SUB-ITEM 77Q1 (E) (I)
Federated Income Securities Trust
Federated Capital Income Fund
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between PASSPORT RESEARCH II, LTD.,
a
Pennsylvania limited partnership located in Pittsburgh,
Pennsylvania
(hereinafter referred to as "Adviser") and FEDERATED INVESTMENT
MANAGEMENT COMPANY, a Delaware statutory trust located in
Pittsburgh,
Pennsylvania (hereinafter referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound
hereby
agree as follows:
1. Sub-Adviser hereby agrees to furnish to
Adviser in its capacity as investment adviser to each of the
portfolios ("Funds") of Federated Income Securities Trust
("Trust") for which Adviser executes
an Exhibit to this Agreement, such investment advice,
statistical and other factual information, as may from
time to time be reasonably
requested by Adviser for the Fund, which may be offered in
one or more
classes of shares ("Classes"). Both Adviser and Sub-Adviser
are
registered as investment advisers under the Investment
Advisers Act of
1940.
2. For its services under this Agreement for
each Fund, Sub-Adviser shall receive from Adviser an annual fee,
as set forth in the
exhibit(s) hereto.
The Sub-Adviser may from time to time and for such
periods as it deems appropriate, reduce its compensation for
a Fund (and, ifappropriate, assume expenses of the Fund or
Class of the Fund) to the extent that the Fund's expenses
exceed such lower expense limitation
as
the Sub-Adviser may, by notice to the Trust on behalf of
the Fund,
voluntarily declare to be effective.
3. This Agreement shall begin for a Fund on
the date that
the
parties execute an exhibit to this Agreement relating to
such Fund and
shall continue in effect for the Fund for two years from the
date of
its execution and from year to year thereafter, subject to
the provisions for termination and all of the other terms
and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a
majority of the Trustees of the Trust,
including a majority of the Trustees who are not parties
to this Agreement or interested persons of any such party
(other than as
Trustees of the Trust) cast in person at a meeting called
for that purpose; and (b) Adviser shall not have notified
the Trust in writing
at least sixty (60) days prior to the anniversary date of
this
Agreement in any year thereafter that it does not desire
such
continuation with respect to the Fund.
4. Notwithstanding any provision in this Agreement,
it may be
terminated for any Fund at any time without the payment of
any penalty:
(a) by the Trustees of the Trust or by a vote of a
majority of the
outstanding voting securities (as defined in Section 2(a)(42)
of the Investment Company Act of 1940 ("Act") of the Fund on sixty
(60) days' written notice to Adviser; (b) by Sub-Adviser or
Adviser upon 120 days'
written notice to the other party to this Agreement.
5. This Agreement shall automatically
terminate:
(a) in the event of its assignment (as defined in the Act);
or
(b) in the event of termination of the Investment Advisory
Contract for any reason whatsoever.
6. So long as both Adviser and Sub-Adviser
shall be legally qualified to act as an investment adviser
to a Fund, neither Adviser
nor Sub-Adviser shall act as an investment adviser (as such
term is
defined in the Act) to the Fund except as provided herein
and in the
Investment Advisory Contract or in such other manner as may be
expressly agreed between Adviser and Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser
shall resign prior to the end of any term of this Agreement or for
any reason be unable or unwilling to serve for a successive
term which has been approved by the Trustees of the Trust pursuant
to the provisions of Paragraph 3 of this Agreement or Paragraph
7 of the Investment Advisory Contract, the remaining party,
Sub-Adviser or Adviser as the case may
be, shall not be prohibited from serving as an investment
adviser to such Fund by reason of the provisions of this
Paragraph 6.
7. This Agreement may be amended from time to
time by agreement of the parties hereto provided that such
amendment shall be approved
both by the vote of a majority of Trustees of the Trust,
including a majority of Trustees who are not parties to this
Agreement or interested persons, as defined in Section 2(a)(19)
of the Act, of any such party at a meeting called for that purpose,
and, where required by
Section 15(a)(2) of the Act, by the holders of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
Act) of the Fund.
8. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive and the Sub-Adviser
shall be free to furnish similar services to others so long as its
services under this Agreement
are not impaired thereby.
9. Sub-Adviser agrees to maintain the security
and confidentiality of nonpublic personal information ("NPI")
of Fund customers and consumers, as those terms are defined in
Xxxxxxxxxx X-X, 00 XXX Part 248. Adviser agrees to use and
redisclose such NPI for the
limited purposes of processing and servicing transactions;
for specific
law enforcement and miscellaneous purposes; and to service
providers or
in connection with joint marketing arrangements directed
by the Fund,
in each instance in furtherance of fulfilling Adviser's
obligations
under this Agreement and consistent with the exceptions
provided in 17
CFR Sections 248.14, 248.15 and 248.13, respectively.
10. Adviser and Sub-Adviser agree that as
between Adviser and Sub-Adviser, Adviser shall be solely
responsible for the allocation of
the Fund's investment portfolio between the equity portion
to be
managed by Adviser and the fixed income portion to be managed
by Sub-
Adviser. Adviser shall indemnify and hold harmless the
Sub-Adviser from and against any and all claims, damages,
losses and expenses
resulting from such allocation decisions and incurred by
or asserted
against by Sub-Adviser, including reasonable attorneys fees
and legal
expenses of investigating or defending against any such claims.
Exhibit A
Federated Income Securities Trust
Federated Capital Income Fund
Sub-Advisory Contract
For all services rendered by Sub-Adviser hereunder, Adviser
shall
pay Sub-Adviser a Sub-Advisory Fee equal to 0.24% of the fixed income
portion of the average daily net assets of the above-mentioned
portfolio. The Sub-Advisory Fee shall be accrued Daily, and paid Daily
as set forth in the primary Investment Advisory Contract dated December
1, 2002.
This Exhibit duly incorporates by reference the Sub-Advisory
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement
to be executed on their behalf by their duly authorized officers as of
the 1st day of January, 2004.
Passport Research II, Ltd.
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: President
Federated Investment Management
Company
By: /s/ G. Xxxxxx Xxxxxxxxx
Name: G. Xxxxxx Xxxxxxxxx
Title: Vice President
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, dated as of January 1, 2004,
that
Federated Income Securities Trust, a business trust duly organized
under the laws of the Commonwealth of Massachusetts (the "Trust"),
does
hereby nominate, constitute and appoint Federated Investment
Management
Company, a statutory trust duly organized under the laws of the
Delaware (the "Sub-Adviser"), to act hereunder as the true and
lawful
agent and attorney-in-fact of the Trust, acting on behalf of each
of
the series portfolios for which the Sub-Adviser acts as investment
adviser shown on Schedule 1 attached hereto and incorporated by
reference herein (each such series portfolio being hereinafter
referred
to as a "Fund" and collectively as the "Funds"), for the
specific
purpose of executing and delivering all such agreements,
instruments,
contracts, assignments, bond powers, stock powers, transfer
instructions, receipts, waivers, consents and other documents,
and
performing all such acts, as the Sub-Adviser may deem necessary
or
reasonably desirable, related to the acquisition, disposition
and/or
reinvestment of the funds and assets of a Fund of the Trust
in
accordance with Sub-Adviser's supervision of the investment,
sale
and
reinvestment of the funds and assets of each Fund pursuant
to the
authority granted to the Adviser as investment adviser of
each Fund
under that certain investment advisory contract dated January 1,
2004,
by and between the Sub-Adviser and the Trust (such investment
advisory
contract, as may be amended, supplemented or otherwise modified
from
time to time is hereinafter referred to as the "Sub-Advisory
Contract").
The Sub-Adviser shall exercise or omit to exercise the
powers and
authorities granted herein in each case as the Adviser in its
sole and
absolute discretion deems desirable or appropriate under existing
circumstances. The Trust hereby ratifies and confirms as good and
effectual, at law or in equity, all that the Sub-Adviser, and its
officers and employees, may do by virtue hereof. However, despite
the
above provisions, nothing herein shall be construed as imposing a
duty
on the Sub-Adviser to act or assume responsibility for any matters
referred to above or other matters even though the Sub-Adviser may
have
power or authority hereunder to do so. Nothing in this
Limited Power
of Attorney shall be construed (i) to be an amendment or
modifications
of, or supplement to, the Investment Advisory Contract, (ii)
to amend,
modify, limit or denigrate any duties, obligations or
liabilities of
the Sub-Adviser under the terms of the Investment Advisory
Contract or
(iii) exonerate, relieve or release the Sub-Adviser any losses,
obligations, penalties, actions, judgments and suits and other
costs,
expenses and disbursements of any kind or nature whatsoever
which may
be imposed on, incurred by or asserted against the Sub-Adviser (x)
under the terms of the Investment Advisory Contract or (y) at
law, or
in equity, for the performance of its duties as the investment Sub-
Adviser of any of the Funds.
The Trust hereby agrees to indemnify and save harmless
the Sub-
Adviser and its trustees, officers and employees (each of the
foregoing
an "Indemnified Party" and collectively the "Indemnified Parties")
against and from any and all losses, obligations, penalties,
actions,
judgments and suits and other costs, expenses and disbursements
of any
kind or nature whatsoever which may be imposed on, incurred by or
asserted against an Indemnified Party, other than as a consequence
of
gross negligence or willful misconduct on the part of an Indemnified
Party, arising out of or in connection with this Limited Power of
Attorney or any other agreement, instrument or document executed in
connection with the exercise of the authority granted to the Sub-
Adviser herein to act on behalf of the Trust, including without
limitation the reasonable costs, expenses and disbursements in
connection with defending such Indemnified Party against any claim
or
liability related to the exercise or performance of any of the Sub-
Adviser's powers or duties under this Limited Power of Attorney or
any
of the other agreements, instruments or documents executed in
connection with the exercise of the authority granted to the Sub-
Adviser herein to act on behalf of the Trust, or the taking of any
action under or in connection with any of the foregoing. The
obligations of the Trust under this paragraph shall survive the
termination of this Limited Power of Attorney with respect to
actions
taken by the Sub-Adviser on behalf of the Trust during the term of
this
Limited Power of Attorney. No Fund shall have any joint or several
obligation with any other Fund to reimburse or indemnify an
Indemnified
Party for any action, event, matter or occurrence performed or
omitted
by or on behalf of the Sub-Adviser in its capacity as agent or
attorney-in-fact of Trust acting on behalf of any other Fund
hereunder.
Any person, partnership, corporation or other legal
entity
dealing with the Sub-Adviser in its capacity as
attorney-in-fact
hereunder for the Trust is hereby expressly put on notice that
the Sub-
Adviser is acting solely in the capacity as an agent of the
Trust and
that any such person, partnership, corporation or other legal
entity
must look solely to the Trust in question for enforcement of any
claim
against the Trust, as the Sub-Adviser assumes no personal
liability
whatsoever for obligations of the Trust entered into by the
Sub-Adviser
in its capacity as attorney-in-fact for the Trust.
Each person, partnership, corporation or other legal
entity which
deals with a Fund of the Trust through the Sub-Adviser in its
capacity
as agent and attorney-in-fact of the Trust, is hereby expressly
put on
notice (i) that all persons or entities dealing with the
Trust must
look solely to the assets of the Fund of the Trust on whose
behalf the
Sub-Adviser is acting pursuant to its powers hereunder for
enforcement
of any claim against the Trust, as the Directors, officers
and/or
agents of such Trust, the shareholders of the various classes
of shares
of the Trust and the other Funds of the Trust assume no personal
liability whatsoever for obligations entered into on behalf of
such
Fund of the Trust, and (ii) that the rights, liabilities and
obligations of any one Fund are separate and distinct from those
of any
other Fund of the Trust.
The execution of this Limited Power of Attorney by
the Trust
acting on behalf of the several Funds shall not be deemed to
evidence
the existence of any express or implied joint undertaking or
appointment by and among any or all of the Funds. Liability
for or
recourse under or upon any undertaking of the Sub-Adviser
pursuant to
the power or authority granted to the Sub-Adviser under this
Limited
Power of Attorney under any rule of law, statute or constitution
or by
the enforcement of any assessment or penalty or by legal or
equitable
proceedings or otherwise shall be limited only to the assets
of the
Fund of the Trust on whose behalf the Sub-Adviser was acting
pursuant
to the authority granted hereunder.
The Trust hereby agrees that no person, partnership,
corporation
or other legal entity dealing with the Sub-Adviser shall be
bound to
inquire into the Sub-Adviser's power and authority hereunder
and any
such person, partnership, corporation or other legal entity
shall be
fully protected in relying on such power or authority unless
such
person, partnership, corporation or other legal entity has
received
prior written notice from the Trust that this Limited Power
of Attorney
has been revoked. This Limited Power of Attorney shall be
revoked and
terminated automatically upon the cancellation or termination
of the
Investment Advisory Contract between the Trust and the
Sub-Adviser.
Except as provided in the immediately preceding sentence,
the powers
and authorities herein granted may be revoked or terminated
by the
Trust at any time provided that no such revocation or
termination shall
be effective until the Sub-Adviser has received actual
notice of such
revocation or termination in writing from the Trust.
This Limited Power of Attorney constitutes the
entire agreement
between the Trust and the Sub-Adviser, may be changed
only by a writing
signed by both of them, and shall bind and benefit their
respective
successors and assigns; provided, however, the Sub-Adviser
shall have
no power or authority hereunder to appoint a successor or
substitute
attorney in fact for the Trust.
This Limited Power of Attorney shall be governed and
construed in
accordance with the laws of the Commonwealth of Pennsylvania
without
reference to principles of conflicts of laws. If any provision
hereof,
or any power or authority conferred upon the Sub-Adviser herein,
would
be invalid or unexercisable under applicable law, then such
provision,
power or authority shall be deemed modified to the extent
necessary to
render it valid or exercisable while most nearly preserving
its
original intent, and no provision hereof, or power or authority
conferred upon the Sub-Adviser herein, shall be affected by the
invalidity or the non-exercisability of another provision hereof,
or of
another power or authority conferred herein.
This Limited Power of Attorney may be executed in as
many
identical counterparts as may be convenient and by the different
parties hereto on separate counterparts. This Limited Power of
Attorney shall become binding on the Trust when the Trust shall
have
executed at least one counterpart and the Sub-Adviser shall have
accepted its appointment by executing this Limited Power of
Attorney.
Immediately after the execution of a counterpart original of
this
Limited Power of Attorney and solely for the convenience of
the parties
hereto, the Trust and the Sub-Adviser will execute sufficient
counterparts so that the Sub-Adviser shall have a counterpart
executed
by it and the Trust, and the Trust shall have a counterpart
executed by
the Trust and the Sub-Adviser. Each counterpart shall be deemed
an
original and all such taken together shall constitute but one and
the
same instrument, and it shall not be necessary in making proof
of this
Limited Power of Attorney to produce or account for more than
one such
counterpart.
IN WITNESS WHEREOF, the Trust has caused this Limited
Power of
Attorney to be executed by its duly authorized officer as of
the date
first written above.
Federated Income Securities
Trust
By: /s/ J. Xxxxxxxxxxx Xxxxxxx
Name: J. Xxxxxxxxxxx Xxxxxxx
Title: President
Accepted and agreed to this
January 1, 2004
Federated Investment Management Company
By: /s/ G. Xxxxxx Xxxxxxxxx
Name: G. Xxxxxx Xxxxxxxxx
Title: Vice President
Schedule 1
to Limited Power of Attorney
dated as of January 1, 2004
by Federated Income Securities Funds
(the Trust "), acting on
behalf of each of the series portfolios
listed below, and appointing
Federated Investment Management Company
the attorney-in-fact of the
Trust
List of Series Portfolios
Federated Capital Income Fund
