EXHIBIT 10(x)(x)(v)(i)(i)
AMENDED AND RESTATED SEVERANCE AGREEMENT
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THIS AMENDED AND RESTATED SEVERANCE AGREEMENT ("Amended and Restated
Severance Agreement"), made and entered into as of this 27th day of December,
1999 by and between FEDERAL REALTY INVESTMENT TRUST, a Maryland real estate
investment trust ("Employer"), and XXXXX X. XXXXXX ("Employee").
WHEREAS, Employee and Employer entered into a Severance Agreement
("Severance Agreement") dated as of August 25, 1999; and
WHEREAS, Employee and Employer wish to amend and restate that Severance
Agreement as set forth herein;
NOW THEREFORE, in consideration of the foregoing, of the mutual promises
herein contained and of other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Termination of Severance Agreement. As of the date first written
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above, the Severance Agreement shall be null and void and of no further force or
effect.
2. Effective Date of Amended and Restated Severance Agreement. This
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Amended and Restated Severance Agreement shall be effective as of the date first
written above and shall continue and remain in full force and effect until
terminated by the parties in writing.
3. Termination Without Cause. In the event that Employee's employment
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with Employer is terminated under any of the circumstances in Sections 3(a) or
3(b), Employee will be deemed to have been Terminated Without Cause and shall
receive payments and benefits as described in this Section 3; provided, however,
in the event Employee's employment with Employer is terminated under any of the
circumstances in Sections 3(a) or 3(b) under circumstances described in Section
8 below, Employee shall receive such payments and benefits as are set forth in
Section 8 in lieu of the payments and benefits under this Section 3:
(a) by Employer other than with Cause (as "Cause" is defined in
Section 5 hereof);
(b) by Employee within six (6) months following the occurrence of one
or more of the following events:
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(i) the nature of Employee's duties or the scope of Employee's
responsibilities or authority as of the date first written
above are materially modified by Employer without
Employee's written consent where such material
modification constitutes an actual or constructive
demotion of Employee; provided, however, that a change in
the position(s) to whom Employee reports shall not by
itself constitute a material modification of Employee's
responsibilities; provided, further, that if Employee
voluntarily becomes an employee of an affiliate of the
Employer in connection with a Spin-off (as defined in
Section 17) of that affiliate, the nature of Employee's
duties and the scope of responsibilities and authority
referred to above in this paragraph (i) shall mean those
as in effect as of the first day of employment with the
affiliate following the Spin-off and not those in effect
with the Employer as of the date first written above;
(ii) Employer changes the location of its principal office to
outside a fifty (50) mile radius of Washington, D.C.;
(iii) Employer's setting of Employee's base salary for any year
at an amount which is less than ninety percent (90%) of
the greater of (A) Employee's base salary for 1999, or (B)
Employee's highest base salary during the three (3) then
most recent calendar years (including the year of
termination), regardless of whether such salary reduction
occurs in one year or over the course of years; and
(iv) this Amended and Restated Severance Agreement is not
expressly assumed by any successor (directly or
indirectly, whether by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of Employer.
(c) Decision by Employer to Terminate Without Cause. Employer's
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decision to terminate Employee's employment Without Cause shall
be made by the Board of Trustees.
(d) Severance Payment Upon Termination Without Cause. In the event
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of Termination Without Cause other than under circumstances
described in Section 8 below, Employee will receive as severance
pay an amount in cash equal to one (1) year's salary. For the
purpose of calculating amounts payable pursuant to this Section
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3(d), "salary" shall be an amount equal to (i) the greater of (A)
Employee's highest annual base salary paid during the previous
three (3) years or (B) Employee's annual base salary in the year
of termination, plus (ii) the greatest annual aggregate amount of
any cash and/or stock bonus paid to Employee in respect of any of
the three (3) fiscal years immediately preceding such termination
(it being understood and agreed that such amount shall not
include compensation paid pursuant to performance share awards).
For purposes of the preceding sentence: (i) a stock bonus will be
considered to have been paid in respect of a particular year if
(A) in the case of a bonus paid under Employer's 1999 Incentive
Bonus Plan (as the same may be amended from time or time, or any
successor plan, the "Bonus Plan"), the stock bonus was awarded in
respect of that year, even if it did not vest in that year, or
(B) in the case of any other stock bonus, the shares vested in
that year (other than as a result of the Termination Without
Cause); and (ii) a stock bonus will be valued (A) in the case of
a bonus paid under the Bonus Plan, at a figure equal to the
number of shares awarded, multiplied by the per-share value
(closing price) on the date on which the bonus was approved by
the Compensation Committee of Employer's Board of Trustees, and
(B) in the case of any other stock bonus, at a figure equal to
the number of shares that vested, multiplied by the per-share
value (closing price) on the date on which they vested. Payment
also will be made for vacation time that has accrued, but is
unused as of the date of termination.
(e) Benefits. In the event of Termination Without Cause other than
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under circumstances described in Section 8 below, Employee shall
receive "Full Benefits" for nine (9) months. Employer shall have
satisfied its obligation to provide Full Benefits to Employee if
it (i) pays premiums due in connection with COBRA continuation
coverage to continue Employee's medical and dental insurance
coverage at not less than the levels of coverage immediately
prior to termination of Employee's employment; (ii) maintains at
not less than Employee's highest levels of coverage prior to
Termination Without Cause individual life insurance policies and
accidental death and dismemberment policies for the benefit of
Employee and pays the annual premiums associated therewith; (iii)
to the extent that Employer maintained a long-term disability
policy that provided coverage to Employee in excess of the
coverage provided under Employer's group long-term disability
policy, maintains at not less than Employee's highest levels of
coverage prior to Termination Without Cause an individual long-
term disability policy for the
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benefit of Employee and pays the annual premiums associated
therewith, subject to the limitations of the policy; and (iv)
pays the annual premiums associated with Employee's continued
participation, at not less than Employee's highest levels of
coverage prior to Termination Without Cause, under Employer's
group long-term disability policy for a period of one (1) year
following Termination Without Cause, subject to the limitations
of the policy. Notwithstanding the foregoing, Employee shall be
required to pay the premiums and any other costs of such Full
Benefits in the same dollar amount that Employee was required to
pay for such costs immediately prior to Termination Without
Cause.
(f) Stock Options. Notwithstanding any agreement to the contrary,
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in the event of any Termination Without Cause other than under
circumstances described in Section 8 below, the vesting of
options to purchase shares of Employer's common stock granted to
Employee and outstanding as of the date of Employee's termination
and scheduled to vest during the twelve (12) months thereafter
shall be accelerated such that all such options will be vested as
of the date of Employee's termination of employment with
Employer. The terms of the stock option agreements shall
determine the period during which any vested options may be
exercisable.
(g) Outplacement Services. In the event of Termination Without Cause
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other than under circumstances described in Section 8 below,
Employer shall make available at Employer's expense to Employee
at Employee's option the services of an employment
search/outplacement agency selected by Employer for a period not
to exceed six (6) months from the date of Employee's termination.
(h) Provision of Telephone/Secretary. In the event of Termination
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Without Cause other than under circumstances described in Section
8 below, Employer shall provide Employee for a period not to
exceed six (6) months from Employee's date of termination with a
telephone number assigned to Employee at Employer's offices,
telephone mail and a secretary to answer the telephone. Such
benefits shall not include an office or physical access to
Employer's offices and will cease upon commencement by Employee
of employment with another employer.
(i) Notice. If Employee terminates his or her employment pursuant to
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Section 3(b) hereof other than under circumstances described in
Section 8 below and (i) Employee is not an executive officer of
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Employer, Employee shall give sixty (60) days' written notice to
Employer of such termination, or (ii) if Employee is an executive
officer of Employer, Employee shall give ninety (90) days'
written notice to Employer of such termination.
(j) Notwithstanding the foregoing provisions of this Agreement, it
shall not be considered a Termination Without Cause in the event
that the Employee voluntarily becomes an employee of an affiliate
of the Employer in connection with a Spin-off of that affiliate
if the Employer has assigned this Agreement to the affiliate as
contemplated in Section 17 and the affiliate has assumed the
obligations hereunder.
4. Voluntary Resignation. If Employee is not an executive officer of
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Employer, Employee shall give sixty (60) days' written notice to Employer of
Employee's resignation from employment in all capacities with Employer other
than under circumstances described in Section 8 below; if Employee is an
executive officer of Employer, Employee shall give ninety (90) days' written
notice to Employer of Employee's resignation from employment in all capacities
with Employer other than under circumstances described in Section 8 below.
5. Severance Benefits Upon Termination With Cause. Employee shall be
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deemed to have been terminated with Cause in the event that the employment of
Employee is terminated for any of the following reasons other than under
circumstances described in Section 8 below:
(a) failure (other than failure due to disability) to substantially
perform his or her duties with Employer or an affiliate thereof;
which failure remains uncured after written notice thereof and
the expiration of a reasonable period of time thereafter in which
Employee is diligently pursuing cure ("Failure to Perform");
(b) willful conduct which is demonstrably and materially injurious to
Employer or an affiliate thereof, monetarily or otherwise;
(c) breach of fiduciary duty involving personal profit; or
(d) willful violation in the course of performing his or her duties
for Employer of any law, rule or regulation (other than traffic
violations or misdemeanor offenses). No act or failure to act
shall be considered willful unless done or omitted to be done in
bad faith and without reasonable belief that the action or
omission was in the best interest of Employer.
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(e) Decision by Employer to Terminate With Cause. The decision to
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terminate the employment of Employee with Cause shall be made by
the Board of Trustees.
(f) Severance Payment Upon Termination with Cause. In the event of
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termination for Failure to Perform pursuant to Section 5(a), or
termination for cause pursuant to Section 5(b), (c) or (d) above,
the terms of the stock option agreements between Employer and
Employee thereunder will determine the terms of the vesting of
options and the exercisability of vested options.
(i) For Cause Termination for Failure to Perform. In the
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event that Employee's employment is terminated with Cause
pursuant to Section 5(a) above, Employee shall receive as
severance pay an amount in cash equal to one (1) month's
salary for every year of service to Employer in excess of
five (5) years of service; such severance payment shall
not exceed six (6) months' pay. The number of months for
which such a payment is due shall determine the length of
the for cause term ("For Cause Term"). For the purposes of
this Section 5(f)(i) only, "salary" shall mean Employee's
then current annual base salary and shall not include any
bonus or other compensation. Payment shall also be made
for accrued, but unused, vacation time. Employee shall
also receive Full Benefits (as defined above) for the For
Cause Term. In the event that, following Employee's
termination for Failure to Perform, Employee becomes
employed by or affiliated with, as a partner, consultant,
contractor or otherwise, any entity which is substantially
engaged in the business of property investment or
management ("Competitor"), all payments specified in this
Section 5(f)(i) shall cease upon the date Employee
commences such employment or affiliation; provided,
however, Employee shall continue to receive medical and
dental care benefits from Employer until (i) Employee is
eligible to receive medical and dental care benefits from
the Competitor, or (ii) the date of expiration of
Employee's For Cause Term, whichever comes first.
(ii) Other Cause Termination. In the event that Employee's
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employment is terminated with Cause pursuant to Section
5(b), (c) or (d), Employee shall receive all base salary
due and payable as of the date of Employee's termination
of
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employment. No payment shall be made for bonus or other
compensation. Payment also will be made for accrued, but
unused vacation time.
6. Severance Benefits Upon Termination Upon Disability. Employer may
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terminate Employee upon thirty (30) days' prior written notice if (i) Employee's
Disability has disabled Employee from rendering service to Employer for at least
a six (6) month consecutive period during the term of Employee's employment,
(ii) Employee's "Disability" is within the meaning of such defined term in
Employer's group long-term disability policy, and (iii) Employee is covered
under such policy. In the event of Employee's Termination Upon Disability,
Employee shall be entitled to receive as severance pay each month for the year
immediately following the date of termination an amount in cash equal to the
difference, if any, between (i) the sum of (y) the amount of payments Employee
receives or will receive during that month pursuant to the disability insurance
policies maintained by Employer for Employee's benefit and (z) the adjustment
described in the next sentence and (ii) Employee's base monthly salary on the
date of termination due to Disability. The adjustment referred to in clause (z)
of the preceding sentence is the amount by which any tax-exempt payments
referred to in clause (y) would need to be increased if such payments were
subject to tax in order to make the after-tax proceeds of such payments equal to
the actual amount of such tax-exempt payments.
(a) Benefits. Employee shall receive Full Benefits (as defined
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above) for one (1) year following termination due to Disability.
(b) Stock Options. In the event that Employee's employment is
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terminated due to Disability, the terms of the stock option
agreements between Employer and Employee shall determine the
vesting of any options held by Employee as of the date of
termination due to Disability and the exercise period for any
vested option.
7. Severance Benefits Upon Termination Upon Death. If Employee dies,
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Employee's estate shall be entitled to receive an amount in cash equal to
Employee's then-current base salary through the last day of the month in which
Employee's death occurs plus any bonus previously awarded but unpaid and any
accrued vacation pay through the last day of the month in which Employee's death
occurs. The terms of the stock option agreements between Employer and Employee
shall determine the vesting of any options held by Employee as of the date of
his or her death and the exercise period for any vested option.
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8. Severance Benefits Upon Termination Upon Change in Control.
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(a) Change in Control Defined. No benefits shall be payable under
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this Section 8 unless there shall have occurred a Change in Control of Employer,
as defined below. For purposes of this Section 8, a "Change in Control" of
Employer shall mean any of the following events:
(i) An acquisition in one or more transactions (other than
directly from Employer or pursuant to options granted by Employer) of any voting
securities of Employer (the "Voting Securities") by any "Person" (as the term is
used for purposes of Section 13(d) or 14(d) of the Securities Act of 1934, as
amended (the "Exchange Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of Employer's then
outstanding Voting Securities; provided, however, in determining whether a
Change in Control has occurred, Voting Securities which are acquired in a "Non-
Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) Employer or (2) any corporation or other Person
of which a majority of its voting power or its equity securities or equity
interest is owned directly or indirectly by Employer (a "Subsidiary"), (B)
Employer or any Subsidiary, or (C) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(ii) The individuals who, as of the date of this Amended and
Restated Severance Agreement, are members of the Board of Trustees (the
"Incumbent Trustees"), cease for any reason to constitute at least two-thirds of
the Board; provided, however, that if the election, or nomination for election
by Employer's shareholders, of any new member was approved by a vote of at least
two-thirds of the Incumbent Trustees, such new member shall, for purposes of
this Amended and Restated Severance Agreement, be considered as a member of the
Incumbent Trustees; provided, further, however, that no individual shall be
considered a member of the Incumbent Trustees if such individual initially
assumed office as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Trustees (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; or
(iii) Approval by shareholders of Employer of
(A) A merger, consolidation or reorganization involving
Employer, unless:
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(1) the shareholders of Employer, immediately before
such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least a
majority of the combined voting power of the outstanding voting securities of
the Person resulting from such merger or consolidation or reorganization (the
"Surviving Person") in substantially the same proportion as their ownership of
the Voting Securities immediately before such merger, consolidation or
reorganization,
(2) the individuals who were members of the
Incumbent Trustees immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the Surviving Person,
(3) no Person (other than Employer or any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by Employer, or any Subsidiary, or any Person which, immediately
prior to such merger, consolidation or reorganization had Beneficial Ownership
of 20% or more of the then outstanding Voting Securities) has Beneficial
Ownership of 20% or more of the combined voting power of the Surviving Person's
then outstanding voting securities, and
(4) a transaction described in clauses (1) through
(3) shall herein be referred to as a "Non-Control Transaction;"
(B) A complete liquidation or dissolution of Employer; or
(C) An agreement for the sale or other disposition of all
or substantially all of the assets of Employer to any Person (other than a
transfer to a Subsidiary).
(iv) Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur (A) solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by Employer which, by reducing the number of Voting Securities
outstanding, increases the proportional number of Voting Securities Beneficially
Owned by the Subject Person; provided, however, that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by Employer, and after such share acquisition
by Employer, the Subject Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall occur; or (B) if Employer (1) establishes a wholly-owned subsidiary
("Holding Company"), (2) causes the Holding Company to establish a wholly-owned
subsidiary ("Merger Sub"), and (3) merges with Merger Sub, with Employer as the
surviving entity (such transactions
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collectively are referred as the "Reorganization"). Immediately following the
completion of the Reorganization, all references to the Voting Securities shall
be deemed to refer to the voting securities of the Holding Company.
(v) Notwithstanding anything contained in this Amended and
Restated Severance Agreement to the contrary, if Employee's employment is
terminated while this Amended and Restated Severance Agreement is in effect and
Employee reasonably demonstrates that such termination (A) was at the request of
a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a Change in Control
(a "Third Party") or (B) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes of this Amended and Restated Severance Agreement, the date of a Change
in Control with respect to Employee shall mean the date immediately prior to the
date of such termination of Employee's employment.
(b) Termination of Employment Following Change in Control. If a
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Change in Control of Employer occurs, Employee shall be entitled to the benefits
provided in this Section 8 upon the subsequent termination of Employee's
employment with Employer for any reason, either voluntarily or involuntarily,
within six (6) months of such Change of Control, unless such termination is
because of Employee's death, Disability or retirement. The term "Retirement"
shall mean termination of employment in accordance with (x) a qualified employee
pension or profit-sharing plan maintained by Employer, or (y) Employer's
retirement policy in effect immediately prior to the Change in Control. For
purposes of this Section 8, Employee's employment shall be terminated by written
notice delivered by either Employer or Employee to the other party. The date of
Employee's termination of employment shall be the earlier of the date of
Employee's or Employer's written notice terminating Employee's employment with
Employer, unless such notice shall specify an effective date of termination
occurring later than the date of such notice, in which event such specified
effective date shall govern ("Termination Date").
(c) Payment of Benefits upon Termination. If, after a Change in
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Control has occurred, Employee's employment with Employer is terminated in
accordance with Section 8(b) above, then Employer shall pay to Employee and
provide Employee, his or her beneficiaries and estate, the following:
(i) Employer shall pay to Employee a single cash payment equal
to the amount described in Section 3(d) above (without giving effect to any
accelerated vesting which may have occurred as a result of the Change in
Control). If Employee's employment is terminated by Employee by a written notice
which specifies a Termination Date at least five (5) business days later than
the date of such notice, the payment shall be made on the Termination Date. If
Employee gives less than five (5)
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business days notice, then such payment shall be made within five (5) business
days of the date of such notice;
(ii) Employee shall receive Full Benefits for one (1) year
following the Termination Date;
(iii) Employer, to the extent legally permissible, shall
continue to provide to Employee all other officer perquisites, allowances,
accommodations of employment, and benefits on the same terms and conditions as
such are from time to time made available generally to the other officers of
Employer but in no event less than the highest level of the perquisites,
allowances, accommodations of employment and benefits that were available to
Employee during the last twelve (12) months of Employee's employment prior to
the Change in Control for a period of one (1) year following the Termination
Date;
(iv) For the purposes of this Section 8(c), Employee's right to
receive officer perquisites, allowances and accommodations of employment is
intended to include (A) Employee's right to have Employer provide Employee for a
period not to exceed six (6) months from Employee's Termination Date with a
telephone number assigned to Employee at Employer's offices, telephone mail and
a secretary to answer the telephone; provided, however, such benefits described
in this Section 8(c)(iv)(A) shall not include an office or physical access to
Employer's offices and will cease upon the commencement by Employee of
employment with another employer, and (B) Employee's right to have Employer make
available at Employer's expense to Employee at Employee's option the services of
an employment search/outplacement agency selected by Employee for a period not
to exceed six (6) months.
(v) Upon the occurrence of a Change in Control, all
restrictions on the receipt of any option to acquire or grant of Voting
Securities to Employee shall lapse and such option shall become immediately and
fully exercisable. Notwithstanding any applicable restrictions or any agreement
to the contrary, Employee may exercise any options to acquire Voting Securities
as of the Change in Control by delivery to Employer of a written notice dated on
or prior to the expiration of the stated term of the option.
(d) Redemption.
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(i) Except as provided in subsection (ii) below, Employer
shall within five (5) business days of receipt of written notice from Employee
given at any time after the occurrence of a Change in Control but prior to the
latest stated expiration date of any option held by Employee on the date of the
Change in Control, redeem any Voting Securities held by Employee (whether
acquired by exercise of any such option or grant or otherwise), at a price equal
to the average closing price of Voting Securities as quoted on the New York
Stock Exchange, or if such Voting Securities are not listed
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thereon, then the average of the closing "bid" and "ask" prices per share in the
over-the-counter securities market for the fifteen (15) trading days prior to
the date of such notice;
(ii) If, during the fifteen (15) day trading period, Voting
Securities are not listed, quoted or reported on any publicly traded securities
market for at least two-thirds (2/3) of the days included in such period, then
the redemption price shall be determined as follows: (A) Employee shall
designate in a written notice to Employer an appraiser to appraise the value of
the Voting Securities to be redeemed; (B) within ten (10) business days of
receipt of such notice Employer shall designate an appraiser to appraise the
value of the Voting Securities to be redeemed, (C) such designated appraisers
shall together designate, within ten (10) business days of the date the
appraiser is designated by Employer, a third appraiser to appraise the value of
such Voting Securities, (D) each appraiser shall value such Voting Securities
within twenty (20) business days of the designation of the third appraiser using
generally accepted appraisal methods for valuing such securities based upon the
value of all of Employer's assets less all of its liabilities without giving
effect for any costs of liquidation or distress sale, if otherwise applicable,
and (E) the average of the three (3) values determined by the three (3)
appraisers shall constitute the price at which Employer must redeem the Voting
Securities covered by Employee's written notice within five (5) business days of
the completion of this appraisal process. All costs and expenses associated with
any appraisal prepared pursuant to this Section 8(d)(ii) shall be borne entirely
by Employer.
(e) Excise Tax Payments.
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(i) In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Code) that is provided for hereunder (other
than the payment provided for in this Section 8(e)(i)) to be paid to or for the
benefit of Employee (including, without limitation, the payments or benefits
provided for under any provision of this Section 8) or payments or benefits
under any other plan, agreements or arrangement between Employee and Employer (a
"Payment" or "Payments"), be determined or alleged to be subject to an excise or
similar purpose tax pursuant to Section 4999 of the Code or any successor or
other comparable federal, state, or local tax laws or any interest or penalties
incurred by Employee with respect to such excise or similar purpose tax (such
excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax") Employer shall pay to Employee
such additional compensation as is necessary (after taking into account all
federal, state and local taxes (including any interest and penalties imposed
with respect to such taxes), including any income or Excise Tax, payable by
Employee as a result of the receipt of such additional compensation) (a "Gross-
Up Payment") to place Employee in the same after-tax position (including
federal, state and local taxes) Employee would have been in had no such Excise
Tax been paid or incurred.
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(ii) All mathematical determinations, and all determinations as
to whether any of the Total Payments are "parachute payments" (within the
meaning of Section 280G of the Code), that are required to be made under this
Section 8(e), including determinations as to whether a Gross-Up Payment is
required, and the amount of such Gross-Up Payment, shall be made by an
independent accounting firm selected by the Employee from among the six (6)
largest accounting firms in the United States (the "Accounting Firm"), which
shall provide its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matter, both to Employer and the Employee by no later than ten
(10) days following the Termination Date, if applicable, or such earlier time as
is requested by Employer or the Employee (if the Employee reasonably believes
that any of the Payments may be subject to the Excise Tax). If the Accounting
Firm determines that no Excise Tax is payable by the Employee, it shall furnish
the Employee and Employer with a written statement that such Accounting Firm has
concluded that no Excise Tax is payable (including the reasons therefor) and
that the Employee has substantial authority not to report any Excise Tax on her
federal income tax return. If a Gross-Up Payment is determined to be payable, it
shall be paid to the Employee within twenty (20) days after the Determination
(and all accompanying calculations and other material supporting the
Determination) is delivered to Employer by the Accounting Firm. The cost of
obtaining the Determination shall be borne by Employer, any determination by the
Accounting Firm shall be binding upon Employer and the Employee, absent manifest
error. Without limiting the obligation of Employer hereunder, Employee agrees,
in the event that Employer makes a Gross-Up Payment to cover any Excise Tax, to
negotiate with Employer in good faith with respect to procedures reasonably
requested by Employer which would afford Employer the ability to contest the
imposition of such Excise Tax; provided, however, that Employee will not be
required to afford Employer any right to contest the applicability of any such
Excise Tax to the extent that Employee reasonably determines (based upon the
opinion of the Accounting Firm) that such contest is inconsistent with the
overall tax interest of Employee.
(iii) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a
portion thereof) will be paid which should not have been paid (an "Excess
Payment") or a Gross-Up Payment (or a portion thereof) which should have been
paid will not have been paid (an "Underpayment"). An Underpayment shall be
deemed to have occurred (A) upon notice (formal or informal) to Employee from
any governmental taxing authority that Employee's tax liability (whether in
respect of Employee's current taxable year or in respect of any prior taxable
year) may be increased by reason of the imposition of the Excise Tax on a
Payment or Payments with respect to which Employer has failed to make a
sufficient Gross-Up Payment, (B) upon determination by a court, (C) by reason of
determination by Employer (which shall include the position taken by Employer,
together with its consolidated group, on its federal income tax return) or (D)
upon the resolution of the Dispute to Employee's satisfaction. If an
Underpayment occurs, Employee shall
13
promptly notify Employer and Employer shall promptly, but in any event, at least
five (5) days prior to the date on which the applicable governmental taxing
authority has requested payment, pay to Employee an additional Gross-Up Payment
equal to the amount of the Underpayment plus any interest and penalties (other
than interest and penalties imposed by reason of Employee's failure to file a
timely tax return or pay taxes shown due on Employee's return where such failure
is not due to Employer's actions or omissions) imposed on the Underpayment. An
Excess Payment shall be deemed to have occurred upon a "Final Determination" (as
hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or
Payments (or a portion thereof) with respect to which Employee had previously
received a Gross-Up Payment. A "Final Determination" shall be deemed to have
occurred when Employee has received from the applicable governmental taxing
authority a refund of taxes or other reduction in Employee's tax liability by
reason of the Excess Payment and upon either (x) the date a determination is
made by, or an agreement is entered into with, the applicable governmental
taxing authority which finally and conclusively binds Employee and such taxing
authority, or in the event that a claim is brought before a court of competent
jurisdiction, the date upon which a final determination has been made by such
court and either all appeals have been taken and finally resolved or the time
for all appeals has expired or (y) the statute of limitations with respect to
Employee's applicable tax return has expired. If an Excess Payment is determined
to have been made, the amount of the Excess Payment shall be treated as a loan
by Employer to Employee and Employee shall pay to Employer on demand (but not
less than ten (10) days after the determination of such Excess Payment and
written notice has been delivered to Employee) the amount of the Excess Payment
plus interest at an annual rate equal to the Applicable Federal Rate provided
for in Section 1274(d) of the Code from the date the Gross-Up Payment (to which
the Excess Payment relates) was paid to Employee until date of repayment of the
Excess Payment to Employer.
(iv) Notwithstanding anything contained in this Section 8 to
the contrary, in the event that, according to the Final Determination, an Excise
Tax will be imposed on any Payment or Payments, Employer shall pay to the
applicable governmental taxing authorities as Excise Tax withholding, the amount
of the Excise Tax that Employer has actually withheld from the Payment or
Payments.
(f) No Set-Off. After a Change in Control, Employer shall have no
----------
right of set-off, reduction or counterclaim in respect of any debt or other
obligation of Employee to Employer against any payment, benefit or other
Employer obligation to Employee provided for in this Section 8 or pursuant to
any other plan, agreement or policy.
(g) Interest on Amounts Payable. After a Change of Control, if any
---------------------------
amounts which are required or determined to be paid or payable or reimbursed or
reimbursable to Employee under this Section 8 (or under any other plan,
agreement,
14
policy or arrangement with Employer) are not so paid promptly at the times
provided herein or therein, such amounts shall accrue interest, compounded daily
at the annual percentage rate which is three percentage points (3%) above the
interest rate which is announced by The Xxxxx National Bank (Washington, D.C.)
from time to time as its prime lending rate, from the date such amounts were
required or determined to have been paid or payable or reimbursed or
reimbursable to Employee until such amounts and any interest accrued thereon are
finally and fully paid; provided, however, that in no event shall the amount of
interest contracted for, charged or received hereunder exceed the maximum non-
usurious amount of interest allowed by applicable law.
(h) Disputes; Payment of Expenses. At any time after a Change of
------------------------------
Control, all costs and expenses (including legal, accounting and other advisory
fees and expenses of investigation) incurred by Employee in connection with (i)
any dispute as to the validity, interpretation or application of any term or
condition of this Section 8, (ii) the determination in any tax year of the tax
consequences to Employee of any amounts payable (or reimbursable) under this
Section 8, or (iii) the preparation of responses to an Internal Revenue Service
audit of, and other defense of, Employee's personal income tax return for any
year which is the subject of any such audit or an adverse determination,
administrative proceeding or civil litigation arising therefrom that is
occasioned by or related to an audit of the Internal Revenue Service of
Employer's income tax returns are, upon written demand by Employee, to be paid
by Employer (and Employee shall be entitled, upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling Employer)
promptly on a current basis (either directly or by reimbursing Employee). Under
no circumstances shall Employee be obligated to pay or reimburse Employer for
any attorneys' fees, costs or expenses incurred by Employer.
9. Confidentiality - Employer's Obligations. Unless Employee and
----------------------------------------
Employer mutually agree on appropriate language for such purposes, in the event
that Employee's employment is Terminated Without Cause pursuant to Section 3
above, With Cause pursuant to Section 5(a) above, or under circumstances
described in Section 8, or Employee voluntarily resigns, Employer, except to the
extent required by law, will not make or publish, without the express prior
written consent of Employee, any written or oral statement concerning Employee's
work related performance or the reasons or basis for the severing of Employee's
employment relationship with Employer; provided, however, that the foregoing
restriction is not applicable to information which was or became generally
available to the public other than as a result of a disclosure by Employer.
10. Confidentiality - Employee's Obligations. Employee acknowledges and
----------------------------------------
reaffirms that Employee will comply with the terms of the confidentiality letter
executed by Employee upon commencement of Employee's employment with Employer.
15
11. Payments. In the event of the termination of Employee's employment
--------
under circumstances described in Section 8, the severance payment made pursuant
to that section shall be made as a lump sum payment. In the event of Employee's
voluntary resignation other than under circumstances described in Section 8,
severance payments made pursuant to this Amended and Restated Severance
Agreement shall be made pro rata on a monthly basis. All other severance
payments payable to Employee pursuant to the terms of this Amended and Restated
Severance Agreement may be made either as a lump sum payment or pro rata on a
monthly basis, at Employee's option.
12. Tax Withholding. Employer may withhold from any benefits payable
---------------
under this Amended and Restated Severance Agreement, and pay over to the
appropriate authority, all federal, state, county, city or other taxes (other
than any excise tax imposed under Section 4999 of the Code or any similar tax to
which the indemnity provisions of Section 8(e) of this Amended and Restated
Severance Agreement shall apply) as shall be required pursuant to any law or
governmental regulation or ruling.
13. Arbitration.
-----------
(a) Any controversy, claim or dispute arising out of or relating to
this Amended and Restated Severance Agreement or the breach
thereof shall be settled by arbitration in accordance with the
then existing Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereof. The parties irrevocably consent to the jurisdiction of
the federal and state courts located in Maryland for this
purpose. Each such arbitration proceeding shall be located in
Maryland.
(b) The arbitrator(s) may, in the course of the proceedings, order
any provisional remedy or conservatory measure (including,
without limitation, attachment, preliminary injunction or the
deposit of specified security) that the arbitrator(s) consider to
be necessary, just and equitable. The failure of a party to
comply with such an interim order may, after due notice and
opportunity to cure with such noncompliance, be treated by the
arbitrator(s) as a default, and some or all of the claims or
defenses of the defaulting party may be stricken and partial or
final award entered against such party, or the arbitrator(s) may
impose such lesser sanctions as the arbitrator(s) may deem
appropriate. A request for interim or provisional relief by a
party to a court shall not be deemed incompatible with the
agreement to arbitrate or a waiver of that agreement.
16
(c) The parties acknowledge that any remedy at law for breach of this
Amended and Restated Severance Agreement may be inadequate, and
that, in the event of a breach by Employee of Sections 10 or 16,
any remedy at law would be inadequate in that such breach would
cause irreparable competitive harm to Employer. Consequently, in
addition to any other relief that may be available, the
arbitrator(s) also may order permanent injunctive relief,
including, without limitation, specific performance, without the
necessity of the prevailing party proving actual damages and
without regard to the adequacy of any remedy at law.
(d) In the event that Employee is the prevailing party in such
arbitration, then Employee shall be entitled to reimbursement by
Employer for all reasonable legal and other professional fees and
expenses incurred by Employee in such arbitration or in enforcing
the award, including reasonable attorney's fees.
(e) The parties agree that the results of any such arbitration
proceeding shall be conclusive and binding upon them.
14. Continued Employment. This Amended and Restated Severance Agreement
--------------------
shall not confer upon the Employee any right with respect to continuance of
employment by Employer.
15. Mitigation. Employee shall not be required to mitigate the amount of
----------
any payment, benefit or other Employer obligation provided for in this Amended
and Restated Severance Agreement by seeking other employment or otherwise and no
such payment shall be offset or reduced by the amount of any compensation or
benefits provided to Employee in any subsequent employment.
16. Restrictions on Competition; Solicitation; Hiring.
-------------------------------------------------
(a) During the term of his or her employment by or with Employer, and
for one (1) year from the date of the termination of Employee's
employment with Employer (the "Post Termination Period"),
Employee shall not, without the prior written consent of
Employer, for himself or herself or on behalf of or in
conjunction with any other person, persons, company, firm,
partnership, corporation, business, group or other entity (each,
a "Person"), work on or participate in the acquisition, leasing,
financing, pre-development or development of any project or
property which was considered and actively pursued by Employer or
its affiliates for acquisition, leasing,
17
financing, pre-development or development within one year prior
to the date of termination of Employee's employment.
(b) During the term of his or her employment by or with Employer, and
thereafter during the Post Termination Period, Employee shall
not, for any reason whatsoever, directly or indirectly, for
himself or herself or on behalf of or in conjunction with any
other Person:
(i) so that Employer may maintain an uninterrupted workforce,
solicit and/or hire any Person who is at the time of
termination of employment, or has been within six (6)
months prior to the time of termination of Employee's
employment, an employee of Employer or its affiliates, for
the purpose or with the intent of enticing such employee
away from or out of the employ of Employer or its
affiliates, provided that Employee shall be permitted to
call upon and hire any member of the Employee's immediate
family;
(ii) in order to protect the confidential information and
proprietary rights of Employer, solicit, induce or attempt
to induce any Person who or that is, at the time of
termination of Employee's employment, or has been within
six (6) months prior to the time of termination of
Employee's employment, an actual customer, client,
business partner, property owner, developer or tenant or a
prospective customer, client, business partner, property
owner, developer or tenant (i.e., a customer, client,
----
business partner, property owner, developer or tenant who
is party to a written proposal or letter of intent with
Employer, in each case written less than six (6) months
prior to termination of Employee's employment) of
Employer, for the purpose or with the intent of (A)
inducing or attempting to induce such Person to cease
doing business with Employer or its affiliates, or (B) in
any way interfering with the relationship between such
Person and Employer or its affiliates; or
(iii) solicit, induce or attempt to induce any Person who is or
that is, at the time of termination of Employee's
employment, or has been within six (6) months prior to the
time of termination of Employee's employment, a tenant,
supplier, licensee or consultant of, or provider of goods
or services to Employer or its affiliates, for the purpose
or with the intent of (A) inducing or attempting to induce
such Person to cease
18
doing business with Employer or its affiliates or (B) in
any way interfering with the relationship between such
Person and Employer or its affiliates.
(c) The above notwithstanding, the restrictions contained in
subsections (a) and (b) above shall not apply to Employee in the
Post-Termination Period in the event that Employee has ceased to
be employed by Employer under circumstances described in Section
8 of this Amended and Restated Severance Agreement.
(d) Because of the difficulty of measuring economic losses to
Employer as a result of a breach of the foregoing covenants, and
because of the immediate and irreparable damage that could be
caused to Employer for which it would have no other adequate
remedy, Employee agrees that the foregoing covenants, in addition
to and not in limitation of any other rights, remedies or damages
available to Employer at law, in equity or under this Agreement,
may be enforced by Employer in the event of the breach or
threatened breach by Employee, by injunctions and/or restraining
orders. If Employer is involved in court or other legal
proceedings to enforce the covenants contained in this Section
16, then in the event Employer prevails in such proceedings,
Employee shall be liable for the payment of reasonable attorneys'
fees, costs and ancillary expenses incurred by Employer in
enforcing its rights hereunder.
(e) It is agreed by the parties that the covenants contained in this
Section 16 impose a fair and reasonable restraint on Employee in
light of the activities and business of Employer on the date of
the execution of this Agreement and the current plans of
Employer; but it is also the intent of Employer and Employee that
such covenants be construed and enforced in accordance with the
changing activities, business and locations of Employer and its
affiliates throughout the term of these covenants.
(f) It is further agreed by the parties hereto that, in the event
that Employee shall cease to be employed hereunder, and enters
into a business or pursues other activities that, at such time,
are not in competition with Employer or its affiliates or with
any business or activity which Employer or its affiliates
contemplated pursuing, as of the date of termination of
Employee's employment, within twelve (12) months from such date
of termination, or similar activities or business in locations
the operation of which, under such circumstances, does not
violate this Section 16 or any of Employee's
19
obligations under this Section 16, Employee shall not be
chargeable with a violation of this Section 16 if Employer or its
affiliates subsequently enter the same (or a similar) competitive
business, course of activities or location, as applicable.
(g) The covenants in this Section 16 are severable and separate, and
the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth herein are
unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent that such court
deems reasonable, and the Agreement shall thereby be reformed to
reflect the same.
(h) All of the covenants in this Section 16 shall be construed as an
agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Employee
against Employer whether predicated on this Agreement or
otherwise shall not constitute a defense to the enforcement by
Employer of such covenants. It is specifically agreed that the
Post Termination Period, during which the agreements and
covenants of Employee made in this Section 16 shall be effective,
shall be computed by excluding from such computation any time
during which Employee is in violation of any provision of this
Section 16.
(i) Notwithstanding any of the foregoing, if any applicable law,
judicial ruling or order shall reduce the time period during
which Employee shall be prohibited from engaging in any
competitive activity described in Section 16 hereof, the period
of time for which Employee shall be prohibited pursuant to
Section 16 hereof shall be the maximum time permitted by law.
17. No Assignment. Neither this Amended and Restated Severance Agreement
-------------
nor any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by either Employer or Employee without the prior
written consent of the other party; provided, however, that this provision shall
not preclude Employee from designating one or more beneficiaries to receive any
amount that may be payable after Employee's death and shall not preclude
Employee's executor or administrator from assigning any right hereunder to the
person or persons entitled thereto; provided, further, that in connection with a
voluntary transfer, the Employer may assign this Amended and Restated Severance
Agreement (and its rights, remedies, obligations, and liabilities) to an
affiliate of the Employer without the consent of the Employee in connection with
a spin off of such affiliate (whether by a transfer of shares of beneficial
ownership, assets, or
20
other substantially similar transaction) to all or substantially all of the
shareholders of the Employer (a "Spin-off") and, upon such assignment, the
affiliate shall be deemed the Employer for all purposes of this Amended and
Restated Severance Agreement. This Amended and Restated Severance Agreement
shall not be terminated either by the voluntary or involuntary dissolution or
the winding up of the affairs of Employer, or by any merger or consolidation
wherein Employer is not the surviving entity, or by any transfer of all or
substantially all of Employer's assets on a consolidated basis. In the event of
any such merger, consolidation or transfer of assets, the provisions of this
Amended and Restated Severance Agreement shall be binding upon and shall inure
to the benefit of the surviving entity or to the entity to which such assets
shall be transferred.
18. Amendment. This Amended and Restated Severance Agreement may be
---------
terminated, amended, modified or supplemented only by a written instrument
executed by Employee and Employer.
19. Waiver. Either party hereto may by written notice to the other: (i)
------
extend the time for performance of any of the obligations or other actions of
the other party under this Amended and Restated Severance Agreement; (ii) waive
compliance with any of the conditions or covenants of the other party contained
in this Amended and Restated Severance Agreement; (iii) waive or modify
performance of any of the obligations of the other party under this Amended and
Restated Severance Agreement. Except as provided in the preceding sentence, no
action taken pursuant to this Amended and Restated Severance Agreement shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Amended and
Restated Severance Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach. No failure by either party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights to
exercise the same any subsequent time or times hereunder.
20. Severability. In case any one or more of the provisions of this
------------
Amended and Restated Severance Agreement shall, for any reason, be held or found
by determination of the arbitrator(s) pursuant to an arbitration held in
accordance with Section 13 above to be invalid, illegal or unenforceable in any
respect (i) such invalidity, illegality or unenforceability shall not affect any
other provisions of this Amended and Restated Severance Agreement, (ii) this
Amended and Restated Severance Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, and (iii) if
the effect of a holding or finding that any such provision is either invalid,
illegal or unenforceable is to modify to Employee's detriment, reduce or
eliminate any compensation, reimbursement, payment, allowance or other benefit
to Employee intended by Employer and Employee in entering into this Amended and
Restated Severance Agreement, Employer shall promptly negotiate and enter into
an agreement with Employee containing alternative provisions (reasonably
acceptable to
21
Employee), that will restore to Employee (to the extent legally permissible)
substantially the same economic, substantive and income tax benefits Employee
would have enjoyed had any such provision of this Amended and Restated Severance
Agreement been upheld as legal, valid and enforceable. Failure to insist upon
strict compliance with any provision of this Amended and Restated Severance
Agreement shall not be deemed a waiver of such provision or of any other
provision of this Amended and Restated Severance Agreement.
21. Governing Law. This Amended and Restated Severance Agreement has been
-------------
executed and delivered in the State of Maryland and its validity,
interpretation, performance and enforcement shall be governed by the laws of
said State; provided, however, that any arbitration under Section 13 hereof
shall be conducted in accordance with the Federal Arbitration Act as then in
force.
22. No Attachment. Except as required by law, no right to receive
-------------
payments under this Amended and Restated Severance Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation or the execution, attachment, levy, or similar process
or assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.
23. Source of Payments. All payments provided under this Amended and
------------------
Restated Severance Agreement shall be paid in cash from the general funds of
Employer, and no special or separate fund shall be established and no other
segregation of assets shall be made to assure payment.
24. Headings. The section and other headings contained in this Amended
--------
and Restated Severance Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Amended and Restated Severance
Agreement.
25. Notices. Any notice required or permitted to be given under this
-------
Amended and Restated Severance Agreement shall be in writing and shall be deemed
to have been given when delivered in person or when deposited in the U.S. mail,
registered or certified, postage prepaid, and mailed to Employee's addresses set
forth herein and the business address of Employer, unless a party changes its
address for receiving notices by giving notice in accordance with this Section,
in which case, to the address specified in such notice.
26. Counterparts. This Amended and Restated Severance Agreement may be
------------
executed in multiple counterparts with the same effect as if each of the signing
parties had signed the same document. All counterparts shall be construed
together and constitute the same instrument.
22
27. Entire Agreement. Except as may otherwise be provided herein, this
----------------
Amended and Restated Severance Agreement supersedes any and all prior written
agreements existing between Employer and Employee with regard to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed and delivered this Amended
and Restated Severance Agreement to be effective as of the day and year
indicated above.
/s/ Xxxxx X. Xxxxxx
______________________________________________
Employee's Signature
Employee's Permanent Address:
0000 Xxxxxx Xxxxxx, X.X.
______________________________________________
Xxxxxxxxxx, XX 00000
______________________________________________
FEDERAL REALTY INVESTMENT TRUST
By: /s/ Xxxxxx X. Xxxx
__________________________________________
Name: Xxxxxx X. Xxxx
_________________________________
Title: Chair Compensation Committee
_________________________________
Address: 0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
23
