SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (this "AGREEMENT") is made and entered into as of
February 5, 1998 by and between Meridian Industrial Trust, Inc., a Maryland
corporation ("MERIDIAN"), and _________________________ ("EXECUTIVE").
WHEREAS, Meridian recognizes the important goal of retaining Executive as
an executive of Meridian, and
WHEREAS, in furtherance of that goal, Meridian wishes to provide a measure
of financial security for Executive should his employment with Meridian be
terminated in certain circumstances;
NOW, THEREFORE, MERIDIAN AND EXECUTIVE AGREE AS FOLLOWS:
1. DEFINITIONS. The following terms when used herein shall have the
meanings set forth below, unless the context clearly indicates to the contrary.
(a) "AGREEMENT" means the severance agreement as set forth herein.
(b) "BASE PAY" means Executive's then current annual base salary (as
determined before any deferrals therefrom under any applicable employee
benefit plans) with Meridian, as calculated immediately before the payment
of any benefits under this Agreement, plus an amount equal to Executive's
incentive bonus earned during the preceding year regardless of the timing
of the payment of such bonus. "Base Pay" does not include stock options,
commissions, deferred compensation payments made to the Executive,
overtime, auto or travel allowance, or other similar payments or
compensation.
(c) "BOARD" means the board of directors of Meridian.
(d) "CEO" means the Chief Executive Officer of Meridian.
(e) "CHANGE OF CONTROL" means the occurrence of any of the following
events:
(i) The acquisition by any person of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) of 35% or more of either the then
outstanding shares of common stock of Meridian (the "OUTSTANDING
COMPANY COMMON STOCK") or the combined voting power of the then
outstanding voting securities of Meridian entitled to vote generally
in the election of directors (the "OUTSTANDING COMPANY VOTING
SECURITIES"); provided, however, that for purposes of this subsection
(i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from Meridian; (B) any
acquisition by Meridian; (C) any acquisition by any employee benefit
plan (or related trust) sponsored or
maintained by Meridian or any entity controlled by Meridian; (D) any
acquisition by any entity pursuant to a transaction which complies
with clauses (A), (B) and (C) of subsection (iii) below; and (E) an
acquisition of beneficial ownership that is a direct result of a
redemption, repurchase or cancellation of shares of Outstanding
Company Common Stock or Outstanding Company Voting Securities
authorized by the Incumbent Board (as defined below);
(ii) Individuals who, as of the date of this Agreement,
constitute the Board (the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date of this
Agreement whose election, or nomination for election by Meridian's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board;
(iii) Consummation of a reorganization, merger or consolidation, a
sale or other disposition of all or substantially all of the assets of
Meridian, or an acquisition of assets of another company (a "BUSINESS
COMBINATION"), unless following such Business Combination (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the entity resulting from such Business
Combination (including an entity which as a result of such transaction
owns Meridian or all or substantially all of Meridian's assets either
directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; (B) no
person (excluding any entity resulting from such Business Combination
or any employee benefit plan (or related trust) of Meridian or such
entity resulting from such Business Combination) beneficially owns
directly or indirectly 35% or more of, respectively, the then
outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such entity except to the extent that
such ownership existed prior to the Business Combination; and (C) at
least a majority of the members of the board of directors of the
company resulting from such Business Combination were members of the
Incumbent Board or members of the
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Board when it provided for such Business Combination; or
(iv) Approval by Meridian's stockholders of a complete
liquidation or dissolution of Meridian.
(f) "CODE" means the Internal Revenue Code of 1986, as amended.
2. SEVERANCE BENEFITS. Executive shall be entitled to receive severance
benefits, as set forth below, following the occurrence of a Change of Control
(i) if Meridian terminates his employment for any reason within 18 months
following such Change of Control, or (ii) if Executive terminates his employment
for any reason within six months following such Change of Control. The
severance benefits to be paid to Executive shall be as follows:
(a) MONETARY BENEFIT. An amount equal to two times the Executive's
Base Pay, paid as a lump sum. Notwithstanding the foregoing, although
Meridian and Executive intend that no portion of the compensation provided
to Executive by Meridian or any affiliate (including the payments provided
for in this Subparagraph 2(a) and any payments to Executive under any
employee benefit plan or other arrangement) be considered an Excess
Parachute Payment (defined below), if any portion of such compensation
constitutes an Excess Parachute Payment and is subject to the Excise Tax
(defined below), then Meridian shall, in addition to providing such
compensation, pay the Gross-Up Payment (defined below) to Executive on or
before the tenth day after Executive provides written notice of the amount
of the Gross-Up Payment to Meridian. For purposes of this Subparagraph
2(a): (i) "EXCESS PARACHUTE PAYMENT" means an excess parachute payment as
defined in section 280G(b) of the Code; (ii) "EXCISE TAX" means the tax
imposed pursuant to section 4999 of the Code; and (iii) "GROSS-UP PAYMENT"
means with respect to any compensation provided to Executive by Meridian or
any affiliate of Meridian (including the payments provided for under this
Agreement and any payments to Executive under any employee benefit plan or
other such arrangement) that is subject to the Excise Tax, an amount that,
after reduction of the amount of such Gross-Up Payment for all federal,
state and local taxes to which the Gross-Up Payment is subject (including
the Excise Tax to which the Gross-Up Payment is subject), is equal to the
amount of the Excise Tax to which such compensation is subject. For
purposes of determining the amount of the Gross-Up Payment, Executive shall
be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment
is to be made, and shall be deemed to pay state and local income taxes, if
applicable, at the highest marginal rate of taxation in the state and
locality of Executive's residence on the date of his termination of
employment with Meridian, net of the maximum reduction in federal income
taxes that could be obtained from deduction of state and local taxes, if
any.
(b) HEALTH COVERAGE. Meridian shall pay the COBRA premiums for
Executive and for any of his covered eligible dependents to continue their
participation in Meridian's medical/dental plan until the earlier of (i) 12
months from the date of
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Executive's termination or (ii) the date Executive becomes ineligible for
COBRA continuation coverage prior to the expiration of such 12-month
period, provided that the Company shall be entitled to make such payment in
a lump sum at its election.
3. TERMINATION AGREEMENT. Notwithstanding any other provision herein to
the contrary, as consideration for payment of any benefits under Paragraph 2,
Meridian may require Executive to execute a termination agreement, including a
release of all claims and confidentiality and non-solicitation provisions,
substantially in the form of EXHIBIT A attached hereto. Executive understands
and agrees that, if Meridian requires such a termination agreement, his
execution of that agreement is a precondition to any obligation of Meridian to
pay any benefits under Paragraph 2.
4. TERMINATION DUE TO DEATH OR DISABILITY. Termination of employment due
to the death or disability of Executive will not be considered a termination of
employment for purposes of this Agreement. Notwithstanding the foregoing, if
Executive dies following a termination of employment which entitled him to
benefits under this Agreement, but prior to receipt of all such benefits, his
beneficiary (as designated to Meridian in writing) or, if none, his estate, will
be entitled to receive all unpaid amounts due hereunder.
5. NOT A CONTRACT OF EMPLOYMENT/BENEFIT PLAN. This Agreement is not an
employment contract for any definite period of time. This Agreement shall have
no effect whatsoever on the at-will employment relationship between Executive
and Meridian. Nothing herein shall be deemed to give Executive the right to be
retained in the employ of Meridian or to restrict the right of Meridian to
discharge Executive at any time and for any reason, with or without cause or
notice. Nothing herein shall be deemed to give Meridian the right to require
Executive to remain in the employ of Meridian or to restrict Executive's right
to terminate his employment at any time. This Agreement is a severance
agreement, not an employee benefit plan or a trust. This Agreement shall not
give Executive any security or other interest in any assets of Meridian.
Executive understands and agrees that, by entering this Agreement, he is
ineligible for any benefits under the Meridian Industrial Trust, Inc. Severance
Benefit Plan or any successor plan thereto.
6. SEVERABILITY. Each part, term or provision of this Agreement is
severable from the others. Notwithstanding any possible future finding by a
duly constituted authority that a particular part, term or provision is invalid,
void or unenforceable, this Agreement has been made with the clear intention
that the validity and enforceability of the remaining parts, terms and
provisions shall not be affected thereby.
7. CHOICE OF LAW. This Agreement shall be interpreted and construed in
accordance with and shall be governed by the laws of the State of California
and, when applicable, the laws of the United States.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties relating to any severance benefits. Any previous agreement with
respect to these matters is
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superseded by this Agreement. No term, provision or condition of this Agreement
may be modified in any respect except by a writing executed by both of the
parties hereto. No person has any authority to make any representation or
promise not set forth in this Agreement. This Agreement has not been executed
in reliance upon any representation or promise except those contained herein.
9. ACKNOWLEDGMENT OF TERMS. Executive acknowledges that he has carefully
read this Agreement; that he has had the opportunity for review of it by an
attorney of his choosing; that he fully understands its final and binding
effect; that the only promises or representations made to him to sign this
Agreement are those stated herein; and that he is signing this Agreement
voluntarily. Executive further acknowledges that all payment amounts as set
forth in this Agreement are gross, pre-tax amounts and that they are therefore
subject to applicable withholding taxes and other deductions required by law.
10. WAIVER UNDER AGREEMENT. The failure of either party to enforce or
require timely compliance with any term or provision of this Agreement shall not
be deemed to be a waiver or relinquishment of rights or obligations arising
hereunder, nor shall such a failure preclude the enforcement of any term or
provision or avoid the liability for any breach of this Agreement.
11. COSTS AND ATTORNEYS' FEES. If any action is initiated to enforce this
Agreement, the prevailing party shall be entitled to recover from the other
party its reasonable costs and attorneys' fees.
12. CONSTRUCTION. This Agreement shall be deemed drafted equally by both
the parties. Its language shall be construed as a whole and according to its
fair meaning. Any presumption or principle that the language is to be construed
against any party shall not apply. The headings in this Agreement are only for
convenience and are not intended to affect construction or interpretation. Any
references to paragraphs, subparagraphs, or sections are to those parts of this
Agreement, unless the context clearly indicates to the contrary. Also unless
the context clearly indicates to the contrary, (a) the plural includes the
singular and the singular includes the plural; (b) "and" and "or" are each used
both conjunctively and disjunctively; (c) "any," "all," "each," or "every" means
"any and all, and each and every"; and (d) "includes" and "including" are each
"without limitation."
13. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon Meridian and its successors and assigns. Meridian will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Meridian to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that Meridian would be required to perform it if no such
succession had taken place. In the event of such a succession, the term
"Meridian" as used in this Agreement shall mean Meridian as already defined, as
well as any successor to its business or assets which assumes and agrees to
perform this Agreement by operation of law or otherwise.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
MERIDIAN INDUSTRIAL TRUST, INC.
By:
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Name:
Title:
EXECUTIVE
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