EXHIBIT 10.2
EXECUTIVE PROTECTION AGREEMENT
This Agreement
entered into as of the 15th day of March, 2005 (the
“Effective Date”) by and between ProLogis, a Maryland
real estate investment trust (the “Trust”), and (the
“Executive”),
WITNESSETH THAT :
WHEREAS, the Trust
wishes to assure itself of the continuity of the Executive’s
services in the event of a change in control of the Trust;
and
WHEREAS, the Trust
and the Executive accordingly desire to enter into this Agreement
on the terms and conditions set forth below;
NOW, THEREFORE, in
consideration of the premises and mutual covenants set forth
herein, it is hereby agreed by and between the parties as
follows:
1. Term
of Agreement . The “Term” of this Agreement shall
commence on the Effective Date and shall continue through
December 31, 2006; provided, however, that on such date and on
each December 31 thereafter, the Term of this Agreement shall
automatically be extended for one additional year unless, not later
than the preceding October 1, either party shall have given
notice that such party does not wish to extend the Term; and
provided further that if a Change in Control (as defined in
paragraph 3 below) shall have occurred during the original or any
extended Term of this Agreement, the Term of this Agreement shall
continue until the end of the twenty-fourth calendar month after
the calendar month in which such Change in Control occurs, at which
time it will expire.
2.
Employment After a Change in Control . If the Executive is
in the employ of the Trust on the date of a Change in Control, the
Trust hereby agrees to continue the Executive in its employ for the
period commencing on the date of the Change in Control and ending
on the last day of the Term of this Agreement. During the period of
employment described in the foregoing provisions of this paragraph
2 (the “Employment Period”), the Executive shall hold
such position with the Trust and exercise such authority and
perform such executive duties as are commensurate with his
position, authority and duties immediately prior to the Employment
Period. The Executive agrees that during the Employment Period he
shall devote his full business time exclusively to the executive
duties described herein and perform such duties faithfully and
efficiently; provided, however, that nothing in this Agreement
shall prevent the Executive from voluntarily resigning from
employment upon no less than 15 days’ advance written
notice to the Trust under circumstances that do not constitute a
Termination (as defined in paragraph 5).
3. Change
in Control . For purposes of this Agreement, a “Change in
Control” means the happening of any of the
following:
(a) The
consummation of a transaction, approved by the shareholders of the
Trust, to merge the Trust into or consolidate the Trust with
another entity, sell or otherwise dispose of all or substantially
all of its assets or adopt a plan of liquidation, provided,
however, that a Change in Control shall not be deemed to have
occurred by reason of a transaction, or a substantially concurrent
or otherwise related series of transactions, upon the completion of
which 50% or more of the beneficial ownership of the voting power
of the Trust, the surviving corporation or corporation directly or
indirectly controlling the Trust or the surviving corporation, as
the case may be, is held by the same persons (as defined below)
(although not necessarily in the same proportion) as held the
beneficial ownership of the voting power of the Trust immediately
prior to the transaction or the substantially concurrent or
otherwise related series of transactions, except that upon the
completion thereof, employees or employee benefit plans of the
Trust may be a new holder of such beneficial ownership
(b) The
“beneficial ownership” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) of securities representing 50% or more
of the combined voting power of the Trust is acquired, other than
from the Trust, by any “person” as defined in Sections
13(d) and 14(d) of the Exchange Act (other than any trustee or
other fiduciary holding securities under an employee benefit or
other similar stock plan of the Trust).
(c) At any time
during any period of two consecutive years, individuals who at the
beginning of such period were members of the Board of Trustees of
the Trust cease for any reason to constitute at least a majority
thereof (unless the election, or the nomination for election by the
Trust’s shareholders, of each new trustee was approved by a
vote of at least two-thirds of the trustees still in office at the
time of such election or nomination who were trustees at the
beginning of such period).
For
purposes of this Agreement, the following terms shall be defined as
indicated:
(i)
The term “Beneficial Owner” shall mean beneficial owner
as defined in Rule 13d-3 under the Exchange Act.
(ii)
Entities shall be treated as being under “common
control” during any period in which they are
“affiliates” of each other as that term is defined in
the Exchange Act.
(iii)
The term “person” shall be as defined in Sections 13(d)
and 14(d) of the Exchange Act, but shall exclude any trustee or
other fiduciary holding securities under an employee benefit or
other similar stock plan of the Trust.
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(iv)
The term “ProLogis Affiliate” shall mean ProLogis and
any of its “affiliates” as that term is defined in the
Exchange Act.”
4.
Compensation During the Employment Period . During the
Employment Period, the Executive shall be compensated as
follows:
(a) He shall
receive an annual salary which is not less than his annual salary
immediately prior to the Employment Period.
(b) He shall be
entitled to participate in annual cash-based incentive compensation
plans which, in the aggregate, provide bonus opportunities which
are not materially less favorable to the Executive than the greater
of (i) the opportunities provided by the Trust for executives
with comparable levels of responsibility as in effect from time to
time; and (ii) the opportunities provided to the Executive
under all such plans in which he was participating prior to the
Employment Period.
(c) He shall be
eligible to participate in other incentive compensation plans and
other employee benefit plans on a basis not materially less
favorable to the Executive than that applicable to other executives
of the Trust with comparable levels of responsibility as in effect
from time to time.
5.
Termination . For purposes of this Agreement, the term
“Termination” shall mean termination of the employment
of the Executive by the Trust during the Employment Period
(I) by the Trust, for any reason other than death, Disability,
or Cause, or (II) by Constructive Discharge of the Executive
(as these terms are described below). For purposes of this
Agreement:
(a) The Executive
shall be considered to have a “Disability” during the
period in which he is unable, by reason of a medically determinable
physical or mental impairment, to engage in the material and
substantial duties of his regular occupation, and such condition is
expected to be permanent, as determined by the Chief Executive
Officer of the Trust.
(b) For purposes
of this Agreement, “Cause” shall mean, in the
reasonable judgment of the Chief Executive Officer of the Trust
(i) the willful and continued failure by the Executive to
substantially perform his duties with the Trust or any subsidiary
after written notification by the Trust or subsidiary,
(ii) the willful engaging by the Executive in conduct which is
demonstrably injurious to the Trust or any subsidiary, monetarily
or otherwise, or (iii) the engaging by the Executive in
egregious misconduct involving serious moral turpitude. For
purposes hereof, no act, or failure to act, on the
Executive’s part shall be deemed “willful” unless
done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that such action was in the best interest
of the
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Trust or
subsidiary.
(c) If, after a
Change in Control, the Executive:
(i)
provides written notice to the Trust of the occurrence of Good
Reason (as defined below) within a reasonable time after the
Executive has knowledge of the circumstances constituting Good
Reason, which notice shall specifically identifies the
circumstances which the Executive believes constitute Good
Reason;
(ii)
the Trust fails to notify the Executive of the Trust’s
intended method of correction within a reasonable period of time
after the Trust receives the notice, or the Trust fails to correct
the circumstances within a reasonable time after such notice;
and
(iii)
the Executive resigns within a reasonable time after receiving the
Trust’s response, if such notice does not indicate an
intention to correct such circumstances, or within a reasonable
time after the Trust fails to correct such
circumstances;
then
the Executive shall be considered to have been subject to a
“Constructive Discharge” by the Trust. For purposes of
this Agreement, “Good Reason” shall mean, without the
Executive’s express written consent (and except in
consequence of a prior termination of the Executive’s
employment), the occurrence of any of the following
circumstances:
(I)
a substantial adverse alteration in the nature of the
Executive’s status or responsibilities from those in effect
immediately prior to the Employment Period;
(II)
failure to provide salary and other compensation and benefits in
accordance with paragraph 4; or
(III)
the failure of the Trust to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement as
contemplated in paragraph 16.
If the Executive becomes employed
by the entity into which the Trust merged, or the purchaser of
substantially all of the assets of the Trust, or a successor to
such entity or purchaser, the Executive shall not be treated as
having terminated employment for purposes of this Agreement until
such time as the Executive terminates employment with the merged
entity or purchaser (or successor), as applicable. If the Executive
is transferred to employment with a subsidiary of the
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Trust (regardless of whether
before, on, or after a Change in Control), such transfer shall not
constitute a termination of employment for purposes of this
Agreement, provided that the subsidiary agrees to assume this
Agreement and be substituted for the Trust under this Agreement
(provided that the subsidiary shall not be substituted for the
Trust for purposes of defining the term “Change in
Control”).
6.
Severance Benefits . Subject to the provisions of paragraphs
7 and 8 below, in the event of a Termination described in paragraph
5, in lieu of the amount otherwise payable under paragraph
4:
(a) The Executive
shall be entitled to the bonus(es) payable for the performance
period(s) in which the date of the Executive’s Termination
occurs, with payment based on achievement of a target level of
performance for the entire period (regardless of actual performance
for the period); provided, however, that the amount of the bonus
shall be subject to a pro-rata reduction to reflect the portion of
the applicable performance period following the date of
termination. Payment under this paragraph (a) shall be made at
the regularly scheduled time for payment of such amounts to active
employees.
(b) As of the date
of Termination, the Executive shall be fully vested in all benefits
accrued through the date of Termination under the ProLogis
Nonqualified Savings Plan, and all such benefits shall be payable
in a lump sum not later than 10 days after the date of
Termination.
(c) Any awards
granted under the ProLogis 1997 Long Term Incentive Plan or under
any other incentive, compensation or other plan that are held by
the
