10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-14818

Federated Investors, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1111467
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Federated Investors Tower Pittsburgh, Pennsylvania	15222-3779
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) 412-288-1900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date: As of October 28, 2010, the Registrant had outstanding 9,000 shares of Class A Common Stock and 102,916,567 shares of Class B Common Stock.

Table of Contents

			Page No.
	Part I. Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets		3
		Consolidated Statements of Income		4
		Consolidated Statements of Changes in Equity		5
		Consolidated Statements of Cash Flows		6
		Notes to the Consolidated Financial Statements		7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		43
	Item 4.	Controls and Procedures		44
	Part II. Other Information
	Item 1.	Legal Proceedings		45
	Item 1A.	Risk Factors		46
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47
	Item 6.	Exhibits		48
Signatures				49

Special Note Regarding Forward-Looking Information

Certain statements in this report on Form 10-Q including those related to asset flows and business mix; obligations to make additional contingent payments pursuant to acquisition agreements; the timing of acquisition related closings; obligations to make additional payments pursuant to employment agreements; the costs associated with the settlement with the Securities and Exchange Commission and the New York State Attorney General; legal proceedings; future cash needs and management’s expectations regarding liquidity and borrowing; future principal uses of cash; performance indicators; impact of accounting policies and new accounting pronouncements; concentration risk; indemnification obligations; the impact of increased regulation (including the possible impact of recent amendments to Rule 2a-7 of the Investment Company Act of 1940); the prospect of increased distribution-related expenses; management’s expectations regarding fee waivers and the impact of such waivers on revenues and net income; the ability to raise additional capital; the rising costs of risk management; possible impairment charges; tax liability; capital losses; the impact of the interest rate swap and the various items set forth under the section entitled Risk Factors constitute forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that may cause the actual results, levels of activity, performance or achievements of Federated or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Among other risks and uncertainties, market conditions may change significantly resulting in changes to Federated’s asset flows and business mix, which may cause a decline in revenues and net income, result in impairments and increase the amount of fee waivers incurred by Federated. The obligation to make contingent payments is based on certain growth and fund performance targets and will be affected by the achievement of such targets, and the obligation to make additional payments pursuant to employment agreements is based on satisfaction of certain conditions set forth in those agreements. Future cash needs and future uses of cash will be impacted by a variety of factors, including the number and size of any acquisitions, Federated’s success in distributing its products, the resolution of pending litigation, potential increases in costs relating to risk management, as well as potential changes in assets under management and/or changes in the terms of distribution and shareholder services contracts with intermediaries who offer Federated’s products to customers. Federated’s risks and uncertainties also include liquidity and credit risks in Federated’s money market funds and revenue risk, which will be affected by yield levels in money market fund products, changes in market values of assets under management, the ability of Federated to collect fees in connection with the management of such products. Many of these factors may be more likely to occur as a result of the ongoing threat of terrorism and the increased scrutiny of the mutual fund industry by federal and state regulators, and the recent and ongoing disruption in global financial markets. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither Federated nor any other person assumes responsibility for the accuracy and completeness of such statements in the future. For more information on these items, see the section entitled Risk Factors herein under Item 2 of Part I, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Part I, Item 1. Financial Statements

Consolidated Balance Sheets

(dollars in thousands)

(unaudited)

	September 30, 2010			December 31, 2009
ASSETS
Current Assets
Cash and cash equivalents	$	222,684		$	90,452
Investments		93,226			31,538
Receivables – affiliates		10,846			11,490
Receivables – other, net of reserve of $123 and $200, respectively		9,711			8,144
Prepaid expenses		13,617			27,090
Current deferred tax asset, net		2,031			11,166
Other current assets		5,167			4,907
Total current assets		357,282			184,787
Long-Term Assets
Goodwill		609,753			581,673
Customer-related intangible assets, net of accumulated amortization of $109,781 and $100,710, respectively		85,258			71,959
Other intangible assets, net of accumulated amortization of $8,494 and $6,932, respectively		6,243			9,364
Deferred sales commissions, net of accumulated amortization of $55,981 and $50,018, respectively		11,228			15,318
Property and equipment, net of accumulated depreciation of $40,423 and $35,541, respectively		38,315			40,027
Other long-term assets		11,063			9,305
Total long-term assets		761,860			727,646
Total assets	$	1,119,142		$	912,433
LIABILITIES
Current Liabilities
Short-term debt – recourse	$	42,500		$	21,000
Accounts payable and accrued expenses		47,566			50,404
Accrued compensation and benefits		53,013			64,387
Other current liabilities		51,173			61,207
Total current liabilities		194,252			196,998
Long-Term Liabilities
Long-term debt – recourse		371,875			105,000
Long-term debt – nonrecourse		6,639			13,556
Long-term deferred tax liability, net		38,226			39,234
Other long-term liabilities		34,787			14,917
Total long-term liabilities		451,527			172,707
Total liabilities		645,779			369,705
Commitments and contingencies (Note (16))
TEMPORARY EQUITY
Redeemable noncontrolling interests in subsidiaries		19,611			13,913
PERMANENT EQUITY
Federated Investors shareholders’ equity
Common stock:
Class A, no par value, 20,000 shares authorized, 9,000 shares issued and outstanding		189			189
Class B, no par value, 900,000,000 shares authorized, 129,505,456 shares issued		232,532			216,820
Additional paid-in capital from treasury stock transactions		153			0
Retained earnings		1,025,967			1,105,073
Treasury stock, at cost, 26,597,889 and 26,571,219 shares Class B common stock, respectively		(795,735	)		(795,389	)
Accumulated other comprehensive (loss) income, net of tax		(9,846	)		1,514
Total Federated Investors, Inc. shareholders’ equity		453,260			528,207
Nonredeemable noncontrolling interest in subsidiary		492			608
Total permanent equity		453,752			528,815
Total liabilities, temporary equity and permanent equity	$	1,119,142		$	912,433

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

3

Consolidated Statements of Income

(dollars in thousands, except per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Revenue
Investment advisory fees, net-affiliates	$	148,051		$	174,861		$	428,364		$	531,721
Investment advisory fees, net-other		15,732			15,151			45,866			42,517
Administrative service fees, net-affiliates		53,085			65,267			161,233			199,726
Other service fees, net-affiliates		21,788			34,374			60,160			125,122
Other service fees, net-other		2,857			2,583			8,821			7,752
Other, net		660			1,367			2,182			4,302
Total revenue		242,173			293,603			706,626			911,140
Operating Expenses
Distribution		68,800			95,911			190,068			333,301
Compensation and related		61,387			62,232			186,469			192,068
Professional service fees		9,401			10,089			9,596			29,873
Office and occupancy		5,841			6,001			16,990			18,315
Systems and communications		5,362			6,058			16,996			17,871
Advertising and promotional		2,724			2,529			7,480			8,238
Travel and related		2,692			2,316			8,005			7,631
Intangible asset impairment and amortization		3,397			3,953			16,522			28,665
Amortization of deferred sales commissions		2,987			5,104			9,274			14,936
Other		4,494			4,677			14,467			17,396
Total operating expenses		167,085			198,870			475,867			668,294
Operating income		75,088			94,733			230,759			242,846
Nonoperating Income (Expenses)
Investment income, net		1,049			233			2,058			789
Gain on securities, net		3,426			1,452			835			1,704
Debt expense – recourse		(4,958	)		(1,112	)		(10,196	)		(3,370	)
Other, net		(65	)		(415	)		(310	)		(1,161	)
Total nonoperating (expenses) income , net		(548	)		158			(7,613	)		(2,038	)
Income before income taxes		74,540			94,891			223,146			240,808
Income tax provision		26,477			34,604			82,613			86,970
Net income including noncontrolling interests in subsidiaries	$	48,063		$	60,287		$	140,533		$	153,838
Less: Net income attributable to noncontrolling interests in subsidiaries		5,007			3,301			7,820			8,444
Net income	$	43,056		$	56,986		$	132,713		$	145,394
Amounts attributable to Federated Investors, Inc.
Earnings per common share – Basic and Diluted	$	0.42		$	0.56		$	1.27		$	1.42
Cash dividends per share	$	0.24		$	0.24		$	1.98		$	0.72

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

4

Consolidated Statements of Changes in Equity

(dollars in thousands)

(unaudited)

	Federated Investors, Inc. Shareholders
	Common Stock		Additional Paid-in Capital from Treasury Stock Transactions			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss) Income, Net of Tax			Total Shareholders’ Equity			Nonredeemable Noncontrolling Interest in Subsidiary			Total Permanent Equity			Redeemable Noncontrolling Interests in Subsidiaries/ Temporary Equity
Balance at December 31, 2008	$	198,630	$	0		$	1,028,928		$	(804,481	)	$	297		$	423,374		$	417		$	423,791		$	779
Net Income		0		0			145,394			0			0			145,394			7,089			152,483			1,355
Other comprehensive income, net of tax:
Unrealized gain, net of reclassification adjustment1		0		0			(132	)		0			777			645			0			645			0
Foreign currency translation2		0		0			0			0			629			629			0			629			62
Comprehensive Income3																146,668			7,089			153,757
Subscriptions – redeemable noncontrolling interest holders		0		0			0			0			0			0			0			0			7,105
Deconsolidation		0		0			0			0			0			0			0			0			(423	)
Stock award activity		12,940		(79	)		(11,158	)		11,548			0			13,251			0			13,251			0
Dividends declared/Distributions to noncontrolling interest in subsidiaries		0		0			(73,650	)		0			0			(73,650	)		(7,023	)		(80,673	)		(130	)
Exercise of stock options		606		79			(2,133	)		6,440			0			4,992			0			4,992			0
Purchase of treasury stock		0		0			0			(18,806	)		0			(18,806	)		0			(18,806	)		0
Balance at September 30, 2009	$	212,176	$	0		$	1,087,249		$	(805,299	)	$	1,703		$	495,829		$	483		$	496,312		$	8,748
Balance at December 31, 2009	$	217,009	$	0		$	1,105,073		$	(795,389	)	$	1,514		$	528,207		$	608		$	528,815		$	13,913
Net Income		0		0			132,713			0			0			132,713			7,420			140,133			400
Other comprehensive loss, net of tax:
Unrealized loss, net of reclassification adjustment1		0		0			16			0			(11,057	)		(11,041	)		0			(11,041	)		0
Foreign currency translation2		0		0			0			0			(303	)		(303	)		0			(303	)		(35	)
Comprehensive Income3																121,369			7,420			128,789
Subscriptions – redeemable noncontrolling interest holders		0		0			0			0			0			0			0			0			7,467
Stock award activity		15,472		0			(8,283	)		8,283			0			15,472			0			15,472			0
Dividends declared/Distributions to noncontrolling interest in subsidiaries		0		0			(203,423	)		0			0			(203,423	)		(7,536	)		(210,959	)		(2,134	)
Exercise of stock options		240		153			(129	)		660			0			924			0			924			0
Purchase of treasury stock		0		0			0			(9,289	)		0			(9,289	)		0			(9,289	)		0
Balance at September 30, 2010	$	232,721	$	153		$	1,025,967		$	(795,735	)	$	(9,846	)	$	453,260		$	492		$	453,752		$	19,611

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

¹ The tax benefit (expense) on the reclassification adjustment, net of unrealized gain/loss was $5,771 and ($429) for the nine months ended September 30, 2010 and 2009, respectively.

² The tax benefit (expense) on the foreign currency translation was $163 and ($339) for the nine months ended September 30, 2010 and 2009, respectively.

³ Comprehensive income for Total Shareholders’ Equity, Nonredeemable Noncontrolling Interest in Subsidiary and Total Permanent Equity was $42,879, $2,446 and $45,325, respectively, for the three months ended September 30, 2010. Comprehensive income for Total Shareholders’ Equity, Nonredeemable Noncontrolling Interest in Subsidiary and Total Permanent Equity was $57,570, $2,436 and $60,006, respectively, for the three months ended September 30, 2009.

5

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

Nine Months Ended September 30,	2010			2009
Operating Activities
Net income including noncontrolling interests in subsidiaries	$	140,533		$	153,838
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Amortization of deferred sales commissions		9,274			14,936
Depreciation and other amortization		16,074			17,947
Impairment of assets		6,956			21,163
Share-based compensation expense		14,703			14,237
(Gain) loss on disposal of assets		(663	)		381
Provision (benefit) for deferred income taxes		14,003			(9,793	)
Tax benefit (detriment) from share-based compensation		1,536			(344	)
Excess tax benefits from share-based compensation		(2,702	)		(954	)
Net purchases of trading securities		(3,448	)		(8,793	)
Deferred sales commissions paid		(8,095	)		(8,744	)
Contingent deferred sales charges received		1,761			2,736
Proceeds from sale of certain B-share-related future revenue		1,223			3,922
Other changes in assets and liabilities:
(Increase) decrease in receivables, net		(885	)		9,516
Decrease in prepaid expenses and other assets		14,426			635
Decrease in accounts payable and accrued expenses		(17,203	)		(15,937	)
Increase in income taxes payable		1,079			1,479
(Decrease) increase in other liabilities		(17,581	)		4,507
Net cash provided by operating activities		170,991			200,732
Investing Activities
Purchases of securities available for sale		(58,202	)		(1,283	)
Cash paid for business acquisitions		(46,127	)		(24,079	)
Cash paid for property and equipment		(5,126	)		(9,964	)
Cash paid for purchased loans		(44,343	)		0
Proceeds from disposal of property and equipment		3,298			0
Proceeds from redemptions of securities available for sale		45,402			1
Net cash used by investing activities		(105,098	)		(35,325	)
Financing Activities
Dividends paid		(203,951	)		(73,912	)
Purchases of treasury stock		(9,289	)		(18,806	)
Distributions to noncontrolling interest in subsidiaries		(9,670	)		(7,153	)
Contributions from noncontrolling interest in subsidiaries		7,467			6,686
Proceeds from shareholders for share-based compensation		683			4,697
Excess tax benefits from share-based compensation		2,702			954
Proceeds from new borrowings – recourse		407,000			54,800
Proceeds from new borrowings – nonrecourse		271			861
Payments on debt – recourse		(118,625	)		(102,371	)
Payments on debt – nonrecourse		(7,383	)		(15,600	)
Other		(2,866	)		0
Net cash provided (used) by financing activities		66,339			(149,844	)
Net increase in cash and cash equivalents		132,232			15,563
Cash and cash equivalents, beginning of period		90,452			45,438
Cash and cash equivalents, end of period	$	222,684		$	61,001

(The accompanying notes are an integral part of these Consolidated Financial Statements.)

6

Notes to the Consolidated Financial Statements

(Unaudited)

(1) Basis of Presentation

The interim consolidated financial statements of Federated Investors, Inc. and its subsidiaries (collectively, Federated) included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented.

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from such estimates, and such differences may be material to the Consolidated Financial Statements.

These financial statements should be read in conjunction with Federated’s Annual Report on Form 10-K for the year ended December 31, 2009. Certain items previously reported have been reclassified to conform to the current period’s presentation.

(2) Summary of Revised Significant Accounting Policies

Included below are excerpts of Federated’s significant accounting policies that have been revised in 2010. For a complete listing of Federated’s significant accounting policies, please refer to Federated’s Annual Report on Form 10-K for the year ended December 31, 2009.

(a) Principles of Consolidation for Variable Interest Entities

Beginning on January 1, 2010, Federated adopted the provisions of the Financial Accounting Standards Board’s (FASB) new consolidation model for variable interest entities (VIEs). As a result, Federated applies two different approaches to consider VIEs for possible consolidation. For non-investment fund entities, Federated considers a qualitative model for identifying whether its interest in a VIE is a controlling financial interest. The qualitative model considers whether Federated has: (1) the power to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or to provide rights to receive benefits from the VIE that could potentially be significant to the VIE. Federated reevaluates the need for consolidation under this qualitative approach on an ongoing basis.

For Federated’s interests in certain investment funds that meet the definition of VIEs, Federated evaluates the extent of Federated’s participation in the economic risks and rewards of the entity based on a quantitative model to determine whether consolidation is necessary. In cases where the results of the quantitative model indicate that Federated’s interest in such an entity absorbs the majority of the variability in the entity’s net assets, Federated is deemed to be the primary beneficiary and thus consolidates the entity.

(b) Deferred Sales Commissions – Self Financing

Federated began self-funding the sale of Class B shares of its sponsored mutual funds in March 2010. Accordingly, Federated capitalizes the upfront commissions related to these B-share sales as deferred sales commissions. The deferred sales commission asset is amortized over the estimated period of benefit of up to eight years. Distribution and shareholder service fees earned are recognized in the Consolidated Statements of Income over the life of the mutual fund share class. Contingent deferred sales charges collected on these share classes are used to reduce the deferred sales commission asset. As of September 30, 2010, Federated has funded $3.7 million in deferred sales commissions.

(c) Cash Flow Hedge

Federated holds an interest rate swap that qualifies for cash flow hedge accounting. Upon inception of a hedging relationship, Federated formally documents the relationship between the hedging instrument and the hedged item, as well as the risk management objective and the nature of the risk being hedged. To qualify for hedge accounting, the derivative must be deemed to be highly effective in offsetting the designated changes in the cash flows of the hedged item. The effective portions of the change in the fair value of the derivative are reported as a component of Accumulated other comprehensive (loss) income, net of tax on the Consolidated Balance Sheets and subsequently reclassified to earnings in the period or periods during which the hedged transaction affects earnings. The change in fair value of the ineffective portion of the derivative, if any, is recognized immediately in earnings. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued. If hedge accounting is discontinued because it is no longer probable that a forecasted transaction will occur, the

7

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

derivative will continue to be recorded on the balance sheet at its fair value with changes in fair value included in current earnings, and the gains and losses in Accumulated other comprehensive (loss) income, net of tax will be recognized immediately into earnings. If hedge accounting is discontinued because the hedging instrument is sold, terminated or no longer designated, the amount reported in Accumulated other comprehensive (loss) income, net of tax up to the date of sale, termination or de-designation continues to be reported in Accumulated other comprehensive (loss) income, net of tax until the forecasted transaction affects earnings. See Note (7) and Note (12) for additional information on the fair value of the interest rate swap at September 30, 2010.

(d) Purchased Loans

Purchased loans, consisting primarily of syndicated, commercial, US dollar-denominated, floating-rate term loans, are recorded at fair value and included in Other current assets on the Consolidated Balance Sheets. Fair value of a purchased loan is determined using an independent, third-party pricing service that determines fair value based upon obtaining bid and ask prices from potential buyers and sellers. Federated is holding the purchased loans as an investment for current income and elected to use fair-value accounting as of the purchase date of the loans in order to account for the purchased loans in a manner similar to its accounting for trading securities. Interest income, which is calculated based on actual days elapsed in a 360-day year, is recorded in Investment income, net in the Consolidated Statements of Income. Changes in the fair values of purchased loans are recognized in Gain on securities, net in the Consolidated Statements of Income. See Note (7) and Note (10) for additional information on the fair value of the purchased loans held at September 30, 2010.

(3) Recent Accounting Pronouncements

(a) On January 1, 2010, Federated adopted the new requirements for expanded fair-value disclosures as issued by the FASB. The new literature requires disclosures about transfers into and out of Levels 1 and 2 fair value measurements and clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. These new rules impact disclosures only and had no impact on Federated’s financial position or results of operations. The new rules also require additional disclosures regarding Level 3 fair value measurements which are effective for reporting periods beginning after December 15, 2010.

(b) On January 1, 2010, Federated adopted the FASB’s new rules governing the consolidation of VIEs, as amended in February 2010 to defer the effective date of the new rules for a reporting entity’s interests in certain investment funds. The new rules prescribe a qualitative model for identifying whether a company has a controlling financial interest in a VIE and eliminates the quantitative model previously prescribed. The new rules identify two primary characteristics of a controlling financial interest: (1) the power to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or provide rights to receive benefits from the VIE. Under the new accounting standard, a company is required to reassess on an ongoing basis whether it holds a controlling financial interest in a VIE. A company that holds a controlling financial interest is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. The adoption of the new standard did not have a material impact on Federated’s Consolidated Financial Statements.

(c) On January 1, 2010, Federated adopted a new accounting standard regarding accounting for transfers of financial assets that removes the concept of a qualifying special-purpose entity from authoritative guidance and also removes the exception previously under GAAP. This new accounting standard also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. The adoption of this new accounting standard did not have a material impact on its Consolidated Financial Statements as Federated was not involved with any transactions to transfer financial assets at the time of adoption.

(d) On January 6, 2010, the FASB issued an update to clarify the scope of the decrease-in-ownership provisions of the accounting rules relating to noncontrolling interests. In addition, the update expands the disclosures required upon deconsolidation of a subsidiary. The update is effective immediately for Federated and is expected to only impact future disclosures regarding the deconsolidation of subsidiaries. Management does not expect the adoption of the update to impact Federated’s Consolidated Financial Statements.

(e) On February 24, 2010, the FASB issued an update to address certain implementation issues related to an entity’s requirement to perform and disclose subsequent-events procedures. Effective upon its issuance, the update exempts Securities and Exchange Commission (SEC) filers from disclosing the date through which subsequent events have been evaluated. As the

8

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

update affected disclosure only, the adoption of the update did not have an impact on Federated’s Consolidated Financial Statements.

(4) Business Combinations and Acquisitions

On September 20, 2010, Federated acquired the money market management business of SunTrust Banks, Inc. (SunTrust Acquisition). Pursuant to the definitive agreement signed on July 16, 2010, $11.0 billion of money market assets transitioned to Federated during the quarter ended September 30, 2010. To date, money market mutual fund assets in nine money market mutual funds managed by SunTrust’s RidgeWorth Capital Management were transitioned into eight existing Federated money market mutual funds with similar investment objectives in connection with the first in a series of closings. Federated expects two more closings to occur in November 2010 to complete the transition.

The transaction includes upfront cash payments that are expected to total up to $7 million, with $4.9 million paid as of September 30, 2010. The transaction also includes contingent purchase price payments payable over five years. The contingent purchase price payments will be calculated as a percentage of revenue less operating expenses directly attributed to certain eligible assets. The contingent payments are not limited by any maximum amount. Based on asset levels of $14.5 billion, the additional payments would total approximately $27 million over five years. The actual amount of the contingent payments will vary based on asset levels and related net revenues. Management is unable to reasonably estimate a range of possible outcomes due to the wide range of possible flow-rate scenarios for the assets under management. The preliminary estimate of fair value of the total estimated consideration is $26.7 million. As of September 30, 2010, a liability of $21.8 million representing the fair value of future consideration payments was recorded in Other long-term liabilities (see Note (7)(a) for a discussion regarding the valuation methodology). This liability will be remeasured at each reporting date and changes in the fair value will be recognized in earnings.

The transaction was accounted for under the acquisition method of accounting. Accordingly, the purchase price was allocated to the intangible assets acquired based upon preliminary estimates of fair values as of the acquisition date. Federated is currently completing its valuation to determine the fair value of the identifiable intangible assets and consideration associated with the SunTrust Acquisition. Although the preliminary results of the valuation are reflected in the Consolidated Financial Statements as of September 30, 2010 and for the three- and nine-month periods ended September 30, 2010 and the related footnotes, the final valuation results may require adjustments to this preliminary valuation and such adjustments may be material. The preliminary valuation results indicate that the purchase price is primarily assignable to a $26.7 million identifiable intangible asset with an indefinite life, which will be deductible for tax purposes.

The results of operations for the SunTrust Acquisition were included in Federated’s Consolidated Financial Statements beginning in September 2010 based on the date of the acquisition. The following table summarizes unaudited pro forma financial information assuming the SunTrust Acquisition occurred at the beginning of the periods presented. This pro forma financial information is for informational purposes only and is not indicative of future results. In addition, the following pro forma financial information has not been adjusted to reflect lower current levels of assets under management:

	(pro forma) Three Months Ended September 30,				(pro forma) Nine Months Ended September 30,
(in millions, except per share data)	2010		2009		2010		2009
Revenue	$	249.7	$	305.6	$	735.4	$	950.7
Net income attributable to Federated Investors, Inc.	$	45.1	$	60.4	$	141.0	$	157.2
Earnings per share – Basic and Diluted
Net income attributable to Federated Investors, Inc.	$	0.44	$	0.59	$	1.35	$	1.53

The pro forma results include adjustments for the effect of acquisition-related expenses including transaction expenses and income tax expense.

(5) Concentration Risk

As of September 30, 2010, Federated has the following revenue concentrations:

9

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

Revenue concentration by asset class – Approximately 50% of Federated’s total revenue for the nine months ended September 30, 2010 was attributable to money market managed assets. A significant change in Federated’s money market business or a significant reduction in money market managed assets due to regulatory changes, changes in the financial markets including significant increases in interest rates over a short period of time, significant deterioration in investor confidence, persistent declines in or prolonged periods of historically low short-term interest rates and resulting fee waivers or other circumstances, could have a material adverse effect on Federated’s results of operations.

Through the adverse market conditions of 2008, Federated’s government agency and treasury money market funds experienced significant asset inflows, which drove substantial increases in Federated’s money market managed assets. These funds grew as certain investors favored the perceived safety and liquidity of portfolios backed by government securities over other investment products. In certain products, the gross yield is not sufficient to cover all of the fund’s normal operating expenses. During the fourth quarter 2008, Federated began waiving fees in order for certain funds to maintain positive or zero net yields.

During the nine months ended September 30, 2010, fee waivers to maintain positive or zero net yields totaled $181.6 million and were partially offset by a related reduction in distribution expenses of $139.8 million such that the net impact to Federated was $41.8 million in reduced operating income. The impact of these fee waivers for the nine months ended September 30, 2010 was significantly more than the impact for the nine months ended September 30, 2009 with $63.1 million in waived fees, $43.8 million in reduced distribution expenses and a net impact on operating income of $19.3 million. Management expects the fee waivers and the related reduction in distribution expense will continue for the remainder of 2010 and into 2011 and will likely be material. Assuming current market conditions and asset levels remain constant, fee waivers for the fourth quarter 2010 may result in a net impact on operating income of approximately $11 million to $12 million. Increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the operating income impact of these waivers. Management is unable to predict the amount of future fee waivers as they are contingent on a number of variables including, but not limited to, available yields on instruments held by the funds, changes in assets within the funds, actions by the Federal Reserve and the U.S. Department of the Treasury, changes in expenses of the funds, changes in the mix of customer assets, and Federated’s willingness to continue the fee waivers.

Revenue concentration by product – Approximately 11% and 12% of Federated’s total revenue for the three and nine months ended September 30, 2010, respectively, was derived from services provided to one sponsored fund (Federated Kaufmann Fund). A significant and prolonged decline in the assets under management in this fund could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to a related reduction to distribution expenses associated with this fund.

Revenue concentration by customer – Approximately 14% and 13% of Federated’s total revenue for the three and nine months ended September 30, 2010, respectively, was derived from services provided to one intermediary customer, the Bank of New York Mellon Corporation (including its Pershing subsidiary). Significant changes in Federated’s relationship with this customer could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to related material reductions to distribution expenses associated with this intermediary.

A listing of Federated’s risk factors is included herein under the section entitled Risk Factors under Item 2 of Part I, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(6) Variable Interest Entities

Federated is involved with various entities in the normal course of business that may be deemed to be voting rights entities or VIEs. In accordance with Federated’s consolidation accounting policy, Federated first determines whether the entity being evaluated is a voting rights entity or a VIE. Once this determination is made, Federated proceeds with its evaluation of whether or not to consolidate the entity. The disclosures below represent the results of such evaluations pertaining to September 30, 2010 and December 31, 2009.

(a) Consolidated Variable Interest Entities

Most of Federated’s sponsored mutual funds meet the definition of a VIE primarily due to the fact that given Federated’s typical series fund structure, the shareholders of each participating portfolio underlying the series fund generally lack the ability as an individual group to make decisions through voting rights regarding the board of directors/trustees of the fund.

10

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

From time to time, Federated invests in certain of these products for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash thereby allowing the product to establish a performance history. Federated’s investment in these products represents its maximum exposure to loss. As of September 30, 2010 and December 31, 2009, Federated was the sole or majority investor in certain of these products and was deemed to be the primary beneficiary since Federated’s majority interest would absorb the majority of the variability of the net assets of the VIE. Federated’s conclusion to consolidate a sponsored product may vary from period to period based on changes in Federated’s percentage interest in the product resulting from changes in the number of fund shares held by either Federated or third parties. Given that the products follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses for Federated. At September 30, 2010, the aggregate assets and liabilities of such entities that Federated consolidated were $25.6 million and $0.4 million, respectively, and Federated recorded $19.6 million to Redeemable noncontrolling interest in subsidiaries on Federated’s Consolidated Balance Sheets. At December 31, 2009, the aggregate assets and liabilities of such entities that Federated consolidated were $22.6 million and $0.5 million, respectively, and Federated recorded $13.9 million to Redeemable noncontrolling interest in subsidiaries on Federated’s Consolidated Balance Sheets. The assets of the products are primarily classified as Investments on Federated’s Consolidated Balance Sheets. The liabilities of the products are primarily classified as Accounts payable and accrued expenses on Federated’s Consolidated Balance Sheets and primarily represent unsettled trades and operating liabilities of the entities. Neither creditors nor equity investors in the products have any recourse to Federated’s general credit. In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of these products for competitive, regulatory or contractual reasons (see Note (1)(o) of Federated’s Annual Report on Form 10-K for the year ended December 31, 2009). Federated has not provided financial support to any of these products outside the ordinary course of business.

(b) Non-Consolidated Variable Interest Entities

At September 30, 2010 and December 31, 2009, Federated was involved with certain VIEs in which it held a significant variable interest or was the sponsor that held a variable interest, but for which it was not the primary beneficiary. The assets and liabilities of these unconsolidated VIEs and Federated’s maximum risk of loss related thereto were as follows:

	As of September 30, 2010						As of December 31, 2009
in millions	Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total remaining carrying value of investment and maximum risk of loss		Unconsolidated VIE assets		Unconsolidated VIE Liabilities		Total remaining carrying value of investment and maximum risk of loss
Sponsored investment funds1	$	262,606.0	$	0	$	280.5	$	305,652.4	$	0	$	89.2
Collateralized debt obligations2	$	17.3	$	122.9	$	0	$	31.1	$	127.3	$	0
Equity investment	$	7.0	$	2.0	$	7.5	$	9.0	$	4.9	$	7.6

¹ The unconsolidated VIE assets for the sponsored investment products represent total net assets under management for the related products. Of Federated’s $280.5 million invested in these products at September 30, 2010, $214.5 million represents investments in money market products included in Cash and cash equivalents, with the remaining $66.0 million included in Investments on the Consolidated Balance Sheets. Of Federated’s $89.2 million invested in these products at December 31, 2009, $81.6 million represents investments in money market products included in Cash and cash equivalents, with the remaining $7.6 million included in Investments on the Consolidated Balance Sheets.

² The risk of loss does not reflect any potential loss as a result of a related deferred tax asset expiring unutilized.

Sponsored Investment Funds – Federated acts as the investment manager for certain investment funds that are deemed to be VIEs, as disclosed above. In addition to Federated’s involvement as the investment manager, Federated may also hold investments in these products. Federated is not the primary beneficiary of these VIEs since Federated’s involvement is limited to that of service provider or represents a minority interest in the fund’s assets under management, or both. As a result, Federated’s variable interest is not deemed to absorb the majority of the variability of the entity’s net assets and therefore Federated has not consolidated these entities.

11

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

In the ordinary course of business, from time to time, Federated may choose to waive certain fees or assume operating expenses of these products for competitive, regulatory or contractual reasons (see Note (1)(o) of Federated’s Annual Report on Form 10-K for the year ended December 31, 2009). Federated has not provided financial support to any of these products outside the ordinary course of business.

Collateralized Debt Obligations (CDOs) – At September 30, 2010 and December 31, 2009, Federated acted as the investment manager for two CDOs with assets under management of $17.3 million and $31.1 million, respectively, that meet the definition of a VIE due primarily to the lack of unilateral decision making authority of the equity holders. These CDOs were not consolidated at September 30, 2010 or December 31, 2009. The CDOs are alternative investment vehicles created for the sole purpose of issuing collateralized debt instruments that offer investors the opportunity for returns that vary with the risk level of their investment. The notes issued by the CDOs are partially collateralized by high yield bonds and had original expected maturities of ten to twelve years. Federated’s variable interests in the CDOs are limited to a 25% equity interest and a fixed, asset-based management fee earned prospectively as services are provided. As an equity holder, Federated participates in all rights and obligations to income and expected losses of the CDOs on a proportionate basis with all other equity holders. In its role as investment manager, Federated is not entitled to any additional residual return nor is it obligated to absorb any expected losses of the entities. Federated has not provided financial support to the CDOs.

Federated is not the primary beneficiary of these VIEs at September 30, 2010 or at December 31, 2009. Upon consideration of the new qualitative model prescribed by the FASB, Federated determined that as of January 1, 2010 and September 30, 2010, neither its equity interest nor its management fee potential could result in Federated receiving benefits or absorbing losses that could potentially be significant to either of these entities. Therefore Federated has not consolidated these entities.

Equity Investment – Federated holds a 12% non-voting, noncontrolling interest in both Dix Hills Partners, LLC, a registered investment adviser and commodity trading adviser, and its affiliate, Dix Hills Associates, LLC (collectively, Dix Hills). Dix Hills is based in Jericho, New York and manages over $1 billion in both absolute return and enhanced fixed-income mandates, including a hedge fund strategy and an enhanced cash strategy. Due primarily to the nature of the voting rights of the equity holders, Dix Hills meets the definition of a VIE, however, with its non-voting 12% interest, Federated is not deemed to have power to direct the activities of Dix Hills and therefore is not the primary beneficiary. Federated has not provided financial support to Dix Hills. Federated’s investment in Dix Hills is included in Other long-term assets on the Consolidated Balance Sheets.

(7) Fair Value Measurements

The FASB defines fair value as the price that would be received to sell an asset or the price paid to transfer a liability on the measurement date. As defined, fair value focuses on the exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. The FASB established a fair value reporting hierarchy to maximize the use of observable inputs and defines the three levels of inputs as follows:

Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets and liabilities may include debt securities and equity securities that are traded in an active exchange market.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs may include observable market data such as closing market prices provided by independent pricing services after considering factors such as the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. In addition, pricing services may determine the fair value of equity securities traded principally in foreign markets when it has been determined that there has been a significant trend in the U.S. equity markets or in index futures trading. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets.

12

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

(a) Fair Value Measurements on a Recurring Basis

The following table presents fair value measurements for classes of Federated’s financial assets and liabilities measured at fair value on a recurring basis:

	September 30, 2010 Fair Value Measurements Using								December 31, 2009 Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial Assets
Cash and cash equivalents	$	222,684	$	0	$	0	$	222,684	$	90,452	$	0	$	0	$	90,452
Available-for-sale equity securities1		65,995		0		0		65,995		7,591		0		0		7,591
Trading securities – equity1		3,594		16,720		0		20,314		4,536		12,966		0		17,502
Trading securities – debt1		850		6,067		0		6,917		267		6,178		0		6,445
Foreign currency forward contract2		0		232		0		232		0		0		0		0
Purchased loans3		0		3,882		0		3,882		0		0		0		0
Total financial assets	$	293,123	$	26,901	$	0	$	320,024	$	102,846	$	19,144	$	0	$	121,990
Financial Liabilities
Interest rate swap4	$	0	$	18,380	$	0	$	18,380	$	0	$	0	$	0	$	0
SunTrust Acquisition future consideration payments liability		0		0		21,846		21,846		0		0		0		0
Foreign currency forward contract5		0		1		0		1		0		154		0		154
Total financial liabilities	$	0	$	18,381	$	21,846	$	40,227	$	0	$	154	$	0	$	154

¹ Amount included in Investments on the Consolidated Balance Sheets.

² Amount included in Receivables – other on the Consolidated Balance Sheets.

³ Amount included in Other current assets on the Consolidated Balance Sheets. Pricing is determined by a third-party pricing service that determines fair value based on bid and ask prices.

⁴ Amount included in Other current liabilities on the Consolidated Balance Sheets. Pricing is determined based on a third-party, model-derived valuation in which all significant inputs are observable in active markets including the Eurodollar future rate and yields for three- and thirty-year Treasury securities.

⁵ Amount included in Accounts payable and accrued expenses on the Consolidated Balance Sheets. Pricing is determined by interpolating a value by utilizing the spot foreign exchange rate and forward points (based on the spot rate and currency interest rate differentials), which are all observable inputs.

The liability for future consideration payments related to the SunTrust Acquisition is recorded at fair value in Other long-term liabilities on the Consolidated Balance Sheet as of September 30, 2010. Management estimated the fair value of future consideration payments related to the SunTrust Acquisition based primarily upon expected future cash flows using an income approach valuation methodology with unobservable market data inputs (Level 3). Such inputs included (1) an estimated rate of change for underlying assets under management based on estimated net redemptions or sales; (2) expected net revenue per managed asset based generally on contract terms; and (3) a discount rate estimated at the current market rate of return.

Federated did not hold material investments in securities that were measured at fair value using significant unobservable market data inputs (Level 3) during the nine months ended September 30, 2010 or year ended December 31, 2009.

Between December 31, 2009 and September 30, 2010, there were no significant transfers between Level 2 and Level 1. From time to time, transfers between Levels 1 and 2 occur reflecting a change in whether pricing services were used to determine the fair value of equity securities traded principally in foreign markets based upon a determination by management that there had been a significant trend in the U.S. equity markets or in index futures trading after the foreign markets closed or if quoted

13

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

market prices were used to determine fair values of these equity securities. Transfers into and out of Levels 1 and 2 of the fair value hierarchy are reported at fair values as of the beginning of the period in which the transfers occur.

With the exception of the aircraft that was classified as held for sale as of December 31, 2009 (and further discussed below), Federated did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at September 30, 2010 or December 31, 2009.

(b) Fair Value Measurements on a Nonrecurring Basis

Since 2008, Federated has experienced significant declines in the assets under management related to certain quantitative investment products acquired in 2006. The declines in assets under management reflect significant market depreciation as well as investor net redemptions. In light of these declines in assets under management, performance relative to peers and indices and the uncertainty regarding each of these in the future, the carrying values of the related intangible assets have been tested for recoverability at various times over the last 18 months. In the first quarter 2009, as a result of management’s impairment testing, Federated recorded a $15.5 million impairment charge in Intangible asset impairment and amortization on the Consolidated Statements of Income. In the second quarter 2010, management’s quarterly recoverability test of the carrying value of these intangible assets indicated that the carrying values were not fully recoverable. Cash flow projections at June 30, 2010 were lower than previous projections prepared in connection with this recoverability testing as a result of additional declines in assets under management due to market depreciation and net outflows. Management estimated the fair value of these intangible assets based primarily upon expected future cash flows using an income approach valuation methodology with unobservable market data inputs (Level 3). Such inputs included (1) an estimated rate of change for underlying assets under management; (2) expected revenue per managed asset; (3) direct operating expenses; and (4) a discount rate. Management estimates a rate of change for underlying assets under management based on a combination of an estimated rate of market appreciation or depreciation and an estimated net redemption or sales rate. Expected revenue per managed asset and direct operating expenses are generally based on contract terms, average market participant data and historical experience. The discount rate is estimated at the current market rate of return. In addition, because of the subjective nature of the projected discounted cash flows, management considered several scenarios and used probability weighting to calculate the expected future cash flows attributable to the intangible assets. The probability-weighted scenarios assumed growth rates in assets under management ranging from -100% to 9% over the cash-flow projection period. As a result of this fair value analysis, Federated recorded a $7.0 million impairment charge on the Consolidated Statements of Income, $5.6 million of which was included in Intangible asset impairment and amortization with the remainder in Other operating expenses. As a result, the related customer relationship intangible assets were written down to $4.3 million, the noncompete agreement included in Other intangible assets was written down to $1.6 million and the related fixed assets were written down to $1.4 million as of June 30, 2010. Intangible asset amortization expense for the succeeding 5 years will be reduced as a result of this impairment. See Note (9) for the revised successive five-year amortization table. Given the uncertainties regarding future market conditions, the timing and pace of a forecasted recovery and possible prolonged periods of underperformance compared to peers and indices and the significance of these factors to assets under management, management cannot be certain of the outcome of future undiscounted cash flow analyses.

As a result of deterioration in the resale market for used aircraft in 2008 and 2009 and management’s intent to sell its aircraft before the end of its previously estimated useful life, Federated recognized impairment charges totaling $5.2 million to write down the carrying value of one of Federated’s aircraft in 2009. Based upon independent valuation and market data for similar assets (Level 2), management estimated the value of this aircraft less expected costs to sell to be $3.4 million at December 31, 2009. The impairment charges of $3.7 million, $1.0 million and $0.5 million were recorded as operating expense in Other on the Consolidated Statements of Income for the first, third and fourth quarters of 2009, respectively. As a result of adopting a plan to sell this aircraft late in 2009, this aircraft was included in Other current assets on the Consolidated Balance Sheets as of December 31, 2009. In the first quarter 2010, this aircraft was sold for net proceeds of $3.3 million. The loss on sale was recorded as an operating expense in Other on the Consolidated Statements of Income in the first quarter of 2010.

(c) Fair Value Measurements of Other Financial Instruments

The fair value of Federated’s nonrecourse debt is estimated based on estimated annual redemption and market appreciation rates of the underlying B-share fund assets. Based on this estimate, the carrying value of nonrecourse debt appearing on the Consolidated Balance Sheets approximates fair value.

14

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

The fair value of Federated’s recourse debt is estimated based on the current market rate for debt with similar remaining maturities. Based on this fair value estimate, the carrying value of recourse debt appearing on the Consolidated Balance Sheets approximates fair value.

(8) Investments

Investments on the Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009 included available-for-sale and trading securities. At September 30, 2010 and December 31, 2009, Federated held investments totaling $66.0 million and $7.6 million, respectively, in fluctuating-value mutual funds that were classified as available-for-sale securities.

Federated’s trading securities totaled $27.2 million and $23.9 million at September 30, 2010 and December 31, 2009, respectively. Federated consolidates certain sponsored products into its Consolidated Financial Statements as a result of Federated’s controlling financial interest in the products (see Note (6)). As a result, all investments held by these sponsored products were included in Federated’s Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009 as trading securities. Federated’s trading investments primarily represented stocks of large- and mid-cap U.S. and international companies and investment-grade debt securities.

Available-for-sale securities were as follows:

	At September 30, 2010									At December 31, 2009
			Gross Unrealized					Estimated Market Value				Gross Unrealized					Estimated Market Value
(in thousands)	Cost		Gains		(Losses)					Cost		Gains		(Losses)
Equity mutual funds	$	47,362	$	2,048	$	(557	)	$	48,853	$	2,301	$	343	$	0		$	2,644
Fixed-income mutual funds		16,411		736		(5	)		17,142		4,620		332		(5	)		4,947
Total fluctuating-value mutual funds	$	63,773	$	2,784	$	(562	)	$	65,995	$	6,921	$	675	$	(5	)	$	7,591

During the first nine months of 2010, Federated invested $55.0 million of available cash in various sponsored equity and fixed-income mutual funds. As of September 30, 2010, unrealized losses of $0.6 million related primarily to equity investments with a fair value of $14.5 million, all of which were outstanding for less than 160 days.

The following table presents gains and losses recognized in Gain on securities, net on the Consolidated Statements of Income in connection with investments:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2010			2009			2010			2009
Unrealized gain (loss) on trading securities	$	2,440		$	1,477		$	(75	)	$	2,606
Realized gains1, 3		1,104			323			2,329			818
Realized losses2, 3		(118	)		(348	)		(1,419	)		(1,334	)
Impairments		0			0			0			(386	)
Gain on securities, net	$	3,426		$	1,452		$	835		$	1,704

¹ Realized gains of $1,094 and $323 related to the disposal of trading securities for the three months ended September 30, 2010 and 2009, respectively. Realized gains of $10 and $0 related to the disposal of available-for-sale securities for the three months ended September 30, 2010 and 2009, respectively. Realized gains of $2,294 and $786 related to the disposal of trading securities for the nine months ended September 30, 2010 and 2009, respectively. Realized gains of $35 and $32 related to the disposal of available-for-sale securities for the nine months ended September 30, 2010 and 2009, respectively.

² Realized losses of $118 and $348 related to the disposal of trading securities for the three months ended September 30, 2010 and 2009, respectively. Realized losses of $1,417 and $1,334 related to the disposal of trading securities for the nine months ended September 30, 2010 and 2009, respectively.

³ Realized gains and losses are computed on a specific-identification basis.

15

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

(9) Intangible Assets and Goodwill

Federated’s identifiable intangible assets consisted of the following at September 30:

	September 30, 2010							December 31, 2009
(in thousands)	Cost		Accumulated Amortization			Carrying Value		Cost		Accumulated Amortization			Carrying Value
Finite-lived intangible assets:
Customer relationships1	$	130,539	$	(109,781	)	$	20,758	$	134,869	$	(100,710	)	$	34,159
Noncompete agreements2		12,837		(8,494	)		4,343		14,396		(6,932	)		7,464
Total finite-lived intangible assets3		143,376		(118,275	)		25,101		149,265		(107,642	)		41,623
Indefinite-lived intangible assets:
Renewable investment advisory rights		64,500		N/A			64,500		37,800		N/A			37,800
Trade names		1,900		N/A			1,900		1,900		N/A			1,900
Total indefinite-lived intangible assets		66,400		N/A			66,400		39,700		N/A			39,700
Total identifiable intangible assets	$	209,776	$	(118,275	)	$	91,501	$	188,965	$	(107,642	)	$	81,323

¹ Weighted average amortization period of 9.6 years as of September 30, 2010

² Weighted average amortization period of 7.0 years as of September 30, 2010

³ Weighted average amortization period of 9.4 years as of September 30, 2010

The decrease of $5.9 million in the cost of the Total finite-lived intangible assets at September 30, 2010 as compared to December 31, 2009 primarily relates to a $5.6 million impairment charge recorded in the second quarter of 2010. See Note (7)(b) for additional information on the impairment.

The increase of $26.7 million in the cost of the Renewable investment advisory rights indefinite-lived intangible assets at September 30, 2010, as compared to December 31, 2009, reflects the purchase price related to the SunTrust Acquisition. See Note (4) for additional information.

Amortization expense for identifiable intangible assets for the three- and nine-month periods ended September 30, 2010 was $3.4 million and $10.9 million, respectively, and $4.0 million and $12.6 million, respectively, for the same periods of 2009. This expense was included in Intangible asset impairment and amortization on the Consolidated Statements of Income for each period.

Following is a schedule of expected aggregate annual amortization expense for intangible assets in each of the five succeeding years assuming no new acquisitions or impairments:

(in millions)	For the years ending December 31,
2010	$	14.3
2011	$	7.5
2012	$	3.9
2013	$	3.1
2014	$	2.4

Goodwill at September 30, 2010 and December 31, 2009 was $609.8 million and $581.7 million, respectively. During the first nine months of 2010, Federated recorded goodwill primarily in connection with contingent purchase price payments and accruals related to the 2005 acquisition of the cash management business of Alliance Capital Management L.P. (Alliance Acquisition) ($6.8 million) and the 2008 acquisition of certain assets of David W. Tice & Associates LLC that relate to the management of the Prudent Bear Fund and the Prudent DollarBear Fund (Prudent Bear Acquisition) ($19.4 million). See Note (16)(a) for additional information.

16

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

(10) Purchased Loans

During the second quarter 2010, Federated began investing in syndicated, commercial, US dollar-denominated, floating-rate term loans. During the third quarter 2010, Federated transferred $43.4 million in purchased loans and $2.7 million in cash into a new Federated sponsored fund in exchange for shares of the fund. This transfer of assets was recorded as a sale for accounting purposes given that the loans were legally isolated from Federated, the Federated sponsored fund has the right to pledge or exchange the loans and Federated has not maintained effective control over the transferred loans. Federated recorded $0.6 million in Gain on securities, net on the Consolidated Statements of Income as a result of the sale of these loans. As of September 30, 2010, the fair value of the remaining purchased loans, which totaled $3.9 million, was included in Other current assets on the Consolidated Balance Sheets. Of this amount, purchases of $2.8 million had not settled as of September 30, 2010; therefore, an offsetting amount was recorded in Other current liabilities on the Consolidated Balance Sheets. The aggregate unpaid principal balance on the purchased loans approximated fair value as of September 30, 2010. As of September 30, 2010, there were no defaults on any of the remaining purchased loans.

(11) Other Current Liabilities

Federated’s Other current liabilities at September 30, 2010 included an accrual of $19.4 million related to the second anniversary contingent purchase price payment for the Prudent Bear Acquisition, which is payable no later than March 2011 (see Note (16)(a) for additional information), $18.4 million related to the interest rate swap (see Note (12) for additional information) and $2.8 million related to unsettled purchased loans (see Note (10) for additional information).

Federated’s Other current liabilities at December 31, 2009 included an accrual of $28.9 million related to the contingent purchase price payments for the 2005 acquisition of the cash management business of Alliance Capital Management L.P. (Alliance Acquisition) which was paid in April 2010. The final payment for the Alliance Acquisition of $3.3 million was paid in July 2010. Also included in Other current liabilities at December 31, 2009 was $20.8 million related to insurance proceeds for claims submitted to cover costs associated with the government investigations into past mutual fund trading practices and related legal proceedings (see Note (16)(c)). The retention of these advance insurance payments was contingent upon final approval of the claim by the insurance carrier. In the event that all or a portion of the claim was denied, Federated would have been required to repay all or a portion of these advance payments. During the second quarter 2010, Federated received an additional $4.2 million in related insurance proceeds and received final approvals by the insurance carrier for $25 million of claims. Accordingly, $25 million of proceeds were recognized on the Consolidated Statements of Income for the second quarter 2010 as reductions to the operating expense line items originally charged.

(12) Recourse Debt and Interest Rate Swap

Recourse debt consisted of the following:

(dollars in thousands)	Weighted- Average Interest Rates						Maturity Date		September 30, 2010		December 31, 2009
	20101			20092
Term Loan		4.396	%		1.72	%		April 1, 2015	$	414,375	$	126,000
Less: Short-term debt – recourse										42,500		21,000
Long-term debt – recourse									$	371,875	$	105,000

¹ As of September 30, 2010; See additional information below regarding the interest rate fixed at 4.396% in connection with the interest rate swap.

² As of December 31, 2009

During the second quarter 2010, Federated entered into a five-year $425 million amended and restated term loan credit agreement by and among Federated, certain of its subsidiaries and a syndicate of 22 banks led by PNC Capital Markets LLC as sole bookrunner and joint lead arranger and Citigroup Global Markets, Inc. as joint lead arranger (Term Loan).

17

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

The Term Loan amended and restated Federated’s $140 million term loan dated August 19, 2008. The Term Loan requires principal payments of $10.6 million per quarter for the first four years and $63.8 million per quarter for the fifth year with the final payment due on April 1, 2015. Certain subsidiaries entered into an Amended and Restated Continuing Agreement of Guaranty and Suretyship whereby these subsidiaries guarantee payment of all obligations incurred through the Term Loan. The Term Loan also includes representations, warranties and other financial and non-financial covenants. Proceeds from the Term Loan were used to refinance and repay the existing debt and are being used for general corporate purposes. The Term Loan qualified for modification accounting treatment. Accordingly, closing costs of $2.8 million were capitalized in the second quarter 2010 and are being amortized over the 5-year term of the loan.

During the first quarter 2010, Federated entered into an interest rate swap to hedge its interest rate risk associated with the $425 million Term Loan (the Swap). The Swap, which became effective in the second quarter 2010, had an initial notional amount of $425 million that declines in accordance with the scheduled principal payments associated with the Term Loan. Under the Swap, which expires on April 1, 2015, Federated receives payments based on the London Interbank Offering Rate (LIBOR) plus a spread and makes payments based on an annual fixed rate of 4.396%. The Swap requires monthly cash settlements of interest paid or received. The differential between the interest paid or interest received from the monthly settlements will be recorded as adjustments to Debt expense – recourse on the Consolidated Statements of Income. The Swap is accounted for as a cash flow hedge and has been determined to be highly effective. Federated evaluates effectiveness using the long-haul method. Changes in the fair value of the Swap will likely be offset by an equal and opposite change in the fair value of the hedged item, therefore very little, if any, net impact on reported earnings is expected. The fair value of the Swap agreement at September 30, 2010 was a liability of $18.4 million which was recorded in Other current liabilities on the Consolidated Balance Sheets. The entire amount of this loss in fair value was recorded in Accumulated other comprehensive (loss) income, net of tax on the Consolidated Balance Sheets at September 30, 2010. During the next twelve months management expects to charge $8.2 million of this after-tax loss to Debt expense – recourse on the Consolidated Statements of Income as a component of Federated’s fixed interest rate of 4.396%. This amount could differ from amounts actually recognized due to changes in interest rates subsequent to September 30, 2010 and will not affect the amount of interest expense recognized in total on the Term Loan for any period presented. During the three- and nine-month periods ended September 30, 2010, $2.2 million and $4.3 million, respectively, were charged to Debt expense – recourse on the Consolidated Statements of Income as a component of Federated’s fixed interest rate of 4.396%.

In addition, as of September 30, 2010 and December 31, 2009, all of Federated’s $200 million Revolving Credit Facility was available for borrowings.

(13) Share-Based Compensation Plans

(a) Restricted Stock

During the first nine months of 2010, Federated awarded 352,879 shares of restricted Federated Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under Federated’s Stock Incentive Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, will generally vest over a three-year period. Federated awarded 1,155,136 shares of restricted Federated Class B common stock under its Stock Incentive Plan to employees during 2009.

(b) Stock Options

During the first nine months of 2010, 51,900 employee stock options were exercised and the resulting shares were issued out of treasury. Options exercised during 2009 totaled 345,275.

(c) Non-management Director Award

During the first nine months of 2010, Federated awarded 6,000 shares of Federated Class B common stock to non-management directors. During 2009, Federated awarded 12,000 fully vested stock options to non-management directors.

18

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

(14) Equity

During 2008, the board of directors authorized a share repurchase program with no stated expiration date that allows Federated to buy back as many as 5 million shares of Class B common stock. No other programs existed as of September 30, 2010. The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock will be held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities.

During the first nine months of 2010, Federated repurchased 0.4 million shares of common stock for $9.3 million, the majority of which were repurchased in the open market and the remainder of which were repurchased in connection with employee separations and were not counted against the board-approved share repurchase program. At September 30, 2010, 3.8 million shares remain available to be purchased under the current buyback program.

(15) Earnings Per Share Attributable to Federated Investors, Inc. Shareholders

The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated Investors, Inc.:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2010			2009			2010			2009
Numerator – Basic
Net income attributable to Federated Investors, Inc.	$	43,056		$	56,986		$	132,713		$	145,394
Less: Total income available to participating unvested restricted shareholders1		(1,251	)		(1,436	)		(5,766	)		(3,514	)
Total net income attributable to Federated Common Stock2	$	41,805		$	55,550		$	126,947		$	141,880
Numerator – Diluted
Net income attributable to Federated Investors, Inc.	$	43,056		$	56,986		$	132,713		$	145,394
Less: Total income available to participating unvested restricted shareholders1		(1,251	)		(1,435	)		(5,766	)		(3,512	)
Total net income attributable to Federated Common Stock2	$	41,805		$	55,551		$	126,947		$	141,882
Denominator
Basic weighted-average common shares outstanding		99,916			99,958			99,907			99,976
Dilutive potential shares from stock options		38			128			84			120
Diluted weighted-average common shares outstanding		99,954			100,086			99,991			100,096
Earnings per Share
Net income attributable to Federated Common Stock – Basic2	$	0.42		$	0.56		$	1.27		$	1.42
Net income attributable to Federated Common Stock – Diluted2	$	0.42		$	0.56		$	1.27		$	1.42

¹ Income available to participating restricted shareholders includes dividends paid to unvested restricted shareholders, net of estimated and actual forfeited dividends, and their proportionate share of undistributed earnings, if any.

² Federated Common Stock excludes unvested restricted stock which are deemed participating securities in accordance with the two-class method of computing earnings per share.

For the three- and nine-month periods ended September 30, 2010, 3.4 million and 2.9 million stock option awards, respectively, were outstanding, but not included in the computation of diluted earnings per share for each period because the exercise price was greater than the average market price of Federated Class B common stock for each respective period. For the three- and nine-month periods ended September 30, 2009, 1.9 million and 2.9 million stock option awards, respectively, were outstanding, but not included in the computation of diluted earnings per share for each period because the exercise price was greater than the average market price of Federated Class B common stock for each respective period. In the event the awards

19

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

become dilutive, these shares would be included in the calculation of diluted earnings per share and would result in additional dilution.

(16) Commitments and Contingencies

(a) Contractual

As part of the SunTrust Acquisition, Federated is required to make contingent purchase price payments over the five-year period following the acquisition date. The contingent purchase price payments will be calculated as a percentage of revenue less operating expenses directly attributed to certain eligible assets. Based on asset levels of $14.5 billion, the additional payments would total approximately $27 million over five years. The actual amount of the contingent payments will vary based on asset levels and related net revenues. Management is unable to reasonably estimate a range of possible outcomes due to the wide range of possible flow-rate scenarios for the assets under management. As of September 30, 2010, a liability of $21.8 million representing the fair value of future consideration payments was recorded in Other long-term liabilities (see Note (7)(a) for a discussion regarding the valuation methodology). This liability will be remeasured at each reporting date and changes in the fair value will be recognized in earnings.

As part of the Prudent Bear Acquisition, Federated is required to make contingent purchase price payments based upon certain revenue growth targets over the four-year period following the acquisition date. The contingent purchase price payments, which could total as much as $99.5 million, will be recorded as additional goodwill at the time the contingency is resolved. The first contingent purchase price payment of $5.1 million was paid in the first quarter of 2010. As of September 30, 2010, $19.4 million was accrued for the second anniversary year payment expected to be made as early as Q4 2010 but no later than March 2011.

In the fourth quarter 2008, Federated acquired certain assets of Clover Capital Management, Inc. (Clover Capital Acquisition). As part of the Clover Capital Acquisition, Federated is required to make contingent purchase price payments based upon growth in revenues over the five-year period following the acquisition date. The contingent purchase price payments, which could total as much as $56 million, will be recorded as additional goodwill at the time the contingency is resolved. The applicable growth targets were not met for the first payment related to the anniversary year ended in December 2009. As such, no amounts were accrued in 2009 or paid in 2010. No amounts were accrued as of September 30, 2010 for the second anniversary year ending in December 2010.

As part of the Alliance Acquisition, Federated was required to make contingent purchase price payments over a five-year period following the acquisition date. These payments were primarily calculated as a percentage of revenues less certain operating expenses directly attributed to the assets acquired. Contingent purchase price payments of $10.7 million, $13.3 million, $16.2 million, $19.8 million and $32.4 million were paid in the second quarters of 2006, 2007, 2008, 2009, and 2010, respectively. In addition, a final contingent purchase payment of $3.3 million was paid in the third quarter 2010. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

In the third quarter 2007, Federated completed a transaction with Rochdale Investment Management LLC to acquire certain assets relating to its business of providing investment advisory and investment management services to the Rochdale Atlas Portfolio (Rochdale Acquisition). The Rochdale Acquisition agreement provides for two forms of contingent purchase price payments that are dependent upon asset growth and fund performance through 2012. The first form of contingent payment is payable in 2010 and 2012 and could aggregate to as much as $20 million. The second form of contingent payment is payable on a semi-annual basis over the five-year period following the acquisition closing date based on certain revenue earned by Federated from the Federated InterContinental Fund. As of September 30, 2010, $2.5 million was paid in semi-annual contingent purchase price payments, $0.6 million was accrued related to future semi-annual contingent purchase price payments and $1.1 million was accrued with regard to the first form of contingent payment payable in the fourth quarter 2010. Both of these future payments were accrued in Other current liabilities and recorded as goodwill. Contingent payments are recorded as additional goodwill at the time the related contingency is resolved.

Pursuant to various significant employment arrangements, Federated may be required to make certain incentive compensation-related payments. The employment contracts expire on various dates through the year 2014 with payments possible through 2018. As of September 30, 2010, the maximum bonus payable over the remaining terms of the contracts approximates $91 million, none of which would be payable in the remainder of 2010. In addition, certain employees have incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund (the Fund Bonus). Based on current asset levels, $0.1 million

20

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

would be paid in 2011 as the first Fund Bonus payment. Management is unable to reasonably estimate a range of possible bonus payments for the Fund Bonus for subsequent years due to the wide range of possible growth-rate scenarios.

Pursuant to other long-term employment arrangements, Federated may be required to make additional payments upon the occurrence of certain events. Under these other agreements, payments could occur on an annual basis and continue through 2013.

(b) Guarantees and Indemnifications

On an intercompany basis, various wholly owned subsidiaries of Federated guarantee certain financial obligations of Federated Investors, Inc., and Federated Investors, Inc. guarantees certain financial and performance-related obligations of various wholly owned subsidiaries. In addition, in the normal course of business, Federated has entered into contracts that provide a variety of indemnifications. Typically, obligations to indemnify third parties arise in the context of contracts entered into by Federated, under which Federated agrees to hold the other party harmless against losses arising out of the contract, provided the other party’s actions are not deemed to have breached an agreed upon standard of care. In each of these circumstances, payment by Federated is contingent on the other party making a claim for indemnity, subject to Federated’s right to challenge the other party’s claim. Further, Federated’s obligations under these agreements may be limited in terms of time and/or amount. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of Federated’s obligations and the unique facts and circumstances involved in each particular agreement. Management believes that if Federated were to incur a loss in any of these matters, such loss should not have a material effect on its business, financial position or results of operations.

(c) Past Mutual Fund Trading Issues and Related Legal Proceedings

During the fourth quarter 2005, Federated entered into settlement agreements with the SEC and New York State Attorney General to resolve the past mutual fund trading issues. Under the terms of the settlements, Federated paid for the benefit of fund shareholders a total of $80.0 million. In addition, Federated agreed to reduce the investment advisory fees on certain Federated Funds by $4.0 million per year for the five-year period beginning January 1, 2006, based upon effective fee rates and assets under management as of September 30, 2005. Depending upon the level of assets under management in these funds during the five-year period, the actual investment advisory fee reduction could be greater or less than $4.0 million per year. For each of the nine months ended September 30, 2010 and 2009, these fee reductions were approximately $2 million.

Since October 2003, Federated has been named as a defendant in twenty-three cases filed in various federal district courts and state courts involving allegations relating to market timing, late trading and excessive fees. One market timing/late trading case was voluntarily dismissed by the plaintiff without prejudice. All of the pending cases involving allegations related to market timing and late trading have been transferred to the U.S. District Court for the District of Maryland and consolidated for pre-trial proceedings. Without admitting the validity of any claim, Federated reached a settlement with the plaintiffs in these pending cases. The settlement was accrued in a prior period and the accrual was not material to the Consolidated Financial Statements. A hearing to address final approval of the settlement was held on October 21 and October 22, 2010. The Court entered an order granting final approval of the settlement on October 25, 2010.

The seven excessive fee cases were originally filed in five different federal courts and one state court. All six of the federal cases are now consolidated and pending in the U.S. District Court for the Western District of Pennsylvania. The state court case was voluntarily dismissed by the plaintiff without prejudice.

The plaintiffs in the excessive fee cases seek compensatory damages reflecting a return of all advisory fees earned by Federated in connection with the management of the Federated Kaufmann Fund since June 28, 2003, as well as attorneys’ fees and expenses. The remaining lawsuits seek unquantified damages, attorneys’ fees and expenses. Federated is defending this litigation. The potential impact of these lawsuits and similar suits against third parties, as well as the timing of settlements, judgments or other resolution of these matters, is uncertain. It is possible that an unfavorable determination will cause a material adverse impact on Federated’s financial position, results of operations and/or liquidity in the period in which the effect becomes reasonably estimable.

The Consolidated Financial Statements for the nine-month periods ended September 30, 2010 and 2009 reflect $7.9 million and $8.9 million, respectively, for costs associated with various legal, regulatory and compliance matters, including costs incurred on behalf of the funds, costs incurred and estimated to complete the distribution of Federated’s regulatory settlement,

21

Notes to the Consolidated Financial Statements (continued)

(Unaudited)

costs related to certain other undertakings of these settlement agreements, and costs incurred and estimated to resolve certain of the above-mentioned ongoing legal proceedings. Accruals for these estimates represent management’s best estimate of probable losses at this time. Actual losses may differ from these estimates, and such differences may have a material impact on Federated’s consolidated results of operations, financial position or cash flows.

(d) Other Legal Proceedings

Federated has other claims asserted and threatened against it in the ordinary course of business. As of September 30, 2010, Federated does not believe that a material loss related to these claims is reasonably estimable. These claims are subject to inherent uncertainties. It is possible that an unfavorable determination will cause a material adverse impact on Federated’s reputation, financial position, results of operations and/or liquidity in the period in which the effect becomes reasonably estimable.

(17) Subsequent Events

On October 28, 2010, the board of directors declared a $0.24 per share dividend to shareholders of record as of November 8, 2010 to be paid on November 15, 2010.

22

Part I, Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations (Unaudited)

The discussion and analysis below should be read in conjunction with the consolidated financial statements appearing elsewhere in this report. Management has presumed that the readers of this interim financial information have read or have access to Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in Federated’s Annual Report on Form 10-K for the year ended December 31, 2009.

General

Federated Investors, Inc. (together with its subsidiaries, Federated) is one of the largest investment managers in the United States with $341 billion in managed assets as of September 30, 2010. The majority of Federated’s revenue is derived from advising and administering Federated mutual funds and Separate Accounts (which include separately managed accounts, institutional accounts, sub-advised funds and other managed products) in both domestic and international markets. Federated also derives revenue from providing various other mutual fund-related services, including distribution, shareholder servicing and retirement plan recordkeeping services (collectively, Other Services).

Federated’s investment products are primarily distributed in three markets. These markets and the relative percentage of managed assets at September 30, 2010 attributable to such markets are as follows: wealth management and trust (49%), broker/dealer (30%) and global institutional (18%).

Investment advisory fees, administrative service fees and certain fees for Other Services, such as distribution and shareholder service fees, are contract-based fees that are generally calculated as a percentage of the net assets of the investment portfolios that are managed by Federated. As such, Federated’s revenue is primarily dependent upon factors that affect the value of managed assets including market conditions and the ability to attract and retain assets. Nearly all assets under management in Federated’s investment products can be redeemed at any time with no advance notice requirement. Fee rates for Federated’s services generally vary by asset type and investment objective and, in certain instances, decline as the average net assets of the individual portfolios exceed certain thresholds. Generally, rates charged for advisory services provided to equity products are higher than rates charged on money market and fixed-income products and liquidation portfolios. Likewise, mutual funds typically have a higher fee rate than Separate Accounts. Similarly, traditional separate accounts typically have a higher fee rate than liquidation portfolios. Accordingly, revenue is also dependent upon the relative composition of average assets under management across both asset and product types. Federated may waive certain fees for competitive reasons such as to maintain positive or zero net yields, to meet regulatory requirements (including settlement-related waivers (see Note (16)(c) to the Consolidated Financial Statements)) or to meet contractual requirements. Since Federated’s products are largely distributed and serviced through financial intermediaries, Federated pays a portion of its fees earned from sponsored products to the financial intermediaries that sell these products. These payments are generally calculated as a percentage of net assets attributable to the party receiving the payment and are recorded on the Consolidated Statements of Income as a distribution expense.

Federated’s remaining Other Services fees are primarily based on fixed rates per retirement plan participant. Revenue relating to these services generally depends upon the number of plan participants, which may vary as a result of sales and marketing efforts, competitive fund performance, introduction and market reception of new product features and acquisitions.

Federated’s most significant operating expenses include distribution expenses and compensation and related costs, which represent fixed and variable compensation and related employee benefits. Certain of these expenses are dependent upon sales, product performance, levels of assets, asset mix and management’s willingness to continue fee waivers to maintain positive or zero net yields.

The discussion and analysis of Federated’s financial condition and results of operations are based on Federated’s Consolidated Financial Statements. Management evaluates Federated’s performance at the consolidated level based on the view that Federated operates in a single operating segment, the investment management business. Management analyzes all expected revenue and expenses and considers market demands in determining an overall fee structure for services provided and in evaluating the addition of new business. Federated’s growth and profitability are dependent upon its ability to attract and retain assets under management and, in light of the recent and continuing adverse market conditions, are also dependent upon the profitability of those assets, which is impacted, in part, by management’s decisions regarding fee waivers to maintain positive or zero net yields on certain products. Fees for fund-related services are ultimately subject to the approval of the independent directors or trustees of the mutual funds. Management believes the most meaningful indicators of Federated’s performance are assets under management, total revenue and net income, both in total and per diluted share.

23

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

Business Developments

Continuing Disruption in Global Financial Markets

In recent years, the financial markets have experienced periods of extreme volatility due to uncertainty and disruption in large segments of the credit markets. During the latter half of 2008 and early 2009, the disruptions in the financial markets worsened causing severe dislocations on the functioning of the markets and unprecedented strain on the availability of liquidity in the short-term debt markets, including the commercial paper markets, which are important for the operation of prime money market funds which invest primarily in a portfolio of short-term, high-quality, fixed-income securities.

Through the adverse market conditions of 2008, Federated’s government agency and treasury money market funds experienced significant asset inflows, which drove substantial increases in Federated’s money market managed assets. These funds grew as certain investors favored the perceived safety and liquidity of portfolios backed by government securities over other investment products. In certain products, the gross yield is not sufficient to cover all of the fund’s normal operating expenses. During the fourth quarter 2008, Federated began waiving fees in order for certain funds to maintain positive or zero net yields.

During the nine months ended September 30, 2010, fee waivers to maintain positive or zero net yields totaled $181.6 million and were partially offset by a related reduction in distribution expenses of $139.8 million such that the net impact to Federated was $41.8 million in reduced operating income. The impact of these fee waivers for the nine months ended September 30, 2010 was significantly more than the impact for the nine months ended September 30, 2009 with $63.1 million in waived fees, $43.8 million in reduced distribution expenses and a net impact on operating income of $19.3 million. Conversely, the net impact of these fee waivers on operating income for the quarter ended September 30, 2010 ($11.0 million) was less than in the fourth quarter 2009 ($14.9 million), the first quarter 2010 ($17.8 million) and the second quarter 2010 ($13.0 million). Management expects the fee waivers and the related reduction in distribution expense will continue for the remainder of 2010 and into 2011 and will likely be material. Assuming current market conditions and asset levels remain constant, fee waivers for the fourth quarter 2010 may result in a net impact on operating income of approximately $11 million to $12 million. Increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the operating income impact of these waivers. Management is unable to predict the amount of future fee waivers as they are contingent on a number of variables including, but not limited to, available yields on instruments held by the funds, changes in assets within the funds, actions by the Federal Reserve and the U.S. Department of the Treasury, changes in expenses of the funds, changes in the mix of customer assets, and Federated’s willingness to continue the fee waivers.

For the nine months ended September 30, 2010, approximately 50% of Federated’s total revenue was attributable to money market managed assets as compared to 67% for the same period of 2009. A significant change in Federated’s money market business or a significant reduction in money market managed assets due to regulatory changes, changes in the financial markets including significant increases in interest rates over a short period of time, significant deterioration in investor confidence, further persistent declines in or additional prolonged periods of historically low short-term interest rates and resulting fee waivers or other circumstances, could have a material adverse effect on Federated’s results of operations.

Business Combinations and Acquisitions

In the third quarter 2010, Federated acquired the money market management business of SunTrust Banks, Inc. (SunTrust Acquisition). Pursuant to the definitive agreement signed on July 16, 2010, $11.0 billion of money market assets transitioned to Federated as of September 30, 2010. To date, money market mutual fund assets in nine money market mutual funds managed by SunTrust’s RidgeWorth Capital Management were transitioned into eight existing Federated money market mutual funds with similar investment objectives in connection with the first in a series of closings. Federated expects two more closings to occur in November 2010 to complete the transition.

The transaction includes upfront cash payments that are expected to total up to $7 million, with $4.9 million paid as of September 30, 2010. The transaction also includes contingent purchase price payments payable over five years. The contingent purchase price payments will be calculated as a percentage of revenue less operating expenses directly attributed to certain eligible assets. The contingent payments are not limited by any maximum amount. Based on asset levels of $14.5 billion, the additional contingent payments would total approximately $27 million over five years. The actual amount of the contingent payments will vary based on asset levels and related net revenues. Management is unable to reasonably estimate a range of possible outcomes due to the wide range of possible flow-rate scenarios for the assets under management. As of September 30, 2010, a liability of $21.8 million representing the fair value of future consideration payments was recorded in Other long-term

24

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

liabilities (see Note (7)(a) for a discussion regarding the valuation methodology). This liability will be remeasured at each reporting date and changes in the fair value will be recognized in earnings.

The transaction was accounted for under the acquisition method of accounting. Accordingly, the purchase price was allocated to the intangible assets acquired based upon preliminary estimates of fair values as of the acquisition date. Federated is currently completing its valuation to determine the fair value of the identifiable intangible assets and consideration associated with the SunTrust Acquisition. Although the preliminary results of the valuation are reflected in the Consolidated Financial Statements as of September 30, 2010 and for the three- and nine-month periods ended September 30, 2010 and the related footnotes, the final valuation results may require adjustments to this preliminary valuation and such adjustments may be material. See Note (4) and Note (16)(a) to the Consolidated Financial Statements for additional information on this acquisition and the related contingent payments.

Recognition of Insurance Proceeds

In the second quarter 2010, Federated obtained the final approval by the insurance carrier for $25 million of claims submitted over the past several years to cover costs associated with the government investigations into past mutual fund trading practices and related legal proceedings. Accordingly, Federated recognized the $25 million of insurance proceeds on the Consolidated Statements of Income as reductions to the operating expense line items originally charged, including Professional service fees ($21.6 million); Compensation and related ($1.5 million); Office and occupancy ($1.4 million); and Advertising and promotional ($0.5 million).

Special Cash Dividend

A $1.26 per share or $129.8 million special cash dividend was paid in the first quarter 2010. This payment was in addition to the regular quarterly cash dividend of $0.24 per share or $24.7 million also paid in the first quarter 2010. All dividends were considered ordinary dividends for tax purposes. The first quarter 2010 dividend of $1.50 per share negatively impacted first quarter 2010 diluted earnings per share by approximately $0.04 per share due to the application of the two-class method of calculating earnings per share.

Amended and Restated Term Loan and Interest Rate Swap

In the second quarter 2010, Federated entered into a five-year $425 million amended and restated term loan credit agreement by and among Federated, certain of its subsidiaries and a syndicate of 22 banks led by PNC Capital Markets LLC as sole bookrunner and joint lead arranger and Citigroup Global Markets, Inc. as joint lead arranger (Term Loan).

The Term Loan amended and restated Federated’s $140 million term loan dated August 19, 2008. The Term Loan requires principal payments of $10.6 million per quarter for the first four years and $63.8 million per quarter for the fifth year with the final payment due on April 1, 2015. Certain subsidiaries entered into an Amended and Restated Continuing Agreement of Guaranty and Suretyship whereby these subsidiaries guarantee payment of all obligations incurred through the Term Loan. The Term Loan also includes representations, warranties and other financial and non-financial covenants. Proceeds from the Term Loan were used to refinance and repay the existing debt and are being used for general corporate purposes.

The borrowings under the Term Loan bear interest at a spread over the London Interbank Offering Rate (LIBOR). During the first quarter 2010, Federated entered into an interest rate swap transaction (the Swap) which became effective in the second quarter 2010, to hedge its interest rate risk associated with the Term Loan. The Swap had an initial notional amount of $425 million that declines in accordance with the scheduled principal payments associated with the Term Loan. Under the Swap, which expires on April 1, 2015, Federated receives payments based on LIBOR plus a spread and makes payments based on an annual fixed rate of 4.396%. The Term Loan qualifies for modification accounting treatment. Accordingly, closing costs of $2.8 million were capitalized in the second quarter 2010 and are being amortized over the 5-year term of the loan.

Asset Impairments

Since 2008, Federated has experienced significant declines in the assets under management related to certain quantitative investment products acquired in 2006. The declines in assets under management reflect significant market depreciation as well as investor net redemptions. In light of these declines in assets under management, performance relative to peers and indices and the uncertainty regarding each of these in the future, the carrying values of the related intangible assets have been tested for recoverability at various times over the last 18 months. In the first quarter 2009, as a result of management’s impairment testing, Federated recorded a $15.5 million impairment charge in Intangible asset impairment and amortization on the Consolidated Statements of Income. As of June 30, 2010, management’s quarterly recoverability test of the carrying value of

25

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

these intangible assets indicated that the carrying values were not fully recoverable. Cash flow projections at June 30, 2010 were lower than previous projections prepared in connection with this recoverability testing as a result of additional declines in assets under management due to market depreciation and net outflows. Management estimated the fair value of these intangible assets based primarily upon expected future cash flows using an income approach valuation methodology with unobservable market data inputs (Level 3). See Note (7) to the Consolidated Financial Statements for additional information. Such inputs included (1) an estimated rate of change for underlying assets under management; (2) expected revenue per managed asset; (3) direct operating expenses; and (4) a discount rate. Management estimates a rate of change for underlying assets under management based on a combination of an estimated rate of market appreciation or depreciation and an estimated net redemption or sales rate. Expected revenue per managed asset and direct operating expenses are generally based on contract terms, average market participant data and historical experience. The discount rate is estimated at the current market rate of return. In addition, because of the subjective nature of the projected discounted cash flows, management considered several scenarios and used probability weighting to calculate the expected future cash flows attributable to the intangible assets. The probability-weighted scenarios assumed growth rates in assets under management ranging from -100% to 9% over the cash-flow projection period. In the second quarter 2010, as a result of management’s impairment testing, Federated recorded a $7.0 million impairment charge on the Consolidated Statements of Income, $5.6 million of which was included in Intangible asset impairment and amortization with the remainder in Other operating expenses. As a result, the related customer relationship intangible assets were written down to $4.3 million, the noncompete agreement included in Other intangible assets was written down to $1.6 million and the related fixed assets were written down to $1.4 million as of June 30, 2010. Intangible asset amortization expense for the succeeding 5 years will be reduced as a result of this impairment. See Note (9) for the revised successive five-year amortization table. Given the uncertainties regarding future market conditions, the timing and pace of a forecasted recovery and possible prolonged periods of underperformance compared to peers and indices and the significance of these factors to assets under management, management cannot be certain of the outcome of future undiscounted cash flow analyses.

As a result of deterioration in the resale market for used aircraft in 2008 and 2009 and management’s intent to sell its aircraft before the end of its previously estimated useful life, Federated recognized impairment charges totaling $5.2 million to write down the carrying value of one of Federated’s aircraft in 2009. Based upon independent valuation and market data for similar assets, management estimated the value of this aircraft less expected costs to sell to be $3.4 million at December 31, 2009. The impairment charges of $3.7 million, $1.0 million and $0.5 million were recorded as operating expense in Other on the Consolidated Statements of Income for the first, third and fourth quarters of 2009, respectively. As a result of adopting a plan to sell this aircraft late in 2009, this aircraft was included in Other current assets on the Consolidated Balance Sheets as of December 31, 2009. In the first quarter 2010, this aircraft was sold for net proceeds of $3.3 million. The loss on sale was recorded as an operating expense in Other on the Consolidated Statements of Income in the first quarter 2010.

26

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

Asset Highlights

Managed Assets at Period End

	September 30,				Percent Change
(in millions)	2010		2009
By Asset Class
Money market	$	260,899	$	318,064		(18	%)
Fixed-income		40,174		32,039		25	%
Equity		29,133		29,124		0	%
Liquidation portfolios1		11,071		13,073		(15	%)
Total managed assets	$	341,277	$	392,300		(13	%)
By Product Type
Funds:
Money market	$	233,611	$	287,634		(19	%)
Fixed-income		32,211		26,960		19	%
Equity		21,325		20,350		5	%
Total mutual fund assets	$	287,147	$	334,944		(14	%)
Separate Accounts:
Money market	$	27,288	$	30,430		(10	%)
Fixed-income		7,963		5,079		57	%
Equity		7,808		8,774		(11	%)
Total separate account assets	$	43,059	$	44,283		(3	%)
Liquidation Portfolios1	$	11,071	$	13,073		(15	%)
Total managed assets	$	341,277	$	392,300		(13	%)

Average Managed Assets

	Three Months Ended September 30,				Percent Change			Nine Months Ended September 30,				Percent Change
(in millions)	2010		2009					2010		2009
By Asset Class
Money market	$	260,098	$	336,530		(23	%)	$	270,276	$	353,434		(24	%)
Fixed-income		39,192		30,376		29	%		36,691		27,190		35	%
Equity		28,033		27,872		1	%		28,769		25,793		12	%
Liquidation portfolios1		11,313		13,370		(15	%)		11,797		4,994		136	%
Total average managed assets	$	338,636	$	408,148		(17	%)	$	347,533	$	411,411		(16	%)
By Product Type
Funds:
Money market	$	232,230	$	304,959		(24	%)	$	239,523	$	320,511		(25	%)
Fixed-income		31,491		25,499		23	%		30,362		22,684		34	%
Equity		20,411		19,215		6	%		20,657		17,558		18	%
Total average mutual fund assets	$	284,132	$	349,673		(19	%)	$	290,542	$	360,753		(19	%)
Separate Accounts:
Money market	$	27,868	$	31,571		(12	%)	$	30,753	$	32,923		(7	%)
Fixed-income		7,701		4,877		58	%		6,329		4,506		40	%
Equity		7,622		8,657		(12	%)		8,112		8,235		(1	%)
Total average separate account assets	$	43,191	$	45,105		(4	%)	$	45,194	$	45,664		(1	%)
Liquidation Portfolios1	$	11,313	$	13,370		(15	%)	$	11,797	$	4,994		136	%
Total average managed assets	$	338,636	$	408,148		(17	%)	$	347,533	$	411,411		(16	%)

¹ Liquidation portfolios include portfolios of distressed fixed-income securities and liquidating collateralized debt obligation (CDO) products. In the distressed security category, Federated has been retained by a third party to manage assets through an orderly liquidation process that will generally occur over a multi-year period. In the case of liquidating CDOs, the CDO structure has unwound earlier than expected due to events of default related to certain distressed securities in the portfolio. Management-fee rates earned from these portfolios are significantly different than those of traditional separate account mandates.

27

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

Changes in Fixed-Income and Equity Fund Managed Assets

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2010			2009			2010			2009
Fixed-Income Funds
Beginning assets	$	30,651		$	24,100		$	28,427		$	19,321
Sales		3,655			4,789			11,775			12,537
Redemptions		(2,829	)		(2,971	)		(9,393	)		(6,978	)
Net sales		826			1,818			2,382			5,559
Net exchanges		20			53			51			101
Market gains and losses/reinvestments1		714			989			1,351			1,979
Ending assets	$	32,211		$	26,960		$	32,211		$	26,960
Equity Funds
Beginning assets	$	19,344		$	17,966		$	20,960		$	17,562
Sales		1,639			1,503			4,532			4,005
Redemptions		(1,582	)		(1,377	)		(5,104	)		(4,119	)
Net sales (redemptions)		57			126			(572	)		(114	)
Net exchanges		(31	)		(12	)		(54	)		(79	)
Acquisition-related		0			257			0			257
Market gains and losses/reinvestments1		1,955			2,013			991			2,724
Ending assets	$	21,325		$	20,350		$	21,325		$	20,350

¹ Reflects approximate changes in the market value of the securities held by the funds, and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates.

28

Part I, Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations (Unaudited)

Changes in Fixed-Income and Equity Separate Account Assets and Liquidation Portfolios

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2010			2009			2010			2009
Fixed-Income Separate Accounts
Beginning assets	$	7,361		$	4,583		$	5,360		$	4,165
Sales2		530			—			3,289			—
Redemptions2		(244	)		—			(1,078	)		—
Net sales2		286			188			2,211			269
Market gains and losses/reinvestments3		316			308			392			645
Ending assets	$	7,963		$	5,079		$	7,963		$	5,079
Equity Separate Accounts
Beginning assets	$	7,470		$	8,245		$	8,713		$	9,099
Sales2		522			—			1,225			—
Redemptions2		(975	)		—			(2,389	)		—
Net redemptions2		(453	)		(281	)		(1,164	)		(1,096	)
Net exchanges		9			20			31			70
Acquisition-related		0			(257	)		0			(257	)
Market gains and losses/reinvestments3		782			1,047			228			958
Ending assets	$	7,808		$	8,774		$	7,808		$	8,774
Liquidation Portfolios
Beginning assets	$	11,491		$	556		$	12,596		$	1,505
Sales2		3			—			10			—
Redemptions2		(423	)		—			(1,535	)		—
Net (redemptions) sales2		(420	)		12,516			(1,525	)		11,563
Market gains and losses/reinvestments3		0			1			0			5
Ending assets	$	11,071		$	13,073		$	11,071		$	13,073

² For certain accounts, Sales, Redemptions or Net sales/redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of Market gains and losses/reinvestments. Sales and Redemptions data was not reported prior to 2010, therefore some historical data is not available.

³ Reflects approximate changes in the market value of the securities held in the portfolios, and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates.

29

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

Changes in Federated’s average asset mix period-over-period across both asset and product types have a direct impact on Federated’s operating income. Asset mix impacts Federated’s total revenue due to the difference in the fee rates per invested dollar earned on each asset and product type. Equity products generally have a higher management-fee rate than fixed-income products, money market products and liquidation portfolios. Likewise, mutual fund products typically have a higher management-fee rate than Separate Accounts. Similarly, traditional separate accounts typically have a higher management-fee rate than liquidation portfolios. Additionally, certain components of distribution expense can vary depending upon the asset type, distribution channel and/or the size of the customer relationship. Federated generally pays out a larger portion of the revenue earned from managed assets in money market funds than managed assets in equity or fixed-income funds. The following table presents the relative composition of average managed assets and the percent of total revenue derived from each asset type for the nine months ended September 30:

	Percent of Total Average Managed Assets						Percent of Total Revenue
	2010			2009			2010			2009
By Asset Class
Money market assets		78	%		86	%		50	%		67	%
Fixed-income assets		11	%		7	%		18	%		11	%
Equity assets		8	%		6	%		31	%		21	%
Liquidation portfolios		3	%		1	%		—			—
Other activities		N/A			N/A			1	%		1	%
By Product Type
Funds:
Money market assets		69	%		78	%		49	%		66	%
Fixed-income assets		9	%		6	%		17	%		10	%
Equity assets		6	%		4	%		27	%		18	%
Separate Accounts:
Money market assets		9	%		8	%		1	%		1	%
Fixed-income assets		2	%		1	%		1	%		1	%
Equity assets		2	%		2	%		4	%		3	%
Liquidation Portfolios		3	%		1	%		—			—
Other activities		N/A			N/A			1	%		1	%

Total managed assets represent the balance of assets under management at a point in time. By contrast, average managed assets represent the average balance of assets under management during a period of time. Because substantially all revenue and certain components of distribution expense are generally calculated daily based on assets under management, changes in average managed assets are typically a key indicator of changes in revenue earned and asset-based expenses incurred during the same period.

September 30, 2010 period-end managed assets decreased 13% over period-end managed assets at September 30, 2009 and average managed assets for the three- and nine-month periods ended September 30, 2010 decreased 17% and 16%, respectively, over average managed assets for the same periods in 2009 primarily as a result of decreases in money market assets, partially offset by increases in fixed-income assets. Period-end money market assets at September 30, 2010 decreased 18% as compared to September 30, 2009. Average money market assets decreased 23% and 24% for the three- and nine-month periods ended September 30, 2010 as compared to the same periods in 2009.

Period-end fixed-income assets at September 30, 2010 increased 25% as compared to September 30, 2009 and average fixed-income assets for the three- and nine-month periods ended September 30, 2010, increased 29% and 35%, respectively, as compared to the same periods in 2009 primarily due to positive net sales and, to a lesser extent, market appreciation. Period-end equity assets at September 30, 2010 remained flat as compared to September 30, 2009 and average equity assets for the three- and nine-month periods ended September 30, 2010 increased 1% and 12%, respectively, as compared to the same periods in 2009 primarily due to market appreciation. As expected, liquidation portfolios at September 30, 2010 decreased 15% as compared to September 30, 2009 and average assets in liquidation portfolios decreased 15% for the three-month period ended September 30, 2010 as compared to the same period in 2009 due to the gradual liquidation of the portfolio. Average assets in liquidation portfolios increased significantly for the nine-month period ended September 30, 2010 as compared to the

30

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

same period of 2009 primarily due to the selection of Federated to advise a multi-billion-dollar portfolio in the third quarter 2009.

Results of Operations

Revenue. Revenue for the three- and nine-month periods ended September 30 is set forth in the following table:

	Three Months Ended September 30,										Nine Months Ended September 30,
(in millions)	2010		2009		Change			Percent Change			2010		2009		Change			Percent Change
Revenue from managed assets	$	240.3	$	291.9	$	(51.6	)		(18	%)	$	700.8	$	906.2	$	(205.4	)		(23	%)
Revenue from sources other than managed assets		1.9		1.7		0.2			12	%		5.8		4.9		0.9			18	%
Total revenue	$	242.2	$	293.6	$	(51.4	)		(18	%)	$	706.6	$	911.1		(204.5	)		(22	%)

Revenue from managed assets decreased $51.6 million for the three-month period ended September 30, 2010 as compared to the same period in 2009 primarily due to a decrease of $42.9 million resulting from a decrease in average money market managed assets and an increase of $17.3 million in voluntary fee waivers by certain money market funds in order to maintain positive or zero net yields. See Business Developments - Continuing Disruption in Global Financial Markets for additional information on the fee waivers to maintain positive or zero net yields along with the related offsetting reduction in expense and the net impact on operating income. The decrease in revenue was partially offset by an increase in revenue of $8.8 million due to an increase in average fixed-income managed assets and an increase of $2.1 million due to an increase average equity managed assets.

Revenue from managed assets decreased $205.4 million for the nine-month period ended September 30, 2010 as compared to the same period in 2009 primarily due to a decrease of $149.8 million resulting from a decrease in average money market managed assets and an increase of $118.5 million in voluntary fee waivers by certain money market funds in order to maintain positive or zero net yields. The decrease in revenue was partially offset by an increase in revenue of $34.3 million due to an increase in average fixed-income managed assets and an increase of $29.2 million due to an increase average equity managed assets.

For the nine-month period ended September 30, 2010, Federated’s ratio of revenue from managed assets to average managed assets was 0.27% as compared to 0.29% for the same period of 2009. The decrease in the rate was primarily due to the significant increase in voluntary fee waivers to maintain positive or zero net yields.

Operating Expenses. Operating expenses are set forth in the following table:

	Three Months Ended September 30,										Nine Months Ended September 30,
(in millions)	2010		2009		Change			Percent Change			2010		2009		Change			Percent Change
Distribution	$	68.8	$	95.9	$	(27.1	)		(28	%)	$	190.1	$	333.3	$	(143.2	)		(43	%)
Compensation and related		61.4		62.2		(0.8	)		(1	%)		186.5		192.1		(5.6	)		(3	%)
Professional service fees		9.4		10.1		(0.7	)		(7	%)		9.6		29.9		(20.3	)		(68	%)
Intangible asset impairment and amortization		3.4		4.0		(0.6	)		(15	%)		16.5		28.7		(12.2	)		(43	%)
All other		24.1		26.7		(2.6	)		(10	%)		73.2		84.3		(11.1	)		(13	%)
Total operating expenses	$	167.1	$	198.9	$	(31.8	)		(16	%)	$	475.9	$	668.3	$	(192.4	)		(29	%)

Total operating expenses for the three-month period ended September 30, 2010 decreased $31.8 million compared to the same period in 2009. Distribution expense decreased $27.1 million primarily due to a $14.9 million decrease compared to the same period of the prior year associated with maintaining positive or zero net yields in certain money market funds and a $14.0 million decrease related to decreased average money market managed assets in the third quarter 2010 as compared to the same period in 2009.

31

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

Total operating expenses for the nine-month period ended September 30, 2010 decreased $192.4 million compared to the same period in 2009. Distribution expense decreased $143.2 million primarily due to a $96.0 million decrease compared to the same period of the prior year associated with maintaining positive or zero net yields in certain money market funds and a $55.3 million decrease related to decreased average money market managed assets in the first nine months of 2010 as compared to the same period in 2009. Professional service fees decreased $20.3 million due primarily to the recognition of $21.6 million in insurance recoveries for certain legal defense costs primarily for civil lawsuits brought against Federated related to excessive fees, late-day trading and market timing. See Contractual Obligations and Contingent Liabilities – Past Mutual Fund Trading Issues and Related Legal Proceedings for more information regarding these lawsuits and Business Developments – Recognition of Insurance Proceeds for additional information on the insurance recoveries. Intangible asset impairment and amortization decreased $12.2 million due primarily to the decrease in impairments of certain intangible assets in the first nine months of 2010 as compared to the same period in 2009. See Business Developments – Asset Impairments for additional information.

Nonoperating Income (Expenses). Nonoperating expenses, net increased $0.7 million for the three months ended September 30, 2010 as compared to the same period in 2009 due primarily to a $3.8 million increase in Debt expense – recourse related to increased borrowings in 2010 (see Business Developments - Amended and Restated Term Loan and Interest Rate Swap for additional information) partially offset by a $2.0 million increase in Gain on securities, net in the third quarter 2010 compared to the third quarter of 2009, related primarily to investments held by the consolidated sponsored investment products, (see Net Income attributable to Noncontrolling Interests in Subsidiaries below for related offset).

Nonoperating expenses, net increased $5.6 million for the nine months ended September 30, 2010 as compared to the same period in 2009 due primarily to a $6.8 million increase in Debt expense – recourse related to increased borrowings in 2010 (see Business Developments - Amended and Restated Term Loan and Interest Rate Swap for additional information).

Income Taxes. The income tax provision decreased $8.1 million for the three months ended September 30, 2010 as compared to the same period in 2009 primarily due to lower income before income taxes. The effective tax rate was 35.5% for the three-month period ended September 30, 2010 as compared to 36.5% for the same period in 2009, primarily due to the third quarter 2009 increase in deferred tax expense to record a valuation allowance on certain deferred tax assets.

The income tax provision decreased $4.4 million for the nine months ended September 30, 2010 as compared to the same period in 2009 primarily due to lower income before income taxes. The effective tax rate was 37.0% for the nine-month period ended September 30, 2010 as compared to 36.1% for the same period in 2009 primarily due to the impact of increased state taxes.

Net Income attributable to Noncontrolling Interests in Subsidiaries. Net income attributable to noncontrolling interests in subsidiaries increased $1.7 million for the three months ended September 30, 2010 as compared to the same period last year primarily as a result of gains on the value of certain securities held by the consolidated sponsored investment products.

Net Income attributable to Federated Investors, Inc. Net income decreased $13.9 million for the three months ended September 30, 2010 as compared to the same period in 2009, primarily as a result of the changes in revenues and expenses noted above. Basic and diluted earnings per share for the three months ended September 30, 2010 decreased $0.14 as compared to the same period of 2009 primarily due to decreased net income attributable to Federated.

Net income decreased $12.7 million for the nine months ended September 30, 2010 as compared to the same period in 2009, primarily as a result of the changes in revenues and expenses noted above. Basic and diluted earnings per share for the nine months ended September 30, 2010 decreased $0.15 as compared to the same period of 2009 due primarily to decreased net income attributable to Federated. See Note (15) to the Consolidated Financial Statements for additional information.

Liquidity and Capital Resources

Liquid Assets. At September 30, 2010, liquid assets, consisting of cash and cash equivalents, marketable security investments and receivables, totaled $336.5 million as compared to $141.6 million at December 31, 2009. The increase of $194.9 million primarily reflects an increase of $132.2 million in Cash and cash equivalents which was attributable to the following significant items:

Cash Provided by Operating Activities. Net cash provided by operating activities totaled $171.0 million for the nine months ended September 30, 2010 as compared to $200.7 million for the same period in 2009. The decrease of $29.7 million was

32

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

primarily due to timing differences of $20.4 million in the cash settlement of assets and liabilities and a $13.3 million decrease in net income including noncontrolling interests in subsidiaries.

Cash Used by Investing Activities. During the nine-month period ended September 30, 2010, Federated used $105.1 million for investing activities, which included $58.2 million in cash paid for purchases of securities available for sale, $46.1 million in cash paid in connection with purchase price payments for current and prior year business acquisitions and $44.3 million in cash paid for purchases of loans partially offset by $45.4 million of proceeds from sales of securities available for sale.

Cash Provided (Used) by Financing Activities. During the nine-month period ended September 30, 2010, cash provided by financing activities was $66.3 million. During the first nine months of 2010, Federated borrowed an additional $309.5 million and $97.5 million in connection with the Term Loan and its $200 million revolving credit facility, respectively. In addition, during the first nine months of 2010, Federated repaid $97.5 million and $21.1 million in connection with its $200 million revolving credit facility and its Term Loan, respectively. See Note (12) to the Consolidated Financial Statements for more information on Recourse debt. During the first nine months of 2010, Federated also paid $204.0 million or a total of $1.98 per share in dividends to holders of its common shares.

Borrowings. In 2008, Federated entered into a $140 million term loan. In the second quarter 2010, Federated amended and restated this loan. See Business Developments – Amended and Restated Term Loan and Interest Rate Swap for additional information. During 2009, Federated repaid $14 million of its borrowings on this loan and made $21.1 million in principal payments during the first nine months of 2010.

Federated also has a $200 million Revolving Credit Facility that expires October 31, 2011 (Revolving Credit Facility). As of September 30, 2010, Federated had $200 million available for borrowings on the Revolving Credit Facility. See Note (12) to the Consolidated Financial Statements for more information on Recourse debt.

Proceeds from the debt facilities have been used for general corporate purposes including cash payments related to acquisitions, quarterly dividends and share repurchase programs.

Both the Revolving Credit Facility and the Term Loan have interest coverage ratio covenants (consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) to consolidated interest expense) and leverage ratio covenants (consolidated debt to consolidated EBITDA) as well as other customary terms and conditions. Both the Revolving Credit Facility and the Term Loan have an interest coverage ratio covenant of at least 4 to 1, and as of September 30, 2010, the interest coverage ratio was 36.10 to 1. The Revolving Credit Facility and the Term Loan have leverage ratio covenants of no more than 2 to 1 and no more than 2.5 to 1, respectively. As of September 30, 2010, the leverage ratios for the Revolving Credit Facility and the Term Loan were 1.14 to 1 and 1.09 to 1, respectively. Federated was in compliance with its interest coverage and leverage ratios at and during the nine months ended September 30, 2010. Each of the Revolving Credit Facility, Term Loan and the Swap also have certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of the debt or the Swap if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, notice of lien or assessment and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed.

Future Cash Needs. In addition to the contractual obligations and contingent liabilities described below, management expects that principal uses of cash will include funding distribution expenditures, paying incentive and base compensation, repaying recourse debt obligations, paying shareholder dividends, funding business acquisitions, repurchasing company stock, advancing sales commissions, seeding new products and funding property and equipment acquisitions, including computer-related software and hardware. As a result of the highly regulated nature of the investment management business, management anticipates that expenditures for compliance and investment management personnel, compliance systems and related professional and consulting fees may continue to increase. Resolution of the matters previously described regarding past mutual fund trading issues and related legal proceedings, including the excessive fee cases could result in payments which may have a material impact on Federated’s liquidity, capital resources and results of operations.

On October 28, 2010, the board of directors declared a $0.24 per share dividend to shareholders of record as of November 8, 2010 to be paid on November 15, 2010.

After evaluating Federated’s existing liquid assets, expected continuing cash flow from operations, the proceeds from the Term Loan, its remaining borrowing capacity under the Revolving Credit Facility and its ability to obtain additional financing

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Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

arrangements and issue debt or stock, management believes it will have sufficient liquidity to meet its present and reasonably foreseeable cash needs. Management may choose to borrow additional amounts up to the maximum available under the Revolving Credit Facility which could cause total outstanding borrowings to total as much as $604 million.

Financial Position

The following discussion summarizes significant changes in assets and liabilities that are not discussed elsewhere in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Prepaid expenses at September 30, 2010 decreased $13.5 million from December 31, 2009 primarily as a result of a decrease in prepaid taxes due to the application of the prior year overpayments to offset current year estimated tax payment requirements.

Goodwill at September 30, 2010 increased $28.1 million from December 31, 2009. During the first nine months of 2010, Federated recorded goodwill primarily in connection with contingent purchase price payments and accruals related to the 2008 acquisition of the certain assets of David W. Tice & Associates LLC that relate to the management of the Prudent Bear Fund and the Prudent DollarBear Fund (Prudent Bear Acquisition) ($19.4 million) and the 2005 acquisition of the cash management business of Alliance Capital Management L.P. (Alliance Acquisition) ($6.8 million). See Note (16)(a) to the Consolidated Financial Statements for additional information. As of September 30, 2010, Federated’s market capitalization exceeded the recorded goodwill balance by more than 250%.

Other long-term liabilities at September 30, 2010 increased $19.9 million from December 31, 2009 primarily as a result of the liability for future consideration payments related to the SunTrust Acquisition recorded at a fair value of $21.8 million. See Note (4) and Note (7)(a) to the Consolidated Financial Statements for additional information.

Contractual Obligations and Contingent Liabilities

Minimum Contractual Payments. As disclosed in Federated’s 2009 Annual Report on Form 10-K, Federated’s contractual obligations consist of payments related to long-term debt and related interest expense, among other obligations. Due to the recent changes as described in the section entitled Business Developments – Amended and Restated Term Loan and Interest Rate Swap, Federated has updated contractual obligation information related to its new long-term debt obligations. As of September 30, 2010, payments due for the remainder of 2010 approximate $15 million; 2011-2012: $117 million; 2013-2014: $214 million; and 2015: $129 million. Amounts include principal and interest payments. The interest payments reflect the fixed rate of 4.396% in effect under the Swap.

Contingent Liabilities and Payments. As part of the SunTrust Acquisition, Federated is required to make contingent purchase price payments over the five-year period following the acquisition date. The contingent purchase price payments will be calculated as a percentage of revenue less operating expenses directly attributed to certain eligible assets. Based on asset levels of $14.5 billion, the additional payments would total approximately $27 million over five years. The actual amount of the contingent payments will vary based on asset levels and related net revenues. Management is unable to reasonably estimate a range of possible outcomes due to the wide range of possible flow-rate scenarios for the assets under management. As of September 30, 2010, a liability of $21.8 million representing the fair value of future consideration payments was recorded in Other long-term liabilities (see Note (7)(a) for a discussion regarding the valuation methodology). This liability will be remeasured at each reporting date and changes in the fair value will be recognized in earnings.

As part of the Prudent Bear Acquisition, Federated is required to make contingent purchase price payments based upon certain revenue growth targets over the four-year period following the acquisition date. The contingent purchase price payments, which could total as much as $99.5 million, will be recorded as additional goodwill at the time the contingency is resolved. The first contingent purchase price payment of $5.1 million was paid in the first quarter of 2010. As of September 30, 2010, $19.4 million was accrued for the second anniversary year payment expected to be made as early as Q4 2010 but no later than March 2011.

In the fourth quarter 2008, Federated acquired certain assets of Clover Capital Management, Inc. (Clover Capital Acquisition). As part of the Clover Capital Acquisition, Federated is required to make contingent purchase price payments based upon growth in revenues over the five-year period following the acquisition date. The contingent purchase price payments, which could total as much as $56 million, will be recorded as additional goodwill at the time the contingency is resolved. The applicable growth targets were not met for the first payment related to the anniversary year ended in December 2009. As such,

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Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

no amounts were accrued in 2009 or paid in 2010. No amounts were accrued as of September 30, 2010 for the second anniversary year ending in December 2010.

As part of the Alliance Acquisition, Federated was required to make contingent purchase price payments over a five-year period following the acquisition date. These payments were primarily calculated as a percentage of revenues less certain operating expenses directly attributed to the assets acquired. Contingent purchase price payments of $10.7 million, $13.3 million, $16.2 million, $19.8 million and $32.4 million were paid in the second quarters of 2006, 2007, 2008, 2009, and 2010, respectively. In addition, a final contingent purchase payment of $3.3 million was paid in the third quarter 2010. Contingent payments were recorded as additional goodwill at the time the related contingency was resolved.

In the third quarter 2007, Federated completed a transaction with Rochdale Investment Management LLC to acquire certain assets relating to its business of providing investment advisory and investment management services to the Rochdale Atlas Portfolio (Rochdale Acquisition). The Rochdale Acquisition agreement provides for two forms of contingent purchase price payments that are dependent upon asset growth and fund performance through 2012. The first form of contingent payment is payable in 2010 and 2012 and could aggregate to as much as $20 million. The second form of contingent payment is payable on a semi-annual basis over the five-year period following the acquisition closing date based on certain revenue earned by Federated from the Federated InterContinental Fund. As of September 30, 2010, $2.5 million was paid in semi-annual contingent purchase price payments, $0.6 million was accrued related to future semi-annual contingent purchase price payments and $1.1 million was accrued with regard to the first form of contingent payment payable in the fourth quarter 2010. Both of these future payments were accrued in Other current liabilities and recorded as goodwill. Contingent payments are recorded as additional goodwill at the time the related contingency is resolved.

Pursuant to various significant employment arrangements, Federated may be required to make certain incentive compensation-related payments. The employment contracts expire on various dates through the year 2014 with payments possible through 2018. As of September 30, 2010, the maximum bonus payable over the remaining terms of the contracts approximates $91 million, none of which would be payable in the remainder of 2010. In addition, certain employees have incentive compensation opportunities related to the Federated Kaufmann Large Cap Fund (the Fund Bonus). Based on current asset levels, $0.1 million would be paid in 2011 as the first Fund Bonus payment. Management is unable to reasonably estimate a range of possible bonus payments for the Fund Bonus for subsequent years due to the wide range of possible growth-rate scenarios.

Pursuant to other long-term employment arrangements, Federated may be required to make additional payments upon the occurrence of certain events. Under these other agreements, payments could occur on an annual basis and continue through 2013.

Past Mutual Fund Trading Issues and Related Legal Proceedings. During the fourth quarter 2005, Federated entered into settlement agreements with the Securities and Exchange Commission (SEC) and New York State Attorney General (NYAG) to resolve the past mutual fund trading issues. Under the terms of the settlements, Federated paid for the benefit of fund shareholders a total of $80.0 million. In addition, Federated agreed to reduce the investment advisory fees on certain Federated Funds by $4.0 million per year for the five-year period beginning January 1, 2006, based upon effective fee rates and assets under management as of September 30, 2005. Depending upon the level of assets under management in these funds during the five-year period, the actual investment advisory fee reduction could be greater or less than $4.0 million per year. For each of the nine months ended September 30, 2010 and 2009, these fee reductions were approximately $2 million.

Since October 2003, Federated has been named as a defendant in twenty-three cases filed in various federal district courts and state courts involving allegations relating to market timing, late trading and excessive fees. One market timing/late trading case was voluntarily dismissed by the plaintiff without prejudice. All of the pending cases involving allegations related to market timing and late trading have been transferred to the U.S. District Court for the District of Maryland and consolidated for pre-trial proceedings. Without admitting the validity of any claim, Federated reached a settlement with the plaintiffs in these pending cases. The settlement was accrued in a prior period and the accrual was not material to the Consolidated Financial Statements. A hearing to address final approval of the settlement was held on October 21 and October 22, 2010. The Court entered an order granting final approval of the settlement on October 25, 2010.

The seven excessive fee cases were originally filed in five different federal courts and one state court. All six of the federal cases are now consolidated and pending in the U.S. District Court for the Western District of Pennsylvania. The state court case was voluntarily dismissed by the plaintiff without prejudice.

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Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

The plaintiffs in the excessive fee cases seek compensatory damages reflecting a return of all advisory fees earned by Federated in connection with the management of the Federated Kaufmann Fund since June 28, 2003, as well as attorneys’ fees and expenses. The remaining lawsuits seek unquantified damages, attorneys’ fees and expenses. Federated is defending this litigation. The potential impact of these lawsuits and similar suits against third parties, as well as the timing of settlements, judgments or other resolution of these matters, is uncertain. It is possible that an unfavorable determination will cause a material adverse impact on Federated’s financial position, results of operations and/or liquidity in the period in which the effect becomes reasonably estimable.

The Consolidated Financial Statements for the nine-month periods ended September 30, 2010 and 2009 reflect $7.9 million and $8.9 million, respectively, for costs associated with various legal, regulatory and compliance matters, including costs incurred on behalf of the funds, costs incurred and estimated to complete the distribution of Federated’s regulatory settlement, costs related to certain other undertakings of these settlement agreements, and costs incurred and estimated to resolve certain of the above-mentioned ongoing legal proceedings. Accruals for these estimates represent management’s best estimate of probable losses at this time. Actual losses may differ from these estimates, and such differences may have a material impact on Federated’s consolidated results of operations, financial position or cash flows.

Other Legal Proceedings. Federated has other claims asserted and threatened against it in the ordinary course of business. As of September 30, 2010, Federated does not believe that a material loss related to these claims is reasonably estimable. These claims are subject to inherent uncertainties. It is possible that an unfavorable determination will cause a material adverse impact on Federated’s reputation, financial position, results of operations and/or liquidity in the period in which the effect becomes reasonably estimable.

Recent Accounting Pronouncements

On January 1, 2010, Federated adopted the Financial Accounting Standards Board’s new rules governing the consolidation of variable interest entities (VIEs), as amended in February 2010 to defer the effective date of the new rules for a reporting entity’s interests in certain investment funds. The new rules prescribe a qualitative model for identifying whether a company has a controlling financial interest in a VIE and eliminates the quantitative model previously prescribed. The new rules identify two primary characteristics of a controlling financial interest: (1) the power to direct significant activities of the VIE, and (2) the obligation to absorb losses of and/or provide rights to receive benefits from the VIE. Under the new accounting standard, a company is required to reassess on an ongoing basis whether it holds a controlling financial interest in a VIE. A company that holds a controlling financial interest is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. The adoption of the new standard did not have a material impact on Federated’s Consolidated Financial Statements.

For a complete list of new accounting standards recently adopted by Federated, see Note (3) to the Consolidated Financial Statements.

Critical Accounting Policies

Federated’s Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Management continually evaluates the accounting policies and estimates it uses to prepare the Consolidated Financial Statements. In general, management’s estimates are based on historical experience, information from third-party professionals and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results may differ from those estimates made by management and those differences may be significant.

Of the significant accounting policies described in Federated’s Annual Report on Form 10-K for the year ended December 31, 2009, management believes that its policies regarding accounting for VIE consolidation, intangible assets, income taxes and loss contingencies involve a higher degree of judgment and complexity. See Note (1) of the Consolidated Financial Statements and the section entitled Critical Accounting Policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Federated’s Annual Report on Form 10-K for the year ended December 31, 2009 for a complete discussion of these policies.

Accounting for Intangible Assets. In the second quarter 2010, certain intangible assets were written down to fair value as described in Note (7)(b) to the Consolidated Financial Statements. As of June 30, 2010, the undiscounted cash flow projections

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Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

exceeded the new carrying amounts by 60%. The undiscounted cash flows were estimated using probability-weighted scenarios which assumed assets under management growth rates ranging from -100% to 9% over the cash-flow projection period. The different scenarios were developed after taking into consideration uncertain market conditions, the timing and pace of a forecasted recovery and the likelihood and potential impact of prolonged periods of underperformance compared to peers and indices. As of June 30, 2010, declines in assets under management related to these intangible assets in excess of 30% over the subsequent twelve months could cause the assets to be considered for further impairment. There were no indicators of impairment present at September 30, 2010 for these assets.

For the remaining intangible assets, there were no significant changes to the disclosures as of December 31, 2009.

Actual changes in the underlying managed assets and other assumptions could cause the projected cash flows to vary significantly, which may cause impairment of the related identifiable intangible asset. The actual amount of an impairment charge, if any, would depend on the estimated fair value of the intangible asset at that time, which will be determined based on the actual level of managed assets, the then-current projections of future changes in managed assets, estimated earnings and the discount rate.

Risk Factors

Potential Adverse Effects of a Material Concentration in Revenue. For the nine months ended September 30, 2010, approximately 50% of Federated’s total revenue was attributable to money market managed assets as compared to 67% for the same period of 2009. A significant change in Federated’s money market business or a significant decline in money market managed assets due to regulatory changes, changes in the financial markets including significant increases in interest rates over a short period of time, significant deterioration in investor confidence, further persistent declines in or additional prolonged periods of historically low short-term interest rates and resulting fee waivers or other circumstances, could have a material adverse effect on Federated’s results of operations.

Potential Adverse Effects of Historically Low Interest Rates. In December 2008, the Federal Reserve cut the federal funds target rate, a benchmark used by banks to set rates paid on many types of consumer and business loans, to a range between 0% and 0.25%. This action by the Federal Reserve negatively impacts the yields of money market funds, in particular treasury and government agency money market funds. Money market fund yields reflect the return on short-term investments (e.g. Treasury bills), less fund expenses. With short-term interest rates at or near zero, money market funds may not be able to maintain positive yields for shareholders. Federated voluntarily waives certain fees or assumes expenses of the funds for competitive reasons such as to maintain positive or zero net yields, which could cause material adverse effects on Federated’s financial position, results of operations or liquidity in the future. Federated, however, is not obligated to make such fee waivers or to assume such fund expenses.

Federated began waiving fees during the fourth quarter 2008 in order for certain funds to maintain positive or zero net yields. During the course of 2009 and in the first quarter 2010, fee waivers to maintain positive or zero net yields progressively increased quarter over quarter as fund yields declined. These fee waivers which totaled $181.6 million for the nine months ended September 30, 2010 were partially offset by a related reduction in distribution expenses of $139.8 million such that the net impact to Federated was $41.8 million in reduced operating income. The impact of these fee waivers for the nine months ended September 30, 2010 was significantly more than the impact for the nine months ended September 30, 2009 with $63.1 million in waived fees, $43.8 million in reduced distribution expenses and a net impact on operating income of $19.3 million. Conversely, the net impact of these fee waivers on operating income for the quarter ended September 30, 2010 ($11.0 million) was less than in the fourth quarter 2009 ($14.9 million), the first quarter 2010 ($17.8 million), and the second quarter 2010 ($13.0 million). Management expects the fee waivers and the related reduction in distribution expense will continue for the remainder of 2010 and into 2011 and will likely be material. Assuming current market conditions and asset levels remain constant, fee waivers for the fourth quarter 2010 may result in a net impact on operating income of approximately $11 million to $12 million. Increases in short-term interest rates that result in higher yields on securities purchased in money market fund portfolios would reduce the operating income impact of these waivers. Management is unable to predict the amount of future fee waivers as they are contingent on a number of variables including available yields on instruments held by the funds, changes in assets within the funds, actions by the Federal Reserve and the U.S. Department of the Treasury, changes in expenses of the funds, changes in the mix of customer assets, and Federated’s willingness to continue the fee waivers.

Potential Adverse Effects of Rising Interest Rates. In a rising short-term interest rate environment, certain investors using money market products and other short-term duration fixed-income products for cash management purposes may shift these investments to direct investments in comparable instruments in order to realize higher yields than those available in money market and other fund products holding lower-yielding instruments. In addition, rising interest rates will tend to reduce the

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Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

market value of securities held in various investment portfolios and other products. Thus, increases in interest rates could have an adverse effect on Federated’s revenue from money market products and from other fixed-income products.

Potential Adverse Effects of a Decline or Disruption in the Economy or Financial Markets. Economic or financial market downturns, including disruptions in securities and credit markets, may adversely affect the profitability and performance of, demand for and investor confidence in Federated’s investment products and services. The ability of Federated to compete and sustain asset and revenue growth is dependent, in part, on the relative attractiveness of the types of investment products Federated offers and its investment performance and strategies under prevailing market conditions. In the event of extreme circumstances, including economic, political, or business crises, Federated’s products may suffer significant net redemptions in assets under management causing severe liquidity issues in its short-term sponsored investment products and declines in the value of and returns on assets under management, all of which could cause material adverse effects on Federated’s reputation, financial position, results of operations or liquidity.

Likewise, a service provider or vendor of Federated, including the major banks that provide custody and portfolio accounting services for Federated’s investment products, could also be adversely affected by the adverse market conditions described above. It is not possible to predict with certainty the extent to which the services or products Federated receives from such service provider or vendor would be interrupted or affected by such situations. Accordingly, there can be no assurance that potential service interruption or Federated’s ability to find a suitable replacement would not have a material adverse effect on Federated’s reputation, financial position, results of operations or liquidity.

Potential Adverse Effects of Changes in Laws and Regulations on Federated’s Investment Management Business. Federated and its investment management business are subject to extensive regulation in the United States and abroad. Federated and the Federated Funds are subject to Federal securities laws, principally the Securities Act of 1933, the Investment Company Act of 1940 (the Investment Company Act) and the Investment Advisers Act of 1940, state laws regarding securities fraud, and regulations promulgated by various regulatory authorities, including the SEC, the Financial Industry Regulatory Authority (FINRA), and the New York Stock Exchange (the NYSE). Federated is also affected by the regulations governing banks and other financial institutions and, to the extent operations take place outside the United States, by foreign laws and regulatory authorities. Changes in laws, regulations or governmental policies, and the costs associated with compliance, could materially and adversely affect the business and operations of Federated.

From time to time, the Federal securities laws have been augmented substantially. For example, among other measures, Federated has been impacted by the Sarbanes-Oxley Act of 2002, the Patriot Act of 2001 and the Gramm-Leach-Bliley Act of 1999. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was enacted into law on July 21, 2010. Under the Dodd-Frank Act, Federated, as well as mutual funds, continue to be primarily regulated by the SEC. The Dodd-Frank Act provides, however, for a new systemic risk regulation regime under which it is possible that Federated and/or any one or more of its mutual funds could be designated by a newly created Financial Stability Oversight Council (“FSOC”) for enhanced prudential regulation by the Federal Reserve Board, in addition to primary regulation by the SEC. Examples of regulatory changes that could occur are the creation of capital requirements for designated investment advisers or money market funds, and/or a change in the rules governing money market mutual fund net asset value (NAV) calculations including the elimination of amortized cost accounting, which would result in fluctuating NAVs for money market mutual funds. Other provisions of the Dodd-Frank Act may affect intermediaries in their sale or use of Federated’s products. Prior to full implementation, it will be difficult to assess the impact of the Dodd-Frank Act on Federated.

In addition, during the past few years the SEC, FINRA and the NYSE have adopted regulations that have increased Federated’s operating expenses and affected the conduct of its business, and may continue to do so. In January 2010, the SEC adopted amendments to Rule 2a-7 of the Investment Company Act which could impact the operation of certain Federated Funds, although Federated does not expect any such impact to Federated or the Federated Funds to be material. Other significant regulations or amendments to regulations (such as proposed changes to Rule 12b-1 of the Investment Company Act) have been proposed that, if adopted, will affect Federated and the Federated Funds, and Federated anticipates that other reforms and regulatory actions affecting Federated and/or the mutual fund industry are likely to occur.

On October 21, 2010, the President’s Working Group issued its report on Money Market Fund Reform Options (the “Report”). The President’s Working Group was tasked with studying possible reforms relating to money market funds that could mitigate systemic risk in the financial markets (including the potential for disruption in the financial markets caused by rapid shareholder redemptions in money market funds). The Report discusses the conditions that could cause money market funds to experience rapid shareholder redemptions and describes the advantages and disadvantages of a variety of policy options that could reduce the risk of such rapid redemptions. The Report suggests that the FSOC examine these options as part of its

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Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

implementation of the Dodd-Frank Act. At this time, it is difficult to assess what impact, if any, the Report’s recommendations will have on Federated.

Over the past few years, various service industries, including mutual fund service providers, have been the subject of changes in tax policy that impact their state and local tax liability. Changes that have been adopted or proposed include (1) an expansion of the nature of a service company’s activities that subject it to tax in a jurisdiction, (2) a change in the methodology by which multi-state companies apportion their income between jurisdictions, and (3) a requirement that affiliated companies calculate their state tax as one combined entity. As adopted changes become effective and additional jurisdictions effect similar changes, there could be a material adverse effect on Federated’s tax liability and effective tax rate and, as a result, net income.

Potential Adverse Effect of Providing Financial Support to Investment Products. Federated may, at its sole discretion, from time to time elect to provide financial support to its sponsored investment products. Providing such support utilizes capital that would otherwise be available for other corporate purposes. Losses on such support, or failure to have or devote sufficient capital to support products, could have a material adverse effect on Federated’s reputation, financial position, results of operations or liquidity.

Risk of Federated’s Money Market Products’ Ability to Maintain a Stable $1.00 Net Asset Value. Approximately 50% of Federated’s revenue for the first nine months of 2010 was from managed assets in money market products. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation. Although money market funds seek to preserve an NAV of $1.00 per share, it is possible for an investor to lose money by investing in these funds. Federated devotes substantial resources including significant credit analysis to the management of its products. Federated money market funds have always maintained a $1.00 NAV; however, there is no guarantee that such results will be achieved in the future. Market conditions could lead to severe liquidity issues and/or prolonged periods of historically low yields in money market products which could impact their NAVs. If the NAV of a Federated money market fund were to decline to less than $1.00 per share, Federated money market funds would likely experience significant redemptions in assets under management, loss of shareholder confidence and reputational harm, all of which could cause material adverse effects on Federated’s financial position, results of operations or liquidity.

No Assurance of Access to Sufficient Liquidity. From time to time, Federated’s operations may require more cash than is then available from operations. In these circumstances, it may be necessary to borrow from lending facilities or to raise capital by securing new debt or by selling shares of Federated equity or debt securities. Federated’s ability to raise additional capital in the future will be affected by several factors including Federated’s creditworthiness, the market value of Federated’s common stock, as well as general market conditions. There can be no assurance that Federated will be able to obtain these funds and financing on acceptable terms, if at all.

Retaining and Recruiting Key Personnel. Federated’s ability to locate and retain quality personnel has contributed significantly to its growth and success and is important to attracting and retaining customers. The market for qualified executives, investment managers, analysts, traders, sales representatives and other key personnel is extremely competitive. There can be no assurance that Federated will be successful in its efforts to recruit and retain the required personnel. Federated has encouraged the continued retention of its executives and other key personnel through measures such as providing competitive compensation arrangements and in certain cases employment agreements. The loss of any such personnel could have an adverse effect on Federated. In certain circumstances, the departure of key employees could cause higher redemption rates for certain assets under management or the loss of client accounts. Moreover, since certain of Federated’s products contribute significantly to its revenues and earnings, the loss of even a small number of key personnel associated with these products could have a disproportionate impact on Federated’s business.

Various executives, investment, sales and other key personnel own restricted stock and hold stock options subject to vesting periods of up to ten years from the date acquired or awarded and to provisions that require resale or forfeiture to Federated in certain circumstances upon termination of employment. In addition, certain of these employees are employed under contracts which require periodic review of compensation and contain restrictive covenants with regard to divulging confidential information and engaging in competitive activities.

Potential Adverse Effects of Increased Competition in the Investment Management Business. The investment management business is highly competitive. Federated competes in the management and distribution of mutual funds and Separate Accounts with other fund management companies, national and regional broker/dealers, commercial banks, insurance companies and other institutions. Many of these competitors have substantially greater resources and brand recognition than Federated. Competition is based on various factors, including business reputation, investment performance, quality of service,

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Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

the strength and continuity of management and selling relationships, distribution services offered, the range of products offered and fees charged.

Many of Federated’s products are designed for use by institutions such as banks, insurance companies and other corporations. A large portion of Federated’s managed assets, particularly money market and fixed-income managed assets are held by institutional investors. Because most institutional investment vehicles are sold without sales commissions at either the time of purchase or the time of redemption, institutional investors may be more inclined to transfer their assets among various institutional funds than investors in retail mutual funds.

A significant portion of Federated’s revenue is derived from providing mutual funds to the wealth management and trust market, comprising approximately 1,600 banks and other financial institutions. Future profitability of Federated will be affected by its ability to retain its share of this market, and could also be adversely affected by consolidations occurring in the banking industry, as well as regulatory changes.

Potential Adverse Effects of Changes in Federated’s Distribution Channels. Federated acts as a wholesaler of investment products to financial intermediaries including banks, broker/dealers, registered investment advisers and other financial planners. Federated also sells investment products directly to corporations and institutions. Approximately 14% and 13% of Federated’s total revenue for the three and nine months ended September 30, 2010, respectively, was derived from services provided to one intermediary customer, the Bank of New York Mellon Corporation (including its Pershing subsidiary). If this financial intermediary were to cease operations or limit or otherwise end the distribution of Federated’s investment products, it could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income. There can be no assurance that Federated will continue to have access to the financial intermediaries that currently distribute Federated products or that Federated’s relationship with such intermediaries will continue over time. In addition, Federated has experienced increases in the cost of distribution as a percentage of total revenue over the years and expects such costs to continue to increase due to asset growth and the competitive nature of the mutual fund business, exclusive of decreases related to maintaining positive or zero net yields. Higher distribution costs reduce Federated’s operating and net income.

Adverse Effects of Declines in the Amount of or Changes in the Mix of Assets Under Management. A significant portion of Federated’s revenue is derived from investment advisory fees, which are based on the value of managed assets and vary with the type of asset being managed, with higher fees generally earned on equity products than on fixed-income and money market products and liquidation portfolios. Likewise, mutual fund products generally have a higher management fee than Separate Accounts. Similarly, traditional separate accounts typically have a higher fee rate than liquidation portfolios. Additionally, certain components of distribution expense can vary depending upon the asset type, distribution channel and/or the size of the customer relationship. Consequently, significant fluctuations in the market value of securities held by, or the level of redemptions from, the funds or other products advised by Federated may materially affect the amount of managed assets and thus Federated’s revenue, profitability and ability to grow. Similarly, changes in Federated’s average asset mix across both asset and product types have a direct impact on Federated’s revenue and profitability. Federated generally pays out a larger portion of the revenue earned from managed assets in money market funds than managed assets in equity or fixed-income funds. Substantially all of Federated’s managed assets are in investment products that permit investors to redeem their investment at any time. Additionally, changing market conditions may continue to cause a shift in Federated’s asset mix towards money market and fixed-income products which may cause a decline in Federated’s revenue and net income.

Adverse Effects of Poor Investment Performance. Success in the investment management business is largely dependent on investment performance relative to market conditions and the performance of competing products. Good performance generally assists retention and growth of assets, resulting in additional revenues. Conversely, poor performance tends to result in decreased sales and increased redemptions with corresponding decreases in revenues to Federated. Poor performance could, therefore, have a material adverse effect on Federated’s business, results of operations or business prospects. In terms of revenue concentration by product, approximately 11% and 12% of Federated’s total revenue for both the three and nine months ended September 30, 2010, respectively, was derived from services provided to one sponsored fund (Federated Kaufmann Fund). A significant and prolonged decline in the assets under management in this fund could have a material adverse effect on Federated’s future revenues and, to a lesser extent, net income, due to a related reduction to distribution expenses associated with this fund.

Operational Risks. Operational risks include, but are not limited to, improper or unauthorized execution and processing of transactions, deficiencies in operating systems, business disruptions, inadequacies or breaches in Federated’s internal control processes and noncompliance with regulatory requirements. Management relies on its employees and systems to comply with established procedures, controls and regulatory requirements. Breakdown or improper use of systems, human error or improper

40

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

action by employees, or noncompliance with regulatory rules could cause material adverse effects on Federated’s reputation, financial position, results of operations and/or liquidity.

No Assurance of Successful Future Acquisitions. Federated’s business strategy contemplates the acquisition of other investment management companies as well as investment assets. There can be no assurance that Federated will find suitable acquisition candidates at acceptable prices, have sufficient capital resources to realize its acquisition strategy, be successful in entering into definitive agreements for desired acquisitions, or successfully integrate acquired companies into Federated, or that any such acquisitions, if consummated, will prove to be advantageous to Federated.

Impairment Risk. At September 30, 2010, Federated had intangible assets including goodwill totaling $701.3 million on its Consolidated Balance Sheet, the vast majority of which represent assets capitalized in connection with Federated’s acquisitions and business combinations. Accounting for intangible assets requires significant management estimates and judgment. Federated may not realize the value of these intangible assets. Management performs an annual review of the carrying values of goodwill and indefinite-lived intangible assets and periodic reviews of the carrying values of all other intangible assets to determine whether events and circumstances indicate that an impairment in value may have occurred. A variety of factors could cause the carrying value of an intangible asset to become impaired. Should a review indicate impairment, a write-down of the carrying value of the intangible asset would occur, resulting in a non-cash charge which would adversely affect Federated’s results of operations for the period.

Systems and Technology Risks. Federated utilizes software and related technologies throughout its businesses including both proprietary systems and those provided by outside vendors. Unanticipated issues could occur and it is not possible to predict with certainty all of the adverse effects that could result from a failure of a third party to address computer system problems. Accordingly, there can be no assurance that potential system interruptions or the cost necessary to rectify the problems would not have a material adverse effect on Federated’s business, financial condition, results of operations or business prospects. In addition, Federated cannot predict the impact to its business and/or the costs to rectify situations involving unauthorized system access, computer theft and computer viruses.

Adverse Effects of Rising Costs of Risk Management. Since 2001, expenses related to risk management have increased and management expects these costs to be significant going forward. As a result of a heightened regulatory environment, management anticipates that expenditures for risk management personnel, risk management systems and related professional and consulting fees may continue to increase. Insurance coverage for significant risks may not be available or may only be available at prohibitive costs. Renewals of insurance policies may expose Federated to additional cost through the assumption of higher deductibles, and co-insurance liability and/or lower coverage levels. Higher insurance costs, incurred deductibles and lower coverage levels may reduce Federated’s operating and net income.

Potential Adverse Effects Related to Past Mutual Fund Trading Issues and Related Legal Proceedings. In the fourth quarter 2005, Federated entered into settlement agreements with the SEC and NYAG to resolve the past mutual fund trading issues. Since October 2003, Federated has been named as a defendant in twenty-three cases filed in various federal district courts and state courts involving allegations relating to market timing, late trading and excessive fees. The plaintiffs in the excessive fee cases seek compensatory damages reflecting a return of all advisory fees earned by Federated in connection with the management of the Federated Kaufmann Fund since June 28, 2003, as well as attorneys’ fees and expenses. The remaining lawsuits seek unquantified damages, attorneys’ fees and expenses. Federated is defending this litigation. The potential impact of these lawsuits and similar suits against third parties is uncertain. It is possible that an unfavorable determination will cause a material adverse impact to Federated’s reputation, financial position, results of operations and/or liquidity. Responding to future requests from regulatory authorities, defending pending litigation and addressing the undertakings required by the settlement agreements will increase Federated’s operating expenses or may reduce Federated’s revenue and could have other material adverse effects on Federated’s business.

Potential Adverse Effects of Reputational Harm. Any material losses in client or shareholder confidence in Federated or in the mutual fund industry as a result of pending litigation, previously settled governmental inquiries, economic or financial market downturns or disruptions, material errors in public news reports, misconduct, rumors on the internet or other matters could increase redemptions from and reduce sales of Federated Funds and other investment management services, resulting in a decrease in future revenues.

Adverse Effects of Termination or Failure to Renew Fund Agreements. A substantial majority of Federated’s revenues are derived from investment management agreements with sponsored funds that, as required by law, are terminable upon 60 days notice. In addition, each such investment management agreement must be approved and renewed annually by each fund’s

41

Management’s Discussion and Analysis (continued)

of Financial Condition and Results of Operations (Unaudited)

board of directors or trustees, including disinterested members of the board, or its shareholders, as required by law. Failure to renew, changes resulting in lower fees, or termination of a significant number of these agreements could have a material adverse impact on Federated. As required by the Investment Company Act, each investment advisory agreement with a mutual fund automatically terminates upon its “assignment,” although new investment advisory agreements may be approved by the mutual fund’s directors or trustees and shareholders. A sale of a sufficient number of shares of Federated’s voting securities to transfer control of Federated could be deemed an “assignment” in certain circumstances. An assignment, actual or constructive, will trigger these termination provisions and may adversely affect Federated’s ability to realize the value of these agreements.

Under the terms of the settlement agreement with the SEC and NYAG, a Federated investment advisory subsidiary may not serve as investment adviser to any registered investment company unless: (1) at least 75% of the fund’s directors are independent of Federated; (2) the chairman of each such fund is independent of Federated; (3) no action may be taken by the fund’s board of directors or trustees or any committee thereof unless approved by a majority of the independent board members of the fund or committee, respectively; and (4) the fund appoints a senior officer who reports to the independent directors or trustees and is responsible for monitoring compliance by the fund with applicable laws and fiduciary duties and for managing the process by which management fees charged to a fund are approved.

Potential Adverse Effects of Unpredictable Events. Unpredictable events, including natural disaster, technology failure, pandemic, war and terrorist attack, could adversely impact Federated’s ability to conduct business. Such events could cause disruptions in economic conditions, system interruption, loss of life, unavailability of personnel or additional costs. As such, there can be no assurance that unpredictable events, or the costs to address such events, would not have a material adverse effect on Federated’s business, financial condition, results of operations or business prospects.

Capital Losses on Investments. Federated has and may continue to realize capital losses upon disposition of its investments. To the extent that these losses are not offset by capital gains in the year realized, there are specific rules in each tax jurisdiction (federal and state) that dictate the other tax years, if any, in which these losses may be used to offset net capital gains. The inability to utilize the capital loss deferred tax assets net of a valuation allowance within the prescribed timeframe may increase Federated’s federal and/or state income tax expense and, as a result, reduce net income.

42

Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk

(Unaudited)

In the normal course of its business, Federated is exposed to risk of loss due to fluctuations in the securities market and general economy. Management is responsible for identifying, assessing and managing market and other risks to the extent possible.

Federated’s marketable security and loan investments expose it to various market risks. A single investment can expose Federated to multiple risks. Interest-rate risk is the risk that unplanned fluctuations in earnings will result from interest-rate volatility while credit risk is the risk that an issuer of debt securities may default on its obligations. At September 30, 2010, Federated was exposed to interest-rate and, to a lesser extent, credit risk, as a result of holding investments in fixed-income sponsored funds ($18.6 million), investments in primarily investment-grade debt securities held by certain sponsored products ($6.3 million) and investments in commercial, U.S. dollar-denominated, floating-rate term loans ($3.9 million). At December 31, 2009, Federated was exposed to interest-rate and, to a lesser extent, credit risk, as a result of holding investments in fixed-income sponsored funds ($6.1 million) and primarily investment-grade debt securities held by certain sponsored products ($5.3 million). At September 30, 2010 and December 31, 2009, management considered a hypothetical 200 basis point fluctuation in interest rates, respectively, and determined that the impact of such fluctuations on these investments, individually and in the aggregate, would not have a material effect on Federated’s financial condition or results of operations.

In the second quarter 2010, Federated entered into a new Term Loan and a Swap (see Business Developments – Amended and Restated Term Loan and Interest Rate Swap). Federated entered into the Swap to convert the variable rate on its Term Loan to a fixed rate thereby mitigating its exposure to interest-rate risk. As of September 30, 2010, Federated’s fair value on the Swap was a liability of $18.4 million. The fair value of the Swap is recognized in earnings as a component of Federated’s interest rate which is fixed at 4.396% over the term of the loan. Near-term reductions in the fair value of the Swap are reasonably possible as a result of changes in interest rates. Management performed a sensitivity analysis of the fair value of the Swap and considered hypothetical six- and twelve-month forward shifts in the assumed yield curve. The analysis showed that a six- and twelve-month forward shift in the current yield curve would lead to a further decrease in the fair value of the Swap of approximately $3 million and $6 million, respectively. The Swap does not subject Federated to income statement risk due to interest rate movements because gains and losses in the fair value of the Swap are recorded in Accumulated other comprehensive (loss) income, net of tax on the Consolidated Balance Sheets.

Price risk is the risk that the market price of an investment will decline and ultimately result in the recognition of a loss for Federated. Federated was exposed to price risk as a result of its $67.5 million investment primarily in sponsored fluctuating-value mutual funds at September 30, 2010. Federated’s investment in these products represents its maximum exposure to loss. At September 30, 2010, management considered a hypothetical 20% fluctuation in market value and determined that the impact of such fluctuations on these investments would impact Federated’s financial condition and results of operations by approximately $14 million.

At December 31, 2009, Federated was exposed to price risk as a result of its $11.4 million investment primarily in sponsored fluctuating-value mutual funds. Federated’s investment in these products represented its maximum exposure to loss. At December 31, 2009, management considered a hypothetical 20% fluctuation in market value and determined that the impact of such fluctuations on these investments, individually and in the aggregate, would not have a material effect on Federated’s financial condition or results of operations.

43

Part I, Item 4. Controls and Procedures

(Unaudited)

(a) Federated carried out an evaluation, under the supervision and with the participation of management, including Federated’s President and Chief Executive Officer and Chief Financial Officer, of the effectiveness of Federated’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2010. Based upon that evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded that Federated’s disclosure controls and procedures were effective at September 30, 2010.

(b) There has been no change in Federated’s internal control over financial reporting that occurred during the quarter ended September 30, 2010 that has materially affected, or is reasonably likely to materially affect, Federated’s internal control over financial reporting.

44

Part II, Item 1. Legal Proceedings

(Unaudited)

The information required by this Item is contained in Note (16)(c) and Note (16)(d) to the Consolidated Financial Statements contained in Part I of this report and is incorporated herein by reference.

45

Part II, Item 1A. Risk Factors

(Unaudited)

A listing of Federated’s risk factors is included herein under the section entitled Risk Factors under Item 2 of Part I, Management’s Discussion and Analysis of Financial Condition and Results of Operations. There are no material changes to the risk factors included in Federated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

46

Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(Unaudited)

(c) The following table summarizes stock repurchases under Federated’s share repurchase program during the third quarter 2010.

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs1
July2		33,953	$	19.05		30,000		3,931,600
August2		103,800		19.96		100,000		3,901,600
September2		10,096		2.88		0		3,801,600
Total		147,849	$	18.59		130,000		3,801,600

¹ Federated’s share repurchase program was authorized in August 2008 by the board of directors and permits the purchase of up to 5.0 million shares of Federated Class B common stock with no stated expiration date. No other plans exist as of September 30, 2010.

² In July, August, and September 2010, 3,953, 3,800 and 10,096 shares, respectively, of restricted stock with weighted-average prices of $2.45, $3.00 and $2.88 per share, respectively, were repurchased in connection with employee separations.

47

Part II, Item 6. Exhibits

(Unaudited)

The following exhibits required to be filed by Item 601 of Regulation S-K are filed herewith and incorporated by reference herein:

Exhibit 2.1 – Definitive Agreement between Federated Investors, Inc. and SunTrust Banks, Inc. dated July 16, 2010 (filed herewith)

Exhibit 31.1 – Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Exhibit 31.2 – Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Exhibit 32 – Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Exhibit 101 – The following materials from Federated’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, formatted in Extensible Business Reporting Language, include: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statement of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) related notes, tagged as blocks of text (furnished herewith).

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Federated Investors, Inc.
			(Registrant)
Date	November 1, 2010	By:	/S/    J. CHRISTOPHER DONAHUE
			J. Christopher Donahue
			President and Chief Executive Officer
Date	November 1, 2010	By:	/S/    THOMAS R. DONAHUE
			Thomas R. Donahue
			Chief Financial Officer

49

EX-2.1

Exhibit 2.1

Execution Copy

AGREEMENT

among

FEDERATED INVESTORS, INC.,

SUNTRUST BANKS, INC.

and

STABLERIVER CAPITAL MANAGEMENT LLC

dated as of

July 16, 2010

TABLE OF CONTENTS

				Page
ARTICLE 1	CERTAIN DEFINITIONS; CONSTRUCTION
	1.1	Certain Definitions			2
	1.2	Construction			19
ARTICLE 2	PURCHASE AND SALE OF ASSETS; PRODUCT ASSET TRANSFERS
	2.1	Sale and Purchase of the Acquired Assets			21
	2.2	Consent Process; Common Fund Process			21
	2.3	Consideration			21
	2.4	Clawbacks			22
	2.5	Payment Calculations			24
		2.5.1	Upfront Closing Payments		24
		2.5.2	Anniversary Payments		25
		2.5.3	Clawback Payments		26
	2.6	Allocation of Consideration			29
	2.7	Closing Dates			30
	2.8	Liabilities			32
ARTICLE 3	REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBADVISER
	3.1	Representations and Warranties of Parent and Subadviser			32
		3.1.1	Organization and Qualification		32
		3.1.2	Authority		33
		3.1.3	No Violations		34
		3.1.4	No Convictions, Sanctions or Other Violations		34
		3.1.5	Governmental Approvals and Other Consents		34
		3.1.6	Litigation		34
		3.1.7	Compliance		35
		3.1.8	Title		35
	3.2	Representations and Warranties Regarding the RidgeWorth Money Market Funds			35
		3.2.1	Authority and Regulation		35
		3.2.2	Compliance		36
		3.2.3	Tax Qualification		36
		3.2.4	Taxes		36
		3.2.5	Litigation		37

- i -

	3.3	Representations and Warranties Regarding Non-Mutual Fund Products		37
		3.3.1	Authority and Regulation	37
		3.3.2	No Violations	37
		3.3.3	Litigation	37
		3.3.4	Compliance	38
		3.3.5	Taxes	39
ARTICLE 4	REPRESENTATIONS AND WARRANTIES OF FEDERATED
	4.1	Representations and Warranties of Federated		39
		4.1.1	Incorporation and Qualification	39
		4.1.2	Authority	39
		4.1.3	No Violations	40
		4.1.4	No Convictions, Sanctions or Other Violations	40
		4.1.5	Governmental Approvals and Other Consents	40
		4.1.6	Litigation	40
		4.1.7	Compliance	41
	4.2	Representations and Warranties Regarding Federated Funds		41
		4.2.1	Authority and Regulation	41
		4.2.2	Compliance	41
		4.2.3	Tax Qualification	42
		4.2.4	Taxes	42
		4.2.5	Contracts	42
		4.2.6	Litigation	42
ARTICLE 5	COVENANTS AND AGREEMENTS
	5.1	Covenants with Respect to the Products and Business		43
		5.1.1	Conduct of Business	43
		5.1.2	Covenants Relating to Products and Product Asset Transfers	43
		5.1.3	Covenants Regarding Certain Product Taxes	45
	5.2	Covenants with Respect to Expenses		46
	5.3	Covenants with Respect to Litigation and Changes in Condition		47
	5.4	Covenants with Respect to Publicity		48
	5.5	Restrictive Covenants		48
		5.5.1	Covenant Not to Compete	48
		5.5.2	Enforcement	50
	5.6	Exclusivity Covenant		51
	5.7	Covenants With Respect to Further Actions		51
	5.8	Certain Matters Relating to Money Market Funds		51

- ii -

ARTICLE 6	CONDITIONS PRECEDENT TO CLOSING
	6.1	Conditions Precedent to any Closing		52
		6.1.1	Consents; Satisfaction of Requirements Relating to the Consent Process and Common Fund Process	52
		6.1.2	No Legal Obstruction	52
	6.2	Conditions Precedent to Obligations of Federated With Respect to Closings		52
		6.2.1	No Breach of Covenants; True and Correct Representations and Warranties	53
		6.2.2	Delivery of Ancillary Closing Documents	53
		6.2.3	Minimum Product Asset Transfer	54
		6.2.4	No Subadviser Material Adverse Change	54
		6.2.5	No Failure to Maintain a $1.00 Net Asset Value	54
	6.3	Conditions Precedent to Obligations of Parent and Subadviser With Respect to Closings		54
		6.3.1	No Breach of Covenants; True and Correct Representations and Warranties	54
		6.3.2	Delivery of Ancillary Closing Documents	55
		6.3.3	No Federated Material Adverse Change	55
		6.3.4	No Failure to Maintain a $1.00 Net Asset Value	55
ARTICLE 7	SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
	7.1	Representation and Warranties in this Agreement		55
	7.2	Covenants		56
ARTICLE 8	TERMINATION; EQUITABLE RELIEF
	8.1	Termination of Agreement		56
	8.2	Survival upon Termination		56
	8.3	Equitable Relief		57
ARTICLE 9	INDEMNIFICATION
	9.1	Indemnification of Federated by Parent and Subadviser		57
		9.1.1	Federated Losses	57
		9.1.2	Deductible; Indemnity Cap	58
	9.2	Indemnification of Parent and Subadviser by Federated		58
		9.2.1	Seller Party Losses	58
		9.2.2	Deductible; Indemnity Cap	59
	9.3	Indemnification Procedures		59
	9.4	Subrogation		61
	9.5	Remedies Exclusive		62

- iii -

ARTICLE 10	MISCELLANEOUS
	10.1	Notices	62
	10.2	Brokers and Finders	63
	10.3	Entire Agreement; Modification	64
	10.4	Governing Law	64
	10.5	Jurisdiction	64
	10.6	Waiver of Jury Trial	65
	10.7	Assignment; Successors	65
	10.8	Waiver	65
	10.9	Further Assurances; Other Covenants	65
	10.10	Counterparts	66
	10.11	Severability	66
	10.12	Third Parties	66
	10.13	Fiduciary Duties	66

- iv -

Exhibits:

Exhibit A-1	RidgeWorth Money Market Funds
Exhibit A-2	Common Funds
Exhibit A-3	Federated Funds
Exhibit B-1	Form of Federated Bring-Down Certificate
Exhibit B-2	Form of Parent Bring-Down Certificate
Exhibit C	Form of Bill of Sale
Exhibit D	Form of Advised Common Funds Advisory Agreement
Exhibit E	Form of First Closing/Interim Closing Transferring Assets Certificate
Schedules:
Schedule 1.1(a)	Eligible Accounts
Schedule 1.1(b)	Seller Parties Knowledge Individuals
Schedule 1.1(c)	Federated Knowledge Individuals
Schedule 2.1	Acquired Assets
Schedule 2.4(a)	Restricted Acquisition Clawback Payment Illustrative Examples
Schedule 2.4(b)	GenSpring Clawback Payment Illustrative Examples
Schedule 2.5.2(a)	Anniversary Payment Methodology
Schedule 2.5.3(a)	Total Relationship AUM and GenSpring AUM Methodology
Schedule 3.1.1(c)	Non-Compete Parties
Schedule 3.1.5	Seller Consents
Schedule 4.1.5	Federated Consents
Schedule 5.1.1	Ordinary Course Exceptions
Schedule 5.1.2(c)(i)	Non-Advised Common Funds
Schedule 5.1.2(c)(ii)	Advised Common Funds

[Exhibits B-1, B-2, C, D and E, and all Schedules have been omitted but will be furnished supplementally to the Securities and Exchange Commission upon request]

- v -

AGREEMENT

This AGREEMENT, dated as of July 16, 2010 (this “Agreement”), is among FEDERATED INVESTORS, INC. (“Federated”), a corporation organized under the laws of the Commonwealth of Pennsylvania with its principal business office located at Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania, SUNTRUST BANKS, INC. (“Parent”), a Georgia corporation, with its headquarters at 303 Peachtree Street, Atlanta, Georgia, and STABLERIVER CAPITAL MANAGEMENT LLC (“Subadviser”), a Delaware limited liability company, with its headquarters at 50 Hurt Plaza, Suite 1400, Atlanta Georgia. Parent and Subadviser may be referred to in this Agreement each as a “Seller Party” and, collectively, as applicable, as the “Seller Parties”.

RECITALS

WHEREAS, Subadviser is an indirect wholly-owned subsidiary of Parent and Parent and its Affiliates operate, and provide investment management, custody and other services to, a liquidity business consisting of (each a “Product” and, collectively, as applicable, the “Products”):

(1) The registered money market mutual funds identified on Exhibit A-1 attached hereto (each a “RidgeWorth Money Market Fund” and, collectively, as applicable, the “RidgeWorth Money Market Funds”), which are each a series of RidgeWorth Funds (the “RidgeWorth Trust”), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company the shares of which are registered under the Securities Act of 1933, as amended (the “1933 Act”); and

(2) The common and collective trust funds identified on Exhibit A-2 attached hereto (each a “Common Fund” and, collectively, as applicable, the “Common Funds”); and

WHEREAS, Federated, through its advisory subsidiaries, is the sponsor to, and serves as investment adviser to, the registered money market mutual funds identified on Exhibit A-3 attached hereto (each a “Federated Fund”, and, collectively, as applicable, the “Federated Funds”), which are each series of Money Market Obligations Trust (“Federated Trust”), a Massachusetts business trust registered under the 1940 Act as an open-end management investment company the shares of which are registered under the 1933 Act, and Federated, through its subsidiaries, sponsors, distributes and serves as investment adviser to mutual funds, separately managed accounts and other investment products; and

WHEREAS, the Seller Parties (and their Affiliates) have identified the Federated Funds as a potential cash sweep vehicle or similar investment liquidity option for their customers and intend to cause (1) the transfer of the assets in the accounts invested in the RidgeWorth Money Market Funds to the Federated Funds as contemplated in this Agreement, which includes, as permitted under Applicable Law, redeeming shareholder accounts from the RidgeWorth Money Market Funds and reinvesting cash proceeds into the Federated Funds pursuant to the discretion of the Seller Parties and their Affiliates, where applicable, or pursuant to an affirmative or negative consent procedure (as described more fully below, the “Consent Process”), (2) the

transfer of the assets in accounts invested in certain Common Funds as contemplated in this Agreement to the Federated Funds or, potentially, certain Other Federated Money Market Funds, and the appointment/designation of an appropriate advisory subsidiary of Federated as the advisor to the Advised Common Funds (as described more fully below, the “Common Fund Process”); and

WHEREAS, the Applicable Seller Parties wish to sell to Federated (or its designated Affiliates), and Federated (either directly or through its designated Affiliates) wishes to purchase from such Applicable Seller Parties, certain assets identified on Schedule 2.1 to this Agreement relating to such Applicable Seller Parties’ business of providing investment advisory and investment management services to the Products (the “Business”), on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the respective representations, warranties and covenants contained in this Agreement, and intending to be legally bound, Parent, Subadviser and Federated agree as follows:

ARTICLE 1

CERTAIN DEFINITIONS; CONSTRUCTION

1.1 Certain Definitions. The following terms have the meanings specified below or are defined in the Sections referred to below.

“1933 Act” is defined in the recitals to this Agreement.

“1934 Act” means the Securities Exchange Act of 1934, as amended.

“1940 Act” is defined in the recitals to this Agreement.

“Acquired Assets” is defined in Section 2.1 of this Agreement.

“Adjusted Upfront Purchase Price Amount” means an amount equal to:

(1) the Upfront Purchase Price Amount, multiplied by:

(2) the result of:

(a) one (1), minus

(b) the result of:

(i) 0.95, minus

(ii) the quotient of:

(A) Aggregate Transferred Assets, divided by

(B) Base AUM.

“Advised Common Funds” is defined in Section 5.1.2(c) of this Agreement.

“Advised Common Funds Advisory Agreement” is defined in Section 5.1.2(c) of this Agreement.

“Advisers Act” means the Investment Advisers Act of 1940, as amended.

“Affiliate” of a Person means a Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the first Person, including a subsidiary of the first Person, a Person of which the first Person is a subsidiary, or another subsidiary of a Person of which the first Person is also a subsidiary.

“Affiliated Person” means, with respect to any Person, an “affiliated person” of such Person as such term is defined in Section 2(a)(3) of the 1940 Act.

“Aggregate Transferred Assets” means the sum of (1) First Closing Transferring Assets, (2) the Interim Closing Transferring Assets, and (3) Final Closing Transferring Assets.

“Agreement” means this Agreement, as it may be amended, modified, supplemented, or restated from time to time.

“Allocations” is defined in Section 2.6(a) of this Agreement.

“Anniversary Dates” means the First Anniversary Date, Second Anniversary Date, Third Anniversary Date, Fourth Anniversary Date, and Fifth Anniversary Date, as applicable.

“Anniversary Payments” means the First Anniversary Payment, the Second Anniversary Payment, the Third Anniversary Payment, the Fourth Anniversary Payment, the Fifth Anniversary Payment, and the Stub Period Payments.

“Applicable Law” means all applicable provisions of all (1) constitutions, treaties, statutes, laws, rules, regulations, interpretations, guidelines, ordinances, codes, orders, common law, or other authority of any Governmental Authority, (2) Governmental Approvals, and (3) orders, decisions, injunctions, judgments, writs, awards, and decrees of or agreements with any Governmental Authority, each as interpreted as of the date of this Agreement or the applicable Closing Date.

“Applicable Seller Party” means Subadviser and RidgeWorth.

“Appropriate Clawback Payment” means:

(1) The aggregate Upfront Closing Payments if a Complete Clawback Trigger Date, or, as applicable, a Clawback Measurement Trigger Date, occurs on or before the last day of the first Fiscal Year after the Final Closing Date;

(2) Seventy-five percent of the aggregate Upfront Closing Payments if a Complete Clawback Trigger Date, or, as applicable, a Clawback Measurement Trigger Date, occurs within the second Fiscal Year after the Final Closing Date; and

(3) Fifty percent of the aggregate Upfront Closing Payments if a Complete Clawback Trigger Date, or, as applicable, a Clawback Measurement Trigger Date, occurs within the third Fiscal Year after the Final Closing Date.

“Base AUM” means $19,850,000,000.

“Base Clawback AUM” means: (1) if a Restricted Acquisition Announcement Date occurs before the end of the fourth calendar month after the month in which the Final Closing Date occurs, the Total Relationship AUM immediately after the Final Closing; or (2) if a Restricted Acquisition Announcement Date occurs after the end of the fourth calendar month after the month in which the Final Closing Date occurs, the average daily Total Relationship AUM over a period beginning on the first day of the month that includes the day that is the one hundred twentieth (120^th) day prior to the first Restricted Acquisition Announcement Date and ending on and including the last day of such month.

“Bill of Sale” means the bills of sale, assignment and general conveyance in the form set forth on Exhibit C hereto which are required to be delivered pursuant to Section 6.2.2(a) of this Agreement.

“Board” means the Board of Directors, Board of Trustees, Board of Managers or Managing Member(s) (as applicable) of (1) Subadviser, (2) Federated, (3) any RidgeWorth Money Market Fund, (4) any Federated Fund (or, as applicable, any Other Federated Money Market Fund), and (5) any other relevant Person, as applicable.

“Business” is defined in the recitals to this Agreement.

“Business Day” means any day other than Saturday, Sunday or any day on which the New York Stock Exchange is closed.

“Cash Consideration Amount” means an amount equal to the sum of the Upfront Closing Payments and the Anniversary Payments.

“Clawback AUM” means the average daily Total Relationship AUM over a period beginning on the Clawback Measurement Trigger Date and ending on and including the Clawback Measurement End Date.

“Clawback Measurement Trigger Date” is defined in Section 2.4(a)(iii) of this Agreement.

“Clawback Measurement End Date” is defined in Section 2.4(a)(iii) of this Agreement.

“Clawback Payment” means any payment that becomes due and payable by Parent under Section 2.4(a) or Section 2.4(b) of this Agreement, as applicable.

“Client” means, with respect to any Person, such Person’s investment management, advisory or subadvisory clients, including any Persons considered to be a “client” of such Person as that term is defined under Advisers Act.

“Closing” means the First Closing, the Interim Closing and the Final Closing, as applicable.

“Closing Date” means the First Closing Date, the Interim Closing Date and the Final Closing Date, as applicable.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Fund Process” is defined in the recitals to this Agreement.

“Common Funds” is defined in the recitals to this Agreement.

“Competing Business” is defined in Section 5.5.1(b) of this Agreement.

“Complete Clawback Trigger Date” is defined in Section 2.4(a)(ii) of this Agreement.

“Consent” means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, amendment, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including, any Governmental Authority.

“Consent Process” is defined in the recitals to this Agreement.

“Consequential Damages” is defined in Section 9.3(h) of this Agreement.

“Contracts” means, in respect of any Person, all loan agreements, indentures, letters of credit (including related letter of credit applications and reimbursement obligations), mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes, guarantees, surety obligations, warranties, licenses, franchises, permits, powers of attorney, purchase orders, leases, custody agreements, advisory agreements, transfer agency agreements, administration agreements, shareholder services agreements, distribution agreements, and other agreements, contracts, instruments, obligations, offers, commitments, arrangements and understandings, written or oral, to which such Person is a party or by which such Person or any of its properties or assets may be bound or affected, in each case as amended, supplemented, restated, waived or otherwise modified.

“Control” (or “controlled”, “controlled by”, “controlling” or “under common control with”) means (1) owning, directly or indirectly (including through one or more intermediaries), more than fifty percent (50%) of the voting securities of a Person or (2) otherwise having the power, directly or indirectly, to exercise a controlling influence over, or to direct or cause the direction of, a Person’s management or policies through owning voting securities, by Contract or credit arrangement, as trustee or executor, or otherwise.

“Deductible” means one hundred thousand dollars ($100,000).

“Eligible Account” means each type of shareholder account identified on Schedule 1.1(a) to this Agreement that is invested in the Federated Funds (or Other Federated Money Market Funds) and is either transferred as contemplated in this Agreement or sourced through the Seller Parties or another Affiliate of any of them pursuant to a dealer agreement or other selling agreement with Federated Securities Corp. and for which one of the foregoing is designated the broker or other intermediary of record, and which accounts do not include any accounts sourced through any third party.

“Federated” is defined in the preamble to this Agreement.

“Federated Advisory Subsidiaries” means Federated Investment Management Company, Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company of Pennsylvania, Federated MDTA LLC, Passport Research Ltd., and Federated Services Corp.

“Federated Bring-Down Certificate” means the certificates in the form of Exhibit B-1 attached to this Agreement which are required to be delivered pursuant to Section 6.3.1.

“Federated Closing Election” is defined in Section 2.7(a) of this Agreement.

“Federated Consents” is defined in Section 4.1.5 of this Agreement.

“Federated Funds” is defined in the recitals to this Agreement.

“Federated Indemnitees” is defined in Section 9.1.1 of this Agreement.

“Federated Material Adverse Change” means, with respect to Federated, or the Federated Funds (and, as applicable, any Other Federated Money Market Funds) taken as a whole, (a) any fact, event, change, circumstance, condition, development or effect that would reasonably be expected to have a material adverse effect (whether taken individually or in the aggregate with all other such effects) on the financial condition, business or results of operations of Federated, or the Federated Funds (and, as applicable, any Other Federated Money Market Funds) taken as a whole, or (b) any event, circumstance or condition affecting Federated, or the Federated Funds (and, as applicable, any Other Federated Money Market Funds) taken as a whole, which would prevent or materially delay the consummation of the Transactions or would be reasonably expected to materially adversely affect the ability of Federated to perform its obligations under this Agreement or any other Transaction Document; provided that, in determining whether a Federated Material Adverse Change has occurred, there shall be excluded any effect to the extent resulting from (1) changes (other than changes in GAAP or Applicable Law) in the financial services industry in general, or the investment advisory or investment management sector in particular, and not specifically relating to Federated, including changes in economic or market conditions or changes in prevailing interest rates, currency exchange rates or price levels or trading volumes in the U.S. or foreign securities markets, so long as Federated is not affected in a materially adverse manner disproportionate to how other sponsors of money market mutual funds are affected, (2) the failure by Federated or any Seller Party to obtain any Consents as a result of the Transactions (provided that the failure of Federated or any Seller Party to obtain any Consent was not intentional or in bad faith), (3) any change, effect, event or occurrence arising out of the announcement of this Agreement or the Transactions contemplated

hereby, (4) any change, effect, event or occurrence arising out of the Transactions contemplated hereby or the performance of this Agreement and the other Transaction Documents by Federated (including actions or omissions of Federated taken in contemplation of the Transactions contemplated by this Agreement and the other Transaction Documents) in compliance with the terms of this Agreement and the other Transaction Documents, (5) changes in national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, and (6) natural disasters or “acts of God.”

“Federated Trust” is defined in the recitals to this Agreement.

“Fifth Anniversary Date” means the date which is five (5) Fiscal Years after the First Closing Date.

“Fifth Anniversary Payment” means an amount equal to forty-five percent (45%) of the Net Revenue attributable to each Eligible Account for the Fiscal Year beginning on the day after the Fourth Anniversary Date.

“Final Closing” is defined in Section 2.7(c) of this Agreement.

“Final Closing Allocation” is defined in Section 2.6(a) of this Agreement.

“Final Closing Date” is defined in Section 2.7(c) of this Agreement. If the Final Closing Date does not occur by December 31, 2010, “Final Closing Date” means December 31, 2010 (or such other date to which the Final Closing Date is extended in accordance with Section 8.1 of this Agreement), for all purposes of this Agreement.

“Final Closing Notice” is defined in Section 2.7(c) of this Agreement.

“Final Closing Payment” means:

(1) if the Aggregate Transferred Assets equal or exceed $18,857,500,000, then an amount equal to the greater of:

(a) zero; and

(b) the result of:

(i) the Upfront Purchase Price Amount, less

(ii) the First Closing Payment and the Interim Closing Payment; or

(2) if the Aggregate Transferred Assets are less than $18,857,500,000, then an amount equal to the greater of:

(a) zero; and

(b) the result of:

(i) the Adjusted Upfront Purchase Price Amount, less

(ii) the First Closing Payment and the Interim Closing Payment.

“Final Closing Transferring Assets” means the Product Assets (if any) transferred from the Products, or over which an advisory subsidiary of Federated is appointed/designated adviser, pursuant to a Product Asset Transfer on the Final Closing Date.

“FINRA” means the Financial Industry Regulatory Authority.

“Firm” means (1) a Qualified Firm that is mutually agreed upon in good faith by the Parties within five (5) Business Days after a Party elects to submit a dispute to a Firm under Section 2.5 of this Agreement, or (2) if the Parties cannot so mutually agree within such five (5) Business Day period, a Qualified Firm selected by lot.

“First Anniversary Date” means the date which is one (1) Fiscal Year after the First Closing Date.

“First Anniversary Payment” means an amount equal to sixty percent (60%) of the Net Revenue attributable to each Eligible Account for the Fiscal Year beginning on the day after the First Closing Date.

“First Closing” is defined in Section 2.7(a) of this Agreement.

“First Closing Allocation” is defined in Section 2.6(a) of this Agreement.

“First Closing Date” is defined in Section 2.7(a) of this Agreement.

“First Closing Payment” means an amount equal to:

(1) the Upfront Purchase Price Amount, multiplied by

(2) the quotient of:

(a) the lesser of (i) Base AUM and (ii) First Closing Transferring Assets, divided by

(b) Base AUM.

“First Closing Transferring Assets” means the Product Assets transferred from the Products, or over which an advisory subsidiary of Federated is appointed/designated adviser, pursuant to a Product Asset Transfer on the First Closing Date.

“Fiscal Year” means a period of 365 days (or, as applicable in the event of an intervening leap year, 366 days).

“Fourth Anniversary Date” means the date which is four (4) Fiscal Years after the First Closing Date.

“Fourth Anniversary Payment” means an amount equal to forty-five percent (45%) of the Net Revenue attributable to each Eligible Account for the Fiscal Year beginning on the day after the Third Anniversary Date.

“GAAP” means generally accepted accounting principles in the United States of America, consistently applied.

“GenSpring Appropriate Clawback Payment” means:

(1) If a GenSpring Complete Clawback Trigger Date, or, as applicable, a GenSpring Clawback Measurement Trigger Date, occurs on or before the last day of the first Fiscal Year after the Final Closing Date, the amount equal to (a) the aggregate Upfront Closing Payments, multiplied by (b) the GenSpring Percentage;

(2) If a GenSpring Complete Clawback Trigger Date, or, as applicable, a GenSpring Clawback Measurement Trigger Date, occurs within the second Fiscal Year after the Final Closing Date, an amount equal to seventy-five percent of the amount equal to (a) the aggregate Upfront Closing Payments, multiplied by (b) the GenSpring Percentage; and

(3) If a GenSpring Complete Clawback Trigger Date, or, as applicable, a GenSpring Clawback Measurement Trigger Date, occurs within the third Fiscal Year after the Final Closing Date, an amount equal to fifty percent of the amount equal to (a) the aggregate Upfront Closing Payments, multiplied by (b) the GenSpring Percentage.

“GenSpring AUM” means, as of any relevant date, the net assets under management by Federated, through its advisory Affiliates, in the Federated Funds and any applicable Other Federated Money Market Funds, or as adviser of an Advised Common Fund, that (1) were GenSpring Product Assets transferred as contemplated in this Agreement or (2) are otherwise attributable to Clients of, or sourced through, GenSpring Holdings Inc. or any of its Controlled Affiliates, and which do not include accounts sourced through any third party.

“GenSpring Base Clawback AUM” means: (1) if any GenSpring Clawback Trigger Date occurs on before the end of the fourth calendar month after the month in which the Final Closing Date occurs, the GenSpring Product Assets; or (2) if any GenSpring Clawback Trigger Date occurs after the end of the fourth calendar month after the month in which the Final Closing Date occurs, the average daily GenSpring AUM over a period beginning on the first day of the month that includes the day that is the one hundred twentieth (120^th) day prior to the GenSpring Clawback Trigger Date and ending on and including the last day of such month.

“GenSpring Clawback AUM” means the average daily GenSpring AUM over a period beginning on the GenSpring Clawback Measurement Trigger Date and ending on and including the GenSpring Clawback Measurement End Date.

“GenSpring Clawback Measurement End Date” is defined in Section 2.4(b)(iii) of this Agreement.

“GenSpring Clawback Measurement Trigger Date” is defined in Section 2.4(b)(iii) of this Agreement.

“GenSpring Clawback Trigger Date” means (1) the date on which any GenSpring Fund is first organized, sponsored, offered or otherwise utilized for the benefit of Clients of GenSpring Holdings, Inc. or its Controlled Affiliates as contemplated under Section 5.5.1(c)(v) of this Agreement; or (2) the date on which a potential acquisition (by asset acquisition, stock acquisition, merger, operation of law, or otherwise) of a Controlling interest in, or substantially all of the assets of, GenSpring Holdings, Inc. or a Controlled Affiliate of GenSpring Holdings, Inc., by a Person (including such Person’s Affiliates) that owns, sponsors, advises, or operates a current or then existing fund group, service or other investment product or business that includes a Restricted Product (any such potential acquisition being a “GenSpring Transaction”) is first disclosed to the public by a party to such acquisition transaction or such party’s Affiliates, whether by a press release, a regulatory filing or other Consent, a website or internet posting, or other means.

“GenSpring Complete Clawback Trigger Date” is defined in Section 2.4(b)(ii) of this Agreement.

“GenSpring Fund” is defined in Section 5.5.1(c)(v) of this Agreement.

“GenSpring Percentage” means the amount determined by dividing (1) the GenSpring Product Assets by (2) the sum of the First Closing Transferring Assets, plus the Second Closing Transferring Assets, plus the Final Closing Transferring Assets.

“GenSpring Product Assets” means the aggregate Product Assets (if any) transferred from the Products, or over which an advisory subsidiary of Federated is appointed/designated adviser, pursuant to the Product Asset Transfers consummated on the Closing Dates as contemplated in this Agreement that are attributable to Clients of, or otherwise sourced through, GenSpring Holdings Inc. or any of its Controlled Affiliates.

“GenSpring Transaction” is defined in clause (2) of the definition of “GenSpring Clawback Trigger Date.”

“Governing Documents” means (1) with respect to any corporation, its articles or certificate of incorporation, by-laws and other organizational documents, as amended, (2) with respect to any limited liability company, its articles or certificate of formation, limited liability company agreement, operating agreement and other organizational documents, as amended, (3) with respect to any business trust, its declaration of trust, trust agreement and other organizational documents, as amended, and (4) with respect to any other Person, its comparable governing agreements and other organizational documents, as amended.

“Governmental Approval” means any Consent of, with, from or to any Governmental Authority.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States, any territory of the United States, or any political subdivision thereof; any court, tribunal or arbitrator; and any self-regulatory organization (as such term is defined in the 1934 Act).

“Indemnified Party” is defined in Section 9.3(a) of this Agreement.

“Indemnifying Party” is defined in Section 9.3(a) of this Agreement.

“Indemnity Cap” means an amount equal to the sum of: (a) the aggregate Upfront Closing Payments; plus (b) five million five hundred thousand dollars ($5,500,000).

“Interim Closing” is defined in Section 2.7(b) of this Agreement.

“Interim Closing Allocation” is defined in Section 2.6(a) of this Agreement.

“Interim Closing Date” is defined in Section 2.7(b) of this Agreement.

“Interim Closing Payment” means the greater of:

(a) zero; and

(b) the result of:

(i) the Upfront Purchase Price Amount, multiplied by

(ii) the quotient of:

(x) the Interim Closing Transferring Assets plus the First Closing Transferring Assets, divided by

(y) Base AUM,

(iii) less the First Closing Payment.

“Interim Closing Transferring Assets” means the Product Assets (if any) transferred from the Products, or over which an advisory subsidiary of Federated is appointed/designated adviser, pursuant to a Product Asset Transfer on the Interim Closing Date.

“Knowledge” means, (a) when used with respect to any Seller Parties, the actual knowledge of the individuals identified on Schedule 1.1(b) to this Agreement (and the actual knowledge of any successors (or successors of successors, and so on) appointed/elected to replace such individuals prior to the date on which such individuals’ knowledge is relevant for purposes of a provision of this Agreement to the extent such knowledge was gained by such successor in the performance of his or her duties as a successor) and the knowledge each such individual (and any such successor (or successors of successors, and so on)) should possess in

the reasonable execution of the duties ordinarily attendant to his or her position, and (b) when used with respect to Federated, the actual knowledge of the individuals identified on Schedule 1.1(c) (and any successors (or successors of successors, and so on) appointed/elected to replace such individuals prior to the date on which such individuals’ knowledge is relevant for purposes of a provision of this Agreement) and the knowledge each such individual (and any such successor (or successors of successors, and so on)) should possess in the reasonable execution of the duties ordinarily attendant to his or her position.

“Liabilities” means any claim, debt, loss, cost, expense, duty, charge, commitment, assessment, Litigation, obligation or other liability of any kind whatsoever, whether or not accrued or fixed, known or unknown, assessed or assessable, absolute or contingent, determined or determinable, or when due or to become due, or otherwise.

“Liens” means any lien, mortgage, pledge, encumbrance, charge, Tax lien, assessment or claim, security interest, adverse claim, community property interest, equitable interest, option, warrant, right of first refusal, easement, profit, license, servitude, right of way, covenant, zoning restriction or other restriction, whether existing prior to, at or after a Closing.

“Litigation” means any action, cause of action, claim, demand, charge, suit, proceeding, audit, citation, summons, subpoena, hearing, inquiry, examination, investigation or other litigation of any nature, civil, criminal, administrative, regulatory or otherwise, in law, in equity or otherwise, pending or threatened, by or before any Governmental Authority.

“Losses” is defined in Section 9.1.1 of this Agreement.

“Money Market Fund” is defined in the definition of “Restricted Product.”

“Net Revenue” means with respect to any Eligible Account an amount equal to:

(1) the sum of (a) net advisory fee revenue, (b) net administrative service fee revenue, (c) net shareholder servicing fee revenue, (d) net 12b-1 fee revenue, and (e) any other net revenue, in each case directly or indirectly earned by Federated from fees charged to the Federated Funds or the Other Federated Money Market Funds for services rendered to such Federated Funds or Other Federated Money Market Funds beginning on a date after the First Closing Date, in each case after deducting fund fee and expense waivers, reductions and reimbursements made or accrued, by Federated or its Affiliates rather than a Federated Fund or Other Federated Money Market Fund, less

(2) any payments made (or accrued for payment) to any Seller Party or any of their respective Affiliates, less

(3) any payments made (or accrued for payment) to, or expenses (incurred or accrued) relating to, third parties (including trading platforms and recordkeepers) on behalf or in respect of, or relating to, any Seller Party or any of their respective Affiliates.

For the avoidance of doubt, “Net Revenue” earned by Federated calculated under this Agreement shall include any component of Net Revenue earned by any Affiliate of Federated.

“Non-Compete Parties” means (1) the Seller Parties and (2) any Person (including subsidiaries and other Affiliates) Controlled by Parent.

“Non-Permitted Money Market Fund” means a Money Market Fund, directly or indirectly, owned, managed, operated, Controlled, sponsored or participated in by a Non-Compete Party (or which a Non-Compete Party Knowingly assists any other Person in owning, managing, operating, Controlling, sponsoring, or participating in) in violation of Section 5.5.1(a) of this Agreement, taking into account Section 5.5.1(c)(iv).

“Other Federated Money Market Fund” means, as applicable, any money market mutual fund in the Federated family of mutual funds other than the Federated Funds.

“Parent” is defined in the preamble to this Agreement.

“Parent Bring-Down Certificate” means the certificates in the form of Exhibit B-2 attached to this Agreement which are required to be delivered pursuant to Section 6.2.1.

“Parties” means Parent, Subadviser and Federated.

“Payment Dates” means, as applicable, each date on which the Upfront Closing Payments or Anniversary Payments are due and payable by Federated pursuant to Section 2.3 of this Agreement, and any date on which a Clawback Payment becomes due and payable by Parent pursuant to Section 2.5 of this Agreement.

“Permitted Liens” means (1) Liens for Taxes, including those arising by operation of law, which are not yet due or delinquent or are being challenged in good faith, and (2) mechanics’, materialmen’s, warehousemen’s, carriers’, workers’, landlord’s or repairmen’s liens or other similar common law or statutory Liens arising or incurred in the ordinary course of business, in each case which are not yet delinquent.

“Person” means any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, business trust (or series thereof), unincorporated organization, or any other entity, whether acting in an individual, fiduciary or other capacity.

“Product” or “Products” is defined in the recitals to this Agreement.

“Product Assets” means the net assets of accounts in a Product or the Products (as applicable); provided, that for purposes of the definitions of “Aggregate Transferred Assets,” “First Closing Payment,” “First Closing Transferring Assets,” “Final Closing Payment,” “Final Closing Transferring Assets,” “Interim Closing Payment,” “Interim Closing Transferring Assets,” and “Upfront Closing Payments,” and any other provisions or calculations relating to the calculation and determination of the Upfront Closing Payments, “Product Assets” shall not include any assets in any Product or the Products (as applicable) that represent accounts of, or assets derived from, any of the series funds of the RidgeWorth Trust (other than the RidgeWorth Money Market Funds).

“Product Asset Transfer” means the redemption and reinvestment of Product Assets from the Products to the Federated Funds (or, as applicable, Other Federated Money Market Funds) pursuant to the Consent Process or to the Federated Funds (or, as applicable, Other Federated Money Market Funds) pursuant to the Common Fund Process, as contemplated in Section 2.2 of this Agreement, and the deemed transfer of Product Assets via the appointment/designation of an appropriate advisory subsidiary of Federated as the adviser of the Advised Common Funds pursuant to the Advised Common Funds Advisory Agreement.

“Qualified Firm” means a public accounting firm that is (1) among the ten largest accounting firms in the United States calculated by revenue during the calendar year prior to the year in which a Party elects to submit a dispute to a Firm under Section 2.5 of this Agreement, and (2) independent from the Parties and their respective Affiliates.

“Regulated Investment Company” is defined under Subchapter M of the Code.

“Restricted Acquisition” means:

(1) The acquisition (by asset acquisition, stock acquisition, merger, operation of law, or otherwise) by any Non-Compete Party, of a Controlling interest in, or substantially all of the assets of, a Person (including such Person’s Affiliates) that owns, sponsors, advises, or operates a current or then existing fund group, service or other investment product or business that includes a Restricted Product; provided that a Restricted Acquisition excludes making or holding any investment of five percent (5%) or less of the issued and outstanding voting shares of any entity that owns, sponsors, advises, or operates a current or then existing fund group, service or other investment product or business that includes a Restricted Product if, and only if, (i) such entity does not have at least fifty percent (50%) of its Board or similar governing body comprised of Persons appointed by, or who are directors, trustees, officers, employees or Affiliates of, a Non-Compete Party, and (ii) such entity is not otherwise Controlled by a Non-Compete Party; or

(2) The acquisition (by asset acquisition, stock acquisition, merger, operation of law, or otherwise) of a Controlling interest in, or substantially all of the assets of, Parent, SunTrust Robinson Humphrey, Inc., SunTrust Investment Services, Inc., or SunTrust Bank, or the trust business of SunTrust Bank, by a Person (including such Person’s Affiliates) that owns, sponsors, advises, or operates a current or then existing fund group, service or other investment product or business that includes a Restricted Product.

“Restricted Acquisition Announcement Date” means the date on which a potential Restricted Acquisition is first disclosed to the public by a party to the Restricted Acquisition or such party’s Affiliates, whether by a press release, a regulatory filing or other Consent, a website or internet posting, or other means.

“Restricted Period” means the period beginning on the First Closing Date and ending on the Fifth Anniversary Date (subject to any tolling provided for in Section 5.5.2 of this Agreement).

“Restricted Product” means (1) an “open-end company” (as such term is defined in Section 5(a)(1) of the 1940 Act) that is governed by the requirements of Rule 2a-7 promulgated

under the 1940 Act (a “Money Market Fund”), and (2) any other investment product that (A) is only permitted to invest in instruments permitted under Rule 2a-7, (B) seeks to maintain a stable net asset value (e.g., $1.00 per share or $10.00 per share) in a manner similar to a Money Market Fund and (C) but for the exceptions under the 1940 Act, would be an “investment company” thereunder. For purposes of clause (1) above, the reference to “Rule 2a-7 promulgated under the 1940 Act” is intended to encompass Rule 2a-7 as in effect as of the date of this Agreement and any amendments to Rule 2a-7 that become effective after the date of this Agreement and on or prior to the First Closing Date (including, in any case, amendments that impose additional requirements on “open-end companies” that are governed by the requirements of Rule 2a-7 as of the date of this Agreement), but not any amendments that become effective after the date of this Agreement and on or prior to the First Closing Date that would require any companies, including fluctuating net asset value “open-end companies,” that are not governed by the requirements of Rule 2a-7 as of the date of this Agreement to be governed by the requirements of Rule 2a-7. For the avoidance of doubt, “Restricted Product” shall not include any checking account, deposit account, certificate of deposit or other similar FDIC-insured banking cash sweep product that is sponsored or offered by SunTrust Bank or its Affiliates.

“Retained Seller Party Liabilities” means any Liabilities of, arising from or relating to (1) any Seller Party, (2) any officer, director or trustee of any Seller Party to the extent relating to them in their capacity as such, or (3) the Business. For the avoidance of doubt, and without limiting the foregoing, “Retained Seller Party Liabilities” include: (a) all Liabilities of any Seller Party whether existing prior to, at or after the Final Closing, or arising from or relating to, actions, omissions, events or periods of time occurring, or the operation of any Seller Party, prior to, at or after the Final Closing; and (b) any obligations or other Liabilities to the extent arising from or relating to (i) any Seller Party’s management of the Products, (ii) the provision of custody, transfer agent or any other services to the Products by any Seller Party, (iii) the Acquired Assets prior to transfer to Federated (or its designated Affiliates), (iv) any assets of any Seller Party not transferred to Federated (or its designated Affiliates), (v) any Litigation against the RidgeWorth Trust, any Product or any of their respective Affiliates, (vi) any Litigation against any Seller Party or any of their respective Affiliates, (vii) any Taxes, (viii) any salary, bonus, vacation, or employee benefit plan obligations, severance or change in control payments, any obligations or Liabilities under or arising in connection with the WARN Act, or other Liabilities owing to any employee of any Seller Party relating to such employee’s employment with, or severance from, any such Seller Party, and (ix) the actions or omissions of any Seller Party or their respective service providers or Affiliates (or of any Person acting at the direction of any of them, which, for the avoidance of doubt, shall not include Federated, the Federated Funds (or, as applicable, any Other Federated Money Market Fund), any of their respective Affiliates or any of their respective service providers in their roles as service providers to Federated, the Federated Funds (or, as applicable, any Other Federated Money Market Fund) or any of their respective Affiliates) relating to the implementation or consummation of the Transactions. Nothing in this definition shall limit the indemnification obligations of Federated under Section 9.2 of this Agreement.

“Retained Product Liabilities” means any Liabilities of, arising from or relating to (1) any Product, or (2) any officer, director or trustee of any Product (as applicable) to the extent relating to them in their capacity as such, or (3) any investment advisory, custody, transfer agent, administration or other services of any kind provided to any Product. For the avoidance of

doubt, and without limiting the foregoing, “Retained Product Liabilities” include (a) all Liabilities of the Products, or arising out of, resulting from or relating to the services provided to the Products by their respective service providers, in all cases to the extent existing on or prior to the consummation of the First Closing, the Interim Closing or the Final Closing with respect to assets transferred at that Closing, as applicable, or to the extent arising from or relating to, actions, omissions, events or periods of time occurring, or the operation of the Products, on or prior to, the consummation of the First Closing, the Interim Closing or Final Closing with respect to assets transferred at that Closing, as applicable, and (b) (i) any payments or other Liabilities (including all conversion fees, expenses and costs) ultimately due to any service provider of the Products, (ii) any Taxes, (iii) any Litigation against any Product, and (iv) any obligation or other Liability arising from or relating to the actions or omissions of the RidgeWorth Trust, any Product or their respective service providers or Affiliates (or of any Person acting at the direction of any of them) relating to the implementation or consummation of the Transactions. Nothing in this definition shall limit the indemnification obligations of Federated under Section 9.2 of this Agreement.

“RidgeWorth” means RidgeWorth Capital Management, Inc., a Georgia corporation.

“RidgeWorth Money Market Funds” is defined in the recitals to this Agreement.

“RidgeWorth Trust” is defined in the recitals to this Agreement.

“SAI” means the statement of additional information of a RidgeWorth Money Market Fund or Federated Fund (or, as applicable, an Other Federated Money Market Fund), as the case may be.

“Second Anniversary Date” means the date which is two (2) Fiscal Years after the First Closing Date.

“Second Anniversary Payment” means an amount equal to sixty percent (60%) of the Net Revenue attributable to each Eligible Account for the Fiscal Year beginning on the day after the First Anniversary Date.

“Seller Consents” is defined in Section 3.1.5 of this Agreement.

“Seller Parties” is defined in the preamble to this Agreement, and, for purposes of (1) the definitions of “Subadviser Material Adverse Change”, “Knowledge” and “Retained Seller Party Liabilities” in Section 1.1, (2) Article 3, (3) the last sentence of Section 5.1.2(a), (4) Section 5.1.2(d)(i), (5) Section 5.2(b), (6) Section 5.3(b), (7) Section 6.2, (8) Section 8.1, (9) Section 9.1, (10) Section 9.3, and (11) references to “Seller Party” or “Seller Parties” in any knowledge qualifier in this Agreement, “Seller Parties” shall also include RidgeWorth.

“Seller Party Advisory Subsidiaries” means RidgeWorth, Subadviser, Silvant Capital Management LLC, Seix Investment Advisors LLC, IronOak Advisors LLC, Certium Asset Management LLC, Ceredex Value Advisors LLC, SunTrust Investment Services, Inc., SunTrust Institutional Investment Advisors LLC, GenSpring Charleston, LLC, GenSpring Family Offices, LLC, and GenSpring International LLC.

“Stub Period One” means a period of days after the Fifth Anniversary Date equal to the number of days during the period beginning the day after the First Closing Date and ending on and including the Interim Closing Date.

“Stub Period One End Date” means the last day of Stub Period One after the Fifth Anniversary Date.

“Stub Period One Payment” means an amount equal to:

(1) sixty percent (60%) of the Net Revenue attributable to each Eligible Account for Stub Period One beginning on the day after the Fifth Anniversary Date, multiplied by

(2) the quotient of:

(a) Interim Closing Transferring Assets, divided by

(b) Aggregate Transferred Assets.

“Stub Period Payments” means the Stub Period One Payment and the Stub Period Two Payment, as applicable.

“Stub Period Two” means a period of days after the Fifth Anniversary Date equal to the number of days during the period beginning the day after the Interim Closing Date and ending on and including the Final Closing Date.

“Stub Period Two End Date” means the last day of Stub Period Two after the Fifth Anniversary Date.

“Stub Period Two Payment” means an amount equal to:

(1) sixty percent (60%) of the Net Revenue attributable to each Eligible Account for Stub Period Two beginning on the day after the Fifth Anniversary Date, multiplied by

(2) the quotient of:

(a) Final Closing Transferring Assets, divided by

(b) Aggregate Transferred Assets.

“Subadviser” is defined in the preamble to this Agreement.

“Subadviser Indemnitees” is defined in Section 9.2 of this Agreement.

“Subadviser Material Adverse Change” means with respect to any Seller Party, or the Products taken as a whole, (a) any fact, event, change, circumstance, condition, development or effect that would reasonably be expected to have a material adverse effect (whether taken individually or in the aggregate with all other such effects) on the financial condition, business or

results of operations of any Seller Party or the Business, or the Products taken as a whole, or (b) any event, circumstance or condition affecting any Seller Party or the Business, or the Products taken as a whole, which would prevent or materially delay the consummation of the Transactions or would be reasonably expected to materially adversely affect the ability of any Seller Party to perform its obligations under this Agreement or any other Transaction Document; provided that, in determining whether a Subadviser Material Adverse Change has occurred, there shall be excluded any effect to the extent resulting from (1) changes (other than changes in GAAP or Applicable Law) in the financial services industry in general, or the investment advisory or investment management sector in particular, and not specifically relating to any Seller Party, including changes in economic or market conditions or changes in prevailing interest rates, currency exchange rates or price levels or trading volumes in the U.S. or foreign securities markets, so long as a Seller Party is not affected in a materially adverse manner disproportionate to how other sponsors of money market mutual funds are affected, (2) the failure by Federated or any Seller Party to obtain any Consents necessary as a result of the Transactions (provided that the failure of Federated or any Seller Party to obtain any Consent was not intentional or in bad faith), (3) any change, effect, event or occurrence arising out of the announcement of this Agreement or the Transactions contemplated hereby, (4) any change, effect, event or occurrence arising out of the Transactions contemplated hereby or the performance of this Agreement and the other Transaction Documents by any Seller Party (including actions or omissions of any of the Seller Parties taken in contemplation of the Transactions contemplated by this Agreement and the other Transaction Documents) in compliance with the terms of this Agreement and the other Transaction Documents, (5) changes in national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, and (6) natural disasters or “acts of God.”

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, custom, duty, stamp, occupation, premium, profits, windfall profits, capital stock, franchise, withholding, social security, unemployment, disability, real property, personal property, sales, use, ad valorem, transfer, registration, value added, general service, alternative or add-on minimum, estimated or other tax, or similar fees, assessments or charges, together with any interest, penalties or additions to tax imposed by any Governmental Authority.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement required to be filed, with any Governmental Authority, relating to Taxes, including any form, schedule or attachment thereto and any amendment or supplement thereof.

“Third Anniversary Date” means the date which is three (3) Fiscal Years after the First Closing Date.

“Third Anniversary Payment” means an amount equal to sixty percent (60%) of the Net Revenue attributable to each Eligible Account for the Fiscal Year beginning on the day after the Second Anniversary Date.

“Third Party Claim” is defined in Section 9.3(b) of this Agreement.

“Third Party Reimbursement” means the actual amount, if any, received by the Indemnified Party from any third Person (including any insurance carrier pursuant to any claim outside the scope of such Party’s insurance coverage).

“Total Consideration” means the Cash Consideration Amount and other consideration described in Section 2.3 of this Agreement.

“Total Relationship AUM” means, as of a relevant date, the net assets under management by Federated, through its advisory Affiliates, in the Federated Funds and any applicable Other Federated Money Market Funds, or as adviser of an Advised Common Fund, that were either transferred as contemplated in this Agreement or sourced through the Seller Parties or another Affiliate of any of them pursuant to a dealer agreement or other selling agreement with Federated Securities Corp. and for which one of the foregoing is designated the broker or other intermediary of record, and which accounts do not include any accounts sourced through any third party.

“Transaction Documents” means this Agreement, the Bill of Sale, the Advised Common Funds Advisory Agreement, the First Closing Transferring Assets Certificate, the Interim Closing Transferring Assets Certificate, the Parent Bring-Down Certificates, the Federated Bring-Down Certificates and any amendments, modifications, supplements or restatements of any of the foregoing documents.

“Transactions” means the transactions contemplated by this Agreement and the other Transaction Documents, including the Product Asset Transfers effected through the Consent Process and the Common Fund Process as contemplated in this Agreement.

“Upfront Closing Payments” means the First Closing Payment, the Interim Closing Payment and the Final Closing Payment.

“Upfront Purchase Price Amount” means eight million seven hundred fifty thousand dollars ($8,750,000).

“WARN Act” means United States Federal Worker Adjustment and Retraining Notification Act of 1988, any successor federal law, or any other applicable state, local or foreign plant closing, mass layoff or termination pay or notification law, in each case, as amended, and including the rules, regulations and interpretations promulgated thereunder.

1.2 Construction.

(a) General. The language used in this Agreement, and any other Transaction Document, shall be deemed to be the language chosen by the parties hereto or thereto to express their mutual intent, and no rule of strict construction shall be applied against any party. Any covenant or requirement in this Agreement or any other Transaction Document that Subadviser or RidgeWorth is required to perform or comply with is intended to be, and shall be, construed to include a covenant and requirement that Parent shall cause Subadviser or RidgeWorth (as applicable) to perform and comply with such covenant or requirement. Unless

the context requires otherwise, any reference to any federal, state, local, or foreign statute or other Applicable Law shall be deemed also to refer to all rules, regulations and interpretations promulgated thereunder, in each case as in effect as of the date hereof or as of the applicable Closing Date. All accounting terms not specifically defined in this Agreement will be construed in accordance with GAAP. Any calculations required to be performed in connection with this Agreement shall be taken out to four (4) decimal places. Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.” All words in this Agreement will be construed to be of such gender or number, as the circumstances require. For example, whenever the context may require, any nouns and pronouns shall include the corresponding masculine, feminine or neuter forms and the singular form of nouns and pronouns shall include the plural and vice versa. The word “or” in this Agreement is disjunctive but not necessarily exclusive (and should be construed, accordingly, as “and/or”). The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the first paragraph of this Agreement. The Section headings in this Agreement are inserted for convenience of reference only and are not intended to alter or affect any provision of this Agreement. Any reference in this Agreement to any Section refers to the corresponding Section of this Agreement. Any reference in this Agreement to any Schedule or Exhibit refers to the corresponding Schedule or Exhibit attached to this Agreement and all such Schedules and Exhibits are incorporated herein by reference. Unless specifically provided otherwise in this Agreement, any reference to (i) “days” shall mean calendar days; and (ii) references to a “Governmental Authority” include (a) any domestic, foreign or other Governmental Authority, as applicable, and (b) any successor to that Governmental Authority.

(b) Valuation of Securities. For purposes of this Agreement and the other Transaction Documents, unless specifically otherwise provided or mutually agreed in writing, if any provision or Product Asset Transfer requires the valuation of securities or other assets of a Product or a Federated Fund (or an Other Federated Money Market Fund), such provision shall be deemed to require such valuation to be conducted (and such Product Asset Transfer shall be conducted) in accordance with the procedures adopted by the Board of the Federated funds (including the Federated Funds and Other Federated Money Market Funds) as implemented by the Valuation Committee appointed by such Board, which are generally described in such Federated Fund’s (or Other Federated Money Market Fund’s) Governing Documents, current prospectus and SAI.

(c) Tax Provisions. It is agreed and understood that no representation or warranty is made by Parent or Subadviser in respect of Taxes, Tax Returns or other Tax related matters in any section of this Agreement other than Sections 3.2.3, 3.2.4 and 3.3.5. It also is agreed and understood that no representation or warranty is made by Federated in respect of Taxes, Tax Returns or other Tax related matters in any section of this Agreement other than Sections 4.2.3 and 4.2.4.

ARTICLE 2

PURCHASE AND SALE OF ASSETS; PRODUCT ASSET TRANSFERS

Subject to the other provisions of this Agreement:

2.1 Sale and Purchase of the Acquired Assets.

(a) At the First Closing, the Interim Closing and at the Final Closing, the Applicable Seller Parties shall sell, transfer, convey, assign and deliver to Federated (or its designated Affiliates), and Federated (or its designated Affiliates) shall purchase or acquire from such Applicable Seller Parties, the applicable portion of the Business encompassing the assets specified on Schedule 2.1 to this Agreement being transferred to Federated (or its designated Affiliates) at such Closing (each such asset being an “Acquired Asset” and, collectively, the “Acquired Assets”).

(b) Each such sale, transfer, conveyance, assignment and delivery shall be made to Federated (or its designated Affiliates) free and clear of any Liens to or on each Closing Date (except for Permitted Liens).

2.2 Consent Process; Common Fund Process. Without limitation of the other covenants of Parent or Subadviser herein, from the execution of this Agreement through the earlier of (a) the Final Closing or (b) any termination of this Agreement pursuant to its terms, Parent and Subadviser shall use commercially reasonable efforts to undertake and complete (i) the Consent Process with respect to the relevant accounts invested in the RidgeWorth Money Market Funds as further described in Section 5.1.2(b) and (ii) the Common Fund Process (including the reinvestment of redemption proceeds in the Federated Funds (or an Other Federated Money Market Fund)) as further described in Section 5.1.2(c).

2.3 Consideration.

(a) Federated shall bear its portion of the costs and expenses of the Transactions as contemplated in Section 5.2, and Federated shall pay to Parent, and Parent shall receive, the Cash Consideration Amount in such amounts and at such times as set forth below:

(i) Upfront Closing Payments. Following the procedures set forth in Section 2.5.1 below, on the fifth (5^th) Business Day after:

(A) the First Closing Date, Federated shall pay any First Closing Payment owing to Parent;

(B) the Interim Closing Date, Federated shall pay the Interim Closing Payment owing to Parent; and

(B) the Final Closing Date, Federated shall pay any Final Closing Payment owing to Parent;

provided, that in no event shall the aggregate Upfront Closing Payments exceed the Upfront Purchase Price Amount or, if the Aggregate Transferred Assets are less than $18,857,500,000, the Adjusted Upfront Purchase Price Amount.

(ii) Anniversary Payments.

(A) Within the seventy-five (75)-day period following the First Anniversary Date, Federated shall pay any First Anniversary Payment owing to Parent.

(B) Within the seventy-five (75)-day period following the Second Anniversary Date, Federated shall pay any Second Anniversary Payment owing to Parent.

(C) Within the seventy-five (75)-day period following the Third Anniversary Date, Federated shall pay any Third Anniversary Payment owing to Parent.

(D) Within the seventy-five (75)-day period following the Fourth Anniversary Date, Federated shall pay any Fourth Anniversary Payment owing to Parent.

(E) Within the seventy-five (75)-day period following the Fifth Anniversary Date, Federated shall pay any Fifth Anniversary Payment owing to Parent.

(F) Within the seventy-five (75)-period following the Stub Period One End Date, Federated shall pay any Stub Period One Payment owing to Parent.

(G) Within the seventy-five (75)-period following the Stub Period Two End Date, Federated shall pay any Stub Period Two Payment owing to Parent.

(b) All payments required to be made under this Section 2.3 or Section 2.4 below shall be payable in U.S. dollars, by wire transfer of available funds to an account designated in writing by the Party that is to receive payment to the Party that is to make payment at least three (3) Business Days in advance of any Payment Date. If any payment required to be made under this Section 2.3 or Section 2.4 below is due to be paid on a date that is not a Business Day, the Payment Date for such payment shall be deemed to be the next Business Day.

2.4 Clawbacks.

(a) (i) If a Restricted Acquisition Announcement Date occurs on or before the last day of the third Fiscal Year after the Final Closing Date, Parent shall promptly notify Federated in writing of: (A) the pending Restricted Acquisition at that time, and (B) the closing of such Restricted Acquisition when it is consummated.

(ii) If, after the first Restricted Acquisition Announcement Date, the Total Relationship AUM falls below sixty percent (60%) of the Base Clawback AUM on any date (“Complete Clawback Trigger Date”) on or before the last day of the third Fiscal Year after the Final Closing Date, then Parent shall pay to Federated the Appropriate Clawback Payment when such payment is due and payable in accordance with Section 2.5.3(b).

(iii) Subject to Section 2.4(a)(ii), if, after the first Restricted Acquisition Announcement Date, the Total Relationship AUM falls below ninety percent (90%) of the Base Clawback AUM on any date (“Clawback Measurement Trigger Date”), but a Complete Clawback Trigger Date does not occur, on or before the last day of the third Fiscal Year after the Final Closing Date (“Clawback Measurement End Date”), then:

(A) If Clawback AUM is equal to or greater than ninety percent (90%) of Base Clawback AUM, then no Clawback Payment pursuant this Section 2.4(a)(iii)(A) shall be owing by Parent to Federated; or

(B) If Clawback AUM is less than ninety percent (90%) of Base Clawback AUM, but equal to or more than sixty percent (60%) of Base Clawback AUM, then Parent shall pay Federated when such payment is due and payable under Section 2.5.3(b), a pro rated Clawback Payment pursuant to this Section 2.4(a)(iii)(B) in an amount determined on the basis of the illustrative examples of the calculations required under this Section 2.4(a) that are included in Schedule 2.4(a) attached hereto.

For the avoidance of doubt, if at any time a Complete Clawback Trigger Date occurs on or before the Clawback Measurement End Date, then no payment would be required under this Section 2.4(a)(iii), but the Appropriate Clawback Payment shall be payable pursuant to Section 2.4(a)(ii) above.

(b) (i) If a GenSpring Clawback Trigger Date occurs on or before the last day of the third Fiscal Year after the Final Closing Date, Parent shall notify Federated in writing of such fact.

(ii) If, after the GenSpring Clawback Trigger Date, the GenSpring AUM falls below sixty percent (60%) of the GenSpring Base Clawback AUM on any date (“GenSpring Complete Clawback Trigger Date”) on or before the last day of the third Fiscal Year after the Final Closing Date, then Parent shall pay to Federated the GenSpring Appropriate Clawback Payment when such payment is due and payable in accordance with Section 2.5.3(c).

(iii) Subject to Section 2.4(b)(ii), if, after the GenSpring Clawback Trigger Date, the GenSpring AUM falls below ninety percent (90%) of the GenSpring Base Clawback AUM on any date (“GenSpring Clawback Measurement Trigger Date”), but a GenSpring Complete Clawback Trigger Date does not occur, on or before the last day of the third Fiscal Year after the Final Closing Date (“GenSpring Clawback Measurement End Date”), then:

(A) If GenSpring Clawback AUM is equal to or greater than ninety percent (90%) of GenSpring Base Clawback AUM, then no Clawback Payment pursuant to this Section 2.4(b)(iii)(A) shall be owing by Parent to Federated;

(B) If GenSpring Clawback AUM is less than ninety percent (90%) of GenSpring Base Clawback AUM, but equal to or more than sixty percent (60%) of GenSpring Base Clawback AUM, then Parent shall pay Federated when such payment is due and payable under Section 2.5.3(c), a pro rated Clawback Payment pursuant to this Section 2.4(b)(iii)(B) in an amount determined on the basis of the illustrative examples of the

calculations required under this Section 2.4(b) that are included in Schedule 2.4(b) attached hereto.

For the avoidance of doubt, if at any time a GenSpring Complete Clawback Trigger Date occurs on or before the GenSpring Clawback Measurement End Date, then no payment would be required under this Section 2.4(b)(iii), but the GenSpring Appropriate Clawback Payment shall be payable pursuant to Section 2.4(b)(ii) above.

2.5 Payment Calculations.

2.5.1 Upfront Closing Payments.

(a) (i) On the fourth (4^th) Business Day prior to the First Closing Date, Parent shall prepare in good faith and deliver to Federated an estimate of: (A) the First Closing Transferring Assets, in the aggregate and broken down by Product, and (B) a corresponding estimated First Closing Payment, in each case together with reasonable supporting calculations and documentation.

(ii) On the first (1^st) Business Day after the First Closing Date, Federated shall prepare in good faith and deliver to the Seller Parties a statement of: (A) the First Closing Transferring Assets, in the aggregate and broken down by Product, and (B) the corresponding First Closing Payment, in each case together with reasonable supporting calculations and documentation.

(b) On the fourth (4^th) Business Day prior to the Interim Closing Date, Parent shall prepare in good faith and deliver to Federated an estimate of: (A) the Interim Closing Transferring Assets, in the aggregate and broken down by Product, and (B) a corresponding estimated Interim Closing Payment, in each case together with reasonable supporting calculations and documentation.

(ii) On the first (1^st) Business Day after the Interim Closing Date, Federated shall prepare in good faith and deliver to the Seller Parties a statement of: (A) the Interim Closing Transferring Assets, in the aggregate and broken down by Product, and (B) the corresponding Interim Closing Payment, in each case together with reasonable supporting calculations and documentation.

(c) (i) On the fourth (4^th) Business Day prior to the Final Closing Date, Parent shall prepare in good faith and deliver to Federated an estimate of: (A) the Final Closing Transferring Assets, in the aggregate and broken down by Product, and (B) a corresponding estimated Final Closing Payment (if any), in each case together with reasonable supporting calculations and documentation.

(ii) On the first (1^st) Business Day after the Final Closing Date, Federated shall prepare in good faith and deliver to the Seller Parties a statement of: (A) the Final Closing Transferring Assets, in the aggregate and broken down by Product, and (B) the corresponding Final Closing Payment, in each case together with reasonable supporting calculations and documentation.

(d) After delivering any statement pursuant to Sections 2.5.1(a)(ii), (b)(ii) or (c)(ii) above, Federated shall give the Seller Parties, and their representatives, reasonable access to Federated’s accounting books, records and personnel to enable the Seller Parties to review each such statement.

(e) After receiving any statement pursuant to Sections 2.5.1(a)(ii), (b)(ii) or (c)(ii) above, the Seller Parties shall have three (3) Business Days to dispute any such statement by notifying Federated of such a dispute. Parent shall specify any such dispute in reasonable detail. If Parent does not notify Federated of a dispute within such three (3) Business Day period, or if Parent notifies Federated that it agrees with Federated’s statement and calculations, then Federated’s statement and calculations as delivered to the Seller Parties shall be final and binding. If Parent disputes any statement, the Parties shall work together in good faith to resolve any such dispute promptly.

(f) If any dispute is not resolved by the applicable Payment Date:

(i) Federated shall pay any undisputed portion of any Upfront Closing Payment on the applicable Payment Date and shall remit any remaining portion later in accordance with the mutual agreement of the Parties or the determination made by the Firm promptly (and, in any event, no later than ten (10) days) after the Parties mutually resolve the dispute or the delivery to the Parties of the Firm’s written report, as applicable.

(ii) If a dispute is not mutually resolved by the Parties within thirty (30) days after the applicable Payment Date, any Party may elect to have the dispute submitted to the Firm by providing written notice to the other Parties. In the event a Party makes such an election, the Parties will in good faith jointly retain the Firm to resolve the remaining unresolved disputes.

The Parties shall use commercially reasonable efforts to cause the Firm to, within sixty (60) days following its retention by the Parties, deliver to the Parties a written report determining the resolution of the applicable disputed item(s), and its determinations will be final and binding upon the Parties for the purposes of resolving the remaining unresolved disputes over the amounts set forth in the statement(s) prepared in accordance with Sections 2.5.1(a)(ii), (b)(ii) or (c)(ii), absent manifest error. The Parties shall reasonably cooperate with the Firm and make available their respective employees and any accounting books and records in their respective possession that the Firm reasonably requests as being necessary in making its determination. The fees and disbursements of the Firm shall be borne one-half by the Seller Parties and one-half by Federated.

Nothing in this Section 2.5.1(f)(ii) shall prohibit the Parties from continuing to work together to mutually resolve any dispute even after such dispute has been submitted to the Firm.

2.5.2 Anniversary Payments.

(a) As soon as reasonably possible after the date of this Agreement, and, in any event, prior to the First Closing Date, the Parties shall work together in good faith to agree upon the methodology for determining the Anniversary Payments (e.g., calculating Net Revenue

attributable to Eligible Accounts), and such methodology will be attached to this Agreement as Schedule 2.5.2(a) prior to the First Closing Date.

(b) Within forty-five (45) days after each applicable Anniversary Date and the Stub Period End Date (as applicable), Federated shall prepare in good faith and deliver to the Seller Parties a statement of any Anniversary Payment to be paid by Federated, together with reasonable supporting calculations and documentation (including Net Revenue calculations).

(c) After delivering any statement pursuant to Section 2.5.2(b) above, Federated shall give the Seller Parties, and their representatives, reasonable access to Federated’s accounting books, records and personnel to enable the Seller Parties to review each such statement.

(d) After receiving any statement pursuant to Section 2.5.2(b) above, the Seller Parties shall, as soon as practicable but not later than thirty (30) days after receiving such statement, notify Federated of any dispute with respect to the calculation of Net Revenue or the corresponding Anniversary Payment specifying the dispute in reasonable detail. If Parent does not notify Federated of a dispute within such thirty (30)-day period, or if Parent notifies Federated that it agrees with Federated’s statement and calculations, then Federated’s statement and calculations as delivered to Parent shall be final and binding. If Parent disputes any statement, the Parties shall work together in good faith to resolve any such dispute promptly.

(e) If any dispute is not resolved by the applicable Payment Date:

(i) Federated shall pay any undisputed portion of any Anniversary Payment on the applicable Payment Date and shall remit any remaining portion later in accordance with the mutual agreement of the Parties or the determination made by the Firm promptly (and, in any event, no later than ten (10) days) after the Parties mutually resolve the dispute or the delivery to the Parties of the Firm’s written report, as applicable.

(ii) The Parties shall follow the procedures set forth in Section 2.5.1(f)(ii) with respect to resolving any dispute over the amounts set forth in the statement(s) prepared in accordance with Section 2.5.2(b).

(f) Parent and Subadviser acknowledge and agree that no guarantees can be made or given regarding the level of Net Revenues that Federated will earn and receive, or the level of Anniversary Payments that will become owing to Parent, and nothing in this Agreement is intended to give any Seller Party, or any Affiliate of any of them, any responsibility for control or decision making with respect to the post-Closing management and operation of the Acquired Assets, the Product Assets transferred pursuant to Product Asset Transfers as contemplated in this Agreement or Federated’s business.

2.5.3 Clawback Payments.

(a) As soon as reasonably possible after the date of this Agreement, and, in any event, prior to the First Closing Date, the Parties shall work together in good faith to agree upon the methodology (e.g., dealer numbers, etc.) for determining Total Relationship AUM and

GenSpring AUM, and such methodology will be attached to this Agreement as Schedule 2.5.3(a) prior to the First Closing Date.

(b) (i) If a Restricted Acquisition Announcement Date occurs on or before the last day of the third Fiscal Year after the Final Closing Date:

(A) Within forty-five (45) days after Federated receives the notice for the Restricted Acquisition Announcement Date from Parent, Federated shall prepare in good faith and deliver to the Seller Parties a statement of the Base Clawback AUM, together with reasonable supporting calculations and documentation.

(B) Within forty-five (45) days after a Complete Clawback Trigger Date or a Clawback Measurement Trigger Date occurs, Federated shall prepare in good faith and deliver to the Seller Parties a statement notifying the Seller Parties that such Complete Clawback Trigger Date or Clawback Measurement Trigger Date occurred, together with reasonable supporting calculations and documentation.

(1) In the case of a Complete Clawback Trigger Date, such statement also shall include: (w) the Total Relationship AUM as of the Complete Clawback Trigger Date; (x) the quotient of Total Relationship AUM on the Complete Clawback Trigger Date divided by Base Clawback AUM; and (y) the Appropriate Clawback Payment together with reasonable supporting calculations and documentation.

(2) In the case of a Clawback Measurement Trigger Date, within forty-five (45) days after the Clawback Measurement End Date, Federated shall prepare in good faith and deliver to the Seller Parties a statement of: (w) the Clawback AUM; (x) the quotient of Clawback AUM divided by Base Clawback AUM; and (y) the amount of the Clawback Payment owing by Parent pursuant to Section 2.4(a)(iii), together with reasonable supporting calculations and documentation.

(ii) After delivering any statement pursuant to Section 2.5.3(b)(i) above, Federated shall give the Seller Parties, and their representatives, reasonable access to Federated’s accounting books, records and personnel to enable the Seller Parties to review each such statement.

(iii) After receiving any statement pursuant to Section 2.5.3(b)(i) above, Parent shall, as soon as practicable but not later than thirty (30) days after receiving such statement, notify Federated of any dispute with respect to the calculation of Base Clawback AUM, or Clawback AUM or any corresponding Clawback Payment, (as applicable) specifying the dispute in reasonable detail. If Parent does not notify Federated of a dispute within such thirty (30)-day period, or if Parent notifies Federated that it agrees with Federated’s statement and calculations, then Federated’s statement and calculations as delivered to the Seller Parties shall be final and binding and Parent shall make the Clawback Payment within ten (10) days after expiration of such thirty (30)-day period. If Parent disputes any statement, the Parties shall work together in good faith to resolve any such dispute promptly.

(iv) If any dispute is not resolved within twenty (20) days after expiration of the thirty (30)-day period contemplated in Section 2.5.3(b)(iii) above:

(A) Parent shall pay any undisputed portion of any Clawback Payment within ten (10) days after the expiration of such fifty (50)-day period and shall remit any remaining portion later in accordance with the mutual agreement of the Parties or with the determination made by the Firm promptly (and, in any event, no later than ten (10) days) after the Parties mutually resolve the dispute or the delivery to the Parties of the Firm’s written report, as applicable.

(B) The Parties shall follow the procedures set forth in Section 2.5.1(f)(ii) with respect to resolving any dispute over the amounts set forth in the statement(s) prepared in accordance with Section 2.5.3(b)(i)(A) or 2.5.3(b)(i)(B). For the avoidance of doubt, any Party may elect to submit the dispute to the Firm immediately after the expiration of such fifty (50)-day period.

(c) (i) If a GenSpring Clawback Trigger Date occurs on or before the last day of the third Fiscal Year after the Final Closing Date, then:

(A) Within forty-five (45) days after Federated receives the notice required under Section 2.4(b)(i) from Parent, Federated shall prepare in good faith and deliver to the Seller Parties a statement of the GenSpring Product Assets, the aggregate Upfront Closing Payments, the GenSpring Percentage, and the GenSpring Base Clawback AUM, together with reasonable supporting calculations and documentation.

(B) Within forty-five (45) days after a GenSpring Complete Clawback Trigger Date or a GenSpring Clawback Measurement Trigger Date occurs, Federated shall prepare in good faith and deliver to the Seller Parties a statement notifying the Seller Parties that such GenSpring Complete Clawback Trigger Date or GenSpring Clawback Measurement Trigger Date occurred, together with reasonable supporting calculations and documentation.

(1) In the case of a GenSpring Complete Clawback Trigger Date, such statement also shall include: (w) the GenSpring AUM as of the GenSpring Complete Clawback Trigger Date; (x) the quotient of GenSpring AUM on the GenSpring Complete Clawback Trigger Date divided by GenSpring Base Clawback AUM; and (y) the GenSpring Appropriate Clawback Payment, together with reasonable supporting calculations and documentation.

(2) In the case of a GenSpring Clawback Measurement Trigger Date, within forty-five (45) days after the GenSpring Clawback Measurement End Date, Federated shall prepare in good faith and deliver to the Seller Parties a statement of: (w) the GenSpring Clawback AUM; (x) the quotient of GenSpring Clawback AUM divided by GenSpring Base Clawback AUM; and (y) the amount of the Clawback Payment owing by Parent pursuant to Section 2.4(b)(iii), together with reasonable supporting calculations and documentation.

(ii) After delivering any statement pursuant to Section 2.5.3(c)(i) above, Federated shall give the Seller Parties, and their representatives, reasonable access to Federated’s accounting books, records and personnel to enable the Seller Parties to review each such statement.

(iii) After receiving any statement pursuant to Section 2.5.3(c)(i) above, Parent shall, as soon as practicable but not later than thirty (30) days after receiving such statement, notify Federated of any dispute with respect to the calculation of any amounts specified in such statement (as applicable) specifying the dispute in reasonable detail. If Parent does not notify Federated of a dispute within such thirty (30)-day period, or if Parent notifies Federated that it agrees with Federated’s statement and calculations, then Federated’s statement and calculations as delivered to the Seller Parties shall be final and binding and Parent shall make the Clawback Payment within ten (10) days after expiration of such thirty (30)-day period. If Parent disputes any statement, the Parties shall work together in good faith to resolve any such dispute promptly.

(iv) If any dispute is not resolved within twenty (20) days after expiration of the thirty (30)-day period contemplated in Section 2.5.3(c)(iii) above:

(A) Parent shall pay any undisputed portion of any Clawback Payment within ten (10) days after the expiration of such fifty (50)-day period and shall remit any remaining portion later in accordance with the mutual agreement of the Parties or with the determination made by the Firm promptly (and, in any event, no later than ten (10) days) after the Parties mutually resolve the dispute or the delivery to the Parties of the Firm’s written report, as applicable.

(B) The Parties shall follow the procedures set forth in Section 2.5.1(f)(ii) with respect to resolving any dispute over the amounts set forth in the statement prepared in accordance with Section 2.5.3(c)(i)(A) or 2.5.3(c)(i)(B). For the avoidance of doubt, any Party may elect to submit the dispute to the Firm immediately after the expiration of such fifty (50)-day period.

2.6 Allocation of Consideration.

(a) For income Tax purposes, Federated shall prepare and deliver to Parent within 120 days after the First Closing, within 120 days after the Interim Closing and within 120 days after the Final Closing an allocation statement to allocate the Total Consideration (the “First Closing Allocation”, “Interim Closing Allocation” and the “Final Closing Allocation”, respectively, each an “Allocation” and together, the “Allocations”). Such Allocations shall be made in accordance with Section 1060 of the Code and the regulations thereunder. Parent will have thirty (30) days after receiving each Allocation from Federated to review such Allocation and notify Federated in writing of any objections that Parent may have to such Allocation. Parent shall specify any such objections in such notice in reasonable detail. If Federated does not receive such a notice of objections from Parent within such thirty (30)-day period with respect to an Allocation, such Allocation delivered by Federated shall be considered final and binding. If Federated does receive such a notice of objections from Parent within such thirty (30)-day period, the Parties shall work together in an effort to promptly resolve any objections, but in no event for a period that is longer than thirty (30) days.

(b) If the Parties agree pursuant to Section 2.6(a) to an Allocation, the Parties shall file an Internal Revenue Service Form 8594 consistent with such Allocation. The Parties agree not to take any Tax position (whether in audits, Tax Returns or otherwise) which is

inconsistent with any final and binding Allocation agreed upon in accordance with Section 2.6(a) unless required to do so under Applicable Law.

2.7 Closing Dates.

(a) First Closing. The consummation of the Product Asset Transfers that are to be consummated initially pursuant to the Transactions contemplated by Section 2.2 of this Agreement, and the transfers of any related Acquired Assets pursuant to the Transactions contemplated in Section 2.1 of this Agreement, (the “First Closing”) shall take place at the offices of Reed Smith LLP, Reed Smith Centre, 225 Fifth Avenue, Suite 1200, Pittsburgh, PA 15222, at 4:00 p.m., New York time, on the date that is five (5) Business Days following the satisfaction or waiver of all applicable conditions to the consummation of the Transactions to be consummated at the First Closing pursuant to this Agreement and the other Transaction Documents, which, as applicable, include the expiration of any applicable notice period or other agreed upon timeframe related to the Consent Process (other than those conditions which by their terms are intended to be fulfilled at the First Closing) or at such other place, time and date as the Parties may mutually agree (such date, the “First Closing Date”); provided that if, based on market conditions at the relevant time, Federated in good faith determines that the First Closing should not occur on the fifth Business Day referenced above due to potential adverse affects to the Federated Funds (or, as applicable, Other Federated Money Market Funds), Federated may, upon written notice to Parent provided at or before 12 o’clock, Noon, New York time, on the Business Day prior to the First Closing Date, elect to postpone the First Closing Date one time for a reasonable period of time until market conditions abate (which period of time shall not exceed thirty (30) calendar days following the date on which the conditions referenced in this sentence have been satisfied or waived) (any such election, a “Federated Closing Election”). In the case of a Federated Closing Election, the satisfaction of the conditions to the consummation of the Transactions to be consummated at the First Closing (other than those conditions which by their terms are intended to be fulfilled at the First Closing) shall be measured as of the date upon which written notice of such Federated Closing Election is delivered to Parent hereunder and not at any subsequent time. Any Party may seek to initiate the First Closing by providing written notice to the other Parties hereto that the conditions referenced in the first sentence of this subsection have been satisfied (or, as applicable, would be waived by such initiating Party). For the avoidance of doubt, subject to the satisfaction or waiver of the applicable conditions precedent in Article 6 of this Agreement, it is the intention of the Parties to consummate the First Closing, and the Parties agree to use commercially reasonable efforts to cause the conditions to the other Party’s obligation to effect the First Closing to be satisfied as soon as reasonably practicable.

(b) Interim Closing. The consummation of the Product Asset Transfers that are to be consummated following the First Closing and prior to the Final Closing pursuant to the Transactions contemplated by Section 2.2 of this Agreement, and the transfers of any related Acquired Assets pursuant to the Transactions contemplated in Section 2.1 of this Agreement, (the “Interim Closing”) shall take place at the offices of Reed Smith LLP, Reed Smith Centre, 225 Fifth Avenue, Suite 1200, Pittsburgh, PA 15222, at 4:00 p.m., New York time, on the date that is five (5) Business Days following the satisfaction or waiver of all applicable conditions to the consummation of the Transactions to be consummated at the Interim Closing pursuant to this Agreement and the other Transaction Documents (other than those conditions which by their

terms are intended to be fulfilled at the Interim Closing) or at such other place, time and date as the Parties may mutually agree (such date, the “Interim Closing Date”); provided that if, based on market conditions at the relevant time, Federated in good faith determines that the Interim Closing should not occur on the fifth Business Day referenced above due to potential adverse affects to the Federated Funds (or, as applicable, Other Federated Money Market Funds), Federated may, upon written notice to Parent provided at or before 12 o’clock, Noon, New York time, on the Business Day prior to the Interim Closing Date, make a Federated Closing Election to postpone the Interim Closing Date one time for a reasonable period of time until market conditions abate (which period of time shall not exceed thirty (30) calendar days following the date on which the conditions referenced in this sentence have been satisfied or waived). In the case of a Federated Closing Election, the satisfaction of the conditions to the consummation of the Transactions to be consummated at the Interim Closing (other than those conditions which by their terms are intended to be fulfilled at the Interim Closing) shall be measured as of the date upon which written notice of such Federated Closing Election is delivered to Parent hereunder and not at any subsequent time. Any Party may seek to initiate the Interim Closing by providing written notice to the other Parties hereto that the conditions referenced in the first sentence of this subsection have been satisfied (or, as applicable, would be waived by such initiating Party). For the avoidance of doubt, subject to the satisfaction or waiver of the applicable conditions precedent in Article 6 of this Agreement, it is the intention of the Parties to consummate the Interim Closing, and the Parties agree to use commercially reasonable efforts to cause the conditions to the other Party’s obligation to effect the Interim Closing to be satisfied within a time frame mutually agreed upon by the Parties.

(c) Final Closing. The consummation of the Product Asset Transfers that are to be consummated last pursuant to the Transactions contemplated by Section 2.2 of this Agreement, and the transfers of any related Acquired Assets pursuant to the Transactions contemplated in Section 2.1 of this Agreement, (the “Final Closing”) shall take place at the offices of Reed Smith LLP, Reed Smith Centre, 225 Fifth Avenue, Suite 1200, Pittsburgh, PA 15222, at 4:00 p.m., New York time, on the date that is five (5) Business Days following the satisfaction or waiver of all applicable conditions to the consummation of the Transactions to be consummated at the Final Closing pursuant to this Agreement and the other Transaction Documents (other than those conditions which by their terms are intended to be fulfilled at the Final Closing) or at such other place, time and date as the Parties may mutually agree (such date, the “Final Closing Date”); provided that if, based on market conditions at the relevant time, Federated in good faith determines that the Final Closing should not occur on the fifth Business Day referenced above due to potential adverse affects to the Federated Funds (or, as applicable, Other Federated Money Market Funds), Federated may, upon written notice to Parent provided at or before 12 o’clock, Noon, New York time, on the Business Day prior to the Final Closing Date, make a Federated Closing Election to postpone the Final Closing Date one time for a reasonable period of time until market conditions abate (which period of time shall not exceed thirty (30) calendar days following the date on which the conditions referenced in this sentence have been satisfied or waived). In the case of a Federated Closing Election, the satisfaction of the conditions to the consummation of the Transactions to be consummated at the Final Closing (other than those conditions which by their terms are intended to be fulfilled at the Final Closing) shall be measured as of the date upon which written notice of such Federated Closing Election is delivered to Parent hereunder and not at any subsequent time. Any Party may seek to initiate the Final Closing by providing written notice to the other Parties hereto that the conditions

referenced in the first sentence of this subsection have been satisfied (or, as applicable, would be waived by such initiating Party) (any such notice, a “Final Closing Notice”). For the avoidance of doubt, subject to the satisfaction or waiver of the applicable conditions precedent in Article 6 of this Agreement, it is the intention of the Parties to consummate the Final Closing, and the Parties agree to use commercially reasonable efforts to cause the conditions to the other Party’s obligation to effect the Final Closing to be satisfied within a time frame mutually agreed upon by the Parties. If the Final Closing does not occur by or on December 31, 2010, the Parties will no longer be obligated to effect the Final Closing unless the Final Closing would have occurred on or prior to December 31, 2010 but for a Federated Closing Election having been made.

2.8 Liabilities. Without limiting Federated’s indemnification obligations under Section 9.2, (i) nothing in this Agreement nor any other Transaction Document shall be construed to transfer any Retained Seller Party Liabilities or any Retained Product Liabilities to Federated, any Federated Fund, or any Other Federated Money Market Fund, or any Affiliate of any of them, or any officer, director or trustee of any of the foregoing and (ii) neither Federated, any Federated Fund, nor any Other Federated Money Market Fund, or any Affiliate of any of them, or any officer, director or trustee of any of the foregoing, shall assume, or otherwise become liable for, any Retained Seller Party Liabilities or any Retained Product Liabilities.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBADVISER

3.1 Representations and Warranties of Parent and Subadviser. Parent and Subadviser jointly and severally represent and warrant to Federated as of the date of this Agreement and, unless a representation and warranty below speaks by its terms as of some other specified date, as of each Closing Date as follows:

3.1.1 Organization and Qualification.

(a) Subadviser. Subadviser is a Delaware limited liability company and is duly organized and presently existing under the laws of the jurisdiction in which it is organized. Subadviser has the requisite power and authority to conduct its business as currently conducted and to own, lease and operate the properties and assets used in connection therewith. Subadviser is duly qualified or licensed to do business and is in good standing in every jurisdiction where its business so requires, except for such failures to be so qualified or licensed as would not result in a Subadviser Material Adverse Change. To the extent that RidgeWorth is required to execute any Transaction Document, or otherwise act to implement or consummate the Transactions, Parent hereby makes the representations and warranties contained in this Section 3.1.1(a) with respect to RidgeWorth (except that RidgeWorth is a Georgia corporation). Subadviser has no subsidiaries.

(b) Parent. Parent is a Georgia corporation and is duly organized and presently existing under the laws of the jurisdiction in which it is organized. Parent has the requisite power and authority to conduct its business as currently conducted and to own, lease and operate the properties and assets used in connection therewith. Parent is duly qualified or licensed to do business and is in good standing in every jurisdiction where its business so

requires, except for such failures to be so qualified or licensed as would not result in a Subadviser Material Adverse Change.

(c) Non-Compete Parties. A list of Persons constituting, as of March 31, 2010, Non-Compete Parties under clause (2) of the definition of “Non-Compete Parties” in Section 1.1 of this Agreement is set forth on Schedule 3.1.1(c) and is complete in all material respects.

3.1.2 Authority.

(a) Subadviser. Subadviser has full power and authority to enter into this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder or thereunder, and to fulfill its role in the Transactions contemplated hereby or thereby. Subadviser has taken all action necessary to be taken by it to authorize the execution, delivery, and performance of this Agreement and the other Transaction Documents to which it is a party, and no further member, manager, or other action or proceeding on the part of Subadviser is necessary to authorize this Agreement and the other Transaction Documents to which it is a party and the consummation of the Transactions. This Agreement and the other Transaction Documents to which it is a party have been (or will be) duly executed and delivered by Subadviser, and are (or will be) the valid and legally binding agreements and obligations of Subadviser, enforceable against it in accordance with their respective terms, except as may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law. Without limiting the foregoing, Parent, and its Affiliates, have (or, by an applicable Closing, will have) the authority to implement the Consent Process and Common Fund Process under Applicable Law and the trust or other account Contracts or documents for shareholders or interest holders (as applicable) of the Products, whether via discretionary authority, affirmative consent, or negative consent pursuant to NASD Rule 2510(d), as administered by FINRA, with respect to the Product Asset Transfers that occur upon each Closing. To the extent that RidgeWorth is required to execute any Transaction Document, or otherwise act to implement or consummate the Transactions, Parent hereby makes the representations and warranties contained in this Section 3.1.2(a) with respect to RidgeWorth.

(b) Parent. Parent has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder or thereunder, and to fulfill its role in the Transactions contemplated hereby or thereby. Parent has taken all corporate and other action necessary to be taken by it to authorize the execution, delivery, and performance of this Agreement and the other Transaction Documents to which it is a party, and no further corporate, shareholder, or other action or proceeding on the part of Parent is necessary to authorize this Agreement and the other Transaction Documents to which it is a party and the consummation of the Transactions. This Agreement and the other Transaction Documents to which it is a party have been (or will be) duly executed and delivered by Parent, and are (or will be) the valid and legally binding agreements and obligations of Parent, enforceable against it in accordance with their respective terms, except as may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally and

subject to general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law. In addition to the above representations and warranties, Parent specifically represents and warrants that, as the ultimate parent company of Subadviser, Parent will benefit and receive value from the Transactions contemplated by this Agreement through Subadviser and that upon a Closing occurring, in addition to other consideration received by Parent, Parent shall have received good and valuable consideration sufficient to make the provisions of this Agreement, and any other Transaction Document to which Parent is a party, legally binding on, and enforceable against, Parent.

3.1.3 No Violations. Subject to the receipt of the Seller Consents, the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party will not breach or violate any provision of any Governing Document of any Seller Party, nor the terms of any material Contract or Applicable Law to which any Seller Party, the Business or the Acquired Assets is subject or by which any of them is obligated or any of their properties or assets bound, other than breaches and violations that would not, individually or in the aggregate, (a) adversely affect the validity or enforceability of this Agreement or any other Transaction Documents to which any Seller Party is a party, (b) prevent the consummation of the Transactions, or (c) result in a Subadviser Material Adverse Change.

3.1.4 No Convictions, Sanctions or Other Violations. No Person who is “associated” (as defined under Advisers Act) with any Applicable Seller Party has for a period of five (5) years prior to the date hereof been convicted of any crime or is or has been subject to any disqualification that would be a basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) of Advisers Act or Rule 206(4)-4(b) thereunder or of a broker-dealer under Section 15 of the 1934 Act. Neither any Applicable Seller Party nor any Affiliated Person of any of them has been convicted of any felony or misdemeanor described in Section 9(a)(1) of the 1940 Act, nor has any Affiliated Person of any Applicable Seller Party been subject, or is presently subject, to any injunction or Commission order that would prevent such Person from acting or serving as an investment adviser, underwriter, broker-dealer, employee, officer, trustee or director of an investment company under Sections 9(a)(2) or 9(b) of the 1940 Act, and there is no proceeding or investigation pending or, to any Seller Party’s Knowledge, threatened, that is reasonably likely to become the basis for any such injunction or Commission order.

3.1.5 Governmental Approvals and Other Consents. Except for any approvals of the Transactions by Subadviser’s Board, which have been obtained, and any other Consents identified on Schedule 3.1.5, (collectively, the “Seller Consents”), none of the Seller Parties, the RidgeWorth Trust or any Product, nor any Affiliate of any of them, are required to submit, file, give or obtain any material Consent to or from any Governmental Authority, the shareholders or Board of the RidgeWorth Money Market Funds, or any other Person in connection with the execution, delivery and performance by any Seller Party of this Agreement or any other Transaction Documents or any Seller Party’s or Products’ consummation of the Transactions.

3.1.6 Litigation. (a) Except for the matters disclosed (if any) as of the date of this Agreement in the registration statements for the RidgeWorth Money Market Funds or in Part I of the Form ADVs of the Seller Party Advisory Subsidiaries, no material Litigation brought by

any Person other than Federated, its Affiliates and their respective employees and representatives is pending or, to any Seller Party’s Knowledge, threatened against any Seller Party in connection with the Acquired Assets or the Business, and (b) no Litigation brought by any Person other than Federated, its Affiliates and their respective employees and representatives is pending or, to any Seller Party’s Knowledge, threatened against any Seller Party in connection with this Agreement, any other Transaction Document, or the Transactions, in each case by or before any Governmental Authority, including any such Litigation that seeks to delay, hinder, or prohibit execution or performance of this Agreement, any other Transaction Document or the consummation of the Transactions.

3.1.7 Compliance. The Applicable Seller Parties have (except for the matters disclosed (if any) as of the date of this Agreement in the registration statements for the RidgeWorth Money Market Funds or in Part I of the Form ADVs of the Seller Party Advisory Subsidiaries) complied and are in compliance in all material respects with all Applicable Law (such as, for example and without limitation, Section 206 of the Advisers Act governing or imposing fiduciary duties) relating to the Acquired Assets, the Business and the Products, and with the material provisions of all applicable Contracts, investment policies and restrictions relating to the Business and Products; and the Applicable Seller Parties and their respective Affiliates possess all requisite Consents required under any Applicable Law to conduct the Business as currently conducted, and are in material compliance with all such Consents. The Seller Parties do not have Knowledge of any information that, with or without the passage of time, is likely to result in any material non-compliance by any Applicable Seller Party, its subsidiaries (if any), or any Product with any of the foregoing.

3.1.8 Title. The Applicable Seller Party has good and marketable title to the Acquired Assets free and clear of any Lien other than Permitted Liens. At the applicable Closing, upon the terms and subject to the conditions set forth in this Agreement, the Applicable Seller Party will sell, transfer, convey, assign and deliver to Federated (or its designated Affiliates) all right, title and interest in and to each of the Acquired Assets, free and clear of all Liens (other than Permitted Liens).

3.2 Representations and Warranties Regarding the RidgeWorth Money Market Funds. Parent and Subadviser jointly and severally represent and warrant to Federated as of the date of this Agreement and, unless a representation and warranty below speaks by its terms as of some other specified date, as of each Closing Date as follows:

3.2.1 Authority and Regulation.

(a) Each RidgeWorth Money Market Fund is a legally designated, separate series of the RidgeWorth Trust, a Massachusetts business trust, duly organized, validly existing and in good standing under the laws of The Commonwealth of Massachusetts. The RidgeWorth Trust is registered as an open-end management investment company under the 1940 Act, and its registration with the Commission as an investment company is in full force and effect as of the date of this Agreement and each Closing.

(b) To the Knowledge of the Seller Parties, the RidgeWorth Trust, and each RidgeWorth Money Market Fund, are in compliance in all material respects with all Applicable

Laws, including the 1940 Act, Advisers Act, the 1933 Act, the 1934 Act, and all applicable state securities laws and rules.

3.2.2 Compliance. To the Knowledge of the Seller Parties: (a) each RidgeWorth Money Market Fund has for the past five years complied and is in compliance in all material respects with the terms and conditions of its Governing Documents and the investment policies and restrictions set forth in its registration statement, (b) the value of the net assets of each RidgeWorth Money Market Fund has been determined, and is being determined, using portfolio valuation methods that comply in all material respects with the methods described in its registration statement and the requirements of the 1940 Act, (c) all issued and outstanding shares of beneficial interest of the RidgeWorth Money Market Funds are duly and validly issued and outstanding, fully paid and non-assessable by the RidgeWorth Money Market Funds, and are registered under the 1933 Act and applicable state or foreign law as required under Applicable Law, and (d) except for the matters disclosed (if any) as of the date of this Agreement in the registration statements for the RidgeWorth Money Market Funds or in Part I of the Form ADVs of the Seller Party Advisory Subsidiaries: (i) there are no consent decrees or similar material arrangements entered into with a Governmental Authority or other Person (whether arising out of a violation, or alleged violation, of Applicable Law or otherwise) by, or relating to, the RidgeWorth Trust or any RidgeWorth Money Market Fund that are still in effect or were in effect; and (ii) neither any Seller Party, nor any Affiliate of any of them, nor, to the Knowledge of the Seller Parties, the RidgeWorth Trust or any RidgeWorth Money Market Fund, has received notice of a material violation of any Applicable Law by or with respect to the RidgeWorth Trust or any RidgeWorth Money Market Fund. All investment advisory-related services are being rendered to any RidgeWorth Money Market Fund pursuant to Contracts that have been approved by the RidgeWorth Money Market Funds’ Board and shareholders of each RidgeWorth Money Market Fund in accordance with all Applicable Law, including the 1940 Act.

3.2.3 Tax Qualification. Each RidgeWorth Money Market Fund is qualified, and has been qualified for all taxable years during which it has conducted business, as a Regulated Investment Company.

3.2.4 Taxes. To the Knowledge of the Seller Parties, all Tax Returns with respect to Taxes of, or assessed or assessable against, any RidgeWorth Money Market Fund that are or have been required to be filed have been duly and timely filed. To any Seller Party’s Knowledge, all Taxes for all periods covered by such Tax Returns or portions thereof ending through the date hereof (or the applicable Closing Date) have been duly and timely paid in full (or adequate provision for such has been made in its financial statements in accordance with GAAP). To any Seller Party’s Knowledge, all required records related to Taxes with respect to or covering any RidgeWorth Money Market Fund have been maintained. To any Seller Party’s Knowledge, all Tax Returns of the RidgeWorth Money Market Funds required to be filed and all Tax Return information or reports in respect of Taxes of the RidgeWorth Money Market Funds required to be provided to shareholders of the RidgeWorth Money Market Funds are correct in all material respects. To any Seller Party’s Knowledge, no such Tax Return is currently under audit and no assessment has been proposed or asserted in writing with respect to any such Tax Return.

3.2.5 Litigation. Except for the matters disclosed as of the date of this Agreement in the registration statements for the RidgeWorth Trust or in Part I of the Form ADVs of the Seller Party Advisory Subsidiaries, no material Litigation brought by any Person other than Federated, its Affiliates and their respective employees and representatives is pending or, to any Seller Party’s Knowledge, threatened against the RidgeWorth Trust or any RidgeWorth Money Market Fund, or the properties, assets or business of the RidgeWorth Trust or any RidgeWorth Money Market Fund, by or before any Governmental Authority, including any such Litigation (a) that would question the right, power, or capacity of the RidgeWorth Trust or the RidgeWorth Money Market Funds to conduct their businesses as conducted now or at any time in the past, (b) that would be expected to result in the revocation, cancellation or suspension, or any adverse modification, of a material Governmental Approval or other Consent applicable to the RidgeWorth Trust or any RidgeWorth Money Market Fund, or (c) that would delay, hinder or prohibit consummation of the Transactions.

3.3 Representations and Warranties Regarding Non-Mutual Fund Products. Parent and Subadviser jointly and severally represent and warrant to Federated as of the date of this Agreement and, unless a representation and warranty below speaks by its terms as of some other specified date, as of each Closing Date as follows:

3.3.1 Authority and Regulation.

(a) Each Common Fund is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized, has the requisite power and authority to conduct its business as currently conducted and to own, lease and operate the properties and assets used in connection therewith, and is duly qualified or licensed to do business and is in good standing in every jurisdiction where its business so requires, except for such failures to be so qualified or licensed as would not result in a Subadviser Material Adverse Change.

(b) Each Common Fund has been, and is established, maintained and managed, in compliance in all material respects with all Applicable Laws, including the 1940 Act, Advisers Act, the 1933 Act, the 1934 Act, and all applicable state securities laws and rules.

3.3.2 No Violations. Subject to the receipt of the Seller Consents, the consummation of the Transactions will not breach or violate any provision of any Governing Document of any Common Fund, nor the terms of any other material Contract or Applicable Law to which any Common Fund is subject or by which any Common Fund is obligated or any of the properties or assets of any Common Fund are bound, other than breaches and violations that would not, individually or in the aggregate, (a) adversely affect the validity or enforceability of this Agreement or any other Transaction Document, (b) prevent the consummation of the Transactions, or (c) result in a Subadviser Material Adverse Change.

3.3.3 Litigation. No material Litigation brought by any Person other than Federated, its Affiliates and their respective employees and representatives is pending or, to any Seller Party’s Knowledge, threatened against any Common Fund, or the properties, assets or business of any Common Fund, by or before any Governmental Authority, including any Litigation (a) that would question the right, power or capacity of any Common Fund to conduct

its business as conducted now or at any time in the past, (b) that would be expected to result in the revocation, cancellation or suspension, or any adverse modification, of a material Governmental Approval or other Consent applicable to any Common Fund, or (c) that would delay, hinder or prohibit consummation of the Transactions.

3.3.4 Compliance.

(a) The Seller Parties and any of their Affiliates that are engaged in managing any Common Fund have performed any services with respect to each Common Fund in compliance, in all material respects, with all Applicable Law (such as, for example and without limitation, Section 206 of the Advisers Act governing or imposing fiduciary duties) and with the provisions of all applicable Contracts, investment policies, restrictions, registration statements, offering documents, Governing Documents or other relevant documents for such Common Funds, in each case in all material respects. There are no consent decrees or similar material arrangements entered into with a Governmental Authority or other Person (whether arising out of a violation, or alleged violation of Applicable Law or otherwise) by, or relating to any Common Fund that are still in effect or were in effect. Neither any Seller Party, nor any Affiliate of any of them, nor, to the Knowledge of the Seller Parties, the Common Funds, has received notice of a material violation of any Applicable Law by or with respect to the Common Funds.

(b) Each Common Fund: (i) was organized, created, registered or originated in compliance with Applicable Law; (ii) has for the past five years complied and is in compliance in all material respects with all Applicable Law (including with respect to investment in, and the issuance of shares of or interests in, such Common Fund), and with the provisions of all applicable Contracts, investment policies, restrictions, registration statements, offering documents, Governing Documents or other relevant documents for such Common Fund or to which such Common Fund is designated a party or bound, and (iii) possesses all material Consents required under any Applicable Law to own and operate its properties and assets, conduct its business and remain open for investment, and is in material compliance with all such Consents, and all such Consents are in full force and effect. All issued and outstanding interests of the Common Funds are duly and validly issued and outstanding, fully paid and non-assessable by the Common Funds, and are registered, or exempt from registration, under the 1933 Act and applicable state or foreign law as required under Applicable Law.

(c) The value of the net assets of each Common Fund has been determined, and is being determined, using portfolio valuation methods that comply in all material respects with the valuation methods described in the applicable Contracts, offering documents, Governing Documents and other relevant documents for such Common Fund and any requirements imposed under Applicable Law.

(d) Each Common Fund is a common fund or collective trust exempt from being registered as an “investment company” under the 1940 Act pursuant to Section 3(c)(3) or Section 3(c)(11) of the 1940 Act, and the shares of or interests in such Common Funds are privately offered and not registered under the 1933 Act pursuant to an exemption from registration thereunder.

3.3.5 Taxes. To any Seller Party’s Knowledge, all Tax Returns with respect to Taxes of, or assessed or assessable against, any Common Fund, and all Tax Return information or reports, that are or have been required to be filed, or provided by the Common Funds to their respective shareholders have been duly and timely filed or provided (as applicable). To any Seller Party’s Knowledge, all Taxes for all periods covered by such Tax Returns or portions thereof ending through the date hereof (or the applicable Closing Date) have been duly and timely paid in full (or adequate provision for such has been made in its financial statements in accordance with GAAP). To any Seller Party’s Knowledge, all required records related to Taxes with respect to or covering any Common Fund have been maintained. To any Seller Party’s Knowledge, all Tax Returns of the Common Funds required to be filed and all Tax Return information and reports in respect of Taxes of the Common Funds required to be provided to shareholders of the Common Funds are correct in all material respects. To any Seller Party’s Knowledge, no such Tax Return is currently under audit and no assessment has been proposed or asserted in writing with respect to any such Tax Return.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF FEDERATED

4.1 Representations and Warranties of Federated. Federated represents and warrants to Parent and Subadviser as of the date of this Agreement and, unless a representation and warranty below speaks by its terms as of some other specified date, as of each Closing Date as follows:

4.1.1 Incorporation and Qualification. Federated is a corporation duly incorporated and presently subsisting under the laws of the Commonwealth of Pennsylvania. Federated has the requisite corporate power and authority to conduct its business as currently conducted and to own, lease, and operate the properties and assets used in connection therewith. Federated is duly qualified or licensed to do business and is in good standing in every jurisdiction where its respective business so requires, except for such failures to qualify or be licensed as would not result in a Federated Material Adverse Change.

4.1.2 Authority. Federated has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder or thereunder, and to fulfill its role in the Transactions contemplated hereby or thereby. Federated has taken all corporate and other action necessary to be taken by it to authorize the execution, delivery, and performance of this Agreement and the other Transaction Documents to which it is a party, and no further corporate, shareholder, or other action or proceeding on the part of Federated is necessary to authorize this Agreement and the other Transaction Documents to which it is a party and the consummation of the Transactions. This Agreement and the other Transaction Documents to which it is a party has been (or will be) duly executed and delivered by Federated, and are (or will be) the valid and legally binding agreements and obligations of Federated enforceable against it in accordance with their respective terms, except as may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally, and subject to general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law. In addition to the above representations and

warranties, Federated specifically represents and warrants that Federated will benefit and receive value from the Transactions contemplated by this Agreement and that upon a Closing occurring, in addition to other consideration received by Federated, Federated shall have received good and valuable consideration sufficient to make the provisions of this Agreement, and any other Transaction Document to which Federated is a party, legally binding on, and enforceable against, Federated.

4.1.3 No Violations. Subject to the receipt of the Federated Consents, the execution, delivery and performance of this Agreement and the other Transaction Documents to which Federated is a party will not breach or violate any provision of the Governing Documents of Federated, nor the terms of any material Contract or Applicable Law to which Federated is subject or by which it is obligated or its property or assets bound, other than breaches and violations that would not, individually or in the aggregate, (a) adversely affect the validity or enforceability of this Agreement or any other Transaction Documents to which Federated is a party, (b) prevent the consummation of the Transactions, or (c) result in a Federated Material Adverse Change.

4.1.4 No Convictions, Sanctions or Other Violations. No Person “associated” (as defined under Advisers Act) with Federated has for a period of five (5) years prior to the date hereof been convicted of any crime or is or has been subject to any disqualification that would be a basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) of Advisers Act or Rule 206(4)-4(b) thereunder or of a broker-dealer under Section 15 of the 1934 Act. Neither Federated nor any Affiliated Person of Federated has been convicted of any felony or misdemeanor described in Section 9(a)(1) of the 1940 Act, nor has any Affiliated Person of Federated been subject, or is presently subject, to any injunction or Commission order that would prevent such person from acting or serving as an investment adviser, underwriter, broker-dealer, employee, officer, trustee or director of an investment company under Sections 9(a)(2) or (b) of the 1940 Act, and there is no proceeding or investigation pending or, to Federated’s Knowledge, threatened, that is reasonably likely to become the basis for any such injunction or Commission order.

4.1.5 Governmental Approvals and Other Consents. Except for any approvals of the Transactions by Federated’s Board, which have been obtained, and any other Consent identified on Schedule 4.1.5 (collectively, the “Federated Consents”), none of Federated, the Federated Trust or any Federated Fund (or, as applicable, any Other Federated Money Market Fund), nor any Affiliate of any of them, are required to submit, file, give or obtain any material Consent to or from any Governmental Authority, the shareholders or Board of the Federated Funds (or, as applicable, the Other Federated Money Market Funds), or any other Person in connection with the execution, delivery, and performance by Federated of this Agreement or any other Transaction Document or Federated’s or the Federated Funds’ (or, as applicable, Other Federated Money Market Funds’) consummation of the Transactions.

4.1.6 Litigation. (a) Except for the matters disclosed as of the date of this Agreement in the registration statements for the Federated Funds (or, as applicable, the Other Federated Money Market Funds) or in Part I of the Form ADVs of the Federated Advisory Subsidiaries, no material Litigation brought by any Person other than the Seller Parties, their Affiliates and their respective employees and representatives is pending or, to Federated’s

Knowledge, threatened against Federated in connection with Federated’s and its advisory subsidiaries’ businesses of providing investment advisory and investment management services to the Federated Funds (or, as applicable, the Other Federated Money Market Funds), and (b) no Litigation brought by any Person other than the Seller Parties, their Affiliates and their respective employees and representatives is pending or, to Federated’s Knowledge, threatened against Federated in connection with this Agreement, any other Transaction Document, or the Transactions, in each case by or before any Governmental Authority, including any such Litigation that seeks to delay, hinder, or prohibit execution or performance of this Agreement, any other Transaction Document or the consummation of the Transactions.

4.1.7 Compliance. Federated, through its subsidiaries, has (except for the matters disclosed as of the date of this Agreement in the registration statements for the Federated Funds (or, as applicable, the Other Federated Money Market Funds) or in Part I of the Form ADVs of the Federated Advisory Subsidiaries) complied and is in compliance, in all material respects, with all Applicable Law (such as, for example and without limitation, Section 206 of the Advisers Act governing or imposing fiduciary duties), relating to the management of the Federated Funds (or, as applicable, Other Federated Money Market Funds), and with the material provisions of all applicable Contracts, investment policies, and restrictions of the Federated Funds (or, as applicable, Other Federated Money Market Funds); and Federated and its Affiliates possess all requisite Consents required under any Applicable Law to conduct their businesses of providing investment advisory and investment management services to the Federated Funds (or, as applicable, Other Federated Money Market Funds) as currently conducted, and are in material compliance with all such Consents. Federated does not have Knowledge of any information that, with or without the passage of time, is likely to result in any material non-compliance by Federated, its subsidiaries or the Federated Funds (or, as applicable, Other Federated Money Market Funds) with any of the foregoing.

4.2 Representations and Warranties Regarding Federated Funds. Federated represents and warrants to Parent and Subadviser as of the date of this Agreement and, unless a representation and warranty below speaks by its terms as of some other specified date, as of each Closing Date as follows:

4.2.1 Authority and Regulation.

(a) Each Federated Fund is a legally designated, separate series of the Federated Trust, a Massachusetts business trust, duly organized, validly existing and in good standing under the laws of The Commonwealth of Massachusetts. The Federated Trust is registered as an open-end management investment company under the 1940 Act, and its registration with the Commission as an investment company is in full force and effect as of the date of this Agreement and each Closing.

(b) To the Knowledge of Federated, the Federated Trust, and each Federated Fund, are in compliance in all material respects with all Applicable Laws, including the 1940 Act, Advisers Act, the 1933 Act, the 1934 Act, and all applicable state securities laws and rules.

4.2.2 Compliance. To the Knowledge of Federated: (a) each Federated Fund has for the past five years complied and is in compliance in all material respects with the terms

and conditions of its Governing Documents and the investment policies and restrictions set forth in its registration statement, (b) the value of the net assets of each Federated Fund is being determined using portfolio valuation methods that comply in all material respects with the methods described in its registration statement and the requirements of the 1940 Act, (c) all issued and outstanding shares of beneficial interest of the Federated Funds are duly and validly issued and outstanding, fully paid and non-assessable by the Federated Funds, and are registered under the 1933 Act and applicable state or foreign law as required under Applicable Law, and (d) except for the matters disclosed as of the date of this Agreement in the registration statements for the Federated Funds (or, as applicable, the Other Federated Money Market Funds) or in Part I of the Form ADVs of the Federated Advisory Subsidiaries: (i) there are no consent decrees or similar material arrangements entered into with a Governmental Authority or other Person (whether arising out of a violation, or alleged violation of Applicable Law or otherwise) by, or relating to, Federated or the Federated Funds that are still in effect or were in effect; and (ii) neither Federated, nor to the Knowledge of Federated, the Federated Funds or any applicable Other Federated Money Market Fund, has received notice of a material violation of any Applicable Law by or with respect to the Federated Funds or any applicable Other Federated Money Market Fund.

4.2.3 Tax Qualification. Each Federated Fund is qualified, and has been qualified for all taxable years during which it has conducted business, as a Regulated Investment Company.

4.2.4 Taxes. To Federated’s Knowledge, all Tax Returns with respect to Taxes of, or assessed or assessable against, any Federated Fund that are or have been required to be filed have been duly and timely filed. To Federated’s Knowledge, all Taxes for all periods covered by such Tax Returns or portions thereof ending through the date hereof (or the applicable Closing) have been duly and timely paid in full (or adequate provision for such will have been made in its financial statements in accordance with GAAP). To Federated’s Knowledge, all required records related to Taxes with respect to or covering any Federated Fund have been maintained. To Federated’s Knowledge, all Tax Returns of the Federated Funds required to be filed and all Tax Return information and reports in respect of Taxes of the Federated Funds required to be provided to shareholders of the Federated Funds are correct in all material respects. To Federated’s Knowledge, no such Tax Return is currently under audit and no assessment has been proposed or asserted in writing with respect to any such Tax Return.

4.2.5 Contracts. All investment advisory-related services are being rendered to any Federated Fund pursuant to Contracts that have been approved by the Federated Funds’ Board and shareholders of each Federated Fund in accordance with all Applicable Law, including the 1940 Act.

4.2.6 Litigation. Except for the matters disclosed as of the date of this Agreement in the registration statements for the Federated Funds (or, as applicable, the Other Federated Money Market Funds) or in Part I of the Form ADVs of the Federated Advisory Subsidiaries, no material Litigation brought by any Person other than the Seller Parties, their Affiliates and their respective employees and representatives is pending or, to Federated’s Knowledge, threatened against any Federated Fund (or, as applicable, any Other Federated Money Market Fund), or the properties, assets or business of any Federated Fund (or, as

applicable, any Other Federated Money Market Fund), by or before any Governmental Authority, including any such Litigation (a) that would question the right, power, or capacity of any Federated Fund (or, as applicable, any Other Federated Money Market Fund) to conduct their businesses as conducted now or at any time in the past, (b) that would be expected to result in the revocation, cancellation or suspension, or any adverse modification, of a material Governmental Approval or other Consent applicable to any Federated Fund (or, as applicable, any Other Federated Money Market Fund) or (c) that would delay, hinder, or prohibit the consummation of the Transactions.

ARTICLE 5

COVENANTS AND AGREEMENTS

5.1 Covenants with Respect to the Products and Business.

5.1.1 Conduct of Business. From the date of this Agreement through the earlier of the Final Closing Date or termination of this Agreement, except as otherwise contemplated by this Agreement (including the First Closing and the Interim Closing), as disclosed in Schedule 5.1.1 to this Agreement, or as otherwise authorized by the prior written consent of Federated (which shall not be unreasonably withheld, conditioned or delayed), Parent and Subadviser agree that Parent and the Applicable Seller Parties shall, to the extent consistent with its fiduciary duties: (a) use the Acquired Assets and conduct the Business only in the ordinary course and in a manner consistent with this Agreement and its past practices; (b) not sell, transfer, lease, pledge, or otherwise dispose of any Acquired Assets; (c) not allow any of the Acquired Assets or, to the extent within an Applicable Seller Parties’ control, the Product Assets to become subject to any Lien of any nature that will not be discharged in full prior to the transfer thereof pursuant to this Agreement or any other Transaction Document (other than Permitted Liens); (d) not organize, sponsor, start, or otherwise create, or become an adviser or subadviser to, any additional money market investment companies or common or collective liquidity funds without providing prior notice to Federated, and (e) not to agree or commit to take any of the actions in this Section 5.1.1.

5.1.2 Covenants Relating to Products and Product Asset Transfers.

(a) Consents Generally. From the date of this Agreement through the Final Closing Date or termination of this Agreement in accordance with its terms, each Party agrees to use commercially reasonable efforts to make, file or give, or cause to be made, filed or given, and use commercially reasonable efforts to obtain, or cause to be obtained, the filings, submissions, and other Governmental Approvals and other Consents that such Party (or its Affiliates) is required to make, file, give or obtain under Applicable Law, Contract or otherwise in connection with the consummation of the Transactions. Nothing in this Agreement or any other Transaction Document shall require Federated (or any of its Affiliates) or any Seller Party (or any of their respective Affiliates) to pay any amount to any shareholder, interest holder or Client, or agree to waive, reimburse or otherwise reduce any fees, in order to obtain any Consent in connection with consummating the Transactions.

(b) Consent Process. The Consent Process involves redeeming shareholder accounts from the RidgeWorth Money Market Funds and reinvesting the redemption proceeds into the Federated Funds (or, as applicable, the Other Federated Money Market Funds) pursuant to a Seller Party’s (or an Affiliate’s) discretion or pursuant to an affirmative or negative consent procedure as permitted under Applicable Law (including, to the extent applicable and available, NASD Rule 2510, as administered by FINRA). Without limiting the generality of Sections 2.2 or 5.1.2(a), Parent, Subadviser and their Affiliates shall determine which Product Assets may be transferred pursuant to the Consent Process and the Parties shall cooperate with each other in preparing, filing (if necessary) and mailing required notices and other shareholder communications, setting relevant dates and deadlines, and resolving objections and addressing questions received in connection with the Consent Process. Each Party shall keep the other Party informed as to the status of the Consent Process, and shall consult with the other Party regarding such matters.

(c) Common Fund Process. The Common Fund Process involves (i) the Seller Parties causing the transfer of Product Assets from the Common Funds set forth on Schedule 5.1.2(c)(i) through reinvestment into the Federated Funds (or, as applicable, an Other Federated Money Market Fund) and (ii) an appropriate advisory subsidiary of Federated entering into the form of advisory agreement attached hereto as Exhibit D (“Advised Common Funds Advisory Agreement”) with respect to the Common Funds set forth on Schedule 5.1.2(c)(ii) (the “Advised Common Funds”). Without limiting the generality of Section 2.2 or 5.1.2(a), the Parties shall cooperate with each other in preparing, filing (if necessary) and mailing required notices and other interest holder communications, setting relevant dates and deadlines, and resolving objections and addressing questions received in connection with the Common Fund Process. Each Party shall keep the other Party informed as to the status of the Common Fund Process, and shall consult with the other Party regarding such matters.

(d) Accuracy of Information or Data.

(i) The Seller Parties covenant that any information or data that describes any Seller Party or the Products, or any Affiliate of any of them, or any of their business operations or plans, which is furnished, provided or approved in writing by the Seller Parties (or their respective auditors or counsel) for inclusion in any (A) prospectus or SAI supplements or any post-effective amendment thereto filed with the Commission after the date of this Agreement, and required in connection with the Transactions contemplated hereby and by the other Transaction Documents, (B) other document filed with the Commission or the FINRA or any other regulatory body or Governmental Authority in connection with the Transactions contemplated hereby and by the other Transaction Documents, or (C) marketing material, advertising material, offering material or Consent used, after the date of this Agreement, in connection with implementing or consummating the Transactions contemplated hereby and by the other Transaction Documents, shall not contain, at the time any such supplements or post-effective amendments thereto become effective, or at the time any such document is furnished to the Commission or the FINRA or any other regulatory body or Governmental Authority, or at the time any such marketing material, advertising material, offering material or Consent is mailed, delivered or otherwise used as contemplated above, any untrue statement of material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading.

(ii) Federated covenants that any information or data that describes Federated, any Federated Fund (or, as applicable, any Other Federated Money Market Fund), or any Affiliate of any of them, or any of their business operations or plans, which is furnished, provided or approved in writing by Federated (or its auditors or counsel) for inclusion in any (A) prospectus or SAI supplements or a post-effective amendment thereto filed with the Commission after the date of this Agreement, and required in connection with the Transactions contemplated hereby and by the other Transaction Documents, (B) other document filed with the Commission or the FINRA or any other regulatory body or Governmental Authority in connection with the Transactions contemplated hereby and by the other Transaction Documents, or (C) marketing material, advertising material, offering material or Consent used, after the date of this Agreement, in connection with implementing or consummating the Transactions contemplated hereby and by the other Transaction Documents, shall not contain, at the time any such supplements or post-effective amendments thereto become effective, , or at the time any such document is furnished to the Commission or the FINRA or any other regulatory body or Governmental Authority, or at the time any such marketing material, advertising material, offering material or Consent is mailed, delivered or otherwise used as contemplated above, any untrue statement of material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading.

5.1.3 Covenants Regarding Certain Product Taxes.

(a) Parent and Subadviser agree that they shall file, or cause to be filed, all Tax Returns (including, with respect to the RidgeWorth Money Market Funds, Internal Revenue Service Forms 1120-RIC and 1099), and provide, or cause to be provided, all Tax Return information or reports, required by Applicable Law to be filed, or provided to shareholders, interest holders, or Clients, (after accounting for any extensions) by any Products by an applicable Closing Date (or by a later required date if such Tax Return or Tax Return information relates to the period prior to such applicable Closing Date and is not a final Tax Return). Parent and Subadviser also shall file, or cause to be filed, any and all final Tax Returns, and provide, or cause to be provided, any final Tax Return information or reports, required by Applicable Law to be filed, or provided to shareholders, interest holders, or Clients, (after accounting for any extensions) by any Products, and shall ensure that all Taxes of, or assessed or assessable against, any Product shall have been paid so far as due or provision shall have been made for the payment thereof.

(b) Federated agrees that it shall file, or cause to be filed, all Tax Returns (including Internal Revenue Service Forms 1120-RIC and 1099), and provide, or cause to be provided, all Tax Return information or reports, required by Applicable Law to be filed, or provided to shareholders, interest holders, or Clients, (after accounting for any extensions) by the Federated Funds (or, as applicable, Other Federated Money Market Funds) after the applicable Closing Date and to ensure that the Federated Funds (or, as applicable, Other Federated Money Market Funds) continue to qualify as Regulated Investment Companies after each Closing Date as long as such Federated Funds (or, as applicable, Other Federated Money Market Funds) are not reorganized into another open-end management investment company that qualifies as a Regulated Investment Company or liquidated.

(c) Federated and Subadviser shall each assist the other, as may reasonably be requested by the other Party, with the preparation of any Tax Return, any Tax or financial audit, or any other Litigation relating to any Tax in respect of the Products or the Federated Funds (or, as applicable, the Other Federated Money Market Funds). In addition, each Party shall retain (except to the extent transferred to Federated or its designated Affiliates), and provide the other with access upon reasonable notice and during normal business hours to such records or information in respect of the Products as may be relevant to such Tax Return, Tax or financial audit, or other Litigation.

5.2 Covenants with Respect to Expenses.

(a) Federated shall be solely responsible for any fees, expenses and costs incurred, suffered or paid by Federated, the Federated Funds, any Other Federated Money Market Funds, and any of their respective Affiliates in connection with consummating the Transactions contemplated in this Agreement and the other Transaction Documents. For the avoidance of doubt, Federated shall be responsible for fees, expenses and costs of Federated, the Federated Funds, any Other Federated Money Market Funds and any of their respective Affiliates, and any agents, service providers, representatives, outside counsel, and accountants engaged by any of them, in connection with (i) the drafting and reviewing of any proxy/registration statements and related materials to shareholders (including any supplemental materials) or other shareholder, interest holder or Client Consents or other communications (including any supplemental materials), (ii) printing any prospectus prepared on Form N-1A of a Federated Fund (or, as applicable, any Other Federated Money Market Fund) required by Applicable Law to be mailed to shareholders or interest holders in connection with the Consent Process or the Common Fund Process (or, if applicable, any reorganizations), (iii) drafting, reviewing, negotiating and executing this Agreement and the other Transaction Documents, (iv) tax and legal opinions delivered by counsel to Federated or the Federated Funds (or, as applicable, Other Federated Money Market Funds) associated with the Transactions, and (v) conversion programming attributable to the Federated Funds (or, as applicable, the Other Federated Money Market Funds).

(b) Parent shall be solely responsible for any fees, expenses and costs incurred, suffered or paid by any Seller Party, the Products and any of their respective Affiliates in connection with consummating the Transactions contemplated in this Agreement and the other Transaction Documents. For the avoidance of doubt, Parent and Subadviser shall be responsible for fees, expenses and costs of any Seller Party, the Products and any of their respective Affiliates, and any agents, service providers, proxy solicitors, representatives, outside counsel, and accountants engaged by any of them, in connection with (i) any Board approval process required to obtain Consents necessary to consummate the Transactions; (ii) the drafting, reviewing, filing, printing and mailing of any proxy/registration statements (e.g., Form N-14) and related materials to shareholders (including any supplemental materials) or other shareholder, interest holder or Client Consents or other communications (including any supplemental materials), (iii) drafting, reviewing, negotiating and executing this Agreement and the other Transaction Documents, (iv) solicitation and tabulation of proxies or other Consents relating to the Products, (v) tax or legal opinions delivered by counsel to any Seller Party or Product associated with the Transactions, and (vi) the implementation of Product Asset Transfers.

5.3 Covenants with Respect to Litigation and Changes in Condition.

(a) From the date of this Agreement through the earlier of the Final Closing Date or termination of this Agreement pursuant to its terms, Federated shall notify Parent and Subadviser promptly of any Litigation that to Federated’s Knowledge (i) (A) is commenced against, settled, otherwise concluded or which relates to Federated or any Federated Fund (or, as applicable, any Other Federated Money Market Fund) and would reasonably be expected to have a Federated Material Adverse Change, or (B) that gives rise to an obligation to file information or a report with the Commission or another Governmental Authority relating in any way to or affecting any Federated Fund (or, as applicable, any Other Federated Money Market Fund), the Transactions, this Agreement or any other Transaction Document, or (ii) would delay, restrain, or enjoin the consummation of, or declare unlawful, the Transactions, or cause the Transactions to be rescinded or delay, restrain, or enjoin the performance of this Agreement or any other Transaction Document. If, at any time prior to the Third Anniversary Date, Federated acquires Knowledge of an inquiry, examination, investigation, or enforcement action by a Governmental Authority asserted against Federated or any Federated Fund, which, if adversely decided, would reasonably be expected to have a material adverse effect on the Transactions, Federated’s money market fund business, Federated’s broker-dealer and mutual fund distributor Affiliates, or a Federated Fund (or, as applicable, an Other Federated Money Market Fund), Federated will promptly notify Parent to the extent permitted by Applicable Law, provided that Federated shall not have any obligation to seek the consent of, or any waiver from, any Governmental Authority to permit such disclosure where it would otherwise be prohibited by Applicable Law.

(b) From the date of this Agreement through the earlier of the Final Closing Date or the termination of this Agreement pursuant to its terms, Parent and Subadviser shall notify Federated promptly of any Litigation that to a Seller Party’s Knowledge (i) (A) is commenced against, settled, otherwise concluded or which relates to any Seller Party, any Product or the Business and would reasonably be expected to have a Subadviser Material Adverse Change, or (B) gives rise to an obligation to file information or a report with the Commission or another Governmental Authority, relating in any way to or affecting any Product, the Business, the Transactions, this Agreement or any other Transaction Document, or (ii) is commenced against any Product, or (iii) would delay, restrain, or enjoin the consummation of, or declare unlawful, the Transactions, or cause the Transactions to be rescinded or delay, restrain, or enjoin the performance of this Agreement or any other Transaction Document. If, at any time prior to the Third Anniversary Date, Parent and Subadviser acquire Knowledge of an inquiry, examination, investigation, or enforcement action by a Governmental Authority asserted against any Seller Party or Product, which, if adversely decided, would reasonably be expected to have a material adverse effect on the Transactions, Federated’s money market fund business, Federated’s broker-dealer and mutual fund distributor Affiliates or a Federated Fund (or, as applicable, an Other Federated Money Market Fund), Parent or Subadviser will promptly notify Federated to the extent permitted by Applicable Law, provided that Parent and Subadviser shall not have any obligation to seek the consent of, or any waiver from, any Governmental Authority to permit such disclosure where it would otherwise be prohibited by Applicable Law.

(c) From the date of this Agreement through the Final Closing Date or termination of this Agreement pursuant to its terms, each Party shall advise the other Party in writing of any fact, condition, event or occurrence that could cause any of the conditions to any

Party’s obligations to consummate the Transactions contained in this Agreement or any other Transaction Document not to be satisfied, promptly after becoming aware of the same.

5.4 Covenants with Respect to Publicity. The Parties agree that all public announcements prior to the Final Closing Date relating to this Agreement, any other Transaction Documents or the Transactions shall only be made after such a Party has submitted, reasonably in advance, the text of such announcement to the other Parties at the addresses set forth in Section 10.1 and each of the other Parties has had a reasonable opportunity to comment thereon and has consented to the release of such public announcement (which consent shall not be unreasonably withheld); provided, however, that any Party may make such disclosures as are required by Applicable Law after making reasonable efforts under the circumstances to consult in advance with the other Parties. Except as permitted by the preceding sentence, or as necessary for a Party to perform its obligations in compliance with this Agreement (i.e., in connection with the Consent Process or the Common Fund Process) or to obtain the benefits of this Agreement, the Parties shall not, and shall direct their Affiliates, legal and financial advisers and other representatives not to, disclose this Agreement, or any of the material terms and conditions hereof, to any Person without the prior written consent of each other Party to this Agreement.

5.5 Restrictive Covenants.

5.5.1 Covenant Not to Compete.

(a) During the Restricted Period, Parent agrees that each Non-Compete Party shall not, directly or indirectly, own, manage, operate, Control, sponsor, or participate in (or Knowingly assist any other Person in owning, managing, operating, Controlling, sponsoring, or participating in) any Competing Business (as defined below) (whether as adviser, subadviser, or otherwise).

(b) For purposes of this Section 5.5.1, “Competing Business” means any enterprise, firm, business or other Person that provides (whether as adviser, subadviser or otherwise) investment advisory or management services to, or otherwise sponsors or operates, a Restricted Product.

(c) The restrictive covenants contained in Section 5.5.1(a) above shall not prevent:

(i) the Seller Parties from continuing to operate the Business in compliance with this Agreement (including Section 5.1.1) through the Final Closing Date;

(ii) the Seller Parties from continuing to operate (but not actively market) the Business to the extent necessary to wind down the affairs of, or liquidate, the Subadviser, the SunTrust Retirement Reserve Fund, the SunTrust Tennessee Reserve Fund, the SunTrust Tax-Free Reserve Fund or any RidgeWorth Money Market Fund as promptly as reasonably practicable;

(iii) any Non-Compete Party, subject to Section 2.4(a), from engaging in a Restricted Acquisition or, subject to Section 2.4(b), from engaging in a GenSpring Transaction;

(iv) the RidgeWorth Trust from organizing and offering new Money Market Funds, which are not advised or subadvised by RidgeWorth, Subadviser or any of their respective Affiliates, and which may be utilized as deemed necessary or appropriate by the Board of the RidgeWorth Trust.

Notwithstanding Section 10.13, the Parties agree that it is a violation of the restrictive covenants in Section 5.5.1(a) if, directly or indirectly,

(A) such new Money Market Funds are actively marketed by Parent, RidgeWorth, Subadviser or any other their respective Affiliates;

(B) Parent, RidgeWorth, Subadviser or any of their respective Affiliates receive any fees, revenue sharing or other compensation from or in respect of such new Money Market Funds; or

(C) assets (corporate, customer or otherwise) are invested in such new Money Market Funds for any reason by Parent, RidgeWorth, Subadviser or any of their respective Affiliates, other than: (x) customer assets invested for the purpose of providing liquidity exchange options for the Class A and Class C shareholders of the RidgeWorth Trust’s other series funds, and (y) assets invested by the RidgeWorth Trust’s other series funds (it being understood that references in this clause to the RidgeWorth Trust’s other series funds do not include the RidgeWorth Money Market Funds).

(v) Subject to Section 2.4(b) of this Agreement, GenSpring Holdings, Inc., or its Controlled Affiliates, from organizing or sponsoring solely for the benefit of, and offering solely to, its Clients (which generally shall be Persons of the types who are Clients thereof as of the date of this Agreement, and which shall not include any Non-Compete Parties) a fund or investment product that is not publicly offered and would be a Restricted Product (any such fund or investment product being a “GenSpring Fund”);

(vi) the series funds of the RidgeWorth Trust (other than the RidgeWorth Money Market Funds or any Non-Permitted Money Market Funds) from utilizing the RidgeWorth Funds Securities Lending Cash Collateral Account solely in connection with, and for purposes of, their respective securities lending activities described in the RidgeWorth Trust’s registration statements;

(vii) SunTrust Bank and the Seller Parties from continuing to maintain and operate the SunTrust Retirement Stable Asset Fund as a “Stable Value or GIC Fund” (i.e., a fund that invests primarily in (i) guaranteed insurance and investment contracts issued by financial institutions including insurance companies and banks and (ii) synthetic guaranteed investment contracts and “wrapped fixed income investments” which are typically structured as fixed income securities paired with a book value wrap that provides benefit responsive withdrawals to participants, the underlying assets of which may be subject to the investment guidelines of the wrap issuer and be invested by Subadviser in securities which include, but are not limited to issues of the U.S. government or its agencies, corporate fixed income securities and mortgage backed securities);

(viii) any fund advised or subadvised by RidgeWorth or its subsidiaries (other than the RidgeWorth Money Market Funds or other Products), or the Money Market Funds contemplated in Section 5.5.1(c)(iv) above, from investing in any Restricted Product offered by a Competing Business; or

(ix) the Seller Parties and SunTrust Bank from continuing to operate, manage and sponsor each Advised Common Fund, provided that either:

(A) an advisory Affiliate of Federated is serving as adviser of such Advised Common Fund pursuant to the Advised Common Funds Advisory Agreement, or

(B) an advisory Affiliate of Federated had previously served as adviser to such Advised Common Fund pursuant to the Advised Common Funds Advisory Agreement and was terminated by SunTrust Bank in good faith during the initial thirteen (13) month term of the Advised Common Funds Agreement (I) for cause (e.g., an uncured material breach) pursuant to Section 9(b)(x), (y) or (z) of the Advised Common Funds Advisory Agreement or (II) in order to comply with the fiduciary duties of SunTrust Bank or any Applicable Seller Party;

provided, however, that in the event that an advisory Affiliate of Federated had previously served as adviser to such Advised Common Fund pursuant to the Advised Common Funds Advisory Agreement and was terminated as contemplated in clause (B) above, the exception to Section 5.5.1(a) provided in this clause (ix) shall not be available (x) after the initial thirteen (13) month term of the Advised Common Funds Advisory Agreement, or (y) if the net assets of such Advised Common Fund on any date after the First Closing exceed five hundred million dollars ($500,000,000).

5.5.2 Enforcement. The restrictive covenants contained in Section 5.5.1 are covenants independent of any other provision of this Agreement or any other Transaction Document, and the existence of any claim that any Seller Party or other Non-Compete Party may allege against Federated, whether based on this Agreement, any other Transaction Document or otherwise, shall not prevent the enforcement of such covenants. The Parties agree that Federated’s remedies at law for any breach or threat of breach by any Seller Party (or any Affiliate of any of them) of the provisions of Section 5.5.1 will be inadequate, and that Federated shall be entitled to an injunction or injunctions to prevent breaches of the provisions of Section 5.5.1 and to enforce specifically the terms and provisions of such Section 5.5.1, in addition to any other remedy to which Federated may be entitled at law or equity. In the event of Litigation regarding any of the restrictive covenants set forth in Section 5.5.1, the prevailing party in such Litigation shall, in addition to any other remedies the prevailing party may obtain in such Litigation, be entitled to recover from the other party or parties its reasonable legal fees (e.g., attorneys’ fees and expenses) incurred by such party in enforcing or defending its rights hereunder (whether at law or in equity). If an action is commenced to enforce the restrictive covenant in Section 5.5.1 and Federated is the prevailing party, unless Federated otherwise agrees in writing, the length of time for which the restrictive covenants contained in Section 5.5.1 shall be in force shall be extended by an amount of time equal to the lesser of (a) six months, or (b) the period of violation by a Non-Compete Party. For purposes of the preceding sentences: (a) a party claiming a breach or threat of breach of, and seeking to enforce (whether at law or in

equity), any restrictive covenant in Section 5.5.1 shall be the “prevailing party” if (i) such party obtains a final judgment, order, decree, decision, award, or injunction that contains a determination, or that is based on a finding that, the other party violated (or threatened violation of) the applicable restrictive covenant in Section 5.5.1, or (ii) the parties mutually agree in any settlement agreement that such party is the “prevailing party”, and (b) the parties or parties against whom a claim of breach or threat of breach of any restrictive covenant in Section 5.5.1 is being enforced (whether at law or in equity) shall be the “prevailing party” if the party claiming a breach or threat of breach of, and seeking to enforce (whether at law or in equity), such covenant does not obtain a final judgment, order, decree, decision or award, or injunction, or the parties do not mutually agree in any settlement agreement that such claiming party is the “prevailing party”, as contemplated in clause (a) above. Should any provision of this Section 5.5 be adjudged to any extent invalid by any competent tribunal, such provision shall be deemed modified to the extent necessary to make it enforceable, and any such invalidity shall not effect the validity or enforceability of such provision as so modified or any other provision of this Agreement or any other Transaction Document.

5.6 Exclusivity Covenant. Parent and Subadviser agree that until the earlier of the Final Closing or termination of this Agreement pursuant to its terms, the Seller Parties shall not, and will cause their respective Affiliates and representatives not to, directly or indirectly, solicit, initiate, encourage, entertain or discuss (and shall not permit any Affiliate, employee, officer, director, agent or other Person acting on their behalf to solicit initiate, encourage, entertain or discuss) any inquiries, proposals or offers involving any purchase or sale of all or any part of the Acquired Assets, Products or Business with any other Person or provide any non-public information regarding the Acquired Assets, Products or Business to any other Person who has informed any Seller Party (or any Affiliate of any of them), or any Person acting on their behalf, that it is or may be interested in considering, proposing or entering into a transaction with respect to the purchase or sale of all or any part of the Acquired Assets, Products or Business. Parent and Subadviser further agree to promptly notify Federated should any Seller Party (or any Affiliate of any of them), or any Person acting on their behalf, receive or become aware of any such inquiries, proposals or offers from any other Person indicating or suggesting an interest in acquiring all or any part of the Acquired Assets, Products or Business, subject to any confidentiality obligations of any Seller Party (or any Affiliate of any of them) with such other Person. Notwithstanding the foregoing, Federated acknowledges that the Seller Parties are conducting a separate sale process with respect to their investment management business (other than the Business) and Federated agrees that this Section 5.6 is not intended to and will not restrict or have any impact on that process.

5.7 Covenants With Respect to Further Actions. At the reasonable request of any Party after the First Closing Date, and without further consideration, the other Parties (as applicable) shall from time to time execute and deliver or cause their Affiliates to execute and deliver (as applicable), such further instruments of transfer, assignment, or Consent, or other documents, as may be reasonably necessary or appropriate to carry out the purposes hereof.

5.8 Certain Matters Relating to Money Market Funds. Parent acknowledges and agrees that, in effecting the Product Asset Transfers as contemplated in this Agreement and the other Transaction Documents, it is intended that: (a) shareholders or interest holders of the Products receive the same number of shares of a Federated Fund (or, as applicable, an Other

Federated Money Market Fund) as such shareholder or interest holder had in the applicable Products; (b) the applicable Products not fluctuate from a stable net asset value of one dollar ($1.00) per share as required by Rule 2a-7 under the 1940 Act, and (c) the Federated Funds (or, as applicable, the Other Federated Money Market Funds) receive at least one dollar ($1.00) in market value for each share issued by it. The Parties agree to consult regularly regarding the potential impact of the Product Asset Transfers, as well as the appropriate actions that should be taken to seek to minimize the potential for material, negative impacts as a result of the Product Asset Transfers. The Parties agree that this Section 5.8 remains subject to the fiduciary obligations and determinations of the respective Boards of the Products (as applicable) and Federated Funds (or, as applicable, an Other Federated Money Market Fund), and, as applicable, compliance with any policies and procedures of the Parties relating to the proposed money market Product Asset Transfers and Transactions.

ARTICLE 6

CONDITIONS PRECEDENT TO CLOSING

6.1 Conditions Precedent to any Closing. Consummation by the Parties of the Transactions to be consummated upon any Closing are subject to the satisfaction or mutual written waiver (to the extent permitted by Applicable Law), at or prior to the applicable Closing, of the following conditions (except, in the case of the Final Closing, as provided below):

6.1.1 Consents; Satisfaction of Requirements Relating to the Consent Process and Common Fund Process. To the extent Product Assets are transferring on an applicable Closing Date pursuant to the Consent Process or the Common Fund Process, (a) all conditions to consummation, including obtaining all applicable Seller Consents, and applicable Federated Consents, for the Product Asset Transfers involving such Product Assets, and the Acquired Assets, as contemplated in this Agreement shall have been obtained prior to the applicable Closing Date and shall remain in full force and effect as of the applicable Closing Date and (b) all requirements under Applicable Law, this Agreement and the other Transaction Documents shall have been satisfied. Without limiting the foregoing, to the extent negative consent letters were utilized in accordance with Applicable Law in connection with the Consent Process, any objections received in response to such negative consent letters shall have been dealt with in a manner mutually acceptable to the Parties.

6.1.2 No Legal Obstruction. No injunction, restraining order or order of any nature shall have been issued by or be pending before any Governmental Authority challenging the validity or legality of the Transactions or restraining or prohibiting the consummation of the Transactions, including the Consent Process or the Common Fund Process.

6.2 Conditions Precedent to Obligations of Federated With Respect to Closings. In addition to the conditions set forth in Section 6.1 above, the obligations of Federated under this Agreement and the other Transaction Documents to consummate the Transactions are subject to the satisfaction, at or prior to the applicable Closing, of the following conditions, any one or more of which may be waived at the option of Federated:

6.2.1 No Breach of Covenants; True and Correct Representations and Warranties. In connection with each Closing, (a) there shall have been no material breach by any Seller Party in the performance of any covenants applicable to it in this Agreement or any other Transaction Document to which it is a party to be performed in whole or in part prior to such Closing relating to those Transactions being consummated upon such Closing, and (b) each of (i) the representations and warranties of Parent and Subadviser set forth in Sections 3.1.1 (Organization and Qualification), 3.1.2 (Authority), 3.2.1(a) (Authority and Regulation) and 3.3.1(a) (Authority and Regulation), and Sections 3.1.6 (Litigation), 3.2.5 (Litigation) and 3.3.3 (Litigation) (but only with respect to Litigation constituting an examination for cause, investigation or enforcement action by a Governmental Authority), shall be true and correct in all material respects (and any representation and warranty in such Sections that is already qualified by a Subadviser Material Adverse Change, materiality or similar qualifier shall be true and correct in all respects) as of the date of this Agreement and as of the applicable Closing Date as though made on and as of such Closing Date, and (ii) the other representations and warranties of Parent and Subadviser set forth in Sections 3.1, 3.2 and 3.3 of this Agreement (including Sections 3.1.6 (Litigation), 3.2.5 (Litigation) and 3.3.3 (Litigation) (with respect to Litigation other than Litigation constituting an examination for cause, investigation or enforcement action by a Governmental Authority) shall be true and correct as of the date of this Agreement and as of the applicable Closing Date as though made on and as of such Closing Date without giving effect to any Subadviser Material Adverse Change, materiality or similar qualifications set forth in such representations and warranties (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), provided that no such representation or warranty of Parent or Subadviser will be deemed untrue or incorrect for purposes of this clause (b)(ii) as a consequence of the existence of any fact, event, change, condition, development, circumstance or effect inconsistent with such representation or warranty, unless such fact, event, change, condition, development, circumstance or effect, individually or taken together with all other facts, events, changes, conditions, developments, circumstances or effects, has had or would reasonably be likely to have a Subadviser Material Adverse Change. At each Closing, Federated shall receive a certificate of Parent executed by an authorized executive officer of Parent certifying to the fulfillment of the foregoing conditions.

6.2.2 Delivery of Ancillary Closing Documents.

(a) At each Closing, Federated shall have received from the Applicable Seller Parties a duly executed Bill of Sale, dated as of the applicable Closing Date, with respect to the Acquired Assets.

(b) At the First Closing, Federated shall have received from SunTrust Bank a duly executed Advised Common Funds Advisory Agreement, dated as of the First Closing Date in the form set forth on Exhibit D hereto and from Parent a duly executed First Closing Transferring Assets Certificate, dated as of the First Closing Date, in the form set forth in Exhibit E hereto.

(c) At the Interim Closing, Federated shall have received from Parent a duly executed Interim Closing Transferring Assets Certificate, dated as of the Interim Closing Date, in the form set forth in Exhibit E hereto.

6.2.3 Minimum Product Asset Transfer. For purposes of the First Closing only, the First Closing Transferring Assets must equal or exceed $10,050,000,000. For purposes of the Interim Closing, the Interim Closing Transferring Assets must equal or exceed $1,000,000,000.

6.2.4 No Subadviser Material Adverse Change. From the date of this Agreement through the applicable Closing, there has not been a Subadviser Material Adverse Change.

6.2.5 No Failure to Maintain a $1.00 Net Asset Value. Following the date hereof, (a) the shadow market net asset value of any of the RidgeWorth Money Market Funds shall not have fallen below $1.00 per share by more than $.005 (provided, that the condition in clause (a) of this Section 6.2.5 shall nevertheless be satisfied if (i) the Seller Parties publicly announce, immediately (and in any event no more the one (1) Business Day) after the Board of the RidgeWorth Trust makes its determination of what actions to take in response to such deviation as required by Rule 2a-7 under the 1940 Act, that any such deviation will be “cured” and (ii) the “cure” is effected by the earlier of: (A) the date that is five (5) Business Days after the date on which the “cure” is publicly announced, and (B) the applicable Closing Date) and (b) no redeeming shareholder of the RidgeWorth Money Market Funds shall have received less than $1.00 in value per share in redemption proceeds. The determinations required by clause (a) above shall be made at such interval(s) and times prescribed in accordance with the procedures adopted by the Board of the RidgeWorth Trust (or at such other intervals and times as such Board determines appropriate and reasonable in light of current market conditions as required under Rule 2a-7(c)(8)(ii) under the 1940 Act).

6.3 Conditions Precedent to Obligations of Parent and Subadviser With Respect to Closings. In addition to the conditions set forth in Section 6.1, the obligations of Parent and Subadviser under this Agreement to consummate the Transactions shall be subject to the satisfaction, at or prior to the applicable Closing, of the following conditions, which may be waived at the option of Parent or Subadviser:

6.3.1 No Breach of Covenants; True and Correct Representations and Warranties. In connection with each Closing, (a) there shall have been no material breach by Federated in the performance of any covenants applicable to it in this Agreement or any other Transaction Document to which it is a party to be performed in whole or in part prior to such Closing relating to those Transactions being consummated upon such Closing, and (b) each of (i) the representations and warranties of Federated set forth in Sections 4.1.1 (Incorporation and Qualification of Federated), 4.1.2 (Authority of Federated) and 4.2.1(a) (Authority of Federated Funds), and Sections 4.1.6 (Litigation) and 4.2.6 (Litigation) (but only with respect to Litigation constituting an examination for cause, investigation or enforcement action by a Governmental Authority), shall be true and correct in all material respects (and any representation and warranty in such Sections that is already qualified by a Federated Material Adverse Change, materiality or similar qualifier shall be true and correct in all respects) as of the date of this Agreement and as of the applicable Closing Date as though made on and as of such Closing Date, and (ii) the other representations and warranties of Federated set forth in Sections 4.1 and 4.2 of this Agreement (including Sections 4.1.6 (Litigation) and 4.2.6 (Litigation) (with respect to Litigation other than Litigation constituting an examination for cause, investigation or enforcement action by a

Governmental Authority) shall be true and correct as of the date of this Agreement and as of the applicable Closing Date as though made on and as of such Closing Date without giving effect to any Federated Material Adverse Change, materiality or similar qualifications set forth in such representations and warranties (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), provided that no such representation or warranty of Federated will be deemed untrue or incorrect for purposes of this clause (b)(ii) as a consequence of the existence of any fact, event, change, condition, development, circumstance or effect inconsistent with such representation or warranty, unless such fact, event, change, condition, development, circumstance or effect, individually or taken together with all other facts, events, changes, conditions, developments, circumstances or effects, has had or would reasonably be likely to have a Federated Material Adverse Change. At each Closing, Parent shall receive a certificate of Federated executed by an authorized executive officer of Federated certifying to the fulfillment of the foregoing conditions.

6.3.2 Delivery of Ancillary Closing Documents. At the First Closing, SunTrust Bank shall have received from the applicable advisory Affiliate of Federated a duly executed Advised Common Funds Advisory Agreement in the form set forth on Exhibit D hereto.

6.3.3 No Federated Material Adverse Change. From the date of this Agreement through the applicable Closing, there has not been a Federated Material Adverse Change.

6.3.4 No Failure to Maintain a $1.00 Net Asset Value. Following the date hereof, (a) the shadow market net asset value of any of the Federated Funds shall not have fallen below $1.00 per share by more than $.005 (provided, that the condition in clause (a) of this Section 6.3.4 shall nevertheless be satisfied if (i) Federated publicly announces, immediately (and in any event no more the one (1) Business Day) after the Board of the Federated Trust makes its determination of what actions to take in response to such deviation as required by Rule 2a-7 under the 1940 Act, that any such deviation will be “cured” and (ii) the “cure” is effected by the earlier of: (A) the date that is five (5) Business Days after the date on which the “cure” is publicly announced, and (B) the applicable Closing Date) and (b) no redeeming shareholder of the Federated Funds shall have received less than $1.00 in value per share in redemption proceeds. The determinations required by clause (a) above shall be made at such interval(s) and times prescribed in accordance with the procedures adopted by the Board of the Federated Trust (or at such other intervals and times as such Board determines appropriate and reasonable in light of current market conditions as required under Rule 2a-7(c)(8)(ii) under the 1940 Act).

ARTICLE 7

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

7.1 Representation and Warranties in this Agreement. The representations and warranties contained in this Agreement shall survive any Closing Date:

(a) in the case of Sections 3.1.1 (Incorporation and Qualification of Parent and Subadviser), 3.1.2 (Authority of Parent and Subadviser), 3.2.1(a) (Authority of the RidgeWorth Money Market Funds), 3.3.1(a) (Authority of the Non-Mutual Fund Products), 3.1.8 (Title), 4.1.1 (Incorporation and Qualification of Federated), 4.1.2 (Authority of Federated), and 4.2.1(a) (Authority of the Federated Funds) of this Agreement, indefinitely;

(b) in the case of Sections 3.2.3 (Tax Qualification of RidgeWorth Money Market Funds), 3.2.4 (Taxes), 3.3.5 (Taxes), 4.2.3 (Tax Qualification of Federated Funds), and 4.2.4 (Taxes) of this Agreement, until the later of (i) the date that is eighteen (18) months after the First Closing Date or (ii) the expiration the statute of limitations under Applicable Law; and

(c) in the case of any other representation and warranty, for a period ending on the date that is eighteen (18) months after the First Closing Date.

7.2 Covenants. Each covenant of the Parties contained in this Agreement shall survive indefinitely, except to the extent such covenant is fully performed or the obligation to so perform such covenant shall have expired in accordance with the terms of this Agreement.

ARTICLE 8

TERMINATION; EQUITABLE RELIEF

8.1 Termination of Agreement. The Parties may terminate this Agreement by written notice to the other Parties after 5:00 p.m., New York time, on December 31, 2010, if the conditions to the consummation of the Transactions to be consummated at the First Closing (other than those conditions which by their terms are intended to be fulfilled at the First Closing) have not been satisfied or waived, unless such date is extended by the mutual written consent of the Parties hereto on or prior to such date. The Parties also agree that the Parties’ obligations to consummate the Interim Closing and the Final Closing shall automatically terminate on December 31, 2010, unless prior to such date the conditions precedent to the Final Closing have been satisfied or waived and a Final Closing Notice has been delivered or unless such date is extended by the mutual written consent of the Parties hereto on or prior to such date. Any such termination shall be without liability of one Party to the other, except as provided below. This Agreement may be terminated prior to the First Closing Date (a) by the written consent of the Parties hereto, (b) by Federated, if any Seller Party is in material breach of any representation, warranty, or covenant set forth herein and such breach is not cured within thirty (30) days of receipt of notice identifying such breach, or (c) by Parent, if Federated is in material breach of any representation, warranty, or covenant set forth herein and such breach is not cured within thirty (30) days of receipt of notice identifying such breach. Any such termination shall be without prejudice to the non-breaching Parties’ rights to seek damages for such breach.

8.2 Survival upon Termination. Section 5.2 (Covenants with Respect to Expenses), and Articles 8 and 10, shall survive any termination of this Agreement, and Article 9 shall survive the termination of this Agreement if the First Closing shall have been consummated. The relevant definitions and provisions in Article 1 also shall survive the termination of this Agreement to the extent incorporated within, or necessary for the interpretation of, the Sections and Articles referenced in the preceding sentence.

8.3 Equitable Relief. The Parties acknowledge that the Products are unique and recognize that in the event of a material breach of this Agreement (including Sections 2.4, 5.5, and 5.8 hereof) by any Seller Party (or other Non-Compete Party) or Federated, as the case may be, money damages would be inadequate and Parent, Subadviser or Federated, as applicable, may have no adequate remedy at law. Accordingly, each of the Parties hereto agrees that each of the other Parties shall have the right, in addition to any other rights and remedies existing in its favor, to enforce the rights and obligations of the other Parties, as applicable, not only by an action for damages but also by an action or actions for specific performance, injunction, and/or other equitable relief, without posting any bond or security.

ARTICLE 9

INDEMNIFICATION

9.1 Indemnification of Federated by Parent and Subadviser.

9.1.1 Federated Losses. From and after the First Closing Date, Parent and Subadviser shall, jointly and severally, indemnify, defend, and hold harmless Federated, the Federated Trust, the Federated Funds, the Other Federated Money Market Funds, and their respective directors, trustees, officers, employees, controlling persons and other Affiliates, and their respective successors and assigns, (collectively, the “Federated Indemnitees”) against any and all claims, demands, obligations, losses, fines, penalties, costs, expenses, amounts paid in settlement, or other damages, (whether or not resulting from Third-Party Claims), including reasonable attorneys’ fees and expenses incurred in the defense of any of the same or in asserting, preserving or enforcing any of their respective rights hereunder (collectively, “Losses”), that any of them may become subject to, or shall incur or suffer, that arise out of, result from, or relate to:

(a) any breach of, or failure to perform, any covenant of or applicable to any Seller Party or any Non-Compete Party contained in this Agreement which is identified by a Federated Indemnitee who provides notice thereof to Parent before the date (if any) on which such covenant expires;

(b) any breach of, or inaccuracy in, any representation or warranty of Parent or Subadviser (including any representation or warranty of, or applicable to, any Seller Party or any Non-Compete Party) contained in this Agreement (including as brought down as contemplated in Section 6.2.1) which is identified by a Federated Indemnitee who provides notice thereof to Parent before the date (if any) on which such representation or warranty expires;

(c) any Retained Seller Party Liability or Retained Product Liability; or

(d) any untrue or allegedly untrue statement of a material fact, or any omission to state a material fact required to be stated or necessary to make the statements therein not misleading, contained in any prospectus or SAI supplement of the RidgeWorth Trust or any RidgeWorth Money Market Fund or any post-effective amendments thereto filed with the Commission after the date of this Agreement in connection with the Transactions, or in any

marketing material, advertising material, offering material or Consent relating to any Product mailed or otherwise used after the date of this Agreement in connection with implementing or consummating the Transactions; provided, however, that such indemnification shall relate only to any statement or fact relating to any Seller Party, the RidgeWorth Trust, or any Product, or any of their respective Affiliates, which is provided, furnished or approved in writing by the Seller Parties (or their respective auditors or counsel) for inclusion in any such prospectus or SAI supplement or post-effective amendment, or in any such marketing material, advertising material, offering material or Consent relating to any Product, or to any omission to state a material fact required to be stated or necessary to make any of such statements not misleading in light of the circumstances.

9.1.2 Deductible; Indemnity Cap. Parent and Subadviser shall not be liable to Federated Indemnitees pursuant to Section 9.1.1(b) until the Losses with respect to such matters exceed an aggregate amount equal to the Deductible and then only for the amount of such Losses with respect to such matters in excess of the Deductible, up to an aggregate maximum amount equal to the Indemnity Cap; provided, however, that the foregoing limitations (i.e., the Deductible and Indemnity Cap) will not apply to (i) claims for indemnification pursuant to Section 9.1.1(b) in respect of breaches of, or inaccuracies in, the representations and warranties set forth in Sections 3.1.1 (Incorporation and Qualification of Parent and Subadviser), 3.1.2 (Authority of Parent and Subadviser), 3.2.1(a) (Authority of the RidgeWorth Money Market Funds), 3.3.1(a) (Authority of the Non-Mutual Fund Products), 3.1.8 (Title), 3.2.3 (Tax Qualification), 3.2.4 (Taxes), or 3.3.5 (Taxes), and (ii) Losses arising out of, resulting from or relating to fraud.

9.2 Indemnification of Parent and Subadviser by Federated.

9.2.1 Seller Party Losses. From and after the First Closing Date, Federated shall indemnify, defend, and hold harmless the Seller Parties, and the RidgeWorth Trust, and their respective directors, trustees, officers, employees, controlling persons and other Affiliates, and their respective successors and assigns, (collectively, the “Subadviser Indemnitees”) against any and all Losses that any of them may become subject to, or shall incur or suffer, that arise out of, result from, or relate to:

(a) any breach of, or failure to perform, any covenant of or applicable to Federated contained in this Agreement which is identified by a Subadviser Indemnitee who provides notice thereof to Federated before the date (if any) on which such covenant expires;

(b) any breach of, or inaccuracy in, any representation or warranty of Federated contained in this Agreement (including as brought down as contemplated in Section 6.3.1) which is identified by an Subadviser Indemnitee who provides notice thereof to Federated before the date (if any) on which such representation or warranty expires;

(c) any untrue or allegedly untrue statement of a material fact, or any omission to state a material fact required to be stated or necessary to make the statements therein not misleading, contained in any prospectus or SAI supplement of the Federated Trust, any Federated Fund or, as applicable, any Other Federated Money Market Fund or any post-effective amendments thereto filed with the Commission after the date of this Agreement in connection

with the Transactions, or in any marketing material, advertising material, offering material or Consent relating to any Product mailed or otherwise used after the date of this Agreement in connection with implementing or consummating the Transactions; provided, however, that such indemnification shall relate only to any statement or fact relating to Federated, the Federated Trust, any Federated Fund or, as applicable, any Other Federated Money Market Fund, or any of their respective Affiliates, which is provided, furnished or approved in writing by Federated (or its respective auditors or counsel) for inclusion in any such prospectus or SAI supplement or post-effective amendment, or in any such marketing material, advertising material, offering material or Consent relating to any Product, or to any omission to state a material fact required to be stated or necessary to make any of such statements not misleading in light of the circumstances; and

(d) the actions or omissions of Federated, the Federated Funds (or, as applicable, any Other Federated Money Market Fund) or their respective Affiliates or service providers (or any Person acting at the direction of any of them, which, for the avoidance of doubt, shall not include any Seller Party, the RidgeWorth Trust or any Product, or any of their respective Affiliates or any of their respective service providers in their roles as service providers to any Seller Party, the RidgeWorth Trust, any Product or any of their respective Affiliates) relating to the implementation or consummation of the Transactions. For the avoidance of doubt, nothing in this Section 9.2.1(d) shall limit the indemnification obligations of the Seller Parties under Section 9.1 of this Agreement.

9.2.2 Deductible; Indemnity Cap. Federated shall not be liable to Subadviser Indemnitees pursuant to Section 9.2.1(b) until the Losses with respect to such matters exceed an aggregate amount equal to the Deductible and then only for the amount of such Losses with respect to such matters in excess of such amount, up to an aggregate maximum amount equal to the Indemnity Cap; provided, however, that the foregoing limitations (i.e., the Deductible and Indemnity Cap) will not apply to (i) claims for indemnification pursuant to Section 9.2.1(b) in respect of breaches of, or inaccuracies in, the representations and warranties set forth in Sections 4.1.1 (Incorporation and Qualification of Federated), 4.1.2 (Authority of Federated), 4.2.1(a) (Authority of the Federated Funds), 4.2.3 (Tax Qualification), or 4.2.4 (Taxes), and (ii) Losses arising out of, resulting from or relating to fraud.

9.3 Indemnification Procedures.

(a) In the case of any claim for indemnification under this Agreement not involving a claim asserted by a third party, the Party entitled to indemnification hereunder (the “Indemnified Party”) shall provide to the Party from which indemnification is sought (the “Indemnifying Party”) written notice of such indemnification claim promptly after the Party entitled to indemnification identifies, and gains actual knowledge of, such claim; provided, that the failure of the Indemnified Party to give notice as provided in this Section 9.3(a) shall not relieve any Indemnifying Party of its indemnification obligations under this Article 9, except to the extent that such failure materially prejudices the Indemnifying Party.

(b) In the case of any claim asserted by a third party against an Indemnified Party (a “Third Party Claim”), written notice shall be given by the Indemnified Party to the Indemnifying Party promptly, but no later than 10 Business Days, after such Indemnified Party

has actual knowledge of the claim as to which indemnity may be sought, and such notice shall set forth in reasonable detail the facts and circumstances pertaining to the Third Party Claim and the basis for the Indemnified Party’s right to indemnification; provided, that the failure of the Indemnified Party to give notice as provided in this Section 9.3(b) shall not relieve any Indemnifying Party of its obligations under this Article 9, except to the extent that such failure materially prejudices such Indemnifying Party (it being understood that the preclusion of the Indemnifying Party from asserting with respect to a Third-Party Claim a germane defense or counterclaim, which would materially reduce the Indemnifying Party’s indemnification obligations under this Agreement, resulting from the failure of the Indemnified Party to provide notice as provided in this Section 9.3(b) shall be deemed to have materially prejudiced the Indemnifying Party).

(c) The Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any claim or Litigation resulting therefrom with counsel of its choice, provided, that the Indemnified Party may participate in such defense at such Indemnified Party’s expense. Except with the prior written consent of the Indemnified Party, which shall not be unreasonably withheld or delayed, no Indemnifying Party, in the defense of any such claim or Litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release from all Liability with respect to such claim or Litigation. In the event that the Indemnified Party shall in good faith upon consultation with counsel determine that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or Litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or Litigation relating to any such claim or Litigation at the sole cost of the Indemnifying Party, provided, that, if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such claim or Litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or Litigation, but shall not be entitled to settle or agree to pay in full such claim or Litigation without the Indemnifying Party’s consent, which shall not be unreasonably withheld or delayed. Subject to entering into a mutually acceptable joint defense agreement, the Parties shall cooperate in the defense of any claim or Litigation subject to this Section 9.3(c) and make available to the other Parties their respective applicable books and records in connection with such defense.

(d) Notwithstanding anything to the contrary contained in this Agreement, no Party shall be obligated to submit any claim to an insurance carrier or to seek any Third Party Reimbursement. Subject to the foregoing:

(i) If a Party elects in its sole discretion to submit a claim to its insurance carrier, the Parties shall reasonably cooperate with each other to obtain the benefits of any insurance coverage for a Third Party Claim that may be in effect at the time such Third Party

Claim is asserted. Nothing contained herein shall obligate any Party to obtain or continue after any Closing any insurance coverage for any period.

(ii) If an Indemnified Party elects in its sole discretion to pursue Third Party Reimbursement, any amounts received therefrom shall reduce the amount of any Losses of such Indemnified Party under this Article 9.

(iii) If, after receipt by an Indemnified Party of any indemnification payment hereunder, such Party receives a Third Party Reimbursement in respect of the same Losses (whether in whole or in part) for which indemnification was made and such Third Party Reimbursement was not taken into account in assessing the amount of indemnification, then the Indemnified Party shall promptly turn over all or the relevant portion of such Third Party Reimbursement to the Indemnifying Party up to the amount of the indemnification paid pursuant hereto.

(e) The Parties agree that Losses hereunder shall be calculated net of any net Tax benefit actually realized by the Indemnified Party arising from the incurrence or payment of any such Loss. For purposes of this Section 9.3(e), such applicable Indemnified Party shall be deemed to have “actually realized” a net Tax benefit to the extent that, and at such time as, the amount of Taxes payable by such applicable Indemnified Party is reduced below the amount of Taxes that such applicable Indemnified Party would have been required to pay but for the receipt or accrual of the indemnity payment or the incurrence or payment of such Losses for which indemnification is provided under this Article 9. The Indemnified Party shall comply with all reasonable requests by the Indemnifying Party for information and documentation supporting the Indemnified Party’s calculation of any net Tax benefit.

(f) The Parties acknowledge that Applicable Law generally recognizes a duty to mitigate damages with respect to commercial contracts. Each Party entitled to indemnification hereunder shall, in accordance with the Applicable Law of the State of New York, use reasonable efforts to seek to mitigate Losses for which such Party may be entitled to indemnification hereunder.

(g) Parent and Subadviser shall have no liability for any Losses caused by an act or omission of Federated or its Affiliates after any Closing. Federated shall not have any liability for any Losses caused by an act or omission of any Seller Party after any Closing.

(h) No Indemnifying Party shall have any liability under this Article 9 for indirect, speculative, special, incidental, consequential, or punitive damages, including lost profits, lost opportunity costs or lost prospective economic advantage (collectively, “Consequential Damages”); provided, however, that this Section 9.3(h) shall not (i) preclude any claim for or recovery of damages or other Losses incurred or suffered by an Indemnified Party in a Third Party Claim that includes claims against the Indemnified Party for Consequential Damages, or (ii) preclude any claim for or recovery of damages or other Losses arising out of, resulting from or relating to a breach of Section 5.5.1 by any Non-Compete Party.

9.4 Subrogation. If any Indemnified Party recovers any amount under this Article 9 in respect of Losses, the Indemnifying Party or Indemnifying Parties shall be subrogated, to the

extent of this recovery, to the Indemnified Party’s rights against any third party with respect to such Losses.

9.5 Remedies Exclusive. Except for any equitable remedies (including under Section 8.3), and except for claims for fraud or claims under, arising out of, resulting from or relating to the Advised Common Funds Advisory Agreement, from and after the consummation of the First Closing, the remedies provided for in this Article 9 shall constitute the sole and exclusive remedies of the Parties for any claims made for breach of this Agreement or any other Transaction Document or in connection with the Transactions contemplated hereby. Each Party waives any provision of Applicable Law to the extent that it would limit or restrict the covenant contained in this Section 9.5.

ARTICLE 10

MISCELLANEOUS

10.1 Notices. All notices or other communications hereunder to a Party shall be deemed to have been duly given and made if in writing and (a) if served by personal delivery against proper receipt shall be effective upon delivery, (b) if delivered by registered or certified mail (return receipt requested) or by a national courier service shall be effective upon receipt or (c) if sent by facsimile or email shall be effective upon the date of dispatch; provided that the facsimile or email is promptly confirmed by written confirmation by registered or certified mail (return receipt requested) or by a national courier service, to such party at its address set forth below or such other address as such Party may specify by notice to the Parties hereto.

To Parent and Subadviser:

SunTrust Banks, Inc

303 Peachtree Street, 11th Floor

Atlanta, GA 30308

Attn: Richard Blumberg

Telephone: (404) 724-3353

Facsimile: (404) 214-8632

Email: richard.blumberg@suntrust.com

With a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attn: Mitchell S. Eitel, Esq.

Telephone: (212) 558-4960

Facsimile: (212) 291-9046

Email: eitelm@sullcrom.com

To Federated:

Federated Investors, Inc.

Federated Investors Tower

1001 Liberty Avenue

Pittsburgh, PA 15222-3779

Attn: Chief Financial Officer

Telephone: 412-288-1222

Facsimile: (412) 992-3040

Email: TDonahue@federatedinv.com

With a copy to:

Reed Smith LLP

Reed Smith Centre

225 Fifth Avenue, Suite 1200

Pittsburgh, PA 15222

Attn: George F. Magera, Esq.

Telephone: 412-288-7268

Facsimile: 412-288-3063

Email: gmagera@reedsmith.com

10.2 Brokers and Finders.

(a) Neither Federated, the Federated Trust nor the Federated Funds (or, as applicable, the Other Federated Money Market Funds), nor any Affiliate of any of them, have employed any broker, financial adviser or finder, or incurred any Liability for any broker, financial advisory or finder fees, in connection with this Agreement, any other Transaction Document or the Transactions, nor has any broker, financial advisor or finder acted directly or indirectly for Federated, the Federated Trust or the Federated Funds (or, as applicable, the Other Federated Money Market Funds), or any Affiliate of any of them, in connection with the Transactions.

(b) Except for Sandler O’Neill & Partners, L.P., neither Parent, Subadviser, the RidgeWorth Trust nor any Product, nor any Affiliate of any of them, have employed any broker, financial adviser or finder, or incurred any Liability for any broker, financial advisory or finder fees, in connection with this Agreement, any other Transaction Document or the Transactions, nor has any broker, financial advisor, or finder acted directly or indirectly for Parent, Subadviser, the RidgeWorth Trust, or any Product, or any Affiliate of any of them, in connection with the Transactions. Any broker fees, financial advisory fees, finders fees or other Liabilities that have been incurred or asserted in connection with this Agreement, any other Transaction Document, or the Transactions relating, and due and owing, to Sandler O’Neill & Partners, L.P. shall be the sole responsibility of Parent and Subadviser, and neither Federated, the Federated Trust, any Federated Fund (or, as applicable, any Other Federated Money Market Fund), nor any Affiliate of any of them, shall be responsible for any such fees or other Liabilities due and owing to Sandler O’Neill & Partners, L.P.

10.3 Entire Agreement; Modification.

(a) This Agreement, together with its Exhibits and Schedules, and the other Transaction Documents, contains the entire agreement and all understandings, and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the Transactions. This Agreement shall not be modified, supplemented, changed, or amended, except by an instrument in writing signed by, or on behalf of, the Parties making specific reference to this Agreement.

(b) Except for the representations and warranties contained in this Agreement, neither the Seller Parties nor any other Person makes any other express or implied representation or warranty on behalf of or otherwise in respect of the Seller Parties, the Products, or the Business, or any Affiliate of any of them. Except for the representations and warranties contained in this Agreement, neither Federated nor any other Person makes any other express or implied representation or warranty on behalf of or otherwise in respect of Federated or the Federated Funds (or, as applicable, the Other Federated Money Market Funds), or any Affiliate of any of them.

(c) Notwithstanding the foregoing, the Confidentiality Agreements, dated October 16, 2009, and December 17, 2009, respectively, between Federated and Parent, shall remain in full force and effect in accordance with their respective terms. Pursuant to the terms of the respective Confidentiality Agreements referred to above, each Party shall return or destroy any “Confidential Information” (as such term is defined therein) of the other Party or its Affiliates that such Party or its Affiliates or representatives have in their possession, and deliver a written confirmation of any such destruction to the other Party, to the extent, and within the time frames, required under the terms of the Confidentiality Agreement applicable to such Party.

10.4 Governing Law. This Agreement and, unless otherwise stated therein, each Transaction Document, and any statements, actions, claims or Litigation relating hereto and thereto (whether for breach of contract, tort, specific performance or otherwise, and whether at law, in equity or otherwise), shall be governed by and construed and enforced in accordance with the laws of State of New York, without giving effect to the conflict of laws rules thereof that would require the application of the laws of another jurisdiction.

10.5 Jurisdiction. The Parties hereby irrevocably submit to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America for the Southern District of New York located in the State of New York, County of New York, City of New York solely in respect of the interpretation, enforcement and defense of the provisions of and the Transactions contemplated by this Agreement and the other Transaction Documents, and that such jurisdiction of such courts with respect thereto shall be exclusive, except solely to the extent that all such courts shall lawfully decline to exercise such jurisdiction. Each Party hereby waives, and agrees not to assert, as a defense in any action, proceeding or other Litigation concerning the interpretation, enforcement or defense of the provisions of and the Transactions contemplated by this Agreement or any other Transaction Document, that such action, proceeding or other Litigation may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement, or any other Transaction Document, or any of the documents referred to in this Agreement may not be enforced in or by

such courts. Each Party hereby consents to and grants any such court jurisdiction over the person of such Party and over the subject matter of any such dispute and agrees that mailing of process or other papers in connection with any such action, proceeding or other Litigation in the manner provided in Section 10.1 or in such other manner as may be permitted by Applicable Law, shall be valid and sufficient service thereof.

10.6 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY WAIVES ANY AND ALL RIGHTS THE PARTY MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT OR IN CONNECTION WITH IT.

10.7 Assignment; Successors. No Party shall delegate its obligations hereunder without the prior written consent of all Parties. No Party shall assign or otherwise transfer its rights under this Agreement (whether by operation of law or otherwise) without the prior written consent of the other Parties, which shall not be unreasonably withheld; and provided, further, that no consent shall be required in respect of (a) the assignment and delegation of this Agreement to an acquirer of all or substantially all of the assets of the assigning Party who agrees in writing to be bound by all of the obligations of the assigning Party hereunder (including any obligation under Sections 2.4, 5.5, 5.9 and 9.1 of this Agreement), (b) the merger of a Party with another Person, provided the other Person agrees in writing to be or by operation of law is bound by all of the obligations of the merging Party hereunder (including any obligations under Sections 2.4, 5.5, 5.9 and 9.1 of this Agreement), or (c) the assignment and delegation of this Agreement as a result of any sale to another Person of securities issued by a Party, provided the other Person agrees in writing to be or by operation of law is bound by all of the obligations of the Party hereunder (including any obligations under Sections 2.4, 5.5, 5.9 and 9.1 of this Agreement). Any purported assignment or delegation other than as permitted by the express terms of this Agreement shall be void and unenforceable. This Agreement shall bind and inure to the benefit of the Parties hereto and their legal representatives and respective permitted successors and permitted assigns.

10.8 Waiver. No waiver by any Party to this Agreement of its rights under any provisions of this Agreement shall be effective unless it shall be made in writing. No failure by any Party to this Agreement to take any action with regard to any breach of this Agreement or default by the other Parties to this Agreement shall constitute a waiver of such Party’s right to enforce any provision of this Agreement or to take action with regard to the breach or default or any subsequent breach or default by the other Parties.

10.9 Further Assurances; Other Covenants.

(a) Each Party shall, and shall use commercially reasonable efforts to cause their Affiliates to, cooperate and take such actions as may be reasonably requested by any other Party in order to carry out the provisions and purposes of this Agreement and to complete the Transactions.

(b) The Parties agree that, should the Parties mutually agree at a later date that one or more fund reorganization transactions should be pursued with respect to one or more RidgeWorth Money Market Funds and corresponding Federated Funds, this Agreement will need

to be amended as mutually agreed between the Parties at such time to contemplate the applicable transaction(s), the Parties shall seek to obtain necessary approvals from the Boards of the applicable RidgeWorth Money Market Funds and corresponding Federated Funds, and Federated shall be entitled to update and complete its financial, business, legal and regulatory due diligence (e.g., of the Seller Parties and the applicable RidgeWorth Money Market Funds) with respect to the applicable transaction(s), which due diligence review, and the results thereof, shall be satisfactory to Federated in its sole discretion, acting in good faith.

(c) For purposes of and solely to the extent necessary for confirming compliance with the clawback provisions in Sections 2.4(b) and 2.5.3(c), and the provisions in Section 5.5.1, the Seller Parties agree to provide Federated and its representatives reasonable access, upon reasonable prior notice and during normal business hours, to the relevant financial books and records of the Seller Parties and their Affiliates during the Restricted Period, subject to applicable law and regulation.

10.10 Counterparts. This Agreement may be executed by original signatures, by facsimile signature, by .pdf signature or by other electronic means. This Agreement also may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Once each Party to this Agreement has executed a copy of this Agreement, this Agreement shall be considered fully executed and effective, notwithstanding that all Parties have not executed the same copy.

10.11 Severability. In the event that any one or more of the provisions contained in this Agreement, or the application thereof in any circumstances, is held invalid, illegal, or unenforceable in any respect for any reason, then (a) the validity, legality, and enforceability of any such provision in every other respect and in any other case or circumstance and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the Parties hereto shall be enforceable to the fullest extent permitted by Applicable Law, and (b) any such provision shall be ineffective in such case or circumstance only to the extent of such invalidity, illegality or unenforceability, and shall be enforced in such case or circumstance to the greatest extent permitted by law in such case or circumstance.

10.12 Third Parties. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any Product, the shareholders, interest holders or accountholders (as applicable) of any Product or any other Persons, other than the Parties hereto (to the extent the provisions of this Agreement apply to them) and their respective, successors, or permitted assigns, (to the same extent) nor is anything in this Agreement intended to relieve or discharge the obligation or Liability of any third parties to any Party to this Agreement, nor shall any provision give any third parties any right of subrogation or action over or against any Party to this Agreement.

10.13 Fiduciary Duties. Notwithstanding anything contained in this Agreement to the contrary, all covenants, and obligations of each Party hereto shall, in all events, be subject to such Party’s (or as applicable, its Affiliates’) applicable fiduciary duties with respect to the Products and the RidgeWorth Trust and the Federated Funds and the Federated Trust (or, as

applicable, any Other Federated Money Market Fund and, if a series of a series company registrant, its registrant)), as applicable.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Parties to this Agreement have executed this Agreement as of the date first written above.

FEDERATED INVESTORS, INC.
By:	/s/ Thomas R. Donahue
Name: Thomas R. Donahue
Title: Chief Financial Officer
SUNTRUST BANKS, INC.
By:	/s/ Richard Blumberg
Name: Richard Blumberg
Title: SVP
STABLERIVER CAPITAL MANAGEMENT LLC
By:	/s/ Patrick A. Paparelli
Name: Patrick A. Paparelli
Title: Chief Operating Officer

[Signature Page to Agreement]

EXHIBIT A-1

RIDGEWORTH MONEY MARKET FUNDS

(each a series of RidgeWorth Funds, a Massachusetts business trust)

RidgeWorth Institutional Cash Management Money Market Fund

Institutional Shares

RidgeWorth Institutional U.S. Government Securities Money Market Fund

Institutional Shares

RidgeWorth Institutional U.S. Treasury Securities Money Market Fund

Corporate Trust Shares

Institutional Shares

RidgeWorth Institutional Municipal Cash Reserve Money Market Fund

Institutional Shares

RidgeWorth Prime Quality Money Market Fund

Class I Shares

Class A Shares

Class C Shares

RidgeWorth U.S. Government Securities Money Market Fund

Class I Shares

Class A Shares

RidgeWorth U.S. Treasury Money Market Fund

Class I Shares

Class A Shares

RidgeWorth Tax-Exempt Money Market Fund

Class I Shares

Class A Shares

RidgeWorth Virginia Tax-Free Money Market Fund

Class I Shares

Class A Shares

EXHIBIT A-2

COMMON FUNDS

SunTrust Reserve Fund

SunTrust Tax-Free Reserve Fund

SunTrust Retirement Reserve Fund

SunTrust Tennessee Reserve Fund

EXHIBIT A-3

FEDERATED FUNDS

(each a series of Money Market Obligations Trust, a Massachusetts business trust)

Prime Obligations Fund

Institutional Shares

Institutional Service Shares

Trust Shares

Government Obligations Fund

Institutional Shares

Institutional Capital Shares

Institutional Service Shares

Trust Shares

Treasury Obligations Fund

Institutional Shares

Institutional Capital Shares

Institutional Service Shares

Trust Shares

Municipal Obligations Fund

Institutional Shares

Institutional Capital Shares

Institutional Service Shares

Tax-Free Obligations Fund

Institutional Shares

Institutional Service Shares

Virginia Municipal Cash Trust

Institutional Shares

Institutional Service Shares

Cash Series Shares

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, J. Christopher Donahue, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Federated Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date November 1, 2010	By:	/s/ J. Christopher Donahue
		J. Christopher Donahue
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Thomas R. Donahue, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Federated Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date November 1, 2010	By:	/s/ Thomas R. Donahue
		Thomas R. Donahue
		Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Federated Investors, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date November 1, 2010	By:	/s/ J. Christopher Donahue
		J. Christopher Donahue
		President and
		Chief Executive Officer
Date November 1, 2010	By:	/s/ Thomas R. Donahue
		Thomas R. Donahue
		Chief Financial Officer