EX-10.1






EXHIBIT 10.1



EXECUTION COPY



EMPLOYMENT AGREEMENT




     AGREEMENT by and among FIRST INDUSTRIAL, L.P. (the “Employer”), FIRST INDUSTRIAL
REALTY TRUST, INC. (“FR” and, together with the Employer, the “Company”) and BRUCE
W. DUNCAN (the “Executive”), executed and effective on January 9, 2009 (the “Effective
Date”).



     WHEREAS, the Employer is desirous of employing the Executive on the terms and conditions, and
for the consideration, hereinafter set forth, and the Executive is desirous of being employed by
the Employer on such terms and conditions and for such consideration.



     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:



     1. Term. The Employer hereby agrees to employ the Executive, and the Executive
hereby agrees to serve the Company, subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on December 31, 2012 (the “Employment
Period”), unless previously terminated in accordance with the provisions of Section 3 hereof.



     2. Terms of Employment. (a) Position and Duties. (i) During the Employment
Period, the Executive shall serve the Employer, and shall act as the President and Chief Executive
Officer of FR, and shall perform customary and appropriate duties as may be reasonably assigned to
the Executive from time to time by the Board of Directors of FR (the “Board”). The
Executive shall have such responsibilities, power and authority as those normally associated with
the position of President and Chief Executive Officer in public companies of a similar stature to
FR. The Executive shall be the senior-most executive of each of the Companies and shall report
solely and directly to the Board. The Executive shall perform his services at the principal
offices of the Company in the Chicago, Illinois area and shall travel for business purposes to the
extent necessary or appropriate in the performance of such services. The Executive shall be
appointed to the Board as of the Effective Date, and shall be nominated for reelection to the Board
at the 2009 meeting of FR shareholders and each other meeting of FR shareholders occurring during
the Employment Period at which the Executive’s Board seat is up for election, and so long as
Executive remains on the Board shall serve without compensation other than that herein provided.
Unless otherwise requested by the entire Board, upon Executive’s cessation of employment with the
Employer for any reason, Executive shall resign from the Board.



          (ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially all of his attention
and time during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period, it shall not be a violation of this Agreement for the Executive to
serve (A) on the board of directors of Starwood Hotels and Resorts Worldwide, Inc. and to serve as
chairman of such board and, if the Executive no longer serves on such board, to serve on the board
of one other for-profit corporation selected by the Executive (subject to the reasonable approval
of the Board), or (B) on civic or charitable boards



 









 







or committees, or to deliver lectures, fulfill speaking engagements or teach at educational
institutions and manage personal investments, so long as the activities described in the preceding
clauses (A) and (B) do not materially interfere with the performance of the Executive’s
responsibilities in accordance with this Agreement and the Executive complies with applicable
provisions of FR’s Code of Business Conduct and Ethics.



     (b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive from the Employer an annual base salary (“Annual Base Salary”) of
$800,000. The Executive’s Annual Base Salary shall be reviewed at least annually by the
Compensation Committee of the Board (the “Committee”) pursuant to its normal performance
review policies for senior executives. The Committee may, but shall not be required to, increase
the Annual Base Salary at any time for any reason and the term “Annual Base Salary” as utilized in
this Agreement shall refer to the Annual Base Salary as increased from time to time. The Annual
Base Salary shall not be reduced after any such increase, and any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The
Annual Base Salary shall be paid at such intervals as the Employer pays executive salaries
generally.



     (ii) Annual Bonus. The Executive shall be paid an annual cash performance bonus (an
“Annual Bonus”) in respect of each calendar year that ends during the Employment Term, to the
extent earned based on performance against objective and reasonably attainable performance
criteria. The performance criteria for any particular calendar year shall be upon in good faith by
the Committee no later than 90 days after the commencement of such calendar year and, in any event,
shall be substantially consistent with the performance criteria applicable to other senior
executives of the Company for the applicable year. Executive’s Annual Bonus for a calendar year
shall equal 150% of his annualized year-end base salary (the “Target Bonus”) for that year
if target levels of performance for that year are achieved, with greater or lesser amounts
(including zero) paid for performance above and below target (such greater and lesser amounts to be
determined by a formula established by the Committee for that year when it established the targets
and performance criteria for that year), and with a maximum bonus no greater than 200% of his
annualized year-end Annual Base Salary. The Executive’s Annual Bonus for a calendar year shall be
determined by the Committee after the end of the calendar year and shall be paid to the Executive
when annual bonuses for that year are paid to other senior executives of the Company generally, but
in no event later than March 15 of the following calendar year, unless the Executive shall elect to
defer the receipt of such Annual Bonus pursuant to an arrangement implemented by the Employer that
meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”). In carrying out its functions under this Section 2(b)(ii), the Committee shall at
all times act reasonably and in good faith, and shall consult with Executive to the extent
appropriate. The Annual Bonus shall be paid in cash, fully vested and freely transferable shares
of common stock of FR (“Common Stock”) or a combination thereof, as determined by the
Committee; provided that the percentage of the Executive’s Annual Bonus paid in stock shall not be
greater than that of other senior executives generally.



     (iii) Long-Term Awards. (A) Commencing with the annual grant of long-term awards to
senior executives of the Company during 2010, the Executive shall be entitled to participate in all
long-term cash and equity incentive plans, practices, policies, and programs



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applicable generally to other senior executives of the Company on a level determined by the
Committee reasonably and in good faith to be commensurate with his position. The amount of
Executive’s annual long-term awards shall be determined by the Committee in good faith in its sole
discretion; provided that the value of Executive’s annual long term awards shall be no less than
that of senior executive officers generally.




     (B) On the Effective Date, the Executive shall be granted by FR a “sign-on award” of
restricted stock units in respect of 1,000,000 shares of Common Stock (the “Sign-On
RSUs”) pursuant to the Restricted Stock Unit Award Agreement attached hereto as
Exhibit A. The Sign-On RSUs shall be granted pursuant to the “employment inducement
award” exception to the shareholder approval requirements of the New York Stock Exchange set
forth in Rule 303A.00 of the New York Stock Exchange Listed Company Manual, and the Common
Stock underlying the Sign-On RSUs shall be promptly registered by the Company on Form S-8
promptly following the Effective Date.



     (iv) Benefits. Other than as stated in Section 2(b)(iii)(A) above, during the
Employment Period, the Executive shall be entitled to participate in all executive and employee
benefit plans and programs of the Company on the same basis as provided generally to other senior
executives of the Company. Each of the Employer and FR reserves the right to amend or cancel any
such plan or program in its sole discretion, subject to the terms of such plan or program and
applicable law. In addition, during the Employment Period the Executive shall receive from the
Employer an automobile allowance of $800 per month. The Executive shall be promptly reimbursed by
the Employer for the reasonable legal fees and expenses incurred by him in connection with the
negotiation and execution of this Agreement, provided that in no event shall reimbursements by the
Employer under this Agreement be made later than the end of the calendar year next following the
calendar year in which the applicable fees and expenses were incurred, provided, that the
Executive shall have submitted an invoice for such fees and expenses at least 10 days before the
end of the calendar year next following the calendar year in which such fees and expenses were
incurred. The amount of such fees that the Employer is obligated to reimburse any given calendar
year shall not affect the fees that the Employer is obligated to reimburse in any other calendar
year, and the Executive’s right to have the Employer reimburse such fees may not be liquidated or
exchanged for any other benefit.



     (v) Vacation. During the Employment Period, the Executive shall be entitled to
receive annual paid vacation per year in accordance with the Company’s policies, but not less than
five weeks per year. Unused vacation time shall not accrue and carry over from year to year.



     (vi) Indemnification; Insurance. During the Employment Period and thereafter, each of
the Employer and FR agrees to indemnify and hold the Executive and the Executive’s heirs and
representatives harmless, to the maximum extent permitted by law, against any and all damages,
costs, liabilities, losses and expenses (including reasonable attorneys’ fees) as a result of any
claim or proceeding (whether civil, criminal, administrative or investigative), or any threatened
claim or proceeding (whether civil, criminal, administrative or investigative), against the
Executive that arises out of or relates to the Executive’s service as an officer, director or
employee, as the case may be, of the Employer or FR, or the Executive’s service in any such
capacity or similar capacity with an affiliate of the Employer or FR or other entity at the request



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of the Employer or FR, both prior to and after the Effective Date, and to promptly advance to
the Executive or the Executive’s heirs or representatives such expenses upon written request with
appropriate documentation of such expense upon receipt of an undertaking by the Executive or on the
Executive’s behalf to repay such amount if it shall ultimately be determined that the Executive is
not entitled to be indemnified by the Employer or FR. In addition, the Company agrees to continue
and maintain, at the Company’s expense, a directors’ and officers’ liability insurance policy
covering Executive both during and, while potential liability exists, after the Employment Period
throughout all applicable limitations periods that is no less favorable to the Executive than the
policy covering active employees, directors and senior officers of the Employer or FR.



     (vii) Expenses. During the Employment Period, the Executive shall be entitled to
receive from the Employer prompt reimbursement for all reasonable business expenses incurred by the
Executive in accordance with the Company’s policies.



     3. Termination of Employment. (a) Death or Disability. The Executive’s
employment and the Employment Period shall terminate automatically upon the Executive’s death
during the Employment Period. If the Company determines in good faith that the Disability (as
defined below) of the Executive has occurred during the Employment Period, it may provide the
Executive with written notice in accordance with Section 12(b) of this Agreement of its intention
to terminate the Executive’s employment. In such event, the Executive’s employment with the
Company and the Employment Period shall terminate effective on the 30th day after receipt of such
notice by the Executive (the “Disability Effective Date”), provided that, within
the thirty (30) days after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall
mean the inability of the Executive to perform the Executive’s duties with the Company on a
full-time basis for six consecutive months or 150 business days within any twelve month period as a
result of a physical, mental or psychological incapacity or impairment.



     (b) Cause. The Company may terminate the Executive’s employment and the Employment
Period either with or without Cause. For purposes of this Agreement, “Cause” shall mean:




     (i) The Executive’s willful and continued failure to substantially perform the
Executive’s duties with the Company after receipt of a Notice requesting such performance
given in accordance with the procedures and time periods described below;




     (ii) Willful and gross misconduct by the Executive in connection with his
performance of services for the Employer;




     (iii) A willful and material breach by the Executive of the restrictive covenants
and confidentiality provisions of the Agreement;




     (iv) Habitual substance abuse by the Executive that continues after receiving Notice
given in accordance with the procedures and time periods described below;



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     (v) Final disqualification of the Executive by a governmental agency from serving as
an officer or director of the Company; or




     (vi) The Executive’s conviction of, or entry of a plea of guilty or nolo contendere
with respect to, a felony crime (excluding any vehicular offense) or a crime involving
fraud, forgery, embezzlement or similar conduct.


provided, however, that the actions in (iii) and (iv) above will not be considered
Cause unless the Executive has failed to cure such actions (if curable) within 30 days of receiving
written notice specifying with particularity the events allegedly giving rise to Cause and that
such actions will not be considered Cause unless the Company provides such written notice within 90
days of the full Board (excluding the Executive, if applicable at the time of such notice) having
knowledge of the relevant action (a “Notice”). Further, no act or failure to act by the
Executive will be deemed “willful” unless done or omitted to be done not in good faith or without
reasonable belief that such action or omission was in the Company’s best interests, and any act or
omission by the Executive pursuant to authority given pursuant to a resolution duly adopted by the
Board or on the advice of counsel for the Company will be deemed made in good faith and in the best
interests of the Company. The Executive will not be deemed to be discharged for Cause unless and
until there is delivered to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than two thirds (2/3) of the entire membership of the Board (excluding the
Executive, if he is then a member of the Board), at a meeting called and duly held for such purpose
(after reasonable notice to Executive and an opportunity for the Executive and the Executive’s
counsel to be heard before the Board), finding in good faith that Executive is guilty of the
conduct set forth above and specifying the particulars thereof in detail.




     (c) Good Reason. The Executive’s employment and the Employment Period may be
terminated by the Executive for Good Reason or by the Executive voluntarily without Good Reason.
“Good Reason” means the occurrence of any one of the following events without the prior
written consent of the Executive:




     (i) The removal from, or failure to re-elect to, or the requirement to share with
another, the Executive’s position as either President or Chief Executive Officer of FR;




     (ii) A material diminution of, or material reduction or material adverse alteration
in, the Executive’s duties or responsibilities, or the Board’s assignment to the
Executive of duties, responsibilities or reporting requirements that are materially
inconsistent with his positions (it being understood that if the Executive does not
continue to be the Chief Executive Officer of a public company following a “Change in
Control Event” (as defined below), such a material diminution, reduction and alteration
shall be deemed to have occurred);




     (iii) The failure to nominate the Executive for election to Board at any meeting of
Shareholders during the Employment Period at which the Executive’s Board seat is up for
election;



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     (iv) The reduction of the Executive’s Annual Base Salary, Target Bonus or maximum
Annual Bonus potential;




     (v) The Company changes the Executive’s primary work location to more than 30 miles
from its location as of the Effective Date resulting in an increase in the Executive’s
commute to and from the Executive’s primary residence of 30 miles or more;




     (vi) The Employer or FR materially breaches the Agreement; or




     (vii) Despite Executive’s timely objection, the Company intentionally directs
Executive to engage in unlawful conduct;


provided, however, that the actions in (i) through (vi) above will not be
considered Good Reason unless the Executive shall describe the basis for the occurrence of the Good
Reason event in reasonable detail in a Notice of Termination (as defined below) provided to the
Company in writing within 90 days of the Executive’s knowledge of the actions giving rise to the
Good Reason, the Company has failed to cure such actions within 30 days of receiving such Notice of
Termination (and if the Company does effect a cure within that period, such Notice of Termination
shall be ineffective) and the Executive terminates employment for Good Reason not later than thirty
(30) days following the last day of the applicable cure period.




     (d) Notice of Termination. Any termination of employment by the Company or the
Executive shall be communicated by Notice of Termination (as defined below) to the other party
hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a
“Notice of Termination” shall mean a written notice that (i) indicates the termination
provision in this Agreement relied upon and (ii) specifies Date of Termination (as defined below)
if other than the date of receipt of such notice. The failure by the Company or the Executive to
set forth in the Notice of Termination any fact or circumstance that contributes to a showing of
Cause or Good Reason shall not waive any right of the Company or the Executive, respectively,
hereunder or preclude the Company or the Executive, respectively, from asserting such fact or
circumstance in enforcing the Company’s or the Executive’s rights hereunder within the applicable
time period set forth in this Agreement.



     (e) Date of Termination. “Date of Termination” shall mean (i) if the
Executive’s employment is terminated by the Company for Cause or other than for Cause, death or
Disability, the date of receipt of the Notice of Termination or any later date specified therein
(which date shall not be more than thirty (30) days after the giving of such notice), (ii) if the
Executive’s employment is terminated by reason of death or by the Company for Disability, the date
of death of the Executive or the Disability Effective Date, as the case may be, and (iii) if the
Executive resigns with or without Good Reason, thirty (30) days from the date of the Company’s
receipt of the Notice of Termination, or such earlier or later date as is mutually agreed by the
Company and the Executive (subject to the Company’s right to cure in the case of a resignation for
Good Reason). Notwithstanding the foregoing, in no event shall the Date of Termination occur until
the Executive experiences a “separation from service” within the meaning of Section 409A of the
Code, and the date on which such separation from service takes place shall be the “Date of
Termination.”



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     4. Obligations of the Company upon Termination. (a) By the Company Other Than
for Cause, Death or Disability; By the Executive for Good Reason. Subject to Section 5, if,
during the Employment Period, (x) the Company shall terminate the Executive’s employment other than
for Cause, death or Disability or (y) the Executive shall terminate employment for Good Reason:



     (i) the Company shall pay to the Executive the following amounts:




     (A) a lump sum cash payment within 30 days after the Date of Termination equal
to the aggregate of the following amounts: (1) the Executive’s Annual Base Salary
and accrued vacation pay through the Date of Termination, (2) the Executive’s
accrued Annual Bonus for the fiscal year immediately preceding the fiscal year in
which the Date of Termination occurs (other than any portion of such Annual Bonus
that was previously deferred, which portion shall instead be paid in accordance with
the applicable deferral election) if such bonus has not been paid as of the Date of
Termination, and (3) the Executive’s business expenses that have not been reimbursed
by the Employer as of the Date of Termination that were incurred by the Executive
prior to the Date of Termination in accordance with the applicable Company policy,
in the case of each of clauses (1) through (3), to the extent not previously paid
(the sum of the amounts described in clauses (1) through (3) shall be hereinafter
referred to as the “Accrued Obligations”);




     (B) subject to the Executive’s delivery (and non-revocation) of an executed
release of claims against the Employer, FR and their respective officers, directors,
employees and affiliates in substantially the form attached hereto as Exhibit
B (the “Release”), which Release must be delivered to the Company not
later than 22 days after the Date of Termination (or such longer period of time
permitted by the Company, but in no event later than the latest business day that is
not more than two months after the end of the calendar year in which the Date of
Termination occurs) (the “Release Deadline”), an amount equal to two times
the sum of (X) Executive’s Annual Base Salary as of the Date of Termination and (Y)
Executive’s Target Bonus for the fiscal year in the which the Date of Termination
occurs, paid (i) 50% in a cash lump sum on the 30th day following the
Date of Termination and (ii) 50% in equal installments over 24 months following the
Date of Termination in accordance with the Company’s normal payroll practices;
provided, however, that if the Date of Termination occurs within 24
months following a Change in Control Event which also constitutes a “change in the
ownership” of FR, a “change in effective control” of FR or a “change in the
ownership of a substantial portion of the assets” of FR, as each such term is
defined in Treas. Reg. Section 1.409A-3(i)(5), the payment described in this
paragraph shall be made in a single lump sum not later than ten business days
following the Date of Termination, and shall not be subject to the Executive’s
execution of a Release; and




     (C) a lump-sum amount in cash equal to the product of (x) the Annual Bonus
which would have been earned by the Executive for the fiscal year in



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which the Date of Termination occurs had the Executive remained employed
throughout such fiscal year, based on the degree to which the applicable performance
goals are achieved and (y) a fraction, the numerator of which is the number of days
in the fiscal year in which the Date of Termination occurs through the Date of
Termination, and the denominator of which is 365, which amount shall be paid on the
date on which annual bonuses for the fiscal year in which the Date of Termination
occurs are paid to senior executives of the Company generally, but not later than 75
days after the end of the fiscal year in which the Date of Termination occurs;




     (ii) For two years following the Date of Termination (the “Benefits Period”), the
Company shall provide the Executive and Executive’s spouse and eligible dependents with
medical and dental insurance coverage (the “Health Care Benefits”) no less favorable to
those which the Executive and his spouse and eligible dependents were receiving immediately
prior to the Date of Termination; provided, however, that the Health Care
Benefits shall be provided during the Benefits Period in such a manner that such benefits
are excluded from the Executive’s income for federal income tax purposes; provided,
further, however, that if the Executive becomes re-employed with another
employer and is eligible to receive health care benefits under another employer-provided
plan, the Health Care Benefits provided hereunder shall cease. The benefits provided
pursuant to this Section 4(a)(ii) are referred to hereafter as the “Post-Employment
Health Care Benefits”; and




     (iii) To the extent not theretofore paid or provided, the Employer shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
that the Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies through the Date of
Termination (such other amounts and benefits shall be hereinafter referred to as the
“Other Benefits”).


Notwithstanding the foregoing provisions of Section 4(a)(i), in the event that the Executive is a
“specified employee” (within the meaning of Section 409A of the Code and with such classification
to be determined in accordance with the methodology established by the Company) (a “Specified
Employee”), amounts and benefits (other than the Accrued Obligations) that are deferred
compensation (within the meaning of Section 409A of the Code) that would otherwise be payable or
provided under Section 4(a)(i) during the six-month period immediately following the Date of
Termination shall instead be paid, with interest on any delayed payment at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), on the first business
day after the date that is six months following the Date of Termination (the “409A Payment
Date”).




For purposes of this Agreement, a “Change in Control Event” shall mean:




          (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



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promulgated under the 1934 Act) of forty percent (40%) or more of the combined voting
power embodied in the then-outstanding voting securities of FR; or




     (B) The cessation, by the persons who, as of the date hereof, constitute the Board
(the “Incumbent Directors”), 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 of directors of the successor to FR, provided
that any person becoming a director of FR 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 (or settlement thereof), shall be considered an Incumbent Director; or




     (C) The consummation of:




          (I) A merger or consolidation of FR, if (X) the common stockholders of FR, 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 fifth percent (50%) of the combined voting power of the then
outstanding voting securities of the successor to FR 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 FR outstanding
immediately before such merger or consolidation and (Y) at least a majority of the
members of the board of directors (or, for a non-corporate entity, equivalent
governing body) of the entity resulting from such merger or consolidation were not
Incumbent Directors at the time of the execution of the initial agreement or of the
action of the Board providing for such merger or consolidation; or




          (II) A liquidation, sale or other ultimate disposition or transfer of fifty
percent (50%) or more of the total assets of FR or the Employer, and their
respective subsidiaries, without a concurrent or imminent plan to reinvest the
proceeds therefrom in industrial real estate (a “50% or More Sale”). The
parties agree and acknowledge that such a reinvestment plan could be a multi-year
plan. A 50% or More Sale shall be deemed to have occurred hereunder at such time as
FR shall have disposed, in a single transaction or set of related transactions, of
more than fifty percent (50%) of the Net Asset Value (defined below) of its and its
subsidiaries’ total real estate portfolio. Such percentage of the portfolio shall
be deemed to have been transferred at such time as FR and its subsidiaries shall
have disposed of fifty percent (50%) or more of their properties in relation to “Net
Asset Value,” such term meaning the net value of its real estate assets calculated
in accordance with customary and generally accepted principles of accounting and
asset valuation used within the REIT industry.



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          (D) Notwithstanding the immediately preceding clauses (A), (B) and (C), a Change in
Control Event shall not be deemed to occur (1) solely because fifty percent (50%) or more
of the combined voting power of the then-outstanding securities of FR is acquired by (X) a
trustee or other fiduciary holding securities under one or more employee benefit plans
maintained for employees of FR, the Employer and/or their U.S. subsidiaries, or (Y) any
corporation or other entity which, immediately prior to such acquisition, is substantially
owned directly or indirectly by FR or by its stockholders in the same proportion as their
ownership of stock in FR immediately prior to such acquisition or (2) as a result of any
transaction in which the Executive participates in any manner with the person or entity
affecting the acquisition or other applicable transaction that, if not for this sub-clause
(D)(2), would be a Change in Control Event.



     (b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than (i) payment of Accrued
Obligations and (ii) the Other Benefits. The Accrued Obligations shall be paid to the Executive’s
estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination. The term “Other Benefits” as utilized in this Section 4(b) shall include death
benefits to which the Executive is entitled as in effect on the date of the Executive’s death.



     (c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, the Company shall provide the Executive with
(i) the Accrued Obligations and (ii) the Other Benefits. The Accrued Obligations shall be paid to
the Executive in a lump sum in cash within thirty (30) days of the Date of Termination. The term
“Other Benefits” as utilized in this Section 4(c) shall include disability benefits to which the
Executive is entitled as in effect on the Disability Effective Date.



     (d) Cause; By the Executive other than for Good Reason. If the Executive’s employment
shall be terminated for Cause or the Executive’s employment shall be terminated by the Executive
other than for Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to provide the Executive with (i)
the Accrued Obligations and (ii) the Other Benefits; provided, however, that if the
Executive’s employment shall be terminated for Cause, the term “Accrued Obligations” shall not be
deemed to include the Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal
year in which the Date of Termination occurs. The Accrued Obligations shall be paid to the
Executive in a lump sum in cash within thirty (30) days of the Date of Termination.



     5. Change in Control Event. Immediately prior to the occurrence of a Change in
Control Event, all outstanding and unvested equity-related awards (other than the Sign-On RSUs
which shall not be subject to this Section 5) granted to the Executive shall fully vest, and if the
Executive is terminated by the Company without Cause or resigns with Good Reason, in either case
during the 24 month period commencing on a Change in Control Event, each stock option, stock
appreciation right or similar security then held by the Executive shall expire on the earlier of
(i) the later of (A) the expiration date as determined pursuant to the applicable agreement
governing such security and (B) the second anniversary of the Date of Termination and (ii) the last
day of the original term of such security.



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     6. Non-exclusivity of Rights. Except as specifically provided, nothing in this
Agreement shall prevent or limit the Executive’s continuing or future participation in any plan,
program, policy or practice provided by the Company or any affiliated companies and for which the
Executive qualifies pursuant to its terms, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the Company or any affiliated
companies. Amounts that are vested benefits or that the Executive is otherwise entitled to receive
pursuant to the terms of any plan, program, policy or practice of or any contract or agreement with
the Company or any affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, program, policy or practice or contract or agreement except
as explicitly modified by this Agreement.



     7. No Mitigation; Cooperation. (a) In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall not be reduced,
regardless of whether the Executive obtains other employment.



     (a) The Executive agrees that in the event this Agreement terminates for any reason, he shall,
to the extent reasonably requested in writing thereafter (and subject to the Executive’s
professional schedule), cooperate with and serve in any capacity requested by the Company in any
investigation and/or threatened or pending litigation (now or in the future) in which the Company
is a party, and regarding which the Executive, by virtue of his employment with the Company, has
knowledge or information relevant to said investigation or litigation, including but not limited to
(i) meeting with representatives of the Company to prepare for testimony and to provide truthful
information regarding his knowledge, and (ii) providing, in any jurisdiction in which the Company
reasonably requests, truthful information or testimony relevant to the investigation or litigation.
The Company agrees to pay the Executive reasonable compensation and reimburse the Executive for
reasonable expenses incurred in connection with such cooperation.



     8. Mediation and Arbitration. Except only as otherwise provided in Section 9(g), each
and every dispute, controversy and contested factual and legal determination arising under or in
connection with this Agreement or the Executive’s employment 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. If the Company or the Executive, as the case may
be, contends that a breach or threatened breach of this Agreement has occurred, or that a bona fide
controversy exists hereunder, the Company or the Executive, as the case may be, may initiate the
arbitration process as described in this Section 8 by filing a Notice of Arbitration with the AAA
(after the 30-day mediation period described in the following sentences) and delivering a copy of
the same to the other party (pursuant to Section 12(b) below). Prior to filing a Notice of
Arbitration with the AAA, the party shall give the other party 30 days notice of intent to file
such Notice of Arbitration. During such 30-day period, the parties shall seek to mediate the
dispute to resolution, and if the dispute fails to be resolved within such period, the party may
file the Notice of Arbitration any time thereafter. Such Notice of Arbitration shall request that
the AAA submit to both the Executive and the Company a list of eleven (11) proposed arbitrators
provided that no arbitrator shall be related to or affiliated with either of the parties. The
arbitrator shall be selected by the parties from that list. No later than ten



11









 




(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 (and delivered the
Notice of 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 be promptly engaged by the parties to
arbitrate the dispute, and 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. If the Executive substantially prevails in such dispute (as determined by the
arbitrator), the Company shall bear the reasonable costs of all counsel, experts or other
representatives that are retained by the Executive (based on such counsel’s, experts’ or other
representatives’ standard hourly rates), and all costs of the arbitration proceeding, including,
without limitation, the fees, costs and expenses imposed or incurred by the arbitrator. If the
Executive is found by the arbitrator to have not substantially prevailed in such dispute, each
party shall bear the costs of its own counsel, experts and other representatives, and the costs of
the arbitration proceeding shall be evenly split between the Executive and the Company;
provided, however, that the Executive shall bear the reasonable costs of all
counsel, experts or other representatives that are retained by the Company (based on such
counsel’s, experts’ or other representatives’ standard hourly rates), and all costs of the
arbitration proceeding, to the extent incurred in connection with any frivolous claim or claim
brought in bad faith by the Executive. Judgment may be entered on the arbitrator’s award in any
court having jurisdiction, including, if applicable, entry of a permanent injunction under such
Section 9(g) of this Agreement. If the Executive ultimately prevails on any issue, then the Company
shall pay interest at the per annum rate of five percent (5.0%) in excess of the per annum rate
publicly announced, from time to time, by Bank One, N.A. (or its successors) as its “prime” or
“base” or “reference” rate of interest, on the amount the arbitrator awards to the Executive
(exclusive of attorneys’ fees and costs and expenses of the arbitration), such interest to be
calculated from the date the amount would have been paid under this Agreement, but for the dispute,
through the date payment (inclusive of interest) is made. Nothing contained in this Section 8
shall constrain any party’s right to petition a court of competent jurisdiction for injunctive or
interlocutory relief pending the outcome of arbitration of any dispute or controversy arising under
this Agreement. In order to comply with Section 409A of the Code, in no event shall the payments
by the Company of the Executive’s attorney’s fees, costs and expenses (if payable by the Company)
under this Section 8 be made later than the end of the calendar year next following the calendar
year in which such dispute is finally resolved, provided, that the Executive shall have
submitted an invoice for such fees and expenses at least 10 days before the end of the calendar
year next following the calendar year in which such dispute is finally resolved. The amount of
such legal fees, costs and expenses that the Employer is obligated to pay in any given calendar
year shall not affect the legal fees and expenses that the Employer is obligated to pay in any
other calendar year, and the Executive’s right to have the Employer pay such legal fees and
expenses may not be liquidated or exchanged for any other benefit.




     9. Restrictive Covenants. (a) Confidential Information. During the
Employment Period and thereafter, the Executive shall not use for the Executive’s own purposes or
for the benefit of any person other than the Company, and shall keep secret and retain in the
strictest confidence, any secret or confidential information, knowledge or data relating to the



12









 







Company or any affiliated company, and their respective businesses, including without
limitation, any data, information, ideas, knowledge and papers pertaining to the customers,
prospective customers, prospective products or business methods of the Company, including without
limitation the business methods, plans and procedures of the Company, that shall have been obtained
by the Executive during the Executive’s employment by the Company or any of its affiliated
companies and that shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After termination of the
Executive’s employment, the Executive shall not, without the prior written consent of the Company
or as may otherwise be required by law or legal process after reasonable advance written notice to
the Company, use communicate or divulge any such information, knowledge or data, directly or
indirectly, to anyone other than the Company and those designated by it. Anything herein to the
contrary notwithstanding, the provisions of this Section 9 shall not apply to information (i)
required to be disclosed by law or by any court, arbitrator, mediator or administrative or
legislative body (including any committee thereof) with actual or apparent jurisdiction to order
the Executive to disclose or make accessible any information, (ii) disclosed to counsel or a
tribunal in the context of any other litigation, arbitration or mediation involving this Agreement,
including, but not limited to, the enforcement of this Agreement, (iii) that becomes generally
known to the public or within the relevant trade or industry other than due to the Executive’s
violation of this Section 9, (iv) that is or becomes available to the Executive on a
non-confidential basis from a source which is entitled to disclose it to the Executive or (v) the
disclosure of which the Executive determines in good faith is consistent with the performance of
his duties for the Company.



     (b) Non-competition. The Company and the Executive have jointly reviewed the tenant
lists, property submittals, logs, broker lists, and operations of the Company, and have agreed that
as an essential inducement for and in consideration of this Agreement and the Company’s agreement
to make the payment of the amounts described in Sections 2(b) and 4 hereof when and as herein
described, the Executive hereby agrees, except with the express prior written discretionary consent
of the Company, that for a period of one (1) year after the Date of Termination (the
“Restrictive Period”), he will not directly or indirectly in any manner compete with the
business of the Company 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 (i) any industrial or mixed office/industrial (but not pure office) REIT or real
estate operating company (a “Peer Group Member”) or (ii) any other person, firm,
partnership, corporation, trust or other entity (including, but not limited to, Peer Group
Members), public or private, which, as a material component of its business (other than for its own
use as an owner or user), invests in, or otherwise provides capital to, industrial warehouse
facilities and properties similar to the Company’s investments and holdings, in each case, (A) in
any geographic market or territory in which the Company 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 (B) in any
market in which an acquisition or other investment by the Company or any affiliate of the Company
is pending or proposed in a written plan as of the date of termination, whether or not embodied in
any formalized, written legal document; provided, that the Executive’s continued service on
the board of directors of Starwood Hotels and Resorts Worldwide, Inc. shall not be deemed to be a
violation of this Section 8(b). The Executive will not be considered to have violated this Section
9(b) if the Executive becomes employed, engaged or associated in any capacity with an organization
that competes with the Company so long as the Executive does not participate in



13









 







any manner whatsoever in the management or operations of the part of such organization that so
competes.



     (c) Investment Opportunities; Customer Non-Solicit. 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, public or private,
in connection with or concerning any investment opportunity of the Company that is in the Pipeline
or as to any customer or prospect of Company on the Customer List, in each case, as of the
effective date of the termination of the Executive’s employment. Within ten (10) business days
after the Date of Termination, the Company shall deliver to the Executive a written statement of
the investment opportunities in the Pipeline as of the Date of Termination (the “Pipeline
Statement”) and a list of the deal opportunities and the actual and prospective entities with
whom the Company proposes to pursue such deal opportunities from time to time (the “Customer
List”), and the Executive shall then review the Pipeline Statement and the Customer List for
accuracy and completeness, to the best of his knowledge, and advise the Company of any corrections
required to the Pipeline Statement and the Customer List. The Executive’s receipt of any severance
amount under Section 4 of this Agreement shall be conditioned on his either acknowledging, in
writing, the accuracy and completeness of the Pipeline Statement and the Customer List, or advising
the Company, in writing, of any corrections or revisions required to the Pipeline Statement and the
Customer List in order to make them accurate and complete, to the best of the Executive’s
knowledge. The restrictions concerning each and every individual investment opportunity in the
Pipeline shall continue until the first to occur of (a) expiration of the Restrictive Period; or
(b) the Executive’s receipt from the Company of written notice that the Company 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.
For purposes of this Agreement, investment opportunity shall be considered in the “Pipeline” if, as
of the Date of Termination, 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 Company
in writing or otherwise) or under consideration by the Company, whether at the Management
Committee, IC, staff level(s) or otherwise, and relates to any of the following potential forms of
transaction: (i) an acquisition for cash; (ii) an UPREIT transaction; (iii) a development project
or venture; (iv) a joint venture partnership or other cooperative relationship, whether through a
DOWNREIT relationship or otherwise; (v) an “Opportunity Fund” or other private investment in or
co-investment with the Company; (vi) any debt placement opportunity by or in Company; (vii) any
service or other fee-generating opportunity by the Company; or (viii) any other investment by the
Company or an affiliate of the Company, in or with any party or by any party in the Company or an
affiliate of the Company. Notwithstanding the foregoing, the Executive’s continued investment in,
and development of, industrial properties in which the Executive has an interest as of the date
hereof and set forth on Exhibit C hereto shall not violate this Agreement.



     (d) Non-solicitation of Employees. In addition to the covenants set forth above, and
notwithstanding anything to the contrary set forth in this Agreement, the Executive hereby agrees,
except with the express prior written consent of the Company (which may be given or withheld in the
Company’s sole discretion), for a period of two (2) years following the Date of Termination, not to
directly or indirectly solicit or induce any employee of the Company



14









 







to terminate his or her employment with Company so as to become employed by or otherwise
render services to any entity with which the Executive has any form of business or economic
relationship, or otherwise with any of the entities set forth in Sections 9(b) and (c) above.



     (e) Non-Disparagement. Except as required by law or legal process, the Executive
agrees not to make any material public disparaging or defamatory comments about the Company
including the Company’s business, its directors, officers, employees, parents, subsidiaries,
partners, affiliates, operating divisions, representatives or agents, or any of them, whether
written, oral, or electronic. In particular, the Executive agrees, except as required by law or
legal process, to make no public statements including, but not limited to, press releases,
statements to journalists, employees, prospective employers, interviews, editorials, commentaries
or speeches, that disparage or are defamatory to the Company’s business in any material respect.
In addition to the confidentiality requirements set forth in this Agreement and those imposed by
law, the Executive further agrees, except as required by law or legal process, not to provide any
third party, directly or indirectly, with any documents, papers, recordings, e-mail, internet
postings, or other written or recorded communications referring or relating to the Company’s
business, with the intention of supporting, directly or indirectly, any disparaging or defamatory
statement, whether written or oral. Except as required by law or legal process, the Company agrees
that neither it nor its directors or executive officers shall make any material public disparaging,
negative or defamatory comments, whether written or oral or electronic, about the Executive,
including the Executive’s character, personality or business acumen or reputation. In particular,
the Company agrees that, except as required by law or legal process, neither it nor its directors
or executive officers shall make any public statements including, but not limited to, press
releases, statements to journalists, prospective employers of, or partners with the Executive,
interviews, editorials, commentaries or speeches, that disparage or are defamatory to the Executive
in any material respect. In addition, the Company further agrees that, except as required by law
or legal process, neither it nor its directors or executive officers shall provide any third
party, directly or indirectly, with any documents, papers, recordings, e-mail, internet postings,
or other written or recorded communications referring or relating to the Executive, with the
intention of supporting, directly or indirectly, any disparaging or defamatory statement, whether
written or oral. For purposes of this Agreement, a “public statement” shall mean any statement to
a third party other than a statement made to a person who is an immediate family member or legal
representative of the speaker (an “Excluded Person”); provided that a statement to an
Excluded Person which is repeated by the Excluded Person to a person which is not an Excluded
Person, with attribution to the original speaker, shall be considered a public statement for
purposes of this Section 9(e).



     (f) Prior Notice Required. The Executive hereby agrees that, prior to accepting
employment with any other person or entity during the Restrictive Period, the Executive will
provide such prospective employer with written notice of the provisions of this Agreement.



     (e) Return Of Company Property/Passwords. The Executive hereby expressly covenants
and agrees that following termination of the Executive’s employment with the Company for any reason
or at any time upon the Company’s request, the Executive will promptly return to the Company all
property of the Company in his possession or control (whether maintained at his office, home or
elsewhere), including, without limitation, all



15









 







Company passwords, credit cards, keys, beepers, laptop computers, cell phones and all copies
of all management studies, business or strategic plans, budgets, notebooks and other printed, typed
or written materials, documents, diaries, calendars and data of or relating to the Company or its
personnel or affairs. Anything to the contrary notwithstanding, nothing in this Section 9(e) shall
prevent the Executive from retaining a home security system, papers and other materials of a
personal nature, including personal diaries, copies of calendars and Rolodexes, information
relating to the Executive’s compensation or relating to reimbursement of expenses, information that
the Executive reasonably believes may be needed for tax purposes, and copies of plans, programs and
agreements relating to the Executive’s employment.



          (f) Executive Covenants Generally.




     (i) The Executive’s covenants as set forth in this Section 9 are from time to time
referred to herein as the “Executive Covenants.” If any of the Executive Covenants
is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such
Executive Covenant shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability and the remaining Executive Covenants shall not
be affected thereby; provided, however, that if any of the Executive
Covenants is finally held to be invalid, illegal or unenforceable because it exceeds the
maximum scope determined to be acceptable to permit such provision to be enforceable, such
Executive Covenant will be deemed to be modified to the minimum extent necessary to modify
such scope in order to make such provision enforceable hereunder.




     (ii) The Executive understands that the foregoing restrictions may limit his ability to
earn a livelihood in a business similar to the business of the Company and its controlled
affiliates, but the Executive nevertheless believes that he has received and will receive
sufficient consideration and other benefits as an employee of the Company and as otherwise
provided hereunder to clearly justify such restrictions which, in any event (given his
education, skills and ability), the Executive does not believe would prevent his from
otherwise earning a living. The Executive has carefully considered the nature and extent of
the restrictions place upon his by this Section 9, and hereby acknowledges and agrees that
the same are reasonable in time and territory and do not confer a benefit upon the Company
disproportionate to the detriment of the Executive.



          (g) Enforcement. Because the Executive’s services are unique and because the
Executive has access to confidential information, the parties hereto agree that money damages would
be an inadequate remedy for any breach of this Section 9. Therefore, in the event of a breach or
threatened breach of this Section 9, the Company or its respective successors or assigns may, in
addition to other rights and remedies existing in their favor at law or in equity, apply to any
court of competent jurisdiction for specific performance and/or injunctive relief in order to
enforce, or prevent any violations of, the provisions hereof (without posting a bond or other
security) or require the Executive to account for and pay over to the Company all compensation,
profits, moneys, accruals or other benefits derived from or received as a result of any
transactions constituting a breach of the covenants contained herein, if and when final judgment of
a court of competent jurisdiction is so entered against the Executive.



16









 





     (h) Interpretation. For purposes of this Section 9, references to “the Company” shall
mean the Company as hereinbefore defined and any of the controlled affiliated companies of either
the Employer or FR.



     10. Certain Additional Payments by the Company. (a) Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall be determined that
any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an
additional payment from the Employer (the “Gross-Up Payment”) in an amount such that, after
payment by the Executive of all taxes (and any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding any income
taxes and penalties imposed pursuant to Section 409A of the Code, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this Section 10(a), if it shall be determined that the Executive would be
entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110%
of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Executive and the amounts
payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the
aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if
applicable, shall be made by reducing the payments and benefits under the following sections in the
following order: (i) Section 4(a)(i)(B) and (ii) Section 4(a)(ii). The Employer’s obligation to
make Gross-Up Payments under this Section 10 shall not be conditioned upon the Executive’s
termination of employment.



     (b) Subject to the provisions of Section 10(c), all determinations required to be made under
this Section 10, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by the public accounting firm which audited FR prior to the corporate transaction which
results in the application of the Excise Tax (the “Accounting Firm”). The Accounting Firm
shall provide detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a Payment or such
earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be
borne solely by the Employer. Any determination by the Accounting Firm shall be binding upon the
Employer and the Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments that will not have been made by the Employer should have been made (the
“Underpayment”), consistent with the calculations required to be made hereunder. In the
event the Employer exhausts its remedies pursuant to Section 10(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Employer to
or for the benefit of the Executive.



     (c) The Executive shall notify the Employer in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Employer of the Gross-Up Payment.
Such notification shall be given as soon as practicable, but no later than 10 business days after
the Executive is informed in writing of such claim. The Executive shall



17









 







apprise the Employer of the nature of such claim and the date on which such claim is requested
to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Employer (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due). If the Employer
notifies the Executive in writing prior to the expiration of such period that the Employer desires
to contest such claim, the Executive shall:




     (i) give the Employer any information reasonably requested by the Employer relating
to such claim,




     (ii) take such action in connection with contesting such claim as the Employer shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Employer,




     (iii) cooperate with the Employer in good faith in order effectively to contest such
claim, and




     (iv) permit the Employer to participate in any proceedings relating to such claim;


provided, however, that the Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such contest,
and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of this Section
10(c), the Employer shall control all proceedings taken in connection with such contest, and, at
its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority on behalf of the
Executive and direct the Executive to sue for a refund or to contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Employer shall determine; provided, however, that, if the Employer pays such
claim and directs the Executive to sue for a refund, the Employer shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties) imposed with respect to such payment or with respect to any imputed income in connection
with such payment; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Employer’s control of the contest shall be limited to issues with respect to which
the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.




          (d) If, after the receipt by the Executive of a Gross-Up Payment or payment by the Employer of
an amount on the Executive’s behalf pursuant to Section 10(c), the Executive




18











 




becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with
respect to such claim, the Executive shall (subject to the Employer’s complying with the
requirements of Section 10(c), if applicable) promptly pay to the Employer the amount of such
refund (together with any interest paid or credited thereon after taxes applicable thereto). If,
after payment by the Employer of an amount on the Executive’s behalf pursuant to Section 10(c), a
determination is made that the Executive shall not be entitled to any refund with respect to such
claim and the Employer does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination, then the amount of
such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.




          (e) Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the
Employer to the Executive within five days of the receipt of the Accounting Firm’s determination;
provided that, the Gross-Up Payment shall in all events be paid no later than the end of
the Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax
(and any income or other related taxes or interest or penalties thereon) on a Payment are remitted
to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts
relating to a claim described in Section 10(c) that does not result in the remittance of any
federal, state, local and foreign income, excise, social security and other taxes, the calendar
year in which the claim is finally settled or otherwise resolved. Notwithstanding any other
pro-vision of this Section 10, the Employer may, in its sole discretion, withhold and pay over to
the Internal Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.



          (f) The following terms shall have the following meanings for purposes of this Section 8.




     (i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.




     (ii) “Parachute Value” of a Payment shall mean the present value as of the date
of the change of control for purposes of Section 280G of the Code of the portion of such
Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by
the Accounting Firm for purposes of determining whether and to what extent the Excise Tax
will apply to such Payment.




     (iii) A “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of
the Executive, whether paid or payable pursuant to this Agreement or otherwise.




     (iv) The “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,”
within the meaning of Section 280G(b)(3) of the Code.



          (g) The Executive and the Employer hereby agree that the foregoing provisions of Section 10 of
this Agreement shall supersede any and all provisions with respect to



19









 




Sections 280G or 4999 of the
Code in any plan, program, policy or other arrangement of the Employer to which the Executive is a
participant, including without limitation, the Employer’s 2008 Omnibus Incentive Plan (or any
comparable successor or predecessor equity plan).




     11. Successors. (a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.



     (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.



     (c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law or otherwise. As used in this Agreement, the term “affiliated companies” shall
include any company controlled by, controlling or under common control with the Company.



     12. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and shall have no force
or effect. This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives. From and
after the Effective Date, this Agreement shall supersede and replace any other agreement between
the parties with respect to the subject matter hereof in effect immediately prior to the execution
of this Agreement.



     (b) All notices and other communications hereunder shall be in writing and shall be given to
the other party by hand delivery or overnight courier or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:



	 	 	 	 	 
	 

	 	 	 	 
	If to the Executive:

	 	At the most recent address
on file at the Company.





With a copy to:	 	 
	 
	 	 	 	 
	 

	 	Kirkland & Ellis LLP


153 East 53rd Street


New York, New York 10022

Attention: Scott D. Price, Esq.	 	 
	 
	 	 	 	 
	If to the Company:

	 	First Industrial, L.P.


311 S Wacker Drive, Suite 4000


Chicago, IL 60606-6678	 	 






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	 	Attention: Chairman of the Board of Directors and
Vice President — Legal
	 	 
	 
	 	 	 	 
	 

	 	With copies to:	 	 
	 
	 	 	 	 
	 

	 	First Industrial Realty Trust, Inc.


311 S. Wacker Drive, Suite 4000


Chicago, Illinois 60606


Attention: Chairman of the Board of Directors	 	 
	 
	 	 	 	 
	 

	 	and	 	 
	 
	 	 	 	 
	 

	 	Wachtell, Lipton, Rosen & Katz


51 West 52nd Street


New York, New York 10019


Attention: Michael J. Segal, Esq.	 	 
	 
	 	 	 	 
	 

	 	and	 	 
	 
	 	 	 	 
	 

	 	Barack Ferrazzano Kirschbaum & Nagelberg LLP
Suite 3900

200 West Madison Street


Chicago IL 60606


Attention: Howard Nagelberg, Esq.	 	 





or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.




     (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.



     (d) The Company may withhold from any amounts payable under this Agreement such federal,
state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.



     (e) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or the Company may
have hereunder shall not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.



     (f) Any provision of this Agreement that by its terms continues after the expiration of the
Employment Period or the termination of the Executive’s employment shall survive in accordance with
its terms.



     (g) The Agreement is intended to comply with the requirements of Section 409A of the Code or
an exemption or exclusion therefrom and shall in all respects be administered in accordance with
Section 409A of the Code. Each payment under this Agreement



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shall be treated as a separate payment
for purposes of Section 409A of the Code. In no event may the Executive, directly or indirectly,
designate the calendar year of any payment to be made under this Agreement. If the Executive dies
following the Date of Termination and prior to the payment of the any amounts delayed on account of
Section 409A of the Code, such amounts shall be paid to the personal representative of the
Executive’s estate within 30 days after the date of the Executive’s death. All reimbursements and
in-kind benefits provided under this Agreement that constitute deferred compensation within the
meaning of Section 409A shall be made or provided in accordance with the requirements of Section
409A of the Code, including, without limitation, that (i) in no event shall reimbursements by the
Company under this Agreement be made later than the end of the calendar year next following the
calendar year in which the applicable fees and expenses were incurred, provided, that the
Executive shall have submitted an invoice for such fees and expenses at least 10 days before the
end of the calendar year next following the calendar year in which such fees and expenses were
incurred; (ii) the amount of in-kind benefits and the Company is obligated to pay or provide in any
given calendar year shall not affect the in-kind benefits that the Company is obligated to pay or
provide in any other calendar year; (iii) the Executive’s right to have the Company pay or provide
such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit;
and (iv) in no event shall the Company’s obligations to make such reimbursements or to provide such
in-kind benefits apply later than the Executive’s remaining lifetime (or if longer, through the
20th anniversary of the Effective Date). Prior to a Change of Control but within the time period
permitted by the applicable Treasury Regulations, the Company may, in consultation with the
Executive, modify the Agreement, in the least restrictive manner necessary and without any
diminution in the value of the payments to the Executive, in order to cause the provisions of the
Agreement to comply with the requirements of Section 409A of the Code, so as to avoid the
imposition of taxes and penalties on the Executive pursuant to Section 409A of the Code.




     (c) The Executive represents that as of the date hereof, no existing covenant or other
obligation (including but not limited to in respect of Starwood Hotels and Resorts Worldwide, Inc.)
restricts the Executive’s obligation to enter into this Agreement with the Employer and to perform
his duties hereunder.



     13 Recoupment. (a) In the event of a material inaccuracy in the Employer’s or FR’s
statements of earnings, gains or other criteria that reduces previously reported net income or
increases previously reported net loss, the Employer shall have the right to take appropriate
action to recoup from the Executive any portion of any incentive compensation received by the
Executive the grant of which was tied to the achievement of one or more specific earnings targets
(e.g., revenue, gain on sale, equity in earnings in unconsolidated communities, G&A expense,
operating income, net income, etc.), with respect to the period for which such financial statements
are materially inaccurate, regardless of whether the Executive engaged in any misconduct or was at
fault or responsible in any way for causing the material inaccuracy, if,
as a result of such material inaccuracy, the Executive otherwise would not have received such
incentive compensation (or portion thereof). In the event the Employer is entitled to, and seeks,
recoupment under this Section 12, the Executive shall promptly reimburse the after-tax portion
(after taking into account all available deductions in respect of such reimbursement) of such
incentive compensation which the Employer is entitled to recoup hereunder. In the event the
Executive fails to make prompt reimbursement of any such incentive compensation which the Employer
is entitled to recoup and as to which the Employer seeks recoupment hereunder, the



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Executive acknowledges and agrees that the Employer shall have the right to (i) deduct the amount to be
reimbursed hereunder from the compensation or other payments due to the Executive from the Company
or (ii) to take any other appropriate action to recoup such payments. The Employer’s right of
recoupment pursuant to this Section 13 shall apply only if the demand for recoupment is made not
later than three years following the payment of applicable incentive compensation.



     (b) The Employer must seek recoupment of any such payments from the Executive within six (6)
months of the Board’s actual knowledge of the material financial statement inaccuracy which forms
the basis for such recoupment pursuant to Section 13(a).



     (c) The rights contained in this Section 13 shall be in addition to, and shall not limit, any
other rights or remedies that the Company may have under law or in equity, including, without
limitation, any rights the Company may have under any other Company recoupment policy or other
agreement or arrangement with the Executive.



     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from its Board and its Managing Member, FR and the Employer, respectively, have
caused these presents to be executed in their name on their behalf, all as of the day and year
first above written.



	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	BRUCE W. DUNCAN	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Bruce W. Duncan	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FIRST INDUSTRIAL, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ W. Edwin Tyler	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	First Industrial Realty Trust, Inc.	 	 
	 

	 	 	 	Title:
	 	General Partner	 	 
	 

	 	 	 	By:
	 	W. Edwin Tyler, Interim Chief
Executive Officer and President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FIRST INDUSTRIAL REALTY TRUST, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ W. Edwin Tyler	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	W. Edwin Tyler	 	 
	 

	 	 	 	Title:
	 	Interim Chief Executive Officer and
President	 	 







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