel 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 the 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, charges, counsel fees, payments, expenses and
liabilities 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;
(2) the 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, or its Investors
regarding account information, the purchase, sale, redemption or transfer of
Interests;
(b) are received by the Company from independent pricing
services or sources for use in valuing the Interests of the
Fund;
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other third parties contracted by
or approved by such 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.
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(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 Interests in violation of any
requirement under the federal securities laws or
regulations; or in violation of any stop order or other
determination or ruling by any federal agency respect to
the offer or sale of such Interest.
Provided, however, that the Company shall not be protected
by this Article 12.B. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties of failure to
meet the standard of care set forth in 12.A. above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions for matters relating to the
Investment Company or Fund, 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 laws or regulations.
D. Notification
In order that the indemnification provisions contained in this
Article 12 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 option to participate with the party seeking
indemnification in 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 13. 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. After 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.
Deutsche Portfolios Page 11 1997
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 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
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. The provisions of Article 7 and Article 12
shall survive the termination of this Agreement.
ARTICLE 14. 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 15. 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 all
parties and shall be annexed hereto, PROVIDED that no such interpretive or
additional provisions shall contravene any applicable federal 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 16. 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 17. NOTICES. Except as otherwise specifically provided herein,
notices and other writings delivered or mailed postage prepaid to the Investment
Company at Cardinal Avenue, Grand Cayman, Cayman Islands, BWI with a copy to
Deutsche Fund Management, Inc. at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: President or to the Company at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, 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.
Deutsche Portfolios Page 12 1997
ARTICLE 18. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
ARTICLE 19. SUCCESSOR AGENT.
If a successor agent shall be appointed by the Investment Company, the
Company shall upon termination of this Agreement deliver to such successor agent
at the office of the Company all properties of the Fund 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 Section One, 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 20. FORCE MAJEURE.
The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Investment Company or the Fund as a
result of work stoppage, natural disaster, governmental action, loss or
malfunction of utilities or other impossibility of performance.
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ARTICLE 21. ASSIGNMENT; SUCCESSORS.
Either party may assign all of or a substantial portion of its business to a
party controlling, controlled by, or under common control with such party.
Nothing in this Article 21 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
ARTICLE 22. SEVERABILITY.
In the event any provision of this Agreement or any interpretive or
additional provision described in Article 15 are held illegal, void or
unenforceable, the balance shall remain in effect.
ARTICLE 23. LIMITATIONS OF LIABILITY OF TRUSTEES AND INVESTORS OF THE INVESTMENT
COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of Investment Company and signed by an authorized officer of the
Investment Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon the
Trustees, the Fund or Investors, but bind only the appropriate property of the
Investment Company, as provided in the Declaration of Trust.
Deutsche Portfolios Page 14 1997
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.
DEUTSCHE PORTFOLIOS
By:
President
FEDERATED SERVICES COMPANY
By:
Senior Vice President
Deutsche Portfolios Page 15 1997