Exhibit 10.12
D IGITAL R EALTY T RUST , I NC .
2730 S AND H ILL R OAD , S UITE 280
M ENLO P ARK , C ALIFORNIA 94025
July 30, 2004
Chris Crosby
c/o Digital Realty Trust, Inc.
2730 Sand Hill Road, Suite 280
Menlo Park, California 94025
Dear Chris:
Digital Realty Trust, Inc. (the
“ REIT ”) and Digital Realty, L.P. (the “
Operating Partnership ” and together with the REIT,
the “ Company ”) are pleased to offer you the
position of Vice President of the REIT and the Operating
Partnership on the following terms, effective as of the effective
date of the Registration Statement on Form S-l 1 with respect to
the initial public offering of shares of the REIT’s common
stock (the “ IPO ”) or such earlier date as may
otherwise be mutually agreed to by you and the Company (the “
Effective Date ”):
1. P OSITION , D UTIES AND R ESPONSIBILITIES . A S of the
Effective Date, the Company will employ you, and you agree to be
employed by the Company, as Vice President of the REIT and the
Operating Partnership. In the capacity of Vice President, you will
have such duties and responsibilities as are normally associated
with such position and will devote your full business time and
attention serving the Company in such position. Your duties may be
changed from time to time by the Company, consistent with your
position. You will report to the Chief Executive Officer of the
REIT or the Operating Partnership, as applicable, and will work
full- time at our principal offices located in Menlo Park,
California (or such other location in the San Francisco greater
metropolitan area as the Company may utilize as its principal
offices), or the regional office in Dallas, Texas, except for
travel to other locations as may be necessary to fulfill your
responsibilities. At the Company’s request, you will serve
the Company and/or its subsidiaries and affiliates in other offices
and capacities in addition to the foregoing. In the event that you
serve in any one or more of such additional capacities, your
compensation will not be increased beyond that specified in this
letter. In addition, in the event your service in one or more of
such additional capacities is terminated, your compensation, as
specified in this letter, will not be diminished or reduced in any
manner as a result of such termination for so long as you otherwise
remain employed under the terms of this letter.
2. B ASE C OMPENSATION . During your employment with the Company, the
Company will pay you a base salary of $150,000 per year, less
payroll deductions and all required withholdings, payable in
accordance with, the Company’s normal payroll practices and
prorated
for any partial month of employment. Your base
salary may be subject to adjustment pursuant to the Company’s
policies as in effect from time to time.
3. A NNUAL B ONUS .
In addition to the base salary set forth above, during your
employment with the Company, you will be eligible to participate in
the Company’s incentive bonus plan applicable to similarly
situated employees of the Company. The amount of your annual bonus
will be based on the attainment of performance criteria established
and evaluated by the Company in accordance with the terms of such
bonus plan as in effect from time to time, provided that, subject
to the terms of such bonus plan, your target and maximum annual
bonus shall initially be 75% and 100%, respectively, of your base
salary actually paid for such year.
4. P ROFITS I NTEREST A WARD .
Subject to adoption by the Board of Directors of the REIT (the
“ Board ”) and approval by the REIT’s
stockholders of the Company’s incentive award plan (the
“ Incentive Plan ”), as of the effective date of
the Registration Statement on Form S-l 1 with respect to the IPO
(the “ Pricing Date ”), the Operating
Partnership agrees to issue to you, and you agree to accept from
the Operating Partnership as part of your compensation for services
rendered to or for the benefit of the Operating Partnership in your
capacity as a partner, that number of Profits Interest Units (as
defined the Amended and Restated Agreement of Limited Partnership
of Digital Realty, L.P.) which is equal to one percent (1%) of
the Management Units Pool (as defined below) (the “
Profits Interest Units ”). The Profits Interest Units
shall be vested in full as of the Pricing Date. Consistent with the
foregoing, the terms and conditions of the Profits Interest Units
(including, without limitation, transfer restrictions with respect
thereto) shall be set forth in a profits interest agreement to be
entered into by the Company and you which shall evidence the grant
of the Profits Interest Units (the “ Profits Interest
Agreement ”). For purposes of this letter, “
Management Units Pool ” shall mean that number of
units equal to three percent (3%) of the total number of
shares of the REIT’s common stock expected to be outstanding
(on a fully diluted basis) upon the closing of the IPO, as set
forth in the preliminary prospectus printed and distributed to
potential investors in connection with the marketing of the IPO
(or, if a subsequent preliminary prospectus is thereafter printed
and recirculated to potential investors, then as set forth in such
subsequent preliminary prospectus) (the “ Preliminary
Prospectus ”).
5. S TOCK O PTION A WARD .
Subject to adoption by the Board and approval by the REIT’s
stockholders of the Incentive Plan, as of the Pricing Date, the
REIT agrees to grant to you in your capacity as an employee of the
REIT or any “subsidiary corporation” thereof (within
the meaning of Section 424(f) of the Internal Revenue Code of
1986, as amended (the “ Code ”)), and you agree
to accept, a stock option to purchase that number of shares of the
REIT’s common stock which is equal to seven and one-half
percent (7.5%) of the Management Options Pool (as defined
below) (the “ Stock Option ”). The Stock Option
shall be granted to you as an “incentive stock option”
(within the meaning of Section 422 of the Code) under the
Incentive Plan at an exercise price per share equal to the initial
public offering price of a share of the REIT’s common stock.
Subject to your continued employment with the Company, the Stock
Option shall vest and become exercisable with respect to
twenty-five percent (25%) of the shares subject thereto on
each of the first four anniversaries of the date of grant, provided
that the Stock Option shall become fully vested and exercisable in
the event of a Change in Control (as defined in the Incentive
Plan). Consistent with the foregoing, the terms and conditions of
the Stock Option
2
shall be set forth in a stock option agreement
to be entered into by the Company and y
