EXECUTIVE PROTECTION AGREEMENT
This Agreement entered into as of the 21 day of December, 2006 (the “Effective Date”) by and between ProLogis, a Maryland real estate investment trust (the “Trust”), and Dessa M. Bokides (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;
WHEREAS, the Trust and the Executive accordingly desire to enter into this Agreement on the terms and conditions set forth below; and
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 her position, authority and duties immediately prior to the Employment Period. The Executive agrees that during the Employment Period she shall devote her 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.
4. Compensation During the Employment Period . During the Employment Period, the Executive shall be compensated as follows:
(a) She shall receive an annual salary which is not less than her annual salary immediately prior to the Employment Period.
(b) She 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 she was participating prior to the Employment Period.
(c) She 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 she is unable, by reason of a medically determinable physical or mental impairment, to engage in the material and substantial duties of her 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 her 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 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 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, the ProLogis 2006 Long Term Incentive Plan or under any other incentive, compensation or other plan that are held by the Executive on the date of Termination shall vest and become immediately exercisable on such date.
(d) The Executive shall continue to receive medical insurance and life insurance coverage in accordance with paragraph 4(c) above for a period of period of 24 months after the date of Termination.
(e) The Exec