EXHIBIT 10.1
XXXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), is made and entered into as
of the 31st day of March, 2002 (the "Effective Date"), by and between First
Industrial Realty Trust, Inc., a Maryland corporation (the "Employer"), and
Xxxxxxx X. Xxxxxx (the "Executive").
RECITALS
A. The Employer desires to employ the Executive as an officer of the
Employer for a specified term.
B. The Executive is willing to accept such employment, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:
AGREEMENTS
1. TERM WITH AUTOMATIC RENEWAL PROVISIONS. THE EXECUTIVE'S EMPLOYMENT
HEREUNDER SHALL BE FOR A CONTINUOUS AND SELF-RENEWING TWO (2) YEAR "EVERGREEN"
TERM (CALCULATED ON A DAY TO DAY BASIS), COMMENCING AS OF THE EFFECTIVE DATE,
UNLESS SOONER TERMINATED AT ANY TIME BY EITHER PARTY, WITH OR WITHOUT CAUSE,
SUCH TERMINATION TO BE EFFECTIVE AS OF THIRTY (30) DAYS AFTER WRITTEN NOTICE TO
THAT EFFECT IS DELIVERED TO THE OTHER PARTY. NOTWITHSTANDING THE PRECEDING
PROVISIONS OF THIS SECTION 1, THE TERM OF THIS AGREEMENT SHALL, IF NOT
PREVIOUSLY TERMINATED, EXPIRE OF ITS OWN ACCORD, AND WITHOUT NOTICE TO OR FROM
EITHER PARTY, ON THE SEVENTIETH (70TH) BIRTHDAY OF THE EXECUTIVE ("RETIREMENT
DATE").
2. POSITION AND DUTIES. The Employer hereby employs the Executive as Chief
Financial Officer of the Employer, or in such other comparable or other capacity
as shall be mutually agreed between the Employer and the Executive by amendment
of this Agreement. During the period of the Executive's employment hereunder,
the Executive shall devote his best efforts and full business time (excluding
any periods of disability, vacation, sick leave or other leave to which the
Executive is entitled), energy, skills and attention to the business and affairs
of the Employer, on an exclusive basis. The Executive's duties and authority
shall consist of and include all duties and authority customarily performed and
held by persons holding equivalent positions with real estate investment trusts
("REIT's") similar in nature and size to the Employer, as such duties and
authority are reasonably defined, modified and delegated from time to time by
the Chief Executive Officer of the Employer (the "CEO"). The Executive shall
have the powers necessary to perform the duties assigned to him, and shall be
provided such supporting services, staff, secretarial and other assistance,
office space and accouterments as shall be reasonably necessary and appropriate
in light of such assigned duties, as determined by the CEO, but in any event
shall be no less favorable to the Executive than such supporting services,
assistance, office
space and accouterments provided to other Senior Headquarters Executives (as
defined in Section 3(c) below) of the Employer.
3. COMPENSATION. As compensation for the services to be provided by the
Executive hereunder, the Executive shall receive the following compensation and
other benefits:
(a) BASE SALARY. The Executive shall receive a minimum aggregate
annual "Base Salary" at the rate of Two Hundred and Eighty-four Thousand Dollars
($284,000) per annum, payable in periodic installments in accordance with the
regular payroll practices of the Employer. Such Base Salary shall, during the
term hereof, be subject to discretionary increase (but not decrease), on an
annual fiscal year basis, as recommended by the CEO and approved by the
Compensation Committee of the Board of Directors of the Employer (the
"Compensation Committee"), in accordance with the Employer's compensation
policies, as they may be established from time to time. After any such increase,
"Base Salary" shall refer to the increased amount and shall not thereafter be
reduced.
(b) PERFORMANCE BONUS. The Executive may receive an annual
"Performance Bonus," payable within sixty (60) days after the end of the fiscal
year of the Employer. The amount (if any) of and the form of the entitlements
(i.e., cash, equity-based awards, or a combination of cash and equity-based
awards) comprising any annual Performance Bonus shall be as recommended by the
CEO and approved by the Compensation Committee in its sole discretion; shall not
be subject to any minimum or guaranteed amount; and shall be generally based on
a combination of company-wide and individual performance criteria. The
Executive's "Maximum Bonus Percentages" and "Maximum Performance Bonus" are set
forth in Exhibit A to this Agreement and the Executive's "Maximum Cash
Performance Bonus" for any fiscal year shall be his Base Salary for such year
multiplied by the Maximum Bonus Percentage for the Cash Bonus Component of the
Performance Bonus as set forth in Exhibit A. Prior to January 1 of each calendar
year, the Executive shall provide the CEO with a written "Personal Achievement
Plan" that sets forth the Executive's individual performance goals for such
calendar year, which goals shall reflect and be consistent with the Employer's
then-current business plan. Whether all or any of the individual elements of the
Executive's Personal Achievement Plan are achieved during the year shall guide,
but shall not bind, the CEO in making his recommendation of the amount of the
Executive's Performance Bonus. For purposes of this Agreement, the term "Cash
Performance Bonus" shall mean that component of the Performance Bonus paid or
payable in cash.
(c) BENEFITS. The Executive shall be entitled to participate in all
plans and benefits that may be from time to time accorded to all, and not simply
any one of, the Executive, the Employer's Chief Investment Officer, and the
Employer's Executive Vice President-Operations (collectively, the "Senior
Headquarters Executives") and shall receive supplemental life and disability
insurance coverages comparable (as a percentage of Base Salary) to those
received by the CEO, all as determined from time to time by the CEO and approved
(if necessary) by the Compensation Committee of the Board. In addition to the
foregoing perquisites, plans and benefits, commencing in fiscal 2002, the
Executive shall receive an annual allowance of two thousand seven hundred and
fifty-six dollars ($2,756) for personal financial planning and personal income
tax preparation, which allowance shall (i) be paid no later than
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March 30 of each year and (ii) increase five percent (5%) per annum (on a
compounded basis), commencing as of the allowance payment due on or before March
30, 2003.
(d) VACATIONS. The Executive shall be entitled to annual vacations in
accordance with the vacation policy of the Employer, which vacations shall be
taken at a time or times mutually agreeable to the Employer and the Executive;
provided, however, that the Executive shall be entitled to at least four (4)
weeks of paid vacations annually.
(e) WITHHOLDING. The Employer shall be entitled to withhold, from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes or charges which, from time to time, it is required
to withhold. The Employer shall be entitled to rely upon the advice and counsel
of its independent accountants with regard to any question concerning the amount
or requirement of any such withholding.
4. TERMINATION.
(a) PREMATURE TERMINATION WITHOUT NOTICE. Notwithstanding Section 1
hereof, the Employer may terminate the Executive's employment on an immediate
basis and without notice, in an emergency circumstance, when reasonably
necessary to preserve or protect the Employer's interests; and in the case of
such an immediate termination, the Employer shall pay the Executive one (1)
month's Base Salary in addition to any other amounts then due to the Executive
as a result of the termination (it being understood that the applicable
termination-based amount then due shall be determined based on the Section of
this Agreement pursuant to which the Executive's employment is terminated). In
the event that the circumstances giving rise to an emergency termination give
rise to payment of a Severance Amount that includes a prorated Cash Performance
Bonus for the then-current year, then such Cash Performance Bonus shall be
prorated as if the Executive had remained employed by the Employer for an
additional period of thirty (30) days beyond the date of actual immediate
emergency termination of his employment as described above.
(b) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that the
Executive voluntarily terminates his employment under this Agreement, other than
pursuant to Section 4(c) (Constructive Discharge) or 4(g) (Change in Control),
then the Employer shall only be required to pay to the Executive such Base
Salary and vacation pay for unused vacation days as shall have accrued and
remain unpaid through the effective date of the termination, and the Employer
shall not be obligated to pay any Performance Bonus for the then-current fiscal
year, or have any further obligations whatsoever to the Executive, other than
payment of any Performance Bonuses previously approved by the Compensation
Committee for any prior fiscal year(s) that remain unpaid, reimbursement of
previously approved expenses, any amounts or rights vested pursuant to the
Scheduled Benefits [as defined in Section 10(b) hereof], and any amounts or
rights vested pursuant to any "employee pension benefit plan" as such term is
defined in Section 3(2)(A) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(c) CONSTRUCTIVE DISCHARGE. If, at any time during the term of this
Agreement, the Executive is Constructively Discharged (as hereinafter defined),
then the Executive shall have the right, by written notice to the Employer given
within thirty (30) days
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after such Constructive Discharge, which notice shall specify the grounds for
such Constructive Discharge, to terminate his employment hereunder, effective as
of fifteen (15) days after such notice, and the Executive shall have no further
obligations under this Agreement except as specified in Sections 5 and 6. The
Executive shall in such event receive from the Employer the Severance Amount and
other entitlements described and defined in subparagraph (f) of this Section 4.
Notwithstanding the foregoing, if the Executive is Constructively Discharged on
or within one (1) year after the occurrence of an event constituting a Change in
Control Event [as defined in subparagraph (g) of this Section 4], then the
Executive shall receive the Change in Control Severance Amount [as defined in
subparagraph (g) of this Section 4] in lieu of the Severance Amount that would
otherwise be paid in respect of a Constructive Discharge under this Section
4(c), and such termination shall also be deemed a Change in Control Termination
for purposes of Section 6 of this Agreement.
For purposes of this Agreement, the Executive shall be deemed to have been
"Constructively Discharged" upon the occurrence of any one of the following
events:
(i) The Executive shall be removed from the position with the
Employer set forth in Section 2 hereof, by the CEO or the Board, other than as a
result of the Executive's appointment to a position of comparable or superior
authority and responsibility, or other than for Cause, subject, however, to the
following caveats and exclusions, none of which shall constitute a Constructive
Discharge: (A) the Employer shall be permitted to broaden and expand the
Executive's responsibilities, whether in the same or different position; (B) the
Employer may, in connection with Executive's disability as described in Section
4(e), appoint Executive to the position that is both (x) related to the position
set forth in Section 2 hereof and (y) the next highest position then available
with the Employer that the Executive is physically and professionally qualified
to perform at the time of such appointment (the "Substitute Position"); and (C)
the Employer may reduce the Executive's Base Salary to a level that is not less
than the greater of (y) the minimum Base Salary established for fiscal year 2002
as set forth in Section 3(a) hereof and (z) eighty-five percent (85%) of the
Executive's then-current Base Salary, provided that such reduction occurs
generally concurrently with, and as a component of, a comprehensive reduction of
Base Salaries (or reduction in number) of the other Senior Headquarters
Executives then employed by Employer, and provided that, in the context of a
general pay reduction, Executive's Base Salary reduction is reasonably
comparable to that imposed on the other Senior Headquarters Executives; it being
specifically understood and agreed that none of the events described in (A),
(B), and (C) above shall constitute a "Constructive Discharge" hereunder; or
(ii) The Executive shall fail to be vested by the Employer with
the powers, authority and support services customarily attendant to said office
within the REIT industry, other than for Cause and other than due to financial
constraints applicable to the Employer resulting in a generalized reduction of
support services within the Employer; or
(iii) The Employer shall formally notify the Executive, in
writing, that the employment of the Executive will be terminated (other than for
Cause) or materially modified (other than for Cause) in the future, or that the
Executive will be Constructively Discharged in the future; or
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(iv) The Employer shall change the primary employment location of
the Executive to a place that is more than fifty (50) miles from the primary
employment location as of the Effective Date of this Agreement, other than in
connection with a general relocation of the headquarters office (or staff) of
the Employer; or
(v) The Employer shall commit a material breach of its
obligations under this Agreement, which it shall fail to cure or commence to
cure within thirty (30) days after receipt of written notice thereof from the
Executive.
(d) PAYMENTS UPON DEATH. This Agreement shall terminate upon the death
of the Executive. Upon the Executive's death and the resulting termination of
this Agreement, the Employer shall only be obligated to pay such Base Salary and
vacation pay for unused vacation days as shall have accrued and remain unpaid
through the date of death plus seventy-five percent (75%) of his "Maximum Cash
Performance Bonus," as set forth in Exhibit A to this Agreement, for the
then-current year as described in Section 3(b), such Cash Performance Bonus to
be prorated through the date of death on a strict per diem basis, and the
Employer shall not have any further obligations to the Executive (other than
payment of any Performance Bonuses previously approved by the Compensation
Committee for prior fiscal year(s) that remain unpaid, reimbursement of
previously approved expenses, any amounts or rights vested pursuant to the
Scheduled Benefits), and any amounts or rights vested pursuant to any "employee
pension benefit plan" as such term is defined in Section 3(2)(A) of ERISA). The
amount that the Employer shall be obligated to pay upon the Executive's death
shall be delivered to such beneficiary, designee or fiduciary as Executive may
have designated in writing or, failing such designation, to the executor or
administrator of his estate, in full settlement and satisfaction of all claims
and demands on behalf of the Executive. Such payments shall be in addition to
such other death benefits of the Employer as shall have been made available for
the benefit of the Executive, and in full settlement and satisfaction of all
payments provided for in this Agreement. The Employer and the Executive agree
that the Employer shall maintain, at all times during the term of this
Agreement, such supplemental life insurance for the benefit of the Executive as
is set forth in Section 3(c) hereof.
(e) PAYMENTS UPON DISABILITY. In the event of the Executive's
"disability" (as defined below), the Employer, acting reasonably and in good
faith, may determine whether or not the basis for, or the cause of, the
Executive's disability is work-related.
(i) If the Employer determines that the basis for, or the cause
of, the Executive's disability is not work-related, the Employer may deliver a
written notice to the Executive advising of the Employer's election to terminate
the Employee's employment, in which case the subject of, and the basis for, the
termination shall be the Executive's disability; and upon delivery of such
termination notice, the Executive's employment shall be terminated. Upon the
termination of the Executive's employment under this Section 4(e)(i), the
Employer shall only be obligated to pay to the Executive such Base Salary and
vacation pay for unused vacation days as shall have accrued and remain unpaid
through the effective date of termination, and the Employer shall not have any
further obligations to the Executive (other than payment of any Performance
Bonuses previously approved by the Compensation Committee for prior fiscal
year(s) that remain unpaid, reimbursement of previously approved expenses, any
amounts or rights vested pursuant to the Scheduled Benefits, and any amounts or
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rights vested pursuant to any "employee pension benefit plan" as such term is
defined in Section 3(2)(A) of ERISA).
(ii) If the basis for, or the cause of, the Executive's
disability is "work-related" (as defined below), then the Employer shall, at the
CEO's election, either (A) terminate the Executive's employment and pay him the
Severance Amount [as defined in subparagraph (f) of this Section 4], in
thirty-six (36) equal monthly installments commencing within thirty (30) days
after the Executive's employment is terminated under this Section 4(e); or (B)
appoint and reassign the Executive to a Substitute Position, as defined in
subparagraph (c)(i) of this Section 4, with an adjustment in Base Salary (and
Performance Bonus targets) to levels then attributable to that Substitute
Position, and such appointment and reassignment shall not constitute a
Constructive Discharge under subparagraph (c) of this Section 4. In the event of
an adjustment in Performance Bonus targets due to reassignment based on
disability, the Performance Bonus for the then-expired portion of the
then-current fiscal year as of such reassignment shall be paid to Executive,
when otherwise due following the termination of such fiscal year, based on a per
diem proration of seventy-five percent (75%) of the Maximum Cash Performance
Bonus for Executive's pre-disability position, prorated through the date of
reassignment. If the Executive declines the Substitute Position, then the
Executive shall be deemed to have voluntarily terminated his employment pursuant
to subparagraph (b) of this Section 4, and he shall be entitled to no Severance
Amount or other entitlements other than those enumerated in Section 4(b) hereof.
(iii) For purposes hereof, the Executive's "disability" shall be
deemed to be "work-related" if the disability is either (A) a result of an
accident or incident that would entitle the Executive to workers' compensation
benefits under the Illinois Workers' Compensation Act, as amended, if such
benefits were sought by the Executive; or (B) a result of an injury sustained at
and during an Employer-sponsored function or event, which function or event is
conducted for business, rather than recreational, purposes (e.g. an annual
retreat that the Executive is required to attend, and at which both business
meetings and recreational activities are conducted, with the Executive required
to participate in all such activities, rather than a company picnic to which the
Executive is invited and at which the Executive elects to participate in
Employer-sponsored recreational activities).
(iv) For purposes hereof, "disability" shall mean the Executive's
inability, as a result of physical or mental incapacity, substantially to
perform his duties hereunder for a period of either six (6) consecutive months,
or one hundred twenty (120) business days within a consecutive twelve (12) month
period. In the event of a dispute regarding the Executive's "disability," or
whether the basis for, or the cause of, the disability is "work-related," such
dispute shall be resolved through arbitration as provided in subparagraph (d) of
Section 10 hereof, except that the arbitrator appointed by the American
Arbitration Association shall be a duly licensed medical doctor.
(v) The Executive shall be entitled to the compensation and
benefits provided under this Agreement during any period of incapacitation
occurring during the term of this Agreement prior to the establishment of the
Executive's "disability" and subsequent termination of his employment.
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(vi) The Employer and the Executive agree that the Employer shall
maintain, at all times during the term of this Agreement, such supplemental
disability insurance for the benefit of the Executive as is set forth in Section
3(c) hereof.
(vii) During the period that the monthly payments are made under
subparagraph (ii) above, such payments shall be reduced by the amount of the
monthly disability payments made under the supplemental disability insurance
maintained by the Employer for the benefit of the Executive as is set forth in
Section 3(c) hereof.
(f) PAYMENTS UPON TERMINATION WITHOUT CAUSE OR THROUGH CONSTRUCTIVE
DISCHARGE. In the event of the termination of the employment of the Executive
under this Agreement: (y) by the Employer "Without Cause," meaning for any
reason other than in accordance with the provisions of subparagraph (d) (death),
subparagraph (e) (disability), subparagraph (g) (Change in Control) or
subparagraph (i) (for Cause) of this Section 4; or (z) by the Executive pursuant
to a Constructive Discharge under subparagraph (c) of this Section 4; then
notwithstanding any actual or allegedly available alternative employment or
other mitigation of damages by (or which may be available to) the Executive, the
Employer shall provide Executive with the following entitlements:
(i) The Employer shall, within thirty (30) days of termination
of employment, pay to the Executive, subject to the "Age-Based Adjustments"
provided and defined in Section 4(h) below, a "Severance Amount" equal to the
sum of:
(A) three (3) times the then-current annual amount of his
Base Salary; plus
(B) seventy-five percent (75%) of his Maximum Cash
Performance Bonus for the then-current year as
described in Section 3(b), such Cash Performance Bonus
to be prorated through the date of termination on a
strict per diem basis. In addition, if the Performance
Bonus for the fiscal year immediately preceding the
year in which such termination of employment occurs
shall not have been determined by the Compensation
Committee as of the date of such termination, then the
Compensation Committee shall, within thirty (30) days
following such termination, make such determination for
the preceding year, subject to the provision that the
amount so determined shall not be less than
seventy-five percent (75%) of the Maximum Performance
Bonus established for such preceding year.
(ii) The Employer shall also:
(A) notwithstanding the vesting schedule otherwise
applicable, fully vest Executive's options, other than
options that may by their terms vest upon or be subject
to the attainment of
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any individual or company-wide performance
criteria (e.g., and without limitation,
Consolidated Incentive Program options),
outstanding under the First Industrial Realty
Trust, Inc. 1994 Stock Incentive Plan, the First
Industrial Realty Trust, Inc. 1997 Stock Incentive
Plan, the First Industrial Realty Trust, Inc. 2001
Stock Incentive Plan and any similar plan
subsequently adopted by the Employer (collectively
referred to herein as the "SIP Options"), and
awards outstanding under the First Industrial
Realty Trust, Inc. Deferred Income Plan ("DIP
Awards"), effective as of the date of termination;
(B) notwithstanding the terms of the grant or award
documentation, release and eliminate all unexpired
transfer and encumbrance restrictions otherwise
applicable to any restricted stock owned by the
Executive, effective as of the date of termination;
(C) allow a period of eighteen (18) months following the
termination of employment for the Executive to exercise
any such SIP Options; and
(D) continue for the Executive his health insurance
coverage, whether single or family, so as to provide a
scope of coverage comparable to that which was in
effect as of the date of termination, for a period of
three (3) years following such termination or until
such time as substitute health insurance coverage with
comparable benefits is available to him at a cost
comparable to that borne by him under the Employer's
policy, by virtue of other employment or family
members' insurance benefits secured or made available
after termination.
(iii) The entitlements described in this subparagraph (f) shall
be in addition to the payment of such Base Salary and vacation pay for unused
vacation days as shall have accrued and remain unpaid through the effective date
of termination, and the payment of any Performance Bonuses previously approved
by the Compensation Committee for prior fiscal year(s) that remain unpaid,
reimbursement of previously approved expenses, any amounts or rights vested
pursuant to the Scheduled Benefits, and any amounts or rights vested pursuant to
any "employee pension benefit plan" as such term is defined in Section 3(2)(A)
of ERISA.
(iv) Payment to the Executive of the Severance Amount and those
items enumerated in subparagraph (iii) above will be made in a single lump sum
within thirty (30) days after a termination effectuated by the Employer Without
Cause or by the Executive based on Constructive Discharge.
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(g) CHANGE IN CONTROL.
(i) In the event of a Change in Control (as defined below) of the
Employer resulting in or associated with (as, when and to the extent herein
provided) the termination of the Executive's employment which is undertaken at
the initiative of either (y) the Employer under subparagraph (g)(ii)(A) below,
or (z) the Executive, under subparagraph (g)(ii)(B) below ("Change in Control
Termination"), the following entitlements shall become operative:
(A) The Executive shall be entitled to receive a "Change in
Control Severance Amount" equal to the sum of the
following amounts:
(1) two (2) times the then-current annual amount of
his Base Salary; plus
(2) his Maximum Cash Performance Bonus for the
then-current fiscal year as described in Section
3(b), prorated through the date of termination on
a strict per diem basis; plus
(3) if the Performance Bonus for the fiscal year
immediately preceding the year in which the Change
in Control Termination occurs shall not have been
determined by the Compensation Committee as of the
date of such termination, then the Compensation
Committee shall, within thirty (30) days following
such termination, make such determination for the
preceding year and such amount shall be paid to
the Executive hereunder, subject to the provision
that the amount so determined shall not be less
than seventy-five percent (75%) of the Maximum
Performance Bonus established for such preceding
year, and; provided further, that if, as of the
date of such termination, First Industrial Realty
Trust, Inc.'s Compensation Committee does not make
the determination required by this subparagraph
(3), then the amount payable pursuant to this
subparagraph shall not be less than seventy-five
percent (75%) of the Maximum Performance Bonus
established for such preceding year; plus
(4) a "Double Historical Average Cash Bonus," which
shall be calculated as follows: first, there will
be a computation of the average of the percentages
of his
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Maximum Cash Performance Bonus paid (or that have
been declared, but remain unpaid, as of the date
of a Change in Control Termination) as annual Cash
Performance Bonuses for the two (2) immediately
preceding fiscal years of the Employer
("Historical Average Cash Bonus Percentage");
second, the Historical Average Cash Bonus
Percentage will then be multiplied by his Maximum
Cash Performance Bonus Percentage attributable to
the year of his Change in Control Termination,
with the resulting percentage thereby derived
being his "Change in Control Bonus Percentage";
third, the Change in Control Bonus Percentage
shall be multiplied by his Base Salary as of the
date of his Change in Control Termination, with
the resulting product being his "Historical
Average Cash Bonus"; and fourth, his Historical
Average Cash Bonus is multiplied by two (2), with
the resulting product being his "Double Historical
Average Cash Bonus." See Example #1 on Exhibit C
hereto for a mathematical example of the preceding
calculation. Notwithstanding the immediately
preceding sentence and Example #1 on Exhibit C, in
the event that (i) the Cash Performance Bonus paid
for either of the two (2) fiscal years immediately
preceding a Change in Control Termination is less
than 100% of the Maximum Cash Performance Bonus
Percentage for such fiscal year, and (ii) an
equity-based Performance Bonus having a stated
aggregate value as of issuance of $100,000 or more
was granted to the Executive in respect of such
years (such year in which (i) and (ii) occur
thereby constituting a "Deficient Bonus Year"),
then for purposes of calculating the Double
Historical Average Cash Bonus component of the
Change in Control Severance Amount, the minimum
Cash Bonus Percentage for any Deficient Bonus Year
(or Years) will be 100%. See Example #2 on Exhibit
C hereto for a mathematical example of the
immediately preceding calculation. If, as of a
Change in Control Event, the Executive has not
received (or had declared by the Compensation
Committee) two Historical Cash Performance Bonuses
with respect to, and while holding, the position
set forth in Section 2, then the percentage of
Maximum Cash
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Performance Bonus used to calculate the Historical
Cash Bonus Percentages shall be the percentage of
Maximum Cash Performance Bonus paid to Executive's
predecessor with respect to the particular
position set forth in Section 2 during that
portion of the two (2) preceding fiscal years of
the Employer during which Executive did not hold
the requisite position, subject to a minimum
percentage of 100% for any Deficient Bonus Year
arising on the basis of his predecessor's
compensation history.
(B) The Employer shall also provide the following
entitlements to the Executive:
(1) notwithstanding the vesting schedule otherwise
applicable, the Employer shall fully vest
Executive's options, other than options that may
by their terms vest upon or be subject to the
attainment of any individual or company-wide
performance criteria (e.g., and without
limitation, Consolidated Incentive Program
options), outstanding under the First Industrial
Realty Trust, Inc. 1994 Stock Incentive Plan, the
First Industrial Realty Trust, Inc. 1997 Stock
Incentive Plan, the First Industrial Realty Trust,
Inc. 2001 Stock Incentive Plan and any similar
plan subsequently adopted by the Employer
(collectively referred to herein as the "SIP
Options"), and awards outstanding under the First
Industrial Realty Trust, Inc. Deferred Income Plan
("DIP Awards"), effective as of date of the Change
in Control Termination;
(2) notwithstanding the terms of the grant or award
documentation, the Employer shall release and
eliminate all unexpired transfer and encumbrance
restrictions otherwise applicable to any
restricted stock owned by the Executive, effective
as of date of the Change in Control Termination;
(3) the Employer shall allow a period of eighteen
(18) months following the termination of
employment for the Executive to exercise any such
SIP Options; and
(4) the Employer shall continue for the Executive
his health insurance coverage, whether single or
family,
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in effect as of the date of termination for three
(3) years following such termination or until such
time as substitute health insurance with
comparable benefits is available to him at a cost
comparable to that borne by him under the
Employer's policy, by virtue of other employment
or family members' insurance benefits secured or
made available after termination.
(C) The Change in Control Severance Amount shall:
(1) be reduced by any amount paid or otherwise
payable to the Executive pursuant to Sections 4(c)
(Constructive Discharge), 4(e) (disability) or
4(f) (termination by Employer without Cause); and
(2) be in addition to: such current Base Salary
and vacation pay for unused vacation days as shall
have accrued and remain unpaid as of the effective
date of termination; the payment of amounts any
Performance Bonuses previously approved by the
Compensation Committee for prior fiscal year(s)
that remain unpaid; reimbursement of previously
approved or otherwise authorized expenses; any
amounts or rights theretofore vested pursuant to
the Scheduled Benefits; and any amounts or rights
vested pursuant to any "employee pension benefit
plan" as such term is defined in Section 3(2)(A)
of ERISA.
(D) The Change in Control Severance Amount will be paid in
a single lump sum, on (I) the date of the Change
in Control Event, if the Executive's employment is
in fact terminated concurrent with the Change in
Control Event [or was terminated by the Employer
prior to the Change in Control Event so as to give
rise to a Change in Control Severance Amount
entitlement as of the Change in Control Event,
pursuant to subparagraph (ii)(A) below]; or (II)
within thirty (30) days after the Executive
terminates his employment following a Change in
Control Event under subparagraph (ii)(B) below.
(ii) The following (and only the following) events shall
constitute a Change in Control Termination under this subparagraph (g):
12
(A) Executive's employment is terminated by the Employer
(or its successor) for any reason other than for Cause
or due to death or disability, within either of the
respective three hundred sixty-five (365) day periods
either preceding or following the event constituting a
Change in Control; or
(B) The Executive terminates his employment under this
Agreement upon and through written notice given to the
Employer within thirty (30) days after the occurrence
of a "Triggering Circumstance," as defined and
described below, such right of termination to exist
only if (x) the Triggering Circumstance described in
(i) or (ii) below occurs within a period of three
hundred sixty-five (365) days following a Change in
Control Event; or (y) either of the Triggering
Circumstances described in (iii) or (iv) below occurs
within a period of seven hundred thirty (730) days
[subject to extension for (iii) as set forth below]
following a Change in Control Event. The following
shall constitute "Triggering Circumstances" hereunder,
entitling the Executive to terminate his employment
following a Change in Control Event and receive a
Change in Control Severance Amount: (i) the Change in
Control Event gives rise to a change in employment
circumstances that would otherwise constitute a
Constructive Discharge; (ii) the Change in Control
Event results in a relocation of the Executive's
primary place of employment to a location that is more
than fifty (50) miles from his primary employment
location with Employer as of the Effective Date of
this Agreement, even if such relocation is pursuant to
a general merger-induced or other general headquarters
office relocation and would, in the absence of a
Change in Control Event, not constitute a Constructive
Discharge hereunder; (iii) the Company (or its
successor), following the Change in Control Event,
pays Cash Performance Bonuses to the Executive,
attributable to either of those two (2) certain fiscal
years respectively constituting (w) the fiscal year in
which the Change in Control Event occurs and (x) the
next succeeding fiscal year ("Post-CIC Fiscal Years"),
at a level that is less than the greater of (y) the
amount equal to the average of the percentages of Base
Salary paid as Cash Performance Bonuses for the two
(2) fiscal years preceding the Change in Control Event
and (z) the amount equal to one hundred percent (100%)
of the respective Base Salaries then in place for each
of the Post-CIC Fiscal Years [it being understood that
the seven hundred thirty (730) day period
13
for determining whether there is a deficiency in a
Cash Performance Bonus for the second of the two (2)
Post-CIC Fiscal Years shall be extended as necessary
to encompass the date on which the Cash Performance
Bonus for the second Post-CIC Fiscal Year is actually
paid]; or (iv) the annual Base Salary payable to the
Executive for either Post-CIC Fiscal Year is less than
the Base Salary in effect as of the occurrence of the
Change in Control Event. In addition to the foregoing
Triggering Circumstance events described in (i)
through (iv) above giving rise to the Executive's
right to effectuate a Change in Control Termination,
it shall also constitute a Triggering Circumstance,
and the Executive shall also be entitled to effectuate
such Change in Control Termination if, as of the
effective date of a Change in Control Event, the
successor employer/acquiring entity does not affirm,
in writing, its assumption of the obligations of the
Employer under this Agreement, and its agreement to
perform such obligations for the benefit of the
Executive following the Change in Control Event. Any
Change in Control Termination by the Executive shall
be effectuated by written notice provided to the
Employer or its successor within thirty (30) days
following the Executive's actual knowledge of the
first occurrence of a Triggering Circumstance which,
in the case of (iii) or (iv) above, shall constitute
the Executive's receipt of the initial non-conforming
Base Salary payment or Cash Performance Bonus payment
in question. The failure of the Executive to give a
timely notice of termination as hereinabove provided
following the occurrence of a Triggering Circumstance
shall constitute a waiver of the Executive's right to
initiate a Change in Control Termination by reason of
such Triggering Circumstance. Executive shall have no
right to initiate a Change in Control Termination
giving rise to an entitlement to a Change in Control
Severance Amount unless a Triggering Circumstance
shall have occurred and shall have been acted upon by
Executive on a timely basis as hereinabove provided.
(iii) For purposes of this Agreement, the term "Change in Control
Event" shall mean the following events:
(A) The consummation of the acquisition by any person [as
such term is defined in Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934
Act")] of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of forty
percent
14
(40%) or more of the combined voting power embodied in
the then-outstanding voting securities of the
Employer; or
(B) The persons who, as of the date hereof, constitute
the Employer's Board of Directors (the "Incumbent
Directors") cease, in opposition to the Nominating
Committee of the Board and as a result of a tender
offer, proxy contest, merger or similar transaction or
event (as opposed to turnover caused by death or
resignation), to constitute at least a majority of the
Board, provided that any person becoming a director of
the Employer subsequent to the date hereof whose
election or nomination for election was approved by a
vote of at least a majority of the Incumbent
Directors, or by a Nominating Committee duly appointed
by such Incumbent Directors, or by successors of
either who shall have become Directors other than as a
result of a hostile attempt to change Directors,
whether through a tender offer, proxy contest or
similar transaction or event shall be considered an
Incumbent Director; or
(C) The consummation of:
(1) a merger or consolidation of the Employer, if
the stockholders of the Employer as constituted in
the aggregate immediately before such merger or
consolidation do not, as a result of and following
such merger or consolidation, own, directly or
indirectly, more than seventy-five percent (75%)
of the combined voting power of the then
outstanding voting securities of the entity
resulting from such merger or consolidation in
substantially the same proportion as was
represented by their ownership of the combined
voting power of the voting securities of the
Employer outstanding immediately before such
merger or consolidation; or
(2) a liquidation, sale or other ultimate disposition
or transfer of all or substantially all of the
total assets of the Employer and its subsidiaries,
which shall be deemed to have occurred for
purposes of ascertaining when a Change in Control
Event has taken place when, as and if the Employer
shall have disposed, in a single transaction or
set of related transactions, of more than fifty
percent (50%) of its and its subsidiaries' total
real estate portfolio, pursuant to a declared plan
of liquidation, such
15
percentage of the portfolio to be deemed to have
been transferred at such time as the Employer and
its Subsidiaries shall have disposed of fifty
percent (50%) or more of their properties in
relation to overall undepreciated (i.e.
cost-based) book value, net operating income or
square footage of developed properties.
(iv) Notwithstanding the immediately preceding subparagraph
(iii), a Change in Control Event shall not be deemed to occur solely because
forty percent (40%) or more of the combined voting power of the then-outstanding
securities of the Employer is acquired by:
(A) a trustee or other fiduciary holding securities
under one or more employee benefit plans
maintained for employees of the entity; or
(B) any corporation or other entity which, immediately
prior to such acquisition, is substantially owned
directly or indirectly by the Employer or by its
stockholders in the same proportion as their
ownership of stock in the Employer immediately
prior to such acquisition.
(v) If it is determined, in the opinion of the Employer's
independent accountants, in consultation, if necessary, with the Employer's
independent legal counsel, that any Change in Control Severance Amount, either
separately or in conjunction with any other payments, benefits and entitlements
received by the Executive in respect of a Change in Control Termination
hereunder or under any other plan or agreement under which the Executive
participates or to which he is a party, would constitute an "Excess Parachute
Payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and thereby be subject to the excise tax imposed
by Section 4999 of the Code (the "Excise Tax"), then in such event the Employer
shall pay to the Executive a "grossing-up" amount equal to the amount of such
Excise Tax, plus all federal and state income or other taxes with respect to the
payment of the amount of such Excise Tax, including all such taxes with respect
to any such grossing-up amount. If, at a later date, the Internal Revenue
Service assesses a deficiency against the Executive for the Excise Tax which is
greater than that which was determined at the time such amounts were paid, then
the Employer shall pay to the Executive the amount of such unreimbursed Excise
Tax plus any interest, penalties and reasonable professional fees or expenses
incurred by the Executive as a result of such assessment, including all such
taxes with respect to any such additional amount. The highest marginal tax rate
applicable to individuals at the time of the payment of such amounts will be
used for purposes of determining the federal and state income and other taxes
with respect thereto. Employer shall withhold from any amounts paid under this
Agreement the amount of any Excise Tax or other federal, state or local taxes
then required to be withheld. Computations of the amount of any grossing-up
supplemental compensation paid under this subparagraph shall be conclusively
made by the Employer's independent accountants, in consultation, if necessary,
with the Employer's independent legal
16
counsel. If, after the Executive receives any gross-up payments or other amount
pursuant to this subparagraph (v), the Executive receives any refund with
respect to the Excise Tax, the Executive shall promptly pay the Employer the
amount of such refund within ten (10) days of receipt by the Executive.
(h) AGE-BASED ADJUSTMENTS. It is recognized and acknowledged that
Executive intends and wishes to retire by the Retirement Date, on which date he
shall have attained the age of seventy (70), which shall be the mandatory
retirement age for senior management of the Employer. This Agreement shall
accordingly terminate, on an automatic basis, as provided in Section 1 above, as
of said Retirement Date. In addition, it is mutually acknowledged and agreed
that the Severance Amount owed to the Executive in the event of a termination of
this Agreement pursuant to Section 4(c) or 4(f) hereof (respectively dealing
with Constructive Discharge and termination by Employer without Cause) shall be
gradually reduced during the three (3) year pre-retirement transition period
preceding the Retirement Date, by being made subject to "Age-Based Adjustments,"
based on the following schedule:
Age of Executive as of % of Severance Amount Due
Date of Termination Per Age-Based Adjustment
------------------- ------------------------
67 75%
68 50%
69 25%
70 0%
(i) TERMINATION FOR CAUSE. The employment of the Executive under this
Agreement may be terminated by the Employer on the basis of "Cause," as
hereinafter defined. If the Executive's employment is terminated by the Employer
for Cause under this subparagraph (i), then the Employer shall only be obligated
to pay to the Executive such Base Salary and vacation pay for unused vacation
days as shall have accrued and remain unpaid through the effective date of
termination, but the Employer shall not be required to pay to the Executive any
Performance Bonus for the then-current fiscal year, or have any further
obligations whatsoever to the Executive, other than any Performance Bonuses
previously approved by the Compensation Committee for prior fiscal year(s) that
remain unpaid; reimbursement for previously approved expenses; and continuation
of any amounts or rights vested pursuant to the Scheduled Benefits that remain
vested upon and notwithstanding the Executive's termination for Cause, in which
event such rights to payment or continuation shall be determined pursuant to the
terms of the plans under which such Scheduled Benefits are provided, and not the
terms of this subparagraph (i) of Section 4. Termination for "Cause" shall mean
the termination of the Executive's employment on the basis or as a result of:
(i) the Executive being found guilty of a felony; (ii) the Executive's
commission of an act that disqualifies the Executive (whether under the
Employer's by-laws, or under any statute, regulation, law or rule applicable to
the Employer) from serving as an officer or director of the Employer; or (iii) a
recurring pattern of material and willful dereliction of duty of the Executive's
material responsibilities, where such recurring failure has a material adverse
effect upon the business of the Employer, as reasonably determined by the CEO,
in the CEO's good faith determination. In making such determination, it is
understood that the CEO shall interpret and apply the above-described standards
(of materiality, or willful dereliction, and of adversity) in a manner that is
normal and customary within the
17
Employer's industry. Executive shall be entitled to thirty (30) days' prior
written notice (the "Termination Notice") of the Employer's intention to
terminate his employment for Cause, and such Termination Notice shall: specify
the grounds for such termination; afford the Executive a reasonable opportunity
to cure any conduct or act (if curable) alleged as grounds for such termination;
and a reasonable opportunity to present to the CEO his position regarding any
dispute relating to the existence of such Cause. Notwithstanding the foregoing
procedure, the Employer (through the CEO) shall have the unilateral right to
make the final substantive determination as to whether the Executive (through
the CEO) has properly remedied or otherwise addressed those matters described in
the Termination Notice as grounds for termination of the Executive's employment;
and in the event that the Employer determines (as of the expiration of the
above-contemplated 30-day period), that the Executive has not appropriately
remedied or otherwise addressed those matters, then the Executive's term of
employment shall, in all events, automatically terminate as of the thirtieth
(30th) day after the Employer delivers the Termination Notice, without any
responsibility or obligation of the Employer to provide the Executive with any
further notice or explanation of the grounds for his termination. If the
Executive challenges his termination for Cause under the provisions of Section
10(d) hereof and the arbitrator finds that the Executive did not engage in
conduct which properly entitled the Employer to terminate the Executive's
employment for Cause under the criteria set forth above, then the Employer shall
pay to the Executive, within thirty (30) days of the arbitrator's decision: the
Severance Amount as if his termination of employment had been effectuated
pursuant to Section 4(f) hereunder; with interest on the Severance Amount at the
rate of eighteen percent (18%) from the date of the Termination Notice to the
date payment is ordered made of such Severance Amount to be paid thereon; plus
the amount of the Executive's reasonable attorneys' fees incurred in such
arbitration.
(j) RESIGNATION FROM RELATED POSITIONS. Upon the termination of the
Executive's employment with the Employer, for any reason whatsoever, the
Executive shall immediately resign from any and all officerships, directorships,
committee memberships and all other elected or appointed positions, of any
nature, that the Executive then holds with any or all of the Employer and its
affiliates.
(k) STOCK REDEMPTION. Upon the termination of the Executive's
employment with the Employer, for any reason whatsoever, the Executive shall
permit the Employer or its affiliate(s), as the case may be, to immediately
redeem any and all common or preferred stock (or any partnership or membership
interests, as the case may be) that the Executive then owns in any affiliate(s)
of Employer, which redemption shall occur at the same cash price (if any) as
Executive actually initially paid to acquire such stock (or partnership or
membership interests, as the case may be). In no event, however, shall the
foregoing requirement apply to any stock (common or preferred) that Executive
owns in Employer, or to any limited partnership interests (so-called "OP Units")
that the Executive owns in First Industrial, L.P., a Delaware limited
partnership in which the Employer is the general partner and which is commonly
referred to as the "Operating Partnership."
5. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that, during the
course of his employment prior to his entry into this Agreement, he has
produced, received and had access to, and may hereafter continue to produce,
receive and otherwise have access to,
18
various materials, records, data, trade secrets and information not generally
available to the public, specifically including any information concerning
projects in the "Pipeline" as defined in Section 6(a)(ii) below (collectively,
"Confidential Information") regarding the Employer and its subsidiaries and
affiliates. Accordingly, during the term of this Agreement and for the one (1)
year period immediately subsequent to any termination of this Agreement, on any
basis, the Executive shall hold in confidence and shall not directly or
indirectly for his own benefit or for the benefit of any other person or entity,
for economic gain or otherwise, disclose, use, copy or make lists of any such
Confidential Information, except to the extent that (a) such information is or
thereafter becomes lawfully available from public sources; or (b) such
disclosure is authorized in writing by the Employer; or (c) such disclosure is
determined by court order or official governmental ruling to be required by law
or by any competent administrative agency or judicial authority; or (d) such
disclosure is otherwise reasonably necessary or appropriate in connection with
the performance by the Executive of his duties hereunder. All records, files,
documents, computer diskettes, computer programs and other computer-generated
material, as well as all other materials or copies thereof relating to the
Employer's business, which the Executive shall prepare or use, shall be and
remain the sole property of the Employer, shall not be removed from the
Employer's premises without its written consent, and shall be promptly returned
to the Employer upon termination of the Executive's employment hereunder.
6. NON-COMPETITION COVENANT.
(a) Restrictive Covenant.
(i) The Employer and the Executive have jointly reviewed the
tenant lists, property submittals, logs, broker lists, and operations of the
Employer, and have agreed that as an essential ingredient of and in
consideration of this Agreement and the Employer's agreement to make the payment
of the amounts described in Sections 3 and 4 hereof when and as herein
described, the Executive hereby agrees, except with the express prior written
consent of the Employer, and subject to the limitations set forth in Section
5(c) below, that for a period of one (1) year [or in the case of a Change in
Control Termination, six (6) months] after the termination of the Executive's
employment with the Employer (the "Restrictive Period"), he will not directly or
indirectly in any manner compete with the business of the Employer, including,
but not by way of limitation, by directly or indirectly owning, managing,
operating, controlling, financing, or by directly or indirectly serving as an
employee, officer or director of or consultant to, or by soliciting or inducing,
or attempting to solicit or induce, any employee or agent of Employer to
terminate employment with Employer and become employed by the following:
(A) any company listed as an industrial or mixed
office/industrial (but not pure office) REIT or
Real Estate Operating Company in the Realty Stock
Review, a Dow Xxxxx & Co. Publication, (a "Peer
Group Member") a copy of such listing for the
month prior of the Effective Date hereof being
attached hereto as Exhibit D, or
(B) any person, firm, partnership, corporation,
trust or other entity (including, but not limited
to, Peer Group Members)
19
which, as a material component of its business
(other than for its own use as an owner or user),
invests in industrial warehouse facilities and
properties similar to the Employer's investments
and holdings: (1) in any geographic market or
territory in which the Employer owns properties or
has an office either as of the date hereof or as
of the date of termination of the Executive's
employment; or (2) in any market in which an
acquisition or other investment by the Employer or
any affiliate of the Employer is pending as of the
date of termination, as conclusively evidenced by
the existence of a Request for Proposal or an
executed Agreement of Purchase and Sale,
Contribution (or Merger) Agreement or Letter of
Intent, Confidentiality Agreement, Due Diligence
Agreement, Pursuit Cost Agreement, Partnership or
Joint Venture Agreement, or by a Post Acceptance
Conference Call (PACC) memorandum or Investment
Committee (IC) approval in existence at the time
of the termination of the Executive's employment.
(ii) In addition, during the Restrictive Period, the Executive
shall not act as a principal, investor or broker/intermediary, or serve as an
employee, officer, advisor or consultant, to any person or entity, in connection
with or concerning any investment opportunity of the Employer that is in the
"Pipeline" (as defined below) as of the effective date of the termination of the
Executive's employment. Within ten (10) business days after the Executive's
termination of employment, the CEO shall deliver to the Executive a written
statement of the investment opportunities in the Pipeline as of the effective
date of the termination of the Executive's employment (the "Pipeline
Statement"), and the Executive shall then review the Pipeline Statement for
accuracy and completeness, to the best of his knowledge, and advise the CEO of
any corrections required to the Pipeline Statement. The Executive's receipt of
any Severance Amount under Sections 4(b), (e) and (f) shall be conditioned on
his either acknowledging, in writing, the accuracy and completeness of the
Pipeline Statement, or advising the CEO, in writing, of any corrections or
revisions required to the Pipeline Statement in order to make it accurate and
complete, to the best of the Executive's knowledge. The restrictions concerning
any one individual investment opportunity in the Pipeline shall continue until
the first to occur of (i) expiration of the Restrictive Period; or (ii) the
Executive's receipt from the Employer of written notice that the Employer has
abandoned such investment opportunity, such notice not to affect the
restrictions on all other investment opportunities contained in the Pipeline
Statement during the remainder of the Restrictive Period. An investment
opportunity shall be considered in the "Pipeline" if, as of the effective date
of the termination of the Executive's employment, the investment opportunity is
pending (for example, is the subject of a letter of intent) or proposed (for
example, has been presented to, or been bid on by, the Employer in writing or
otherwise) or under consideration by the Employer, whether at the PACC, IC,
staff level(s) or otherwise, and relates to any of the following potential forms
of transaction: (A) an acquisition for cash; (B) an UPREIT transaction; (C) a
transaction under the "First Exchange"
20
program; (D) a development project or venture; (E) a joint venture partnership
or other cooperative relationship, whether through a DOWNREIT relationship or
otherwise; (F) an "Opportunity Fund" or other private investment in or
co-investment with the Employer; (G) any debt placement opportunity by or in
Employer; (H) any service or other fee-generating opportunity by the Employer;
or (I) any other investment by the Employer or an affiliate of the Employer, in
or with any party or by any party in the Employer or an affiliate of the
Employer.
(iii) The Restrictions contained in subparagraphs (i) and (ii)
above are collectively referred to as the "Restrictive Covenant." If the
Executive violates the Restrictive Covenant and the Employer brings legal action
for injunctive or other relief, the Employer shall not, as a result of the time
involved in obtaining such relief, be deprived of the benefit of the full period
of the Restrictive Covenant. Accordingly, the Restrictive Covenant shall be
deemed to have the duration specified in this subparagraph (i) computed from the
date the relief is granted, but reduced by the time between the period when the
Restrictive Period began to run and the date of the first violation of the
Restrictive Covenant by the Executive. In the event that a successor of the
Employer assumes and agrees to perform this Agreement or otherwise acquires the
Employer, this Restrictive Covenant shall continue to apply only to the primary
markets of the Employer as they existed immediately before such assumption or
acquisition, and shall not apply to any of the successor's other offices or
markets. The foregoing Restrictive Covenant shall not prohibit the Executive
from owning, directly or indirectly, capital stock or similar securities that
are listed on a securities exchange or quoted on the National Association of
Securities Dealers Automated Quotation System and that do not represent more
than five percent (5%) of the outstanding capital stock of any corporation.
(b) RELIEF FROM RESTRICTIVE COVENANTS. In the event the Executive
shall desire to engage in any activity that would violate the Restrictive
Covenant which he reasonably and in good faith believes would be immaterial to
the economic and proprietary interests of the Employer or any of its affiliates,
he may, prior to (but not after) engaging in such activity, submit to the CEO a
written request for relief from the Restrictive Covenant, which written request
shall set forth the scope of the proposed activity, the scope of the requested
relief and the basis upon which Executive believes such activity to be
immaterial to the interests of the Employer. Within ten (10) business days after
receipt of the Executive's written request, and subject to the specific approval
of the Board, the CEO shall advise the Executive, in writing, as to whether the
requested relief shall be granted. The parties agree that such relief shall be
granted only if the CEO reasonably determines that the reasonably anticipated
impact on the Employer of the grant of such relief is in fact immaterial to and
fully compatible with the economic and proprietary interests of the Employer
(and its separate regions, ventures, divisions, subsidiaries and affiliates), it
being specifically hereby understood and acknowledged by the Executive that a
purportedly "minor" percentage impact on company-wide revenues or expenses of
the Employer shall not be deemed to be per se immaterial.
(c) TERMINATION OF RESTRICTIVE COVENANT - CERTAIN CHANGE IN CONTROL
TERMINATION BY EXECUTIVE. If the Executive terminates his employment with the
successor of the Employer following a Change in Control Event in the absence of
a Triggering Circumstance, so as to effectuate a termination of his employment
without any entitlement of or claim by the Executive to a Change in Control
Severance Amount, then the Restrictive Covenant set forth in
21
this Section 6 shall not be operative with respect to the Executive following
such termination, during the Restrictive Period or otherwise, but the
obligations of the Executive set forth in Section 5 as to Confidential
Information shall remain operative as therein provided.
(d) REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive
acknowledges that the restrictions contained in Sections 5 and 6 of this
Agreement are reasonable and necessary for the protection of the legitimate
proprietary business interests of the Employer; that any violation of these
restrictions would cause substantial injury to the Employer and such interests;
that the Employer would not have entered into this Agreement with the Executive
without receiving the additional consideration offered by the Executive in
binding himself to these restrictions; and that such restrictions were a
material inducement to the Employer to enter into this Agreement. In the event
of any violation of these restrictions or statement of intent by the Executive
to violate any of these restrictions, the Employer shall automatically be
relieved of any and all further financial and other obligations to the Executive
under this Agreement, in relation to Severance Payments or otherwise, and shall
be entitled to all rights, remedies or damages available at law, in equity or
otherwise under this Agreement; and, without limitation, shall be entitled to
temporary and preliminary injunctive relief, granted by a court of competent
jurisdiction, to prevent or restrain any such violation by the Executive and any
and all persons directly or indirectly acting for or with him, as the case may
be, such injunctive relief to be available pending the outcome of the
arbitration process provided under Section 10(d) of this Agreement, which
arbitration process will entitle the arbitrator to determine that permanent
injunctive relief is to be granted to the Employer, whereupon such relief shall
be granted by a court of competent jurisdiction, based on the determination of
the arbitrator.
7. INTERCORPORATE TRANSFERS. If the Executive shall be transferred by the
Employer to an affiliate of the Employer, such transfer, by itself and without
any adverse financial or functional impact on the Executive, shall not be deemed
a Constructive Discharge or otherwise be deemed to terminate or modify this
Agreement, and the employing corporation or other entity to which the Executive
is transferred shall, for all purposes of this Agreement, be construed as
standing in the same place and stead as the Employer as of the effective date of
such transfer provided, however, that at all times after such transfer, First
Industrial Realty Trust, Inc. shall remain liable for all obligations of the
Employer hereunder, including the payment of all Base Salary, Performance
Bonuses or other amounts set forth herein. For purposes hereof, an affiliate of
the Employer shall mean any corporation or other entity directly or indirectly
controlling, controlled by, or under common control with, the Employer.
8. INTEREST IN ASSETS AND PAYMENTS. Neither the Executive nor his estate
shall acquire any rights in any funds or other assets of the Employer, otherwise
than by and through the actual payment of amounts payable hereunder; nor shall
the Executive or his estate have any power to transfer, assign, anticipate,
pledge, hypothecate or otherwise encumber any of said payments; nor shall any of
such payments be subject to seizure for the payment of any debt, judgment,
alimony, separate maintenance or be transferable by operation of law in the
event or as a result of any bankruptcy, insolvency or other legal proceeding
otherwise relating to the Executive.
22
9. INDEMNIFICATION.
(a) During the term of this Agreement and thereafter throughout all
applicable limitations periods, the Employer shall provide the Executive
(including his heirs, personal representatives, executors and administrators),
with such coverage as shall be generally available to senior officers of the
Employer under the Employer's then-current directors' and officers' liability
insurance policy, at the Employer's expense.
(b) In addition to the insurance coverage provided for in paragraph
(a) of this Section 9, the Employer shall defend, hold harmless and indemnify
the Executive (and his heirs, executors and administrators) to the fullest
extent permitted under applicable law, and subject to each of the requirements,
limitations and specifications set forth in the Articles of Incorporation,
Bylaws and other organizational documents of the Employer, against all expenses
and liabilities reasonably incurred by him in connection with or arising out of,
any action, suit or proceeding in which the Executive may be involved by reason
of his having been an officer of the Employer (whether or not he continues to be
an officer at the time of such expenses or liabilities are incurred), such
expenses and liabilities to include, but not be limited to, judgments, court
costs and attorneys' fees and the cost of reasonable settlements.
(c) In the event the Executive becomes a party, or is threatened to be
made a party, to any action, suit or proceeding for which the Employer has
agreed to provide insurance coverage or indemnification under this Section 9,
the Employer shall, to the full extent permitted under applicable law, and
subject to the each of the requirements, limitations and specifications set
forth in the Articles of Incorporation, Bylaws and other organizational
documents of the Employer, advance all expenses (including the reasonable
attorneys' fees of the attorneys selected by Employer and approved by Executive
for the representation of the Executive), judgments, fines and amounts paid in
settlement (collectively "Expenses") incurred by the Executive in connection
with the investigation, defense, settlement, or appeal of any threatened,
pending or completed action, suit or proceeding, subject to receipt by the
Employer of a written undertaking from the Executive covenanting: (i) to
reimburse the Employer for the amount of all of the Expenses actually paid by
the Employer to or on behalf of the Executive in the event it shall be
ultimately determined, by the court or the arbitrator, as applicable to the
case, that the Executive is not entitled to indemnification by the Employer for
such Expenses; and (ii) to assign to the Employer all rights of the Executive to
insurance proceeds, under any policy of directors' and officers' liability
insurance or otherwise, to the extent of the amount of the Expenses actually
paid by the Employer to or on behalf of the Executive.
10. GENERAL PROVISIONS.
(a) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, the Employer, the Executive's personal
representatives, the Employer's successors and assigns, and any successor or
assign of the Employer shall be deemed the "Employer" hereunder. The Executive
may neither assign his duties or obligations this Agreement, nor sell, assign,
pledge, encumber, transfer or hypothecate his entitlement hereunder, and the
Employer shall have no obligation to recognize any such purported alienation, or
pay any funds to any party claiming the benefit thereof.
23
(b) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire agreement between the parties respecting the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral; provided, however, that all
benefits and rights conferred by those equity-based and other compensation plans
as provided by the plans included on Exhibit B hereto (collectively, the
"Scheduled Benefits") shall be governed by those equity-based and other
compensation plans and ancillary documents, whether adopted or signed prior to
or after the Effective Date of this Agreement and as such are modified by this
Agreement. Except as otherwise explicitly provided herein, this Agreement may
not be amended or modified except by written agreement signed by the Executive
and the Employer.
(c) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should be
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remaining provisions shall not be affected
thereby. This Agreement shall be construed and the legal relations of the
parties hereto shall be determined in accordance with the laws of the State of
Illinois, as such state constitutes the situs of the headquarters office of the
Employer and the place of employment hereunder, and such laws shall apply
without reference to the rules of law regarding conflicts of law.
(d) ARBITRATION. Except only as otherwise provided in subparagraph (d)
of Section 6, each and every dispute, controversy and contested factual and
legal determination arising under or in connection with this Agreement or the
Executive's employment by the Employer shall be committed to and be resolved
exclusively through the arbitration process, in an arbitration proceeding,
conducted by a single arbitrator sitting in Chicago, Illinois, in accordance
with the rules of the American Arbitration Association (the "AAA") then in
effect. The arbitrator shall be selected by the parties from a list of eleven
(11) arbitrators provided by the AAA, provided that no arbitrator shall be
related to or affiliated with either of the parties. No later than ten (10) days
after the list of proposed arbitrators is received by the parties, the parties,
or their respective representatives, shall meet at a mutually convenient
location in Chicago, Illinois, or telephonically. At that meeting, the party who
sought arbitration shall eliminate one (1) proposed arbitrator and then the
other party shall eliminate one (1) proposed arbitrator. The parties shall
continue to alternatively eliminate names from the list of proposed arbitrators
in this manner until each party has eliminated five (5) proposed arbitrators.
The remaining arbitrator shall arbitrate the dispute. Each party shall submit,
in writing, the specific requested action or decision it wishes to take, or
make, with respect to the matter in dispute ("Proposed Solution"), and the
arbitrator shall be obligated to choose one (1) party's specific Proposed
Solution, without being permitted to effectuate any compromise or "new"
position; provided, however, that the arbitrator shall be authorized to award
amounts not in dispute during the pendency of any dispute or controversy arising
under or in connection with this Agreement. The party whose Proposed Solution is
not selected shall bear the costs of all counsel, experts or other
representatives that are retained by both parties, together with all costs of
the arbitration proceeding, including, without limitation, the fees, costs and
expenses imposed or incurred by the arbitrator. If the arbitrator ultimately
chooses the Executive's Proposed Solution, then the Employer shall pay interest
at the rate of eighteen percent (18%) interest, per annum, on the amount the
arbitrator awards to the Executive (exclusive of attorneys' fees and costs and
expenses of the arbitration), such interest to
24
be calculated from the date the amount payable under the Executive's Proposed
Solution would have been paid under this Agreement, but for the dispute, through
the date payment is ordered made. Judgment may be entered on the arbitrator's
award in any court having jurisdiction, including, if applicable, entry of a
permanent injunction under such subparagraph (d) of Section 6.
(e) PRESS RELEASES AND PUBLIC DISCLOSURE. Any press release or other
public communication by either the Executive or the Employer with any other
person concerning the terms, conditions or circumstances of Executive's
employment, or the termination of such employment, shall be subject to prior
written approval of both the Executive and the Employer, subject to the proviso
that the Employer shall be entitled to make requisite and appropriate public
disclosure of the terms of this Agreement and any termination hereof, without
the Executive's consent or approval, as may be required under applicable
statutes, and the rules and regulations of the Securities and Exchange
Commission and New York Stock Exchange. Employer shall be entitled to rely on
the advice and counsel of its legal counsel and other professional advisors in
determining whether any such disclosure is required.
(f) PUT DEMAND AS TO RELEASED SECURITIES. If, pursuant to either of
Sections 4(f) or 4(g) hereof, the Employer shall have prematurely released and
eliminated all unexpired transfer and encumbrance restrictions otherwise
applicable to any restricted shares of common stock of the Employer owned by the
Executive, then the Executive shall, on a one-time basis exercisable within
thirty (30) days of the date of such release of restrictions, have the right to
put to the Employer, and require that the Employer purchase, such shares of
restricted stock as shall have been released as above described ("Released
Securities"). Such put shall be exercised by delivery of a "Put Demand" to the
Employer, given in writing pursuant to the notice provisions hereof, which Put
Demand: (i) shall encompass all of the Released Securities owned by the
Executive; and (ii) shall in no event be applicable to or available in respect
of any "Exempt Shares," which shall constitute those Released Securities that
may otherwise be sold by the Executive, without registration, pursuant to either
or both of Rules 144 and 145 of the Securities Act of 1933, as amended, within a
period of one hundred twenty (120) days following the date of the release of the
Executive's restricted shares. Upon its receipt of a timely and otherwise proper
Put Demand from the Executive, the Employer shall thereby and thereupon become
obligated, within a period of ten (10) days following the date of delivery of
the Put Demand, to purchase, for cash, the Released Securities that were the
subject of the Put Demand in question (in all events exclusive of Exempt
Shares), at a price per share equal to the weighted average (by daily trading
volume on the New York Stock Exchange) of the closing price of the Employer's
shares of common stock for the thirty (30) trading days immediately preceding
the date of delivery of the Put Demand. The specific date on which such purchase
shall be consummated and closed shall be established pursuant to the mutual
agreement of the parties and, in the absence of such agreement, on the tenth
(10th) day following the date of delivery of the Put Demand (and if such day
falls on a weekend or business holiday, then on the first business day
thereafter). By his delivery of a Put Demand, the Executive shall become
irrevocably obligated to sell, at the price above specified, all of the Released
Securities that were the subject of the Put Demand. The transfer of the Released
Securities to the Employer shall be effectuated pursuant to commercially
reasonable and customary stock transfer and other related documentation prepared
at Employer's expense by counsel to the Employer.
25
(g) INTEREST. If any amount due hereunder is not paid within ten (10)
days of being due, then the Employer or the Executive, as applicable, shall pay
interest at the rate of 200 basis points above the base commercial lending rate
published in The Wall Street Journal in effect from time to time during the
period of such non-payment; provided, however, that if the interest rate set
forth above exceeds the highest legally-permissible interest rate, then the
interest rate shall be reduced to the level of the highest legally permissible
interest rate.
(h) WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party, shall be deemed a waiver of any similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
(i) NOTICES. Notices given pursuant to this Agreement shall be in
writing, and shall be deemed given when received if personally delivered, or on
the first (1st) business day after deposit with a commercial overnight delivery
service. Notices to the Employer shall be addressed and delivered to the
principal headquarters office of the Employer, Attention: President and Chief
Executive Officer, with a copy concurrently so delivered to General Corporate
Counsel to the Employer, Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx, 000
Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, to the joint attention
of Xxxxx X. Xxxxx-Xxxxxxx and Xxxxxx X. Xxxxxxxxx. Notices to the Executive
shall be sent to the address set forth below the Executive's signature on this
Agreement, or to such other address as Executive may hereafter designate in a
written notice given to the Employer and its counsel.
(j) COUNTERPARTS. This Agreement and any amendments thereto may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
[Remainder of Page Intentionally Left Blank]
26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
FIRST INDUSTRIAL REALTY TRUST, XXXXXXX X. XXXXXX
INC., a Maryland corporation
By: /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
------------------------------------- -----------------------------
Xxxxxxx X. Xxxxxxx Address of Executive:
President and Chief Executive Officer
27
XXXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT (THE "AGREEMENT")
EXHIBIT A
The Executive's Maximum Performance Bonus under Section 3(b) of the
Agreement shall be equal to the sum of the following percentages of his Base
Salary, as such percentages are modified from time to time by the Compensation
Committee of the Board in accordance with its procedures governing the review
and modification of executive compensation for the Employer:
BONUS COMPONENTS MAXIMUM BONUS PERCENTAGE
--------------------------------------------------------
Cash Bonus 180%
--------------------------------------------------------
Equity-Based Bonus 140%
--------------------------------------------------------
A-1
XXXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT (THE "AGREEMENT")
EXHIBIT B
The Executive's Scheduled Benefits are those provided according to the following
plans:
A. First Industrial Realty Trust, Inc. 1994 Stock Incentive Plan and related
awards and grant agreements thereunder.
B. First Industrial Realty Trust, Inc. 1997 Stock Incentive Plan and related
awards and grant agreements thereunder.
C. First Industrial Realty Trust, Inc. 2001 Stock Incentive Plan.
D. First Industrial Realty Trust, Inc. Deferred Income Plan.
B-1
XXXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT (THE "AGREEMENT")
EXHIBIT C
EXAMPLE #1
CALCULATION OF HYPOTHETICAL DOUBLE HISTORICAL AVERAGE CASH BONUS
WITH NO IMPACT OF DEFICIENT BONUS YEAR ADJUSTMENT
The first example below is a calculation that would be performed pursuant to
Section 4(g)(i)(A)(3) of the Agreement.
Assume the following:
- Change in Control Termination is February 1, 2000.
- Base Salary during 1998, 1999 was $100,000.
- Base Salary as of Change in Control Termination is $150,000.
- For 1998 and 1999 the Maximum Cash Performance Bonus Percentage was
150%.
- For 2000 the Maximum Cash Performance Bonus Percentage is 180%.
- Cash Performance Bonus for 1998 was $150,000 (or 100% of Maximum Cash
Performance Bonus).
- Cash Performance Bonus for 1999 was $75,000 (or 50% of Maximum Cash
Performance Bonus).
- Equity-Based Performance Bonus value for 1999 was not more than
$100,000 (See below for example of year in which such value was
$100,000 or more).
Step 1 - Determine Historical Average Cash Bonus Percentage
1998 Cash Bonus Percentage
(as a Percentage of the Maximum Cash Bonus Percentage) 100%
1999 Cash Bonus Percentage
(as a Percentage of the Maximum Cash Bonus Percentage) 50%
Average of above percentages is the ----
Historical Average Cash Bonus Percentage 75%
====
Step 2 - Determine Change in Control Bonus Percentage
Historical Prior Average Cash Bonus Percentage 75%
Multiplied by Maximum Cash Performance Bonus
Percentage for year of Change in Control Termination x 180%
----
Change in Control Bonus Percentage is: 135%
====
C-1
Step 3 - Determine Historical Average Cash Bonus
Change in Control Bonus Percentage 135%
Multiplied by Base Salary as of Change
in Control Termination x $150,000
--------
Historical Average Cash Bonus is: $202,500
========
Step 4 - Determine Double Historical Average Cash Bonus
Historical Average Cash Bonus $202,500
Multiplied by 2 x 2
--------
Double Historical Average Cash Bonus is: $405,000
========
EXAMPLE #2
CALCULATION OF HYPOTHETICAL DOUBLE HISTORICAL AVERAGE CASH BONUS
WITH DEFICIENT BONUS YEAR ADJUSTMENT
The second example assumes that the 1999 Cash Performance Bonus triggers a
Deficient Bonus Year.
Assume the following:
- The facts presented in Example #1 remain static
- Equity-based Performance Bonus value for 1999 was $100,000 (contrary
to Example #1)
Step 1 - Determine Historical Average Cash Bonus Percentage
1998 Cash Bonus Percentage
(as a Percentage of the Maximum Cash Bonus Percentage) 100%
1999 Cash Bonus Percentage
(as a Percentage of the Maximum Cash Bonus Percentage) 50%
----
Average of above percentages is the Historical Average
Cash Bonus Percentage 75%
====
Step 2 - Determine whether 1998 or 1999 was a "Deficient Bonus Year"
- 1998 was not a Deficient Bonus Year, because the Cash
Performance Bonus Percentage paid was 100% of the Maximum
Cash Performance Bonus.
C-2
- 1999 was a Deficient Bonus Year, because the Cash Bonus
Percentage was 75%, which is less than 100%, and the value
of the equity-based performance bonus was $100,000 or more
(contrary to Example #1). Because 1999 is a Deficient Bonus
Year, the 1999 75% Cash Bonus Percentage is deemed to be
100% for purposes of the calculation of the Double
Historical Average Cash Bonus.
Step 3 - Determine Historical Average Cash Bonus Percentage using 100% for
1999
1998 Cash Bonus Percentage 100%
1999 Deemed Cash Bonus Percentage 100%
----
Average of above percentages is Historical Average
Cash Bonus Percentage 100%
====
Step 4 - Determine Change in Control Bonus Percentage
Historical Average Cash Bonus Percentage 100%
Multiplied by Maximum Cash Performance
Bonus Percentage for year of Change in
Control Termination x 180%
----
Change in Control Bonus Percentage is: 180%
====
Step 5 - Determine Historical Average Cash Bonus
Change in Control Bonus Percentage 180%
Multiplied by Base Salary as of Change
in Control Termination x $150,000
--------
Historical Average Cash Bonus is: $270,000
========
Step 6 - Determine Double Historical Average Cash Bonus
Historical Average Cash Bonus $270,000
Multiplied by 2 x 2
--------
Double Historical Average Cash Bonus is: $540,000
========
C-3
XXXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT (THE "AGREEMENT")
EXHIBIT D
A copy of the list of industrial and mixed office/industrial REIT and Real
Estate Operating Companies as published in the Realty Stock Review, a Dow Xxxxx
& Co. publication, for the month prior to the Effective Date of the Agreement is
attached hereto.
D-1
