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Exhibit 10.24
SEVERANCE
AGREEMENT
THIS SEVERANCE AGREEMENT
(“Severance Agreement”), made and entered into as of
this 1 st day
of October, 2007 by and between FEDERAL REALTY INVESTMENT TRUST, a
Maryland real estate investment trust (“Employer”), and
JOSEPH M. SQUERI (“Employee”).
WHEREAS, Employee currently
serves as Employer’s Executive Vice President and on
January 1, 2008, the Employee will serve as Employer’s
Executive Vice President-Chief Financial Officer and Treasurer. The
Employer and the Employee wish to set forth the terms of a
severance agreement for Employee;
NOW THEREFORE, in
consideration of the foregoing, of the mutual promises herein
contained and of other good and valuable consideration, the receipt
of which is hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. Termination Without
Cause on or after January 1, 2009. In the event that
Employee’s employment with Employer is terminated under any
of the circumstances in Sections 1(a) or 1(b) on or after
January 1, 2009, Employee will be deemed to have been
Terminated Without Cause and shall receive payments and benefits as
described in this Section 1; provided , however
, in the event Employee’s employment with Employer is
terminated under any of the circumstances in Sections 1(a) or 1(b)
under circumstances described in Section 6 below, Employee
shall receive such payments and benefits as are set forth in
Section 6 in lieu of the payments and benefits under this
Section 1:
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(a) |
by Employer other than with Cause (as “Cause” is
defined in Section 3, hereof); |
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(b) |
by Employee within six (6) months following the occurrence
of one or more of the following events: |
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(i) |
the nature of Employee’s duties or the scope of
Employee’s responsibilities or authority as of the date first
written above are materially modified by Employer without
Employee’s written consent where such material modification
constitutes an actual or constructive demotion of Employee ;
provided, however , that a change in the position(s) to whom
Employee reports shall not by itself constitute a material
modification of Employee’s responsibilities; provided
, further , that if Employee voluntarily becomes an employee
of an affiliate of the Employer in connection with a Spin-off (as
defined in Section 15) 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 the office where the
Employee is headquartered; |
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(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 2007, or (B) Employee’s highest base salary during
the
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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
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(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. |
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(c) |
Decision by Employer to Terminate Without Cause .
Employer’s decision to terminate Employee’s employment
Without Cause shall be made by the Board of Trustees. |
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(d) |
Severance Payment Upon Termination Without Cause on or after
January 1, 2009 . In the event of Termination Without
Cause on or after January 1, 2009 other than under
circumstances described in Section 6 below, Employee will
receive as severance pay an amount in cash equal to one
(1) year’s salary. For the purpose of calculating
amounts payable pursuant to this Section 1(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 annual bonus paid to Employee in respect of any of the three
(3) fiscal years immediately preceding such termination. For
purposes of the preceding sentence: (i) the term
“salary” shall not include any cash or equity-based
incentive award intended to be a long-term incentive award,
including awards made pursuant to Employer’s Amended and
Restated 2003 Long-Term Incentive Award Program; (ii) an
annual bonus paid in the form of stock 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 annual Incentive Bonus Plan
in effect for the applicable year (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); (iii) 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; and (iv) notwithstanding the valuation
provisions in clause (iii) above, if Employee elected to
receive all or any portion of an annual bonus in the form of stock
rather than cash, the maximum amount to be included as bonus in the
computation of “salary” for that year shall be the
amount of cash bonus otherwise payable without taking into account
any additional stock granted in consideration for delayed vesting.
Payment also will be made for vacation time that has accrued, but
is unused as of the date of termination. |
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(e) |
Benefits . In the event of Termination Without Cause on
or after January 1, 2009 other than under circumstances
described in Section 6 below, Employee shall receive
“Full Benefits” for nine (9) months. Employer
shall have satisfied its
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obligation to provide Full
Benefits to Employee if it (i) pays premiums due in connection
with COBRA continuation coverage to continue Employee’s
medical and dental insurance coverage at not less than the levels
of coverage immediately prior to termination of Employee’s
employment; (ii) maintains at not less than Employee’s
highest levels of coverage prior to Termination Without Cause
individual life insurance policies and accidental death and
dismemberment policies for the benefit of Employee and pays the
annual premiums associated therewith; (iii) to the extent that
Employer maintained a long-term disability policy that provided
coverage to Employee in excess of the coverage provided under
Employer’s group long-term disability policy, maintains at
not less than Employee’s highest levels of coverage prior to
Termination Without Cause an individual long-term disability policy
for the 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.
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(f) |
Stock Options . Notwithstanding any agreement to the
contrary, in the event of any Termination Without Cause on or after
January 1, 2009 other than under circumstances described in
Section 6 below, the vesting of options to purchase shares of
Employer’s common stock granted to Employee and outstanding
as of the date of Employee’s termination and scheduled to
vest during the twelve (12) months thereafter shall be
accelerated such that all such options will be vested as of the
date of Employee’s termination of employment with Employer.
The terms of the stock option agreements shall determine the period
during which any vested options may be exercisable. |
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(g) |
Outplacement Services . In the event of Termination
Without Cause on or after January 1, 2009 other than under
circumstances described in Section 6 below, Employer shall
make available at Employer’s expense to Employee at
Employee’s option the services of an employment
search/outplacement agency selected by Employer for a period not to
exceed six (6) months from the date of Employee’s
termination. |
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(h) |
Provision of Telephone/Secretary . In the event of
Termination Without Cause on or after January 1, 2009 other
than under circumstances described in Section 6 below,
Employer shall provide Employee for a period not to exceed six
(6) months from Employee’s date of termination with a
telephone number assigned to Employee at Employer’s offices,
telephone mail and a secretary to answer the telephone. Such
benefits shall not include an office or physical access to
Employer’s offices and will cease upon commencement by
Employee of employment with another employer. |
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(i) |
Notice
. If Employee terminates his or her employment pursuant to
Section 1(b) hereof other than under circumstances described
in Section 6 below and
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(i) Employee is not
an executive officer of Employer, Employee shall give sixty
(60) days’ written notice to Employer of such
termination, or (ii) if Employee is an executive officer of
Employer, Employee shall give ninety (90) days’ written
notice to Employer of such termination.
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(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 15 and the affiliate has assumed the
obligations hereunder. |
1A. Termination Without
Cause on or prior to January 1, 2009. In the event that
Employee’s employment with Employer is terminated under any
of the circumstances in Sections 1(a) or 1(b) on or prior to
January 1, 2009 other than under circumstances described in
Section 6 below, Employee shall be entitled to receive the
following: (a) if such termination occurs on or prior to
December 31, 2007, Employee shall not be entitled to receive
any payments or benefits; and (b) if such termination occurs
on or after January 1, 2008 but prior to January 1, 2009,
Employee shall be entitled to receive one (1) month of annual
base salary for each full month Employee was employed by Employer
prior to such termination and no other payments or benefits.
Notwithstanding anything in this Agreement to the contrary with
respect to grants of options or restricted shares of Employer, the
terms and conditions set forth in that certain Restricted Share
Award Agreement (New Hire Award) and in that certain Restricted
Share Award Agreement (Shares in Lieu of Salary/Bonus), both of
which are dated of even date herewith between Employer and
Employee, shall control over the terms of this Agreement with
respect to the grants of restricted shares set forth therein in the
event of any termination of Employee’s employment with
Employer.
2. Voluntary
Resignation . If Employee is not an executive officer of
Employer, Employee shall give sixty (60) days’ written
notice to Employer of Employee’s resignation from employment
in all capacities with Employer other than under circumstances
described in Section 6 below; if Employee is an executive
officer of Employer, Employee shall give ninety
(90) days’ written notice to Employer of
Employee’s resignation from employment in all capacities with
Employer other than under circumstances described in Section 6
below.
3. Severance Benefits Upon
Termination With Cause . Employee shall be deemed to have been
terminated with Cause in the event that the employment of Employee
is terminated for any of the following reasons other than under
circumstances described in Section 6 below:
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(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”); |
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(b) |
willful conduct which is demonstrably and materially injurious
to Employer or an affiliate thereof, monetarily or
otherwise; |
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(c) |
breach of fiduciary duty involving personal profit;
or |
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(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).
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No act or failure to act
shall be considered willful unless done or omitted to be done in
bad faith and without reasonable belief that the action or omission
was in the best interest of Employer.
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(e) |
Decision by Employer to Terminate With Cause . The
decision to terminate the employment of Employee with Cause shall
be made by the Board of Trustees. |
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(f) |
Severance Payment Upon Termination with Cause . In the
event of termination for Failure to Perform pursuant to
Section 3(a), or termination for cause pursuant to
Section 3(b), (c) or (d) above, the terms of the
stock option agreements between Employer and Employee thereunder
will determine the terms of the vesting of options and the
exercisability of vested options. |
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(i) |
For Cause Termination for Failure to Perform . In the
event that Employee’s employment is terminated with Cause
pursuant to Section 3(a) above on or after January 1,
2009, 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 3(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 3(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. Employee shall receive no payments or benefits if Employee
is terminated for Cause prior to January 1, 2009. |
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(ii) |
Other Cause Termination . In the event that
Employee’s employment is terminated with Cause pursuant to
Section 3(b), (c) or (d) on or after January 1,
2009, 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. Employee shall receive
no payments or benefits if Employee is terminated for Cause prior
to January 1, 2009. |
4. Severance Benefits Upon
Termination Upon Disability on or after January 1, 2009 .
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
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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 on or after January 1, 2009, 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 on or after January 1, 2009. |
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(b) |
Stock Options . In the event that Employee’s
employment is terminated due to Disability on or after
January 1, 2009, 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. |
Employee shall receive no payments or
benefits if Employee is terminated due to Disability prior to
January 1, 2009.
5. Severance Benefits Upon
Termination Upon Death on or after January 1, 2009 . If
Employee dies on or after January 1, 2009, 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. Employee shall receive no payments or
benefits if Employee dies prior to January 1, 2009.
6. Severance Benefits Upon
Termination Upon Change in Control .
(a) Change in Control
Defined . No benefits shall be payable under this
Section 6 unless there shall have occurred a Change in Control
of Employer, as defined below. For purposes of this Section 6,
a “Change in Control” of Employer shall mean any of the
following events:
(i) An acquisition in one or
more transactions (other than directly from Employer or pursuant to
options granted by Employer) of any voting securities of Employer
(the “Voting Securities”) by any “Person”
(as the term is used for purposes of Section 13(d) or 14(d) of
the Securities Act of 1934, as amended (the “Exchange
Act”)) immediately after which such Person has
“Beneficial Ownership” (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of the
combined voting power of Employer’s then outstanding Voting
Securities; provided , however , in determining
whether a Change in Control has occurred, Voting Securities which
are acquired in a “Non-Control Acquisition” (as
hereinafter defined) shall not constitute an acquisition which
would cause a Change in Control. A “Non-Control
Acquisition” shall mean an acquisition by (A) an
employee benefit plan (or a trust forming a part thereof)
maintained by (1) Employer or (2) any corporation or
other Person
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of which a majority of its voting power
or its equity securities or equity interest is owned directly or
indirectly by Employer (a “Subsidiary”),
(B) Employer or any Subsidiary, or (C) any Person in
connection with a “Non-Control Transaction” (as
hereinafter defined);
(ii) The individuals who, as
of the date of this Severance Agreement, are members of the Board
of Trustees (the “Incumbent Trustees”), cease for any
reason to constitute at least two-thirds of the Board;
provided , however , that if the election, or
nomination for election by Employer’s shareholders, of any
new member was approved by a vote of at least two-thirds of the
Incumbent Trustees, such new member shall, for purposes of this
Severance Agreement, be considered as a member of the Incumbent
Trustees; provided , further , however , that
no individual shall be considered a member of the Incumbent
Trustees if such individual initially assumed office as a result of
either an actual or threatened “Election Contest” (as
described in Rule 14a-11 promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Trustees (a
“Proxy Contest”) including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest;
or
(iii) Approval by
shareholders of Employer of
(A) A merger, consolidation
or reorganization involving Employer, unless:
(1) the shareholders of
Employer, immediately before such merger, consolidation or
reorganization, own, directly or indirectly immediately following
such merger, consolidation or reorganization, at least a majority
of the combined voting power of the outstanding voting securities
of the Person resulting from such merger or consolidation or
reorganization (the “Surviving Person”) in
substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation or
reorganization,
(2) the individuals who were
members of the Incumbent Trustees immediately prior to the
execution of the agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds of the members of
the board of directors of the Surviving Person,
(3) no Person (other than
Employer or any Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by Employer, or any Subsidiary,
or any Person which, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of 20% or
more of the then outstanding Voting Securities) has Beneficial
Ownership of 20% or more of the combined voting power of the
Surviving Person’s then outstanding voting securities,
and
(4) a transaction described
in clauses (1) through (3) shall herein be referred to as
a “Non-Control Transaction;”
(B) A complete liquidation or
dissolution of Employer; or
(C) An agreement for the sale
or other disposition of all or substantially all of the assets of
Employer to any Person (other than a transfer to a
Subsidiary).
(iv) Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur
(A) solely because any Person (the “Subject
Person”) acquired Beneficial Ownership of more than the
permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting
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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 P
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