Exhibit 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
(“Agreement”) dated as of October 9, 2009, by and
between DCT Industrial Trust Inc. with its principal place of
business at 518 Seventeenth Street, Suite 800, Denver, Colorado
80202 (the “Company”), and Michael J. Ruen, residing at
the address set forth on the signature page hereof (the
“Executive”).
WHEREAS, the Company and the
Executive were parties to an employment agreement made and entered
into on July 21, 2006, as amended on December 18, 2007
and December 19, 2008 (the “Prior Employment
Agreement”), that expired by its terms; and
WHEREAS, the Company wishes to
continue to employ the Executive, and the Executive wishes to
accept such offer, on the terms set forth below.
Accordingly, the parties hereto
agree as follows:
1. Term . The Company hereby
employs the Executive, and the Executive hereby accepts such
employment, for a two year term commencing on October 10, 2009
and continuing through October 9, 2011, unless sooner
terminated in accordance with the provisions of Section 4 or
Section 5 (the period during which the Executive is employed
hereunder being hereinafter referred to as the
“Term”).
2. Duties . During the Term,
the Executive shall be employed by the Company as Managing
Director, East Region, and, as such, the Executive shall faithfully
perform for the Company the duties of such office and shall perform
such other duties of an executive, managerial or administrative
nature, which are consistent with such office, as shall be
specified and designated from time to time by the Board of
Directors of the Company (the “Board”) or the Chief
Executive Officer. The Executive shall devote substantially all of
his business time and effort to the performance of his duties
hereunder; provided, however, that the Executive may engage in
civic or charitable activities, provided that such activities do
not interfere with the Executive’s performance of his duties
hereunder or violate this Agreement.
3. Compensation .
3.1 Salary . The Company
shall pay the Executive during the Term an initial salary at the
rate of $260,000 per annum (the “Annual Salary”), in
accordance with the customary payroll practices of the Company
applicable to senior executives (but, in no event, less frequently
than monthly). The Board, or committee thereof, may provide for
such increases in Annual Salary as it may in its discretion deem
appropriate; provided that in no event shall the Annual Salary be
decreased.
3.2 Bonus . During the Term,
in addition to the Annual Salary, for each fiscal year of the
Company ending during the Term, the Executive shall be eligible to
receive an annual cash bonus. The target annual cash bonus for each
fiscal year of the Company ending during the Term shall be at least
equal to $200,000; provided that the amount of the actual cash
bonus paid (which may be more or less than the target amount) shall
be determined by the Company, in its sole discretion, based on such
factors relating to the performance of the Executive or the Company
as it deems relevant. Each cash bonus payment under this
Section 3.2 shall be made in
a single lump sum within two and one-half
(2 1
/ 2 ) months following the end of the fiscal
year of the Company in which such bonus is earned. By way of
illustration (but not limitation) of the manner in which the
preceding sentence operates, if the Executive earns a bonus for
fiscal year 2009, then the cash bonus payment must be paid in a
single lump sum between January 1, 2010 and March 15,
2010.
3.3 Long-Term Incentive
Awards . During the Term, in addition to the Annual Salary and
cash bonus, the Executive shall be eligible to receive annual
equity awards under the Company’s 2006 Long-Term Incentive
Plan (the “LTIP”) or other equity-based plan as in
effect from time to time that is materially comparable in the
aggregate to the LTIP. The target value of the annual equity awards
for each fiscal year of the Company ending during the Term shall be
at least equal to $450,000; provided that the value of the actual
equity awards granted (which may be more or less than the target
value) shall be determined by the Company, in its sole discretion,
based on such factors relating to the performance of the Executive
or the Company as it deems relevant. Grants of annual equity awards
under this Section 3.3 shall be made within two and one-half
(2 1
/ 2 ) months
following the end of the fiscal year of the Company to which such
awards relate. Annual equity awards granted shall vest in equal
annual installments over no more than five years, and the vesting
period for any grant made during the Term will begin on
January 1 of the year in which such grant is made. Any grants
which are financially equivalent to restricted stock (e.g.
restricted stock units or phantom units), other than those that
remain subject to performance-based vesting hurdles, shall be
accompanied by the grant of dividend equivalent rights. The
Executive shall also be eligible to participate in any multi-year
equity award programs established by the Company for senior
executives. The Company will have the right to determine, in its
sole discretion, the terms of any such programs or the
Executive’s award thereunder.
3.4 Benefits - In General .
Except with respect to benefits of a type otherwise provided for
under Section 3.5, the Executive shall be entitled during the
Term to participate in any group life, hospitalization or
disability insurance plans, health programs, retirement plans,
fringe benefit programs and similar benefits that are available to
other senior executives of the Company generally, on the same terms
as such other executives, in each case to the extent that the
Executive is eligible under the terms of such plans or
programs.
3.5 Specific Benefits .
Without limiting the generality of Section 3.4, the Company
shall make available to the Executive vacation of four weeks per
year which vacation days may accrue subject to the Company policy
regarding vacation accruals.
3.6 Expenses . The Company
shall pay or reimburse the Executive for all ordinary and
reasonable out-of-pocket expenses actually incurred (and, in the
case of reimbursement, paid) by the Executive during the Term in
the performance of the Executive’s services under this
Agreement (including, without limitation, with respect to use of a
mobile phone, use of a blackberry, and entertainment costs);
provided that the Executive submits reasonable proof of such
expenses within the period provided by the Company for expense
reimbursements to its senior executives generally, with the
properly completed forms as prescribed from time to time by the
Company. In addition, the Executive shall be entitled to reasonable
reimbursement for travel, according to the Company’s policy
(which provides for coach class airfare and reimbursement for
upgrades).
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3.7 Indemnification and Directors
and Officers Liability Insurance . The Executive shall be
indemnified, and shall have his legal expenses in connection with
regulatory or other legal proceedings advanced to him, by the
Company in connection with his performance of services hereunder,
if and as applicable, on terms and conditions no less favorable to
the Executive than those that apply to any other senior executives
of the Company. The Company shall cause the Executive to be covered
by directors and officers liability insurance with such coverage to
be no less favorable to him than the coverage then being provided
to any other senior executive of the Company.
3.8 Timing of Expense
Reimbursement . All in-kind benefits provided and expenses
eligible for reimbursement under this Agreement must be provided by
the Company or incurred by the Executive during the time periods
set forth in the Agreement. All reimbursements shall be paid as
soon as administratively practicable, but in no event shall any
reimbursement be paid after the last day of the taxable year
following the taxable year in which the expense was incurred. The
amount of in-kind benefits provided or reimbursable expenses
incurred in one taxable year shall not affect the in-kind benefits
to be provided or the expenses eligible for reimbursement in any
other taxable year. Such right to reimbursement or in-kind benefits
is not subject to liquidation or exchange for another
benefit.
4. Termination upon Death or
Disability . If the Executive dies during the Term, the Term
shall terminate as of the date of death, and the obligations of the
Company under this Agreement to or with respect to the Executive
shall terminate in their entirety upon such date except as
otherwise provided under this Section 4. If the Executive
becomes disabled by virtue of ill health or other disability and is
unable to perform substantially and continuously the duties
assigned to him for more than 180 consecutive or non-consecutive
days out of any consecutive 12-month period in the reasonable
opinion of a qualified physician chosen by the Company and
reasonably acceptable to the Executive (the foregoing circumstance
being referred to below as a “Disability”), the Company
shall have the right, to the extent permitted by law, to terminate
the employment of the Executive upon notice in writing to the
Executive. Upon termination of employment due to death or
Disability during the Term, (i) the Executive (or the
Executive’s estate or beneficiaries in the case of the death
of the Executive) shall be entitled to receive any Annual
Salary, bonus and other benefits earned and accrued under this
Agreement prior to the date of termination (and reimbursement under
this Agreement for expenses incurred prior to the date of
termination), (ii) the Executive (or the Executive’s
estate or beneficiaries in the case of the death of the Executive)
shall be entitled to receive (A) a cash payment equal to
(I) the target bonus for the year of termination multiplied by
(II) a fraction (x) the numerator of which is the number of
days in the year up to the termination and (y) the denominator
of which is 365, and (B) elimination of any exclusively
time-based vesting conditions (but not performance conditions,
which shall remain in effect subject to the terms thereof) on any
restricted stock, stock options and other equity awards; provided
that, in the event of termination of employment due to Disability,
the Executive will only be entitled to receive the payment and
accelerated vesting set forth in this clause (ii) if the
Executive executes and delivers to the Company a general release in
a form reasonably acceptable to the Company, which does not require
the release of any payment rights under this Section 4 or
under Section 3.7, within thirty (30) days
following
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such termination and such release becomes
irrevocable at the earliest possible time under applicable law
following such execution and delivery, (iii) Section 3.7
shall apply in accordance with its terms and (iv) the
Executive (or, in the case of his death, his estate and
beneficiaries) shall have no further rights to any other
compensation or benefits hereunder on or after the termination of
employment, or any other rights hereunder. By way of illustration
(but not limitation) of the manner in which clause (ii)(B) of the
preceding sentence operates, if the Executive were to hold an
equity award with a five-year performance-based vesting condition,
where the Executive would also need to remain employed during such
period, and the Executive’s employment were to terminate in
the fourth year of the vesting period due to his death or
Disability, then, so long as the performance measures are met at
the end of the five-year performance period, the Executive or his
estate would be entitled to payments as though he had remained
employed (and, if the performance measures are not met at the end
of the five-year performance period, the award is thereupon
forfeited).
Any payments that the Executive is
entitled to receive pursuant to clause (i) of the third
sentence of this Section 4 shall be made by the Company in a
single lump sum within five (5) days after termination of
employment due to death or Disability. Any payment or acceleration
of vesting that the Executive is entitled to receive pursuant to
clause (ii) of the third sentence of this Section 4 shall
be made by the Company in a single lump sum or occur, respectively,
upon the 45 th day after termination of employment due to death
or Disability.
5. Certain Terminations of
Employment .
5.1 Termination by the Company
for Cause; Termination by the Executive without Good Reason
.
(a) For purposes of this Agreement,
“Cause” shall mean the Executive’s:
(i) conviction of a felony (other
than a traffic violation), a crime of moral turpitude, or any
financial crime involving the Company; a willful act of dishonesty,
breach of trust or unethical business conduct in connection with
the business of the Company that has a material detrimental impact
on the Company;
(ii) the commission of fraud,
misappropriation or embezzlement against the Company; any act or
omission in the performance of his duties hereunder that
constitutes willful misconduct, willful neglect or gross neglect,
in any such case if such action or omission is either material or
repeated;
(iii) repeated failure to use
reasonable efforts in all material respects to adhere to the
directions of the Board or the Chief Executive Officer, or the
Company’s policies and practices, after his being informed
that he is not so adhering;
(iv) willful failure to
substantially perform his duties properly assigned to him (other
than any such failure resulting from his Disability);
(v) breach of any of the provisions
of Section 6; or
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(vi) breach in any material respect
of the terms and provisions of this Agreement and failure to cure
such breach within ten days following written notice from the
Company specifying such breach; provided that the Company shall not
be permitted to terminate the Executive for Cause except on written
notice given to the Executive at any time following the occurrence
of any of the events described in clause (i), (ii) or
(v) above and on written notice given to the Executive at any
time not more than 30 days following the occurrence of any of the
events described in clause (iii), (iv) or (vi) above (or,
if later, the Company’s knowledge thereof).
(b) The Company may terminate the
Executive’s employment hereunder for Cause, and the Executive
may terminate his employment hereunder for any or no reason on at
least 30 days’ and not more than 60 days’ written
notice given to the Company. If the Company terminates the
Executive for Cause during the Term, or if the Executive terminates
his employment during the Term and the termination by the Executive
is not covered by Section 5.2, then (i) the Executive
shall be entitled to receive any Annual Salary and other benefits
earned and accrued under this Agreement prior to the date of
termination of employment (and reimbursement under this Agreement
for expenses incurred prior to the date of termination of
employment); (ii) Section 3.7 shall apply in accordance
with its terms; and (iii) the Executive shall have no further
rights to any other compensation or benefits hereunder on or after
the termination of employment, or any other rights
hereunder.
5.2 Termination by the Company
without Cause; Termination by the Executive for Good Reason
.
(a) For purposes of this Agreement,
“Good Reason” shall mean, unless otherwise consented to
in writing by the Executive,
(i) the material reduction of the
Executive’s authority, duties and responsibilities, or the
assignment to the Executive of duties materially inconsistent with
the Executive’s position or positions with the Company, as
specified in Section 2;
(ii) a reduction in the Annual
Salary of the Executive, or a reduction in the target bonus or
target LTIP award applicable to the Executive (except for a
material reduction in target bonus or target LTIP award that is
part of a Company program to reduce “general and
administrative” expenses due to business conditions which
reduction is applied to other senior officers generally; provided
that such reduction is before the occurrence of a Change in Control
(as defined below));
(iii) the relocation of the
Executive’s office to more than 30 miles from Denver,
Colorado; or
(iv) any material breach by the
Company of any provision of this Agreement.
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Notwithstanding the foregoing, (i) Good
Reason (A) shall not be deemed to exist unless the Executive
gives to the Company a written notice identifying the event or
condition purportedly giving rise to Good Reason expressly
referencing this Section 5.2(a) within 45 days after the time
at which the event or condition first occurs or arises (or, if
later, was discovered or should have been discovered by the
Executive) and (B) shall not be deemed to exist at any time at
which there exists an event or condition which could serve as the
basis of a termination of the Executive’s employment for
Cause; and (ii) if there exists (without regard to the
following clause (ii)(A)) an event or condition that constitutes
Good Reason, (A) the Company shall have 45 days from the date
notice of Good Reason is given to cure such event or condition and,
if the Company does so, such event or condition shall not
constitute Good Reason hereunder; and (B) if the Company does
not cure such event or condition within such 45-day period, the
Executive shall have one business day thereafter to give the
Company notice of termination of employment on account thereof
(specifying a termination date no later than 10 days from the date
of such notice of termination). If the 45 days noted in clause
(ii)(A) above extends beyond the Term, then the Term for purposes
of Section 5.2(b) shall be extended until the earlier of
(i) the date on which the Company cures such event or
condition or (ii) the first business day following the end of
such 45-day period.
(b) The Company may terminate the
Executive’s employment at any time for any reason or no
reason upon notice to the Executive and the Executive may terminate
the Executive’s employment with the Company for Good Reason
upon notice to the Company. If the Company terminates the
Executive’s employment and the termination is not covered by
Section 4 or 5.1, or the Executive terminates his employment
for Good Reason, and such termination occurs either during the Term
or within 12 months after a Change in Control (as defined in
Section 5.3) that occurs at any time during or after the Term,
(i) the Company shall pay to the Executive Annual Salary,
bonus and other benefits earned and accrued under this Agreement
prior to the termination of employment (and reimbursement under
this Agreement for expenses incurred prior to the termination of
employment); (ii) the Company shall pay or provide to the
Executive (A) one times (or, in the event of a termination
within 12 months after a Change of Control, one and one-half times)
Annual Salary, (B) one times (or, in the event of a
termination within 12 months after a Change of Control, one and
one-half times) the greater of (x) the target bonus for the
year of termination and (y) the average of the actual bonuses
for the two years (with respect to which bonuses are determined)
prior to the year of termination, (C) a cash payment equal to
(I) the target bonus for the year of termination multiplied by
(II) a fraction (x) the numerator of which is the number of
days in the year up to the termination and (y) the denominator
of which is 365 and (D) for a period of one year (or, in the
event of a termination within 12 months after a Change of Control,
one and one-half years) after termination of employment, such
continuing coverage under the group health plans the Executive
would have received under this Agreement (and at such costs to the
Executive) as would have applied in the absence of such termination
(but not taking into account any post-termination increases in
Annual Salary that may otherwise have occurred without regard to
such termination and that may have favorably affected such
benefits); (iii) the Executive shall be entitled to
elimination of any exclusively time-based vesting conditions (but
not performance conditions, which shall remain in effect subject to
the terms thereof) on any grant under the LTIP or any other grant
of restricted stock, stock options or other equity awards;
(iv) Section 3.7 shall apply in accordance with its
terms; and (v) the Executive shall have no further rights to
any other compensation or benefits hereunder on or after the
termination of employment, or any other rights hereunder; provided
that the Executive will only
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be entitled to receive the payments, benefits
and accelerated vesting set forth in clauses (ii) and
(iii) if the Executive executes and delivers to the
Comp
