Exhibit (h) (xii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
FINANCIAL ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT dated as of January 1, 2007 is made, severally and not jointly
(except that the parties agree that the calculation required by Section XIII
hereunder shall be joint and not several) by each of the investment companies
listed on Exhibit A hereto (each, a "Trust") and State Street Bank and Trust
Company ("State Street").
WHEREAS, each Trust is registered as a 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 (the "Shares");
WHEREAS, certain Trusts subject to this Agreement are "series companies" as
defined in Rule 18f-2(a) under the 1940 Act and, as used in this Agreement, the
term "Portfolio" refers to either (i) an individual portfolio of such a series
company or (ii) an investment company that is not organized as a series company,
and the term "Portfolios" refers to all such portfolios and investment
companies, collectively;
WHEREAS, Shares of each Portfolio may be subdivided into "classes" as provided
in Rule 18f-3 under the 1940 Act;
WHEREAS, the Trust desires to retain State Street as financial administrator
(the "Financial Administrator") to furnish certain financial administrative
services on behalf of the Portfolios;
WHEREAS, the Trust desires to retain State Street as accounting agent (the
"Accounting Agent") to perform certain accounting and recordkeeping services on
behalf of the Portfolios; and
WHEREAS, State Street is willing to perform such services on the terms provided
herein.
NOW, THEREFORE, the parties agree as follows:
I. APPOINTMENT
A. Of State Street as the Financial Administrator
The Trust hereby appoints State Street to act as Financial Administrator with
respect to the Trust for purposes of providing certain financial administrative
services for the period and on the terms set forth in this Agreement. State
Street accepts such appointment and agrees to render the financial
administrative services stated herein.
The Trust will initially consist of the Portfolios identified on Exhibit A
hereto. In the event that the Trust establishes one or more additional
Portfolios with respect to which it wishes to retain the Financial Administrator
to act as financial administrator hereunder, the Trust shall notify the
Financial Administrator in writing (including by facsimile or electronic mail
communication). Upon such notification, such Portfolio shall become subject to
the provisions of this Agreement to the same extent as the existing Portfolios,
except to the extent that such provisions (including those relating to
compensation and expenses payable by the Trust and its Portfolios) may be
modified with respect to each additional Portfolio in writing by the Trust and
the Financial Administrator at the time of the addition of the Portfolio.
B. Of State Street as the Accounting Agent
The Trust hereby appoints State Street to act as Accounting Agent with respect
to the Portfolios for purposes of providing certain accounting and recordkeeping
services for the period and on the terms set forth in this Agreement. State
Street accepts such appointment and agrees to render the accounting and
recordkeeping services stated herein.
The Trust will initially consist of the Portfolios identified on Exhibit A. In
the event that the Trust establishes one or more additional Portfolios with
respect to which it wishes to retain the Accounting Agent to act as accounting
agent hereunder, the Trust shall notify the Accounting Agent in writing
(including by facsimile or electronic mail communication). Upon such
notification, such Portfolio shall become subject to the provisions of this
Agreement to the same extent as the existing Portfolios, except to the extent
that such provisions (including those relating to compensation and expenses
payable by the Trust and its Portfolios) may be modified with respect to each
additional Portfolio in writing by the Trust and the Accounting Agent at the
time of the addition of the Portfolio.
II. REPRESENTATIONS and WARRANTIES
A. By State Street. State Street represents and warrants that:
1. It is a Massachusetts trust company, duly organized and
existing under the laws of The Commonwealth of Massachusetts;
2. It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
3. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
4. No legal or administrative proceedings have been instituted or
threatened which would impair State Street's ability to perform
its duties and obligations under this Agreement;
5. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of State Street or any law or regulation applicable to
it; and
6. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
B. By the Trust. The Trust represents and warrants that:
1. It is duly organized, existing and in
good standing under the laws of the jurisdiction in which
it was formed;
2. It has the power and authority under
applicable laws and by its organizational documents to
enter into and perform this Agreement;
3. All requisite proceedings have been
taken to authorize it to enter into and perform this
Agreement;
4. With respect to each Portfolio, it is
an investment company properly registered under the 1940
Act;
5. A registration statement under the
1940 Act (and if Shares of the Portfolio are offered
publicly, under the Securities Act of 1933, as amended
(the "1933 Act")) has been filed and will be effective and
remain effective during the term of this Agreement. The
Trust also warrants that as of the effective date of this
Agreement, all necessary filings under the securities laws
of the states in which the Trust offers or sells its
Shares have been made;
6. No legal or administrative
proceedings have been instituted or threatened which would
impair the Trust's ability to perform its duties and
obligations under this Agreement;
7. Its entrance into this Agreement will
not cause a material breach or be in material conflict
with any other agreement or obligation of the Trust or any
law or regulation applicable to it; and
8. As of the close of business on the
date of this Agreement, the Trust is authorized to issue
its Shares.
III.DUTIES of STATE STREET
A. As the Financial Administrator. The Financial Administrator shall
provide the following services, in each case, subject to the control,
supervision and direction of the respective Trust and its Board of
Trustees/Directors (the "Board") and in accordance with procedures which may be
established from time to time between the Trust and the Financial Administrator
(including the procedures established in the "Service Level Agreement" as
defined in Section V of this Agreement):
1. Compile, review and deliver to the Trust, fund performance statistics
including Securities and Exchange Commission (the "SEC") yields,
distribution yields and total returns;
2. Prepare and submit for approval by officers of the Trust a fund
expense budget, review expense calculations and arrange for payment
of the Trust's expenses;
3. Prepare and submit for approval the annual Statement of Position 93-2
("ROCSOP") adjustment based in part on the tax provision information
provided by Federated Administrative Services.
4. Prepare for review and approval by officers of the Trust financial
information required for the Trust's annual and semi-annual reports,
proxy statements and other communications required or otherwise to be
sent to shareholders; review text of "President's Letter to
Shareholders" and "Management's Discussion of Financial Performance"
as included in shareholder reports (which shall also be subject to
review by the Trust's legal counsel);
5. Prepare for review by an officer of and legal counsel for the Trust
the Trust's periodic financial reports required to be filed with the
SEC on Form N-SAR and financial information required by Form N-1A,
Form N-14, Form N-Q and Form 24F-2 and such other reports, forms or
filings as may be mutually agreed upon;
6. Prepare reports relating to the business and affairs of the Trust as
may be mutually agreed upon and not otherwise prepared by the Trust's
investment adviser, custodian, legal counsel or independent
accountants;
7. Oversee and review calculations of fees paid to State Street and to
the Trust's investment adviser, shareholder servicing agent,
distributor, custodian, fund administrator, fund accountant and
transfer and dividend disbursing agent ("Transfer Agent"), in
addition to the oversight and review of all asset based fee
calculations;
8. Prepare fund income forecasts and submit for approval by officers of
the Trust, recommendations for fund income dividend distributions;
9. Maintain continuing awareness of significant emerging regulatory and
legislative developments which may affect the Trust, and provide
related planning assistance where requested or appropriate;
10.Complete monthly preferred shares "asset coverage" test (as that term
is defined in Section 18(h) of the 1940 Act) (the "1940 Act Test")
following the compliance procedures contained in Exhibit D attached
hereto, as such Exhibit may be amended from time to time by mutual
agreement of the parties (the "Compliance Procedures");
11.Complete monthly preferred shares basic maintenance amount test for
Fitch Ratings, Ltd. ("Fitch") (the "Fitch Preferred Shares Basic
Maintenance Test") following the Compliance Procedures; and
12.Complete monthly preferred shares basic maintenance amount test for
Xxxxx'x Investors Service, Inc. ("Xxxxx'x") (the "Xxxxx'x Preferred
Shares Basic Maintenance Test") following the Compliance Procedures.
The Financial Administrator shall provide the office facilities and the
personnel required by it to perform the services contemplated herein.
B. As the Accounting Agent. The Accounting Agent shall provide the
following services, in each case, subject to the control, supervision
and direction of the respective Trust and its Board and in accordance
with procedures which may be established from time to time between the
Trust and the Accounting Agent (including the procedures established in
the "Service Level Agreement" as defined in Section V of this
Agreement):
1. Books of Account. The Accounting Agent shall maintain the
books of account of the Trust and shall perform the following
duties in the manner prescribed by the respective Trust's
currently effective prospectus, statement of additional
information or other governing document, certified copies of which
have been supplied to the Accounting Agent (a "Governing
Document") (including the procedures established in the Service
Level Agreement):
a. Value the assets of each Portfolio using: primarily, market
quotations (including the use of matrix pricing) supplied by the
independent pricing services selected by the Accounting Agent in
consultation with the Trust's investment adviser (the "Adviser")
and approved by the Board; secondarily, if a designated pricing
service does not provide a price for a security that the
Accounting Agent believes should be available by market quotation,
the Accounting Agent may obtain a price by calling brokers
designated by the Adviser, or if the Adviser does not supply the
names of such brokers, the Accounting Agent will attempt on its
own to find brokers to price the security, subject to approval by
the Adviser; thirdly, for securities for which no market price is
available, the Valuation Committee overseen by the Board (the
"Committee") will determine a fair value in good faith; or
fourthly, such other procedures as may be adopted by the Board.
Consistent with Rule 2a-4 under the 1940 Act, estimates may be
used where necessary or appropriate. The Accounting Agent is not
the guarantor of the accuracy of the securities prices received
from such pricing agents and the Accounting Agent is not liable to
the Trust for errors in valuing a Portfolio's assets or
calculating the net asset value (the "NAV") per share of such
Portfolio or class when the calculations are based upon inaccurate
prices provided by pricing agents. The Accounting Agent will
provide daily to the Adviser the security prices used in
calculating the NAV of each Portfolio, for its use in preparing
exception reports for those prices on which the Adviser has a
comment. Further, upon receipt of the exception reports generated
by the Adviser, the Accounting Agent will diligently pursue
communication regarding exception reports with the designated
pricing agents;
b. Determine the NAV per share of each Portfolio and/or class, at
the time and in the manner from time to time determined by the
Board and as set forth in the Prospectus of such Portfolio;
c. Prepare the weekly or bi-weekly xxxx-to-market reports and
analysis in compliance with Rule 2a-7 for each of the money market
portfolios.
d. Monitor the triggers used to determine when the ITG fair value
pricing procedures may be invoked, as further detailed on attached
Exhibit C (the Fair Value Pricing Authorization), and inform the
appropriate Federated personnel that triggers had been met.
e. Calculate the net income of each of the Portfolios, if any;
f. Calculate realized capital gains or losses of each of the
Portfolios resulting from sale or disposition of assets, if any;
g. Calculate the expense accruals for each fund/class of shares;
h. Determine the dividend factor for all daily dividend funds;
i. Maintain the general ledger and other accounts, books and
financial records of the Trust, including for each Portfolio, as
required under Section 31(a) of the 1940 Act and the rules
thereunder in connection with the services provided by State
Street
j. At the request of the Trust, prepare various reports or other
financial documents in accordance with generally accepted
accounting principles as required by federal, state and other
applicable laws and regulations; and
k. Such other similar services as may be reasonably requested by
the Trust.
The Trust shall provide timely prior notice to the Accounting Agent of any
modification in the manner in which such calculations are to be performed as
prescribed in any revision to the Trust's Governing Document. The Accounting
Agent shall not be responsible for any revisions to the manner in which such
calculations are to be performed unless such revisions are communicated in
writing to the Accounting Agent.
2. Records. The Accounting Agent shall create and maintain all records
relating to its activities and obligations under this Agreement in
such a manner as will meet the obligations of the Trust under the
1940 Act, specifically Section 31 thereof and Rules 31a-1 and 31a-2
thereunder. All such records shall be the property of the Trust and
shall at all times during the regular business hours of the
Accounting Agent be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of the SEC.
Subject to Section XVII.B below, the Accounting Agent shall preserve
for the period required by law the records required to be maintained
thereunder.
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IV. DUTIES of the TRUST
A. Delivery of Documents. The Trust will promptly deliver, upon request,
to the Financial Administrator copies of each of the following documents and all
future amendments and supplements, if any:
1. The Trust's organizational documents;
2. The Trust's currently effective registration statements under
the 1933 Act (if applicable) and the 1940 Act and the Trust's
Prospectus(es) and Statement(s) of Additional Information
(collectively, the "Prospectus") relating to all Portfolios and
all amendments and supplements thereto as in effect from time to
time;
3. Certified copies of resolutions of the Board authorizing (a)
the Trust to enter into this Agreement and (b) certain individuals
on behalf of the Trust and its third-party agents to (i) give
instructions to the Financial Administrator pursuant to this
Agreement and (ii) authorize the payment of expenses;
4. The investment advisory agreements between the Trust and the
Advisers; and
5. Such other certificates, documents or opinions which the
Financial Administrator may, in its reasonable discretion, deem
necessary or appropriate in the proper performance of its duties.
The Trust shall provide, or shall cause its third-party agent to provide, timely
notice to the Accounting Agent of all data reasonably required by the Accounting
Agent for performance of its duties described in Section III.B hereunder. The
Trust's failure to provide such timely notice shall excuse the Accounting Agent
from the performance of such duties, but only to the extent the Accounting
Agent's performance is prejudiced by the Trust's failure.
State Street is authorized and instructed to rely upon any and all information
it receives from the Trust or its third-party agent that it reasonably believes
to be genuine. State Street shall have no responsibility to review, confirm or
otherwise assume any duty with respect to the accuracy or completeness of any
data supplied to it by or on behalf of the Trust.
State Street shall value the Trust's securities and other assets utilizing
prices obtained from sources designated by the Trust, or the Trust's duly-
authorized agent, on a Price Source Authorization substantially in the form
attached hereto as Exhibit B or otherwise designated by means of Proper
Instructions (as such term is defined herein) (collectively, the "Authorized
Price Sources"). State Street shall not be responsible for any revisions to the
methods of calculation adopted by the Trust unless and until such revisions are
communicated in writing to State Street.
B. Proper Instructions. The Trust and its third-party agents shall
communicate to State Street by means of Proper Instructions. Proper
Instructions shall mean (i) a writing signed or initialed by one or more persons
as the Board shall have from time to time authorized or (ii) a communication
effected directly between the Trust or its third-party agent and State Street by
electro-mechanical or electronic devices, provided that the Trust and State
Street have approved such procedures. State Street may rely upon any Proper
Instruction believed by it to be genuine and to have been properly issued by or
on behalf of the Trust. Oral instructions shall be considered Proper
Instructions if State Street reasonably believes them to have been given by a
person authorized to give such instructions. The Trust and its third-party
agents shall cause all oral instructions to be confirmed in accordance with
clauses (i) or (ii) above, as appropriate. The Trust and its third-party agents
shall give timely Proper Instructions to State Street in regard to matters
affecting accounting practices and State Street's performance pursuant to this
Agreement.
V. PERFORMANCE GOALS:
A. The Trust and State Street have developed mutually acceptable
performance goals dated January 1, 2007, and as may be amended from time to
time, regarding the manner in which they expect to deliver and receive the
services under this Agreement (hereinafter referred to as "Service Level
Agreement"). The parties agree that such Service Level Agreement reflects
performance goals and any failure to perform in accordance with the provisions
thereof shall not be considered a breach of contract that gives rise to
contractual or other remedies. It is the intention of the parties that the sole
remedy for failure to perform in accordance with the provisions of the Service
Level Agreement, or any dispute relating to performance goals set forth in the
Service Level Agreement, will be a meeting of the parties to resolve the failure
pursuant to the consultation procedure described in Sections V. B. and V.C.
below. Notwithstanding the foregoing, the parties hereby acknowledge that any
party's failure (or lack thereof) to meet the provisions of the Service Level
Agreement, while not in and of itself a breach of contract giving rise to
contractual or other remedies, may factor into the Trust's reasonably determined
belief regarding the standard of care exercised by State Street hereunder.
B. Consultation Procedure. If a party hereto is unable to meet the
provisions of the Service Level Agreement, or in the event that a dispute arises
relating to performance goals set forth in the Service Level Agreement, either
party to this Agreement shall address any concerns it may have by requiring a
consultation with the other party.
C. Purpose of Consultation Procedure. The purpose of the consultation
procedure is to endeavor to resolve any failure to meet the provisions of the
Service Level Agreement. If a consultation occurs under this Section V, all
parties must negotiate in good faith to endeavor to:
1. implement changes which will enable the Service Level
Agreement provisions to be met - such changes may include, but
are not limited to, modification of either or both parties'
respective operational resources;
2. agree to alternative Service Level Agreement provisions which
meet the parties' respective business requirements; or
3. otherwise find a solution such that within a reasonable time
after the consultation, the inability to meet the Service
Level Agreement provision(s) is reasonably expected to be less
likely to occur in the future.
VI. COMPLIANCE WITH GOVERNMENTAL RULES and REGULATIONS; RECORDS
The Trust assumes full responsibility for its compliance with all securities,
tax, commodities and other laws, rules and regulations applicable to it.
VII. WARRANTIES
If, prior to the Accounting Agent's calculation of the current NAV, the Trust or
its third-party agent notifies the Accounting Agent that any of its accounting
services are erroneous in any material respect, the Accounting Agent shall
endeavor in a timely manner to correct such failure. Third-parties that are
selected by and approved by the Trust and from which the Accounting Agent may
obtain certain data included in the accounting services are solely responsible
for the contents of such data and the Trust agrees to make no claim against the
Accounting Agent arising out of the contents of such third-party data including,
but not limited to, the accuracy thereof.
VIII. FORCE MAJEURE
The parties will maintain throughout the term of this Agreement, such
contingency plans as are reasonably believed to be necessary and appropriate to
recover the parties' operations from the occurrence of a disaster and which are
consistent with any statute or regulation to which the parties are subject that
imposes business resumption and contingency planning standards. The parties
agree to provide to one another a summary of their respective contingency plans
as they relate to the systems used to provide the services hereunder and to
provide periodic updates of such summary upon a party's reasonable request. If
any party is unable to carry out any of its obligations under this Agreement
because of conditions beyond its reasonable control, including, but not limited
to, acts of war or terrorism, work stoppages, fire, civil disobedience, delays
associated with hardware malfunction or availability, riots, rebellions, storms,
electrical failures, acts of God, and similar occurrences ("Force Majeure"),
this Agreement will remain in effect and the non-performing party's obligations
shall be suspended without liability for a period equal to the period of the
continuing Force Majeure (which such period shall not exceed fifteen (15)
business days), provided that:
(1) where reasonably practicable, the non-performing party gives the
other party prompt notice describing the Force Majeure, including
the nature of the occurrence and its expected duration and, where
reasonably practicable, continues to furnish regular reports with
respect thereto during the period of Force Majeure;
(2) the suspension of obligations is of no greater scope and of no
longer duration than is required by the Force Majeure;
(3) no obligations of any party that accrued before the Force Majeure
are excused as a result of the Force Majeure; and
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(4) the non-performing Party uses reasonable efforts to remedy its
inability to perform as quickly as possible.
IX. INSTRUCTIONS and ADVICE
At any time, State Street may apply to any officer of the Trust for instructions
and may consult with its own legal counsel with respect to any matter arising in
connection with the services to be performed by State Street under the terms of
this Agreement. At any time, State Street may consult with outside counsel for
the Trust or the independent accountants for the Trust ("Trust Advisers") at the
expense of the Trust, provided that State Street first obtains consent of the
Trust which shall not be unreasonably withheld, with respect to any matter
arising in connection with the services to be performed by State Street under
the terms of this Agreement. In its capacity as the Financial Administrator or
as the Accounting Agent under the terms of this Agreement, State Street shall
not be liable, and shall be indemnified by the Trust or appropriate Portfolio
for any action taken or omitted by it in good faith reliance upon any
instructions or advice provided to State Street by a Trust Adviser or upon any
paper or document reasonably believed by it to be genuine and to have been
signed by the proper person or persons. State Street shall not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Trust. Nothing in this paragraph shall be construed as
imposing upon State Street any obligation to seek such instructions or advice,
or to act in accordance with such advice when received.
X. NOTICES
All notices shall be in writing and deemed given when delivered in person, by
facsimile, by overnight delivery through a commercial courier service, or by
registered or certified mail, return receipt requested. Notices shall be
addressed to each party at its address set forth below, or such other address as
the recipient may have specified by earlier notice to the sender:
If to State Street:LaFayette Corporate Center
0 Xxxxxx xx XxXxxxxxx, 0 Xxxxx
Xxxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: State Street Bank and Trust Company
0 Xxxxxx xx XxXxxxxxx, 0xx Xxxxx
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
ATTN: Xxxx Xxxxx Zeven, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Trust: 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
ATTN: Xxxxxxx X. Xxxxx, Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
XI. CONFIDENTIALITY
State Street agrees that, except as otherwise required by law or in connection
with any required disclosure to a banking or other regulatory authority, it will
keep confidential all records and information in its possession relating to the
Trust or its beneficiaries and will not disclose the same to any person except
at the request or with the written consent of the Trust.
XII. LIMITATION of LIABILITY and INDEMNIFICATION
State Street shall be held to a standard of reasonable care in carrying out its
duties under this Agreement. State Street shall be responsible for the
performance of only such duties as are set forth in this Agreement and, except
as otherwise provided under Section XVI, shall have no responsibility for the
actions or activities of any other party, including other service providers.
State Street shall have no liability for any error of judgment or mistake of law
or for any loss or damage resulting from the performance or nonperformance of
its duties hereunder unless caused by or resulting from the negligence, reckless
misconduct, willful malfeasance or lack of good faith of State Street, its
officers or employees and, in such event, such liability will be subject to the
limitations set forth in Section XIII herein. STATE STREET SHALL NOT BE LIABLE
FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) IN ANY WAY DUE TO
THE TRUST'S USE OF THE SERVICES DESCRIBED HEREIN OR THE PERFORMANCE OF OR
FAILURE TO PERFORM STATE STREET'S OBLIGATIONS UNDER THIS AGREEMENT. This
disclaimer applies without limitation to claims regardless of the form of
action, whether in contract (including negligence), strict liability, or
otherwise and regardless of whether such damages are foreseeable.
The Trust will indemnify and hold harmless State Street and its stockholders,
directors, officers, employees, agents, and representatives (collectively, the
"Trust Indemnified Persons") for, and will pay to the Trust Indemnified Persons
the amount of, any actual and direct damages, whether or not involving a third-
party claim (collectively, the "Damages"), arising from or in connection with
(i) any act or omission by State Street (or any of its affiliates) pursuant to
this Agreement which does not constitute negligence, reckless misconduct,
willful malfeasance or lack of good faith in fulfilling the terms and
obligations of this Agreement, (ii) any act or omission by the Trust (or any of
its affiliates) which constitutes a breach of any representation, warranty,
term, or obligation contained in this Agreement, or (iii) any act or omission by
the Trust (or any of its affiliates) which constitutes negligence, reckless
misconduct, willful malfeasance, or lack of good faith in fulfilling the terms
and obligations of this Agreement. The remedies provided in this paragraph are
not exclusive of or limit any other remedies that may be available to State
Street or any other Trust Indemnified Person.
State Street will indemnify and hold harmless the Trust, and its respective
shareholders, trustees, directors, officers, agents, and representatives
(collectively, the "State Street Indemnified Persons") for, and will pay to the
State Street Indemnified Persons the amount of, any Damages, arising from or in
connection with (i) any act or omission by State Street (or any of its
affiliates) which constitutes a breach of any representation, warranty, term, or
obligation contained in this Agreement or (ii) any act or omission by State
Street (or any of its affiliates) which constitutes negligence, reckless
misconduct, willful malfeasance, or lack of good faith in fulfilling the terms
and obligations of this Agreement; provided, however, that State Street shall
not be required to provide indemnification for damages arising from errors
caused by inaccurate prices received from independent pricing services and
reasonably relied upon by State Street. In the event that State Street is
required to provide indemnification under this Section XII, its liability shall
be limited as described under Section XIII below. The remedies provided in this
paragraph are not exclusive of or limit any other remedies that may be available
to the Trust or any other State Street Indemnified Person.
The indemnification and limitation of liability contained herein shall survive
the termination of this Agreement.
XIII. EXCLUSIVE REMEDY
State Street's total cumulative liability under this Agreement for all of the
Trusts in the aggregate during any calendar year shall be limited to actual or
direct damage up to the aggregate amount of two (2) times the fees earned by
State Street under Section XVI hereunder during the calendar year (or annualized
period) preceding the event giving rise to liability.
XIV. SERVICES NOT EXCLUSIVE
The services of State Street to the Trust are not to be deemed exclusive and
State Street shall be free to render similar services to others. State Street
shall be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Trust from time to time, have no
authority to act or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
XV. TERM; TERMINATION; AMENDMENT
A. Term. This Agreement shall become effective on the date first written
above and shall remain in full force and effect for a period of four (4) years
from the effective date (the "Initial Term") and shall automatically continue in
full force and effect after such Initial Term unless either party terminates
this Agreement by written notice to the other party at least six (6) months
prior to the expiration of the Initial Term. During the Initial Term and upon
reasonable prior notice to State Street and or the circumstances, the Treasurer
of the funds may, at any time, and from time to time, as approved by the Board,
remove funds from the list of funds on Exhibit A for purposes of selecting
another service provider; provided, however, that the number of funds so removed
within any calendar year shall not exceed five (5). Additionally, if State
Street (or any of its affiliates) engages in (i) any act or omission which
constitutes a breach of any representation, warranty, term, or obligation
contained in this Agreement or (ii) any act or omission which constitutes
negligence, reckless misconduct, willful malfeasance, or lack of good faith in
fulfilling the terms and obligations of this Agreement, then each Trust or
series thereof, shall have the right to immediately terminate this Agreement.
B. Termination. Either party may terminate this Agreement at any time
after the Initial Term upon at least six (6) months' prior written notice to the
other party. Termination of this Agreement with respect to any given Portfolio
shall in no way affect the continued validity of this Agreement with respect to
any other Portfolio. Upon termination of this Agreement, the Trust shall pay to
State Street such compensation and any reimbursable expenses as may be due under
the terms hereof as of the date of such termination, including reasonable out-
of-pocket expenses associated with such termination.
C. Amendment. This Agreement may be modified or amended from time to time
by the mutual agreement of the parties hereto. No amendment to this Agreement
shall be effective unless it is in writing and signed by a duly authorized
representative of each party. The term "Agreement", as used herein, includes all
schedules and attachments hereto and any future written amendments,
modifications, or supplements made in accordance herewith.
XVI. FEES, EXPENSES and EXPENSE REIMBURSEMENT
State Street shall receive from the Trust such compensation for its services
provided pursuant to this Agreement as may be agreed to from time to time as set
forth in the Financial Administration and Accounting Services Fee Schedule
between the parties (the "Fee Schedule"), attached as Schedule 1, approved by
the parties. In the event of substantial change in the mix of types of
Portfolios or in the event of new types of Portfolios offered by the Trust or
modifications or changes to the service delivery requirements, the parties shall
review the existing fee structure and an appropriate adjustment to the fee, if
any, shall be negotiated by the parties within ninety (90) days. The fees are
accrued daily and billed monthly and shall be due and payable upon receipt of
the invoice. Upon the termination of this Agreement before the end of any
month, the fee for the part of the month before such termination shall be
prorated according to the proportion which such part bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. In
addition, the Trust shall reimburse State Street for its out-of-pocket costs and
expenses incurred in connection with this Agreement with respect to reasonable
attorney's fees incurred by State Street to collect any charges due under this
Agreement.
The Trust agrees to promptly reimburse State Street for any equipment and
supplies specially ordered by or for the Trust (with the Trust's consent)
through State Street and for any other expenses not contemplated by this
Agreement that State Street may incur on the Trust's behalf at the Trust's
request and with the Trust's consent.
Each party will bear all expenses that are incurred in its operation and not
specifically assumed by the other party. Expenses to be borne by the Trust
include, but are not limited to: Organization expenses; cost of services of
independent accountants and outside legal and tax counsel (including such
counsel's review of the Trust's registration statement, proxy materials, federal
and state tax qualification as a regulated investment company and other reports
and materials prepared by State Street under this Agreement); cost of any
services contracted for by the Trust directly from parties other than State
Street; cost of trading operations and brokerage fees, commissions and transfer
taxes in connection with the purchase and sale of securities for the Trust;
investment advisory fees; taxes, insurance premiums and other fees and expenses
applicable to its operation; costs incidental to any meetings of shareholders
including, but not limited to, legal and accounting fees, proxy filing fees and
the costs of preparation, printing and mailing of any proxy materials; costs
incidental to Board meetings, including fees and expenses of Board members; the
salary and expenses of any officer, director/trustee or employee of the Trust;
costs incidental to the preparation, printing and distribution of the Trust's
registration statements and any amendments thereto and shareholder reports; cost
of typesetting and printing of prospectuses; cost of preparation and filing of
the Trust's tax returns, Form N-1A or N-2, Form N-14, Form N-Q and Form N-SAR,
and all notices, registrations and amendments associated with applicable federal
and state tax and securities laws; fidelity bond and directors' and officers'
liability insurance; and cost of independent pricing services used in computing
the Trust's NAV.
State Street is authorized to and may employ or associate with such person or
persons as it may deem desirable to assist it in performing its duties under
this Agreement; provided, however, that the compensation of such person or
persons shall be paid by State Street and State Street shall be as fully
responsible to the Trust for the acts and omissions of any such person or
persons as it is for its own acts and omissions.
XVII. ASSIGNMENT; SUCCESSOR AGENT
A. Assignment. This Agreement shall not be assigned by either party
without the prior written consent of the other party, except that either party
may assign to a successor all of or a substantial portion of its business, or to
a party controlling, controlled by, or under common control with such party.
B. Successor Agent. This Agreement shall be binding on and shall inure to
the benefit of each party and to their successors and permitted assigns. If a
successor agent for the Trust shall be appointed by the Trust, State Street
shall upon termination deliver to such successor agent all properties of the
Trust held by it hereunder.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to State Street on or before the date
when such termination shall become effective, then State Street 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
$100,000,000, all properties held by State Street under this Agreement.
Thereafter, such bank or trust company shall be the successor of State Street
under this Agreement.
XVIII.ENTIRE AGREEMENT
This Agreement (including all schedules and attachments hereto) constitutes the
entire Agreement between the parties with respect to the subject matter hereof
and terminates and supersedes all prior agreements, representations, warranties,
commitments, statements, negotiations and undertakings with respect to such
services to be performed hereunder whether oral or in writing.
XIX. WAIVER
The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver nor shall it deprive
such party of the right thereafter to insist upon strict adherence to that term
or any term of this Agreement. Any waiver must be in writing signed by the
waiving party.
XX. HEADINGS NOT CONTROLLING
Headings used in this Agreement are for reference purposes only and shall not be
deemed a part of this Agreement.
XXI. SURVIVAL
After expiration or termination of this Agreement, all provisions relating to
payment (Section XVI and the Fee Schedule) shall survive until completion of
required payments. In addition, all provisions regarding termination (Section
XV), indemnification, warranty, liability and limits thereon (Section XII and
Section XIII) shall survive, unless and until the expiration of any time period
specified elsewhere in this Agreement with respect to the provision in question.
XXII. SEVERABILITY
In the event any provision of this Agreement is held illegal, invalid, void or
unenforceable, the balance shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
XXIII.GOVERNING LAW; JURISDICTION
This Agreement shall be deemed to have been made in The Commonwealth of
Massachusetts and shall be governed by and construed under and in accordance
with the laws of The Commonwealth of Massachusetts without giving effect to its
conflict of laws principles and rules. The parties agree that any dispute
arising herefrom shall be subject to the exclusive jurisdiction of courts
sitting in The Commonwealth of Massachusetts.
XXIV. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments hereto
may be reproduced by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process. The parties hereto each agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
4
XXV. REMOTE ACCESS SERVICES ADDENDUM
State Street and the Trust agree to be bound by the terms of the Remote Access
Services Addendum attached hereto as Exhibit E.
XXVI. MISCELLANEOUS
The execution and delivery of this Agreement have been authorized by the Board
of the Trust and signed by an authorized officer of the Trust, acting as such,
and neither such authorization by the Board 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 any member of the Board or shareholders of the
Trust, but bind only the property of the Trust, or Portfolio, as provided in the
organizational documents.
Each party agrees to promptly sign all documents and take any additional
actions reasonably requested by the other to accomplish the purposes of this
Agreement.
[Remainder of Page Intentionally Blank]
5
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Date: December 29, 2006
INVESTMENT COMPANIES
(Listed on Exhibit A hereto)
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Treasurer
Date: December 28, 2006
6
EXHIBIT A
TO THE FINANCIAL ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
(REVISED AS OF 6/1/07)
FEDERATED WORLD INVESTMENT SERIES, INC.:*
Federated International Capital Appreciation Fund
Federated International High Income Fund
Federated International Small Company Fund
Federated International Value Fund
EXHIBIT B
To: State Street Bank and Trust Company
From: Federated Investors, Inc.
Client Name: Federated Investors, Inc.
Client Address:Federated Investors Tower
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Date: January 1, 2007
Re: PRICE SOURCE AUTHORIZATION
Reference is made to the Financial Administration and Accounting Services
Agreement dated January 1, 2007 between the registered investment companies, or
series thereof, listed on Exhibit A to the Financial Administration and
Accounting Services Agreement (each, a "Trust") and State Street Bank and Trust
Company ("State Street"). Capitalized terms used in this Price Source
Authorization or in any attachment or supplement shall have the meanings
provided in the Financial Administration and Accounting Services Agreement
unless otherwise specified. Pursuant to the Financial Administration and
Accounting Services Agreement, the Trust hereby directs State Street to
calculate the net asset value ("NAV") of the Trust or, if applicable, its
Series, in accordance with the terms of each Trusts' or Series' currently
effective Prospectus. State Street will perform the NAV calculation subject to
the terms and conditions of the Financial Administration and Accounting Services
Agreement and this Authorization.
The Trust hereby authorizes State Street to use the pricing sources specified on
the attached Authorization Matrix (as amended from time to time) as sources for
prices of assets in calculating the net asset value of the Trust. The Trust
understands that State Street does not assume responsibility for the accuracy of
the quotations provided by the specified pricing sources and that State Street
shall have no liability for any incorrect data provided by the pricing sources
specified by the Trust, except as provided under the Financial Administration
and Accounting Services Agreement (including agreed upon tolerance checks as to
the data furnished and calculating the net asset value of the Trust in
accordance with the data furnished to State Street). The Trust also
acknowledges that prices supplied by the Funds or an affiliate may be subject to
approval of the Trust's Board and are not the responsibility of State Street.
The Trust agrees to indemnify and hold State Street harmless as provided under
the Financial Administration and Accounting Services Agreement.
State Street agrees that written notice of any change in the name of any
specified pricing source will be sent to the Trust as such information is
available to State Street.
Kindly acknowledge your acceptance of the terms of this letter in the space
provided below.
(CLIENT/FUND NAME)
By: /s/ Xxxxxxx X. Xxxxx The foregoing terms are hereby accepted.
Title: -Treasurer, Federated Funds STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxx X'Xxxxxxx
Title: Vice President
AUTHORIZATION MATRIX
AUTHORIZATION MATRIX TO BE ATTACHED TO PRICE SOURCE AUTHORIZATION DATED
_1/1/2007__
CLIENT: _FEDERATED INVESTORS __EFFECTIVE DATE: January
01, 2007(supersedes prior Authorization Matrices)
Security Type PRIMARY SECONDARY SOURCE TERTIARY PRICING PRICING VALUATION
SOURCE SOURCE LOGIC DEFAULT POINT
LOGIC
EQUITIES
U.S. LISTED EQUITIES (NYSE, AMEX) REUTERS THOMSON/ILX FT LAST MEAN MARKET
Interactive CLOSE
Data
U.S. OTC EQUITIES REUTERS THOMSON/ILX FT NOCP MEAN MARKET
(NASDAQ) Interactive CLOSE
Data
FOREIGN EQUITIES REUTERS THOMSON/ILX FT LAST MEAN MARKET
Interactive CLOSE
Data
LISTED ADR'S REUTERS THOMSON/ILX FT LAST MEAN MARKET
Interactive CLOSE
Data
FIXED INCOME
MUNICIPAL BONDS Standard & FT Interactive Data BLOOMBERG BID EVALUATED
Poor's 4:00 pm*
4:00 pm*
MORTGAGE BACKED BEAR XXXXXXX REUTERS FT / Based on EVALUATED
4:00 pm* 4:00 pm* BLOOMBERG Cash
Flows
TREASURIES BEAR XXXXXXX REUTERS FT / BID side EVALUATED
4:00 pm* 4:00 pm* BLOOMBERG quote
ABS, HIGH GRADE CORPORATES, CONVERTIBLE BONDS, YANKEE / REUTERS FT Interactive Data BLOOMBERG MEAN EVALUATED
XXXXX XXXXX 4:00 pm* 3:00 pm*
HIGH YIELD CORPORATES (BBB- OR BELOW, INCLUDES NA, NR, FT REUTERS BLOOMBERG MEAN EVALUATED
ETC.) Interactive 4:00 pm*
Data
3:00 pm*
EUROBONDS/FOREIGN BONDS FT FRI CORP BLOOMBERG LAST BID
Interactive
Data
OTHER ASSETS
OPTIONS REUTERS BLOOMBERG MEAN LAST MARKET
CLOSE
FUTURES REUTERS BLOOMBERG SETTLEMENT
NON - LISTED ADR'S FT BLOOMBERG LAST MEAN
Interactive
Data
CREDIT DEFAULT SWAPS BEAR XXXXXXX Mid EVALUATED
4:00 pm* Level
Quote
MUTUAL FUNDS Accounting BLOOMBERG MARKET
Agent CLOSE
EXCHANGE RATES
World BLOOMBERG SNAPSHOT 4:00PM
Markets
Money Market Pricing
FT REUTERS BLOOMBERG
Interactive
Data
AUTHORIZATION MATRIX
* TIMES FOR DOMESTIC BOND FEEDS ARE SUPPLIED BY THE INDIVIDUAL VENDORS TO
INDICATE THE TIMING OF THEIR EVALUATION
PRICE SOURCE AND METHODOLOGY AUTHORIZATION
INSTRUCTIONS: FOR EACH SECURITY TYPE ALLOWED BY THE TRUST'S PROSPECTUS, PLEASE
INDICATE THE PRIMARY, SECONDARY AND TERTIARY SOURCE TO BE USED IN CALCULATING
NET ASSET VALUE FOR THE TRUST IDENTIFIED. NOTE: IF INVESTMENT MANAGER IS A
PRICING SOURCE, PLEASE SPECIFY EXPLICITLY.
STATE STREET PERFORMS A DATA QUALITY REVIEW PROCESS AS SPECIFIED IN THE SOURCES
STATUS PRICING MATRIX ON THE NAVIGATOR PRICING SYSTEM WHICH SPECIFIES PRICING
TOLERANCE THRESHOLDS, INDEX AND PRICE AGING DETAILS. THE SOURCES STATUS PRICING
MATRIX WILL BE PROVIDED FOR YOUR INFORMATION AND REVIEW.
AUTHORIZED BY: /S/ XXXXXXX X. XXXXX 12/28/06ACCEPTED: /S/ XXXXXXX X. XXXXXXX
12/29/06_________
TRUST OFFICER STATE STREET VICE
PRESIDENT
AUTHORIZATION MATRIX
EXPLANATION OF FIELDS
Client: Indicate the name of the Client and the Trust name or if multiple trusts, attach a list of trust names
Primary Indicate the primary source for prices for the security type. If an Investment Manager is a pricing source, please
Source: specify explicitly.
Secondary Indicate the secondary source for prices for the security type. If an Investment Manager is a pricing source, please
Source: specify explicitly.
Tertiary Indicate the tertiary (3rd level) source for prices for the security type. If an Investment Manager is a pricing
Source: source, please specify explicitly.
Pricing Indicate the price type to be referenced for the security type: Ask, Bid, Close, Evaluated, Last, Official Close etc.-
Logic: Please note that the closing price reported by an exchange (which may sometimes be referred to by the exchange or one or
more pricing agents as the "official close", the "official closing price" or other similar term) will be taken to be the
"most recent sale price" for purposes of this section. In these instances, it is believed to be representative of the
value at the close of the exchange.
Pricing Indicate the price type to be referenced for the security type: Ask, Bid, Close, Evaluated, Last, etc. in the instance
Default where the preferred price
Logic: type is not available.
Valuation That point in time where the market inputs needed for the applicable valuation process/model are taken from market
Point: sources (trading market
or counterparty)
Authorized Provide the signature of the person authorizing the completion of the Price Source Authorization
By:
Date: Indicate the date the Price Source Authorization was completed
AUTHORIZATION MATRIX
EXHIBIT C
FAIR VALUE PRICING AUTHORIZATION
AUTHORIZATION MATRIX
To: State Street Bank and Trust Company
From: Federated Investors, Inc.
Client Name: Federated Investors, Inc.
Client Address: Federated Investors Tower
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX. 00000-0000
Date: January 1, 2007
Re: FAIR VALUE PRICING AUTHORIZATION
Reference is made to the Financial Administration and Accounting Services
Agreement dated January 1, 2007 between the Trust and State Street Bank and
Trust Company ("State Street"). Capitalized terms used in this Fair Value
Pricing Authorization or in any attachment or supplement shall have the meanings
provided in the Financial Administration and Accounting Services Agreement
unless otherwise specified. Pursuant to the Financial Administration and
Accounting Services Agreement, the Fund hereby directs State Street to calculate
the net asset value ("NAV") of the Trust or, if applicable, its Series, in
accordance with the terms of the Trusts' or Series' currently effective
Prospectus or other governing documents. State Street will perform the NAV
calculation subject to the terms and conditions of the Financial Administration
and Accounting Services Agreement, Price Source Authorization, and this
Authorization.
The Trust hereby authorizes State Street to use the Fair Value pricing source
specified on the attached Fair Value Pricing Authorization Form to obtain
adjustment factors to be applied to the closing prices of the securities of the
Trust or the Series to calculate a fair-value-adjusted market value to be used
in the calculation of the net asset value of the Trust or its Series. The Trust
understands that State Street does not assume responsibility for the accuracy of
the adjustment factors or other fair value pricing information provided by the
specified fair value vendor and that State Street shall have no liability for
any incorrect data provided by said vendor specified by the Trust, except as may
arise from State Street's lack of reasonable care in applying any adjustment
factors to the closing prices of the Trusts' or Series' securities and/or (if
applicable) calculating the fair value adjusted net asset value of the Trust or
Series in accordance with the data furnished to State Street.
The Trust agrees to indemnify and hold State Street harmless from any claim,
loss or damage arising as a result of using Fair Value adjustment factors or
prices furnished by any specified Fair Value pricing source.
The Trust agrees to notify State Street promptly in writing if the fair value
pricing procedures authorized by the Trust's Board have been changed.
Kindly acknowledge your acceptance of the terms of this letter in the space
provided below.
By: /s/ Xxxxxxx X. Xxxxx The foregoing terms are hereby accepted.
[Authorized Officer of the Trust]
Title: Treasurer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxx X'Xxxxxxx
Vice President
FUND ENTITY NAME: FEDERATED INVESTORS_____________
EFFECTIVE DATE: __1-1-2007____
FAIR VALUE PRICING SOURCE: ITG
MARKET TRIGGER(S) WITH TIMING
1) THE FIRST TRIGGER INCORPORATES 2 NIKKEI 225 FUTURES CONTRACTS *
a) NIA Index (Most recent contract trading in Singapore)
b) NXA Index (Most recent contract trading in Chicago)
TIMING: NIA Index at 1AM EST/2AM EDT - NXA Index at 4PM EST/EDT
* THE FOLLOWING CHART DETAILS THE APPROPRIATE TRIGGERS IN THE EVENT THAT
ONE OR MORE OF THE ABOVE MARKETS IS CLOSED.
JAPANESE SINGAPORE (NIA INDEX) / CHICAGO (NXA INDEX)
STOCK
MARKET
Open / Open Open / Closed Closed / Closed / Closed
Open
NIA/NXA (from 1-2AM to GLOBEX S&P 500 (from Japanese close to 4PM) NXA GLOBEX S&P 500 (from Japanese close to 4PM)
Open 4PM); 1-2AM depending - Symbol SPA Index or ESA Index (from - Symbol SPA Index or ESA Index
on Japanese close 4AM to
4PM)
NXA (from prior day's GLOBEX S&P 500 (from prior day's 4PM to NXA GLOBEX S&P 500 (from prior day's 4PM to
Closed 4PM to current 4PM) current 4PM) - Symbol SPA Index or ESA Index (from current 4PM) - Symbol SPA Index or ESA Index
prior
day's
4PM to
current
4PM)
1) THE SECOND TRIGGER IS BASED ON THE S&P 500
a) S&P 500 (SPX Index)
TIMING: 11:30AM EST/EDT - 4:05PM EST/EDT
Note: GMT may change to and from DST on a different schedule than the U.S.
Special attention must be made to know when changes to DST occur to ensure the
prices are determined at the correct time.
THRESHOLD TO REQUEST CLIENT DETERMINATION TO INVOKE FAIR VALUE** (+ or -):
0.5 % or greater in either trigger
** THE FINAL DETERMINATION TO INVOKE FAIR VALUE IS MADE BY FEDERATED'S GLOBAL
EQUITY TRADERS AT THE TIME OF NOTIFICATION (4:15PM) BY STATE STREET THAT EITHER
OF THE TWO TRIGGERS HAVE BEEN ACHIEVED.
Authorized By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Treasurer
Officer of the Trust
Date: 12/28/06
Accepted By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Vice President
State Street Bank and Trust Company
Date: 12/29/06
Fund Entity Indicate trust name or if multiple trusts or series of a trust, attach a complete list
Name
Effective Date the trusts are to begin using Fair Value Pricing Source at SSC
Date
Fair Value Name of Fair Value Pricing Source to be used
Pricing
Source
Market Name of Trigger used to determine when to invoke Fair Value Pricing procedures, i.e., S&P 500, Nikkei
Trigger(s)
Timing of A specific time at which the Trigger determines Fair Value Pricing procedures should be initiated, i.e., Japan close to
Trigger(s) 4 PM EST (Nikkei Futures), 4 PM EST prior day to 4 PM EST current day (S&P500)
Threshold Minimum percentage of movement of designated Trigger to determine that a request for authorization should occur to
to Invoke invoke Fair Value.
Fair Value
Authorized Provide signature of the Trust Officer authorizing the completion of the Fair Value Pricing Authorization Form
By
Accepted By Provide signature of a Vice President from State Street Fund Group accepting the completion of the Fair Value Pricing
Authorization Form
EXHIBIT D
COMPLIANCE PROCEDURES EXHIBIT
COMPLIANCE PROCEDURES
1940 ACT PREFERRED SHARES ASSET COVERAGE
SECTION 18(H) OF THE INVESTMENT COMPANY ACT OF 1940
"Asset coverage" of a class of senior security of an issuer which is a stock
means the ratio which the value of the total assets of such issuer, less all
liabilities and indebtedness not represented by senior securities, bears to the
aggregate amount of senior securities representing indebtedness of such issuer
plus the aggregate of the involuntary liquidation preference of such class of
senior security which is a stock. The involuntary liquidation preference of a
class of senior security which is a stock shall be deemed to mean the amount to
which such class of senior security would be entitled on involuntary liquidation
of the issuer in preference to a security junior to it.
FREQUENCY: MONTHLY, as of the last business day of each month
CALCULATION:Determine whether the Asset Coverage is at least 200%
Total fund net assets
+ accrued unpaid dividends on pfd shs {divide} Value of senior securities representing indebtedness
+ + + liquidation preference on pfd shares
+ liquidation preference on pfd shs
+ value of senior securities representing indebtedness + accrued unpaid dividends on pfd shs
= Asset Coverage Percentage
> or = 200% = Fund Passes Test
< 200% = Fund Fails Test
TOLERANCE:
State Street Fund Administration (SSFA) will complete the test on a monthly
basis and report the results of the test to Federated Investors Inc. Once SSFA
has notified Federated of the test results, Federated may impose certain
restrictions on trading.
CURE PERIOD:
Should the Fund fail to maintain the 1940 Act Preferred Shares Asset Coverage as
of a given Valuation Date (the last business day of each month), the cure date
is as of the LAST business day of the month following such Valuation Date.
PREFERRED SHARES BASIC MAINTENANCE AMOUNT:
FREQUENCY: MONTHLY
REPORTING DEADLINES:As of the Closing Time (February 18, 2003), on a pro forma
basis assuming the receipt of the net proceeds from the sale
of the AMPS and using portfolio holdings and valuations as of
the close of business on any day not more than six business
days prior to the Closing Time (provided that the total net
assets of the Fund as of the Closing Time have not declined by
more than 5% or more from such valuation date). [Note:
Compliance as of the Closing Time (using portfolio holdings
and valuations as of the Closing Time) with the Investment
Company Act Preferred Shares Asset Coverage is also required.
On the first business day after the date of original issue
(i.e., February 18, 2003) of the preferred shares (by 5 pm
ET); as of the close of business on original issue date
On the seventh business day after each monthly Valuation Date
(by 5 pm ET), as of the Valuation Date
In instances of failure to satisfy Preferred Shares Basic
Maintenance Amount as of any Valuation Date, on the seventh
business day after the Preferred Shares Basic Maintenance Cure
Date (Deadline = the 14th business day after the failure
Valuation Date) (by 5 pm ET), as of the Preferred Shares Basic
Maintenance Cure Date
On the seventh business day after the Fund has redeemed Common
Shares (by 5 pm ET)
On the seventh business day after the ratio of the Discounted
Value of (Fitch or Xxxxx'x) Eligible Assets to the Preferred
Shares Basic Maintenance Amount as of any monthly Valuation
Date is less than or equal to 105% (by 5 pm ET) [Note: This
adds nothing to the existing requirement to furnish a report
as of each Valuation Date].
On the seventh business day after a request by Moody's or
Fitch (by 5pm ET), as of the date of such request
On the second business day prior to the first day of a Special
Rate Period (by 11 am ET), as of the third business day prior
to the first day of the Special Rate Period and assuming for
purposes of the calculation that (a) the Maximum Rate is the
Maximum Rate on such third business day as if such day were
the Auction date for the proposed Special Rate Period and (b)
the Moody's and Fitch Discount Factors are determined by
reference to an Exposure Period of 8 weeks.
CURE PERIOD:
Should the Fund fail to satisfy the Preferred Shares Basic Maintenance Amount as
of a given Valuation Date (the last business day of each month), the cure date
is as of the SEVENTH business day following such Valuation Date.
CALCULATION:
To ensure that the eligible assets (assets discounted based upon Fitch's and
Moody's ratings, as described below) of the Fund are greater than the Fund's
basic maintenance amount (as described below). If the eligible assets are less
than the basic maintenance amount, the Fund fails the test.
BASIC MAINTENANCE AMOUNT (BMA):
The Fund's basic maintenance amount is the sum of the following:
BMA Component Calculation
1. Sum of:
a.LIQUIDATION VALUE OF THE OUTSTANDING SHARES OF PREFERRED STOCK Number of
The product of the number of Preferred Shares outstanding on the Valuation Date multiplied by the liquidation preferred
price of $25,000 (plus the product of the number of shares of any other series of preferred shares outstanding shares
on such date multiplied by the liquidation preference of such shares) plus any redemption premium applicable outstanding *
to Preferred Shares (or other preferred shares) then subject to redemption liquidation
price of
preferred
shares
FEDERATED TO
INFORM SSFA OF
ANY INSTANCE OF
A REDEMPTION
PREMIUM.
b. CURRENT PERIOD DIVIDEND EXPOSURE For each series
The aggregate amount of dividends that will have accumulated at the respective Applicable Rates (whether or not of preferred
earned or declared) to (but not including) the first respective Dividend Payment Dates for Preferred Shares shares:
outstanding that follows such Valuation Date (plus the aggregate amount of dividends, whether or not earned Number of
or declared, that will have accumulated in respect of other outstanding preferred shares to, but not preferred
including, the first respective dividend payment dates for such other shares that follow such Valuation Date) shares
outstanding *
$25,000 *
Auction rate *
(# of days in
dividend period
/ 365 [if
dividend period
= 7 days or 360
[for all other
dividend
periods])
c.PROJECTED DIVIDEND AMOUNT For each series
The aggregate amount of dividends that would accumulate on shares of each series of Preferred Shares of preferred
shares:
# of preferred
shares
outstanding *
$25,000 *
Maximum Rate*
Volatility
Factor
* # of days
from first
Dividend
Payment Date
following
Valuation Date
through the
49th day after
Valuation Date
365 [if
dividend period
= 7 days] or
360 [for all
other dividend
periods]
outstanding from such first respective Dividend Payment Date therefore through the 49th day after such Maximum rate=
Valuation Date, RATE MULTIPLE
(1.10 if
prevailing
rating is Aa3
or higher for
Xxxxx'x, and
AA- or higher
for Fitch)
MULTIPLIED BY
(A) THE "AA"
FINANCIAL
COMPOSITE
COMMERCIAL
PAPER RATE (in
the case of
Minimum Rate
Periods and
Special Rate
Periods of
fewer than 183
Rate Period
Days) OR (B)
THE TREASURY
XXXX RATE in
the case of
Special Rate
Periods of more
than 182 Rate
Period Days but
fewer than 365
Rate Period
Days.
at the Maximum Rate (calculated as if such Valuation Date were the Auction Date for the Rate Period commencing FEDERATED TO
on such Dividend Payment Date) NOTIFY SSFA IN
CASE OF :
* SPECIAL RATE
PERIOD
* CREDIT
RATING FOR
PREFERRED
SHARES FALLS
BELOW AA3
FOR XXXXX'X
OR AA- FOR
FITCH
* IF A FAILURE
TO DEPOSIT
OCCURS
* IF ALL
OUTSTANDING
SHARES ARE
SUBJECT TO
SUBMITTED
HOLD ORDERS
for a Minimum Rate Period of shares of such series to commence on such Dividend Payment Date,
assuming, solely for purposes of the foregoing, that if on such Valuation Date the Fund shall have delivered a
Notice of Special Rate Period to the Auction Agent with respect to shares of such series, such Maximum Rate
shall be the HIGHER OF
i.the Maximum Rate for the Special Rate Period of shares of such series to commence on such Dividend Payment
Date AND
ii.the Maximum Rate for a Minimum Rate Period of shares of such series to commence on such Dividend Payment
Date, multiplied by the greater of
iii. the Xxxxx'x Volatility Factor (if Xxxxx'x is then rating the Preferred Shares) and SSFA WILL USE A
VOLATILITY RATE
OF 2.75 FOR
CONSERVATISM.
iv. the Fitch Volatility Factor (if Fitch is then rating the Preferred Shares) applicable to a Minimum Rate
Period, OR,
in the event the Fund shall have delivered a Notice of Special Rate Period to the Auction Agent with respect
to such shares of such series designating a Special Rate Period consisting of 56 Rate Period Days or more the
greater of
v.the Xxxxx'x Volatility Factor and
vi. Fitch Volatility Factor
applicable to a Special Rate Period of that length
(plus the aggregate amount of dividends that would accumulate at the maximum dividend rate or rates on any
other preferred stock outstanding from such respective dividend payment dates through the 56th day after such
Valuation Date, as established by or pursuant to the respective statements supplementary establishing and
fixing the rights and preferences of such other preferred shares), (except that
if such Valuation Date occurs at a time when a Failure to Deposit (or, in the case of preferred stock other
than Preferred Shares, a failure similar to a Failure to Deposit) has occurred that has not been cured, the
dividend for purposes of calculation would accumulate at the current dividend rate then applicable to the
shares in respect of which such failure has occurred AND
for those days during the period described in this subparagraph (C) in respect of which the Applicable Rate in
effect immediately prior to such Dividend Payment Date will remain in effect (or, in the case of preferred
shares other than Preferred Shares, in respect of which the dividend rate or rates in effect immediately prior
to such respective dividend payment dates will remain in effect), the dividend for purposes of calculation
would accumulate at such Applicable Rate (or other rate or rates, as the case may be) in respect of those
days)
d. THE AMOUNT OF ANTICIPATED EXPENSES OF THE FUND FOR THE 90 DAYS SUBSEQUENT TO SUCH VALUATION DATE. Current daily
expense accrual
* 90 days
e. THE AMOUNT OF THE FUND'S MAXIMUM POTENTIAL GROSS-UP PAYMENT LIABILITY FEDERATED TO
in respect of Preferred Shares (and similar amounts payable in respect of other preferred shares, as of such INFORM SSFA IF
Valuation Date. SUCH SITUATION
MAXIMUM POTENTIAL GROSS-UP PAYMENT LIABILITY as of any Valuation Date, shall mean the aggregate amount of EXISTS.
Gross-up Payments that would be due if the Fund were to make Taxable Allocations, with respect to any taxable Estimated
year, estimated based upon dividends paid and the amount of undistributed realized net capital gains and other taxable
taxable income earned by the Fund, as of the end of the calendar month immediately preceding such Valuation distribution
Date, and assuming such Gross-up Payments are fully taxable. (capital gain +
taxable income)
to preferred
shares * 38.6%
federal tax.
f. THE AMOUNT OF ANY INDEBTEDNESS OR OBLIGATIONS OF THE FUND SENIOR IN RIGHT OF PAYMENT TO THE PREFERRED FEDERATED TO
SHARES; and INFORM SSFA IF
SUCH SITUATION
EXISTS.
g. ANY CURRENT LIABILITIES as of such Valuation Date to the extent not reflected in any of 1a through 1f Liabilities
(including, without limitation, any payables for Municipal Obligations purchased as of such Valuation Date and from the trial
any liabilities incurred for the purpose of clearing securities transactions) balance.
2. LESS: Less:
the face value of The value of
(i.e., for purposes of current Moody's guidelines, any of the
x.xxxx, Fund's assets
b. short-term Municipal Obligations rated XXX-0, XXXX-0 xx X-0, and irrevocably
c.short-term securities that are the direct obligation of the U.S. government, provided in each case that such deposited by
securities mature on or prior to the date upon which any of 1a through 1g become payable, otherwise the the Fund for
Moody's Discounted Value) the payment of
of any of the Fund's assets irrevocably deposited by the Fund for the payment of any of 1a through 1g any of 1a
through 1g.
FITCH
FITCH ELIGIBLE
ASSETs:
Eligible Asset Calculation
Component
1. Cash, Cash per trial balance
2. Receivables for Receivable for Municipal Obligations Sold per trial balance. Ensure that the receivables are due to settle
Municipal within five business days of the Valuation Date.
Obligations Sold,
or
3. Unrealized Gain Unrealized Gain from Hedging Transactions' shall mean, as of any Valuation Date, (1) in the case of a swap
from Hedging contract (including total return swaps and interest rate swaps), the amount, if any, that the Fund would
Transactions receive if the swap contract were terminated as of the Valuation Date, (2) in the case of an interest rate
futures contract, the amount, if any, that the Fund would receive if it were to eliminate its open futures
position as of the Valuation Date by entering into an offsetting contract of the same specifications or (3) in
the case of an option on interest rate futures contracts, the Market Value thereof as of the Valuation Date.
For the purpose of determining the Discounted Value of any Unrealized Gain from Hedging Transactions,
(i) unrealized gain from a swap contract shall be treated in the same manner as a Municipal Obligation, except
that the issuer rating assigned to the swap counterparty shall be used, and (ii) unrealized gain from an
interest rate futures contract or an option on interest rate futures contracts shall be deemed to have a rating
of A by Fitch. The amount of any unrealized loss from hedging transactions as of any Valuation Date shall be
treated as a reduction to Fitch Eligible Assets.
4. Municipal
Obligation that
a. Pays interest FEDERATED TO INFORM SSFA IN ANY INSTANCE WHERE INTEREST IS NOT PAID IN CASH.
in cash,
b. Does not have FEDERATED TO INFORM SSFA IN ANY INSTANCE WHERE FITCH'S RATINGS HAVE BEEN SUSPENDED.
its Fitch
rating
suspended by
Fitch, and
c. Is part of an ISSUER SIZE FROM BLOOMBERG WILL BE USED TO DETERMINE ELIGIBILITY. SSFA TO PERFORM THE ANALYSIS BASED ON CUSIP
issue of AND NOTIFY FEDERATED OF ANY ISSUES BELOW $10,000,000. FEDERATED WILL DETERMINE AND COMMUNICATE TO SSFA WHETHER
Municipal OR NOT THE CUSIP IS PART OF AN OVERALL ISSUE OF AT LEAST $10,000,000.
Obligations of
at least
$10,000,000
For purposes of applying the following requirements for Single Issuer Concentration, State Concentration and applying the applicable
Fitch Discount Factor:
1. If a Municipal Obligation is not rated by Fitch but is rated by Moody's AND S&P, such Municipal Obligation (excluding short-
term Municipal Obligations) will be deemed to have the Fitch rating which is the LOWER of the Moody's and S&P rating.
2. If a Municipal Obligation is not rated by Fitch but is rated by Moody's OR S&P, such Municipal Obligation (excluding short-
term Municipal Obligations) will be deemed to have such rating.
SSFA WILL OBTAIN RATINGS FROM BLOOMBERG FOR NEW BUYS AND FOR THE ENTIRE PORTFOLIO MONTHLY.
A. SINGLE ISSUER
CONCENTRATION:
1. Municipal For purposes of identifying single issuers, the first six digits of the municipal security's cusip will be
Obligations considered the issuer identifier. It is possible that the six digit cusip may represent a conduit rather than
issued by any one the true issuer. Therefore, if any issuer exceeds the set limit, SSFA will research the true issuer on
issuer and rated Bloomberg and notify Federated.
BB or lower, or
not rated, may
comprise no more
than 4% of total
Fitch Eligible
Assets.
2. The total
amount identified
in item 1
(above), together
with any
Municipal
Obligations
issued by the
same issuer and
rated BBB by
Fitch may
comprise no more
than 6% of total
Fitch Eligible
Assets.
3. The total
amount identified
in item 2 (above)
together with any
Municipal
Obligations
issued by the
same issuer and
rated A by Fitch
may comprise no
more than 10% of
total Fitch
Eligible Assets.
4. The total
amount identified
in item 3 (above)
together with any
Municipal
Obligations
issued by the
same issuer and
rated AA by Fitch
may comprise no
more than 20% of
total Fitch
Eligible Assets.
For purposes of FOR PURPOSES OF THIS TEST, SSFA WILL ASSUME THAT THE RATING PROVIDED BY BLOOMBERG IS FOR THE OBLIGATION AND
the calculations BASED SOLELY ON THE UNDERLYING CREDIT ENHANCEMENT, UNLESS INFORMATION IS SUPPLIED BY FEDERATED.
in items 1 - 4
(above), any
Municipal
Obligation backed
by the guaranty,
letter of credit
or insurance
issued by a third
party shall be
deemed to be
issued by such
third party if
the issuance of
such third party
credit is the
sole determinant
of the rating on
such Municipal
Obligations; and
any Municipal
Obligation for
which the nominal
issuer is a
conduit for a
third party the
obligations of
which are the
sole source of
revenues for the
payment of such
Municipal
Obligation shall
be deemed to be
issued by such
third party.
B. STATE
CONCENTRATION:
1. Municipal
Obligations
issued by issuers
located within a
single state or
territory and
rated BB or lower
or not rated may
comprise no more
than 12% of total
Fitch Eligible
Assets.
2. The total
amount identified
in item 1
(above), together
with any
Municipal
Obligations
issued by issuers
located within
the same state or
territory and
rated BBB by
Fitch may
comprise no more
than 20% of total
Fitch Eligible
Assets.
3. The total
amount identified
in item 2 (above)
together with any
Municipal
Obligations
issued by issuers
located within
the same state or
territory and
rated A by Fitch
may comprise no
more than 40% of
total Fitch
Eligible Assets.
4. The total
amount identified
in item 3 (above)
together with any
Municipal
Obligations
issued by issuers
located within
the same state or
territory and
rated AA by Fitch
may comprise no
more than 60% of
total Fitch
Eligible Assets
For purposes of applying the foregoing requirements for Single Issuer Concentration and State Concentration:
1.Eligible Assets shall be calculated without including cash; and
2.Municipal Obligations rated F1 by Fitch or, if not rated by Fitch, rated XXX-0, XXXX-0 or P-1 by Moody's; or, if not rated by
Moody's, rated A-1+/AA or SP-1+/AA by S&P shall be considered to have a long-term rating of A.
ADJUSTMENTS TO
FITCH'S ELIGIBLE
ASSETS FOR
FUTURES, OPTIONS
AND FORWARD
COMMITMENTS:
1. For purposes
of determining
whether the Fund
has Fitch
Eligible Assets
with an aggregate
Discounted Value
that equals or
exceeds the
Preferred Shares
Basic Maintenance
Amount,
the Discounted
Value of Fitch
Eligible Assets
which the Fund is
obligated to
deliver or
receive pursuant
to an outstanding
option shall be
as follows:
a.assets SSFA will test whether the written call options expire within 49 days after the Valuation Date.
subject to IF THE 49 DAY LIMIT TEST IS NOT PASSED, SSFA WILL CONTACT FEDERATED TO DETERMINE WHETHER THE WRITTEN CALL
call options OPTIONS ARE EXCHANGE-TRADED AND "READILY REVERSIBLE".
written by the
Fund which are
either
exchange-
traded and
"readily
reversible" or
which expire
within 49 days
after the date
as of which
such valuation
is made shall
be valued at
the LESSER OF:
i.Discounted
Value and
ii.the
exercise
price of
the call
option
written by
the Fund;
b. assets
subject to
call options
written by the
Fund not
meeting the
requirements
of clause (a)
of this
sentence shall
have NO VALUE;
c.assets
subject to put
options
written by the
Fund shall be
valued at the
LESSER OF:
i.the
exercise
price and
ii.the
Discounted
Value of
the subject
security;
and
d. Where FEDERATED TO INFORM SSFA OF THE VARIOUS SECURITIES OF THE CLASS OF SECURITIES IF SUCH SITUATION EXISTS.
delivery may
be made to the
Fund with any
security of a
class of
securities,
the Fund shall
assume it will
take delivery
of the
security with
the lowest
Discounted
Value.
2. For purposes
of determining
whether the Fund
has Fitch
Eligible Assets
with an aggregate
Discounted Value
that equals or
exceeds the
Preferred Shares
Basic Maintenance
Amount,
the following
amounts shall be
SUBTRACTED from
the aggregate
Discounted Value
of the Fitch
Eligible Assets
held by the Fund:
a.10% of the
exercise price
of a written
call option;
b. the
exercise price
of any written
put option;
c.the
settlement
price of the
underlying
futures
contract if
the Fund
writes put
options on a
futures
contract
d. 105% of
the Market
Value of the
underlying
futures
contracts if
the Fund
writes call
options on a
futures
contract and
does not own
the underlying
contract.
3. For purposes
of determining
whether the Fund
has Fitch
Eligible Assets
with an aggregate
Discounted Value
that equals or
exceeds the
Preferred Shares
Basic Maintenance
Amount,
the Discounted
Value of Forward
Commitments will
be the Discounted
Value as
calculated by
applying the
respective Fitch
Discount Factor.
DISCOUNTING FITCH'S ASSETS: Once the above procedures have been performed,
determine the discounted market value for each security. Discount each security
as follows:
RATING CATEGORY
EXPOSURE PERIOD AAA* AA* A* BBB* F1** UNRATED***
7 weeks 151% 159% 166% 173% 136% 225%
8 weeks or less but greater than 7 weeks
154% 161% 168% 176% 137% 231%
9 weeks or less but greater than 8 weeks
158% 163% 170% 177% 138% 240%
* Fitch rating.
** Municipal Obligations rated F2 by Fitch, which do not mature or have a
demand feature at par exercisable in 30 days and which do not have a long-
term rating.
*** Municipal Obligations rated less than BBB by Fitch or unrated.
Notwithstanding the foregoing:
1. The Fitch Discount Factor for short-term Municipal Obligations will be
115%, so long as:
a.Such Municipal Obligations are rated at least F2 by Fitch (or, if not
rated by Fitch, rated XXX-0, XXXX-0 or P-1 by Moody's or at least A-1+ or
SP-1+ by S&P) and
b. Mature or have a demand feature at par exercisable in 30 days or
less, and
2. No Fitch Discount Factor will be applied to cash or to Receivables for
Municipal Obligations Sold.
When the Fund sells a Municipal Obligation and agrees to repurchase such Municipal Obligation at a future date, such
Municipal Obligation shall be valued at its Discounted Value for purposes of determining Fitch Eligible Assets, and the
amount of the repurchase price of such Municipal Obligation shall be included as a liability for purposes of
calculating the Preferred Shares Basic Maintenance Amount.
When the Fund purchases a Fitch Eligible Asset and agrees to sell it at a future date, such Fitch Eligible Asset shall
be valued at the amount of cash to be received by the Fund upon such future date, provided that the counterparty to the
transaction has a long-term debt rating of at least A by Fitch and the transaction has a term of no more than 30 days;
otherwise, such Fitch Eligible Asset shall be valued at the Discounted Value of such Fitch Eligible Asset.
Notwithstanding the foregoing, an asset will not be considered a Fitch Eligible Asset for purposes of determining the SSFA WILL
Preferred Shares Basic Maintenance Amount to the extent it is ASSUME THIS
1. subject to any material lien, mortgage, pledge, security interest or security agreement of any kind PARAGRAPH IS
(collectively, "Liens"), except for NOT
a.Liens which are being contested in good faith by appropriate proceedings and which Fitch (if Fitch is then APPLICABLE
rating the Preferred Shares) has indicated to the Fund will not affect the status of such asset as a Fitch UNLESS
Eligible Asset, INFORMATION
b. Liens for taxes that are not then due and payable or that can be paid thereafter without penalty, IS PROVIDED
c.Liens to secure payment for services rendered or cash advanced to the Fund by the Fund's investment adviser, BY
custodian or the Auction Agent, FEDERATED.
d. Liens by virtue of any repurchase agreement, and
e.Liens in connection with any futures margin account or swap contract; or
2. deposited irrevocably for the payment of any liabilities.
MOODY'S
MOODY'S ELIGIBLE
ASSETs:
Eligible Asset Calculation
Component
1. Cash, Cash per trial balance
2. Receivables for Receivable for Municipal Obligations Sold per trial balance. Ensure that the receivables are due to settle
Municipal within five business days of the Valuation Date.
Obligations Sold,
or
3. Unrealized Gain Unrealized Gain from Hedging Transactions' shall mean, as of any Valuation Date, (1) in the case of a swap
from Hedging contract (including total return swaps and interest rate swaps), the amount, if any, that the Fund would
Transactions receive if the swap contract were terminated as of the Valuation Date, (2) in the case of an interest rate
futures contract, the amount, if any, that the Fund would receive if it were to eliminate its open futures
position as of the Valuation Date by entering into an offsetting contract of the same specifications or (3) in
the case of an option on interest rate futures contracts, the Market Value thereof as of the Valuation Date.
For the purpose of determining the Discounted Value of any Unrealized Gain from Hedging Transactions,
(i) unrealized gain from a swap contract shall be treated in the same manner as a Municipal Obligation, except
that the issuer rating assigned to the swap counterparty shall be used, and (ii) unrealized gain from an
interest rate futures contract or an option on interest rate futures contracts shall be deemed to have a rating
of A by Moody's. The amount of any unrealized loss from hedging transactions as of any Valuation Date shall be
treated as a reduction to Moody's Eligible Assets.
4. Municipal
Obligation that
a.Pays interest FEDERATED TO INFORM SSFA IN ANY INSTANCE WHERE INTEREST IS NOT PAID IN CASH.
in cash,
b. Does not FEDERATED TO INFORM SSFA IN ANY INSTANCE WHERE MOODY'S RATINGS HAVE BEEN SUSPENDED.
have its
Xxxxx'x rating
suspended by
Moody's, and
x.Xx part of an ISSUER SIZE FROM BLOOMBERG WILL BE USED TO DETERMINE ELIGIBILITY. SSFA TO PERFORM THE ANALYSIS BASED ON CUSIP
issue of AND NOTIFY FEDERATED OF ANY ISSUES BELOW $10,000,000. FEDERATED WILL DETERMINE AND COMMUNICATE TO SSFA WHETHER
Municipal OR NOT THE CUSIP IS PART OF AN OVERALL ISSUE OF AT LEAST $10,000,000.
Obligations of
at least
$10,000,000
For purposes of applying the following requirements for Single Issuer Concentration, State Concentration and applying the applicable
Moody's Discount Factor, except as the Fund is otherwise advised in writing by Moody's:
1. if a Municipal Obligation is not rated by Moody's but is rated by Fitch and S&P, such Municipal Obligation (excluding short-
term Municipal Obligations) will be deemed to have the Xxxxx'x rating which is equivalent to the lower of the Fitch and S&P
ratings;
2. if a Municipal Obligation is not rated by Moody's but is rated by Fitch or S&P, such Municipal Obligation (excluding short-
term Municipal Obligations) will be deemed to have the Moody's equivalent of such rating.
SSFA WILL OBTAIN RATINGS FROM BLOOMBERG FOR NEW BUYS AND FOR THE ENTIRE PORTFOLIO MONTHLY. FEDERATED TO INFORM SSFA IN ANY INSTANCE
WHERE THE FUND IS ADVISED IN WRITING BY MOODY'S THAT THE FOREGOING DOES NOT APPLY TO A MUNICIPAL OBLIGATION HELD BY THE FUND
A. SINGLE ISSUER
CONCENTRATION:
1. Municipal For purposes of identifying single issuers, the first six digits of the municipal security's cusip will be
Obligations considered the issuer identifier. It is possible that the six digit cusip may represent a conduit rather than
issued by any one the true issuer. Therefore, if any issuer exceeds the set limit, SSFA will research the true issuer on
issuer and rated Bloomberg and notify Federated.
Ba or lower by
Moody's or not
rated by Moody's
may comprise no
more than 4% of
total Moody's
Eligible Assets.
2. The total
amount identified
in item 1
(above), together
with any
Municipal
Obligations
issued by the
same issuer and
rated Baa by
Moody's may
comprise no more
than 6% of total
Moody's Eligible
Assets.
3. The total
amount identified
in item 2 (above)
together with any
Municipal
Obligations
issued by the
same issuer and
rated A by
Moody's may
comprise no more
than 10% of total
Moody's Eligible
Assets.
4. The total
amount identified
in item 3 (above)
together with any
Municipal
Obligations
issued by the
same issuer and
rated Aa by
Moody's may
comprise no more
than 20% of total
Moody's Eligible
Assets.
For purposes of FOR PURPOSES OF THIS TEST, SSFA WILL ASSUME THAT THE RATING PROVIDED BY BLOOMBERG IS FOR THE OBLIGATION AND NOT
the calculations BASED SOLELY ON THE UNDERLYING CREDIT ENHANCEMENT, UNLESS INFORMATION IS SUPPLIED BY FEDERATED.
in items 1 - 4
(above), any
Municipal
Obligation backed
by the guaranty,
letter of credit
or insurance
issued by a third
party shall be
deemed to be
issued by such
third party if
the issuance of
such third party
credit is the
sole determinant
of the rating on
such Municipal
Obligations; and
any Municipal
Obligation for
which the nominal
issuer is a
conduit for a
third party the
obligations of
which are the
sole source of
revenues for the
payment of such
Municipal
Obligation shall
be deemed to be
issued by such
third party.
B. STATE
CONCENTRATION:
1. Municipal
Obligations
issued by issuers
located within a
single state or
territory and
rated Ba or lower
by Moody's or not
rated by Moody's
may comprise no
more than 12% of
total Moody's
Eligible Assets.
2. The total
amount identified
in item 1
(above), together
with any
Municipal
Obligations
issued by issuers
located within a
single state or
territory and
rated Baa by
Moody's may
comprise no more
than 20% of total
Moody's Eligible
Assets.
3. The total
amount identified
in item 2 (above)
together with any
Municipal
Obligations
issued by issuers
located within a
single state or
territory and
rated A by
Moody's may
comprise no more
than 40% of total
Moody's Eligible
Assets.
4. The total
amount identified
in item 3 (above)
together with any
Municipal
Obligations
issued by issuers
located within a
single state or
territory and
rated Aa by
Moody's may
comprise no more
than 60% of total
Moody's Eligible
Assets.
For purposes of applying the foregoing requirements for Single Issuer Concentration and State Concentration:
1. Eligible Assets shall be calculated without including cash; and
2. Municipal Obligations rated XXX-0, XXXX-0 or P-1 by Moody's or, if not rated by Moody's, rated A-1+/AA or SP-1+/AA by S&P, or
if not rated by S&P, rated F1 by Fitch, shall be considered to have a long-term rating of A.
ADJUSTMENTS TO
MOODY'S ELIGIBLE
ASSETS FOR
FUTURES, OPTIONS
AND FORWARD
COMMITMENTS:
1. For purposes
of determining
whether the Fund
has Moody's
Eligible Assets
with an aggregate
Discounted Value
that equals or
exceeds the
Preferred Shares
Basic Maintenance
Amount,
the Discounted
Value of Moody's
Eligible Assets
which the Fund is
obligated to
deliver or
receive pursuant
to an outstanding
option shall be
as follows:
a.assets SSFA will test whether the written call options expire within 49 days after the Valuation Date.
subject to IF THE 49 DAY LIMIT TEST IS NOT PASSED, SSFA WILL CONTACT FEDERATED TO DETERMINE WHETHER THE WRITTEN CALL
call options OPTIONS ARE EXCHANGE-TRADED AND "READILY REVERSIBLE".
written by the
Fund which are
either
exchange-
traded and
"readily
reversible" or
which expire
within 49 days
after the date
as of which
such valuation
is made shall
be valued at
the LESSER OF:
i.Discounted
Value and
ii.the
exercise
price of
the call
option
written by
the Fund;
b. assets
subject to
call options
written by the
Fund not
meeting the
requirements
of clause (A)
of this
sentence shall
have NO VALUE;
c.assets
subject to put
options
written by the
Fund shall be
valued at the
LESSER OF:
i.the
exercise
price and
ii.the
Discounted
Value of
the subject
security;
and
d. where FEDERATED TO INFORM SSFA OF THE VARIOUS SECURITIES OF THE CLASS OF SECURITIES IF SUCH SITUATION EXISTS.
delivery may
be made to the
Fund with any
security of a
class of
securities,
the Fund shall
assume it will
take delivery
of the
security with
the lowest
Discounted
Value.
2. For purposes
of determining
whether the Fund
has Moody's
Eligible Assets
with an aggregate
Discounted Value
that equals or
exceeds the
Preferred Shares
Basic Maintenance
Amount,
the following
amounts shall be
SUBTRACTED from
the aggregate
Discounted Value
of the Moody's
Eligible Assets
held by the Fund:
a.10% of the
exercise price
of a written
call option;
b. the
exercise price
of any written
put option;
c.the
settlement
price of the
underlying
futures
contract if
the Fund
writes put
options on a
futures
contract; and
d. 105% of
the Market
Value of the
underlying
futures
contracts if
the Fund
writes call
options on a
futures
contract and
does not own
the underlying
contract.
3. For purposes
of determining
whether the Fund
has Moody's
Eligible Assets
with an aggregate
Discounted Value
that equals or
exceeds the
Preferred Shares
Basic Maintenance
Amount,
the Discounted
Value of all
FORWARD
COMMITMENTS will
be the Discounted
Value as
calculated by
applying the
respective
Moody's Discount
Factor.
DISCOUNTING MOODY'S ASSETS: Once the above procedures have been performed,
determine the discounted market value for each security. Discount each security
as follows:
RATING CATEGORY
EXPOSURE PERIOD AAA* AA* A* BAA* (V)MIG-1** UNRATED***
7 weeks.................. 151% 159% 166% 173% 136% 225%
8 weeks or less but greater than 7 weeks 154% 161% 168% 176% 137% 231%
9 weeks or less but greater than 8 weeks 158% 163% 170% 177% 138% 240%
* Xxxxx'x rating (or, if not rated by Moody's, see above).
** Municipal Obligations rated MIG-1 or VMIG-1 (or, if not rated by Moody's,
see above), which do not mature or have a demand feature at par
exercisable in 30 days and which do not have a long-term rating.
*** Municipal Obligations rated less than Baa3 by Moody's (or, if not rated by
Moody's, see above) or unrated. Securities rated below Baa by Moody's
(or, if not rated by Moody's, see above) and unrated securities, which are
securities rated by neither Moody's, S&P or Fitch, may not exceed 10% of
Moody's Eligible Assets.
Notwithstanding the foregoing:
1. The Moody's Discount Factor for short-term Municipal Obligations will be
115%, so long as
a) such Municipal Obligations are rated at least XXX-0, XXXX-0 or P-1 by
Moody's (or if not rated by Moody's, rated at least F1 by Fitch or at
least A-1+/AA or SP-1+/AA by S&P) and
b) mature or have a demand feature at par exercisable in 30 days or less, and
2. No Moody's Discount Factor will be applied to cash or to Receivables for
Municipal Obligations Sold.
When the Fund sells a Municipal Obligation and agrees to repurchase such Municipal Obligation at a future date, such
Municipal Obligation shall be valued at its Discounted Value for purposes of determining Moody's Eligible Assets and
the amount of the repurchase price of such Municipal Obligation shall be included as a liability for purposes of
calculating the Preferred Shares Basic Maintenance Amount.
When the Fund purchases a Moody's Eligible Asset and agrees to sell it at a future date, such Moody's Eligible Asset
shall be valued at the amount of cash to be received by the Fund upon such future date, provided that the counterparty
to the transaction has a long-term debt rating of at least A2 from Moody's and the transaction has a term of no more
than 30 days; otherwise, such Moody's Eligible Asset shall be valued at the Discounted Value of such Moody's Eligible
Asset.
Notwithstanding the foregoing, an asset will not be considered a Moody's Eligible Asset for purposes of determining the SSFA WILL
Preferred Shares Basic Maintenance Amount to the extent it is ASSUME THIS
1. subject to any Liens, except for PARAGRAPH IS
a.Liens which are being contested in good faith by appropriate proceedings and which Moody's (if Xxxxx'x is then NOT
rating the Preferred Shares) has indicated to the Fund will not affect the status of such asset as a Moody's APPLICABLE
Eligible Asset, UNLESS
b. Liens for taxes that are not then due and payable or that can be paid thereafter without penalty, INFORMATION
c.Liens to secure payment for services rendered or cash advanced to the Fund by the Fund's investment adviser, IS PROVIDED
custodian or the Auction Agent, BY
d. Liens by virtue of any repurchase agreement, and FEDERATED.
e.Liens in connection with any futures margin account or swap contract; or
1. deposited irrevocably for the payment of any liabilities.
EXHIBIT E
REMOTE ACCESS SERVICES ADDENDUM
REMOTE ACCESS SERVICES ADDENDUM
TO
FINANCIAL ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
ADDENDUM to that certain Financial Administration and Accounting Services
Agreement dated as of January 1, 2007 (the "Services Agreement") between each of
the investment companies listed on Exhibit A to the Services Agreement (the
"Customer") and State Street Bank and Trust Company, including its subsidiaries
and affiliates ("State Street").
State Street has developed and utilizes proprietary accounting and other
systems in conjunction with the custodian services which State Street provides
to the Customer. In this regard, State Street maintains certain information in
databases under its control and ownership which it makes available to its
customers (the "Remote Access Services").
THE SERVICES
State Street agrees to provide the Customer, and its designated investment
advisors, consultants or other third parties authorized by State Street
("Authorized Designees") with access to In~SightSM as described in Exhibit A to
this Addendum or such other systems as may be offered from time to time (the
"System") on a remote basis.
SECURITY PROCEDURES
The Customer agrees to comply, and to cause its Authorized Designees to comply,
with remote access operating standards and procedures and with user
identification or other password control requirements and other security
procedures as may be issued from time to time by State Street for use of the
System and access to the Remote Access Services. The Customer agrees to advise
State Street immediately in the event that it learns or has reason to believe
that any person to whom it has given access to the System or the Remote Access
Services has violated or intends to violate the terms of this Addendum and the
Customer will cooperate with State Street in seeking injunctive or other
equitable relief. The Customer agrees to discontinue use of the System and
Remote Access Services, if requested, for any security reasons cited by State
Street.
FEES
Fees and charges for the use of the System and the Remote Access Services and
related payment terms shall be as set forth in the Financial Administration and
Accounting Services Fee Schedule in effect from time to time between the parties
(the "Fee Schedule"). The Customer shall be responsible for any tariffs, duties
or taxes imposed or levied by any government or governmental agency by reason of
the transactions contemplated by this Addendum, including, without limitation,
federal, state and local taxes, use, value added and personal property taxes
(other than income, franchise or similar taxes which may be imposed or assessed
against State Street). Any claimed exemption from such tariffs, duties or taxes
shall be supported by proper documentary evidence delivered to State Street.
PROPRIETARY INFORMATION/INJUNCTIVE RELIEF
The System and Remote Access Services described herein and the databases,
computer programs, screen formats, report formats, interactive design
techniques, formulae, processes, systems, software, know-how, algorithms,
programs, training aids, printed materials, methods, books, records, files,
documentation and other information made available to the Customer by State
Street as part of the Remote Access Services and through the use of the System
and all copyrights, patents, trade secrets and other proprietary rights of State
Street related thereto are the exclusive, valuable and confidential property of
State Street and its relevant licensors (the "Proprietary Information"). The
Customer agrees on behalf of itself and its Authorized Designees to keep the
Proprietary Information confidential and to limit access to its employees and
Authorized Designees (under a similar duty of confidentiality) who require
access to the System for the purposes intended. The foregoing shall not apply
to Proprietary Information in the public domain or required by law to be made
public.
The Customer agrees to use the Remote Access Services only in connection with
the proper purposes of this Addendum. The Customer will not, and will cause its
employees and Authorized Designees not to, (i) permit any third party to use the
System or the Remote Access Services, (ii) sell, rent, license or otherwise use
the System or the Remote Access Services in the operation of a service bureau or
for any purpose other than as expressly authorized under this Addendum, (iii)
use the System or the Remote Access Services for any fund, trust or other
investment vehicle without the prior written consent of State Street, or (iv)
allow or cause any information transmitted from State Street's databases,
including data from third party sources, available through use of the System or
the Remote Access Services, to be published, redistributed or retransmitted for
other than use for or on behalf of the Customer, as State Street's customer.
The Customer agrees that neither it nor its Authorized Designees will modify the
System in any way; enhance or otherwise create derivative works based upon the
System; nor will the Customer or Customer's Authorized Designees reverse
engineer, decompile or otherwise attempt to secure the source code for all or
any part of the System.
The Customer acknowledges that the disclosure of any Proprietary Information, or
of any information which at law or equity ought to remain confidential, will
immediately give rise to continuing irreparable injury to State Street
inadequately compensable in damages at law and that State Street shall be
entitled to obtain immediate injunctive relief against the breach or threatened
breach of any of the foregoing undertakings, in addition to any other legal
remedies which may be available.
LIMITED WARRANTIES
State Street represents and warrants that it is the owner of and has the right
to grant access to the System and to provide the Remote Access Services
contemplated herein. Because of the nature of computer information technology,
including but not limited to the use of the Internet, and the necessity of
relying upon third party sources, and data and pricing information obtained from
third parties, the System and Remote Access Services are provided "AS IS", and
the Customer and its Authorized Designees shall be solely responsible for the
investment decisions, results obtained, regulatory reports and statements
produced using the Remote Access Services. State Street and its relevant
licensors will not be liable to the Customer or its Authorized Designees for any
direct or indirect, special, incidental, punitive or consequential damages
arising out of or in any way connected with the System or the Remote Access
Services, nor shall either party be responsible for delays or nonperformance
under this Addendum arising out of any cause or event beyond such party's
control.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET, FOR ITSELF AND ITS
RELEVANT LICENSORS, EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE
SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
INFRINGEMENT
State Street will defend or, at our option, settle any claim or action brought
against the Customer to the extent that it is based upon an assertion that
access to the System or use of the Remote Access Services by the Customer under
this Addendum constitutes direct infringement of any patent or copyright or
misappropriation of a trade secret, provided that the Customer notifies State
Street promptly in writing of any such claim or proceeding and cooperates with
State Street in the defense of such claim or proceeding. Should the System or
the Remote Access Services or any part thereof become, or in State Street's
opinion be likely to become, the subject of a claim of infringement or the like
under any applicable patent or copyright or trade secret laws, State Street
shall have the right, at State Street's sole option, to (i) procure for the
Customer the right to continue using the System or the Remote Access Services,
(ii) replace or modify the System or the Remote Access Services so that the
System or the Remote Access Services becomes noninfringing, or (iii) terminate
this Addendum without further obligation.
TERMINATION
Either party to the Services Agreement may terminate this Addendum (i) for any
reason by giving the other party at least one-hundred and eighty (180) days'
prior written notice in the case of notice of termination by State Street to the
Customer or thirty (30) days' notice in the case of notice from the Customer to
State Street of termination, or (ii) immediately for failure of the other party
to comply with any material term and condition of the Addendum by giving the
other party written notice of termination. This Addendum shall in any event
terminate within ninety (90) days after the termination of the Services
Agreement. In the event of termination, the Customer will return to State
Street all copies of documentation and other confidential information in its
possession or in the possession of its Authorized Designees. The foregoing
provisions with respect to confidentiality and infringement will survive
termination for a period of three (3) years.
MISCELLANEOUS
This Addendum and the exhibits hereto constitute the entire understanding of the
parties to the Services Agreement with respect to access to the System and the
Remote Access Services. This Addendum cannot be modified or altered except in a
writing duly executed by each of State Street and the Customer and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
By its execution of the Services Agreement, the Customer accepts responsibility
for its and its Authorized Designees' compliance with the terms of this
Addendum.
EXHIBIT A
TO
REMOTE ACCESS SERVICES ADDENDUM TO
FINANCIAL ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
IN~SIGHTSM
System Product Description
In~SightSM provides bilateral information delivery, interoperability, and
on-line access to State Street. In~SightSM allows users a single point of entry
into State Street's diverse systems and applications. Reports and data from
systems such as Investment Policy MonitorSM, Multicurrency HorizonSM, Securities
Lending, Performance & Analytics, and Electronic Trade Delivery can be accessed
through In~SightSM. This Internet-enabled application is designed to run from a
Web browser and perform across low-speed data lines or corporate high-speed
backbones. In~SightSM also offers users a flexible toolset, including an ad-hoc
query function, a custom graphics package, a report designer, and a scheduling
capability.
