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Exhibit (d)(4)
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Form of Sub-Advisory Agreement between BB&T Asset Management, LLC and Federated
Investment Management Company
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FORM OF
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SUBADVISORY AGREEMENT
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This Subadvisory Agreement (this "Agreement") is entered into as of the
1st day of February, 2001, by and between BB&T Asset Management, LLC, a North
Carolina corporation with an office in Raleigh, North Carolina (the "Adviser")
and Federated Investment Management Company, a Delaware business trust ("FIMC").
R E C I T A L S:
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A. The Adviser has entered into an advisory agreement dated
February 1, 2001, (the "Advisory Agreement") with BB & T Funds, a
Massachusetts business trust (the "Company"), pursuant to which the
Adviser provides portfolio management services to the series of the
Company set forth on Schedule 1 to this Agreement (each a "Fund" and
collectively the "Funds");
B. The Advisory Agreement provides that the Adviser may delegate any or
all of its portfolio management responsibilities under the Advisory
Agreement to one or more subadvisers; and
C. The Adviser and the Board of Directors (the "Board") of the Company
desire to retain FIMC to render portfolio management services in the
manner and on the terms set forth in this Agreement.
A G R E E M E N T:
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Adviser and FIMC agree as follows:
SECTION 1. APPOINTMENT OF SUBADVISER.
The Adviser hereby appoints FIMC as subadviser for each Fund and
authorizes FIMC, in its discretion and without prior consultation with the
Adviser, to invest and manage each Fund's portfolio of Securities in accordance
with such Fund's stated investment objective to the fullest extent permitted by:
(a) the Fund's investment policies, limitations, procedures and
guidelines set forth in the documents listed on Schedules 2 and 3 to
this Agreement;
(b) any additional objectives, policies or guidelines established
by the Adviser or by the Board that have been furnished in writing to
FIMC;
(c) the provisions of the Investment Company Act of 1940
(the "1940 Act") and the rules and regulations thereunder applicable
to the Fund, including rule 2a-7 promulgated thereunder ("Rule 2a-7");
and
(d) the provisions of Subchapter M of the Internal Revenue Code
("IRC") applicable to "regulated investment companies."
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For purposes of this Agreement, "Securities" include any investment permitted
under the foregoing policies, limitations, procedures, guidelines, laws or
regulations. Subject to the supervision of the Adviser and the Board, the
Adviser authorizes FIMC to determine the structure and composition of the Fund's
portfolio, including the purchase, retention and disposition of, and exercise of
all rights pertaining to, the Securities comprising the portfolio.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF FIMC
FIMC represents and warrants to Adviser as follows:
(a) FIMC is a business trust duly organized, validly existing,
and in good standing under the laws of the State of Delaware.
(b) This Agreement constitutes the legal, valid, and binding
obligation of FIMC, enforceable against FIMC in accordance with its
terms. FIMC has the absolute and unrestricted right, power, and
authority to execute and deliver this and to perform its obligations
under this Agreement.
(c) Neither the execution and delivery of this Agreement by FIMC
nor the performance of any of its obligations hereunder will give any
person the right to prevent, delay, or otherwise interfere with the
performance of such obligations pursuant to:
(i) any provision of FIMC's Declaration of Trust or
By-Laws;
(ii) any resolution adopted by the board of trustees or
the shareholders of FIMC;
(iii) any law, regulation or administrative or court order
to which FIMC may be subject; or
(iv) any contract to which FIMC is a party or by which
FIMC may be bound.
FIMC is not and will not be required to obtain any consent from any
person in connection with the execution and delivery of this Agreement
or the performance of any obligations hereunder.
(d) FIMC is registered with the Securities and Exchange
Commission ("SEC") as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act") and is registered or
licensed as an investment adviser under the laws of all jurisdictions
in which its activities require it to be so registered or licensed,
except where the failure to be so licensed would not have a material
adverse effect on its business.
(e) FIMC has furnished to the Adviser true and complete copies of
all the documents listed on Schedule 3 to this Agreement.
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SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
The Adviser represents and warrants to FIMC as follows:
(a) The Adviser is a stated chartered bank duly organized, validly
existing, and in good standing under the laws of the State of North
Carolina.
(b) This Agreement constitutes the legal, valid, and binding
obligation of the Adviser, enforceable against the Adviser in
accordance with its terms. the Adviser has the absolute and
unrestricted right, power, and authority to execute and deliver this
and to perform its obligations under this Agreement.
(c) Neither the execution and delivery of this Agreement by the
Adviser nor the performance of any of its obligations hereunder will
give any person the right to prevent, delay, or otherwise interfere
with the performance of such obligations pursuant to:
(i) any provision of the Adviser's bank charter or
By-Laws;
(ii) any resolution adopted by the board of directors or
the shareholders of the Adviser;
(iii) any law, regulation or administrative or court order
to which the Adviser may be subject; or
(iv) any contract to which the Adviser is a party or by
which the Adviser may be bound.
Except for the approval of the Board and of each Fund's shareholders as
required by Section 15 of the 1940 Act, the Adviser is not and will not
be required to obtain any consent from any person in connection with
the execution and delivery of this Agreement or the performance of any
obligations hereunder.
(d) The Adviser is registered with the SEC as an investment
adviser under the Advisers Act and is registered or licensed
as an investment adviser under the laws of all jurisdictions in which
its activities require it to be so registered or licensed, except
where the failure to be so licensed would not have a material adverse
effect on its business.
(e) The Adviser has furnished to FIMC true and complete copies
of all the documents listed on Schedule 2 to this Agreement.
SECTION 3. CONDITIONS TO AGREEMENT.
FIMC's and the Adviser's obligations under this Agreement are subject
to the satisfaction of the following conditions precedent:
(a) Receipt by FIMC of a certificate of an officer of Company
stating that (i) this Agreement and the Advisory Agreement have been
approved by the vote of a majority of the Trustees, who are not
interested persons of FIMC or the Adviser, cast in person at a meeting
of the Board call for the purpose of voting on such approval, and (ii)
this
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Agreement and the Advisory Agreement have been approved by the
vote of a majority of the outstanding voting securities of the Company;
(b) Receipt by FIMC of certified copies of instructions from the
Fund to its custodian designating the persons specified by FIMC as
"Authorized Persons" under the Fund's custody agreement;
(c) The Fund's execution and delivery of a limited power of
attorney in favor of FIMC, in a form mutually agreeable to FIMC, the
Adviser and the Board;
(d) Receipt by FIMC of Board resolutions, certified by an officer
of the Company, adopting all procedures and guidelines listed on
Schedule 3 to this Agreement and identified as required by Rule 2a-7
or any other exemptive rule or order that is or will become applicable
to any Fund;
(e) Receipt by FIMC of complete copies, certified by an officer
of the Company, of all other policies procedures, guidelines, and
codes listed on Schedule 2 to this Agreement; and
(f) Any other documents, certificates or other instruments that
FIMC or the Adviser may reasonable request from the Fund.
SECTION 4. COMPENSATION.
For the services provided under this Agreement, the Adviser will pay to
FIMC a fee at the annual rate set forth opposite each Fund's name on Schedule 1
multiplied times such Fund's average daily net assets. Such fee will accrue
daily and will be paid monthly to FIMC on or before the last business day of the
next succeeding calendar month. If this Agreement is effective for only a
portion of a month, the fee will be prorated for the portion of such month
during which this Agreement is in effect.
SECTION 5. INFORMATION AND REPORTS.
(a) The Adviser will promptly notify FIMC of any material change
in any of the documents listed on Schedule 2 to this Agreement and will
provide FIMC with copies of any such modified document. The Adviser
will also provide FIMC with a list, to the best of the Adviser's
knowledge, of all affiliated persons of Adviser (and any affiliated
person of such an affiliated person) and will promptly update the list
whenever the Adviser becomes aware of any additional affiliated
persons.
(b) FIMC will maintain books and records relating to its
management of the Fund under its customary procedures and in compliance
with applicable regulations under the 1940 Act and the Advisers Act.
FIMC will permit the Adviser to inspect such books and records at all
reasonable times during normal business hours, upon reasonable notice.
Prior to each Board meeting, FIMC will provide the Adviser and the
Board with reports regarding its management of the Fund during the
interim period, in such form as may be mutually agreed upon by FIMC and
the Adviser. FIMC will also provide the Adviser with any information
regarding its management of the Fund required for any shareholder
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report, amended registration statement or prospectus supplement filed
by the Fund with the SEC.
SECTION 6. NONEXCLUSIVE AGREEMENT; ALLOCATION OF TRANSACTIONS.
(a) The investment management services provided by FIMC
hereunder are not to be deemed to be exclusive, and FIMC shall be free
to render similar services to other advisers, investment companies, and
other types of clients.
(b) To the extent consistent with applicable law, FIMC may
aggregate purchase or sell orders for the Fund with contemporaneous
purchase or sell orders of other clients of FIMC or its affiliated
persons. In such event, allocation of the Securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made
by FIMC in the manner FIMC considers to be the most equitable and
consistent with its and its affiliates' fiduciary obligations to the
Fund and to such other clients. The Adviser hereby acknowledges that
such aggregation of orders may not result in a more favorable price or
lower brokerage commissions in all instances.
(c) FIMC will place purchase and sell orders for the Fund with or
through such banks, brokers, dealers, futures commission merchants or
other firms dealing in Securities ("Brokers") as it determines, which
may include Brokers that are affiliated persons of FIMC, provided such
orders are exempt from the provisions of Section 17(a), (d) and (e) of
the 1940 Act. FIMC will use its best efforts to obtain execution of
transactions for the Fund at prices which are advantageous to the Fund
and at commission rates that are reasonable in relation to the services
received. FIMC may, however, select Brokers on the basis that they
provide brokerage, research or other services or products to the Fund
and/or other clients of FIMC and its affiliated persons. In selecting
Brokers, FIMC may also consider the reliability, integrity and
financial condition of the Broker, and the size of and difficulty in
executing the order.
SECTION 7. FUND EXPENSES.
Each Fund shall pay or cause to be paid all of its own expenses and its
allocable share of Trust expenses incurred in managing its portfolio of
Securities, including all commissions, xxxx-ups, transfer fees, registration
fees, ticket charges, transfer taxes, custodian fees and similar expenses. Each
Fund will also pay its allocable share of such extraordinary expenses as may
arise including expenses incurred in connection with litigation, proceedings,
and claims and the legal obligations of the Trust to indemnify its officers and
Trustees and agents with respect thereto. Each Fund will promptly reimburse FIMC
for any such expense to the extent advanced by FIMC. In no event will FIMC have
any obligation to pay any of the Funds' expenses, including without limitation,
the expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for administrative
personnel and services; expenses incurred in the distribution of its shares
("Shares"), including expenses of administrative support services; fees and
expenses of preparing and printing its Registration Statements under the
Securities Act of 1933 and the 1940 Act; expenses of registering and qualifying
the Trust, the Funds, and Shares of the Funds under federal and state laws and
regulations; expenses of preparing, printing, and distributing prospectuses (and
any amendments
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thereto) to shareholders; interest expense, taxes, fees, and commissions of
every kind; expenses of issue (including cost of Share certificates), purchase,
repurchase, and redemption of Shares; charges and expenses of custodians,
transfer agents, dividend disbursing agents, shareholder servicing agents, and
registrars; printing and mailing costs, auditing, accounting, and legal
expenses; reports to shareholders and governmental officers and commissions;
expenses of meetings of Trustees and shareholders and proxy solicitations
therefor; insurance expenses; association membership dues and such nonrecurring
items as may arise, including all losses and liabilities incurred in
administering the Trust/Corporation and the Funds.
SECTION 8. LIMITATION OF LIABILITY.
(a) In the absence of willful misfeasance, bad faith or gross
negligence on the part of FIMC, or of reckless disregard by FIMC of its
obligations and duties hereunder, FIMC shall not be subject to any
liability to the Adviser, the Fund, the Company, any shareholder of the
Fund, or to any person, firm or organization. Without limiting the
foregoing, FIMC shall not have any liability whatsoever for any
investment losses incurred by a Fund, or arising from transactions by a
Fund, prior to the date on which FIMC assumes responsibility for the
management of the Fund's portfolio.
(b) The Adviser, the Company, and the Fund are hereby expressly
put on notice of the limitation of liability as set forth in the
Declaration of Trust of FIMC and agree that the obligations assumed by
FIMC pursuant to this Agreement will be limited in any case to FIMC and
its assets and the Adviser, the Company, and the Fund shall not seek
satisfaction of any such obligation from the shareholders of FIMC, the
trustees of FIMC, officers, employees or agents of FIMC, or any of
them.
SECTION 9. PRICING.
The Adviser, the Company and the Fund hereby acknowledge that FIMC is
not responsible for pricing portfolio Securities, and that the Adviser, the
Company, the Fund, and FIMC will rely on the pricing agent chosen by the Board
of the Company for prices of Securities, for any purposes.
SECTION 10. TERM.
This Agreement shall begin as of the date of its execution and shall
continue in effect until September 30, 2001 and thereafter for successive
periods of one year, subject to the provisions for termination and all of the
other terms and conditions hereof if such continuance is specifically approved
at least annually in conformity with the requirements of the 1940 Act; provided,
however, that this Agreement may be terminated by the Fund at any time, without
the payment of any penalty, by the Board or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Fund, or by
the Adviser or FIMC at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the other party. This
Agreement will terminate automatically in the event of its assignment (as
defined in the 0000 Xxx) or upon the termination of the Adviser's management
agreement with the Fund.
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SECTION 11. LIMITED POWER OF ATTORNEY.
Subject to any other written instructions of the Adviser or the
Company, FIMC is hereby appointed the Fund's agent and attorney-in-fact for the
limited purposes of executing account documentation, agreements, contracts and
other documents as FIMC shall be requested by brokers, dealers, counter parties
and other persons in connection with its management of the Fund's assets. The
Adviser and the Company hereby ratify and confirm as good and effectual, at law
or in equity, all that FIMC and its officers and employees, may do in its
capacity as attorney-in-fact. However, nothing herein shall be construed as
imposing a duty on FIMC to act or assume responsibility for any matters in its
capacity as attorney-in-fact for the Fund. Any person, partnership, corporation
or other legal entity dealing with FIMC in its capacity as attorney-in-fact
hereunder for the Fund is hereby expressly put on notice that FIMC is acting
solely in the capacity as an agent of the Fund and that any such person,
partnership, corporation or other legal entity must look solely to the Fund for
enforcement of any claim against Fund, as FIMC assumes no personal liability
whatsoever for obligations of the Fund entered into by FIMC in its capacity as
attorney-in-fact for the Fund.
SECTION 12. GENERAL PROVISIONS
SECTION 12.1. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
FIMC: Federated Investment Management Company
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
Adviser: BB&T Asset Management, LLC
000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
SECTION 12.2. FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
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SECTION 12.3. WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
SECTION 12.4. ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
SECTION 12.5. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
SECTION 12.6. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
SECTION 12.7. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be
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construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
SECTION 12.8. GOVERNING LAW
This Agreement will be governed by the laws of the State of
Pennsylvania without regard to conflicts of laws principles.
SECTION 12.9. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.
BB&T ASSET MANAGEMENT, LLC
By:_________________________
Name:
Title:
FEDERATED INVESTMENT MANAGEMENT COMPANY
By:__________________________
Name:
Title:
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SCHEDULE 1 - FUNDS AND SUBADVISORY FEES
Annual
Subadvisory
Name of Series Assets Fee*
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BB&T Prime Money Market Fund $0-$500million 0.10% of average daily
net assets
>$500 million 0.08% of average daily
net assets
* A MINIMUM FEE OF
$250,000 PER ANNUM
WILL APPLY.
BB&T ASSET MANAGEMENT, LLC
By:_________________________
Name:
Title:
FEDERATED INVESTMENT MANAGEMENT COMPANY
By:_________________________
Name:
Title:
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SCHEDULE 2 - FUND DOCUMENTATION
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1. Company's Declaration of Trust and Bylaws.
2. Currently effective registration statement for each class of each
Fund's shares and any pending amendments to such registration statement.
3. Any supplements to any prospectus or statement of additional information
for any class of any Fund's shares.
4. Custody Agreement between the Trust and Branch Banking and Trust Company as
Custodian for the Portfolio's securities, including information as to:
o the Portfolio's nominee,
o the Federal tax identification numbers of the Portfolio and its nominee,
o all routing, bank, participant and account numbers and other information
necessary to provide proper instructions for transfer and delivery of
Securities to the Portfolio's accounts at the Custodian,
o the name, address, phone and fax number of the Custodian's employees
responsible for the Portfolio's accounts, and
o the Portfolio's pricing service and contact persons.
5. All policies, procedures, guidelines and codes adopted by the Board under
the 1940 Act or any regulation thereunder, including:
o Rule 2a-7 (if the Portfolio holds itself out as a "money market fund"),
o Rule 10f-3 (relating to affiliated underwriting syndicates),
o Rule 17a-7 (relating to interfund transactions),
o Rule 17e-1 (relating to transactions with affiliated Brokers),
o Rule 17f-4 (relating to securities held in securities depositories),
o Rule 17j-1 (relating to a code of ethics), and
o Rule 17f-5 (relating to foreign custody).
6. All SEC exemptive orders applicable to the Portfolio, and all procedures
and guidelines adopted by the Board under the terms of such orders.
7. All procedures and guidelines adopted by the Board or the Manager
regarding:
o Repurchase agreements,
o Evaluating the liquidity of securities, include restricted securities,
municipal leases and stripped U.S. government securities,
o Segregation of liquid assets in connection with reverse repurchase
agreements, firm commitments, standby commitments, short sales, options
and futures agreements,
o Derivative contracts and securities, and
o Affiliated bank procedures.
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8. Any master agreements that the Trust has entered into on behalf of the
Portfolio, including:
o Master Repurchase Agreement,
o Master Futures and Options Agreements,
o Master Foreign Exchange Netting Agreements, and
o Master Swap Agreements.
9. Blue Sky undertakings.
10.CFTC Rule 4.5 letter.
11. Schedule of the current year's Board meetings, and the reports needed by the
Board.
12. Pricing and performance calculation entities and contact persons.
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SCHEDULE 3 - SUBADVISER DOCUMENTATION
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1. Part II of FIMC's Form ADV most recently filed with the SEC.
2. Guidelines and procedures required by Rule 2a-7, consisting of:
o Forms of resolutions authorizing use of the amortized cost method,
o Amortized Cost Procedures, and
o Federated Investment Adviser Guidelines
3. Procedures and checklists required by the following exemptive rules and
orders under under the 1940 Act:
o Rule 10f-3 (relating to affiliated underwriting syndicates),
o Rule 17a-7 (relating to interfund transactions),
o Rule 17e-1 (relating to transactions with affiliated Brokers),
o Rule 17f-4 (relating to securities held in securities depositories),
o Rule 17j-1 (relating to a code of ethics),
o Release No. IC-22903 (granting an exemption for the use of
"core funds"),
o Release No. IC-22313 (granting an exemption for the purchase of
affiliated money market funds)
o Release Nos. IC-16602 and IC-19816 (granting an exemption for
certain transactions with affiliated banks), and
o Release No. IC-15243 (granting an exemption permitting the purchase
of insurance from an affiliate and the settlement of claims
therefrom).
4. Procedures and checklist required
5. All exemptive orders granted by the SEC that will become applicable
to the Portfolio, and the procedures and guidelines followed by FIMC in
accordance therewith.
