Exhibit 10.12
Cabot Industrial Properties, L.P.
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
September 10, 1998
Xxxxxx X. Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Dear Xx. Xxxxxx:
This letter reflects our agreement relative to your appointment as Senior
Vice President of Cabot Industrial Trust (the "Trust") and your employment by
Cabot Industrial Properties, L.P. (the "Partnership").
The Partnership agrees to employ you in such capacity for a two-year term
(the "Term"), beginning February 4, 1998 (the "Effective Date"). After the
first anniversary of the Effective Date and on each successive anniversary
thereof, the Term shall be automatically extended for an additional twelve-month
period, unless you or the Partnership provides written notice of non-renewal to
the other at least 120 days before any such anniversary. During the Term, while
you are employed by the Partnership, you agree that you shall devote
substantially all of your business time, energies and talents to serving as
Senior Vice President of the Trust, you shall perform your duties faithfully and
efficiently subject to the directions of the Chairman of the Trust and you will
not engage, directly or indirectly, in any activities that compete with those of
the Trust or the Partnership.
During the Term while you are employed by the Partnership, you will be paid
base compensation in the amount of $175,000 per year and you will be eligible
for a cash bonus in such amount as may be determined by the Board of Trustees of
the Trust or the Compensation Committee thereof, in its sole discretion. The
amount of your base compensation and your bonus will be reviewed by the Board
each year during the Term. You also will be granted such options under the
Cabot Industrial Trust Long Term Incentive Plan (the "Plan") as the committee of
the Plan determines.
If, during the Term, after a Change in Control (as described in the Plan),
(i) the Trust or the Partnership or the successor of either (A) terminates your
employment without Cause (as defined below) or does not extend the Term or (B)
constructively terminates your employment by substantially adversely altering
either your status or responsibilities or your annual base compensation and
bonus from those in effect immediately prior to the Change in Control or by
moving the location of your office more than 50 miles from its then current
location, or (ii) if
you terminate your employment on or before the first anniversary of the Change
in Control, you will be entitled to a lump sum payment as soon as practicable
after the date of such termination, subject to payroll tax withholding as
required by law, in an amount equal to three times the sum of the rate of your
annual base compensation as in effect on such date (or as in effect on the date
of the Change in Control, if higher) plus the amount of your bonus for the year
prior to the year in which your employment terminates; provided, that if
termination occurs prior to the time that a bonus has first been awarded to you
hereunder the amount of the bonus shall be deemed to be the amount of your
target incentive bonus as established by the Board of Trustees or the
Compensation Committee thereof or, if such target bonus has not then been
established, 30% of the rate of your annual base compensation as in effect on
such date. In the event it is determined that any payment or benefit (or
combination thereof), including acceleration of any share options, by the Trust
to you or for your benefit would be subject to the excise tax imposed by section
4999 of the Internal Revenue Code, the Trust or the Partnership shall pay you a
tax gross-up payment in accordance with Exhibit A, which is attached to and
forms a part of this agreement. For purposes of this agreement, "Cause" shall
mean your willful engaging in conduct which is demonstrably monetarily injurious
to the Trust or the Partnership or your engaging in egregious misconduct
involving serious moral turpitude.
This letter amends and restates in full our prior Agreement, dated February
4, 1998. If this letter satisfactorily reflects our agreement, as amended,
please sign and return the attached copy to my attention. Thank you for your
efforts on behalf of the Trust and the Partnership.
/s/ Xxxxxx X. Xxxxxxxxx
_________________________
Xxxxxx X. Xxxxxxxxx,
President
Accepted as of this 4th day of
February, 1998.
/s/ Xxxxxx X. Xxxxxx
_______________________
Xxxxxx X. Xxxxxx
Exhibit A
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Tax Gross-Up Payment
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1. Gross-Up Payment. In the event that it is determined that any payments,
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benefits or distributions (or any combination thereof) to or for the
benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of the attached letter agreement, or
otherwise) by the Trust or any of its affiliates (including the
Partnership) or by one or more trusts established by the Trust or any of
its affiliates for the benefit of their employees, are subject to the
excise tax imposed by section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), which payments are collectively referred to as
"Parachute Payments", the Trust or the Partnership shall pay to or for the
benefit of Executive a payment (a "Gross-Up Payment") equal to the sum of
the following amounts:
a. the amount of the excise tax attributable to the Parachute Payments
(referred to as the "Excise Tax") and the amount of any additional
excise tax under section 4999 of the Code imposed with respect to
additional payments, if any, made pursuant to this paragraph 1;
b. any interest or penalties incurred by Executive with respect to the
Excise Tax and other payments, if any, made pursuant to this paragraph
1; and
c. any taxes, including income taxes, incurred by Executive on the Excise
Tax and other payments, if any, made pursuant to this paragraph 1.
2. Determination and Payment of Gross-Up Payment. Subject to the provisions
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of paragraph 3 below, all determinations required to be made under this
Exhibit A, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by a nationally recognized
certified public accounting firm as may be designated by the Trust or the
Partnership (the "Accounting Firm") which shall provide detailed supporting
calculations to the Trust, the Partnership and Executive within fifteen
(15) business days of the effective time of a Change in Control or such
earlier time as is requested by the Trust or the Partnership. All fees and
expenses of the Accounting Firm shall be borne solely by the Trust or the
Partnership. Any Gross-Up Payment, as determined pursuant to paragraph 1,
shall be paid by the Trust or the Partnership to Executive within five (5)
days after the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by Executive, it
shall so indicate to Executive in writing. Any determination by the
Accounting Firm shall be binding upon the Trust, the Partnership and
Executive. As a result of the uncertainty in the application of section
4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that a Gross-Up Payment which will not have
been made by the Trust or the Partnership should have been made
("Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Trust or the Partnership exhausts its remedies pursuant to
paragraph 3 and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Trust or the Partnership to or for the benefit of Executive.
3. Claims by IRS. Executive shall notify the Trust and the Partnership in
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writing of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Trust or the Partnership of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no
later than ten (10) business days after Executive is informed in writing of
such claim and shall apprise the Trust and the Partnership of the nature of
such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it gives such notice to the
Trust and the Partnership (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Trust or
the Partnership notifies Executive in writing prior to the expiration of
such period that it desires to contest such claim, Executive shall:
a. give the Trust and the Partnership any information requested by either
relating to such claim;
b. take such action in connection with contesting such claim as the Trust
or the Partnership shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Trust or the Partnership;
c. cooperate with the Trust and the Partnership in good faith in order to
effectively contest such claim; and
d. permit the Trust and the Partnership to participate in any proceedings
relating to such claim;
provided, however, that the Trust or the Partnership shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto) imposed
as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this paragraph 3, the
Trust or the Partnership shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a
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determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Trust or the
Partnership shall determine; provided, however, that if the Trust or the
Partnership directs Executive to pay such claim and xxx for a refund, the
Trust or the Partnership shall advance the amount of such payment to
Executive, on an interest-free basis, and shall indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect
to such advance; and provided, further, that if Executive is required to
extend the statute of limitations to enable the Trust or the Partnership to
contest such claim, Executive may limit this extension solely to such
contested amount. The control of the contest by the Trust or the
Partnership shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
4. Refunds. If, after the receipt by Executive of an amount advanced by the
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Trust or the Partnership pursuant to paragraph 3, Executive becomes
entitled to receive any refund with respect to such claim, Executive shall
(subject to the Trust's or the Partnership's complying with the
requirements of paragraph 3) promptly pay to the Trust or the Partnership
the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Trust or the Partnership pursuant to
paragraph 3, a determination is made that Executive shall not be entitled
to any refund with respect to such claim and the Trust or the Partnership
does not notify Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
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