SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (the "Agreement") is entered into as of April
6, 2001, by and between Robert Masters, an individual residing in the State of
New York ("Senior Officer") and Acadia Realty Trust, a Maryland real estate
investment trust with offices at 20 Soundview Marketplace, Port Washington, New
York 11050 (the "Trust").
RECITALS
WHEREAS, The Trust desires to continue the employment of Senior Officer
as Senior Vice President, General Counsel and Corporate Secretary, and Senior
Officer desires to be employed by the Trust as Senior Vice President, General
Counsel and Corporate Secretary; and
WHEREAS, Senior Officer has requested the Trust to enter into a
severance agreement and the Trust is willing to do so.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreement set forth herein, the parties hereby agree as follows:
1. Termination of Employment and Change in Control.
(a) Senior Officer's employment hereunder may be terminated at
any time under the following circumstances:
(i) Cause. The Trust shall have the right to terminate
Senior Officer's employment for Cause upon Senior
Officer's: (A) willful and continued failure
substantially to perform his duties hereunder (other
than any such failure resulting from Senior Officer's
incapacity due to physical or mental illness) which
failure continues for a period of ten (10) days after
written demand for substantial performance is
delivered by the Trust specifically identifying the
manner in which the Trust believes the Senior Officer
has not substantially performed his duties; (B)
willful misconduct or (C) conviction of, or plea of
guilty to a felony. For purposes of this
subparagraph, no act, or failure to act, on Senior
Officer's part shall be considered "willful" unless
done, or omitted to be done, by him (i) not in good
faith and (ii) without reasonable belief that his
action or omission was in furtherance of the
interests of the Trust.
(ii) Death. Senior Officer's employment hereunder shall
terminate upon his death.
(iii) Disability. The Trust shall have the right to
terminate Senior Officer's employment due to
"Disability" in the event that there is a
determination by the Trust that the Senior Officer
has become physically or mentally incapable of
performing his duties under this Agreement and such
disability has disabled the Senior Officer for a
cumulative period of one hundred eighty (180) days
within a twelve (12) month period.
(iv) Good Reason. The Senior Officer shall have the right
to terminate his employment for "Good Reason": (A)
upon the occurrence of any material breach of this
Agreement by the Trust which shall include but not be
limited to: a material, adverse alteration in the
nature of Senior Officer's duties, responsibilities,
or authority; (B) upon a reduction in Senior
Officer's Annual Base Salary or a material reduction
in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in
question, or a failure to pay such amounts when due
which is not cured by the Trust within ten (10) days
after written notice of such default by the Senior
Officer, (C) if the Trust relocates Senior Officer's
office requiring the Senior Officer to increase his
commuting time by more than one hour, then the Senior
Officer shall have the right to terminate his
employment, which termination shall be deemed for
Good Reason.
(v) Without Cause. The Trust shall have the right to
terminate the Senior Officer's employment hereunder
Without Cause subject to the terms and conditions of
this Agreement.
(vi) Change in Control. The Senior Officer shall have the
right to terminate his employment hereunder on or
within three (3) months following a Change in
Control. Such termination shall be deemed a
termination for Good Reason hereunder. For purposes
of this Agreement "Change in Control" shall mean that
any of the following events has occurred: (A) any
"person" or "group" of persons, as such terms are
used in Sections 13 and 14 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other
than any employee benefit plan sponsored by the
Trust, becomes the "beneficial owner", as such term
is used in Section 13 of the Exchange Act
(irrespective of any vesting or waiting periods) of
(i) Common Shares or any class of stock convertible
into Common Shares and/or (ii) Common OP Units or
preferred units or any other class of units
convertible into Common OP Units, in an amount equal
to thirty (30%) percent or more of the sum total of
the Common Shares and the Common OP Units (treating
all classes of outstanding Common Shares, units or
other securities convertible into Common Shares as if
they were converted into Common Shares or Common OP
Units, as the case may be, and then treating Common
Shares and Common OP Units as if they were a single
class) issued and outstanding immediately prior to
such acquisition as if they were a single class and
disregarding any equity raise in connection with the
financing of such transaction; or (B) the dissolution
or liquidation of the Trust or the consummation of
any merger or consolidation of the Trust if the
shareholders of the Trust and unit holders of the
Partnership taken as a whole and considered as one
class immediately before such transaction own,
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immediately after consummation of such transaction,
equity securities and partnership units possessing
less than fifty (50%) percent of the surviving or
acquiring Trust and partnership taken as a whole; or
(C) or any sale or other disposition of all or
substantially all of its assets, or a sale or other
disposition of at least 51% (based upon gross asset
value) of the core assets (defined as those
properties formerly marketed by Credit Suisse First
Boston as the core portfolio of the Company) or
(D) a turnover, during any two (2) year period, of
the majority of the members of the Board, without the
consent of the remaining members of the Board as to
the appointment of the new Board members.
(b) Notice of Termination Any termination of Senior Officer's
employment by the Trust or any such termination by the Senior Officer (other
than on account of death) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of Senior
Officer's employment under the provision so indicated. In the event of the
termination of Senior Officer's employment on account of death, written Notice
of Termination shall be deemed to have been provided on the date of death.
2. Compensation Upon Termination of Employment By the Trust for
Cause or Voluntarily By The Senior Officer.
In the event the Trust terminates Senior Officer's employment for
Cause, or the Senior Officer voluntarily terminates his employment, the Trust
shall pay the Senior Officer any unpaid Annual Base Salary at the rate then in
effect accrued through and including the date of termination and any accrued
vacation pay ("Unpaid Accrued Salary"). In addition, in such event, the Senior
Officer shall be entitled to exercise any options which, as of the date of
termination, have vested and are exercisable in accordance with the terms of the
applicable option grant agreement or plan. All options and all restricted stock
granted to the Senior Officer which have not vested on the date of termination
shall automatically terminate.
Except for any rights which the Senior Officer may have to Unpaid
Accrued Salary through and including the date of termination, and vested options
and stock, the Trust shall have no further obligations hereunder following such
termination. The aforesaid amounts shall be payable in full immediately upon
such termination.
3. Compensation Upon Termination of Employment Upon Disability,
Without Cause or By Senior Officer for Good Reason.
In the event of termination of Senior Officer's employment as a result
of Senior Officer's Disability, Without Cause or by Senior Officer for Good
Reason, the Trust shall pay to the Senior Officer, the following:
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(i) any Unpaid Accrued Salary through and including the
date of termination; plus
(ii) an amount equal to one year's salary at the then
current annual base salary (before any reductions)
(the "Severance Salary"); plus
(iii) reimbursement of expenses incurred prior to date of
termination ("Expense Reimbursement"); plus
(iv) the Senior Officer's car allowance, if any, for one
year (the "Car Allowance"); plus
(v) a pro rata portion of Senior Officer's bonus (based
upon the average of the last two years' bonuses);
plus
In the event of termination of or resignation by Senior Officer because
of a Change in Control, in addition to the above amounts,
(vi) the Trust shall pay to the Senior Officer an amount
equal to six months' base salary (the "Change of
Control Retention Payment"); and
(vii) the Trust shall continue Senior Officer's base salary
and medical benefits for a period not to exceed the
earlier of (a) six months from the date of such
termination or (b) the date when Senior Officer
becomes reemployed.
Notwithstanding anything to the contrary contained herein, if the
Senior Officer's employment is terminated Without Cause, or the Senior Officer
terminates his employment for Good Reason prior to a Change of Control and
subsequently an event is announced within six months of his termination which,
when consummated, would constitute a Change of Control, then the Senior Officer
shall be entitled to the payment described in Section 3(vi) upon consummation.
In addition, all (A) incentive compensation payments or programs of any
nature whether stock based or otherwise that are subject to a vesting schedule,
including without limitation restricted stock, phantom stock, units and any loan
forgiveness arrangements granted to the Senior Officer ("Incentive
Compensation") shall immediately vest as of the date of such termination
("Vested Incentive Compensation") and (B) options granted to the Senior Officer
shall immediately vest as of the date of such termination (the "Vested Options")
and the Senior Officer shall be entitled at the option of the Senior Officer,
his estate or his personal representative, within three years of the date of
such termination, to exercise any options which have vested (including, without
limitation, by acceleration in accordance with the terms of the Agreement, the
applicable option grant agreement or the current Acadia stock option plan (the
"Plan")) and are exercisable in accordance with the terms of the applicable
option grant agreement or plan and/or any other methods or procedures for
exercise applicable to optionees.
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Except for any rights which the Senior Officer may have to all of the
above including unpaid Accrued Salary, Severance Salary, Vested Incentive
Compensation, Vested Options, Expense Reimbursement, the Car Allowance and the
Bonus, the Trust shall have no further obligations hereunder following such
termination.
The parties both agree that the agreement to make these payments was
consideration and an inducement to obtain Senior Officer's consent to enter into
this Agreement. The payments are not a penalty and neither party will claim them
to be a penalty. Rather, the payments represent a fair approximation of
reasonable amounts due to the Senior Officer.
4. Change in Control.
(a) Options. Any options granted to the Senior Officer that have
not vested as of the date of a Change in Control shall immediately vest upon the
date of the Change in Control. Neither the occurrence of a Change in Control,
nor the vesting in any options as a result thereof shall require the Senior
Officer to exercise any options.
(b) Restricted Stock. Any restricted stock granted to the Senior
Officer that have not vested as of the date of a Change in Control shall
immediately vest upon the date of the Change in Control. In the event of a
conflict between any restricted stock agreement or the Plan and this Agreement,
the terms of this Agreement shall control.
(c) Upon Termination. If the surviving entity terminates
Senior's Officer's employment Without Cause, the Trust shall pay to the Senior
Officer, and the Senior Officer shall be entitled to, all the payments and
rights the Senior Officer would have had if the Senior Officer had terminated
his employment with Good Reason as set forth in Paragraph 3, including the
payments due under Paragraph 3.(vi) and (vii), but less the value of any
severance payments Senior Officer receives from the surviving entity after the
date of the Change of Control. The rights described herein are subject to the
provisions of Section 6(b).
5. Indemnification/Legal Fees.
(a) Indemnification. In the event the Senior Officer is made
party or threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of Senior Officer's employment with or serving as an officer of the
Trust, whether or not the basis of such Proceeding is alleged action in an
official capacity, the Trust shall indemnify, hold harmless and defend Senior
Officer to the fullest extent authorized by Maryland law, as the same exists and
may hereafter be amended, against any and all claims, demands, suits, judgments,
assessments and settlements including all expenses incurred or suffered by
Senior Officer in connection therewith (including, without limitation, all legal
fees incurred using counsel reasonably acceptable to Senior Officer) and such
indemnification shall continue as to Senior Officer even after Senior Officer is
no longer employed by the Trust and shall inure to the benefit of his heirs,
executors, and administrators. Expenses incurred by Senior Officer in connection
with any Proceeding shall be paid by the Trust in advance upon request of Senior
Officer that the Trust pay such expenses; but only in the event that Senior
Officer shall have delivered in writing to the Trust an undertaking to reimburse
the Trust for expenses with respect to which Senior Officer is not entitled to
indemnification. The provisions of this Paragraph shall remain in effect after
this Agreement is terminated irrespective of the reasons for termination. The
indemnification provisions of this Paragraph shall not supersede or reduce any
indemnification provided to Senior Officer under any separate agreement, or the
by-laws of the Trust since it is intended that this Agreement shall expand and
extend the Senior Officer's rights to receive indemnity.
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(b) Legal Fees. If any contest or dispute shall arise between
the Trust and Senior Officer regarding or as a result of any provision of this
Agreement, the Trust shall reimburse Senior Officer for all legal fees and
expenses reasonably incurred by Senior Officer in connection with such contest
or dispute, but only if Senior Officer is successful in respect of substantially
all of Senior Officer's claims pursued or defended in connection with such
contest or dispute. Such reimbursement shall be made as soon as practicable
following the resolution of such contest or dispute (whether or not appealed).
6. Successors and Assigns, Term.
(a) The Trust shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Trust, by agreement in
form and substance satisfactory to Senior Officer, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Trust would be required to perform it if no such succession had taken place.
Failure of the Trust to obtain any such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle Senior
Officer to compensation from the Trust in the same amount and on the same terms
as he would be entitled to hereunder if Senior Officer terminated his employment
for Good Reason hereunder in accordance with the terms as set forth in Paragraph
1.(a)(iv), except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination. In the event of such a breach of this Agreement, the Notice of
Termination shall specify such date as the date of termination. As used in this
Agreement, "Trust" shall mean the Trust as hereinbefore defined and any
successor to all or substantially all of its business and/or its assets as
aforesaid which executes and delivers the Agreement provided for in this
Paragraph 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. Any cash payments owed to Senior Officer
pursuant to this Paragraph 6 shall be paid to Senior Officer in a single sum
without discount for early payment immediately prior to the consummation of the
transaction with such successor. Nothing in this Paragraph 6(a) shall be
construed to interfere with the Trust's right to implement or pursue such
succession.
(b) Notwithstanding anything to the contrary contained herein,
this Agreement, including the obligations described in Section 4.(c), shall
terminate and be of no further force and effect 18 months from the date of a
Change of Control.
7. Timing of and No Duplication of Payments.
All payments payable to Senior Officer pursuant to this Agreement shall
be paid as soon as practicable after such amounts have become fully vested and
determinable. In addition, Senior Officer shall not be entitled to receive
duplicate payments under any of the provisions of this Agreement.
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8. Modification or Waiver.
No amendment, modification, waiver, termination or cancellation of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification, waiver, termination or cancellation is sought. No course of
dealing between or among the parties to this Agreement shall be deemed to affect
or to modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Trust or Senior Officer in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Trust or Senior Officer of any such right or remedy
shall preclude other or further exercise thereof. A waiver of right to remedy on
any one occasion shall not be construed as a bar to or waiver of any such right
or remedy on any other occasion.
The respective rights and obligations of the parties hereunder shall
survive the Senior Officer's termination of employment and termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
9. Notices.
All notices or other communications required or permitted hereunder
shall be made in writing and shall be deemed to have been duly given if
delivered by hand or delivered by a recognized delivery service or mailed,
postage prepaid, by express, certified or registered mail, return receipt
requested, and addressed to the Trust at the address set forth above or Senior
Officer at his address as set forth in the Trust records (or to such other
address as shall have been previously provided in accordance with this Paragraph
10).
10. Governing Law.
This Agreement will be governed by and construed in accordance with the
laws of the State of New York.
11. Severability.
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then, such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provisions or term or the remaining provisions or terms of this Agreement.
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12. Legal Representation.
Each of the Trust and Senior Officer has had an opportunity to discuss
this Agreement with counsel.
13. Counterparts.
This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and both of which taken together shall constitute
one and the same Agreement.
14. Headings.
The headings of the Paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part hereof and shall
not affect the construction or interpretation of this Agreement.
15. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and undertakings, both written and oral, among the parties with respect to the
subject matter hereof.
16. Survival of Agreements.
The covenants made in Paragraphs 1 through 5 each shall survive the
termination of this Agreement.
17. Binding Effect.
This Agreement shall be binding on the Trust, its successors and
assigns, including any surviving entity resulting from a merger, consolidation
or other corporate reorganization.
18. Senior Officer's Covenants.
Senior Officer covenants and agrees that in the event he receives any
compensation (other than compensation upon termination of employment by the
Trust for Cause or voluntarily by the Senior Officer) pursuant to this
Agreement, he shall not solicit for employment any personnel employed by the
Trust at the time of his termination for a period of two years from his Date of
Termination as long as such personnel is still employed by the Trust. Nothing
contained herein to the contrary, however, shall prevent Senior Officer from
providing a reference for any such personnel.
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19. Confidentiality.
Senior Officer and the Trust agree to keep this Agreement confidential
to the extent permitted by law. Senior Officer agrees to keep confidential all
information in his possession regarding the Company, its properties and its
plans, which is not generally known to the public.
20. Excess Parachute Payments
Any provision of this Agreement to the contrary notwithstanding, if any
of the payments or benefits provided for in this Agreement, together with any
other payments which Employee has a right to receive from the Company or any of
its affiliates, constitute a "parachute payment", as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"),
payments pursuant to this Agreement shall be reduced, if necessary to the
largest amount as will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code, all as determined by the
Company's regularly engaged independent public accountants.
21. Prior Understandings.
This Agreement embodies the entire contract between the parties hereto
with respect to employment and severance and supersedes any and all prior
agreements and understandings, written or oral, formal or informal by and
between the Trust and the Senior Officer.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
ACADIA REALTY TRUST
By:___________________________
Kenneth F. Bernstein
President
______________________________
Name: Robert Masters
Title: Senior Vice President
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