EXHIBIT 10
SENIOR MANAGEMENT CHANGE OF CONTROL SEVERANCE PLAN
Section 1. Purpose.
The Company considers it essential to its best interests to foster
the optimum performance of its senior management. The Company recognizes
that the possibility of a Change in Control of the Company or one or
more Subsidiaries may exist, or that the Company may engage in certain
other transactions which may affect its senior management, and that such
possibility, and the uncertainty and questions which it may raise, may
result in the distraction of management or professional personnel to the
detriment of the Company.
In order to encourage senior management to maintain their continued
attention and dedication to their duties and responsibilities, the
Company has adopted this Senior Management Change of Control Severance
Plan.
Section 2. Definitions.
As hereinafter used:
2.1 The "Board of Trustees" means the Board of Trustees of
Liberty Property Trust.
2.2 A "Change of Control" shall be deemed to have occurred upon
the earliest to occur of the following events:
(i) the date on which the shareholders of the Company (or
the Board of Trustees, if shareholder action is not required) approve a
plan or other arrangement pursuant to which the Company will be
dissolved or liquidated, or
(ii) the date on which the shareholders of the Company (or
the Board of Trustees, if shareholder action is not required) approve a
definitive agreement to sell or otherwise dispose of substantially all
of the assets of the Company, other than a transaction in which the
holders of the Common Shares immediately prior to the transaction will
have at least eighty percent (80%) of the voting power of the acquiring
entity's voting securities immediately after such transaction (without
regard such holders' ownership of such acquiring entity's voting
securities immediately before or contemporaneously with such
transaction), which voting securities are to be held by such holders
immediately following such transaction in substantially the same
proportion among themselves as such holders' ownership of the Common
Shares immediately before such transaction, or
(iii) the date on which the shareholders of the Company (or
the Board of Trustees, if shareholder action is not required) and the
shareholders of the other constituent entity (or its board of
directors/trustees if shareholder action is not required) have approved
a definitive agreement to merge or consolidate the Company with or into
such other entity, other than, in either case, a merger or consolidation
of the Company in which the holders of the Common Shares immediately
prior to the merger or consolidation will have at least eighty percent
(80%) of the voting power of the surviving entity's voting securities
immediately after such merger or consolidation (without regard such
holders' ownership of such acquiring entity's voting securities
immediately before or contemporaneously with such merger or
consolidation), which voting securities are to be held by such holders
immediately following such merger or consolidation in substantially the
same proportion among themselves as such holders' ownership of the
Common Shares immediately before such merger or consolidation, or
(iv) the date on which any entity, person or group, within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities
Exchange Act of 1934, as amended (other than the Company or any
Subsidiary or any employee benefit plan sponsored or maintained by the
Company or any Subsidiary), shall have become the beneficial owner of,
or shall have obtained voting control over, more than twenty percent
(20%) of the outstanding Common Shares (without regard to any
contractual or other restriction on the conversion or other exchange of
securities into or for Common Shares), or
(v) the first day after the date on which the Plan is
effective when a majority of the members of the Board of Trustees shall
have been members of the Board of Trustees for less than two (2) years,
unless the nomination for election of each new trustee who was not a
trustee at the beginning of such two (2)-year period was approved by a
vote of at least two-thirds of the trustees then still in office who
were trustees at the beginning of such period,
(vi) the first day after the date on which Liberty Property
Trust, alone or together with one or more direct or indirect wholly
owned subsidiaries of Liberty Property Trust, is not or are not the sole
general partner or partners of Liberty Property Limited Partnership.
2.3 "Claimant" has the meaning set forth in Section 6.3.
2.4 "Common Shares" means the Common Shares of Beneficial
Interest, $0.001 par value, of the Company and any other securities
evidencing the common equity beneficial interest in the Company.
2.5 "Company" means Liberty Property Trust and/or Liberty
Property Limited Partnership, and any successor in interest thereto.
2.6 "Compensation Committee" means a committee composed of John
A. Miller, Frederick F. Buchholz and M. Leanne Lachman, and/or any other
individuals appointed to such committee or substituted for the
individuals named above by the Board of Trustees prior to any Change of
Control. Any two (2) such individuals shall constitute a quorum. All
members of the Compensation Committee must be members of such committee
prior to the time a Change of Control occurs.
2.7 "Effective Date" of the Plan is September 29, 1998.
2.8 "Disability" has the meaning set forth in Section 3.2.
2.9 An "Employee" means a person:
(a) whose name is listed in Exhibit "A" hereto, as such
Exhibit may be amended or supplemented from time to time, or who has
been designated in writing by the Company's Compensation Committee to
participate in the Plan (even if such person's name is listed in Exhibit
"A" hereto); and
(b) who is employed by the Company at the time of a change
of a Change of Control.
The term "Employee" specifically excludes any person (a) who
is receiving severance pay or (b) who signed an agreement pursuant to
which his or her employment will terminate in the future on a date
certain.
2.10 "Eligible Bonus" means the largest annual incentive bonus
earned by an eligible Employee over the five (5)-year period preceding a
Change of Control, excluding all commissions and all bonuses awarded by
the Company other than on an annual basis (such as one-time grants of
restricted stock).
2.11 "Extended Leave of Absence" has the meaning set forth in
Section 3.2.
2.12 "Good Reason" has the meaning set forth in Section 3.4.
2.13 "Liberty Property Limited Partnership" means Liberty
Property Limited Partnership, a Pennsylvania limited partnership.
2.14 "Liberty Property Trust" means Liberty Property Trust, a
Maryland real estate investment trust.
2.15 "Notice of Termination" has the meaning set forth in Section
3.5.
2.16 "Paid Time Off" means time when, in accordance with the
regular payroll practices and procedures applicable immediately
preceding the Change of Control, the Employee is entitled to receive
remuneration without reporting for work.
2.17 "Pay" means the base salary of an eligible Employee at his
or her stated weekly, monthly or annual rate as of the Employee's
Termination Date, or, if a higher amount, as of the date of the Change
of Control. "Pay" does not include overtime pay, bonuses of any kind,
commissions, incentive pay or any other remuneration. A "Year of Pay"
shall be calculated in accordance with the regular payroll practices and
procedures applicable immediately preceding the Change of Control.
2.18 "Plan" means this Senior Management Change of Control
Severance Pay Plan as set forth herein, as amended from time to time.
2.19 "Severance Pay" is a payment made to an eligible Employee
pursuant to Section 3.1. All Severance Pay due to an eligible Employee
must be paid to the eligible Employee within two (2) years after the
date that the first Severance Pay is paid to such Employee.
2.20 "Subsidiary" means Liberty Property Limited Partnership and
each other subsidiary of Liberty Property Trust.
2.21 "Termination Date" means the date upon which the Employee's
employment ceases with the Company or any Subsidiary, as the case may
be.
2.22 "Willful Misconduct" has the meaning set forth in Section
3.3.
2.23 "Year of Pay" has the meaning set forth in Section 2.17.
Section 3. Eligibility.
3.1 An Employee shall be eligible to receive Severance Pay if and
only if all of the following conditions are met (and the Employee is not
disqualified from eligibility pursuant to Section 3.2):
(a) The Employee is an Employee of the Company or any
Subsidiary after the Effective Date of the Plan;
(b) The Employee is employed by the Company at the time a
Change of Control occurs; and
(c) The Employee is terminated from employment within two
(2) years after the Change of Control described in Section 3.1(b)
occurs, unless such termination is: (i) as a result of such Employee's
death, or such Employee's Disability or Extended Leave of Absence in
accordance with Section 3.2, (ii) as a result of such Employee's Willful
Misconduct or (iii) by the Employee other than for Good Reason. In the
event an individual's employment is terminated for any reason prior to
the occurrence of a Change of Control, such individual shall not be
entitled to any benefits under the Plan by virtue of such Change of
Control.
3.2 Disability or Extended Leave of Absence. If, as a result of
an Employee's incapacity due to physical or mental illness (a
"Disability"), or as a result of any other leave of absence (an
"Extended Leave of Absence"), the Employee shall have been absent from
the full-time performance of his or her duties for twelve (12)
consecutive months, the Employee may be terminated and shall not be
entitled to any benefits under the Plan.
3.3 Willful Misconduct. Termination of the Employee's employment
for "Willful Misconduct" shall mean termination:
(a) Upon the willful and continued failure by the Employee
to substantially perform his or her duties, which failure the Employee
fails to cure (other than any such failure resulting from incapacity due
to physical or mental illness, Disability or an Extended Leave of
Absence or the Employee's termination of his or her employment for Good
Reason) within ten (10) days after a written demand for substantial
performance is delivered to the Employee by the Company or the
Subsidiary by which he or she is employed, which demand specifically
identifies the manner in which the Company or such Subsidiary believes
that the Employee has not substantially performed his or her duties; or
(b) The willful engaging by the Employee in conduct which is
clearly and materially injurious to the Company and/or any Subsidiary,
monetarily or otherwise. For purposes of this Section 3.3, no act, or
failure to act, on the Employee's part shall be deemed "willful" unless
done, or omitted to be done, by the Employee in bad faith and without
reasonable belief that his or her action or omission was in or not
opposed to the best interest of the Company and/or any Subsidiary.
(c) Notwithstanding the foregoing, the Employee shall not be
deemed to have been terminated for Willful Misconduct unless and until
there shall have been delivered to the Employee a copy of a written
determination of the Compensation Committee issued pursuant to a meeting
of the Compensation Committee (after reasonable notice to the Employee
and an opportunity for the Employee, together with his or her counsel,
to be heard before the Compensation Committee) finding that in the good
faith opinion of the Compensation Committee the Employee was guilty of
conduct constituting Willful Misconduct, as set forth in this Section
3.3, and specifying the particulars thereof in detail.
3.4 Good Reason. The Employee shall be entitled to terminate his
or her employment for Good Reason and receive Severance Pay, if the
Employee provides written notice to the Compensation Committee no later
than two (2) weeks after the Employee's termination date of the
Employee's election to resign and the circumstances constituting the
Good Reason to resign. The Employee's right to terminate his or her own
employment pursuant to this Section 3.4 shall not be affected by his or
her incapacity due to physical or mental illness or Disability. The
Employee's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good
Reason. "Good Reason" shall mean, without the Employee's express
written consent, the occurrence after a Change in Control of any of the
following circumstances:
(a) The Employee is demoted to a materially lower position;
(b) The Employee is assigned any material duties
inconsistent with the status of the position that the Employee held
immediately prior to the Change of Control or an adverse material
alteration in the nature or status of the Employee's responsibilities or
an adverse material alteration in the quality or amount of office
accommodations or assistance provided to the Employee, from those in
effect immediately prior to such Change of Control, which shall
constitute a constructive demotion;
(c) A reduction in the Employee's annual base salary as in
effect on the date immediately prior to the Change of Control, or as the
same may be increased from time to time thereafter;
(d) A requirement that the Employee's site of principal
employment be more than 50 miles from the offices at which the Employee
was principally employed immediately prior to the date of the Change of
Control, except for required travel on the Company's business to an
extent substantially consistent with the Employee's business travel
obligations immediately prior to such Change of Control;
(e) The failure of the Employee to receive payment of any
portion of his or her compensation or compensation under any deferred
compensation program of the Company within fifteen (15) days after the
date on which the Employee notifies the Company of such failure;
(f) The failure to continue in effect any compensation or
benefit plan or perquisites in which the Employee participated
immediately prior to the Change of Control, which compensation or
benefit plan or perquisites, or any thereof, are, or any thereof is,
material to his or her total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan or
perquisite) has been made with respect to such plan or perquisites, or
the failure by the Company which experienced the Change in Control (or
its successor) to continue the Employee's participation therein (or in
such substitute or alternative plan or perquisite) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Employee's participation relative to other
participants, than existed immediately prior to the Change of Control;
(g) The failure to continue to provide the Employee with
benefits substantially similar to those enjoyed by him or her under any
of the Company's life insurance, medical, accident or disability plans
in which the Employee was participating at the time of the Change of
Control (unless an equitable arrangement has been made with respect to
such benefits), the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits (unless an
equitable arrangement has been made with respect to such reduction), or
the failure to provide the Employee with the number of paid vacation
days or other Paid Time Off days to which the Employee is entitled on
the basis of his or her years of service and position with the Company
in accordance with the vacation or Paid Time Off policy applicable and
in effect at the time of the Change of Control;
(h) The failure of the Company to obtain the unqualified
agreement from any successor to assume or adopt the Plan; or
(i) Any termination of the Employee's employment that is not
effected pursuant to a Notice of Termination satisfying the requirements
of Section 3.3(c).
3.5 Any purported termination of the Employee's employment by the
Company or by the Employee shall be communicated by written Notice of
Termination to the other party. "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in the
Plan relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated. Any Notice of Termination
to the Company shall be directed to the Compensation Committee. All
Notices of Termination shall be sent (i) by certified or registered mail
and shall be deemed received three (3) business days after the date of
mailing; (ii) by Federal Express or similar overnight courier and shall
be deemed received one (1) business day after delivery to Federal
Express or similar overnight courier; or (iii) by personal service and
shall be deemed received on the same day as service.
3.6 An Employee may not receive Severance Pay if any of the
following disqualifying events occur:
(a) The Employee is receiving severance pay at the time the
Change of Control occurs;
(b) The Employee has signed an agreement pursuant to which
his or her employment will terminate in the future on a date certain;
(c) The Company does not undergo a Change of Control prior
to termination of his or her employment; or
(d) Except in the case of a Change of Control, the Employee
voluntarily terminates his or her employment with the Company.
Section 4. Severance Benefit Amount.
4.1 Except as otherwise provided in this Section 4, the Severance
Pay to be paid to an eligible Employee shall be an amount equal to the
sum of (A) the product of 2.99 multiplied by the sum of one (1) Year of
Pay for such Employee plus such Employee's Eligible Bonus, plus (B) the
pro rata portion, through the Termination Date, of any unpaid
performance bonus earned by such Employee for the year in which the
Change of Control occurs. In addition, except as otherwise provided in
this Section 4:
(a) all of such Employee's options or other rights to
acquire Common Shares or partnership interests in Liberty Property
Limited Partnership and all unvested amounts contributed by the Company
to the Company-sponsored tax-qualified defined contribution plan with a
cash or deferred arrangement, commonly known as a "401(k) plan," for the
benefit of such Employee shall vest immediately upon the Termination
Date,
(b) for the year in which the Change of Control occurs and
each of the two successive years, the Company shall contribute to the
Company-sponsored tax-qualified defined contribution plan with a cash or
deferred arrangement, commonly known as a "401(k) plan," for the benefit
of such Employee an amount equal to the maximum amount for such year
permitted to be so contributed under applicable laws, and
(c) for three (3) years after the Termination Date, the
Company shall continue to provide such Employee with benefits
substantially similar to those enjoyed by such Employee under the
Company's life insurance, medical, accident or disability plans in which
the Employee was participating at the time of the Change of Control.
4.2 The Company, in its sole discretion, may increase the
Severance Pay to an amount in excess of that specified in Section 4.1,
subject to the limitations of Section 4.6. Any increase in severance
pay must be expressly authorized in writing by the Compensation
Committee.
4.3 If an Employee applies for and receives unemployment
compensation payments for any period of time during or for which
Severance Pay is being paid, any Severance Pay remaining to be paid
shall not be reduced by the amount of any such unemployment compensation
payments.
4.4 If an Employee due to sickness or injury receives short-term
disability payments, worker's compensation or long-term disability
payments after the Employee's Termination Date, the Employee shall not
receive any Severance Pay until the cessation of said payments. Once
such payments cease, the amount of Severance Pay to which the Employee
is entitled shall be reduced by the amount of any such short-term
disability, worker's compensation or long-term disability payments.
4.5 The severance benefit provided for in the Plan is the maximum
benefit that the Company will pay for severance. To the extent that a
federal, state or local law might require the Company to make a payment
to an Employee because of that Employee's involuntary termination, the
benefit payable under the Plan shall be correspondingly reduced. To the
extent that an Employee receives severance pay in connection with the
cessation of his or her employment other than pursuant to the Plan
(whether pursuant to a contract or other severance plan or policy), the
benefit payable under the Plan shall be correspondingly reduced. Any
overpayments made under the Plan shall be promptly repaid after written
request. Severance pay that will be offset does not include payments
received by an Employee due to his or her participation in any other
benefit plan which is not a severance plan, or payments made to an
Employee for his or her accrued, but unused vacation or Paid Time Off
days.
4.6 If, at the time the Change of Control occurs, Section 280G(b)
of the Internal Revenue Code of 1986, as amended (the "Code"), is
applicable to the Employee and to the Company with respect to the
events associated with the Change of Control, then notwithstanding any
other provision of the Plan, if the aggregate present value of the
"parachute payments" to the Employee, determined under Section 280G(b)
is at least three times the "base amount" determined under Section 280G,
then the compensation otherwise payable under the Plan (and any other
amount payable hereunder or any other severance plan, program, policy or
obligation of the Company, Subsidiary or any other affiliate thereof)
shall be reduced so that the aggregate present value of the parachute
payments to the Employee determined under Section 280G, does not exceed
2.99 times the base amount. In no event, however, shall any benefit
provided hereunder be reduced to the extent such benefit is specifically
excluded by Section 280G(b) of the Code as a "parachute payment" or as
an "excess parachute payment." Any decisions regarding the requirement
or implementation of such reductions shall be made by the tax counsel
and accounting firm retained by the Company at the time the Plan is
adopted.
4.7 The Company shall have the right to take such action as it
deems necessary or appropriate to satisfy any requirements under
federal, state or other laws to withhold or to make deductions from any
benefits payable under the Plan.
Section 5. Distribution of Benefits.
5.1 The Company shall pay Severance Pay to each eligible Employee
it employed directly out of the general assets of the Company. Payments
will be made in a single lump sum payment or in installments in
accordance with normal payroll practices, as elected by the Employee.
Such payments shall commence as soon as practicable following the
Employee's Termination Date and continue until the benefit due is paid.
5.2 Severance Pay shall be paid to the estate of any eligible
Employee who dies before the entire amount due hereunder is paid.
Section 6. Plan Administration.
6.1 The Plan shall be administered by the Compensation Committee,
which shall have complete authority to prescribe, amend and rescind
rules and regulations relating to the Plan.
6.2 The determinations by the Compensation Committee prior to a
Change of Control on the matters referred to such Committee shall be
conclusive. Prior to a Change of Control, the Compensation Committee
shall have full discretionary authority, the maximum discretion allowed
by law, to administer, interpret and apply the terms of the Plan, and to
determine any and all questions or disputes hereunder, including but not
limited to eligibility for benefits and the amount of benefits due.
Subsequent to a Change of Control the Compensation Committee shall not
have full discretionary authority; rather, its determinations shall be
made strictly in accordance with the terms of the Plan and shall be
subject to de novo review by a court of competent jurisdiction.
6.3 In the event of a claim by any person, including but not
limited to any Employee (the "Claimant"), as to whether such person is
entitled to any benefit under the Plan, the amount of any distribution
or its method of payment, such Claimant shall present the reason for his
or her claim in writing to the Compensation Committee. Such claim must
be filed within forty-five (45) days following the date upon which the
Claimant first learns of his or her claim. All claims shall be in
writing, signed and dated and shall briefly explain the basis for the
claim. The claim shall be mailed to the Compensation Committee by
certified mail at the following address:
Liberty Property Trust
65 Valley Stream Parkway
Malvern, PA 19355
Attention: General Counsel's Office
Compensation Committee for the
Senior Management Change of Control Severance Plan
Telephone:(610) 648-1700
Telecopy:(610) 644-2175 (fax)
The Compensation Committee shall, within ninety (90) days after receipt
of such written claim, decide the claim and send written notification to
the Claimant as to its disposition; provided that the Compensation
Committee may elect to extend such period for an additional ninety (90)
days if special circumstances so warrant and the Claimant is so notified
in writing prior to the expiration of the original ninety (90)-day
period. In the event the claim is wholly or partially denied, such
written notification shall (a) state the specific reason or reasons for
the denial; (b) make specific reference to pertinent Plan provisions on
which the denial is based; (c) provide a description of any additional
material or information necessary for the Claimant to perfect the claim
and an explanation of why such material or information is necessary; and
(d) set forth the procedure by which the Claimant may appeal the denial
of his or her claim. The Claimant may request a review of such denial
by making application in writing to the Compensation Committee within
sixty (60) days after receipt of such denial. Such application must be
via certified mail. Such Claimant (or his or her duly authorized
representative) may, upon written request to the Compensation Committee,
review any documents pertinent to his or her claim, and submit in
writing issues and comments in support of his or her claim or position.
Within sixty (60) days after receipt of a written appeal, the
Compensation Committee shall decide the appeal and notify the Claimant
of the final decision; provided that the Compensation Committee may
elect to extend such sixty (60)-day period to up to one hundred twenty
(120) days after receipt of the written appeal. The final decision
shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the Claimant, and
specific references to the pertinent Plan provisions on which the
decision is based.
Section 7. Plan Modification or Termination.
7.1 The Plan shall terminate automatically on the day following
the annual meeting of the Company's shareholders to be held in 2002.
Unless the Company's Board of Trustees determines, prior to such
termination, that the duration of the Plan shall not be extended, then,
on the date of each annual meeting of the Company's shareholders
(beginning with the meeting to be held in 2002), the Plan shall be
extended automatically until the day following the next annual meeting
of the Company's shareholders.
7.2 Prior to a Change of Control, the Plan may be modified or
amended by the Compensation Committee unless such amendment or
modification, in the reasonable judgment of the Compensation Committee
(which judgment shall be conclusive), does not have a material adverse
effect on the rights of any eligible Employee under the Plan. If a
Change of Control occurs, the Plan may not be modified, amended or
terminated until two (2) years after the Change of Control occurs,
except for such modifications or amendments which do not adversely
affect the rights of any eligible Employee under the Plan.
7.3 All claims for benefits hereunder, even if raised after
termination of the Plan, shall be determined pursuant to Section 6.3,
and when acting pursuant thereto, the Compensation Committee shall
retain the authority provided in Section 6. Notwithstanding any
termination of the Plan, if a Change of Control has occurred, all
Employees who are eligible before the date of termination to receive
Severance Pay pursuant to the Plan shall remain entitled to receive said
benefit under the terms and conditions of the Plan.
Section 8. General Provisions.
8.1 Nothing herein contained shall be deemed to give any Employee
the right to be retained in the employ of the Company or to interfere
with the right of the Company to discharge him or her at any time, with
or without cause.
8.2 If any of the positions on the Compensation Committee becomes
vacant, either the Chairman of the Board or President of the Company may
appoint such person or persons as he or she determines, to carry out the
responsibilities assigned to such position under the Plan, so long as,
if a Change of Control has occurred within two (2) years prior to such
appointment, such person was employed by the Company or was a member of
the Board of Trustees prior to any such Change of Control.
8.3 Except as otherwise provided by law, no right or interest of
any Employee under the Plan shall be assignable or transferable, in
whole or in part, either directly or by operation of law or otherwise,
including without limitation by execution, levy, garnishment,
attachment, pledge or in any other manner, but excluding adjudication of
incompetency; no attempted assignment or transfer thereof shall be
effective; and no right or interest of any Employee under the Plan shall
be liable for, or subject to, any obligation or liability of such
Employee, except to the extent specifically provided for herein.
8.4 The Plan is unfunded. All benefits payable under the Plan
shall be paid out of the general assets of the entity which employed the
Employee at the time the Change of Control pursuant to which he or she
is eligible for benefits hereunder.
8.5 The Plan shall be governed by and construed in accordance
with the Employee Retirement Income Security Act of 1974, as amended,
and to the extent not preempted, the laws of the Commonwealth of
Pennsylvania.
8.6 The Plan is intended to constitute a "welfare plan" under the
Employee Retirement Income Security Act of 1974, as amended, and any
ambiguities in the Plan shall be construed to effect that intent.
Exhibit "A"
Employees
Referenced in Section 2.9(a)
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