FEDERAL REALTY INVESTMENT TRUST
RESTRICTED SHARE AWARD AGREEMENT
February 15, 2000
The parties to this Restricted Share Award Agreement (this "Agreement")
are Federal Realty Investment Trust, an unincorporated business trust organized
under the laws of the District of Columbia (the "Trust"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, an individual employee of the Trust (the "Key Employee").
The Board of Trustees of the Trust (the "Board of Trustees") has
authorized the award by the Trust to the Key Employee, under the Trust's
Amended and Restated 1993 Long-Term Incentive Plan (the "Amended Plan") of a
Restricted Share Award for a certain number of shares of beneficial interest,
no par value, of the Trust (the "Shares"), subject to certain restrictions and
covenants on the part of Key Employee. The parties hereto desire to set forth
in this Agreement their respective rights and obligations with respect to such
Shares.
Capitalized terms used in this Agreement, unless otherwise defined herein,
have the respective meanings given to such terms in the Amended Plan. The
terms of the Amended Plan are incorporated by reference as if set forth herein
in their entirety. To the extent this Restricted Share Award Agreement is in
any way inconsistent with the Amended Plan, the terms and provisions of the
Amended Plan shall prevail.
In consideration of the covenants set forth in this Agreement, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Award of Restricted Shares.
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(a) The Trust hereby confirms the grant to the Key Employee, as of
February 15, 2000 (the "Award Date"), of Twenty Thousand (20,000) Shares (the
"Restricted Shares"), subject to the restrictions and other terms and
conditions set forth herein and in the Amended Plan.
(b) On or as soon as practicable after the Award Date, the Trust
shall cause one or more stock certificates representing the Restricted Shares
to be registered in the name of the Key Employee. Such stock certificate or
certificates shall be subject to such stop-transfer orders and other
restrictions as the Board of Trustees or any committee thereof may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Shares
are listed and any applicable federal or state securities law, and the Trust
may cause a legend
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or legends to be placed on such certificate or certificates to make appropriate
reference to such restrictions.
The certificate or certificates representing the Restricted Shares shall
be held in custody by the Chief Financial Officer of the Trust until the
Restriction Period (as hereinafter defined in Paragraph 3) with respect thereto
shall have lapsed. Simultaneously with the execution and delivery of this
Agreement, the Key Employee shall deliver to the Trust one or more undated
stock powers endorsed in blank relating to the Restricted Shares. The Trust
shall deliver or cause to be delivered to the Key Employee or, in the case of
the Key Employee's death, to the Key Employee's Beneficiary, one or more stock
certificates for the appropriate number of Shares, free of all such
restrictions, as to which the restrictions shall have expired. Upon forfeiture,
in accordance with Paragraph 4, of all or any portion of the Restricted Shares,
the certificate or certificates representing the forfeited Restricted Shares
shall be canceled.
2. Restrictions Applicable to Restricted Shares.
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(a) Beginning on the Award Date, the Key Employee shall have all
rights and privileges of a stockholder with respect to the Restricted Shares,
except that the following restrictions shall apply:
(i) none of the Restricted Shares may be assigned or
transferred (other than by will or the laws of descent and distribution, or in
the Committee's discretion, pursuant to a domestic relations order within the
meaning of Rule 16a-12 of the Securities Exchange Act of 1934, as amended),
pledged or sold, during the Restriction Period (as hereinafter defined in
Paragraph 3);
(ii) all or a portion of the Restricted Shares may be forfeited
in accordance with Paragraph 4; and
(iii) any Shares distributed as a dividend or otherwise with
respect to any Restricted Shares as to which the restrictions have not yet
lapsed shall be subject to the same restrictions as such Restricted Shares and
shall be represented by book entry and held in the same manner as the
Restricted Shares with respect to which they were distributed.
(b) Any attempt to dispose of Restricted Shares in a manner contrary
to the restrictions set forth in this Agreement shall be null, void and
ineffective. As the restrictions set forth in this Paragraph 2 hereof lapse in
accordance with the terms of this Agreement as to all or a portion of the
Restricted Shares, such shares shall no longer be considered Restricted Shares
for purposes of this Agreement.
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3. Restriction Period.
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(a) The restrictions set forth in Paragraph 2 shall apply for a
period (the "Restriction Period") from the Award Date until such Restriction
Period lapses as follows:
(i) with respect to Four Thousand (4,000) Restricted Shares,
the Restriction Period shall lapse on February 15 , 2001;
(ii) with respect to an additional Four Thousand (4,000)
Restricted Shares, the Restriction Period shall lapse on February 15, 2002; and
(iii) with respect to an additional Four Thousand (4,000)
Restricted Shares, the Restriction Period shall lapse on February 15, 2003; and
(iv) with respect to an additional Four Thousand (4,000)
Restricted Shares, the Restriction Period shall lapse on February 15, 2004, and
(v) with respect to the remaining Four Thousand (4,000)
Restricted Shares, the Restriction Period shall lapse on February 15, 2005;
provided, however, that the Restriction Period for any particular Restricted
Shares shall not lapse on the date set forth above unless the Key Employee has
tendered to the Trust, on or before that date, the amount of any state and
federal withholding tax obligation which will be imposed on the Trust by reason
of the lapsing of the Restriction Period for such Restricted Shares on that
date.
(b) Notwithstanding the foregoing, the Restriction Period shall
lapse as to all Restricted Shares (i) in the event of the death or Disability
of the Key Employee, or (ii) in the event that the Key Employee is discharged
by the Trust without Cause as defined in the Amended Plan, provided in any case
that the Key Employee shall have completed at least one year of employment
after the Award Date, and provided further that the Key Employee or his legal
representative shall first tender, within ninety (90) days after the death,
Disability or discharge without Cause, the amount of any state and federal
withholding tax obligation which will be imposed on the Trust by reason of the
lapsing of the Restriction Period for such Restricted Shares.
(c) Also notwithstanding the foregoing, the Restriction Period shall
lapse as to all Restricted Shares upon the occurrence of a Change in Control,
and in such event, the Trust shall deliver or cause to be delivered to the Key
Employee within ten (10) business days after the Change in Control one or more
stock certificates representing those Shares as to which the Restriction Period
shall have lapsed, provided that the Key Employee shall first tender the amount
of any state and federal withholding tax obligation which will be imposed on
the Trust by reason of the lapsing of the Restriction Period for
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such Restricted Shares.
4. Forfeiture. Subject to Paragraph 3(c), if during the Restriction
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Period (i) the Key Employee is discharged by the Trust for Cause, (ii) the Key
Employee resigns from employment with the Trust, or (iii) any of the events
described in Paragraph 3(b) above occur prior to the completion by the Key
Employee of one year of employment after the Award Date, then all rights of the
Key Employee to any and all then-remaining Restricted Shares shall terminate
and be forfeited. In addition, in the event the Key Employee or his legal
representative fails to tender to the Trust any required tax withholding amount
in accordance with Paragraphs 3(a), 3(b), or 3(c) above by the date specified
therein, then the Trust shall retain a portion of the Restricted Shares
sufficient to meet its tax withholding obligation.
5. Assignment. This Agreement shall be binding upon and inure to the
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benefit of the heirs and representatives of the Key Employee and the assigns
and successors of the Trust, but neither this Agreement nor any rights
hereunder shall be assignable or otherwise subject to hypothecation by the Key
Employee.
6. Entire Agreement; Amendment. This Agreement constitutes the entire
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agreement of the parties with respect to the subject matter hereof and shall
supersede all prior agreements and understandings, oral or written, between the
parties with respect thereto. This Agreement may be amended at any time by
written agreement of the parties hereto.
7. Governing Law. This Agreement and its validity, interpretation,
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performance and enforcement shall be governed by the laws of the State of
Maryland other than the conflict of laws provisions of such laws, and shall be
construed in accordance therewith.
8. Severability. If, for any reason, any provision of this Agreement is
------------
held invalid, such invalidity shall not affect any other provision of this
Agreement not so held invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no
way affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect.
9. Continued Employment. This Agreement shall not confer upon the Key
---------------------
Employee any right with respect to continuance of employment by the Trust.
10. Certain References. References to the Key Employee in any provision
------------------
of this Agreement under circumstances where the provision should logically be
construed to apply to the Key Employee's executors or the administrators, or
the person or persons to
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whom all or any portion of the Restricted Shares may be transferred by will or
the laws of descent and distribution, shall be deemed to include such person or
persons.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be duly
executed and the Key Employee has hereunto set his hand effective as of the day
and year first above written.
FEDERAL REALTY INVESTMENT TRUST
By:___________________________
Name:_________________________
Title:________________________
WITNESS: KEY EMPLOYEE
________________________ ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Page 5 of 5
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT ("Severance Agreement"), made and entered into as
of this 1st day of March, 2000 by and between FEDERAL REALTY INVESTMENT TRUST,
a Maryland real estate investment trust ("Employer"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("Employee").
WHEREAS, commencing on February 15, 2000, Employee will serve as
Employer's Vice President - Strategic Transactions 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. Effective Date of Severance Agreement. This 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.
2. Termination Without Cause. In the event that Employee's employment
-------------------------
with Employer is terminated under any of the circumstances in Sections
2(a) or 2(b), Employee will be deemed to have been Terminated Without
Cause and shall receive payments and benefits as described in this
Section 2; provided, however, in the event Employee's employment with
Employer is terminated under any of the circumstances in Sections 2(a)
or 2(b) under circumstances described in Section 7 below, Employee
shall receive such payments and benefits as are set forth in Section 7
in lieu of the payments and benefits under this Section 2:
(a) by Employer other than with Cause (as "Cause" is defined in
Section 4 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 reports shall not by itself
constitute a material modification of Employee's
responsibilities unless Employee is assigned to
report to a position below the level of executive
officer; 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 16) 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;
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(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 2000, 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 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.
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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 describedin Section 7 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 2(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 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 under circumstances described in Section 7 below,
Employee shall receive "Full Benefits" for nine (9) months.
Employer shall have satisfied its obligation to
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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 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 7 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 7
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 7 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 Section 2(b) hereof other than under circumstances
described in Section 7 below and (i)
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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.
(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 16 and the affiliate
has assumed the obligations hereunder.
3. 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 7
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 7 below.
4. 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 7 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.
(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.
(f) Severance Payment Upon Termination with Cause. In the event
of termination for Failure to Perform pursuant to Section
4(a), or termination for cause pursuant to Section 4(b), (c)
or (d) above, the terms of the stock option agreements
between
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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
--------------------------------------------
event that Employee's employment is terminated with
Cause pursuant to Section 4(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 4(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 4(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
-----------------------
employment is terminated with Cause pursuant to
Section 4(b), (c) or (d), 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.
5. 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.
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(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.
6. 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.
7. Severance Benefits Upon Termination Upon Change in Control.
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(a) Change in Control Defined. No benefits shall be payable under
-------------------------
this Section 7 unless there shall have occurred a Change in
Control of Employer, as defined below. For purposes of this
Section 7, 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
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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
(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
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(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 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 7
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 7, Employee's employment shall be terminated by
written notice
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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 7(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 2(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) 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 7(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 7(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.
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(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 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 7(d)(ii)
shall be borne entirely by Employer.
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(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 7(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 7) 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.
(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 7(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
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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 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
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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 7
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 7 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 7 (or under any other plan, agreement,
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 ▇▇▇▇▇ 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 7,
(ii) the determination in any tax year of the tax
consequences to Employee of any amounts payable (or
reimbursable) under this Section 7, 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
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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.
8. 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 2 above, With Cause pursuant to Section 4(a)
above, or under circumstances described in Section 7, 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.
9. 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.
10. Payments. In the event of the termination of Employee's employment
--------
under circumstances described in Section 7, 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 7, 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.
11. 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 7(e) of this Severance Agreement
shall apply) as shall be required pursuant to any law or governmental
regulation or ruling.
12. 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
14 of 20
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 eposit 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.
(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 9 or 15, 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.
13. Continued Employment. This Severance Agreement shall not confer upon
---------------------
the Employee any right with respect to continuance of employment by
Employer; provided, however, that Employer shall not, prior to
February 15, 2001, (i) terminate Employee's employment other than
with Cause (as "Cause" is defined in Section 4 hereof); or (ii) do
any of the things described in Section 2(b)(i) or 2(b)(iii) which
would entitle Employee to resign and receive a severance payment
pursuant to Section 2(d) of this Agreement.
14. 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.
15 of 20
1.5 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.
(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
16 of 20
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 7 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 15, 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 15 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 15 or any of
Employee's obligations under this Section 15, Employee shall not be
chargeable with a violation of this Section 15 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 15 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.
17 of 20
(h) All of the covenants in this Section 15 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 15 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 15.
(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 15 hereof, the period of time for
which Employee shall be prohibited pursuant to Section 15 hereof
shall be the maximum time permitted by law.
16. 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; provided, further,
that in connection with a voluntary transfer, the Employer may assign this
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 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 Severance Agreement. 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.
17. Amendment. This Severance Agreement may be terminated, amended, modified or
----------
supplemented only by a written instrument executed by Employee and Employer.
18. 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
18 of 20
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.
19. 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
12 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.
20. 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 12 hereof shall be conducted
in accordance with the Federal Arbitration Act as then in force.
21. 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.
22. 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.
23. 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.
24. 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
19 of 20
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.
25. 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.
26. 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.
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:________________________________
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
20 of 20
March 1, 2002
▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇:
This letter agreement will set forth the terms of the termination of
your employment with Federal Realty Investment Trust (the "Trust"):
1. Your employment was terminated without cause pursuant to the
Amended and Restated Severance Agreement dated March 6, 1998 between you and the
Trust (the "Severance Agreement") effective March 1, 2002 (the "Termination
Date"). You and the Trust acknowledge that you have been paid through the
Termination Date and that the Trust owes you payment for all accrued unused
vacation as of the Termination Date, plus an additional eleven vacation days.
2. The Trust will make a severance payment to you in the amount of
$1,035,400 pursuant to Section 3(d) of your Severance Agreement. You agree that
the above amount is the correct amount payable under that section of your
Severance Agreement. Your severance payment will be payable in a lump sum on the
date on which this letter agreement becomes effective and enforceable (i.e., the
day after the expiration of the revocation period referred to in paragraph 15
below without your having revoked this letter agreement). You will also be
entitled to all benefits and balances under your 401-K and Non-Qualified
Deferred Compensation plans.
3. You will receive Full Benefits as described in Section 3(e) of the
Severance Agreement for the periods specified in Section 3(e) plus an additional
period of seven (7) months.
4. You will receive outplacement services as described in Section 3(h)
for a period not to exceed six (6) months and beginning on any date elected by
you in writing during the sixteen (16) month period commencing on the
Termination Date.
5. You will receive the perquisites described in Section 3(i) of the
Severance Agreement beginning September 30, 2002.
6. Effective as of the Termination Date, you will receive loan
forgiveness described
in Section 3(f) of the Severance Agreement as well as loan forgiveness
provided for upon termination of your employment without cause under the
performance share award, restricted share award, share purchase plan and option
agreements between you and the Trust. It is hereby acknowledged and agreed that
the balance of your outstanding indebtedness to the Trust as of the Termination
Date, after giving effect to the debt forgiveness triggered by your Termination
Without Cause, is $1,729,988.50 ("Total Outstanding Debt") and this amount, and
the debt forgiveness, is itemized on Exhibit A.
7. The Trust has agreed to modify and extend the terms of your
obligation to repay the Total Outstanding Debt as follows: the Total Outstanding
Debt will bear interest at a fixed annual rate of 5.85% and will have a maturity
date of September 30, 2007, unless earlier forgiven or prepaid and will require
interest-only quarterly payments of $25,301.08, which shall be due and payable
on each January 15th, April 15th, July 15th and October 15th during the Term;
the obligation will be recourse to you and you shall maintain collateral in the
form of unencumbered Federal Realty stock or cash or any cash equivalent having
a then current market value of not less than 110% of the outstanding loan
balance. The sufficiency of Collateral will be evaluated as of March 1 of each
year during the term of the loan. In the event that the value of the Collateral
is less than 100% of the outstanding loan balance as of March 1, you will post
additional Collateral as required in order to satisfy this requirement. In the
event that the value of the Collateral exceeds 110% of the outstanding loan
balance as of March 1, excess Collateral will be released at your request. If
the Trust contemplates a change in control (as that term is defined in the
Trust's 2001 Long-Term Incentive Plan) prior to September 30, 2007, the Trust
may, but shall have no obligation to, engage you in connection with such
transaction, and, if the Trust does so engage you pursuant to a written
agreement signed by you and ▇▇▇▇▇ ▇▇▇▇▇▇▇ or any Executive Officer on behalf of
the Trust, the outstanding principal balance of the Total Outstanding Debt will
be forgiven in full in the event that the change in control transaction is
completed on or before September 30, 2007. In consideration for the
modifications and extension provided herein and the cancellation of all existing
promissory notes which previously evidenced the Total Outstanding Debt, you will
execute, concurrently herewith, the Full Recourse Secured Promissory Note and
Share Pledge Agreement in the forms attached hereto as Exhibit B, evidencing and
securing your obligation with respect to the Total Outstanding Debt.
8. Effective as of the Termination Date, you will receive the
accelerated vesting of stock options, performance shares and restricted shares,
pursuant to Section 3(g) of your Severance Agreement and other agreements
between you and the Trust, as itemized in Exhibit C hereto (and the options may
be exercised for a period of seven months commencing on the date first set forth
above, plus the period specified in such agreements).
9. It is acknowledged and agreed that the Split Dollar Life Insurance
Agreement between you, the Trust and the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust shall
remain in full force and effect in accordance with the Split Dollar Life
Insurance Agreement.
10. The Trust may withhold from any amounts payable under this letter
agreement, and pay over to the appropriate authority, all federal, state,
county, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
2
11. You understand and acknowledge that the payments provided for in
this letter agreement are the only payments to which you will be entitled and
that they exceed the payments and benefits to which you were otherwise entitled.
In consideration of these payments, you agree that you will not be entitled to
collect unemployment compensation. You acknowledge and recognize that in
agreeing to provide you with the payments provided under this letter agreement,
the Trust in no way admits any wrongdoing or liability to you arising out of any
basis, including but not limited to your employment and/or ending of employment
with the Trust.
12. You acknowledge that the Trust's business reputation in the real
estate industry and the morale of its employees are of great value to the Trust.
Thus, in consideration of the payments provided under this letter agreement, you
agree that (a) you will not disparage the Trust, its affiliates or its and their
officers, directors, trustees or employees, and (b) you will comply with all the
terms and conditions of the confidentiality letter you executed as a condition
of employment with the Trust (a copy of which is attached to this letter
agreement as Attachment A) and you will not divulge and will keep confidential
all proprietary and private information regarding the Trust which was made known
to you during your employment, other than any disclosure required by any law or
regulation, court of competent jurisdiction, recognized subpoena power, or
governmental agency or authority, or to the extent necessary for ▇▇▇▇▇▇ to
enforce Federal's obligations hereunder.
The Trust acknowledges your reputation and its great value to you. The
Trust agrees that neither it nor its officers, directors, trustees, or agents
will disparage your work performance or ethic or your integrity, or otherwise
comment upon you unfavorably; and that neither it nor its officers, directors,
trustees, or agents will make or publish, without your express prior written
consent, any disparaging written or oral statement concerning you or your work
performance or ethic or your integrity.
13. You agree to return to the Trust all items containing proprietary
information or trade secrets and any other property belonging to the Trust on or
before the last day of the Term of the Consulting Agreement between you and the
Trust. Notwithstanding the foregoing, you may retain, as your personal property,
the Compaq Armada M300 laptop computer and docking station that the Trust
provided for your use ("Computer"), provided that you must present the Computer
to ▇▇▇▇ ▇▇▇▇▇▇ on or before the last day of the Term of the Consulting Agreement
so that she may delete any proprietary or confidential information stored
thereon.
14. In consideration of the mutual promises of the parties and of the
payments and other benefits promised herein by the Trust, you agree to release
the Trust, all affiliated companies, and all employees, representatives,
officers, trustees and directors of those entities of any and all claims or
causes of action which you could assert arising, directly or indirectly, out of,
or in any way connected with, based upon, or related to your employment by the
Trust or your retirement under all statutes, laws, and regulations, whether,
federal, state or local by executing a Release (in the form attached to this
letter agreement as Attachment A) simultaneously with the execution of this
letter agreement, and the Release shall be attached to and form a part of this
letter agreement.
15. You acknowledge that you have been given at least twenty-one (21)
days to consider this letter agreement, that you have seven (7) days from the
date you sign this letter
3
agreement in which to revoke it, and that this letter agreement will not be
effective or enforceable until after the seven-day revocation period ends
without your revocation of it. Revocation can be made by delivery of a written
notice of revocation to ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President - General Counsel,
on or before the seventh calendar day after you sign this letter agreement.
16. This letter agreement (i) supersedes all other agreements between
you and the Trust with regard to the subject matter hereof, (ii) will be
governed by and interpreted under the laws of Maryland, and (iii) will become
final and binding on both parties only upon full execution by both parties, your
execution of the Release and the passage of the seven-day revocation period
without your revocation.
It has been an honor and a pleasure working with you, ▇▇▇. On behalf of
myself, the other officers and employees of the Trust, and the Board of
Trustees, I want to thank you for your many years of devoted and very
professional service to the Trust. We wish you all the best in your future
endeavors.
WITNESS: FEDERAL REALTY INVESTMENT TRUST
______________________________ By: ______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President-General Counsel
and Secretary
WITNESS:
______________________________ ______________________________________
▇▇▇ ▇. ▇▇▇▇▇▇
Date of Signature: ___________________
4
ATTACHMENT A
RELEASE
This Release, entered into and effective for all purposes as of this ____ day of
March, 2002, between ▇▇▇ ▇. ▇▇▇▇▇▇ ("Employee") and Federal Realty Investment
Trust ("Employer"),
KNOW ALL MEN BY THESE PRESENTS THAT:
A. In consideration of Employer's agreement to make the payments and to
provide other benefits to Employee as set forth in a letter agreement dated
March 1, 2002, the receipt and sufficiency of which are hereby acknowledged,
Employee hereby irrevocably and unconditionally releases, remits, acquits, and
discharges Employer and any affiliate of Employer and its present and former
officers, Trustees, agents, employees, contractors, successors and assigns
(separately and collectively "releasees"), jointly and individually, from any
and all claims, known or unknown, which Employee, her heirs, successors or
assigns have or may have against releasees and any and all liability which the
releasees may have to her whether called claims, demands, causes of action,
obligations, damages or liabilities arising from any and all basis, however
called, including but not limited to claims of discrimination under any federal,
state or local law, rule or regulation. This release relates to claims known or
unknown arising prior to and during Employee's employment by Employer, whether
those claims are past or present, whether they arise from common law, contract
or statute, whether they arise from labor laws or discrimination laws, or any
other law, rule or regulation, provided, however, that this release does not
apply to any rights or claims that may arise after the date of this Release.
Employee specifically acknowledges that this release is applicable to any claim
under the CIVIL RIGHTS ACT OF 1964, as amended, the AGE DISCRIMINATION IN
EMPLOYMENT ACT, as amended, and/or the AMERICANS WITH DISABILITIES ACT. This
release is for any relief, no matter how called, including but not limited to
reinstatement, wages, back pay, front pay, severance pay, compensatory damages,
punitive damages or damages for pain or suffering, or attorney fees.
B. Subject to Paragraph D. below, Employer and its successors and
assigns hereby irrevocably and unconditionally release, remit, acquit, and
discharge Employee from any and all claims, known or unknown, which Employer has
or may have against Employee and any and all liability which Employee may have
to it whether called claims, demands, causes of action, obligations, damages or
liabilities arising from any and all basis, however called. This release relates
to claims known or unknown arising prior to and during Employee's employment by
Employer, whether those claims are past or present, whether they arise from
common law, contract or statute, whether they arise from labor laws or
discrimination laws, or any other law, rule or regulation, provided, however,
that this release does not apply to any rights or claims that relate to events
occurring after the date of this Mutual Release. This release is for any relief,
no matter how called, including but not limited to compensatory damages,
punitive damages or damages for pain or suffering, or attorney fees.
5
C. Employee represents that he has not filed any administrative or
judicial claim or complaint against releasees. Employer represents that it has
filed no administrative or judicial claim or complaint against Employee.
D. This Release shall be and remain in effect despite any alleged
breach of the letter agreement or the discovery or existence of any new or
additional fact or any fact different from that which Employee or Employer or
their counsel now know or believe to be true. Notwithstanding the foregoing,
nothing in this Release shall be construed as or constitute a release of
Employee's or Employer's rights to enforce the terms of the letter agreement, or
to seek relief, including but not limited to any damages, for any breach of the
letter agreement.
E. Employee acknowledges that he has read the foregoing Release; that
he has had a right to consult an attorney, and has been encouraged by the
Employer to review this Release with an attorney; that he has been given a
period of not less than 21 days in which to consider this Release; that he
understands it; and that he accepts and agrees to all the provisions contained
herein. Employee understands that this Release sets forth the entire
understanding of the parties, and he acknowledges that he has not relied upon
any other representations or promises in entering into this Release.
Employee may revoke this Release at any time during the seven days
immediately following his execution of the Release, after which time the Release
shall be irrevocable and enforceable in any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Release as of the
date first above written.
______________________________________
▇▇▇ ▇. ▇▇▇▇▇▇
FEDERAL REALTY INVESTMENT TRUST
By: ___________________________________
Title:
6
EXHIBIT A
---------
TOTAL OUTSTANDING DEBT
----------------------
Debt Forgiven On Total Outstanding
Existing Debt TWOC/1/ Debt
-------------- ---------------- -----------------
Stock Option Loans $1,104,988.50 $ 0 $1,104,988.50
Share Purchase Loans and
Associated Tax Loans $ 750,000.00 $125,000.00 $ 625,000.00
Tax Loans on Restricted Shares $ 333,377.19 $333,377.19 $ 0
Tax Loans on Performance
Shares $ 398,656.25 $398,656.25 $ 0
------------- ----------- -------------
Total $2,587,021.94 $857,033.44 $1,729,988.50
------------- ----------- -------------
Newly Created Debt Debt Forgiven
as a Result of TWOC on TWOC
------------------- -------------
Tax Loans on Restricted
Shares $393,251 $393,251
Tax Loans on Performance
Shares $314,500 $314,500
-------- --------
Total $707,751 $707,751
-------- --------
------------------
/1/ "TWOC" refers to Termination Without Cause, as defined in Section 3 of ▇▇▇
▇▇▇▇▇▇'▇ Amended and Restated Severance Agreement.
7
EXHIBIT B
FORM OF FULL RECOURSE SECURED PROMISSORY NOTE AND STOCK
PLEDGE AGREEMENT
8
EXHIBIT C
ACCELERATED VESTING
TYPE OF AWARD ACCELERATION
--------------------------------------------- ----------------------------------------------------
Performance Share Award Agreements Accelerated vesting of remaining 25,000 shares
--------------------------------------------- ----------------------------------------------------
Restricted Share Award Agreements
(Service Awards) Accelerated vesting of remaining 29,950 shares
--------------------------------------------- ----------------------------------------------------
Restricted Share Award Agreements (Bonus) Accelerated vesting of 4,805 shares
--------------------------------------------- ----------------------------------------------------
Options Accelerated vesting of 69,999 options; vested
options are exercisable for 12 months
--------------------------------------------- ----------------------------------------------------
9
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made as of the _1st___
day of March, 2002, by and between Federal Realty Investment Trust, with an
address of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Federal") and ▇▇▇
▇. ▇▇▇▇▇▇, an individual with an address of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇ ").
WHEREAS Federal desires to engage ▇▇▇▇▇▇ to serve as a consultant to
Federal and ▇▇▇▇▇▇ desires to so serve as a consultant to Federal.
NOW THEREFORE, in consideration of the promises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Appointment as Independent Consultant. Federal agrees to engage
-------------------------------------
▇▇▇▇▇▇ as an independent consultant, for the purposes set forth in Paragraph 3
of this Agreement (the "Services"). The parties acknowledge and agree that
▇▇▇▇▇▇'▇ employment with Federal was terminated effective March 1, 2002 and that
nothing in this Agreement shall constitute or be construed as constituting,
creating or extending an agency, partnership, master-servant or
employer-employee relationship between Federal and ▇▇▇▇▇▇. Federal shall not be
liable for any act or omission of ▇▇▇▇▇▇ or for any obligation or debt incurred
by ▇▇▇▇▇▇, unless the same shall have been authorized by any Executive Officer
of Federal.
2. Term. The term of this Agreement shall commence on March 1, 2002,
----
and shall continue through September 30, 2002 or the Termination Date ("Term").
▇▇▇▇▇▇ shall return to Federal any and all records, reports, documents and other
materials relating to the Services that are in his possession or control, by
overnight courier within twenty-four (24) hours after the first to occur of: (i)
a request by Federal, or (ii) the Termination Date, or (iii) September 30, 2002.
Federal shall promptly reimburse ▇▇▇▇▇▇ for actual charges incurred to deliver
such materials.
3. Services. ▇▇▇▇▇▇ agrees to use reasonable best efforts to complete
--------
each and all of the following Services, to the reasonable satisfaction of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ (or such other Federal designee as may be appointed by the Chief
Executive Officer of Federal) on or before September 30, 2002. ▇▇▇▇▇▇ shall
devote the time required as determined in his reasonable discretion to complete
the Services.
a. Transition all matters, projects and other business for
which ▇▇▇▇▇▇ was responsible during the term of his
employment with Federal to ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ and
other designated employees.
b. Renegotiate the ▇▇▇▇▇▇▇ Row construction loan on terms
acceptable to Federal.
4. Consulting Fees, Expenses and Support.
-------------------------------------
a. Federal agrees to pay ▇▇▇▇▇▇ a consulting fee of $27,100 per
month for each
month of the Term, payable in equal installments on the 1st and
15th of each month in arrears, with the first payment due on
March 15, 2002 ("Consulting Fee").
▇. ▇▇▇▇▇▇ will be eligible to receive a success fee ("Success
Fee"), the target amount of which shall be $500,000, payable
promptly after ▇▇▇▇▇▇ procures on behalf of the Trust a
restructured ▇▇▇▇▇▇▇ Row construction loan on terms acceptable
to the Trust, provided that ▇▇▇▇▇ ▇▇▇▇▇▇▇ (or, in the event he
is incapacitated his successor) recommends and the
Compensation Committee approves the payment of the Success
Fee.
c. During the Term of this Agreement, Federal will provide ▇▇▇▇▇▇
with his current office space in Federal's Rockville, Maryland
office, as well as administrative support (which may be shared),
computer services (with a connection to Federal's network), a
phone, fax and other items and services that ▇▇▇▇▇▇ had
available to him prior to February 28, 2002 and necessary to
enable ▇▇▇▇▇▇ to perform the Services. Notwithstanding anything
to the contrary in the preceding sentence, Federal will not
terminate ▇▇▇▇▇▇'▇ existing administrative assistant, ▇▇▇▇▇ ▇▇▇
("Fox") without cause prior to June 1, 2002, and she will
continue to support ▇▇▇▇▇▇ through June 1, 2002 (or earlier if
she elects to terminate her employment or is terminated with
cause). Federal agrees that in the event that Federal terminates
Fox effective June 1, 2002, she will be notified of the
termination on or about April 15, 2002 and will receive a
severance payment equal to four (4) weeks' base salary in
exchange for a release of claims.
d. Federal will reimburse ▇▇▇▇▇▇ or pay directly in accordance with
Federal's Travel and Entertainment Policy, all reasonable costs
and expenses necessary in connection with the performance of the
Services hereunder, such as out of town travel and related
expenses, provided that any expenditures in excess of $5,000 per
month must be expressly authorized by Federal in advance.
5. Confidentiality and Nondisclosure.
---------------------------------
a. In connection with the performance of the Services, ▇▇▇▇▇▇
acknowledges that he may have access to Federal's confidential
information and other secret or confidential matters relating to
the business of Federal or its affiliates. "Confidential
Information" means any information, oral or written, that is not
generally known outside of Federal and/or its affiliates. It is
understood that all such information shall have been received by
▇▇▇▇▇▇ in confidence and ▇▇▇▇▇▇ specifically agrees to retain
all such information in strict confidence, disclosing it to no
third party (other than Federal) and making no use of that
information for ▇▇▇▇▇▇'▇ own benefit or for any purpose
whatsoever (other than as contemplated herein), without express
written authorization from Federal, other than any disclosure
required by any law or regulation, court of competent
jurisdiction, recognized subpoena power, or governmental agency
or authority, or to the extent necessary for ▇▇▇▇▇▇ to enforce
Federal's obligations hereunder.
b. The terms of this Confidentiality and Nondisclosure agreement
shall survive the termination of ▇▇▇▇▇▇'▇ association with
Federal, regardless of the manner of such
termination.
6. Ownership of Intellectual Property. ▇▇▇▇▇▇ shall perform the
----------------------------------
Services solely for the benefit of Federal and it is the parties' intent that
Federal shall own all title in all material and works created by ▇▇▇▇▇▇ under
this Agreement (the "Works"). ▇▇▇▇▇▇ hereby assignees to Federal all of ▇▇▇▇▇▇'▇
right, title and interest, including copyright, throughout the world, in and to
all such Works, including the rights to bring suit or make any claim in
Federal's name for prior or future infringement of rights in the Works. ▇▇▇▇▇▇
further agrees, at the request and expense of Federal or its successor in
interest, to do all lawful acts which may be required for obtaining and
enforcing copyright rights in the Works and otherwise to aid Federal or its
successor in enforcing rights in the Works.
7. Governing Law. Any controversy or claim arising out of or relating
-------------
to this Agreement, or the breach thereof, shall be governed by the laws of
Maryland.
8. Assignability. It is understood that the Services provided hereunder
-------------
are personal to ▇▇▇▇▇▇. Therefore, ▇▇▇▇▇▇ may not assign, transfer or sell his
rights under this Agreement, or delegate his duties hereunder unless as
expressly provided herein or otherwise with the prior written consent of
Federal. Any attempted assignments or delegation without such consent shall be
void and without effect.
9. Termination. Federal may terminate this Agreement by written notice
-----------
to ▇▇▇▇▇▇ in the event that ▇▇▇▇▇▇ engages in willful misconduct, bad faith or
gross negligence in the performance of the Services which conduct results in
actual injury to Federal, in which event Federal's obligation to pay, and
▇▇▇▇▇▇'▇ right to receive, the Consulting Fee and the Success Fee shall
terminate as of the date of termination. ▇▇▇▇▇▇ may terminate this Agreement by
written notice to Federal in the event that Federal engages in willful
misconduct, bad faith or gross negligence in connection with this Agreement,
which conduct results in actual injury to ▇▇▇▇▇▇, in which event ▇▇▇▇▇▇'▇
obligation to provide the Services shall terminate and Federal shall promptly
pay to ▇▇▇▇▇▇ the balance of the Consulting Fee and the Success Fee. ▇▇▇▇▇▇ may
terminate this Agreement by written notice to Federal for any other reason, in
which event ▇▇▇▇▇▇'▇ obligation to provide the Services shall terminate and
Federal's obligation to pay ▇▇▇▇▇▇ the balance of the Consulting Fee and the
Success Fee shall also terminate. The effective date of any termination pursuant
to this provision shall herein be referred to as the "Termination Date". These
rights shall be in addition to and not in lieu of any other right or remedy
otherwise available for any breach of this Agreement.
10. Indemnification. Federal hereby agrees to indemnify and hold ▇▇▇▇▇▇
---------------
harmless from and against all claims, liabilities, losses, damages and expenses
incurred or arising out of ▇▇▇▇▇▇'▇ performance of the Services pursuant to this
Agreement to the fullest extent permitted under Maryland law, except for any
claim, liability, loss, damage or expense that relates to or arises from any
action or failure to act by ▇▇▇▇▇▇ constituting willful misconduct, bad faith or
gross negligence.
11. Limited Liability. The parties hereto agree that the obligations of
-----------------
Federal under
this Agreement are not binding upon any of the trustees, officers or
shareholders of Federal individually. The parties to this Agreement agree that
no trustee, officer or shareholder of Federal may be held personally liable or
responsible for any obligations of Federal arising out of this Agreement.
12. Entire Agreement. This Agreement represents the entire agreement
----------------
between the parties hereto with regard to the subject matter hereof. Any
modifications, amendments or waivers of any of the provisions, herein shall be
effective only if made in writing and duly signed by each party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
FEDERAL REALTY INVESTMENT TRUST
------------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Senior Vice President-General Counsel
-------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
FULL RECOURSE SECURED PROMISSORY NOTE
-------------------------------------
$1,729,988.50 March 14, 2002
FOR VALUE RECEIVED, the undersigned, ▇▇▇ ▇. ▇▇▇▇▇▇ (the "Maker"),
promises to pay to the order of Federal Realty Investment Trust, a Maryland real
estate investment trust (the "Trust"), on the Maturity Date (as defined herein),
the aggregate principal sum of One Million Seven Hundred Twenty-nine Thousand
Nine Hundred Eighty-eight Dollars and Fifty Cents ($1,729,988.50).
1. Letter Agreement. This Note is the promissory note referred to
----------------
in section 7 of the certain letter agreement dated as of March 1, 2002 by and
between Maker and the Trust (the "Letter Agreement"). Maker is executing and
delivering this Note as required pursuant to the terms of the Letter Agreement.
2. Interest. Interest on the outstanding principal amount of this
--------
Note shall be payable at the rate of 5.85% per annum. Interest shall be due and
payable quarterly in arrears on January 15, April 15, July 15 and October 15 of
each year for so long as any principal amount remains outstanding. All payments
under this Note shall be made to the order of the Trust at the address listed in
Section 9, or such other address as the Trust may designate in writing to the
Maker.
3. Maturity Date. The principal balance of and all accrued and
-------------
unpaid interest on this Note shall be paid in full on the earliest of: (a)
September 30, 2007 or (b) the occurrence of any Event of Default (as defined
herein) (the "Maturity Date").
4. Payment. This Note, as well as any accrued interest hereunder,
-------
may be prepaid at any time in full or from time to time in part, without premium
or penalty. In the event of any prepayment, such prepayment shall be applied
first toward accrued and unpaid interest hereon, and any balance shall then be
applied to the unpaid principal balance hereof. In the event of any partial
prepayment, the Trust shall prepare and attach a schedule to this Note which
reflects the adjusted balance of the principal and accrued interest on this
Note. Except as set forth in Section 5 of this Note, all payments of principal
and interest on this Note shall be paid in the legal currency of the United
States. The Maker, or his successors and assigns, waives diligence, presentment
for payment, demand, protest, and notice of protest, dishonor and nonpayment of
this Note and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time and that the holder hereof may accept security for
this Note or release security for this Note, all without in any way affecting
the liability of the Maker hereunder.
This Note will be forgiven in full, pursuant to section 7 of the Letter
Agreement if the Trust engages the Maker pursuant to a written agreement signed
by the Maker and ▇▇▇▇▇ ▇▇▇▇▇▇▇ or any Executive Officer on behalf of the Trust
in connection with a contemplated change in control (as that term is defined in
the Trust's 2001 Long-Term Incentive Plan) prior to September 30, 2007 and the
change in control transaction is completed on or before September 30, 2007.
- 1 -
5. Payment in Common Shares. In addition to payment pursuant
------------------------
to paragraph 4 above, this Note may also be paid in full or in part by the Maker
at any time or from time to time by either (a) the surrender to the Trust for
cancellation of a certificate or certificates registered in the name of the
Maker (or his successors or assigns) representing the Trust's common shares of
beneficial interest, par value $.01 per share ("Common Shares"), or (b) the
delivery by the Maker to the Trust of a written instrument notifying the Trust
of the Maker's intent to surrender for cancellation of a specified number of the
Pledged Shares (as defined below) then held by the Trust pursuant to the terms
of the Pledge Agreement (as defined below) for the purpose of making such
payment. In either case, the aggregate amount of the accrued but unpaid interest
and principal, if any, to be paid shall be calculated based on the aggregate
Value (as defined below) of the Common Shares surrendered or to be surrendered
for cancellation by the Trust. For purposes of this Note, "Value" shall mean the
product of the number of Common Shares so delivered, multiplied by the Fair
Market Value of a Common Share. "Fair Market Value" shall mean 100% of the
closing sale price of the Trust's common shares of beneficial interest (as
reported on The New York Stock Exchange's Composite Transactions Tape) for the
trading day immediately preceding the day on which the Trust has taken delivery
of the Common Shares or the Maker's written request for the application of
Pledged Shares for such purpose, as the case may be, in connection with such
payment.
6. Security. Payment of this Note shall be secured by a Share
--------
Pledge Agreement, in substantially the form attached hereto as Exhibit A (the
"Pledge Agreement"), to be executed and delivered by the Maker and providing,
among other things, for the pledge by the Maker of Common Shares having an
aggregate Value (calculated as of March 1, 2002) of at least One Million Nine
Hundred Two Thousand Nine Hundred Eighty-seven Dollars and Thirty-five Cents
($1,902,987.35) (such Common Shares, the "Pledged Shares"). Notwithstanding the
foregoing, this Note is a "recourse" Note and the right of the Trust under the
Pledge Agreement to foreclose upon and dispose of the Pledged Shares shall be in
addition to, and shall not in any way limit, hinder or affect, any other rights
and remedies that may be available to the Trust under applicable law.
7. Default. The occurrence of any of the following shall
-------
constitute an "Event of Default" under this Note:
(a) Default in the payment of any installment of principal
and/or interest on this Note when due and the continuation of such default for
more than ten (10) days;
(b) The occurrence of any event of default under the
Pledge Agreement securing this Note.
Upon the occurrence of any such Event of Default, the entire
unpaid balance of principal on this Note, together with all accrued interest
thereon, shall be due and payable either immediately or at any time during the
continuance of such Event of Default, at the option of the Trust. Failure to
exercise this option upon or during an Event of Default shall not constitute a
waiver of the right to exercise the same upon the occurrence of any subsequent
Event of Default. No delay or omission on the part of the Trust in exercising
any rights hereunder shall operate as a waiver of such rights or of any other
right under this Note. Without limiting the
- 2 -
generality of the foregoing, upon the occurrence of an Event of Default the rate
at which interest shall accrue on the outstanding principal balance and other
amounts due hereunder shall increase to 10% per annum until all such amounts
have been paid in full.
8. Attorneys' Fees. If the Maker fails to pay any amounts due
---------------
under this Note when due, the Maker shall pay to the holder hereof, in addition
to such amounts due, all costs of collection, including reasonable attorneys'
fees.
9. Notices. Any notice, request, demand, claim, or other
-------
communication under this Note shall be in writing and shall be either personally
delivered, sent by facsimile or sent by reputable overnight courier service
(charges prepaid) to the recipient at the following address:
If to the Trust:
---------------
Federal Realty Investment Trust
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal Department
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Maker:
---------------
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement will be deemed to have been given
hereunder when delivered personally or sent by facsimile, and one day after
deposit with a respectable overnight courier service.
10. Governing Law. All issues concerning this Agreement shall be
-------------
governed by and construed in accordance with the laws of the State of MARYLAND,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of MARYLAND or any other jurisdiction) that would cause
the application of the law of any jurisdiction other than the State of MARYLAND.
11. Jurisdiction; Venue; Jury Trial. The Maker hereby consents
---------------------------------
to the exclusive jurisdiction of the federal and state courts located in THE
State of MARYLAND, and waives any
- 3 -
objections of improper venue and forum of such courts, in connection with any
action hereunder. The Maker further consents to personal jurisdiction in the
State of MARYLAND and agrees that service of process by certified mail, return
receipt requested, shall constitute good and valid service (in addition to any
other proper service). The Maker hereby waives any right to a jury trial in any
such action.
12. Enforceability. If any one or more of the provisions of
--------------
this Note is determined to be unenforceable, in whole or in part, for any
reason, the remaining provisions shall remain fully operative. No renewal or
extension of this Note, delay in enforcing any right of the Trust under this
Note, or assignment by the Trust of this Note shall affect the liability of the
Maker. All rights of the Trust under this Note are cumulative and may be
exercised concurrently or consecutively at the Trust's option.
[Signature Page Follows]
- 4 -
IN WITNESS WHEREOF, the Maker has caused this Secured
Promissory Note to be executed on its behalf as of the date first above written.
THE MAKER:
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
- 5 -
Exhibit A: Share Pledge Agreement
---------
SHARE PLEDGE AGREEMENT
THIS SHARE PLEDGE AGREEMENT (this "Agreement") is entered into
as of March _14_, 2002, by and between ▇▇▇ ▇. ▇▇▇▇▇▇, an individual having his
principal residence in the State of Maryland ("Pledgor") and Federal Realty
Investment Trust, a Maryland real estate investment trust (together with its
successors and assigns, "Secured Party").
WHEREAS, Secured Party and Pledgor have entered into that
certain letter agreement dated as of March 1, 2002 (the "Letter Agreement"),
pursuant to which Secured Party has agreed to modify and extend the terms of
Pledgor's obligation to repay Pledgor's outstanding indebtedness to Secured
Party in aggregate principal amount of One Million Seven Hundred Twenty-nine
Thousand Nine Hundred Eighty-eight Dollars and Fifty Cents ($1,729,988.50) (the
"Total Outstanding Indebtedness"), upon the terms and subject to the conditions
set forth in the Letter Agreement;
WHEREAS, pursuant to the Letter Agreement and in consideration
of the cancellation of all promissory notes which previously evidenced the Total
Outstanding Indebtedness, Pledgor has executed and delivered a Note of even date
herewith (the "Note") evidencing and setting forth the terms and conditions
governing Pledgor's obligations to repay the Total Outstanding Indebtedness;
WHEREAS, in accordance with the Letter Agreement and the Note,
Pledgor is required to execute and deliver this Agreement and to pledge
hereunder the Collateral (as hereinafter defined) as security for Pledgor's
obligations under the Note; and
WHEREAS, all capitalized terms used herein which are not
herein defined shall have the meanings ascribed to them in the Note;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS
For the purposes of this Agreement:
(a) "Business Day" means a day (other than a Saturday or a
Sunday) on which banks generally are open for business in Washington, D.C.
(b) "Calculation Date" means, prior to the Maturity Date,
each March 1 on which principal or accrued interest remains outstanding under
the Note. If March 1 is not a Business Day, the Calculation Date shall be the
next succeeding Business Day.
(c) "Collateral" means (i) 85,000 Common Shares, owned by
Pledgor on the date hereof (and the certificates, copies of which are attached
hereto, representing such Common
Shares); (ii) if the aggregate Value of the Collateral pledged pursuant to this
Section 1(c) is less than the Minimum Collateral Level as calculated on any
Calculation Date, that number of additional Common Shares that are required to
raise the aggregate Value of the Collateral to the Required Collateral Level as
calculated on such Calculation Date (and the certificates representing such
shares), and (iii) any dividends, distributions in property, returns of capital
or other distributions made on or with respect to any of the foregoing shares to
the extent provided in Section 3(b) hereof. Notwithstanding the foregoing,
Collateral shall not include that number of Common Shares that are required to
lower the aggregate Value of the Collateral to the Required Collateral Level as
calculated on any Calculation Date (and the certificates representing such
shares) if the aggregate Value of the Collateral pledged pursuant to this
Section 1(c) is more than the Required Collateral Level as calculated on any
Calculation Date.
(d) "Event of Default" means: (i) the occurrence of any Event
of Default under the Note and the continuance thereof beyond any applicable
period of cure provided therein; or (ii) any breach by Pledgor of any covenant
contained in Section 2 of this Agreement.
(e) "Minimum Collateral Level" means 100% of the outstanding
principal balance, together with accrued but unpaid interest thereon, under the
Note.
(f) "Required Collateral Level" means 110% of the outstanding
principal balance, together with accrued but unpaid interest thereon, under the
Note.
2. PLEDGE OF COLLATERAL
(a) As security for the due and punctual payment and
performance by Pledgor of all of his obligations under the Note (the "Secured
Obligations"), Pledgor hereby pledges and assigns to Secured Party all of the
Collateral, and grants to Secured Party a first priority security interest in
the Collateral and the proceeds thereof.
(b) Simultaneously with the execution of this Agreement,
Pledgor shall deliver to Secured Party certificates representing the Collateral
described in Section 1(c)(i) hereof, and will deliver to Secured Party the
certificates for the shares of Collateral described in Section 1(c)(iii) hereof
within five (5) days after Pledgor's acquisition of such shares. Pledgor further
agrees that, if it is determined following any calculation performed on a
Calculation Date that the aggregate Value of the Collateral pledged on such
Calculation Date (the "Calculation Date Value") is less than the Minimum
Collateral Level, he shall deliver to Secured Party within ten (10) business
days following such Calculation Date a certificate or certificates representing
that number of Common Shares having an aggregate Value equal to the difference
between (x) the Required Collateral Level, less (y) such Calculation Date Value.
Each such certificate shall be registered in the name of Pledgor, duly endorsed
in blank or accompanied by a stock power duly executed by Pledgor in blank, in
form and substance satisfactory to the Secured Party, with any documentary tax
stamps and any other documents necessary to cause Secured Party to have a good,
valid and perfected first pledge of, lien on and security interest in the
Collateral, free and clear of any mortgage, pledge, lien, security interest,
hypothecation, assignment, charge, right, encumbrance or restriction
(individually, "Encumbrance" and collectively, "Encumbrances"). At any time
following an Event of Default, any or all of the Collateral held by Secured
Party
2
hereunder and having a value up to the Required Collateral Level as of that date
may, at the option of Secured Party exercised in accordance with Section 3(d)
hereof, be registered in the name of Secured Party or in the name of its
nominee, and Pledgor hereby covenants that, upon demand therefor by Secured
Party, Pledgor shall effect such registration.
(c) Secured Party hereby confirms receipt of the certificates
representing the Collateral described in Section 1(c)(i) hereof and agrees to
hold the Collateral in accordance with the terms of this Agreement.
3. VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS
So long as no Event of Default shall have occurred:
(a) Pledgor shall be entitled to exercise any and all voting
and/or consensual rights and powers relating or pertaining to the Collateral or
any part thereof, subject to the terms hereof.
(b) Pledgor shall be entitled to receive and retain cash
dividends payable on the Collateral; provided, however, that all other dividends
-------- -------
(including, without limitation, stock and liquidating dividends), distributions
in property, returns of capital and other distributions made on or in respect of
the Collateral, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of Secured Party or received
in exchange for the Collateral or any part thereof or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Secured Party
may be a party or otherwise, and any and all cash and other property received in
exchange for or redemption of any of the Collateral, shall be retained by
Secured Party, or, if delivered to Pledgor, shall be held in trust for the
benefit of Secured Party and forthwith delivered to Secured Party and shall be
considered as part of the Collateral for all purposes of this Agreement.
Notwithstanding the above, if any dividend is retained by the Secured Party, it
shall be deemed, at the option of either the Pledgor or Secured Party, to be a
Calculation Date and any Collateral in excess of the Required Collateral Level
shall be released to Pledgor and any deficiency in the Collateral below the
Required Collateral Level shall be cured by Pledgor's delivery of additional
Collateral pursuant to paragraph 2 (b) hereof.
(c) Secured Party shall execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, powers of attorney,
dividend orders, and other instruments as Pledgor may request for the purpose of
enabling Pledgor to exercise the voting and/or consensual rights and powers
which Pledgor is entitled to exercise pursuant to Section 3(a) above and/or to
receive the dividends which Pledgor is authorized to receive and retain pursuant
to Section 3(b) above; and Pledgor shall execute and deliver to Secured Party
such instruments as may be required or may be requested by Secured Party to
enable Secured Party to receive and retain the dividends, distributions in
property, returns of capital and other distributions it is authorized to receive
and retain pursuant to Section 3(b) above.
(d) Upon the occurrence of an Event of Default, all rights of
Pledgor to exercise the voting and/or consensual rights and powers which Pledgor
is entitled to exercise pursuant to Section 3(a) above and/or to receive the
dividends which Pledgor is authorized to
3
receive and retain pursuant to Section 3(b) above shall cease, at the option of
Secured Party, on not less than one (1) day's notice to Pledgor, and all such
rights shall thereupon become vested in Secured Party. In such case Pledgor
shall execute and deliver such documents as Secured Party may request. In
addition, Secured Party is hereby appointed the attorney-in-fact of Pledgor,
with full power of substitution, which appointment as attorney-in-fact is
irrevocable and coupled with an interest, to take all such actions after the
occurrence of an Event of Default, whether in the name of Secured Party or
Pledgor, as Secured Party may consider necessary or desirable. Any and all money
and other property paid over to or received by Secured Party pursuant to the
provisions of this Section 3(d) shall be retained by Secured Party as part of
the Collateral and shall be applied in accordance with the provisions hereof.
4. REMEDIES ON DEFAULT
(a) If at any time an Event of Default shall have occurred,
then, in addition to having the right to exercise any right or remedy of a
secured party upon default under the Uniform Commercial Code as then in effect
in the jurisdiction in which the Collateral is held by Secured Party, Secured
Party may, to the extent permitted by law, without being required to give any
notice to Pledgor except as provided below:
(i) Apply any cash held by it hereunder in the manner
provided in Section 4(h) below; and
(ii) If there shall be no such cash or if the cash so
applied shall be insufficient to pay in full the items specified in Sections
4(h)(i) and (h)(ii) below, exercise any and all the rights, powers and remedies
of any owner of the Collateral (including without limitation the right to vote
the Common Shares and receive dividends and distributions with respect to such
Common Shares and sell such Common Shares as described below). In the event of
such default and without limiting the foregoing, Secured Party is authorized to
retire or cancel (if allowable under applicable law and, if so, subject to the
provisions set forth in the next succeeding two sentences) or sell, assign and
deliver at its discretion, from time to time, all or any part of the Collateral
upon five (5) business days prior written notice to Pledgor. Pledgor and Secured
Party hereby agree and acknowledge that upon retirement or cancellation, the
Secured Obligations shall be reduced by the aggregate Value of the Common Shares
so retired or canceled. Secured Party further agrees that if elects to pursue
the remedy of retirement or cancellation, Secured Party will retire or cancel
only such number of Common Shares as have an aggregate Value equal to the sum of
(x) the aggregate amount of the Secured Obligations then outstanding, with any
remaining Collateral returned to Pledgor pursuant to the provisions of Section 8
hereof. Pledgor shall have no right to redeem the Collateral after any such
sale, assignment, retirement or cancellation. In case of any sale or assignment
of the Collateral, the proceeds shall be applied as provided in Section 4(h)
below.
(b) Secured Party, instead of exercising the power of
retirement, cancellation or sale of the Collateral herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose its lien or security
interest arising from this Agreement and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
4
(c) Upon the occurrence of an Event of Default, Secured Party
or its nominee shall have the right, upon not less than five (5) business day's
written notice to Pledgor, to exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any shares of the Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange, at its discretion, any or
all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of Secured Party, and, in connection
therewith, to deposit and deliver any and all of the Collateral with any
committee, depository, transfer agent, registrar or other designated agency upon
such terms and conditions as Secured Party may determine.
(d) On any sale of the Collateral, Secured Party is hereby
authorized to comply with any limitation or restriction in connection with such
sale that it may be advised by counsel is necessary in order to avoid any
violation of applicable law or in order to obtain any required approval of the
purchaser or purchasers by any governmental regulatory authority or officer or
court.
(e) Compliance with the foregoing procedures shall result in
such sale or disposition being considered or deemed to have been made in a
commercially reasonable manner.
(f) Each of the rights, powers, and remedies provided herein,
or now or hereafter existing at law or in equity or by statute or otherwise,
shall be cumulative and concurrent and shall be in addition to every other
right, power or remedy provided for herein or therein or now or hereafter
existing at law or in equity or by statute or otherwise. The exercise of any
such right, power or remedy shall not preclude the simultaneous or later
exercise of any or all other such rights, powers or remedies. No notice to or
demand on Pledgor in any case shall entitle Pledgor to any other notice or
demand in similar or other circumstances.
(g) The proceeds of any collection, recovery, receipt,
appropriation, realization or sale as aforesaid shall be applied by Secured
Party in the following order:
(i) First, to the payment of any amounts due under the
-----
Secured Obligations; (ii) Second, to the payment of all reasonable costs and
------
expenses incurred by Secured Party as a result of any Event of Default; (iii)
Finally, to the payment to Pledgor of any surplus then remaining from such
-------
proceeds, unless otherwise required by law or directed by a court of competent
jurisdiction; provided that Pledgor shall be liable for any deficiency if such
--------
proceeds are insufficient to satisfy all of the Secured Obligations.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR
(a) Pledgor represents, warrants and covenants that:
(i) Pledgor has all requisite capacity, power and
authority, being under no legal restriction, limitation or disability, to own
the Collateral and to execute, deliver and perform this Agreement.
5
(ii) This Agreement has been duly executed and delivered
by Pledgor and constitutes a legal, valid, and binding obligation of Pledgor,
enforceable in accordance with its terms.
(iii) Pledgor is or, with respect to the Collateral
described in Sections 1(b)(ii) and (iii) hereof, not later than the time of
delivery of certificates therefor will be, the direct record and beneficial
owner of each share of the Collateral. Pledgor has and will have good, valid and
marketable title thereto, free and clear of all Encumbrances other than the
security interest created by this Agreement.
(iv) The Collateral is and will be duly and validly
pledged to Secured Party in accordance with law, and Secured Party has a good,
valid, and perfected first priority security interest in the Collateral and the
proceeds thereof, and no filing or other action will be necessary to perfect or
protect such security interest.
(v) The execution, delivery and performance by Pledgor
of this Agreement does not and will not: (A) conflict with or result in a breach
of or constitute a default or require any consent under, or result in or require
the acceleration of any of indebtedness pursuant to, any agreement, indenture or
other instrument to which Pledgor is a party or by which Pledgor or any of his
property may be bound or affected; or (B) conflict with or violate any judgment,
decree, order, law, statute, ordinance, license or other governmental rule or
regulation applicable to Pledgor.
(vi) No approval, consent or other action by Pledgor,
any governmental authority, or any other person or entity is or will be
necessary to permit the valid execution, delivery or performance of this
Agreement by Pledgor. Pledgor's spouse has waived any and all ownership, joint
tenancy, community property or common law interest in, or other claim, whether
in law or equity, that she may have to, the Collateral.
(vii) There is no action, claim, suit, proceeding or
investigation pending, or to the knowledge of Pledgor, threatened or reasonably
anticipated, against or affecting Pledgor, this Agreement, or the transactions
contemplated hereby, before or by any court, arbitrator or governmental
authority which might adversely affect Pledgor's ability to perform his
obligations under this Agreement or might materially adversely affect the value
of the Collateral.
(b) Until all Secured Obligations have been paid and
performed in full or until all of the Collateral is returned to Pledgor pursuant
to Section 6 hereof, whichever is earlier, Pledgor hereby covenants that, unless
Secured Party otherwise consents in advance in writing:
(i) Pledgor shall: (A) at the request of Secured Party,
execute, deliver, and file any and all financing statements, continuation
statements, stock powers, instruments, and other documents, necessary or
desirable, in Secured Party's opinion, to create, perfect, preserve, validate or
otherwise protect the pledge of the Collateral to Secured Party and Secured
Party's lien on and security interest in the Collateral and the first priority
thereof; (B) maintain, or cause to be maintained, at all times, the pledge of
the Collateral to Secured Party and Secured Party's lien on and security
interest in the Collateral and the first priority thereof; and (C) defend the
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Collateral and Secured Party's interest therein against all claims and demands
of all persons at any time claiming the same or any interest therein adverse to
Secured Party.
(ii) Pledgor shall not sell, transfer, pledge, assign or
otherwise dispose of any of the Collateral or any interest therein, and Pledgor
shall not create, incur, assume or suffer to exist any Encumbrance with respect
to any of the Collateral or any interest therein (except pursuant hereto).
(iii) Pledgor shall pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon him or upon the
Collateral before the same shall become past due.
(iv) Pledgor shall not take or permit to be taken any
action in connection with the Collateral or otherwise which would impair the
value of the interests or rights of Pledgor therein or which would impair the
interests or rights of Secured Party therein or with respect thereto.
6. RETURN OF COLLATERAL
(a) When the Note has been paid in full and provided any Event
of Default has been cured, this Agreement shall terminate and the Collateral
held by Secured Party shall be returned within five (5) business days to Pledgor
at the address of Pledgor set forth herein or at such other address as Pledgor
may direct in writing. Secured Party shall not be deemed to have made any
representation or warranty with respect to any Collateral so delivered, except
that such Collateral is free and clear, on the date of delivery, of any and all
liens, charges and encumbrances arising from its own acts.
(b) If, on any Calculation Date, the Calculation Date Value
exceeds the Required Collateral Level, Secured Party shall within ten (10)
business days return to Pledgor at the address of Pledgor set forth herein or at
such other address as Pledgor may direct in writing a certificate or
certificates representing a number of Common Shares with an aggregate Value
equal to such excess over the Required Collateral Level. Notwithstanding
anything to the contrary in this Agreement, provided that Pledgor is not in
default of its obligations under the Note or this Agreement, Pledgor may, on no
more that two (2) occasions during the term of this Agreement not counting
Calculation Dates, request by written notice to the Secured Party, that
Collateral in excess of the Required Collateral Level be returned to Pledgor,
whereupon the Secured Party shall calculate the aggregate Value of the
Collateral pledged on the date that the Secured Party receives such request and
return to Pledgor a certificate or certificates representing a number of Common
Shares with an aggregate Value equal to the excess over the Required Collateral
Level. Secured Party shall not be deemed to have made any representation or
warranty with respect to any Collateral so delivered, except that such
Collateral is free and clear, on the date of delivery, of any and all liens,
charges and encumbrances arising from its own acts.
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7. ADDITIONAL ACTIONS AND DOCUMENTS
Pledgor hereby agrees to take or cause to be taken such
further actions (including, without limitation, the delivery of certificates for
all of the Collateral that may be required to be pledged following any
Calculation Date), to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments, and to obtain such
consents as may be necessary or desirable, in the opinion of Secured Party, in
order to fully effectuate the purposes, terms and conditions of this Agreement,
whether before, at or after the occurrence of an Event of Default.
8. SURVIVAL
It is the express intention and agreement of the parties
hereto that all covenants, agreements, statements, representations, warranties
and indemnities made by Pledgor herein shall survive the execution and delivery
of this Agreement.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior oral or written agreements, commitments or understandings with respect to
the matters provided for herein.
10. NOTICES
Any notice or request hereunder shall be given to the Pledgor or to the
Secured Party at their respective addresses set forth below or at such other
address as such Person may hereafter specify in a notice designated as a notice
given in the manner required under this Section 12. Any notice or request
hereunder shall be given by (a) hand delivery, (b) registered or certified mail,
return receipt requested, (c) delivery by an internationally recognized
overnight courier, or (d) facsimile to the number set forth below (or such other
number as may hereafter be specified in a notice given in the manner required
under this Section 12) with telephone communication to Pledgor or a duly
authorized officer of Secured Party, as the case may be, confirming its receipt
as subsequently confirmed by registered or certified mail. Notices and requests
shall be deemed to have been given (x) in the case of those by mail, five (5)
Business Days after being deposited in the mail at the addresses as provided in
this Section 12, (y) in the case of those by overnight courier, one (1) day
after deposit with such courier, and (z) in the case of those given by
facsimile, upon receipt.
(i) If to the Secured Party:
Federal Realty Investment Trust
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Attention: Legal Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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FAX: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Pledgor:
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11. AMENDMENT
No amendment, modification or supplement of or to this
Agreement shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification or
supplement is sought.
12. BENEFIT AND ASSIGNMENT
(a) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by Pledgor. In the event of a sale
or assignment by Secured Party of all or any part of the interests in the Note,
Secured Party may assign and transfer its rights and interests under this
Agreement in whole or in part to the purchaser or purchasers of such interests
in the Note, whereupon such purchaser or purchasers shall become vested with all
of the powers and rights given to Secured Party hereunder, and shall be deemed
to be a "Secured Party" for all purposes hereunder, and the predecessor Secured
Party shall thereafter be forever released and fully discharged from any
liability or responsibility hereunder with respect to the rights and interests
so assigned.
13. WAIVER
No delay or failure on the part of Secured Party in exercising
any right, power or privilege under this Agreement or under any other
instruments given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against Secured Party unless made in writing and signed by
Secured Party and then only to the extent expressly specified therein.
14. SEVERABILITY
If any part of any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or
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unenforceable in any respect, such part shall be ineffective to the extent of
such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions of this Agreement.
15. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland without giving effect to its
conflict of laws rules. Any judicial proceeding brought by or against the
Pledgor with respect to any of the obligations, this Agreement or any related
agreement may be brought in any federal or state court of competent jurisdiction
located in the State of Maryland, and, by execution and delivery of this
Agreement, Pledgor accepts for itself and in connection with its properties,
generally and unconditionally the non-exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement. Pledgor hereby waives personal service of
process and consents that service of process upon it may be made by certified or
registered mail, return receipt requested, at its address specified or
determined in accordance with Section 12 hereof, and service so made shall be
deemed completed on the third (3rd) Business Day after mailing. Nothing herein
shall affect the right to serve process in any manner permitted by law or shall
limit the right of the Secured Party to bring proceedings against Pledgor in the
courts of any other jurisdiction having jurisdiction over Pledgor. Pledgor
waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceedings by Pledgor
against the Secured Party involving, directly or indirectly, any matter or claim
in any way arising out of, related to or connected with this Agreement or any
related agreement, shall be brought only in a federal or state court located in
the State of Maryland.
16. PRONOUNS
All pronouns and any variations thereof in this Agreement
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the person or entity may require.
17. HEADINGS
Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
18. EXECUTION
To facilitate execution, this Agreement may be executed in as
many counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart;
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but it shall be sufficient that the signature of, or on behalf of, each party,
or that the signatures of the persons required to bind any party, appear on one
or more of the counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than that number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Agreement, or has caused this Agreement to be duly executed on its
behalf, as of the day and year first above written.
Federal Realty Investment Trust:
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Senior Vice President - General
Counsel and Secretary
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