Exhibit 10.1

EXECUTION VERSION
 
SHAREHOLDERS' AGREEMENT
DATED 2 JULY 2018
BT PENSION SCHEME TRUSTEES LIMITED
as trustee for and on behalf of the BT PENSION SCHEME

and

FEDERATED INVESTORS, INC.

and

HERMES FUND MANAGERS LIMITED

and

FEDERATED HOLDINGS (UK) II LIMITED 

 
 
 
 
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Allen & Overy LLP

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CONTENTS
Clause    Page
1.
Definitions and Interpretation    3

2.
Business and Objectives    4

3.
Effectiveness of this Agreement    5

4.
Compliance with and Precedence of this Agreement    5

5.
Board Composition and Corporate Governance    5

6.
Management and Decision Making    9

7.
Conflict of Interests    10

8.
Budgets and Dividend Policy    11

9.
Information Rights    12

10.
Other Continuing Obligations of the Company    13

11.
Funding and Issues of Securities    14

12.
Rights Offers    15

13.
Restrictions on Disposal    17

14.
General Provisions Relating to Issue and Transfer of Shares    18

15.
Prohibited Activities    18

16.
Warranties    19

17.
Anti-Corruption    19

18.
Term and Termination    20

19.
Confidentiality    20

20.
Tax Matters    22

21.
Notices    22

22.
Payments    24

23.
General    24

24.
Governing law and Jurisdiction    26

Schedule    
1.
Capital Structure    28

2.
Board Meetings    29

3.
Shareholder Meetings    31

4.
Reserved Matters    32

Part 1
Matters Requiring Shareholder Approval    32

5.
Information Rights    35

Part 1
Accounts and periodic accounting    35

Part 2
Other Information    35

6.
Form of Deed of Adherence    37

 
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7.
ESG Principles    39

8.
Definitions and Interpretation    40

Signatories    48
Documents in the Agreed Form    
1.
Constitution    52

2.
Initial Budget    53

3.
New LTIP and share incentive plan    54

THIS DEED is made on 2 July 2018
BETWEEN:
(1)
HERMES FUND MANAGERS LIMITED a company incorporated in England & Wales
(registered number 01661776) whose registered office is at Sixth Floor, 150
Cheapside, London, England, EC2V 6ET (the Company);

(2)
BT PENSION SCHEME TRUSTEES LIMITED incorporated in England & Wales with
registered number 06009363 and which has its registered office at One America
Square, 17 Crosswall, London, England, EC3N 2LB in its capacity as trustee for
and on behalf of the BT Pension Scheme (the Scheme) which is governed by a deed
and rules dated 5 April 2016 (as amended) (BTPS);

(3)
FEDERATED HOLDINGS (UK) II LIMITED (registered in England under registered
number 11227851) whose registered office is at 5th Floor One New Change, London,
United Kingdom, EC4M 9AF (Federated); and

(4)
FEDERATED INVESTORS, INC. a company incorporated in the Commonwealth of
Pennsylvania, USA (FII, and together with Federated, the Federated Parties
(which expression shall mean either or both of FII and Federated, as
applicable)).

BACKGROUND:
(A)
Hermes Fund Managers Limited is a private limited company incorporated in
England with registered number 01661776.

(B)
With effect from the Effective Date, the capital structure of the Company will
be as set out in Schedule 1.

(C)
The parties have agreed that the Group is to be owned, controlled, managed and
financed on the terms set out in this agreement.

(D)
FII is the Ultimate Holding Company of Federated and has agreed to the direct
obligations to the other parties to this agreement on the terms set out in this
agreement.

(E)
In consideration of the mutual promises of each of the parties and the
contributions they undertake to make to the Business, the parties agree to enter
into this agreement to govern their relationships.

 
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IT IS AGREED as follows:
1.
DEFINITIONS AND INTERPRETATION

1.1
In addition to terms defined elsewhere in this agreement, the definitions and
other provisions in Schedule 8 apply throughout this agreement, unless the
contrary intention appears.

1.2
In this agreement, unless the contrary intention appears, a reference to a
clause, subclause, paragraph, or schedule is a reference to a clause, subclause,
paragraph, or schedule of or to this agreement. The schedules form part of this
agreement.

1.3
The headings in this agreement do not affect its interpretation.

2.
BUSINESS AND OBJECTIVES

2.1
Business

(a)
The parties agree that the Group is to own and carry on the Business and the
Company must not and must procure that each other Group Company does not carry
on any other business that is outside the scope or nature of the Business,
unless otherwise approved by the Shareholders under clause 6.3.

(b)
For the avoidance of doubt, the parties agree that the Group shall not cease a
principal line of its Business and shall not undertake a Material Business
Acquisition or Material Business Disposal, unless otherwise approved by the
Shareholders under clause 6.3.

2.2
Objectives

The parties acknowledge and agree that the primary objectives of the Group are:
(a)
to be a vehicle of Federated and its Affiliates to own and carry on the
Business;

(b)
to maximise the value of the Shares for the benefit of all Shareholders; and

(c)
to carry on the Business in accordance with ESG Principles.

2.3
Development of the Business

The parties anticipate that the Business will evolve and will discuss in good
faith further opportunities to develop the Business.
2.4
Distribution of products

(a)
FII shall procure that its distribution subsidiaries shall act as distributors
of the services and products of the Group on the terms of the Federated
Distribution Agreements.

(b)
The Group shall act as distributors of the services and products of FII and its
subsidiaries on the terms of the Hermes Distribution Agreements.

(c)
The Federated Distribution Agreements and the Hermes Distribution Agreements,
and any subsequent variations or amendments to or termination of such Federated
Distribution Agreements or Hermes Distribution Agreements, shall be entered into
on market standard and arm's length terms. Any Federated Distribution Agreements
or Hermes Distribution Agreements not entered into in the ordinary course of
business and on arm's length terms, and any subsequent variations or amendments
to or termination

 
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of such Federated Distribution Agreements or Hermes Distribution Agreements not
in the ordinary course of business and on arm's length terms, shall be subject
to Shareholder Approval.
2.5
Management and control of the Company

The management and control of the Company must be exercised in the United
Kingdom and the Shareholders must use all reasonable endeavours to ensure that
the Company is treated for all purposes, including taxation, as resident in the
United Kingdom.
2.6
Brand

The Group shall operate under the 'Hermes' brand unless otherwise approved by
the Shareholders under clause 6.3, provided that the Board may change such
branding without approval from Shareholders: (a) to incorporate the name
'Federated' into such branding; and (b) in respect of products and/or services
offered or sold by the Group in the United States or its territories.
3.
EFFECTIVENESS OF THIS AGREEMENT

This agreement takes effect at the time and on the date at which the sale of
Shares to Federated is completed under the SPA (the Effective Date).
4.
COMPLIANCE WITH AND PRECEDENCE OF THIS AGREEMENT

4.1
Adoption of Constitution

The parties agree that on the Effective Date the Constitution shall be adopted
as the articles of association of the Company in substitution for all prior
articles of association.
4.2
General undertaking

Each Shareholder must exercise all powers and rights available to that
Shareholder as a holder of Shares in order to give effect to the provisions of
this agreement and to ensure that the Company complies with its obligations
under this agreement. References in this agreement to the Shareholders procuring
that the Company performs its obligations are to be interpreted accordingly.
4.3
Agreement prevails over Constitution

Each Shareholder agrees that if any provision of the Constitution at any time
conflicts or is inconsistent with the provisions of this agreement: (i) the
provisions of this agreement are to prevail to the extent of the conflict or
inconsistency, (ii) the Constitution will be taken to be read and interpreted
accordingly, and (iii) the Constitution must be amended to the extent necessary
in accordance with clause 4.4.
4.4
Amendments to Constitution

Each Shareholder must exercise all powers and rights available to that
Shareholder to procure the amendment of the Constitution to the extent necessary
to give effect to the provisions of this agreement.
4.5
Company exclusion

The Company is not required to comply with any obligation contained in this
agreement to the extent that to do so would constitute an unlawful fetter on the
Company's statutory powers. This does not

 
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affect the validity of the relevant provisions as between the other parties or
the respective obligations of the other parties under this clause 4.
5.
BOARD COMPOSITION AND CORPORATE GOVERNANCE

5.1
Board Composition

(a)
The Board shall comprise a maximum of thirteen Directors.

(b)
BTPS may from time to time appoint and remove one Director (the BTPS Nominated
Director).

(c)
The Federated Parties may from time to time appoint and remove up to seven
Directors (the Federated Nominated Directors).

(d)
The Federated Parties may from time to time appoint and remove one management
representative as a Director (it being understood that initially such management
representative will be Harriet Steel).

(e)
The Chief Executive Officer shall be a Director.

(f)
Three Independent Directors shall be appointed and removed from time to time by
the Federated Parties.

5.2
Removal of Directors

(a)
Despite any other provision of this agreement, a person will be automatically
removed as a Director if the person is, or becomes, ineligible to be a Director
under any applicable law, rule or regulation, or any provision of the
Constitution.

(b)
Despite any other provision of this agreement, a Federated Nominated Director or
the BTPS Nominated Director (as the case may be) will be automatically removed
as a Director if:

(i)
the Nominated Director's Appointer (and its Permitted Transferees, if any) cease
to hold any Shares; or

(ii)
the number of Nominated Directors appointed by that person's Appointer (and its
Permitted Transferees, if any) exceeds the number of Nominated Directors that
the Appointer is entitled to appoint under clause 5.1, in which case such number
of Nominated Directors of that Appointer will be automatically removed from
office (on a last in, first out basis) as is necessary to ensure that the number
of Nominated Directors appointed by that Appointer equals the number of
Nominated Directors that Appointer is entitled to appoint under clause 5.1.

(c)
Subject to clauses 5.2(a) and 5.2(b):

(i)
only BTPS may remove a Director appointed by it under clause 5.1(b); and

(ii)
only the Federated Parties may remove a Director appointed by them under clauses
5.1(c) and 5.1(d),

and no Shareholder may exercise any vote or other power to remove a Director
appointed by another Shareholder.
(d)
The Shareholder removing a Federated Nominated Director or BTPS Nominated
Director (as the case may be) under this clause 5 must indemnify the Company
against any Loss arising as a result of that Nominated Director's removal from
office.

 
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5.3
Independent Directors

(a)
Independent Directors, who shall be appointed and removed from time to time by
the Federated Parties, must fulfil the following criteria:

(i)
they have experience of the fund management industry; and

(ii)
at the time of their appointment, and for the previous three years, they are not
a shareholder in, employee, director or officer of any Shareholder or members of
their group and do not provide services to any Shareholder or members of their
group or any Group Company.

5.4
Initial Directors

With effect from the Effective Date, the Board shall comprise the Directors set
out in the first column of the table below, and, where relevant, as a Nominated
Director for the Appointer set out in the second column in the table below
opposite that Director's name:
Director
Appointer/role
David Stewart (Chairman)
Federated Parties/Independent Director
David Watson
Federated Parties/Independent Director
Sally James
Federated Parties/Independent Director
Saker Nusseibeh
The Board/Chief Executive Officer
Harriet Steel
Federated Parties/Management representative
William McClory
BTPS
Thomas R. Donahue
Federated Parties
John B. Fisher
Federated Parties
Gordon J. Ceresino
Federated Parties
Deborah A. Cunningham
Federated Parties
Theodore W. Zierden III
Federated Parties
Denis McAuley III
Federated Parties
Jane E. Lambesis
Federated Parties

5.5
Process for subsequent appointment and removal of Nominated Directors

To appoint or remove a Nominated Director under this agreement, a Shareholder
must give written notice to the Company specifying the identity of the person it
wishes to appoint or remove. The notice must in the case of an appointment, be
accompanied by a signed written consent from that person agreeing to act as a
Director.
5.6
Chairman

 
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The Federated Parties are entitled to appoint and remove one of the Independent
Directors as the chairman of the Board. The initial chairman with effect from
the Effective Date shall be David Stewart.
5.7
Alternate Directors

A Director may by notice to the Company:
(a)
appoint a person approved by the Director's Appointor to be their alternate
Director, or in the case of any Director appointed by the Board, appoint a
person approved by the Board to be their alternate Director; and

(b)
remove a person appointed as their alternate Director.

5.8
Directors of other Group Companies

The board of directors of each Subsidiary of the Company shall comprise such
persons as are approved by the Board from time to time.
5.9
Board meetings

Meetings of the Board must be held and conducted in accordance with the
provisions of Schedule 2.
5.10
Board committees

(a)
The Board shall have an Audit Committee and a Risk and Compliance Committee and
shall be entitled to constitute any additional committees, and dissolve any
committees (including the following committees), from time to time. The
Federated Parties shall have the right to appoint a majority of the persons
appointed to each such committee (including the Audit Committee and the Risk and
Compliance Committee) and the chairman of each committee, provided that at least
one Independent Director is appointed to each such committee and the chairman of
each committee shall be an Independent Director.

(b)
The initial chairman of the Audit Committee with effect from the Effective Date
shall be David Watson.

(c)
The initial chairman of the Risk and Compliance Committee with effect from the
Effective Date shall be Sally James.

5.11
Policies apply to all Group Companies

The policies adopted from time to time by the Risk and Compliance Committee of
the Board shall apply to all Group Companies, and the Company shall use its
powers in relation to the other Group Companies to ensure that they comply with
such policies.
5.12
Fees and expenses of Directors

(a)
Each Independent Director is entitled to such remuneration, fees and benefits
from a Group Company as may be approved by the Board.

(b)
The Company must reimburse the Independent Directors in respect of all expenses
reasonably incurred by them in connection with the proper performance of their
duties as a Director.

(c)
None of the other Directors shall be paid any remuneration or expenses (or, in
the case of an employee of the Company, additional remuneration or expenses) for
acting as a Director.

 
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5.13
Shareholder meetings

Shareholder meetings must be held and conducted in accordance with the
provisions of Schedule 3.
6.
MANAGEMENT AND DECISION MAKING

6.1
Board responsibilities and obligations

The Board shall:
(a)
oversee the overall strategic direction of the Company and the Company's
internal controls;

(b)
endeavour to ensure that the business of the Company is managed in accordance
with this agreement; and

(c)
make or provide input on decisions which are not part of the day to day
management of the Company as necessary.

6.2
Board shall appoint Chief Executive Officer

(a)
The Board shall, after consultation with the Federated Parties and BTPS, appoint
a Chief Executive Officer of the Company who must report to the Board. Subject
to any applicable law, rule or regulation, the Board also may remove and replace
the Chief Executive Officer of the Company.

(b)
The initial Chief Executive Officer of the Company with effect from the
Effective Date shall be Saker Nusseibeh.

6.3
Matters requiring Shareholder Approval

The Company must ensure that, and each Shareholder undertakes to exercise all
its powers as a Shareholder or otherwise so as to procure that, for so long as
both Federated (or its Permitted Transferee or successors or assignees) and BTPS
(or its Permitted Transferee or successors or assignees) continue to hold
Shares, no Group Company does any of the things listed in Schedule 4 (or
anything which is analogous or has a substantially similar effect to any of
those things) without the prior written approval of both Federated and BTPS. The
approval required by this clause 6.3 is in addition to any resolution required
by statute or under the general law.
6.4
Manner of giving Shareholder Approval

Any approval required to be given under clause 6.3 by a Shareholder that is a
corporation may be given on behalf of that Shareholder by:
(a)
notice in writing executed by or on behalf of that Shareholder; or

(b)
the affirmative vote of that Shareholder at a general meeting of the
Shareholders,

in each case stating that the notice or vote, as the case may be, constitutes
the approval of that Shareholder for the purposes of clause 6.3 of this
agreement.
6.5
Matters in relation to which a Shareholder has an Interest

 
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If a Shareholder has an Interest in a matter that would otherwise require
approval of that Shareholder under clause 6.3 and that Shareholder is precluded
from voting on that matter in accordance with clause 7.2, then approval of that
Shareholder is not required for the purposes of clause 6.3.
7.
CONFLICT OF INTERESTS

7.1
Directors' Interests and voting rights

Subject to clause 7.2, clause 7.3 and clause 7.4, if a Director has an Interest
in any matter which conflicts or may conflict with the interests of the Company
and which is to be considered or voted upon at a Board meeting or which is to be
subject of a written resolution of the Directors:
(a)
unless the Director has already given a general notice of his Interest in
accordance with relevant law, the Director must without delay declare the
Interest by giving written notice to each other Director setting out the nature
and extent of the Interest and the relation of the Interest to the affairs of
the Company or the Business; and

(b)
so long as the Director complies with clause 7.1(a) but subject to clause 7.2
and clause 7.3, the Director:

(i)
is entitled to attend or participate in any discussion on matters that relate to
the Interest;

(ii)
is entitled to receive all information and advice received by the other
Directors on matters that relate to the Interest;

(iii)
is entitled to vote (and be counted in a quorum at a meeting) on matters that
relate to the Interest; and

(iv)
is entitled to retain benefits under any transaction relating to the Interest
and the Company cannot avoid any such transaction merely because of the
existence of the Interest.

7.2
Conflict between Interests and Company rights

A Shareholder or Director who has an Interest in any matter is not entitled to
exercise any right or power to prevent any Group Company from enforcing its
rights or defending any claim in relation to that matter.
7.3
Shareholder Interests and Directors' voting rights

Without prejudice to clause 7.2, if any matter to be considered or voted upon at
a Board meeting relates to:
(a)
any Group Company enforcing rights under or taking any action against a
Shareholder (or a member of its group) in relation to any matter arising under
any Transaction Document or any subsequent agreement entered into between any
Group Company and a Shareholder (or a member of its group);

(b)
any Group Company defending itself against any action taken against it by a
Shareholder (or a member of its group);

 
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(c)
any Group Company taking any action against a Director appointed by a
Shareholder in relation to any (or any alleged) breach of duty by that Director;
or

(d)
any Group Company defending itself against any action taken against it by a
Director appointed by a Shareholder,

then that matter must be considered at a separate meeting or meetings of the
Board (notice of which must be given to each Director), and all the Directors
appointed by the relevant Shareholder:
(e)
are entitled to attend the initial part of the meeting with the sole purpose of
expressing their views on that matter before it is discussed on the merits
amongst the other Directors;

(f)
are not entitled to attend or participate in any further discussion of that
matter;

(g)
are not entitled to receive information or advice received by the Company on
that matter; and

(h)
are not entitled to vote (or be counted in the quorum at a meeting) in relation
to that matter.

The quorum for any such meeting is three Directors who are entitled to vote on
the matter.
7.4
Specific interests of a Director

(a)
The parties agree that a Director is authorised and permitted to,
notwithstanding his office, have an Interest arising from any duty he or she may
owe to (whether as a result of being appointed by a Shareholder or otherwise),
or Interest he or she may have as an employee, director, trustee, member,
partner, officer or representative of, or a consultant to, or direct or indirect
investor (including by virtue of a carried interest, remuneration or incentive
arrangements or the holding of securities) in, a Shareholder and/or its
Affiliates. Any such Interests are deemed approved.

(b)
Any other Interests of the Federated Nominated Directors and the BTPS Nominated
Director shall be declared at the first board meeting of the Company on or
following the Effective Date and the Constitution shall reflect that such
potential conflicts of Interests are approved by the Company's shareholders.

8.
BUDGETS AND DIVIDEND POLICY

8.1
Initial Budget / Status of Budgets

The Budget in the Agreed Form for the Financial Year ending 31 December 2018 is
the Initial Budget. The Federated Parties and BTPS acknowledge and agree that
the Initial Budget and subsequent Budgets are and will be projections, and that
the Board and Company management will have flexibility in good faith to adjust
the Budgets from time to time as they determine facts, circumstances or business
need warrant, subject always to the approval of the Board and to the terms of
this agreement (including any consent or approval rights granted to the
Shareholders under this agreement).
8.2
Subsequent Budgets

(a)
The Company must procure that the Chief Executive Officer prepares and submits
to the Board each year, for its consideration and approval, a draft Budget for
the next Financial Year.

 
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(b)
The Budget for a Financial Year must include:

(i)
an operating budget for the Group setting out for each calendar month in that
Financial Year projected revenue, operating expenditure, capital expenditure and
working capital requirements;

(ii)
a cash flow and regulatory capital forecast for the Group for each quarter in
that Financial Year and a projected consolidated balance sheet for the Group as
at the end of such quarter;

(iii)
a report on the Group's performance during the current Financial Year; and

(iv)
such other information as the Board requires from time to time.

(c)
The Budget submitted to the Board in respect of a Financial Year will not become
the Budget for that period unless and until it has received approval of the
Board. The Board must in good faith use all reasonable endeavours to approve the
Budget.

8.3
Company dividend policy

(a)
Subject to clause 8.3(b):

(i)
the Dividend policy of the Company will be as agreed by the Board from time to
time; and

(ii)
the Dividend policy of each other Group Company will be as agreed by the
relevant board of directors from time to time.

(b)
The Board or the relevant board of directors of any other Group Company may
decide that a Dividend is payable only if:

(i)
the Dividend is not prohibited by statute or the general law;

(ii)
the Board determines that the Dividend is not likely to result at any time in
the regulatory capital of the Group being below the Regulatory Capital Target
Amount; and

(iii)
when making its determination, it takes into account the Budget, working capital
requirements, debt repayment obligations and operational requirements of the
relevant Group Company, and any other facts or circumstances the Board or the
relevant board of directors of such other Group Company (as applicable) deems
relevant.

9.
INFORMATION RIGHTS

9.1
Accounts and periodic reporting

The Company must:
(a)
maintain accurate and complete accounting and other financial records in
accordance with all applicable laws; and

(b)
prepare the accounts and reports set out in the first column of the table in
Part 1 of Schedule 5 and provide copies of those accounts and reports to each
Shareholder as soon as they are available and in any event within the period
specified in the second column of the table in Part 1 of Schedule 5.

 
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9.2
Other information to be provided

The Company must promptly provide to each Shareholder the information and
assistance set out in Part 2 of Schedule 5.
9.3
Access to books, records and other information

(a)
Subject to clause 9.4, the Company must give each Shareholder and each Nominated
Director and their advisors (without prejudice to any rights they may have under
applicable law) reasonable access (subject to the confidentiality obligations
contained herein) on reasonable notice as reasonably required or in connection
with the exercise of their rights under this agreement, the SPA or the Put and
Call Option Deed to:

(i)
review and take copies of documents relating to any Group Company, including the
statutory registers and all accounting and other financial records; and

(ii)
discuss the affairs, finances, accounts and any enquiries in respect of the
information provided pursuant to clauses 9.1 and/or 9.2 in relation to each
Group Company with the relevant responsible officer, any person who reports
directly to that officer and the auditor of the relevant Group Company.

9.4
Exceptions to Shareholder access rights

Nothing in clause 9.3 requires the Company to give any person access to
information if to do so would, in the reasonable opinion of the Board:
(a)
constitute a breach by any Group Company of any obligation of confidentiality
owed to a third party or imposed by law; or

(b)
materially disrupt, or have a material adverse effect on, the business or
operations of any Group Company.

9.5
Disclosure of information

So far as legally permissible, a Nominated Director is entitled to pass such
information concerning any Group Company to his Appointer or any of his
Appointer's Affiliates or Associated Persons as may be reasonably requested or
the relevant Director may consider appropriate from time to time, so long as
each recipient keeps that information confidential in accordance with clause 19.
10.
OTHER CONTINUING OBLIGATIONS OF THE COMPANY

10.1
Compliance

The Company must take all reasonable steps to obtain, and must comply with the
terms of, all regulatory licences, binding codes of conduct, permissions and
consents necessary for the conduct of its business and must procure that each
other Group Company does likewise.
10.2
Insurance

 
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(a)
The Company must keep insured, and must procure that each other Group Company
keeps insured, at all times with a reputable insurer:

(i)
all its assets against such risks and in such manner and to such extent as
accords with good commercial practice with regard to assets of the same kind in
comparable circumstances;

(ii)
itself in respect of any accident, damage, injury, third party loss, loss of
profits and other risks and to such an extent as accords with good commercial
practice with regard to a business of the same kind as that of the relevant
Group Company; and

(iii)
to the extent permitted by law (but subject to such reasonable exclusions and
limitations as may be approved by the Board), its directors and officers against
any liability incurred by them in the lawful performance of their duties, on
terms approved by the Board.

(b)
The Company must procure that its insurance policies are reviewed by its
insurance brokers at least once every year and that all reasonable
recommendations made by its brokers in relation to such policies are complied
with, unless the Board decides otherwise.

10.3
Anti-Corruption Policies

The Company must comply, and must procure that each Group Company complies, with
the Anti-Corruption Policies and must review them at least annually.
11.
FUNDING AND ISSUES OF SECURITIES

11.1
The Shareholders intend that the Company will be self-financing without further
recourse to Shareholders.

11.2
However, if, notwithstanding clause 11.1, the Board determines that the Company
requires further funding in order to maintain its Regulatory Capital Target
Amount the Company shall notify the Shareholders of that fact with a detailed
explanation, the amount of funding required and the date by which the funding is
required (being a minimum of fifteen Business Days from the date of the notice).
The issue shall be subject to clause 12 and the Federated Parties shall apply
for their full Rights Entitlement and all Offer Shares to be issued. BTPS may
elect not to provide its pro rata share of the funding, in which case the whole
of such funding shall be provided by the Federated Parties, all such Shares
shall be issued to Federated and BTPS's equity interest in the Company shall be
diluted accordingly. Each Shareholder agrees to exercise all of its rights (as
necessary) to approve any such allotment and issue of Shares made pursuant to
this clause 11.2.

11.3
Any such subscription of Shares shall, unless agreed between Federated and BTPS
or, failing any such agreement within 10 Business Days of the date of the notice
from the Company to the Shareholders under clause 11.2, be undertaken at the
"Fair Value" (without any discount) as determined by the independent valuer by
applying the valuation principles and following the process, methodology and
assumptions as are set out in Schedule 4 of the Put and Call Option Deed.

11.4
If the Board determines that the Company requires emergency funding and there is
insufficient time to determine fair value in accordance with clause 11.3, the
funding shall, unless otherwise agreed between Federated and BTPS, be provided
by way of a subscription of Shares, and the parties shall procure that the
process to agree or determine fair value in accordance with clause 11.3 is
undertaken as soon as practicable following such subscription and any necessary
transfers between BTPS and the Federated Parties at no cost or further issues
are made so that BTPS and the Federated Parties are in the same

 
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position economically and as regards voting rights as if the issue had taken
place at fair value in accordance with clause 11.3.
11.5
If the Board determines that additional, non-ordinary course capital is required
by the Company, any funding shall be provided by a subscription for Ordinary
Shares at the "Fair Value" (without any discount) as agreed between Federated
and BTPS or, failing any such agreement within 10 Business Days of the date of
any notice from the Company to the Shareholders under this clause 11.5, as
determined by the independent valuer by applying the valuation principles and
following the process, methodology and assumptions as are set out in Schedule 4
of the Put and Call Option Deed and otherwise on such terms as may be agreed by
the Shareholders.

11.6
Any issue of Shares under clauses 11.2, 11.4 or 11.5 shall be subject to clause
12.

11.7
Other than the obligations of the Shareholders in clause 11.2, no Shareholder is
obliged to:

(a)
contribute any funds to any Group Company; or

(b)
give any security or provide any guarantee on behalf or for the benefit of any
Group Company.

11.8
Restrictions on issues of Securities

The Company must not issue any Securities unless the issue:
(a)
is pursuant to clause 11.2, 11.4, 11.5; or

(b)
is pursuant to clause 11.9; or

(c)
has received Shareholder Approval and is made in accordance with the rights
offer process set out in clause 12.

11.9
Incentivisation of employees

The Company shall, on the Effective Date, adopt the “New LTIP” in the Agreed
Form as described in the SPA. The Board may after the Effective Date resolve
(with and subject to the approval of Shareholders) that the Company adopt
further employee share schemes or long term incentive plans in order to
incentivise employees. Shareholders' pre-emption rights in relation to an issue
of Securities carried out in accordance with any such scheme or plan shall be,
and are hereby, irrevocably waived by the Shareholders and each Shareholder
shall exercise all its rights as Shareholder (as necessary) to implement any
such arrangement.
12.
RIGHTS OFFERS

12.1
Rights offer notice

Subject to clause 12.5, if the Company proposes to issue any Shares including in
accordance with clauses 11.2, 11.4 and 11.5, it must first give written notice
to each Shareholder (an Offer Notice) as soon as reasonably practicable (if
applicable) after Shareholder Approval for that issue is given, inviting the
Shareholder to subscribe for those Shares. An Offer Notice must:
(a)
specify the aggregate number of Shares the Company proposes to offer for
subscription (the Offer Shares), the issue price per Share (the Offer Price) and
any other terms and conditions of the issue (the Offer Terms);

 
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(b)
state that, subject to the provisions of this agreement, each Shareholder is
entitled to subscribe for its Equity Proportion of the total number of Offer
Shares at the Offer Price and on the Offer Terms (Rights Entitlement);

(c)
confirm the number of Offer Shares in the Shareholder's Rights Entitlement;

(d)
specify the period for which the offer is open, which must be at least five
Business Days (the Offer Period);

(e)
state that the Shareholder may apply for more Offer Shares than its Rights
Entitlement and will be liable to subscribe for up to the number of Offer Shares
applied for if other Shareholders do not take up their full Rights Entitlement;

(f)
invite the Shareholder to apply for Offer Shares by giving written notice to the
Company no later than 5.00 pm on the last day of the Offer Period, stating the
number of Offer Shares for which the Shareholder wishes to subscribe (which may
be greater than, equal to or less than the Shareholder's Rights Entitlement);

(g)
the proposed date for completion of the issue of the Offer Shares, which must be
at least five Business Days and no more than ten Business Days after expiry of
the Offer Period (the Offer Closing Date); and

(h)
not be revoked unless otherwise decided by the Board.

12.2
Allocation of Offer Shares

(a)
Each Shareholder that applies for Offer Shares in accordance with the provisions
of this agreement and the terms of the Offer Notice (a Subscribing Shareholder)
will be issued the number of Offer Shares calculated under this clause 12.2.

(b)
If the total number of Offer Shares applied for by all Subscribing Shareholders
is less than or equal to the total number of Offer Shares, the Company must
issue to each Subscribing Shareholder the number of Offer Shares that it applied
for.

(c)
If the total number of Offer Shares applied for by all Subscribing Shareholders
is more than the total number of Offer Shares, the Company must issue all of the
Offer Shares to the Subscribing Shareholders, so far as practicable, in
proportion to the number of Shares then held by them but so that no Subscribing
Shareholder will be issued more Offer Shares than it applied for.

(d)
A Shareholder that does not apply in writing for any Offer Shares within the
Offer Period is not entitled to subscribe for any Offer Shares.

12.3
Notice of outcome of rights offer process

Within one Business Day after the end of the Offer Period, the Company must give
notice to each Subscribing Shareholder, specifying:
(a)
the number of Offer Shares to be issued to that Subscribing Shareholder (the
Subscription Shares) calculated under clause 12.2; and

(b)
the subscription price payable by that Subscribing Shareholder for its
Subscription Shares.

 
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12.4
Closing of rights offer process

On the Offer Closing Date:
(a)
each Subscribing Shareholder must pay to the Company the subscription price for
its Subscription Shares;

(b)
the Company must issue to each Subscribing Shareholder its Subscription Shares;
and

(c)
the Company must enter the name of each Subscribing Shareholder in the register
of members of the Company as holder of its Subscription Shares and execute and
deliver to each Subscribing Shareholder a share certificate representing its
Subscription Shares.

12.5
Rights offer exclusions

The provisions of clauses 12.1 to 12.4 shall not apply to any issue of Shares:
(a)
which the Shareholders have agreed in writing should be issued without complying
with the procedure set out in clauses 12.1 to 12.4; or

(b)
pursuant to any employee share schemes or long term incentive plans as envisaged
in clause 11.9.

13.
RESTRICTIONS ON DISPOSAL

13.1
Purpose of this clause

Each Shareholder:
(a)
acknowledges and agrees that the purpose of this clause 13 is to maintain the
closely held nature of the Company by restricting the way in which Shareholders
may Dispose of their Shares; and

(b)
must not enter into any arrangement, structuring device or other transaction
which is designed, directly or indirectly, to avoid the provisions of this
clause 13 or is otherwise inconsistent with the purpose of this clause 13. For
the avoidance of doubt, nothing in this clause 13 shall require any consent or
approval to be given by BTPS to any change in control (whether by share sale,
sale of all or substantially all assets, merger or otherwise) of FII.

13.2
Restrictions on Disposal of Shares

Except for a Disposal:
(a)
which is a transfer of Shares permitted by clause 13.3; or

(b)
to which the other Shareholder gives its prior written consent,

no Shareholder may Dispose of any Shares unless and until the last period for
the exercise of a “Put Option” or a “Call Option” under the Put and Call Option
Deed has expired and no such option has been exercised.
13.3
Permitted transfers

 
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Subject to clauses 13.4 and 14, a Shareholder may transfer its Shares:
(a)
on giving the other Shareholder not less than 5 Business Days' prior written
notice, to a Permitted Transferee where the transfer is of all (but not part) of
the Shareholder's Shares and the Permitted Transferee first executes and
delivers to the Company a Deed of Adherence; or

(b)
in accordance with the Put and Call Option Deed.

13.4
Retransfer by Permitted Transferee

If a Shareholder holding Shares transferred to it under clause 13.3(a) is about
to cease to be a Permitted Transferee of the transferor that transferred those
Shares to that Shareholder, it must immediately transfer all of its Shares back
to that transferor or to another Permitted Transferee of that transferor.
14.
GENERAL PROVISIONS RELATING TO ISSUE AND TRANSFER OF SHARES

14.1
Registration of issues and transfers of Shares

The Company must not issue any Shares or register the transfer of any Shares
unless:
(a)
the issue or transfer is made in accordance with this agreement and/or the Put
and Call Option Deed; and

(b)
the subscriber or transferee (if not already a party to this agreement) (the New
Party) first executes and delivers to the Company a Deed of Adherence, except
where the Shares are issued or transferred to or for the benefit of a nominee or
custodian of BTPS or any employee of the Group pursuant to an employee share
scheme or long term incentive plan, as envisaged by clause 11.9.

14.2
Acceptance of New Party as party

If a person becomes a holder of Shares, other than as a result of breach of this
agreement, and the provisions of clause 14.1 are complied with, each party:
(a)
accepts the New Party as a party to this agreement; and

(b)
agrees and acknowledges that the New Party will be entitled to the rights and
benefits of this agreement as if the New Party were named in this agreement as a
Shareholder.

14.3
Share certificates

Each Share certificate issued by the Company must include a statement that:
"Transfer and disposal of shares in the Company are subject to the restrictions
contained in the Shareholders' Agreement relating to the Company dated 2 July
2018 and the constitution of the Company."
15.
PROHIBITED ACTIVITIES

15.1
Prohibited activities

Unless Federated and BTPS otherwise agree in writing, neither Federated nor BTPS
nor their Affiliates shall, at any time during the period commencing on the
Effective Date and ending on the date two years

 
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after the date Federated (or its Permitted Transferee or successors or
assignees) or BTPS (or its Permitted Transferee or successors or assignees) (as
appropriate) ceases to hold any Shares, solicit, hire, employ, accept secondment
or redeployment of:
(a)
any Senior Employee or any sales, portfolio manager, investment professional,
advisory, stewardship or other non-administrative employee of a Group Company;
or

(b)
in the case of Federated (and its Affiliates), any such employee of BTPS (or its
Affiliates); or

(c)
in the case of BTPS (and its Affiliates), any such employee of Federated (or its
Affiliates),

provided that nothing in this clause 15.1 shall prevent either Shareholder or
its Affiliates, after that Shareholder has ceased to be a Shareholder, from
employing or accepting secondment or redeployment of any such employee who
approaches that Shareholder or Affiliate seeking employment on his or her own
initiative (without having been solicited to do so) or who responds to a bona
fide general advertisement issued by that Shareholder or Affiliate.
15.2
Acknowledgements

Each Shareholder acknowledges that:
(a)
the prohibitions in this clause 15 are no more extensive than is reasonable in
the circumstances to protect the business interests and goodwill of the Group;
and

(b)
damages alone are not an adequate remedy if any Shareholder breaches this clause
15 and, without prejudice to any other remedy available to the Company, the
other Shareholder or the Company may apply for injunctive relief if that
Shareholder breaches or threatens to breach this clause 15 or if the other
Shareholder or the Company reasonably and in good faith believes that a breach
of this clause 15 by that Shareholder is imminent.

16.
WARRANTIES

Each party warrants to each other party on the date of this agreement that each
of the following statements is true and accurate:
(a)
it is a corporation validly existing under the laws of the place of its
incorporation or organisation (as appropriate);

(b)
it has the power to execute and deliver, and to perform its obligations under,
this agreement and it has taken all necessary corporate action to authorise such
execution and delivery and the performance of such obligations;

(c)
its obligations under this agreement are legal, valid and binding in accordance
with their terms;

(d)
the execution and delivery by it of this agreement and the performance of its
obligations under it does not and will not conflict in any material respect with
or constitute a default under any provision of:

(i)
any agreement or instrument to which it is a party;

(ii)
its constitution or, in the case of BTPS, the trust deed and rules of the
Scheme; or

 
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(iii)
any law, order, judgment, award, injunction, decree, rule or regulation by which
it is bound; and

(e)
no Insolvency Event has occurred in relation to it.

17.
ANTI-CORRUPTION

Each party undertakes to each other party that:
(a)
it will not engage in any activity, practice or conduct which would contravene
or otherwise constitute an offence under any applicable anti-bribery,
anti-corruption, anti-money laundering or trade control laws, irrespective of
where such activity, practice or conduct takes place; and

(b)
to the extent that it has not already done so, it will establish and at all
times maintain in place procedures reasonably designed to prevent any Associated
Person from undertaking any conduct that would contravene or otherwise give rise
to an offence under any applicable anti-bribery and/or anti-corruption laws
(Anti-Corruption Policies).

18.
TERM AND TERMINATION

18.1
Term

This agreement takes effect on the Effective Date and continues until terminated
in accordance with clause 18.2.
18.2
Circumstances for termination

This agreement terminates:
(a)
in respect of the rights and obligations of all parties, on the earlier of:

(i)
the date of completion of the sale of BTPS' Shares to Federated pursuant to a
“Put Option” or a “Call Option”, or the right of first refusal process, in the
Put and Call Option Deed;

(ii)
the date on which the Company is wound up;

(iii)
the date on which one person becomes the beneficial owner all of the Shares; and

(iv)
the date on which all parties agree in writing to terminate this agreement; and

(b)
in respect of the rights and obligations of a Shareholder, on the date on which
that Shareholder (or any member of its group or Permitted Transferee) ceases to
hold any Shares.

18.3
Effect of termination

If this agreement terminates in respect of the rights and obligations of any
party:
(a)
except as provided in clause 18.3(c) that party is released from its obligations
to further perform this agreement;

(b)
each party retains all rights that it has against each other party in respect of
any breach of this agreement occurring before termination; and

 
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(c)
the provisions of and the rights and obligations of each party under this clause
18.3 and each of the Surviving Clauses survive termination of this agreement.

19.
CONFIDENTIALITY

19.1
Confidentiality obligations

Except as permitted by this clause 19:
(a)
each Shareholder must keep confidential:

(i)
all information made available to it by or on behalf of the Company or by its
Nominated Director under clause 9.5 (whether before, on or after the date of
this agreement and whether in writing, orally, electronically or in any other
form or medium) which relates to the past, present or future business,
operations or affairs of any Group Company;

(ii)
all information made available to it by or on behalf any other Shareholder
(whether before, on or after the date of this agreement and whether in writing,
orally, electronically or in any other form or medium) in connection with the
arrangements contemplated by this agreement; and

(iii)
the existence, terms and subject matter of, and the negotiations relating to,
this agreement,

and must not disclose or cause or permit the disclosure to any person of any
such information, or use any such information for any purpose other than
exercising or enforcing its rights or performing its obligations under this
agreement or monitoring and making decisions regarding its investment in the
Company; and
(b)
the Company must keep confidential:

(i)
all information made available to it by or on behalf of any Shareholder (whether
before, on or after the date of this agreement and whether in writing, orally,
electronically or in any other form or medium) in connection with the
arrangements contemplated by this agreement; and

(ii)
the existence, terms and subject matter of, and the negotiations relating to,
this agreement,

and must not disclose or cause or permit the disclosure to any person of any
such information, or use any such information for any purpose other than
conducting the Business or exercising its rights or performing its obligations
under this agreement.
19.2
Excluded information

Clause 19.1 does not apply to any information which:
(a)
is in or comes into the public domain, except through a breach of this clause 19
or through a breach by any person of any other obligation of confidentiality; or

(b)
at the time it was disclosed by one party to another was already in the lawful
possession of the second party and not held by the second party subject to an
obligation of confidentiality.

 
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19.3
Disclosure to Affiliates or Representatives

Nothing in clause 19.1 prevents any party from disclosing information to any of
its Affiliates or Representatives if:
(a)
the information needs to be disclosed to that Affiliate or Representative:

(i)
to enable that party to exercise or enforce its rights or perform its
obligations under this agreement; or

(ii)
to enable a Shareholder to monitor and make decisions regarding its investment
in the Company; or

(iii)
in respect of BTPS, where such disclosure is required or desirable to perform
BTPS's obligation as trustee of the Scheme; and

(b)
before disclosure is made that party has informed the relevant Affiliate or
Representative in writing that the information is confidential and must only be
used for the purpose for which it was disclosed.

A party that discloses information under this clause 19.3 must ensure that each
of its Affiliates or Representatives to whom information is so disclosed
strictly complies with that party's obligations under this clause 19 as if those
obligations were imposed directly on the relevant Affiliate or Representative.
19.4
Required disclosure

Nothing in clause 19.1 prevents a party or any of its Affiliates or
Representatives from disclosing information if disclosure is required by law,
rule or regulation (except to the extent the requirement can be excluded or
limited by contract or by a confidentiality obligation), any tribunal or court
of competent jurisdiction, any Government Agency or the listing rules of any
recognised securities exchange. Before any disclosure is made under this clause
19.4, the party that is, or whose Affiliate or Representative is, required to
make disclosure must, to the extent permitted by law and the relevant disclosure
requirement:
(a)
notify the party that made the relevant information available to it (the
Discloser) as soon as reasonably practicable after it becomes aware that
disclosure is required;

(b)
take all steps reasonably required by the Discloser to prevent or restrict the
disclosure of that information; and

(c)
co-operate with the Discloser regarding the timing and content of such
disclosure.

For the purposes of this clause 19.4, where the information required to be
disclosed is the existence, terms or subject matter of, or the negotiations
relating to, this agreement, references to the Discloser are taken to be
references to each other party.
19.5
Legal proceedings

Nothing in clause 19.1 prevents a party from disclosing information to the
extent required to enable that party to enforce the provisions of this agreement
or for the purpose of defending any proceedings brought against that party.

 
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20.
TAX MATTERS

Unless the Shareholders otherwise expressly agree in writing, the Shareholders
must procure that all of the Company's trading losses and all other amounts
eligible for relief for taxation are carried forward by the Company and not
surrendered (wholly or partly) to the Shareholders.
21.
NOTICES

21.1
Manner of giving notice

Any notice or other communication to be given under this agreement must be in
writing (which includes email) and may be delivered by hand or sent by post or
email to the party to be served as follows:
(a)
to the Company at:

Address:    Sixth Floor, 150 Cheapside, London, England, EC2V 6ET
Email:    Joseph.Kagan@hermes-investment.com
For the attention of:    Head of legal;
(b)
to BTPS at:

Address:    One America Square, 17 Crosswall, London, England, EC3N 2LB
Email:    G.Haselden@btps.co.uk
For the attention of:    Head of legal; and
(c)
to the Federated Parties at:

Address:    Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania, USA 15222 3779
Email:    pgermain@federatedinv.com
For the attention of:    General Counsel with a reference to Project Conduit,
or at any such other address or email address notified for this purpose to the
other parties under this clause 21. Any notice or other communication sent by
post must be sent by prepaid ordinary post (if the country of destination is the
same as the country of origin) or by airmail (if the country of destination is
not the same as the country of origin).
21.2
When notice given

Any notice or other communication is deemed to have been given:
(a)
if delivered by hand, on the date of delivery; or

(b)
if sent by post, on the third day after it was put into the post (for post
within the same country) or on the fifth day after it was put into the post (for
post sent from one country to another); or

 
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(c)
if sent by email, upon the generation of a receipt notice by the recipient's
server or, if such notice is not so generated, upon delivery to the recipient's
server,

but if the notice or other communication would otherwise be taken to be received
after 5.00 pm or on a Saturday, Sunday or public holiday in the place of receipt
then the notice or communication is taken to be received at 9.00 am (local time
at the place of receipt) on the next day that is not a Saturday, Sunday or
public holiday in the place of receipt.
21.3
Proof of service

In proving service of a notice or other communication, it is sufficient to prove
that delivery was made or that the envelope containing the communication was
properly addressed and posted either by prepaid post or by prepaid airmail or
that the email was properly addressed and transmitted by the sender's server
into the network and there was no apparent error in the operation of the
sender's email system (as the case may be).
21.4
Documents relating to legal proceedings

This clause 21 does not apply in relation to the service of any claim form,
notice, order, judgment or other document relating to or in connection with any
proceedings, suit or action arising out of or in connection with this agreement.
22.
PAYMENTS

Unless otherwise expressly stated (or as otherwise agreed in the case of a given
payment), each payment to be made under this agreement must be made in cash in
pounds sterling by transfer of the relevant amount into the relevant account on
the date (and, if applicable, at or before the time) the payment is due for
value on that date and in immediately available funds. The relevant account for
a given payment is such account as the receiving party may, not less than three
Business Days before the date that payment is due, specify by giving notice to
the relevant paying party or parties for the purpose of that payment. With
respect to any payment or contribution obligation, Federated shall pay or
contribute, and FII shall procure that Federated shall pay or contribute, the
amounts payable or to be contributed when due, and each of the Federated Parties
shall have a direct obligation to pay or contribute the sum due, but payment or
contribution by either Federated Party of the full sum due will satisfy the
obligations of both Federated Parties to make such payment or contribution.
23.
GENERAL

23.1
Amendment

This agreement may only be amended in writing and where the amendment is signed
by all the parties.
23.2
Assignment

(a)
Subject to clause 23.2(b), this agreement shall be binding upon and endure for
the benefit of the successors and assignees of the parties and, subject to any
succession or assignment permitted by this agreement, any such successor or
assignee of any party shall in its own right be able to enforce any term of this
agreement.

(b)
None of the parties nor their successors and assignees shall be entitled to
assign, transfer, charge or deal in any way with the benefit of their rights or
obligations under this agreement without the prior written consent of the other
parties, except (i) for an assignment or transfer by a Shareholder to a

 
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Permitted Transferee which is made on condition that the relevant rights or
obligations be reassigned or transferred to that Shareholder (or another
Permitted Transferee of that Shareholder) if the transferee ceases to be a
Permitted Transferee of the transferor, and (ii) FII may freely assign this
agreement in connection with a sale of all or substantially all of its assets, a
merger or consolidation transaction of FII, so long as the buyer or surviving
entity agrees in writing to be bound by this agreement. If an assignment takes
place pursuant to this clause 23.2, the other parties shall be under no greater
liability under this agreement than if the assignment had not taken place and,
as between BTPS and the Federated Parties, the parties may nevertheless enforce
this agreement against the other parties as if the assignment had not occurred.
For the avoidance of doubt, nothing in this clause 23.2 shall require any
consent or approval to be given by BTPS or the Company to any change in control
(whether by stock sale, asset sale, merger or otherwise) of FII.
23.3
Consents and approvals

Except as otherwise expressly provided in this agreement, a party may give or
withhold its consent to, or approval of, any matter referred to in this
agreement in its absolute discretion. A party that gives its consent to, or
approval of, any matter referred to in this agreement is not taken to have made
any warranty or representation as to any matter or circumstance connected with
the subject matter of that consent or approval.
23.4
Costs

Except as otherwise expressly provided in this agreement, each party must pay
the costs and expenses incurred by it in connection with entering into and
performing its obligations under this agreement.
23.5
Entire agreement

This agreement and the Put and Call Option Deed contain the entire agreement
between the parties relating to the transactions contemplated by this agreement
and supersede all previous agreements, whether oral or in writing, between the
parties relating to these transactions. Except as required by statute, no terms
must be implied (whether by custom, usage or otherwise) into this agreement. In
entering into this agreement, none of the parties has relied on any
representation, statement or promise not expressly set out herein, and each
party waives any rights in respect of any such representation, statement or
promise which may have been made, provided that this clause 23.5 shall not
affect any right or remedy in respect of fraud or fraudulent misrepresentation.
23.6
Execution in counterparts

This agreement may be executed in any number of counterparts and any party may
enter into this agreement by executing and delivering a counterpart. Each
counterpart constitutes the agreement of the party who has executed and
delivered that counterpart. Faxed or scanned signatures are taken to be valid
and binding to the same extent as original signatures.
23.7
Exercise and waiver of rights

The rights of each party under this agreement:
(a)
may be exercised as often as necessary;

(b)
except as otherwise expressly provided by this agreement, are cumulative and not
exclusive of rights and remedies provided by law; and

 
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(c)
may be waived only in writing and specifically,

and delay in exercising or non-exercise of any such right is not a waiver of
that right.
23.8
No partnership or agency

Nothing in this agreement or the Constitution will be deemed to constitute a
partnership between the parties or, unless this agreement expressly provides
otherwise, constitute any party the agent of any other party for any purpose.
23.9
BTPS as trustee

BTPS is entering into this agreement solely in its capacity as trustee of the
Scheme and all rights and obligations under this agreement and the Transaction
Documents shall be held on trust by BTPS for the Scheme and BTPS shall have no
liability under this agreement or the Transaction Documents except to the extent
those liabilities are met from assets of the Scheme.
23.10
BTPS acting through custodian

Any person appointed as custodian of the Scheme may exercise or perform all
rights and obligations of BTPS under this agreement and any such exercise or
performance shall be deemed to be that of BTPS. For these purposes Britel Fund
Trustees Limited, a company incorporated in England with number 1687153, is a
custodian of the Scheme.
23.11
Severability

The provisions contained in each clause are enforceable independently of each
other clause and the validity and enforceability of any clause will not be
affected by the invalidity or unenforceability of any other clause.
23.12
No Third Party Rights

A person who is not a party to this agreement may not enforce any of its terms
under the Contracts (Rights of Third Parties) Act 1999.
23.13
Parties' Obligations

Without prejudice to clause 22, the obligations of the Federated Parties under
this agreement shall be several not joint or joint and several, and shall be
considered direct obligations of each Federated Party, enforceable fully and
directly against each Federated Party without the need to join the other
Federated Party or to pursue remedies first against the other Federated Party.
Each of FII and BTPS undertakes that where any obligation in this agreement is
expressed to apply to any Affiliate of FII (including Federated) or BTPS (as the
case may be), it will procure that such entity complies with such obligations as
if it had been a party to this agreement.
24.
GOVERNING LAW AND JURISDICTION

24.1
Governing law of this agreement

This agreement and any non-contractual obligations arising out of or in
connection with it are governed by English law.

 
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24.2
Jurisdiction

The English courts have exclusive jurisdiction to settle any dispute, claim or
controversy arising out of or in connection with this agreement (including a
dispute, claim or controversy relating to any non-contractual obligations
arising out of or in connection with this agreement) and the parties submit to
the exclusive jurisdiction of the English courts.
24.3
Waiver of objections

For the purposes of clause 24.2, each party waives any objection to the English
courts on the grounds that they are an inconvenient or inappropriate forum to
settle any Dispute.
24.4
Service of process agent

Without prejudice to any other method of service permitted by law, FII
irrevocably appoints Federated Investors (UK) LLP of 5th floor, One New Change,
London EC4M 9AF (marked for the attention of General Counsel) as its agent in
England for service of process in relation to any Dispute.
24.5
Alternative service of process agent

If any person appointed as process agent under clause 24.4 is unable for any
reason to so act, FII must immediately (and in any event within ten Business
Days of the event taking place) appoint another agent on terms acceptable to
BTPS.
24.6
Failure of notify by process agent

Each party agrees that failure by a process agent to notify it of any process
will not invalidate the relevant proceedings.
24.7
Other methods of service allowed by law

This clause 24 does not affect any other method of service allowed by law.
IN WITNESS of which this agreement has been executed as a deed and has been
delivered on the date stated at the beginning of this agreement.

 
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Schedule 1

CAPITAL STRUCTURE
Name of holder
Ordinary Shares held as at the Effective Date
Equity Proportion as at the Effective Date (%)
BTPS
24,659,578
29.5
Federated
50,155,076
60
Management shareholders
8,777,138
10.5
Totals:
83,591,792
100%

 
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SCHEDULE 2    
BOARD MEETINGS
1.
Frequency of meetings

The Board must meet as necessary to discharge its duties but in any case no less
frequently than quarterly. Any Director may call a meeting of the Board.
2.
Notice

Except in the case of an emergency (in which case the notice convening the
meeting must indicate the nature of, and the reasons for, the emergency), at
least five Business Days' written notice of each meeting of the Board must be
given to each Director by the chairman, the secretary or any Director.
3.
Agenda and Meeting Materials

3.1
A notice of a Board meeting must be accompanied by an agenda of all the business
to be transacted at the meeting. Any matter not on the agenda may not be raised
at the meeting for a vote unless the BTPS Nominated Director and a Federated
Nominated Director so agree.

3.2
The Company shall provide one Director appointed by each Shareholder with copies
of Board meeting materials sufficiently in advance (taking into account relevant
facts and circumstances at the time) to afford each such Director with a
reasonable opportunity to review and comment on such Board materials, and the
Company will in good faith consider and, as Company management considers
appropriate, incorporate into such materials any comments received from each
such Director prior to the Board meeting.

3.3
The Company shall provide such information or materials in respect of the
Company as may be reasonably requested by each Shareholder in respect of any
matter to be discussed at a Board meeting.

4.
Location

Each meeting of the Board must be held in the United Kingdom at the place set
out in the notice of meeting. One meeting per year may be held outside the
United Kingdom if agreed by a Federated Director and the BTPS Director.
5.
Use of technology

5.1
The Board may conduct meetings by telephone or by any other means which will
enable each Director:

(a)
to hear (or otherwise receive real-time communications made by) each of the
other Directors participating in the meeting; and

(b)
to address (or otherwise communicate in real time with) all of the other
Directors participating in the meeting simultaneously,

even if all the Directors are not physically present in the same place.
5.2
A Board meeting held in this manner is taken to be held at the place where the
chairman of the meeting is physically present or at such other place, where at
least one Director is physically present for the duration of the meeting, as the
chairman of the meeting may decide.

 
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5.3
If a technological link fails, the Board meeting will be adjourned until the
failure is rectified.

6.
Quorum

6.1
Unless Federated and BTPS otherwise agree in writing, the quorum for a meeting
of the Directors is the presence (including participation in accordance with
paragraph 5 above) of at least four Directors, of whom at least two must be
Federated Nominated Directors, one must be an Independent Director and one must
be the BTPS Nominated Director.

6.2
For the purposes of determining whether a quorum is present, an alternate
Director who is present at the meeting is to be counted as a Director for each
Director on whose behalf the alternate is attending the meeting.

6.3
If a quorum is not present at a Board meeting within 60 minutes of the time
appointed for the start of the meeting, the meeting will be adjourned to the
same time and place two Business Days thereafter. If a quorum is not present at
the reconvened meeting within 60 minutes of the time appointed for the start of
the meeting, those present will be taken to constitute a quorum for the purposes
of that meeting only.

7.
Voting rights

7.1
At each Board meeting, any resolution put to a vote shall be decided by a
majority of votes. Subject to paragraph 7.2 below, each Director who is eligible
to vote on a resolution in accordance with the Constitution shall have one vote.

7.2
In addition to a Director's individual vote, a Director will have the right to
vote on behalf of each Director in respect of whom he or she is an alternate
Director where his or her appointer is not present at the meeting.

7.3
In the case of an equality of votes, the chairman will not have a second or
casting vote.

8.
Board decisions

All resolutions proposed at meetings of the Directors or proposed by way of
Directors' written resolutions must be decided by a simple majority of votes
cast, calculated in accordance with and subject to paragraph 7 above.
9.
Written resolutions

The Directors may vote on a resolution without a meeting of the Directors being
held if all the Directors entitled to vote on the resolution sign or indicate
their approval of, a document containing a statement that they are in favour of
the resolution set out in the document. The document may be in counterparts,
signed or approved by one or more Directors, and may be circulated by fax or
email.

 
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SCHEDULE 3    
SHAREHOLDER MEETINGS
1.
Frequency and location of meetings

Subject to any relevant statute or the general law, the Board may call a meeting
of the Shareholders at a time and place the Board resolves.
2.
Quorum

2.1
The quorum for a meeting of the Shareholders is the presence in person, or by
proxy, representative or attorney, of at least two Shareholders, of whom at
least one must be or represent BTPS and at least one must be or represent
Federated.

2.2
If a quorum is not present at a meeting of the Shareholders within 60 minutes of
the time appointed for the start of the meeting, the meeting will be adjourned
to the same time and place two Business Days thereafter. If a quorum is not
present at the reconvened meeting within 60 minutes of the time appointed for
the start of the meeting, then any resolution passed by the members present
shall be as valid and effectual as if it had been passed at a general meeting of
the Company duly convened and held.

3.
Voting rights

The voting rights of the Shareholders are as follows:
(a)
on a show of hands, each Shareholder is entitled to one vote; and

(b)
on a poll, each Shareholder is entitled to one vote for each Share held by that
Shareholder.

4.
Shareholder decisions

A Shareholder resolution may only be carried:
(a)
subject to any relevant statute or the general law and clause 6.3, if it passed
by a majority of votes entitled to be cast on the resolution; and

(b)
if the passing of the resolution and the circumstances surrounding it are
consistent with the terms of this agreement.

5.
Written resolutions

Subject to clause 6.3, the Shareholders may pass a resolution without a meeting
of the Shareholders being held if all the Shareholders entitled to vote on the
resolution sign, or indicate their approval of, a document stating that they are
in favour of the resolution set out in the document. The document may be in
counterparts, signed or approved by one or more Shareholders, and may be
circulated by email.

 
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SCHEDULE 4    
RESERVED MATTERS
MATTERS REQUIRING SHAREHOLDER APPROVAL
1.    Constitution
Amend or repeal the constitution of the Company or adopt a new constitution.
2.    Issue of Securities
Issue any securities, grant any person rights to be issued any securities or
vary or exercise any discretion in relation to the terms of issue of any
securities of any Group Company (other than an issue of securities by one Group
Company to another or in accordance with clause 11.2, 11.4, 11.5 or 11.9 or as
otherwise contemplated by any Transaction Document).
For the avoidance of doubt: (a) if Securities are to be issued in accordance
with the terms of this agreement and a Shareholder does not participate in such
issuance (including in respect of any issue of Securities pursuant to clause
11.2, 11.4 and clause 11.5), then its equity interest in the Company shall be
diluted accordingly; and (b) the approval of Shareholders shall be required to
the creation of any employee share scheme or long term incentive plan (other
than the New LTIP in the Agreed Form to be adopted on the Effective Date) which
may require the issue of shares, or the grant of rights to acquire shares, in
the capital of the Company, but no such approval shall be required to the issue
or award of such shares or rights pursuant to any such plan or scheme which has
been so approved, including the New LTIP.

Following adoption of the New LTIP on the Effective Date as contemplated in
clause 11.9, make any material amendment to the terms of the New LTIP as so
adopted.
3.    Changes to capital structure
Purchase, redeem or otherwise reorganise the Company's share capital, including
by way of reduction of capital, buy-back or redemption of securities, conversion
of securities from one class to another or consolidation and subdivision of
shares.
For the avoidance of doubt, if Securities are to be issued in accordance with
the terms of this agreement and a Shareholder does not participate in such
issuance (including in respect of any issue of Securities pursuant to clause
11.2, 11.4 and clause 11.5), then its equity interest in the Company shall be
diluted accordingly.
4.    Creation of security
Create or redeem any mortgage, charge, debenture or other security or
encumbrance over any Group Company or assets other than a security interest
arising or created in the ordinary course of business or by operation of law.
5.    Insolvency or winding-up
Appoint any administrator, liquidator, provisional liquidator, receiver,
receiver and manager or equivalent officer to the relevant Group Company or take
any step to dissolve or wind up the relevant Group Company (other than: (i)
where the board of the relevant Group Company resolves that such a step should
be taken in circumstances where the directors (having taken appropriate
professional advice) hold a bona fide belief that the relevant Group Company is
insolvent; (ii) as part of a bona fide solvent restructuring; or (iii) where the
relevant Group Company is dormant or has net assets below £50,000).

 
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6.    Transactions with Shareholders
Enter into transactions, agreements or arrangements or vary, waive or amend any
agreement, in each case with an annual cost in excess of £250,000, between a
Group Company and any Shareholder or its Affiliates, other than in accordance
with clause 11.2 or clause 11.4 or clause 11.5 or in respect of any distribution
agreements entered into in the ordinary course of business and on arm's length
terms.
Enter into transactions, agreements or arrangements or vary, waive or amend any
agreement between a Group Company and any Shareholder or its Affiliates, other
than in accordance with clause 11.2 or clause 11.4 or clause 11.5, which are (i)
not on arm's length terms, or (ii) involve the recharge or any central or group
costs by a Shareholder or its Affiliate to a Group Company.
7.    Activities of the Group
Start an additional line of business (in addition to the Group's two existing
principal lines of business, investment management and stewardship, as at the
Effective Date) that is outside the scope or nature of the Business.
Cease either of the existing principal lines of business carried on by the Group
as at the Effective Date.
For the avoidance of doubt, decisions including those relating to starting,
liquidating, merging or divesting individual funds, accounts or other products,
or related strategies, or expanding or reducing distribution territories,
jurisdictions or methods, among other things, will not constitute reserved
matters for the purposes of this Schedule 4.
8.    Acquisitions
Acquire any shares or other securities in any body corporate, trust or other
entity (other than in the ordinary course of business), or acquire any interest
in or all or substantially all of the assets of any business (other than in the
ordinary course of business), in each case with a value in excess of
£20,000,000, and in each case other than from another Group Company (a
Material Business Acquisition).
9.    Sale of the Business
Sell or transfer all or a material part of the Business whether by way of sale
of shares, assets, business or some other arrangement, in each case where the
value of such Business or material part of the Business is in excess of
£10,000,000, and whether by a single transaction or series of transactions,
related or not (a Material Business Disposal).
10.    Joint ventures
Enter into, or terminate any joint venture or partnership arrangement with a
value in excess of £10,000,000.
11.    Listing
Take steps to list any Securities of any Group Company on a stock exchange or
publicly traded market.
12.    Borrowings
Enter into any new borrowing facility or issue any loan note, bond or similar
debt instrument in excess of £1,000,000.
13.    ESG
Make any material changes to the ESG Principles other than ordinary course
amendments and evolution which are in alignment with the high environmental,
social and governance standards the Group applies.
14.    Lendings
Make any loan or advance in excess of £250,000 (other than credit given in the
ordinary course of business, or loans or advances to employees in the ordinary
course of business, or loans to other Group Companies).

 
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15.    Branding
Change the branding of the Group's services and / or products from "Hermes"
provided that the Board may change such branding without approval from
Shareholders (a) to incorporate the name "Federated" into such branding, (b) in
respect of Group products and services offered or sold in the United States or
its territories.
16.    Fiscal Year
Alter the accounting reference date/financial year end of any Group Company
(except insofar as to comply with applicable accounting standards or applicable
law or, with the consent of BTPS not to be unreasonably withheld, to harmonise
the Group Company's financial year with that of FII).
17.    Authorisation, agreement or negotiation
Authorise or agree to do any of the matters referred to in this Schedule 4.

 
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SCHEDULE 5    
INFORMATION RIGHTS

 
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PART 1    
ACCOUNTS AND PERIODIC ACCOUNTING
Reporting required
Timing
•
Quarterly management accounts of the Group, such accounts:
(a)    to include a consolidated income statement, statement of financial
position and cash flow statement for the Group broken down according to the
principal divisions of the Group from time to time;
(b)    to refer to any material matter occurring in or relating to the period in
question;
(c)    to include a comparison of all such information with the projections and
forecasts in the relevant Budget and with the corresponding information for the
same period in the preceding year, together with a statement of any material
variation from the Budget;
(d)    to itemise all material transactions referred to in the statement of
projected capital expenditure included in the relevant Budget and entered into
by the Group during that period; and
(e) to include a commentary by the Chief Executive Officer and chief financial
officer on the state of the business and finances of the Group.
Draft or estimated reporting to be provided within 15 days of the end of the
relevant quarter.
Final reporting to be provided within 45 days of the end of the relevant
quarter.

2.    The audited consolidated annual financial statements and annual report of
the Group for each Financial Year.
Within 120 days of the end of the relevant Financial Year.
3.    Budget for each Financial Year.
Within 20 days of adoption or any material amendment.

 
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PART 2    
OTHER INFORMATION
Information required
1.    Notice of any event, occurrence or change (including any applicable
regulatory or legal development or change) which has or could reasonably be
expected to have a material effect (positive or negative) on the business,
assets, liabilities, financial or trading position, profitability or prospects
of the Group, taken as a whole.
2.    Any information and assistance reasonably requested by BTPS for the
purpose of reporting of the fair value the Group on 30 June and 31 December in
each year within the time periods reasonably specified by BTPS.
3.    Notice of any pending, threatened or expected material litigation, claim
or other proceedings involving any Group Company.
4.    Any information and assistance reasonably requested by a Shareholder in
connection with the material contracts of the Group and notice of any expected
termination, avoidance or recession of any such material contract.
5.    Notice of any offer received from a third party that could reasonably be
expected to lead to a disposal of all the Shares or the whole or a substantial
part of the undertaking or assets of the Group.
6.    Such other information relating to the business or affairs of the Group as
any Shareholder may from time to time reasonably request, including such
information as may be required by any Shareholder for the purposes of its
regulatory or governmental reporting requirements or its legal obligations.

 
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SCHEDULE 6    
FORM OF DEED OF ADHERENCE
THIS DEED is made on l
BY: l of l (the New Party).
IN FAVOUR OF: Those persons specified in paragraph 4 of this deed.
BACKGROUND:
(A)
The New Party proposes to [purchase] l shares in the capital of Hermes Fund
Managers Limited (the Company).

(B)
This agreement is made by the New Party in compliance with clause 14.1 of a
shareholders' agreement dated 2 July 2018 made between the Company, BT Pension
Scheme Trustees Limited, Federated Holdings (UK) II Limited and Federated
Investors, Inc. (the Shareholders' Agreement).

(C)
The New Party acknowledges that:

(a)
any provision in the Shareholders' Agreement which imposes a detriment on a
party in breach:

(i)
protects the legitimate interests of the other party in the enforcement of the
obligation breached; and

(ii)
is not out of all proportion to those legitimate interests; and

(b)
it has been properly advised in relation to this this deed of adherence.

THIS DEED WITNESSES as follows:
1.
The New Party confirms that it has been supplied with a copy of the
Shareholders' Agreement.

2.
The New Party has agreed to purchase from [insert seller party details] l shares
in the capital of the Company at a purchase price of l per share and agrees to
become a member of the Company and to hold the shares subject to the
Shareholders' Agreement and the constitution of the Company.

3.
The New Party undertakes to be bound by the Shareholders' Agreement in all
respects as if the New Party was a party to the Shareholders' Agreement and
named in it as a Shareholder and to observe and perform all the provisions and
obligations of the Shareholders' Agreement applicable to or binding on a
Shareholder under the Shareholders' Agreement insofar as they fall to be
observed or performed on or after the date of this deed.

4.
This deed is made for the benefit of:

(a)
the parties to the Shareholders' Agreement; and

(b)
every other person who after the date of the Shareholders' Agreement (and
whether before or after the execution of this deed) assumes any rights or
obligations under the Shareholders' Agreement or accedes to it.

 
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5.
The address and email address of the New Party for the purposes of clause 21 of
the Shareholders' Agreement is as follows:

Address:    l
Email:    l
For the attention of:    l.
6.
This deed and any non-contractual obligations arising out of or in connection
with it are governed by the law of England.

7.
Any Dispute arising out of or in connection with this deed must be settled in
accordance with clause 24 of the Shareholders' Agreement, which is deemed to be
incorporated in full into this deed.

IN WITNESS of which this deed has been executed and has been delivered on the
date which appears first on page 1.

EXECUTED AS A DEED by [COMPANY NAME]
)
)
 
 
 
 
_______________________________________
 
_______________________________________
Signature of director
 
Signature of [director]/[company secretary][witness]
 
 
 
_______________________________________
 
_______________________________________
Name of director
 
Name of [director]/[company secretary][witness]

 
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SCHEDULE 7    
ESG PRINCIPLES
ESG Principles means the Responsible Investment Principles applied by the Group
as at the date of this agreement and the Hermes Pledge the Group applied to its
own business as at the date of this agreement and with any ordinary course
amendments and evolution of those policies and principles which are in alignment
with the high environmental, social and governance standards the Group applies.
Responsible Investment Principles means:
Principles derived from the United Nations Principles for Responsible Investment
(UNPRI) whereby ESG Factors are incorporated by a fund manager into its
investment analysis and decision-making processes; into active ownership
policies and practices; into the disclosures sought from the entities into which
investments are made; and are adopted in the operation and management of its own
business and its engagement with the investment industry more generally.
By way of example, the Company adopts a responsible investment approach that
encompasses systematic consideration of a range of non-financial factors
alongside more traditional financial analysis of cash-flows and P/E ratios. It
involves the incorporation of longer-term risk factors including a company's
relationship with its stakeholders as well as its impact, through both its
operations and the products and services it offers, on the environment and wider
society. It also necessitates recognising the importance of the long-term health
and stability of the markets in which it invests.
ESG Factors means:

Environmental, social and governance factors (ESG). Examples of ESG factors
include (1) Environmental: climate change, greenhouse gas (GHG) emissions,
resource depletion, including water, waste and pollution, deforestation (2)
Social: working conditions, including slavery and child labour, local
communities, including indigenous communities, conflict, health and safety,
employee relations and diversity (3) Governance: executive pay, bribery and
corruption, political lobbying and donations, board diversity and structure, and
tax strategy. It is not possible to provide an exhaustive list of ESG factors as
the implications of "non-financial" influences on long-term investment prospects
continually evolves and is influenced by both industry, geography and asset
class.
By way of example, in operating its business and in the management of assets on
behalf of clients, the Company recognises that companies are not abstract
entities but are composed of people and operate within communities. It is
self-evident therefore that companies have responsibilities towards those
individuals whom they employ as well as the communities in which they operate;
both are rich sources of capital for a company but need to be managed with
integrity. The observance of basic human and labour rights, developing the full
potential and productivity of human capital and effectively combating bribery
and corruption are essential for the long-term sustainability of companies and
ultimately maintaining their license to operate.

 
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SCHEDULE 8    
DEFINITIONS AND INTERPRETATION
1.
Definitions

In this agreement:
Affiliate means:
(a)
in respect of any individual:

(i)
any Relative of that individual;

(ii)
any entity Controlled by that individual or one or more Relatives of that
individual;

(iii)
the executor of that individual's estate; and

(iv)
any trust for the benefit of that individual or one or more Relatives of that
individual;

(b)
in respect of any entity, a second entity that:

(i)
Controls the first entity;

(ii)
is under the Control of the first entity; or

(iii)
is under the Control of a third entity that Controls the first entity;

(c)
in respect of a Nominated Director:

(i)
any Affiliate within the meaning of paragraph (a) above; and

(ii)
the Nominated Director's Appointer or any of its Affiliates within the meaning
of paragraph (a) above; and

(d)
in respect of any body corporate:

(i)
any Affiliate within the meaning of paragraph (b) above; and

(ii)
any shareholder or director of that body corporate;

(e)
in respect of BTPS also includes any replacement or additional trustee of the
Scheme, any custodian of the Scheme and any Affiliate within the meaning of
paragraph (b) of such replacement or additional trustee or custodian;

Agreed Form means, in relation to any documents, the form of that document which
is initialled for the purposes of identification by or on behalf of each of the
parties;
Anti-Corruption Policies has the meaning given in clause 17;
Appointer means, in relation to a Nominated Director, the person who appointed
that Director under clause 5.1;

 
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Associated Person means, in relation to a body corporate, a person (including an
employee, agent or Subsidiary of that body corporate) who performs services for
or on behalf of that body corporate;
Beneficiary means BTPS;
Board means the board of directors of the Company;
BTPS Nominated Director has the meaning given in clause 5.1(b) and shall include
any alternate of that Director;
Budget means the budget for the Group for a Financial Year set under clause 8;
Business means the asset management and advisory business and stewardship
business of the Company and its Affiliates conducted in a manner that is
consistent with the ESG Principles, and any alternation or development of such
businesses as may be approved from time to time in accordance with this
agreement;
Business Day means a day other than a Saturday, Sunday or public holiday on
which banks are generally open in London and New York for normal business;
Chief Executive Officer means the chief executive officer of the Group from time
to time appointed in accordance with clause 6.2;
Constitution means the constitution of the Company in Agreed Form, as amended
from time to time;
Control means:
(a)
owning or controlling (directly or indirectly) more than 50% of the voting share
capital of the relevant undertaking; or

(b)
being able to direct the casting of more than 50% of the votes exercisable at
general meetings of the relevant undertaking on all, or substantially all,
matters; or

(c)
having the right to appoint or remove directors of the relevant undertaking
holding a majority of the voting rights at meetings of the board on all, or
substantially all, matters; or

(d)
having the power to determine the conduct of business affairs of an undertaking
(whether through ownership of equity interest or partnership or other ownership
interests, by contract or otherwise),

and Controlled and Controlling Interest shall have a corresponding meaning;
Deed of Adherence means a deed of adherence to this agreement to be executed by
any transferee of a Share substantially in the form set out in Schedule 6;
Director means a director of the Company;
Discloser has the meaning given in clause 19.4;
Dispose means, in relation to any Share:
(a)
to sell, transfer, assign, swap, surrender, gift, declare a trust over, or
otherwise dispose of, deal with or Encumber, any legal or equitable interest in
the Share;

 
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(b)
to do anything which has the effect of placing a person in substantially the
same position as that person would have been in, had any of the things mentioned
in paragraph (a) above been done; or

(c)
to authorise, agree to or attempt to do any of the things mentioned in paragraph
(a) or (b) above,

and the term Disposal has a corresponding meaning;
Dispute means any dispute, claim, difference or controversy arising out of,
relating to or having any connection with this agreement, including any dispute
as to its existence, validity, interpretation, performance, breach or
termination or the consequences of its nullity and any dispute relating to any
non-contractual obligations arising out of or in connection with it;
Dividend includes a dividend or other distribution in kind or in cash;
Effective Date means the date on which this agreement takes effect in accordance
with clause 3;
Encumbrance means a mortgage, charge (fixed or floating), pledge, lien, option,
right to acquire, right of pre-emption, assignment by way of security or trust
arrangement for the purpose of providing security or other security interest of
any kind (including any retention arrangement), and the term Encumber has a
corresponding meaning;
Equity Proportion means, in relation to a Shareholder, the total number of
Shares held by that Shareholder from time to time divided by (i) the total
number of Shares in issue from time to time plus (ii) where such rights entitle
the holder thereof to participate in an offer of new Shares, the aggregate
number of Shares in respect of which rights to subscribe have been granted or
allocated (whether conditionally or unconditionally) to or for the benefit of,
or reserved for, management or employees of the Group, expressed as a
percentage;
ESG Principles has the meaning given in Schedule 7;
FCA means the UK Financial Conduct Authority and any successor regulatory
authority from time to time;
FCA Handbook means the handbook of rules and guidance maintained by the FCA from
time to time;
Federated Distribution Agreements means the distribution agreements, each of
which shall be on arm's length terms, to be entered into on or after the
Effective Date between the Company or other Group Companies on the one hand and
members of the FII group on the other, for the distribution by members of the
FII group of products and services of Group Companies;
Federated Nominated Directors has the meaning given in clause 5.1(c) and shall
include any alternate of any such Director;
Financial Year means a period starting on 1 January of any year and ending on 31
December of the same year;
Government Agency means any government, any department, officer or minister of
any government and any governmental, semi-governmental, administrative,
regulatory, fiscal, judicial or quasi-judicial agency, authority, board,
commission, tribunal or entity;

 
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Group means the Company and its Subsidiaries from time to time and Group Company
means any of them;
group means an Ultimate Holding Company and its Subsidiaries and group member
has a corresponding meaning;
Hermes Distribution Agreements means the distribution agreements, each of which
shall be on arm's length terms, to be entered into on or after the Effective
Date between the Company or other Group Companies on the one hand and members of
the FII group on the other, for the distribution by Group Companies of products
and services of the FII group;
Holding Company has the meaning given in paragraph 2 below;
Independent Directors means the directors appointed in accordance with clauses
5.1(f) and 5.3;
Initial Budget means the initial budget of the Group for the 2018 Financial Year
in the Agreed Form;
Insolvency Event means, in respect of any person:
(a)
the person is unable to, or states that it is unable to, pay its debts as they
fall due or stops or threatens to stop paying its debts as they fall due;

(b)
any indebtedness of the person is subject to a moratorium;

(c)
a liquidator, provisional liquidator or administrator has been appointed to any
property of the person or an event occurs which gives any other person a right
to seek such an appointment;

(d)
an order has been made, a resolution has been passed or proposed in a notice of
meeting or in an announcement to any recognised securities exchange, or an
application to court has been made for the winding-up or dissolution of the
person or for the entry into of any arrangement, compromise or composition with,
or assignment for the benefit of, creditors of the person or any class of them,
and that order, resolution or application has not been stayed, lifted or
discharged within 60 days of the date of such order, resolution or application;

(e)
a trustee has been appointed to take control of the property of the person in
connection with a proposal to enter into a personal insolvency agreement;

(f)
an order has been made or an application to court has been made for bankruptcy
of the person, and that order or application has not been stayed, lifted or
discharged within 60 days of the date of such order or application; or

(g)
the person has otherwise become, or is otherwise taken to be, insolvent in any
jurisdiction or an event occurs in any jurisdiction in relation to the person
which is analogous to, or which has a substantially similar effect to, any of
the events referred to in paragraphs (a) to (f) above;

Interest means, in relation to any person, any direct or indirect financial or
commercial interest of that person or its Affiliates arising from any existing
or proposed arrangement, contract, litigation or other proceeding between any
Group Company and that person or any of its Affiliates, where such arrangement,
contract, litigation or other proceeding can be reasonably considered to be
material in the context of the business of the Group taken as a whole;

 
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Loss means all losses, damages, costs, expenses, charges and other liabilities
whether present or future, fixed or unascertained, actual or contingent;
Material Business Acquisition has the meaning given in paragraph 8 of Schedule
4;
Material Business Disposal has the meaning given in paragraph 9 of Schedule 4;
New LTIP has the meaning given to it in the SPA;
New Party has the meaning given in clause 14.1;
Nominated Director means a Director appointed under clause 5.1 (and includes any
alternate of that Director);
Permitted Transferee means:
(a)
in relation to a Shareholder that is a body corporate, a member of the same
Wholly Owned Group as that Shareholder provided that, in relation to Federated
(and any transferee of Federated), the transferee must also be a Wholly Owned
Subsidiary of FII; and

(b)
in relation to BTPS, any replacement or additional trustee of the Scheme and any
custodian of the Scheme and any member of the same Wholly Owned Group as such
replacement or additional trustee or custodian.

Put and Call Option Deed means the deed dated the same date as this agreement
between BTPS, Federated and FII relating to shares in the Company;
Regulatory Capital Target Amount means the Group's required regulatory capital
as determined in accordance with applicable requirements and shown in the
Company's then most recent Internal Capital Adequacy Assessment Process (ICAAP)
submission to the FCA, inclusive of any regulatory capital planning buffer
required by the FCA, plus a discretionary safe margin buffer of capital, all as
determined in good faith by the Board, in each case calculated using methodology
consistent with the calculation of the Company's ICAAP for prior recent years,
applicable FCA requirements, usual industry practice and past practices, and
applied by the Company from time to time;
Relative means, in relation to an individual:
(a)
the spouse, parent, son, daughter, brother or sister (whether by blood or
adoption) of that individual; or

(b)
any person married to any of the persons specified in paragraph (a);

Relevant Date means the date on which a party becomes a party to this agreement
whether as an original party or by executing a Deed of Adherence in accordance
with clause 14;
Representative means, in relation to a person, any director, officer or employee
of, and any accountant, auditor, financier, financial adviser, legal adviser,
technical adviser or other expert adviser or consultant to, that person;
Securities means:

 
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(a)
Shares or any other class of shares in the Company or any other equity
securities in the Company; and

(b)
options, warrants, notes, bonds or other securities or debt (i) convertible
into, or exchangeable for, Shares or any other class of shares or any other
equity securities in the Company or (ii) containing equity features or
containing profit participation features;

Senior Employee means any person employed or engaged by a Group Company who (a)
holds the position of 'Director' or above; or (b) has an annual basic salary of
£150,000 or more, or any person who has had such a position within the Group
within the twelve months prior to the relevant time;
Share means an ordinary share in the capital of the Company;
Shareholder means a registered holder of Shares (or whose custodian or nominee
is the registered holder) who is party to this agreement as an original party
(being Federated and BTPS as at the date of this agreement) or by having
executed a Deed of Adherence in accordance with clause 14;
Shareholder Approval means an approval given in accordance with clauses 6.3 and
6.4;
SPA means the share sale and purchase agreement entered into between BTPS and
the Federated Parties relating to the sale and purchase of shares in the
Company;
Subsidiary has the meaning given in paragraph 2 below;
Surviving Clauses means clause 1, clause 15.1 (for two years), clause 19, clause
21, clause 23 and clause 24;
Transaction Document means this agreement, the Constitution, the Put and Call
Option Deed, the long term incentive plan to be adopted by the Company on or
around the Effective Date and the SPA;
Ultimate Holding Company means a Holding Company which is not itself a
Subsidiary; and
Warranties means the warranties given by the parties under clause 16.
2.
Subsidiary, Holding Company, Wholly Owned Subsidiary and Wholly Owned Group

For the purposes of this agreement:
(a)
A company is a Subsidiary of another company, its Holding Company, if that other
company:

(i)
holds a majority of the voting rights in it;

(ii)
is entitled to a majority of the profits or capital distributed or returned by
it; or

(iii)
is a member of it and has the right to appoint or remove a majority of its board
of directors; or

(iv)
is a member of it and controls alone, pursuant to an agreement with other
members, a majority of the voting rights in it,

or if it is a Subsidiary of a company that is itself a Subsidiary of that other
company.

 
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(b)
A company is a Wholly Owned Subsidiary of another company (HoldCo) if it has no
members other than HoldCo and HoldCo's wholly owned Subsidiaries or persons
acting on behalf of HoldCo or its wholly owned Subsidiaries.

(c)
Wholly Owned Group means a body corporate and any Holding Company of which it is
a Wholly Owned Subsidiary and any other Wholly Owned Subsidiaries of that
Holding Company (including any Wholly Owned Subsidiary of the body corporate).

(d)
In this paragraph 2, company includes any body corporate.

3.
Reasonable endeavours

Except as otherwise expressly provided in this agreement, any provision of this
agreement which requires a party to use reasonable endeavours or all reasonable
endeavours, or to take all steps reasonably necessary, to procure that something
is performed or occurs does not impose any obligation to:
(a)
commence any legal action or proceeding against any person;

(b)
procure absolutely that that thing is done or happens;

(c)
incur a material expense, except where that provision expressly specifies
otherwise; or

(d)
accept any undertakings or conditions, or waive any fees, required by any third
party if those undertakings or conditions, or waivers in the reasonable opinion
of the party required to give such undertakings or satisfy such conditions or
waive such fees, are materially adverse to its commercial interests or
fundamentally or materially alter the basis on which it originally agreed to the
arrangements the subject of this agreement.

4.
Things required to be done other than on a Business Day

Unless otherwise indicated, where the day on which any act, matter or thing is
to be done is a day other than a Business Day, that act, matter or thing must be
done on or by the next Business Day.
5.
Several liability

Where any obligation, representation, warranty or undertaking in this agreement
is expressed to be made, undertaken or given by two or more parties, those
parties will be taken to be severally liable in respect of it, unless this
agreement expressly provides otherwise.
6.
Other rules of interpretation

In this agreement:
(a)
any reference, express or implied, to any legislation in any jurisdiction
includes:

(i)
that legislation as amended, extended or applied by or under any other
legislation made before or after execution of this agreement;

(ii)
any legislation which that legislation re‑enacts with or without modification;
and

(iii)
any subordinate legislation made before or after execution of this agreement
under that legislation, including (where applicable) that legislation as
amended, extended or

 
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applied as described in paragraph 17(a)(i), or under any legislation which it
re‑enacts as described in paragraph 17(a)(ii);
(b)
references to persons or entities include natural persons, partnerships,
companies, bodies corporate, associations, organisations, governments, states,
foundations and trusts (in each case whether or not having separate legal
personality);

(c)
references to an individual or a natural person include his estate and personal
representatives;

(d)
subject to clause 23.2, references to a party to this agreement include the
successors or assigns (immediate or otherwise) of that party;

(e)
references to any English legal term for any action, remedy, method or judicial
or arbitral proceeding, legal document, legal status, court, arbitral tribunal,
official or any legal concept or thing must, in respect of any jurisdiction
other than England, be taken to include what most nearly approximates in that
jurisdiction to the English legal term;

(f)
a reference to this agreement or any other document is a reference to this
agreement or that other document as amended, varied, supplemented, or novated
(in each case, other than in breach of the provisions of this agreement) at any
time;

(g)
unless otherwise indicated, a reference to any time is a reference to that time
in London;

(h)
a reference to £ or pounds is to British pounds sterling or its equivalent in
any other relevant currency;

(i)
the phrases "to the extent" and "to the extent that" are used to indicate an
element of degree and are not synonymous with the word "if";

(j)
singular words include the plural and vice versa;

(k)
a word of any gender includes the corresponding words of any other gender;

(l)
if a word or phrase is defined, other grammatical forms of that word have a
corresponding meaning;

(m)
general words must not be given a restrictive meaning by reason of the fact that
they are followed by particular examples intended to be embraced by the general
words, and references to "includes" mean "includes without limitation"; and

(n)
nothing is to be construed adversely to a party just because that party put
forward this agreement or the relevant part of this agreement.

 
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0122421-0000002 CO:33052312.2
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SIGNATORIES
EXECUTED as a DEED by HERMES FUND MANAGERS LIMITED acting by the director herein
named in the presence of:
)
)
)
)
)

/s/ Saker Nusseibeh

Name: Saker Nusseibeh
Witness:
Signature:
Name:
Address:

Occupation:
 /s/ Joseph Kagan
 Joseph Kagan
150 Cheapside London EC2V 6ET

  Solicitor

SIGNATURE PAGE – SHAREHOLDERS’ AGREEMENT

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

 

EXECUTED as a DEED by BT PENSION SCHEME TRUSTEES LIMITED in its capacity as
trustee for and on behalf of the BT Pension Scheme acting by the director herein
named in the presence of:
)
)
)
)
)

  /s/ John Wroe

Name: John Wroe
Witness:
Signature:
Name:
Address:

Occupation:
  /s/ Mrs. Kate Tollis
 Mrs. Kate Tollis
  One America Square London EC3N 2LB

  Manager

SIGNATURE PAGE – SHAREHOLDERS’ AGREEMENT

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

 

EXECUTED as a DEED by FEDERATED HOLDINGS (UK) II LIMITED acting by the
authorised signatory named in the presence of:
)
)
)
)
)
……………………………………………………….

Name: /s/ Denis McAuley, III

Designation: Director
Witness:
Signature:
Name:
Address:

Occupation:
    /s/ George F. Magera
  George F. Magera
   1001 Liberty Avenue, Pittsburgh, PA 15222

  Deputy General Counsel

SIGNATURE PAGE – SHAREHOLDERS’ AGREEMENT

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

 

EXECUTED as a DEED by FEDERATED INVESTORS, INC. acting by the authorised
signatory named in the presence of:
)
)
)
)
)
……………………………………………………….

Name: /s/ Thomas R. Donahue

Designation: Chief Financial Officer
Witness:
Signature:
Name:
Address:

Occupation:
   /s/ George F. Magera
   George F. Magera
  1001 Liberty Avenue Pittsburgh, PA 15222

Assistant Secretary

SIGNATURE PAGE – SHAREHOLDERS’ AGREEMENT

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SIGNATURE PAGE – SHAREHOLDERS’ AGREEMENT

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DOCUMENTS IN THE AGREED FORM
1.
CONSTITUTION

2.
INITIAL BUDGET

 
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3.
NEW LTIP AND SHARE INCENTIVE PLAN

 
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