Exhibit (h)(v) under Form N-1A
Exhibit (10) under Item 601/Reg. S-K
Exhibit 1
to the
Principal Shareholder Servicer's Agreement
Related to Class B Shares of
the Funds
The following provisions are hereby incorporated and made part of the
Principal Shareholder Servicer's Agreement (the "Principal Shareholder
Servicer's Agreement") as of the 24th day of October, 1997, by and between those
Investment Companies on behalf of the Portfolios (individually referred to
herein as a "Fund" and collectively as "Funds") and Classes of Shares
("Classes") listed on Schedule A to Exhibit 1, as may be amended from time to
time, having their principal office and place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779, and who have approved this form of
Agreement and Federated Securities Corp. as the principal shareholder servicer
(the "Principal Servicer"). Each of the Exhibits hereto is incorporated herein
in its entirety and made a part hereof. In the event of any inconsistency
between the terms of this Exhibit and the terms of the Principal Shareholder
Servicer's Agreement, the terms of this Exhibit shall govern.
1. Each Investment Company hereby appoints the Principal Servicer to arrange
for the rendition of the shareholder services in respect of Class B Shares
("Class B Shares") of each Fund. Pursuant to this appointment, the
Principal Servicer is authorized to select various companies including but
not limited to Federated Shareholder Services ("Companies or a Company ")
to provide such services.
2. (a) In consideration of the Principal Servicer's Services under this
Agreement in respect of the Class B Shares each Fund agrees to pay the
Principal Servicer or at its direction its "Allocable Portion" (as
hereinafter defined) of a fee (the "Servicing Fee") equal to 0.25 of 1% per
annum of the average daily net asset value of the Class B Shares of the
Fund outstanding from time to time, provided however, that in the event the
Fund operates as a fund of funds (a "FOF Fund") by investing the proceeds
of the issuance of its Class B Shares in Class A Shares of another fund
(the "Other Fund") and the Principal Shareholder Servicer receives a
servicing fee in respect of the Class A Shares of the Other Fund so
acquired by the FOF Fund, the Servicing Fee payable in respect of such
Class B Shares of the FOF Fund will be reduced by the amount of the
servicing fee actually received by the Principal Shareholder Servicer or
its assign from the Other Fund in respect of the Class A Shares of the
Other Fund acquired with the proceeds of such Class B Shares of the FOF
Fund.
(b) (i) The Principal Servicer will be deemed to have fully earned its
Allocable Portion (computed as of any date) of the Servicing Fee
payable in respect of the Class B Shares of a Fund (and to have
satisfied its obligation to arrange for shareholder services in
respect of such Class B Shares) on the date it has arranged for
shareholder services to be performed by Federated Shareholder Services
by payment of the lump sum contemplated by Alternative A to Exhibit 1
to the Shareholder Services Agreement among the Principal Servicer,
Federated Shareholder Services and the Fund dated as of the date
hereof (the "Shareholder Services Agreement") to Federated Shareholder
Services (whose obligations are fully supported by its parent company)
in respect of each "Commission Share" (as defined in the Allocation
Schedule attached hereto in Schedule B) of the Fund, taken into
account in determining such Principal Servicer's Allocable Portion of
such Servicing Fees as of such date. The Principal Servicer shall not
be deemed to have any other duties in respect of the Shares and its
Allocable Portion of the Servicing Fees to which the preceding
sentence applies and such arrangements shall be deemed a separate and
distinct contractual arrangement from that described in clause (ii).
(ii) The Principal Servicer will be deemed to have fully earned any
Servicing Fees not included in its Allocable Portion (i.e., those
attributable to Shares in respect of which Alternative A under Exhibit
1 to the Shareholder Services Agreement is not applicable) as such
services are performed in respect of such Shares.
(c) Notwithstanding anything to the contrary set forth in this Exhibit,
the Principal Shareholder Agreement, or (to the extent waiver thereof
is permitted thereby) applicable law, each Investment Company's
obligation to pay the Principal Servicer's Allocable Portion of the
Servicing Fees payable in respect of the Class B Shares of a Fund
shall not be terminated or modified for any reason (including a
termination of this Principal Shareholder Servicer's Agreement as it
relates to the Fund) except to the extent required by a change in the
Investment Company Act of 1940 (the "Act") or the Conduct Rules of the
National Association of Securities Dealers, Inc., in either case
enacted or promulgated after May 1, 1997, or in connection with a
"Complete Termination" (as hereinafter defined) in respect of the
Class B Shares of such Fund.
(d) Notwithstanding anything to the contrary in this Exhibit, the
Principal Shareholder Agreement, or (to the extent waiver thereof is
permitted thereby) applicable law, the Principal Servicer may assign,
sell or pledge (collectively, "Transfer") its rights to its Allocable
Portion of the Servicing Fees (but not its obligations to the
Investment Companies under this Principal Shareholder Servicer's
Agreement) in respect of the Class B Shares of a Fund to raise funds
to make the expenditures related to the Services and in connection
therewith upon receipt of notice of such Transfer, the Investment
Company shall pay to the assignee, purchaser or pledgee (collectively
with their subsequent transferees, "Transferees") such portion of the
Principal Servicer's Allocable Portion of the Servicing Fees in
respect of the Class B Shares of the Fund so Transferred. Except as
provided in (c) above and notwithstanding anything to the contrary set
forth elsewhere in this Exhibit, the Principal Shareholder Agreement,
or (to the extent waiver thereof is permitted thereby) applicable law,
to the extent the Principal Servicer has Transferred its rights
thereto to raise funds as aforesaid, the Investment Companies'
obligation to pay to the Principal Servicer's Transferees the
Principal Servicer's Allocable Portion of the Servicing Fees payable
in respect of the Class B Shares of each Fund shall be absolute and
unconditional and shall not be subject to dispute, offset,
counterclaim or any defense whatsoever, including without limitation,
any of the foregoing based on the insolvency or bankruptcy of the
Principal Servicer, Federated Shareholder Services (or its parent) or
the failure of Federated Shareholder Services (or its parent) to
perform its Irrevocable Service Commitment (it being understood that
such provision is not a waiver of the Investment Companies' right to
pursue such Principal Servicer and enforce such claims against the
assets of such Principal Servicer other than the Principal Servicer's
right to the Distribution Fees, Servicing Fees and CDSCs in respect of
the Class B Shares of the Fund which have been so transferred in
connection with such Transfer). The Fund agrees that each such
Transferee is a third party beneficiary of the provisions of this
clause (d) but only insofar as those provisions relate to Servicing
Fees transferred to such Transferee.
(e) For purposes of this Principal Shareholder Servicer's Agreement, the
term Allocable Portion of Servicing Fees payable in respect of the
Class B Shares of any Fund shall mean the portion of such Servicing
Fees allocated to such Principal Servicer in accordance with the
Allocation Schedule attached hereto as Schedule B.
(f) For purposes of this Principal Shareholder Servicer's Contract, the
term "Complete Termination" of shareholder servicing arrangements in
respect of Class B Shares of a Fund means a termination of shareholder
servicing arrangements involving the complete cessation of payments of
Servicing Fees in respect of all Class B Shares, and the complete
cessation of payments of servicing fees for every existing and future
class of shares of the Fund and any successor Fund or any Fund
acquiring a substantial portion of the assets of the Fund ,which has
substantially similar characteristics to the Class B Shares taking
into account the manner and amount of sales charge, servicing fee,
contingent deferred sales charge or other similar charge borne
directly or indirectly by the holders of such shares.
3. The Principal Servicer may enter into separate written agreements with
Companies to provide the services set forth in Paragraph 1 herein. The
schedules of fees to be paid such Companies and the basis upon which
such fees will be paid shall be determined from time to time by the
Principal Servicer in its sole discretion.
4. The Principal Servicer will prepare reports to the Board of
Trustees/Directors of the Investment Companies on a quarterly basis
showing amounts expended hereunder including amounts paid to Companies
and the purpose for such expenditures.
In consideration of the mutual covenants set forth in the Principal
Shareholder Servicer's Contract, the Principal Servicer and the Investment
Companies hereby execute and deliver this Exhibit with respect to the Class B
Shares of each Fund.
Witness the due execution hereof this 24th day of October, 1997.
ATTEST: INVESTMENT COMPANIES (listed on Schedule
A)
By: /s/ S. Xxxxxxx Xxxxx By: /s/ Xxxx X. XxXxxxxxx
-------------------------- -----------------------------
Title: Assistant Secretary Title: Executive Vice President
----------------------- --------------------------
ATTEST: FEDERATED SECURITIES CORP.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------- -----------------------------
Title: Assistant Secretary Title: Vice President
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SCHEDULE B
to
the Principal
Shareholder
Servicer's Agreement
for
Class B Shares of the
Federated Funds
ALLOCATION SCHEDULE
Shareholder Servicing Fees related to Shares of each Fund
shall be allocated among the existing Principal Servicer and each
subsequent Principal Servicer in accordance with this Schedule B.
Defined terms used in this Schedule B and not otherwise
defined herein shall have the meaning assigned to them in the Principal
Shareholder Servicer's Agreement. As used herein the following terms
shall have the meanings indicated:
"Commission Share", means in respect of any Fund, each Share
of such Fund, other than an Omnibus Share, which is issued under
circumstances which would normally give rise to an obligation of the
holder of such Share to pay a Contingent Deferred Sales Charge upon
redemption of such Share (including, without limitation, any Share of such
Fund issued in connection with a Permitted Free Exchange) and any such
Share shall continue to be a Commission Share of such Fund prior to the
redemption (including a redemption in connection with a Permitted Free
Exchange) or conversion of such Share, even though the obligation to pay
the Contingent Deferred Sales Charge may have expired or conditions for
waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission
Share, the date with reference to which the amount of the Contingent
Deferred Sales Charge payable on redemption thereof, if any, is computed.
"Existing Principal Servicer Cut-Off Date" means, in respect
of any Fund, the last date on which the existing Principal Servicer acted
as Principal Servicer of Shares of such Fund.
"4% Commission Assets" means, in respect of all Funds, as of
any date, the sum of: (a) in respect of all Shares of all Funds sold by
Selling Agents which have always sold Shares only on a 4% sales commission
basis, the aggregate Net Asset Value as of such date of all outstanding
Shares of all Funds sold by such Selling Agents or derived from such
Shares by dividend reinvestment, free exchanges or otherwise and (b) in
respect of all Shares of all Funds sold by all other Selling Agents which
are selling Shares on a 4% sales commission basis, the aggregate Net Asset
Values (as of the respective Dates of Original Issuance) of all Commission
Shares and Omnibus Shares sold by such Selling Agents on a 4% sales
commission basis which were issued on or prior to such date and which have
not been converted to Class A Shares pursuant to a Permitted Conversion
Feature.
"Free Share" means, in respect of any Fund, each Share of such
Fund, other than a Commission Share or Omnibus Share (including, without
limitation, any Share issued in connection with the reinvestment of
dividends or capital gains).
"Inception Date" means, in respect of any Fund, the first date
on which such Fund issued Shares.
"Net Asset Value" means, (i) with respect to any Fund, as of
the date any determination thereof is made, the net asset value of such
Fund computed in the manner such value is required to be computed by such
Fund in its reports to its shareholders, and (ii) with respect to any
Share of such Fund as of any date, the quotient obtained by dividing: (A)
the net asset value of such Fund (as computed in accordance with clause
(i) above) allocated to Shares of such Fund (in accordance with the
constituent documents for such Fund) as of such date, by (B) the number of
Shares of such Fund outstanding on such date.
"Omnibus Share" means, in respect of any Fund, a commission
share sold by one of the Selling Agents listed on Exhibit I. If the Fund,
the Principal Servicer and its Transferees determine that the Seller's
Transfer Agent is able to track all commission shares sold by any of the
Selling Agents listed on Exhibit I in the same manner as Commission Shares
are currently tracked in respect of Selling Agents not listed on Exhibit
I, then Exhibit I shall be amended to delete such Selling Agent from
Exhibit I so that commission shares sold by such Selling Agent will
thereafter be treated as Commission Shares.
"Subsequent Principal Servicer Start-Up Date" means, in
respect of any subsequent Principal Servicer and any Fund, the first date
on which such subsequent Principal Servicer acted as principal servicer of
Shares of such Fund.
"Subsequent Principal Servicer Cut-Off Date" means, in respect
of any subsequent Principal Servicer and any Fund, the last date on which
such subsequent Principal Servicer acted as principal servicer of Shares
of such Fund.
PART I: ATTRIBUTION OF SHARES
Shares of each Fund, which are outstanding from time to time,
shall be attributed to the existing Principal Servicer and any subsequent
Principal Servicer in accordance with the following rules:
(1) Commission Shares:
-----------------
(a) Commission Shares of any Fund attributed to the existing
Principal Servicer shall be Commission Shares of such Fund acquired by the
existing Principal Servicer, the Date of Original Issuance of which
occurred on or after the Inception Date of such Fund and on or prior to
the Existing Servicer Cut-Off Date.
(b) Commission Shares of any Fund attributed to any
Subsequent Principal Servicer shall be Commission Shares of such Fund, the
Date of Original Issuance of which occurs after the Subsequent Principal
Servicer Start-Up Date and on or prior to the subsequent Principal
Servicer Cut-Off Date.
(c) A Commission Share of a particular Fund (the "Issuing
Fund") issued in consideration of the investment of proceeds of the
redemption of a Commission Share of another Fund (the "Redeeming Fund") in
connection with a Permitted Free Exchange, is deemed to have a Date of
Original Issuance identical to the Date of Original Issuance of the
Commission Share of the Redeeming Fund and any such Commission Share will
be attributed to the existing Principal Servicer or a subsequent Principal
Servicer based upon such Date of Original Issuance in accordance with
rules (a) and (b) above.
(d) A Commission Share redeemed other than in connection
with a Permitted Free Exchange or converted to a Class A Share is
attributable to the existing Principal Servicer or a subsequent Principal
Servicer based upon the Date of Original Issuance in accordance with rules
(a), (b) and (c) above.
(2) Omnibus Shares:
--------------
Omnibus Shares of a Fund outstanding on any date shall be
attributed to the existing Principal Servicer or a subsequent Principal
Servicer as the case may be, in the same proportion that outstanding
Commission Shares of such Fund are attributed to it on such date.
(3) Free Shares:
-----------
Free Shares of a Fund outstanding on any date shall be
attributed to the existing Principal Servicer or a subsequent Principal
Servicer as the case may be, in the same proportion that the Commission
Shares of such Fund outstanding on such date are attributed to it on such
date.
PART II: ALLOCATION OF SHAREHOLDER SERVICING FEES
The portion of the Shareholder Servicing Fees accrued in
respect of all Shares of all of the Funds during a particular calendar
month and allocable to the existing Principal Servicer or a subsequent
Principal Servicer is determined by the following formula:
(A - (E x ((C + D)/2))) x B
where:
A = Shareholder Servicing Fees accrued in respect of all Shares of all
of the Funds during a particular calendar month
B = fraction referred to in the next paragraph for such calendar month,
in respect of the existing Principal Servicer or subsequent
Principal Servicer, as the case may be
C = 4% Commission Assets of all Funds as of the beginning of such
calendar month
D = 4% Commission Assets of all Funds as of the end of such calendar
month
E = .25% times a fraction the numerator of which is the number days in
such calendar month and the denominator of which is 365
Assuming that the Asset Based Sales Charge remains constant
over time and among Funds so that Part III hereof does not become
operative:
(1) The fraction referred to in B of the prior paragraph in
respect of any calendar month in respect of the existing Principal
Servicer or a subsequent Principal Servicer is:
(A + C) /2
----------
(B + D) /2
where:
A = The aggregate Net Asset Value of all Shares of all Funds attributed
to the existing Principal Servicer or such subsequent Principal
Servicer, as the case may be, and outstanding at the beginning of
such calendar month
B = The aggregate Net Asset Value of all Shares of all Funds at the
beginning of such calendar month
C = The aggregate Net Asset Value of all Shares of all Funds attributed
to the existing Principal Servicer or such subsequent Principal
Servicer, as the case may be, and outstanding at the end of such
calendar month
D = The aggregate Net Asset Value of all Shares of all Funds at the end
of such calendar month
(2) If the Fund, the existing Principal Servicer and its
Transferees and each subsequent Principal Servicer determine that the
Transfer Agent is able to produce automated monthly reports which allocate
the average Net Asset Value of the Commission Shares (or all Shares if
available) of all Funds among the existing Principal Servicer and each
subsequent Principal Servicer in a manner consistent with the methodology
detailed in Part I and Part III(1) above, the portion of the Asset Based
Sales Charges accrued in respect of all Shares of all Funds during a
particular calendar month will be allocated to the Initial Purchaser, the
Revolving Purchaser or the Seller by multiplying the total of such Asset
Based Sales Charges by the following fraction:
(A) / (B)
where:
A = Average Net Asset Value of all the Commission Shares (or all Shares
if available) of all Funds for such calendar month attributed to the
existing Principal Servicer or such subsequent Principal Servicer,
as the case may be
B = Total average Net Asset Value of all Commission Shares (or all
Shares if available) of all Funds for such calendar month.
PART III: ADJUSTMENTS OF THE EXISTING PRINCIPAL SERVICER'S AND EACH
----------------------------------------------------------------------
SUBSEQUENT PRINCIPAL SERVICER'S ALLOCABLE SHARE OF ASSET BASED
---------------------------------------------------------------
SALES CHARGES AND CONTINGENT DEFERRED SALES CHARGES
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The Parties to the Principal Shareholder Servicer's Agreement
recognize that, if the terms of any Principal Shareholder Servicer's
Agreement, any Prospectus, the Conduct Rules or any other Applicable Law
change disproportionately reduces, in a manner inconsistent with the
intent of this Allocation Schedule, the amount of the existing Principal
Servicer's or any subsequent Principal Servicer's Allocable Portion of
Shareholder Servicing Fees that would have been determined on the basis of
the Allocation Schedule as of any date had no such change occurred, this
Allocation Schedule in respect of the Shares relating to such Fund shall
be adjusted by agreement among the Fund, the existing Principal Servicer
and its Transferees and each subsequent Principal Servicer; provided,
however, if the existing Principal Servicer, such Transferees, each
subsequent Principal Servicer and such Fund cannot agree within thirty
(30) days after the date of any such change, the Parties shall submit the
question to arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association and the decision reached by
the arbitrator shall be final and binding on the Parties hereto.
EXHIBIT I TO THE
ALLOCATION SCHEDULE
SELLING AGENTS CURRENTLY OFFERING OMNIBUS SHARES
1. Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
2. Core-Link
