Exhibit 10.1

AGREEMENT

THIS AGREEMENT (“Agreement”) is made and entered into by and among Federated
Investors, Inc. (hereinafter “Federated”), Federated Investment Management
Company, Federated Global Investment Management Corp., Federated Investment
Counseling, Federated Advisory Services Company, Passport Research Ltd.,
Federated Equity Management Company of Pennsylvania, Passport Research II, Ltd.
(hereinafter referred to collectively and individually, along with their
affiliated companies, as “Federated Advisors”) (all also collectively referred
to herein as “Federated”), having their place of business at Federated Investors
Tower, Pittsburgh, PA 15222-3779, and Keith M. Schappert (hereinafter “Mr.
Schappert”), an individual residing at 1234 Bennington Avenue, Pittsburgh, PA
15217.

NOW THEREFORE, in consideration of the mutual covenants set forth herein and the
benefits to be derived herefrom, and intending to be legally bound hereby,
Federated, Federated Advisors and Mr. Schappert enter into this Agreement as of
the date of its execution by Mr. Schappert, and agree as follows:

1.     Resignation as Officer and Director

Mr. Schappert has elected to resign as President and Chief Executive Officer of
Federated Advisors and as Vice President of Federated effective as of
January 27, 2006, his decision to resign is irrevocable, and his resignation is
accepted by Federated. The parties mutually agree that Mr. Schappert’s service
as an officer/director/trustee of Federated Advisors also ends effective as of
January 27, 2006, and Mr. Schappert does hereby resign those positions effective
as of that date, his decision to resign is irrevocable, and his resignation is
accepted by Federated Advisors.

--------------------------------------------------------------------------------

2.    Duties and Responsibilities

On January 27, 2006, Mr. Schappert and J. Christopher Donahue, President and
Chief Executive Officer of Federated, agreed to Mr. Schappert’s decision to
resign from Federated and Federated Advisors; and that Mr. Schappert would no
longer have day-to-day duties or responsibilities for Federated in his position
as President and Chief Executive Officer of Federated Advisors or otherwise; and
that Mr. Schappert would assist in the orderly transition of his duties and
responsibilities to the person(s) identified to fulfill those duties and
responsibilities; and that Mr. Schappert would make himself available to consult
with Mr. Donahue or his designees on the business, strategy and affairs of
Federated and Federated Advisors from and after January 27, 2006 through
March 17, 2006 (the “Consulting Period”). During the Consulting Period, Mr.
Schappert no longer has need for nor access to his office at Federated Investors
Tower during normal business hours and will have access to his office at
Federated between the hours of 6:00 p.m. and 8:00 a.m., Monday through Friday,
and 9.00 a.m. to 5.00 p.m. on Saturday and Sunday. During the Consulting Period,
Mr. Schappert’s secretary, Susan Hill, will continue to be available to Mr.
Schappert, by telephone and electronic communication, to assist him with
fulfilling his consulting responsibilities, and with his business and personal
affairs. During the Consulting Period, Mr. Schappert will continue to be able to
access, from an off-site location, the computer he has had access to while
employed by Federated, although Federated may take necessary precautions to
limit Mr. Schappert’s access to, and Mr. Schappert agrees not to access,
Federated’s confidential information now that Mr. Schappert is no longer
fulfilling the day-to-day duties and responsibilities as the President and Chief
Executive Officer of Federated Advisors. Mr. Schappert agrees to complete and
timely file

 

-2-

--------------------------------------------------------------------------------

any reports or statements required to be filed by law or by Federated policies
and to comply with all Federated policies applicable to him.

3.    Consideration for This Agreement

In consideration for this Agreement, Federated will pay the following to
Mr. Schappert, on the following terms:

(a) For purposes of the severance payment consisting of two (2) equal payments
totaling $700,000, minus all required deductions (“Base Severance Payments”), as
set forth in the first full paragraph of page 5 of the letter between Federated
and Mr. Schappert dated May 13, 2002 (“May 2002 Letter”), this resignation is
treated as a termination of employment by Federated not for cause.
Notwithstanding the payment provisions of the May 2002 Letter, the first such
payment will be made not later than three (3) business days after the later of
(a) the Effective Date of this Agreement, or (b) March 7, 2006, and the second
payment will be made six (6) months after the date of the first such payment,
which date of the second payment is anticipated to be on or before September 17,
2006, so long as Mr. Schappert has complied with his obligations hereunder, and
under the May 2002 Letter (as modified in paragraph (c) below).

(b) Subject to paragraph (d) below, Mr. Schappert will remain as an employee of
Federated during the Consulting Period. Federated will pay Mr. Schappert his
regular salary during the Consulting Period and continue during the Consulting
Period to provide Mr. Schappert with the employee benefits generally available
to Federated employees.

(c) In additional consideration of this Agreement, Federated will pay to Mr.
Schappert the additional gross sum of One Million Three Hundred Thousand
($1,300,000) Dollars, minus all required deductions (“Additional Severance
Payment”). This amount shall be paid on the same date as the payment of the
first of the two payments of the Base Severance

 

-3-

--------------------------------------------------------------------------------

Payments. For and in consideration of this Agreement and solely as to the
payment of the Base Severance Payments and Additional Severance Payment, and not
as to any other purpose, reason, or payment, Federated further agrees that the
limitations on Mr. Schappert contained in the first sentence of the eighth
paragraph on page 4 of the May 2002 Letter, which reads:

During your employment, plus an additional six (6) month period thereafter, you
agree that you will not, for yourself or on behalf of any other person or
entity, directly or indirectly, (a) compete with Federated; or (b) solicit,
attempt to obtain business from or do business with or service any Federated
customer or potential customer.

are of no further force or effect. Mr. Schappert specifically acknowledges and
affirms that all other provisions of the documents referenced in paragraphs 4
(a), (b), (e) and (f) below, remain in full force and effect according to their
terms. Mr. Schappert acknowledges and agrees that he waives, releases and
forfeits any and all rights to any and all money, stock, options or any other
benefit under any other agreement between him and Federated, including, but not
limited to, any and all rights to vested or unvested, earned or unearned, stock
or options under the agreements set forth in paragraphs 4(c) and (d). Federated
will repurchase the 40,000 shares of Restricted Stock provided for in the
agreement described in paragraph 4(c) at a price of $3.00 per share, and
Mr. Schappert agrees that he will sell them to Federated at that price, and will
execute the Irrevocable Stock Power, attached hereto and marked as Exhibit “A,”
and return it to Federated simultaneous with his return of this Agreement
executed by him. Mr. Schappert acknowledges and agrees that no payment to him
due under this Agreement will be made by Federated until it receives such
Irrevocable Stock Power, properly executed by Mr. Schappert.

(d) Further, Mr. Schappert and Federated agree that, upon the Effective Date of
this Agreement, if it is before March 17, 2006, the Consulting Period will
terminate, and Mr. Schappert’s employment with Federated terminates as of such
Effective Date, but Federated will

 

-4-

--------------------------------------------------------------------------------

then pay Mr. Schappert a gross amount equal to the balance of his regular salary
for the period of January 27, 2006 and March 17, 2006 that remains unpaid as of
the Effective Date. However, Mr. Schappert and Federated specifically agree that
his last day of employment under the Consulting Period and this paragraph will
be no earlier than March 7, 2006.

(e) Upon fulfillment of the promises set forth in (a), (b), (c) and (d) above,
Federated and Federated Advisors will have no further obligation to make any
payment of salary, bonus, compensation, severance or benefits of any kind or
nature except that the parties’ agreements and promises contained in the
documents referenced in paragraphs 4(a), (b), (e) and (f) below, except as
specifically amended herein, remain in full force and effect according to their
terms.

4.    Other Agreements

Except as may be modified by this Agreement, the following agreements between
Federated, Federated Advisors and/or Mr. Schappert remain in full force and
effect according to their terms:

 

  (a) Letter between Federated and Mr. Schappert dated May 13, 2002, as modified
by paragraph 3 of this Agreement.

 

  (b) Agreement regarding Confidential Information dated February 5, 2002.

 

  (c) Amended and Restated 2003 Restricted Stock Award Agreement dated
September 20, 2004.

 

  (d) 2002 Employee Stock Option Agreement dated February 4, 2002.

 

  (e) 2002 Executive Stock Option Agreement dated December 18, 2002.

 

  (f) Bonus Restricted Stock Program Award Agreement dated March 4, 2005.

The Agreements referenced in (c) and (d) above shall, as of the Effective Date,
be of no further force or effect.

 

-5-

--------------------------------------------------------------------------------

5.    No Additional Obligations of Federated

This Agreement sets forth the entire obligation of Federated and Federated
Advisors to provide salary, incentive compensation, severance, termination pay,
bonus, pension, health, hospitalization and major medical insurance, dental
insurance, group-life insurance, disability insurance, vacation, sick pay,
holiday pay, compensation or benefits of any kind to Mr. Schappert; Federated
and its affiliated companies shall have no other obligations to provide any
other benefits to Mr. Schappert except as otherwise expressly provided herein or
in the documents set forth in paragraphs 4(a), (b), (e) and (f); and Mr.
Schappert acknowledges that the performance by Federated and Federated Advisors
of their obligations under this Agreement shall be in full discharge of any and
all obligations that Federated and Federated Advisors may have to Mr. Schappert,
or for his benefit, for salary, incentive compensation, severance, termination
pay, bonus, pension, health, hospitalization and major medical insurance, dental
insurance, group-life insurance, disability insurance, vacation, sick pay,
holiday pay, consulting pay, compensation or benefits of any kind under any
employment agreement or otherwise. Nothing contained herein, nevertheless, shall
be interpreted or construed to limit or reduce Mr. Schappert’s right to receive
his accrued and vested benefits from the Federated Profit Sharing/401(k) Plan.
Nor shall anything contained herein be interpreted or construed as a waiver by
Mr. Schappert of, or limitation upon, his rights to continue medical benefits
coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”).

6.    Releases of Claims

As a material inducement to Federated and Federated Advisors to enter into this
Agreement, except for the performance by Federated and Federated Advisors of
their obligations under this Agreement, Mr. Schappert irrevocably and
unconditionally releases, acquits, and

 

-6-

--------------------------------------------------------------------------------

forever discharges Federated, Federated Advisors, and each of their affiliates,
successors, assigns, and each of their past and present directors, officers,
employees, agents, affiliates (and past and present directors, officers,
employees and agents of such successors, assigns and affiliates)(collectively
“Releasees”), or any of them, from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts, and expenses
(including attorneys’ fees, costs actually incurred, and liquidated damages), of
any nature whatsoever, known or unknown (collectively “Claims”), which he now
has, owns, or holds or claims to have, own, or hold, or which he at any time
hereafter may have, own or hold, or claim to have, own or hold, against
Releasees, from the beginning of time to the later of (a) the Effective Date of
this Agreement, or (b) March 7, 2006, if that date is his last day of employment
under paragraph 3(d). Without limitation of the foregoing, this general release
includes any Claims relating to (i) the employment of Mr. Schappert by Federated
or Federated Advisors or any of its affiliated companies, (ii) his resignation
from or the cessation of such employment, (iii) the payment to him of any
compensation, salary, bonus, benefit or payment of any kind, (iv) any Claims
arising from any contract or agreement (including any contract or agreement
between him and Federated, except those expressly remaining in force under
paragraph 3(c) of this Agreement), and (v) the alleged violation by Federated,
Federated Advisors or any Releasee of any federal, state or local statutes,
ordinances or common laws, including, but not limited to, the Civil Rights Act
of 1866; the Civil Rights Act of 1871; Title VII of the Civil Rights Act of
1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of
1967; the Rehabilitation Act of 1973; the Older Workers Benefit Protection Act;
the Americans With Disabilities Act; the Employee Retirement Income Security Act
of 1974; Executive Order 11246; the Veterans Reemployment Statutes; the

 

-7-

--------------------------------------------------------------------------------

Family Medical Leave Act; the Sarbanes Oxley Act of 2002; the Pennsylvania Wage
Payment and Collection Law; the Pennsylvania Human Relations Act; or Chapters
651-659 of the Pittsburgh Code, all as amended.

7.    Confidential Information

Mr. Schappert agrees to deliver to Federated and Federated Advisors, within
seven (7) days of his execution of this Agreement, any Confidential Information
obtained, developed, or received by him during the course of employment with
Federated or Federated Advisors or in connection with his service as an
officer/director/trustee of Federated or Federated Advisors. Mr. Schappert
promises and agrees not to disclose, either directly or indirectly, in any
manner whatsoever without Federated’s written consent, any Confidential
Information identified in the Agreement regarding Confidential Information dated
February 5, 2002, unless compelled by subpoena, civil investigative demand,
regulatory demand, or pursuant to applicable law to disclose Confidential
Information or to produce documents or other things regarding said Confidential
Information. In the event that Mr. Schappert is legally compelled to disclose
any Confidential Information or any other information concerning Federated or
Federated Advisors, Mr. Schappert shall seek a written opinion from reputable
and experienced outside counsel that a specific disclosure is necessary in order
for Mr. Schappert not to be in violation or default under an applicable law or
order. Mr. Schappert agrees that he shall provide Federated and Federated
Advisors with prompt notice of such request or requirement as well as a copy of
such opinion together with the text of the proposed disclosure as far in advance
of its disclosure as is reasonably practicable, and will in good faith consult
with and consider the suggestions of Federated and Federated Advisors concerning
the nature and scope of the information Mr. Schappert proposes to disclose.
Federated and Federated Advisors may seek an appropriate

 

-8-

--------------------------------------------------------------------------------

protective order or other remedy, may consult with Mr. Schappert with respect to
taking steps to resist or narrow the scope of such request or legal process, or
may waive compliance, in whole or in part, with the terms of this Agreement.
Mr. Schappert agrees to cooperate fully with and not to oppose any action by
Federated and Federated Advisors to obtain a protective order or other
appropriate remedy. In the event that no such protective order or other remedy
is obtained, or that Federated and Federated Advisors waive compliance with the
terms of this Agreement, Mr. Schappert may disclose only that part of the
Confidential Information as he is advised by counsel in writing is legally
required. In any such event, Mr. Schappert shall use his best efforts to ensure
that all Confidential Information and other information that is so disclosed
will be accorded confidential treatment. Neither this provision nor this
Agreement shall prohibit Mr. Schappert from cooperating or participating in any
proceeding or matter before the U.S. Equal Employment Opportunity Commission,
but he specifically waives and disclaims any right to receive any compensation
or benefit therefrom, either individually or as part of a group or class.

8.    No Negative or Derogatory Comments

Mr. Schappert agrees to make no negative or derogatory comments, directly or by
innuendo in any business or social setting, about (a) Federated or Federated
Advisors (or any of their officers, employees, directors or trustees),
(b) Federated’s or Federated Advisors’ business and investment practices and
philosophies, or (c) the various mutual funds for which Federated or Federated
Advisors provides services. Federated has discussed this matter with J.
Christopher Donahue and told Mr. Donahue that while he remains employed by
Federated or any of its affiliated companies, Mr. Donahue is to make no negative
or derogatory comments, directly or by innuendo, about Mr. Schappert’s business
practices and philosophies in any business or social setting.

 

-9-

--------------------------------------------------------------------------------

9.    Future Assistance or Cooperation

Each party hereto promises and agrees to execute such other documents and to
take such other actions as may be reasonably requested by the other party to
carry out this Agreement. Further, Mr. Schappert promises and agrees that if
Federated or Federated Advisors shall, in the future, require Mr. Schappert’s
assistance or cooperation in preparation for, or the conduct of, litigation or
any proceeding involving matters or events which occurred during Mr. Schappert’s
employment by Federated or Federated Advisors or service as an
officer/director/trustee of Federated Advisors, as to which Mr. Schappert’s
knowledge or testimony may be important to Federated or Federated Advisors,
Mr. Schappert shall furnish at mutually convenient times such assistance or
cooperation to Federated or Federated Advisors as Federated or Federated
Advisors shall reasonably request and as is within Mr. Schappert’s capability,
provided that Federated or Federated Advisors shall reimburse Mr. Schappert for
any reasonable expense Mr. Schappert incurs in furnishing such assistance and
shall provide reasonable compensation for time expended on the matter by
Mr. Schappert, except that no compensation shall be paid for testimony in any
litigation or proceeding.

10.    No Admission

Mr. Schappert, Federated and Federated Advisors have decided that it is in his
or its self-interest to enter into this Agreement. Each of the parties
understands that this Agreement does not constitute an admission or
acknowledgment of the other of them of any act or wrongdoing.

11.    Integration

This Agreement supersedes all prior negotiations and understandings with respect
to the subject matter hereof; and this Agreement represents the entire
understanding of the parties with respect to such subject matter. No
termination, revocation, modification or amendment of this

 

-10-

--------------------------------------------------------------------------------

Agreement shall be binding unless in writing and signed by the party against
whom such termination, revocation, waiver, modification or amendment shall be
asserted. However, Federated may, solely to the extent necessary to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), modify
the terms of this Agreement if it is determined that such terms would subject
any payments or benefits hereunder to the additional tax and/or interest
assessed under Section 409A of the Code. Notwithstanding, Mr. Schappert
recognizes and acknowledges that Section 409A of the Code may affect the timing
and recognition of payments due hereunder or under other plans or arrangements
applicable to him, and may impose upon him certain taxes or other charges for
which he is and shall remain solely responsible.

12.    Governing Law

This Agreement is made and entered into in the Commonwealth of Pennsylvania; and
all the terms and provisions hereof shall be interpreted and construed in
accordance with, and governed by, the laws of the Commonwealth of Pennsylvania,
without regard to its conflict of law provisions, except to the extent federal
law applies.

13.    Consideration of Agreement

Mr. Schappert acknowledges that he first received this Agreement on January 27,
2006, and acknowledges that he has had at least twenty-one (21) days within
which to consider this Agreement before signing it. He acknowledges and agrees
that any changes or modifications to it are and have been the result of good
faith negotiations between him and Federated, and that any such modifications or
changes, material or otherwise, do not and did not restart or affect in any
manner the original twenty-one (21) day consideration period. Mr. Schappert
acknowledges that for a period of seven (7) days after he signs this Agreement
he may revoke or cancel it by written

 

-11-

--------------------------------------------------------------------------------

notification delivered to J. Christopher Donahue at his office in Federated
Investors Tower, and that this Agreement will not become effective or
enforceable until the day after the last day of that seven-day period, so long
as there has not been such revocation by Mr. Schappert (“Effective Date”).
Mr. Schappert further acknowledges that he has been advised to consult with an
attorney before signing this Agreement, that he enters into this Agreement
voluntarily, and that the Base Severance Payments are, and have at all times
been, part of the consideration for this Agreement, and would not be due and
payable to him except upon his entering into this Agreement.

Mr. Schappert acknowledges and agrees that if he does not accept this Agreement
by signing it, and the Irrevocable Stock Power, and returning executed originals
of them to Mr. Donahue so that they are received by 5:00 p.m. E.S.T. on
March 17, 2006, this Agreement will be considered automatically withdrawn with
no further action by Federated required.

 

WITNESS:

   

/s/ Susan B. Hill

   

/s/ Keith M. Schappert

March 7, 2006

   

Keith M. Schappert

Date of Signature

by Mr. Schappert: 3/5/06

   

FEDERATED INVESTORS, INC.

   

By:

 

/s/ J. Christopher Donahue

   

Title:

 

President & CEO

   

FEDERATED INVESTMENT MANAGEMENT COMPANY

   

By:

 

/s/ John B. Fisher

   

Title:

 

President & CEO

 

-12-

--------------------------------------------------------------------------------

FEDERATED GLOBAL INVESTMENT MANAGEMENT CORP.

By:

 

/s/ John B. Fisher

Title:

 

President & CEO

FEDERATED INVESTMENT COUNSELING

By:

 

/s/ John B. Fisher

Title:

 

President & CEO

FEDERATED ADVISORY SERVICES COMPANY

By:

 

/s/ John B. Fisher

Title:

 

President & CEO

PASSPORT RESEARCH LTD.

By:

 

/s/ John B. Fisher

Title:

 

President & CEO

FEDERATED EQUITY MANAGEMENT COMPANY OF PENNSYLVANIA

By:

 

/s/ John B. Fisher

Title:

 

President & CEO

PASSPORT RESEARCH II, LTD.

By:

 

/s/ John B. Fisher

Title:

 

President & CEO

2-24-06 Date of Signature of Federated Parties

Schappert Agreement

 

-13-

--------------------------------------------------------------------------------

Exhibit A

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned, Keith M. Schappert, does hereby irrevocably
assign and transfer unto Federated Investors, Inc, a Pennsylvania corporation
(the “Company”), all of the undersigned’s right, title and interest in the Forty
Thousand (40,000) shares of the Class B Common Stock, no par value, of the
Company issued to the undersigned pursuant to that Amended and Restated 2003
Restricted Stock Award Agreement dated September 20, 2004 and standing in the
name of the undersigned on the books of the Company (the “Shares”). The
undersigned further does hereby irrevocably constitute and appoint the Secretary
or Assistant Secretary of the Company as agent and attorney-in-fact to transfer
the Shares on the books of the Company, with full power of substitution in the
premises.

 

Witness: /s/ Susan B. Hill

   

/s/ Keith M. Schappert

Print Name: Susan B. Hill

   

Keith M. Schappert

Dated: March 7, 2006