FEDERATED INVESTORS, INC.
EMPLOYEE STOCK PURCHASE PLAN
EFFECTIVE AS OF JULY 1, 1998
ARTICLE I - PURPOSE
1.01. PURPOSE. The Federated Investors, Inc. Employee Stock Purchase Plan
(as the same may be amended from time to time, the "Plan") is intended to
provide an arrangement under which employees of Federated Investors, Inc., a
Pennsylvania corporation (the "Company"), and its corporate subsidiaries will
have an opportunity to acquire a proprietary interest in the Company through the
purchase of shares of the Class B Common Stock of the Company. It is the
intention of the Company that the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall be construed so as to comply in all
respects with the requirements of the Code applicable to employee stock purchase
plans. The Plan shall be effective July 1, 1998.
ARTICLE II - DEFINITIONS
2.01. "ACCOUNT" shall mean a bookkeeping account to which a Participant's
payroll deductions are credited in accordance with Section 4.02.
2.02. "ADJUSTMENT TRANSACTION" shall have the meaning given to that term
in Section 10.04.
2.03. "BOARD" shall mean the Board of Directors of the Company.
2.04. "CODE" shall have the meaning given to such term in Section 1.01.
2.05. "COMMITTEE" shall mean the committee described in Article IX.
2.06. "COMMON STOCK" shall mean the Class B Common Stock, no par value,
of the Company.
2.07. "COMPANY" shall have the meaning given to such term in Section 1.01.
2.08 "COMPENSATION" shall mean a Participant's wages as reported in Box 1
of IRS Form W-2 plus any salary reduction contributions to a 401(k) plan,
cafeteria plan or tax deferred annuity which are not includable in the gross
income of the Participant. Compensation shall include all forms of Compensation
including any lump-sum variable payments that may be paid on a periodic basis.
Compensation shall not include any bonus amount, including, but not limited to,
payments made under any stock incentive, executive incentive compensation or
deferred bonus plans.
2.09. "EMPLOYEE" shall mean any person who is (i) employed on a full-time
basis by the Company or any of its corporate subsidiaries or (ii) employed on a
part-time basis by the Company or any of its corporate subsidiaries and who
meets the Company's requirements for benefits eligibility at the beginning of
the Offering Period; provided, however, that the following employees shall be
excluded from participation in the Plan: (a) temporary employees and (b) any
Five Percent Owner.
2.10. "FAIR MARKET VALUE" shall mean, as of any applicable date: (i) if
the Common Stock is listed on a national securities exchange or is authorized
for quotation on The Nasdaq Stock Market's National Market ("NNM"), the closing
price, regular way, of the Common Stock on such exchange or NNM, as the case may
be, or if no such reported sale of the Common Stock shall have occurred on such
date, on the next preceding date on which there was such a reported sale; or
(ii) if the Common Stock is not listed for trading on a national securities
exchange or authorized for quotation on NNM, the closing bid price as reported
by The Nasdaq Stock Market or The Nasdaq SmallCap Market (if applicable), or if
no such prices shall have been so reported for such date, on the next preceding
date for which such prices were so reported; or (iii) if the Common Stock is not
listed for trading on a national securities exchange or authorized for quotation
on NNM, The Nasdaq Stock Market or The Nasdaq SmallCap Market (if applicable),
the last reported bid price published in the "pink sheets" or displayed on the
National Association of Securities Dealers, Inc. ("NASD") Electronic Bulletin
Board, as the case may be; or (iv) if the Common Stock is not listed for trading
on a national securities exchange, or is not authorized for quotation on NNM,
The Nasdaq Stock Market or The Nasdaq SmallCap Market, or is not published in
the "pink sheets" or displayed on the NASD Electronic Bulletin Board, the Fair
Market Value of the Common Stock as determined in good faith by the Committee.
2.11. "FIVE PERCENT OWNER" shall mean an employee of the Company or any of
its corporate subsidiaries who after the grant of an Option under this Plan,
would own stock, and/or hold outstanding Options to purchase stock, possessing
in the aggregate 5% or more of the total combined voting power or value of all
classes of stock of the Company (for purposes of this section, the rules of
ss.424(d) of the Code shall apply in determining stock ownership of any
employee);
2.12. "MAXIMUM CONTRIBUTION" shall mean the maximum amount of Compensation
which each Employee may deduct for the purpose of purchasing shares of Common
Stock under the Plan. The Maximum Contribution, which shall be ten percent (10%)
of Compensation or such other percentage (in whole percentages) of Compensation
as may from time to time be determined from time to time by the Committee on a
uniform basis with respect to all Participants.
2.13 "MINIMUM CONTRIBUTION" shall mean 1% of Compensation for any
payroll period.
2.14. "OFFERING COMMENCEMENT DATE" shall mean each January 1, April 1,
July 1 and October 1 during the term of the Plan, beginning July 1, 1998.
2.15. "OFFERING PERIOD" shall mean each three-month period beginning on an
Offering Commencement Date.
2.16. "OFFERING TERMINATION DATE" shall mean the last business day of
each Offering Period.
2.17. "OPTION" shall mean an option to acquire shares of Common Stock
deemed to have been granted to a Participant as described in Section 5.02.
2.18. "OPTION PRICE" shall mean the purchase price of shares of Common
Stock subject to an Option as described in Section 5.03.
2.19. "PARTICIPANT" shall mean an Employee who elects to participate in
the Plan in accordance with Article III.
2.20. "PLAN" shall have the meaning given to such term in Section 1.01.
2.21 "PURCHASE DATE" shall mean the tenth (10th) business day following
the applicable Offering Termination Date, or such earlier business day on or
following the Offering Termination Date as determined by the Company, as of
which purchases of Common Stock shall be made with contributions accumulated
during a particular Offering Period.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.01. INITIAL ELIGIBILITY. Any Employee is eligible to participate in the
Plan for each Offering Period commencing on or after such Employee's first day
of employment with the Company or any of its corporate subsidiaries.
3.02. RESTRICTIONS ON PARTICIPATION. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be permitted to participate in the Plan
or shall be deemed to have been granted an Option under the Plan which permits
his or her rights to purchase stock under all employee stock purchase plans (as
described in Section 423 of the Code) of the Company to accrue at a rate which
exceeds $25,000 (or such other amount as may be the applicable dollar limitation
under Section 423(b)(8) of the Code) in Fair Market Value of the Common Stock
(determined at the time such Option is granted) for each calendar year in which
such Option is outstanding.
3.03. COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a
Participant by completing an authorization for a payroll deduction on the form
provided by the Company and filing it with the Company on or before the due date
established for the applicable Offering Period by the Committee or its designee.
Payroll deductions for a Participant, as elected in accordance with Article IV,
shall apply to each payroll period the pay date for which occurs during the
applicable Offering Period. Such payroll deduction election shall remain in
effect throughout that initial Offering Period and during each subsequent
Offering Period until modified or terminated as provided in Section 4.03 and
Article VII.
ARTICLE IV - PAYROLL DEDUCTIONS
4.01. AMOUNT OF DEDUCTION. At the time a Participant files his or her
authorization for payroll deduction, he or she shall elect to have deductions
made from his or her Compensation on each payday during the time he or she is a
Participant of a specified whole percentage of his or her Compensation in an
amount not less than the Minimum Contribution and not in excess of the Maximum
Contribution.
4.02. PARTICIPANT'S ACCOUNT. All payroll deductions made for a Participant
shall be credited to his or her Account under the Plan. A Participant may not
make any separate cash payment into such Account. No interest shall accrue on
the amount of payroll deductions credited to a Participant's Account under the
Plan at any time.
4.03. CHANGES IN PAYROLL DEDUCTIONS. A Participant may discontinue
participation in the Plan at any time prior to the applicable deadline, as
provided in Article VII, but no other change can be made during an Offering
Period. A Participant may elect to change or terminate his or her payroll
deductions for a subsequent Offering Period by providing written notice to the
Company on or before the due date established for the applicable Offering Period
by the Committee or its designee.
ARTICLE V - OFFERING PERIODS AND GRANTING OF OPTIONS
5.01. OFFERING PERIODS. Except as otherwise provided in this Plan or as
otherwise determined by the Committee, in each calendar year during the term of
the Plan there shall be four Offering Periods, beginning on each Offering
Commencement Date and ending on the next following Offering Termination Date.
5.02. OPTION PRICE. The Option Price with respect to an Offering Period
shall be such price as the Committee shall determine; provided, however, that
unless and until the Committee decides otherwise, the Option Price shall equal
the average price per share actually paid to acquire the shares for the Plan as
of the applicable Purchase Date; provided further, however, that in no event
shall the Option Price be less than 85% of the lower of:
(a) the Fair Market Value of the Common Stock on the Offering
Commencement Date; or
(b) the Fair Market Value of the Common Stock on the Offering
Termination Date.
5.03. NUMBER OF OPTION SHARES. Subject to Section 3.02, on the Offering
Commencement Date for each Offering Period, a Participant shall be deemed to
have been granted an Option to purchase the number of whole and fractional
shares (determined to not more than four decimal places) of Common Stock as can
be purchased at the Option Price with the amount credited to such Participant's
Account as of the Offering Termination Date with respect to that Offering
Period; provided, however, that if the number of shares of Common Stock
remaining available for issuance under the Plan, is less than the number of
shares to be purchased as of an Offering Termination Date, a pro rata allocation
of the available shares shall be made based upon the respective amounts then
credited to Participants' Accounts, and the cash balance credited to each such
Account shall be returned to the Participant whose Account has been so credited.
ARTICLE VI - EXERCISE OF OPTION
6.01. AUTOMATIC EXERCISE. Unless a Participant gives written notice of
withdrawal from the Plan to the Company as provided in Article VII prior to the
Offering Termination Date of an Offering Period, the Option deemed to have been
granted to such Participant under Section 5.02 hereof will be deemed to have
been exercised in full automatically on the Purchase Date applicable to such
Offering Period.
6.02. DELIVERY OF COMMON STOCK. Each Participant's Account shall be
credited with the number of whole and fractional shares (determined to not more
than four decimal places) of Common Stock purchased on his or her behalf for
each Offering Period. Such Participant shall be deemed to be a shareholder with
respect to such shares for all purposes and shall have all of the rights of a
shareholder with respect to such shares, including, but not limited to, the
right to receive dividends, if any, paid with respect to such shares. Promptly
after receiving a written request from a Participant, the Company shall deliver
to such Participant stock certificate(s) representing all, but not less than
all, of the shares of Common Stock purchased on behalf of such Participant under
the Plan which have not been previously delivered to such Participant, subject
to such Participant's payment of any transaction costs associated with such
transfer; provided, however, that the value of any fractional share shall be
paid to the Participant in cash as provided in Section 8.06.
6.03. DEATH OR RETIREMENT. Upon termination of the Participant's
employment by reason of death while in the employ of the Company or retirement,
the Participant or, in the event the Participant is deceased, the Participant's
beneficiary (as defined in Section 10.01), shall have the right to elect, by
written notice given to the Company prior to the later of (i) the Offering
Termination Date for the Offering Period during which the Participant
terminated, or (ii) if applicable, the date which is sixty (60) days following
the date of the Participant's death, either:
(a) to withdraw all of the payroll deductions credited to the
Participant's Account, or
(b) to exercise the Participant's Option on such Offering
Termination Date for the number of full shares of stock which the
accumulated payroll deductions credited to the Participant's Account at
the date of the Participant's termination of employment, will purchase at
the applicable Option Price, and any excess in such Account will be
returned to said Participant or beneficiary, without interest.
In the event that no such written notice of election shall be duly
received by the Company, the Participant or beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b) above, to exercise the
Participant's Option.
6.04. OTHER TERMINATION OF EMPLOYMENT. Upon termination of the
Participant's employment for any reason other than death while in the employ of
the Company or retirement, the payroll deductions credited to such Participant's
Account for the Offering Period during which such termination occurs will be
returned to him or her as soon as practicable following the Offering Termination
Date.
ARTICLE VII - WITHDRAWAL
7.01. IN GENERAL. A Participant may withdraw payroll deductions credited
to his or her Account during an Offering Period by giving written notice to the
Company no later than five (5) business days prior to the Offering Termination
Date of such Offering Period or by such other due date for withdrawal notices
the Committee may establish. All of the payroll deductions credited to a
Participant's Account for such Offering Period, without interest, will be paid
to such Participant as soon as practicable following the Offering Termination
Date, and no further payroll deductions will be made with respect to such
Participant during such Offering Period or any subsequent Offering Period unless
such Participant again commences participation in accordance with Section 3.03.
7.02. EFFECT ON SUBSEQUENT PARTICIPATION. A Participant who withdraws from
the Plan shall be eligible to participate again in the Plan beginning with the
first Offering Period which commences after the date of withdrawal.
ARTICLE VIII - STOCK
8.01. MAXIMUM SHARES. The maximum number of shares of Common Stock which
shall be issued under the Plan (subject to adjustment pursuant to Section 10.04)
during the term hereof shall be 500,000 shares. Such shares may be authorized
but unissued shares or treasury shares, as the Committee may determine. If an
Option shall expire or terminate without being exercised in full, any shares not
purchased pursuant to such Option shall again be available for granting Options
hereunder.
8.02. PARTICIPANT'S INTEREST IN OPTION STOCK. The Participant will have no
interest in the shares of Common Stock covered by an Option deemed to have been
granted hereunder until such Option has been exercised under Section 6.01.
8.03. REGISTERED OWNERSHIP OF COMMON STOCK. Shares of Common Stock to be
delivered to a Participant under the Plan will be registered in the name of the
Participant, or, if the Participant so directs by written notice to the Company
prior to the Offering Termination Date applicable thereto, in the names of the
Participant and one such other person as may be designated by the Participant,
as joint tenants with rights of survivorship or as tenants by the entireties, to
the extent permitted by applicable law.
8.04. RESTRICTIONS ON EXERCISE. The Board may, in its discretion, require
as conditions to the exercise of any Option that the shares of Common Stock
reserved for issuance upon the exercise of the Option shall have been duly
listed, upon official notice of issuance, on a stock exchange or NNM, and that
either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the Participant shall have represented at the time of purchase,
in form and substance satisfactory to the Company, that it is his or her
intention to purchase the shares for investment and not for resale or
distribution.
8.05 RESTRICTIONS ON SHARES. The Committee shall have the authority to
impose transfer restrictions on the shares of Common Stock purchased under the
Plan and to place restrictive legends on the certificates for such restricted
shares; provided, however, that if any such restrictions are to apply to shares
of Common Stock purchased for an Offering Period, then prior to the due date for
Participant payroll deduction elections for such Offering Period, the Committee
shall notify prospective Participants of the nature of such restrictions.
8.06. ESTABLISHMENT OF ACCOUNT WITH TRANSFER AGENT. By enrolling in the
Plan, each Participant will be deemed to have authorized the establishment of an
account in his or her name with the Company's transfer agent for the Common
Stock and to have consented to the sharing by such transfer agent with the
Company of information regarding the disposition of shares from said account.
With respect to any fractional shares credited to such account, upon the
withdrawal of such fractional shares from the account for any reason:
(a) the Participant will receive cash in lieu of such fractional
shares,
(b) such cash will be payable solely from proceeds of the sale of
underlying whole shares held by the Plan, net of any fees and commissions
incurred on such sale; and
(c) the Company's transfer agent shall determine the time and manner
of the sale of underlying whole shares held by the Plan in accordance with
its standard procedures for transacting in fractional shares.
ARTICLE IX - ADMINISTRATION
9.01. APPOINTMENT OF COMMITTEE. The Board shall appoint a Committee to
administer the Plan, which shall consist of no fewer than two members of the
Board. No member of the Committee shall be eligible to purchase Common Stock
under the Plan. The Committee may, subject to compliance with applicable legal
requirements, delegate such of its powers and authority under the Plan as it
deems appropriate to designated officers or employees of the Company. In
addition, the Board may exercise any of the authority conferred upon the
Committee hereunder. In the event of any such delegation of authority or
exercise of authority by the Board, references in the Plan to the Committee
shall be deemed to refer to the delegate of the Committee or the Board, as the
case may be.
9.02. AUTHORITY OF COMMITTEE. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its sole and absolute
discretion to interpret and construe any and all provisions of the Plan, to
adopt rules and regulations for administering the Plan, and to make all other
determinations deemed necessary or advisable for administering the Plan. The
Committee's determination on the foregoing matters shall be conclusive.
ARTICLE X - MISCELLANEOUS
10.01. DESIGNATION OF BENEFICIARY. A Participant may file a written
designation of a beneficiary for purposes of the Plan. Such designation of
beneficiary may be changed by the Participant at any time by written notice to
the Company. In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Participant's death, the beneficiary shall be the executor or administrator of
the estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the beneficiary shall be, in the
sole and absolute discretion of the Company, the spouse or any one or more
dependents of the Participant. No beneficiary shall, prior to the death of the
Participant by whom he or she has been designated, acquire any interest under
the Plan.
10.02. TRANSFERABILITY. Neither payroll deductions credited to a
Participant's Account nor any rights with regard to the exercise of an Option or
to receive Common Stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the Participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Company
may, in its sole discretion, treat such act as an election to withdraw funds in
accordance with Section 7.01.
10.03. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose and
the Company shall not be obligated to segregate such payroll deductions or any
Accounts.
10.04. EQUITABLE ADJUSTMENT. If, while any Options are outstanding, the
outstanding shares of Common Stock of the Company have increased, decreased,
changed into, or been exchanged for a different number or kind of shares or
securities of the Company or any other entity through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split or other
transaction (an "Adjustment Transaction"), appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding Options, and/or the Option Price
applicable to such outstanding Options or the Committee, if it deems it
appropriate, may convert Options into the right to receive cash or other
property pursuant to the Adjustment Transaction. In addition, in any such event,
the number and/or kind of shares which may be offered for purchase under the
Plan may also be proportionately adjusted if deemed appropriate by the
Committee.
10.05. AMENDMENT AND TERMINATION. The Board shall have complete power and
authority to terminate or amend the Plan. No termination, modification, or
amendment of the Plan may, without the consent of a Participant then having an
unexercised Option under the Plan, adversely affect the rights of such
Participant with respect to such Option
10.06. COSTS AND EXPENSES. No brokerage commissions or other transaction
costs and fees shall be charged by the Company in connection with the purchase
of shares under the Plan. All other costs and expenses incurred in administering
the Plan shall be borne by the Company; provided that any commissions or other
transactions costs incurred in the sale of Common Stock by a Participant, the
transfer of Common Stock to another brokerage account established by a
Participant, or the transfer of stock certificates to a Participant shall be
passed through to and paid by such Participant. The Company or its transfer
agent may deduct the amount of such commissions or transactions costs from the
proceeds of any sale of the Common Stock by a Participant or from amounts
credited to a Participant's Account. Any amounts credited to Accounts shall
constitute general assets of the Company and nothing in the Plan shall be
construed to create a trust or fiduciary relationship with respect to such
Accounts.
10.07. NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly,
create any right for the benefit of any Employee or class of Employees to
purchase any shares under the Plan, or create in any Employee or class of
Employees any right with respect to continuation of employment by the Company
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an Employee's employment at any time.
10.08. GOVERNING LAW. The law of the Commonwealth of Pennsylvania,
other than the conflict of laws provisions of such law, will
govern all matters relating to the Plan.