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EXHIBIT 10.1 Separation and Release Agreement
This Separation and Release
Agreement (this " Agreement ") is made effective as of
the 17th day of December, 2008 (the " Agreement Date "), by
and between First Industrial Realty Trust, Inc. , a Maryland
corporation (the " Company "), and Michael J. Havala
(the " Executive ").
Whereas, Executive currently serves as Chief Financial
Officer of the Company pursuant to an employment agreement by and
between the Company and Executive dated March 31, 2002 (the "
Employment Agreement) ; and
Whereas, Executive has advised the Company of his intention
to resign all positions with the Company effective as of the close
of business on the Agreement Date, and the Company’s Board of
Directors has accepted such resignation.
Now, therefore, in
consideration of the mutual covenants herein contained, and upon
the other terms and conditions hereinafter provided, the parties
hereby agree as follows:
Section 1. Termination of Employment and Employment
Agreement . Except as otherwise specifically set forth
herein, the Employment Agreement and Executive’s employment
with the Company shall terminate effective as of the close of
business on the Agreement Date. Executive acknowledges that he has
resigned from any and all officerships, directorships, committee
memberships and all other elected or appointed positions, of any
nature, that Executive held immediately prior to the Agreement Date
with the Company and/or any of its affiliates, all effective as of
the close of business on the Agreement Date.
Section 2. Severance
Payments . In consideration for the promises made in this
Agreement, the Company agrees to pay, or provide to, Executive the
following (collectively, the " Severance Benefits "):
(a) A
single lump sum in an amount equal to One Million Six Hundred Forty
Eight Thousand Seven Hundred and Nine Dollars ($1,648,709.00) to be
made to Executive in calendar year 2008; provided that
Executive’s execution of the Release (define below) is not
revoked.
(b) The
Company shall continue, for Executive and his family, health
insurance coverage, so as to provide a scope of coverage comparable
to that which was in effect as of the Agreement Date, for a period
of three (3) years following the Agreement Date or, if
earlier, until such time as substitute health insurance coverage
with comparable benefits is available to Executive at a cost
comparable to that borne by Executive under the Company’s
policy, by virtue of other employment or family members’
insurance benefits secured or made available after termination.
Executive shall be obligated to inform the Company of any such
comparable coverage within five (5) business days of becoming
covered by such comparable coverage.
(c) Within
five (5) days of the Effective Date, the Company shall
reimburse Executive for any business expenses that are payable
under the Company’s normal expense
reimbursement policies and practices that were incurred by the
Executive prior to the Agreement Date.
(d) The
parties acknowledge and agree that the amount set forth in
subparagraph (a) above includes all accrued but unused
paid-vacation through the Agreement Date.
(e) Executive
acknowledges and agrees that all payments made, and benefits
provided, pursuant to this Agreement shall be subject to all
applicable tax withholding and reporting requirements.
(f) Executive
acknowledges and agrees that all payments made, and benefits
provided, pursuant to this Agreement are in consideration for
Executive’s promises contained in this Agreement, and that
such payments and benefits under the terms of the Employment
Agreement would not be payable absent execution of this Agreement.
Executive further acknowledges and agrees that the payments and
benefits described in this Agreement are conditioned upon the
execution and non-revocation of the Release described in
Section 10 . If Executive revokes this Agreement on or
before the Effective Date, no payment or benefit described herein
(except as provided in Section 2(c)) shall be due to
Executive. Section 3.
Code Section 409A . Executive acknowledges and
agrees that he shall be solely responsible for any additional
taxes, penalty or interest that may be imposed by Section 409A of
the Code on any such payments and or benefits if any such tax,
penalty or interest is imposed by the Internal Revenue Service.
Section 4. Termination of
Benefits . Executive’s continued participation in all
compensation and other benefit plans will cease as of the Agreement
Date; provided that nothing contained herein shall limit or
otherwise impair Executive’s right to receive pension,
welfare or similar benefit payments which are vested as of the
Agreement Date under any applicable tax-qualified pension plan,
welfare benefit plan or other tax-qualified or non-qualified
benefit plans, pursuant and subject to the terms and conditions of
the applicable plan.
Section 5. Equity Awards .
(a) Executive’s
options, other than options that may by their terms vest upon or be
subject to the attainment of any individual or company-wide
performance criteria (e.g., and without limitation, Consolidated
Incentive Program options), outstanding under the First Industrial
Realty Trust, Inc. 1994 Stock Incentive Plan, the First Industrial
Realty Trust, Inc. 1997 Stock Incentive Plan, the First Industrial
Realty Trust, Inc. 2001 Stock Incentive Plan and any similar plan
subsequently adopted by the Company (collectively referred to
herein as the " SIP Options "), and awards outstanding under
the First Industrial Realty Trust, Inc. Deferred Income Plan ("
DIP Awards "), shall be fully vested effective as of the
Agreement Date.
(b) All
unexpired transfer and encumbrance restrictions otherwise
applicable to any restricted stock owned by the Executive, shall be
released and eliminated effective as of the Agreement Date.
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(c) Executive
shall be permitted to exercise any SIP Options until the earlier of
i) eighteen (18) months following the Agreement Date or ii)
the original expiration pursuant to the award agreement under which
such SIP Options were originally granted.
Section 6. Change in
Control . In the event the termination of Executive’s
employment is determined to be a Change in Control Termination, as
defined in Section 3(g)(ii) of the Employment Agreement, and
it is determined, in the opinion of the Employer’s
independent accountants, in consultation, if necessary, with the
Employer’s independent legal counsel, that the Severance
Benefits, either separately or in conjunction with any other
payments, benefits and entitlements received by the Executive in
respect of the Change in Control Termination under any other plan
or agreement under which the Executive participates or to which he
is a party, would constitute an "Excess Parachute Payment" within
the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the " Code "), and thereby be subject to
the excise tax imposed by Section 4999 of the Code (the " Excise
Tax "), then in such event the Employer shall pay to the
Executive a "grossing-up" amount equal to the amount of such Excise
Tax, plus all federal and state income or other taxes with respect
to the payment of the amount of such Excise Tax, including all such
taxes with respect to any such grossing-up amount. Such grossing-up
payment shall be made with or as soon as practicable following the
payment under to this Agreement which constitutes an Excess
Parachute Payment, but in no event later than the end of the year
following the year in which Employee remits the related taxes to
the Internal Revenue Service. If, at a later date, the Internal
Revenue Service assesses a deficiency against the Executive for the
Excise Tax which is greater than that which was determined at the
time such amounts were paid, then the Employer shall pay to the
Executive the amount of such unreimbursed Excise Tax plus any
interest, penalties and reasonable professional fees or expenses
incurred by the Executive as a result of such assessment, including
all such taxes with respect to any such additional amount. Such
deficiency payment shall be made as soon as practicable, but no
later than the end of the year following the year in which
Executive remits the payment to the Internal Revenue Service in
satisfaction of the deficiency, or if no payment is remitted, the
end of the year following the year in which the audit is completed
or there is a final and nonappealable settlement or other
resolution. The highest marginal tax rate applicable to individuals
at the time of the payment of such amounts will be used for
purposes of determining the federal and state income and other
taxes with respect thereto. Employer shall withhold from any
amounts paid under this Agreement the amount of any Excise Tax or
other federal, state or local taxes then required to be withheld.
Computations of the amount of any grossing-up supplemental
compensation paid under this subparagraph shall be conclusively
made by the Employer’s independent accountants, in
consultation, if necessary, with the Employer’s independent
legal counsel. If, after the Executive receives any gross-up
payments or other amount pursuant to this Section 6 ,
the Executive receives any refund with respect to the Excise Tax,
the Executive shall promptly pay the Employer the amount of such
refund within ten (10) days of receipt by the Executive.
Section 7.
Confidentiality . Executive acknowledges that, during
the course of his employment, he has produced, received and had
access to, various materials, records, data, trade secrets and
information not generally available to the public, specifically
including any information concerning projects in the Pipeline, as
defined below (collectively, " Confidential Information ")
regarding the Company and its subsidiaries and affiliates.
Accordingly, for the one (1) year period immediately
subsequent to the Agreement Date, Executive shall hold in
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confidence and shall not directly or indirectly for his own
benefit or for the benefit of any other person or entity, for
economic gain or otherwise, disclose, use, copy or make lists of
any such Confidential Information, except to the extent that
(a) such information is or thereafter becomes lawfully
available from public sources; or (b) such disclosure is
authorized in writing by the Company; or (c) such disclosure
is determined by court order or official governmental ruling to be
required by law or by any competent administrative agency or
judicial authority. All records, files, documents, computer
diskettes, computer programs and other computer-generated material,
as well as all other materials or copies thereof relating to the
Company’s business, which Executive prepared or used, shall
be and remain the sole property of the Company and shall be
promptly returned to the Company prior to the Effective Date.
Section 8. Restrictive
Covenants .
(a) Executive
hereby agrees, except with the express prior written discretionary
consent of the Company, that for a period of one (1) year
after the Agreement Date (the " Restrictive Period "), he
will not directly or indirectly in any manner compete with the
business of the Company, including, but not by way of limitation,
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, or by soliciting or
inducing, or attempting to solicit or induce, any employee or agent
of Company to terminate employment with Company and become employed
by the following:
(i) Any
company listed (during the year immediately preceding the Agreement
Date) as an industrial or mixed office/industrial (but not
pure office) REIT or Real Estate Operating Company as provided in
the NAREIT Chart Book, dated January 2008 (a " Peer Group
Member "); or
(ii) any
person, firm, partnership, corporation, trust or other entity
(including, but not limited to, Peer Group Members) which, as a
material component of its business (other than for its own use as
an owner or user), invests in industrial warehouse facilities and
properties similar to the Company’s investments and holdings:
(1) in any geographic market or territory in which the Company
owns properties or has an office either as of the Agreement Date;
or (2) in any market in which an acquisition or other
investment by the Company or any affiliate of the Company is
pending as of the date of termination, as conclusively evidenced by
the existence of a Request for Proposal or an executed Agreement of
Purchase and Sale, Contribution (or Merger) Agreement or Letter of
Intent, Confidentiality Agreement, Due Diligence Agreement, Pursuit
Cost Agreement, Partnership or Joint Venture Agreement, or by a
Post Acceptance Conference Call (PACC) memorandum or
Investment Committee (IC) approval in existence as of the
Agreement Date.
(b) 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,
in connection with or concerning any investment opportunity of the
Company that is in the " Pipeline " (as defined below) as of
the Agreement Date. Within ten (10) business days after the
Agreement Date, the CEO shall deliver to the Executive a written
statement of the investment opportunities in the Pipeline as of the
Agreement Date (the " Pipeline Statement ") (as reflected on
Exhibit A to this Agreement), and the Executive
shall then review
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the Pipeline Statement for accuracy and completeness, to the
best of his knowledge, and advise the CEO of any corrections
required to the Pipeline Statement. The Executive’s receipt
of any Severance Amount under Section 2(a) and
Section 2(b) shall be conditioned on his either
acknowledging, in writing, the accuracy and completeness of the
Pipeline Statement, or advising the CEO, in writing, of any
corrections or revisions required to the Pipeline Statement in
order to make it accurate and complete, to the best of the
Executive’s knowledge. The restrictions concerning any one
individual investment opportunity in the Pipeline shall continue
until the first to occur of (i) expiration of the Restrictive
Period; or (ii) 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. An investment
opportunity shall be considered in the "Pipeline" if, as of the
Agreement Date, 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
PACC, IC, staff level(s) or otherwise, and relates to any of the
following potential forms of transaction: (A) an acquisition
for cash; (B) an UPREIT transaction; (C) a transaction
under the "First Exchange" program; (D) a development project
or venture; (E) a joint venture partnership or other
cooperative relationship, whether through a DOWNREIT relationship
or otherwise; (F) an "Opportunity Fund" or other private
investment in or co-investment with the Company; (G) any debt
placement opportunity by or in Company; (H) any service or
other fee-generating opportunity by the Company; or (I) 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.
(c) The
restrictions contained in Section 8(a) and
Section 8(b) above are collectively referred to as the
" Restrictive Covenants ." If Executive violates the
Restrictive Covenants and the Company brings legal action for
injunctive or other relief, the Company shall not, as a result of
the time involved in obtaining such relief, be deprived of the
ben
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