Exhibit 10(i)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Severance Agreement"), made and entered into as
of this 1st day of March, 2002 by and between FEDERAL REALTY INVESTMENT TRUST, a
Maryland real estate investment trust ("Employer"), and XXXXX X. FINGER
("Employee").
WHEREAS, Employee has been hired to serve as Employer's Senior Vice
President - Chief Financial Officer, and Employer and Employee wish to set forth
the terms of a severance agreement for Employee;
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 Without Cause. In the event that Employee's employment with
Employer is terminated under any of the circumstances in Sections 1(a) or 1(b),
Employee will be deemed to have been Terminated Without Cause and shall receive
payments and benefits as described in this Section 1; provided, however, in the
event Employee's employment with Employer is terminated under any of the
circumstances in Sections 1(a) or 1(b) under circumstances described in Section
6 below, Employee shall receive such payments and benefits as are set forth in
Section 6 in lieu of the payments and benefits under this Section 1; and
provided, further, that no payments or benefits shall be payable under this
Section 1 unless Employee shall have been employed by Employer for at least six
(6) months at the time of the triggering event (i.e., the termination by
Employer or the occurrence of any of the events described in 1(b)(i)-(iv)
below):
(a) by Employer other than with Cause (as "Cause" is defined in Section
3, hereof);
(b) by Employee within six (6) months following the occurrence of one or
more of the following events:
(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
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reports shall not by itself constitute a material modification
of Employee's responsibilities;
(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
Employee's highest base salary during Employee's employment
with Employer; and
(iv) this 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 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 of
Termination Without Cause other than under circumstances described
in Section 6 below, Employee will receive as severance pay an amount
in cash equal to one (1) year's salary. For the purpose of
calculating the amount payable pursuant to this Section 1(d),
"salary" shall be an amount equal to Employee's annual base salary
in the year of termination. 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 under
circumstances described in Section 6 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
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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
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, in the
event of any Termination Without Cause other than under
circumstances described in Section 6 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
other than under circumstances described in Section 6 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
Without Cause other than under circumstances described in Section 6
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.
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(i) Notice. If Employee terminates his or her employment pursuant to
Section 1(b) hereof other than under circumstances described in
Section 6 below and (i) Employee is not an executive officer of
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.
2. Voluntary Resignation. If Employee is not an executive officer of
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 6 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 6 below.
3. Termination With Cause. Employee shall be 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 6 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, as determined by the
President of Employer in his absolute discretion ("Failure to
Perform");
(b) willful or intentional conduct which is demonstrably 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.
(e) Decision by Employer to Terminate With Cause. The decision to
terminate the employment of Employee with Cause shall be made by
the Board of Trustees.
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(f) Payment Upon Termination with Cause. In the event that
Employee's employment is terminated with Cause, Employee
shall receive all base salary due and payable as of the
date of Employee's termination of employment. No payment
shall be made for bonus or other compensation. Payment
also will be made for accrued, but unused vacation time.
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.
4. Severance Benefits Upon Termination Upon Disability. Employer may
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
above) for one (1) year following termination due to
Disability.
(b) Stock Options. In the event that Employee's employment is
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.
5. Severance Benefits Upon Termination Upon Death. If Employee dies,
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
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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.
6. Severance Benefits Upon Termination Upon Change in Control.
(a) Change in Control Defined. No benefits shall be payable
under this Section 6 unless there shall have occurred a Change in Control of
Employer, as defined below. For purposes of this Section 6, 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
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 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
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(iii) Approval by shareholders of Employer of
(A) A merger, consolidation or reorganization involving
Employer, unless:
(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
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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 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 Severance
Agreement to the contrary, if Employee's employment is terminated while this
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 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 Change in Control of Employer occurs, Employee shall be entitled to the
benefits provided in this Section 6 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 6, 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 Control has occurred, Employee's employment with Employer is terminated in
accordance with Section 6(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 1(d) above. If Employee's employment is
terminated by Employee by a written notice which specifies a Termination Date at
least five (5)
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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) 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 6(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 6(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.
(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
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quoted on the New York Stock Exchange, or if such Voting Securities are not
listed 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 6(d)(ii) shall be borne entirely
by Employer.
(e) Excise Tax Payments.
(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 6(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 6) 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 6(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
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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 6 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 6 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 6 (or under any other plan,
agreement,
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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 6, (ii) the determination in any tax year of the tax
consequences to Employee of any amounts payable (or reimbursable) under this
Section 6, 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.
7. 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 1
above, With Cause pursuant to Section 3(a) above, or under circumstances
described in Section 6, 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.
8. 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.
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9. Payments. In the event of the termination of Employee's employment
under circumstances described in Section 6, 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 6,
severance payments made pursuant to this Severance Agreement shall be made pro
rata on a monthly basis. All other severance payments payable to Employee
pursuant to the terms of this Severance Agreement may be made either as a lump
sum payment or pro rata on a monthly basis, at Employee's option.
10. Tax Withholding. Employer may withhold from any benefits payable under
this 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 6(e) of this Severance Agreement shall apply) as shall be
required pursuant to any law or governmental regulation or ruling.
11. Arbitration.
(a) Any controversy, claim or dispute arising out of or relating to
this 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.
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(c) The parties acknowledge that any remedy at law for breach of
this Severance Agreement may be inadequate, and that, in the
event of a breach by Employee of Sections 8 or 14, 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.
12. Continued Employment. This Severance Agreement shall not confer upon
the Employee any right with respect to continuance of employment by Employer.
13. Mitigation. Employee shall not be required to mitigate the amount of
any payment, benefit or other Employer obligation provided for in this 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.
14. 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, financing,
pre-development or development within one year prior to the date
of termination of Employee's employment.
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(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 doing business
with Employer or its affiliates or (B) in
any way interfering with the relationship
between such Person and Employer or its
affiliates.
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(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 6 of this
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 14, 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 14 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 14 or any
of Employee's obligations under this Section 14,
Employee shall not be chargeable with a violation of
this Section 14 if Employer or its affiliates
subsequently enter the same (or a similar) competitive
business, course of activities or location, as
applicable.
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(g) The covenants in this Section 14 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 14 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 14
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 14.
(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 14 hereof, the
period of time for which Employee shall be prohibited pursuant
to Section 14 hereof shall be the maximum time permitted by
law.
15. No Assignment. Neither this 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. This 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 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.
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16. Amendment. This Severance Agreement may be terminated, amended,
modified or supplemented only by a written instrument executed by Employee and
Employer.
17. 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 Severance Agreement; (ii) waive compliance with any
of the conditions or covenants of the other party contained in this Severance
Agreement; (iii) waive or modify performance of any of the obligations of the
other party under this Severance Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this 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 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.
18. Severability. In case any one or more of the provisions of this
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 11
above to be invalid, illegal or unenforceable in any respect (i) such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Severance Agreement, (ii) this 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 Severance Agreement, Employer shall promptly negotiate and
enter into an agreement with Employee containing alternative provisions
(reasonably acceptable to 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
Severance Agreement been upheld as legal, valid and enforceable. Failure to
insist upon strict compliance with any provision of this Severance Agreement
shall not be deemed a waiver of such provision or of any other provision of this
Severance Agreement.
19. Governing Law. This 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 11 hereof shall be conducted in accordance
with the Federal Arbitration Act as then in force.
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20. No Attachment. Except as required by law, no right to receive
payments under this 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.
21. Source of Payments. All payments provided under this 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.
22. Headings. The section and other headings contained in this
Severance Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Severance Agreement.
23. Notices. Any notice required or permitted to be given under this
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.
24. Counterparts. This 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.
25. Entire Agreement. Except as may otherwise be provided herein, this
Severance Agreement supersedes any and all prior written agreements existing
between Employer and Employee with regard to the subject matter hereof.
[signatures on next page]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Severance Agreement to be effective as of the day and year indicated above.
______________________________________
Employee's Signature
Employee's Permanent Address:
FEDERAL REALTY INVESTMENT TRUST
By:___________________________________
Name:
Title: Chairman, Compensation
Committee
Address: 0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
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