Exhibt (h)(xvii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
MUTUAL FUNDS SERVICE AGREEMENT
This Agreement is entered into among the financial institution or
service provider executing this Agreement (the "Institution"), Federated
Securities Corp. ("FSC"), and Federated Shareholder Services Company ("FSS"),
with respect to those investment companies listed in Exhibit A hereto (referred
to individually as the "Fund" and collectively as the "Funds") for whose shares
of beneficial interest or capital stock ("Shares") FSC serves as Distributor and
for whom FSS provides or coordinates shareholder services.
WHEREAS, the Institution provides agency, investment advisory,
fiduciary, administrative, or other services for its clients, customers, or
affiliates;
WHEREAS, FSS provides shareholder services for the shareholders of the
Funds in part by retaining financial institutions (such as the Institution) to
perform those shareholder services;
WHEREAS, FSS and FSC have determined that services usually provided by
the Institution are substantially equivalent to shareholder services and that
the compensation of the Institution for those services could reasonably be
expected to contribute to the distribution and sale of Fund share to clients,
customers, or affiliates of the Institution; and
WHEREAS, the Institution is willing to provide shareholder services for
shareholders of the Funds as consideration for compensation received from FSS;
NOW, THEREFORE, the parties agree as follows:
1. AGREEMENT TO PROVIDE SERVICES.
FSS hereby appoints the Institution to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Shareholder Services");.
The Institution agrees to provide Shareholder Services which, in its
best judgment, are necessary or desirable for its customers who are investors in
the Funds. The Institution further agrees to provide FSS, upon request, a
written description of the Shareholder Services which the Institution is
providing hereunder.
2. SERVICE FEES PAYABLE TO THE INSTITUTION.
During the term of this Agreement, FSS will pay Institution the fees as set
forth in Exhibit A to this Agreement, less an amount sufficient to pay other
Institutions with whom FSS has entered into a form of Mutual Fund Service
Agreement (or like contract for shareholder or other similar services). The fee
schedule for the Institution may be changed by FSS or FSC sending a new fee
schedule or written notice to the Institution pursuant to Paragraph 10 of this
Agreement. Payments by FSS for Shareholder Services under this Agreement may be
derived from payments received by FSS from the Funds under their Shareholder
Services Agreement or from FSS's own assets. FSS may make supplemental payments
to the Institution as set forth in Exhibit A to this Agreement as additional
compensation for Shareholder Services; such supplemental payments will be made
from the assets of FSS, or its affiliates, and not from the assets of the Funds
nor from payments received by FSS under any applicable Shareholder Service
Agreement.
3. STATUS OF THE INSTITUTION.
The Institution hereby represents and warrants:
(a)(i) that it is a broker or dealer as defined in Section 3(a)(4) or 3(a)(5) of
the Securities Exchange Act of 1934 ("Exchange Act"); that it is registered
with the Securities and Exchange Commission pursuant to Section 15 of the
Exchange Act; that it is a member of the National Association of Securities
Dealers, Inc.; and that, during the term of this Agreement, it will abide
by all of the rules and regulations of the NASD including, without
limitation, the NASD Rules of Fair Practice. The Institution agrees to
notify FSC immediately in the event of (1) its expulsion or suspension from
the NASD, or (2) its being found to have violated any applicable federal or
state law, rule or regulation arising out of its activities as a
broker-dealer or in connection with this Agreement, or which may otherwise
affect in any material way its ability to act in accordance with the terms
of this Agreement. The Institution's expulsion from the NASD will
automatically terminate this Agreement immediately without notice.
Suspension of the Institution from the NASD for violation of any applicable
federal or state law, rule or regulation will terminate this Agreement
effective immediately upon FSC's written notice of termination to the
Institution; OR --
(a)(ii) that it is a "bank," as that term is defined in Section 3(a)(6) of the
Exchange Act and that, during the term of this Agreement, it will abide by
the rules and regulations of those state and federal banking authorities
with appropriate jurisdiction over the Institution, especially those
regulations dealing with the activities of the Institution as described
under this Agreement. The Institution agrees to notify FSC or FSS
immediately of any action by or communication from state or federal banking
authorities, state securities authorities, the Securities and Exchange
Commission, or any other party which may affect its status as a bank, or
which may otherwise affect in any material way its ability to act in
accordance with the terms of this Agreement. Any action or decision of any
of the foregoing regulatory authorities or any court of appropriate
jurisdiction which affects the Institution's ability to act in accordance
with the terms of this agreement, including the loss of its exemption from
registration as a broker or dealer, will terminate this Agreement effective
upon FSC's written notice of termination to the Institution; OR --
(a)(iii) that its activities and business, including the services which are
rendered under this Agreement, do not require the Institution to
register as a broker or a dealer with the Securities and Exchange
Commission. The Institution agrees to notify FSC or FSS immediately
of any action by or communication from state securities
authorities, the Securities and Exchange Commission, or any other
party which action or communication may in any material way affect
its ability to act in accordance with the terms of this Agreement.
Any action or decision of any of the foregoing regulatory
authorities or any court of appropriate jurisdiction which affects
the Institution's ability to act in accordance with the terms of
this agreement, including the loss of its exemption from
registration as a broker or dealer, will terminate this Agreement
effective upon FSC's written notice of termination to the
Institution; AND
(b) that the Institution is registered with the appropriate securities
authorities in all states in which its activities make such registration
necessary.
4. THE INSTITUTION ACTS AS AGENT FOR ITS CUSTOMERS.
The parties agree that in each transaction in the Shares of any Fund and
with regard to any services rendered pursuant to this Agreement: (a) the
Institution is acting in the capacity of agent or fiduciary on behalf of the
customer; (b) each transaction over which the Institution does not exercise
investment discretion is initiated solely upon the order of the customer; (c) as
between the Institution and its customer, the customer will have full beneficial
ownership of all Shares of the Funds; (d) each transaction shall be for the
account of the customer and not for the Institution's account; and (e) each
transaction shall be without recourse to the Institution provided that the
Institution acts in accordance with the terms of this Agreement. The Institution
shall not have any authority in any transaction to act as FSS's agent or as
agent for the Funds.
5. SOLICITATION OF PROXIES.
Unless such action would cause the Institution to violate its fiduciary
or other similar obligations to its customers, the Institution agrees not to
solicit or cause to be solicited directly, or indirectly at any time in the
future, any proxies from the shareholders of a Fund in opposition to proxies
solicited by management of the Fund, unless a court of competent jurisdiction
shall have determined that the conduct of a majority of the Board of Trustees or
Directors of the Fund constitutes willful misfeasance, bad faith, gross
negligence, or reckless disregard of their duties. This paragraph 5 will survive
the term of this Agreement.
6. DELIVERY OF PROSPECTUSES TO CUSTOMERS.
In circumstances where the Institution does not have investment
discretion over the customer's account, the Institution will deliver or cause to
be delivered to each customer, at or prior to the time of any purchase of
Shares, a copy of the current prospectus of the Fund and, upon request by a
customer or shareholder, a copy of the Fund's current Statement of Additional
Information. The Institution shall not make any representations concerning any
Shares other than those contained in the prospectus or Statement of Additional
Information of the Fund or in any promotional materials or sales literature
furnished to the Institution by FSC or the Fund.
7. ERISA and Discretionary Assets.
(a) The Institution understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from
receiving administrative service fees or other compensation from
funds in which the fiduciary's discretionary ERISA assets are
invested. To date, the Department of Labor has not issued any
exemptive order or advisory opinion that would exempt fiduciaries
from this interpretation. Without specific authorization from the
Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where
the fiduciary is to be compensated by the fund for such investment.
Receipt of such compensation could violate ERISA provisions against
fiduciary self-dealing and conflict of interest and could subject
the fiduciary to substantial penalties.
(b) The Institution will not perform or provide any duties which would
cause it to be a fiduciary under Section 4975 of the Internal
Revenue Code, as amended. For purposes of that Section, the
Institution understands that any person who exercises any
discretionary authority or discretionary control with respect to
any individual retirement account or assets of an employee benefit
plan, or who renders investment advice to such an account or plan
for a fee, or has any authority or responsibility to do so, or has
any discretionary authority or discretionary responsibility in the
administration of such an account or plan, is a fiduciary.
8. CUSTOMER NAMES PROPRIETARY TO THE INSTITUTION.
(a) The names of the Institution's customers are and shall remain the
Institution's sole property and shall not be used by FSS, or its affiliates
for any purpose except the performance of their respective duties and
responsibilities under this Agreement and except for servicing and
informational mailings relating to the Funds. Notwithstanding the
foregoing, this Paragraph 8 shall not prohibit FSS, or any of its
affiliates from utilizing the names of the Institution's customers for any
purpose if the names are obtained in any manner other than from the
Institution pursuant to this Agreement.
(b) Neither party shall use the name of the other party in any manner without
the other party's written consent, except as required by any applicable
federal or state law, rule or regulation, and except pursuant to any
mutually agreed upon promotional programs.
(c) The provisions of this Paragraph 8 shall survive the termination of this
Agreement.
9. SECURITY AGAINST UNAUTHORIZED USE OF FUNDS' RECORDKEEPING SYSTEMS.
The Institution agrees to provide such security as is necessary to
prevent any unauthorized use of the Funds' recordkeeping system, accessed via
any computer hardware or software provided to the Institution by FSS.
10. TERMINATION AND AMENDMENT.
(a) This Agreement shall become effective in this form as of the date set forth
below or as of the first date thereafter upon which the Institution
executes any transaction, performs any service, or receives any payment
pursuant hereto. This Agreement supersedes any prior sales, distribution,
shareholder service, or administrative service agreements between the
parties.
(b) This Agreement, including Exhibit A hereto, may be amended by FSS from time
to time by the following procedure. FSS will mail a copy of the amendment
to the Institution's address, as shown below. If the Institution does not
object to the amendment within thirty (30) days after its receipt, the
amendment will become part of the Agreement. The Institution's objection
must be in writing and be received by FSS within such thirty days.
(c) Notwithstanding subparagraph 10(a) and in addition to subparagraph 3(a),
this Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the vote of a
majority of the Independent Directors or Trustees of the Fund or by a
vote of a majority of the outstanding voting securities of the Fund
as defined in the Investment Company Act of 1940 on not more than
sixty (60) days' written notice to the parties to this Agreement;
(ii) automatically in the event of the Agreement's assignment as defined
in the Investment Company Act of 1940, upon the termination of the
"Shareholder Service Agreement" between the Fund and FSS; and
(iii) by any party to the Agreement without cause by giving the other party
at least sixty (60) days' written notice of its intention to terminate.
(e) The termination of this Agreement with respect to any one Fund will not
cause the Agreement's termination with respect to any other Fund.
11. CERTIFICATION OF CUSTOMERS' TAXPAYER IDENTIFICATION NUMBERS.
The Institution agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide FSS, or
its respective designee with timely written notice of any failure to obtain such
taxpayer identification number certification in order to enable the
implementation of any required backup withholding.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof
whether oral or written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Section 10, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent
with the Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission thereunder.
(b) This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the
same instrument.
(c) Except as otherwise specifically provided in this Agreement, all notices
required or permitted to be given pursuant to this Agreement shall be given
in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, overnight courier services, or by facsimile or similar
electronic means of delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to FSS shall be
given or sent to FSS at their offices located at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779, and all notices to the Institution
shall be given or sent to it at its address shown below.
FEDERATED SHAREHOLDER SERVICES COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ TRUST COMPANY
[INSTITUTION]
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Address
This Agreement shall be effective
Dated: BEGINNING FEBRUARY 1, 1999 By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Authorized Signature
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, VICE PRESIDENT
& SECURITIES COUNSEL
Print Name and Title
EXHIBIT A
TO THE
MUTUAL FUNDS SERVICE AGREEMENT
Shareholder
SERVICES FEE
▇▇▇▇▇▇▇▇ Equity Income Fund 0.25%
▇▇▇▇▇▇▇▇ Government Income Fund 0.02%
▇▇▇▇▇▇▇▇ Intermediate Bond Fund 0.02%
▇▇▇▇▇▇▇▇ Intermediate Tax-Free Fund 0.02%
▇▇▇▇▇▇▇▇ International Stock Fund 0.25%
▇▇▇▇▇▇▇▇ Mid-Cap Growth Fund 0.25%
Marshall Short-Term Income Fund 0.02%
▇▇▇▇▇▇▇▇ Small-Cap Growth Fund 0.25%
▇▇▇▇▇▇▇▇ Large-Cap Growth & Income Fund 0.25%
▇▇▇▇▇▇▇▇ Mid-Cap Value Fund 0.25%
Updated: _FEBRUARY 1_, 1999
