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Exhibit 10.13
2/28/2002
CHANGE IN CONTROL/SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL/SEVERANCE AGREEMENT ("Agreement") is entered
into as of November ____, 2001 by and between Equity Residential Properties
Trust, a Maryland real estate investment trust (the "Company"), and
___________________________ (the "Executive").
WITNESSETH
WHEREAS, the Board of Trustees of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereinafter defined) and a
change in the Chief Executive Officer of the Company exists or may exist in the
future and that the threat or the occurrence of such an event can result in
significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its shareholders to retain the services of the
Executive in the event of a threat or occurrence of either a Change in Control
or a change in the Chief Executive Officer of the Company and to ensure his
continued dedication and efforts in such event without undue concern for his
personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company, particularly in the event of a threat or the occurrence of either a
Change in Control or a change in the Chief Executive Officer of the Company, the
Company desires to enter into this Agreement with the Executive to provide the
Executive with certain benefits in the event his employment is terminated as a
result of, or in connection with such an event and to provide the Executive with
certain other benefits whether or not the Executive's employment is terminated.
AGREEMENT
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein and other good and valuation consideration, the receipt
and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. TERM OF AGREEMENT. This Agreement shall commence as of the
date hereof and shall continue in effect until the date the Executive's
employment is terminated; provided, however, that if the Executive's employment
is terminated following, or in anticipation of, either a Change in Control or
the hiring of a new Chief Executive Officer of the Company, the term shall
continue in effect until all payments and benefits have been made or provided to
the Executive hereunder.
2. DEFINITIONS
2.1 ACCRUED COMPENSATION. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all amounts
earned or accrued through the "Termination Date" (as hereinafter defined) but
not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the Executive on
behalf of the Company during the period ending on the Termination Date, (iii)
vacation and sick leave pay (to the extent provided by Company policy or
applicable law), (iv) incentive compensation (other than the "Pro Rata Bonus"
(as hereinafter defined)); and (v)
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100% of any target bonus with respect to the Company's fiscal year ended prior
to the Termination Date.
2.2 BASE AMOUNT. For purposes of this Agreement, "Base Amount"
shall mean the greater of (a) the Executive's annual base salary, at the rate in
effect immediately prior to the Change in Control or the hiring of a new Chief
Executive Officer; and (b) the Executive's annual base salary, at the rate in
effect on the Termination Date.
2.3 BONUS AMOUNT. For purposes of this Agreement, "Bonus Amount"
shall mean the annual average of the cash and fair market value (when paid) of
stock or other property paid to the Executive (including amounts that would have
been paid if they had not been deferred) under the Company's annual incentive
bonus plan for the three years immediately preceding the year in which the
Executive's employment terminates, or for such shorter period that the Executive
has been employed by the Company. If the Executive's employment is terminated in
the Executive's first year of employment, "Bonus Amount" shall mean 100% of the
target bonus that the Executive would have been eligible to receive for such
year.
2.4 CAUSE. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive has been convicted of a felony
involving fraud or dishonesty or the termination is evidenced by a resolution
adopted in good faith by at least two-thirds of the Board that the Executive:
(i) intentionally and continually failed substantially to perform his reasonably
assigned duties with the Company (other than a failure resulting from the
Executive's incapacity due to physical or mental illness or from the Executive's
assignment of duties that would constitute "Good Reason" as hereinafter defined)
which failure continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance has been delivered to the
Executive specifying the manner in which the Executive has failed substantially
to perform or (ii) intentionally engaged in conduct which is demonstrably and
materially injurious to the Company; PROVIDED, HOWEVER, that no termination of
the Executive's employment shall be for Cause as set forth in clause (ii) above
until (x) there shall have been delivered to the Executive a copy of a written
notice setting forth that the Executive was guilty of the conduct set forth in
clause (ii) and specifying the particulars thereof in detail and (y) the
Executive shall have been provided an opportunity to be heard in person by the
Board (with the assistance of the Executive's counsel if the Executive so
desires). Neither an act nor a failure to act, on the Executive's part shall be
considered "intentional" unless the Executive has acted or failed to act with a
lack of good faith and with a lack of reasonable belief that the Executive's
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the contrary, no failure
to perform by the Executive after a Notice of Termination (as defined in Section
2.9) is given by the Executive shall constitute Cause for purposes of this
Agreement.
2.5 CHANGE IN CONTROL. For purposes of this Agreement, a "Change
in Control" shall mean any of the following events:
(a) An acquisition (other than directly from the Company)
of any voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 Act")), immediately
after which such Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of 30% or more of the combined voting
power of the Company's then outstanding Voting Securities; PROVIDED, HOWEVER,
that in determining whether a Change in Control has occurred, Voting Securities
which are acquired in
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a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its equity securities or
equity interest is owned directly or indirectly by the Company (a "Subsidiary"),
(ii) the Company or any Subsidiary or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined).
(b) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless:
(A) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation or
reorganization, at least seventy percent (70%) of the
combined voting power of the outstanding Voting
Securities of the corporation or other entity
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership
of the Voting Securities immediately before such
merger, consolidation or reorganization; and
(B) the individuals who were members of
the Incumbent Board immediately prior to the
execution of the agreement providing for such merger,
consolidation or reorganization constitute at least a
majority of the members of the board of directors or
similar governing body of the Surviving Corporation
or a corporation or other entity beneficially owning,
directly or indirectly, a majority of the Voting
Securities of the Surviving Corporation.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of the assets of the
Company to any Person (other than to an entity of which the
Company directly or indirectly owns at least 70% of the voting
shares).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
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(c) The rejection by the voting Beneficial Owners of the
outstanding Shares of the entire slate of trustees that the Board proposes at a
single election of trustees; or
(d) The rejection by the voting Beneficial Owners of the
outstanding Shares of one-half or more of the trustees that the Board proposes
over any two or more consecutive elections of trustees.
(e) Notwithstanding anything contained in this Agreement
to the contrary, if the Executive's employment is terminated prior to a Change
in Control and the Executive reasonably demonstrates that such termination: (i)
was at the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change in Control and who effectuates a
Change in Control (a "Third Party") or (ii) otherwise occurred in connection
with, or in anticipation of, a Change in Control which actually occurs, then for
all purposes of this Agreement, the date of a Change in Control with respect to
the Executive shall mean the date immediately prior to the date of such
termination of the Executive's employment.
2.6 COMPANY. For purposes of this Agreement, the "Company" shall
include the Company's "Successors and Assigns" (as hereinafter defined).
2.7 DISABILITY. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity that entitles the Executive to benefits
under the Company sponsored long-term disability plan in which he or she
participates.
2.8 GOOD REASON.
(a) For purposes of this Agreement, "Good Reason" shall mean the
occurrence after either a Change in Control or the hiring of a new Chief
Executive Officer of any of the events or conditions described in subsections
(i) through (viii) hereof:
(i) a change in the Executive's status, position
or responsibilities (including reporting responsibilities)
which, in the Executive's reasonable judgment, represents a
substantial adverse change from his status, position or
responsibilities as in effect at any time within 180 days
preceding the date of either a Change in Control or the hiring
of a new Chief Executive Officer, or at any time thereafter;
the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable
judgment, are inconsistent with his status, title, position or
responsibilities as in effect at any time within 180 days
preceding either the date of a Change of Control or the hiring
of a new Chief Executive Officer, or at any time thereafter;
or any removal of the Executive from or failure to reappoint
or reelect him to any of such offices or positions held prior
to either a Change of Control or the hiring of a new Chief
Executive Officer, except in connection with the termination
of his employment for Disability, Cause, as a result of his
death or by the Executive other than for Good Reason;
(ii) a reduction in the Executive's base salary
or any failure to pay the Executive any compensation or
benefits to which he is entitled within five days of written
notice thereof;
(iii) the Company's requiring the Executive to be
based at any place outside a 30-mile radius from the
Executive's principal location of business prior
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to either a Change in Control or the hiring of a new Chief
Executive Officer, except for reasonably required travel on
the Company's business which is not materially greater than
such travel requirements prior to such event;
(iv) the failure by the Company to provide the
Executive with compensation and benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward
opportunities which opportunities will be evaluated in light
of the performance requirements therefor) to those provided
for under each other employee compensation and benefit plan,
program and practice in which the Executive was participating
at any time within 180 days preceding the date of either a
Change in Control or the hiring of a new Chief Executive
Officer, or at any time thereafter;
(v) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the
Company, which petition is not dismissed within sixty (60)
days;
(vi) any material breach by the Company of any
provision of this Agreement;
(vii) any purported termination of the Executive's
employment for Cause by the Company which does not comply with
the terms of Section 2.4; or
(viii) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any Successors
and Assigns to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof.
(b) Any event or condition described in Section 2.8(a)(i) through
(viii) which occurs prior to either a Change in Control or the hiring of a new
Chief Executive Officer, but which the Executive reasonably demonstrates (i) was
at the request of a Third Party or (ii) otherwise arose in connection with, or
in anticipation of, a Change in Control or the hiring of a new Chief Executive
Officer, which actually occurs, shall constitute Good Reason for purposes of
this Agreement notwithstanding that it occurred prior to the Change in Control
or the hiring of a new Chief Executive Officer.
(c) The Executive's right to terminate his employment pursuant to
this Section 2.8 shall not be affected by his incapacity due to a Disability.
2.9. NOTICE OF TERMINATION. For purposes of this Agreement,
following either a Change in Control or the hiring of a new Chief Executive
Officer, "Notice of Termination" shall mean a written notice of termination from
the Company of the Executive's employment which indicates a specific termination
provision in this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
2.10. PRO RATA BONUS. For purposes of this Agreement, "Pro Rata
Bonus" shall mean an amount equal to 100% of the target bonus that the Executive
would have been eligible to receive for the Company's fiscal year in which the
Executive's employment terminates, multiplied by a fraction, the numerator of
which is the number of days in such fiscal year through the Termination Date and
the denominator of which is 365.
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2.11. SUCCESSORS AND ASSIGNS. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity acquiring all
or substantially all the Voting Securities, assets or business of the Company
whether by operation of law or otherwise, and any affiliate of such Successors
and Assigns.
2.12. TERMINATION DATE. For purposes of this Agreement, "Termination
Date" shall mean the first to occur of: (a) in the case of the Executive's
death, his date of death, (b) in the case of Good Reason, the last day of his
employment and (c) in all other cases, the date specified in the Notice of
Termination or if no Notice of Termination is sent, the last day of his
employment; PROVIDED, HOWEVER, that if the Executive's employment is terminated
by the Company due to Disability, the date specified in the Notice of
Termination shall be the 30th day after receipt of the Notice of Termination by
the Executive, provided that the Executive shall not have returned to the
full-time performance of his duties within 30 days after such receipt.
3. TERMINATION OF EMPLOYMENT. If the Executive's employment with
the Company shall be terminated within thirty-six (36) months following either a
Change-In-Control or the hiring of a new Chief Executive Officer, the Executive
shall be entitled to the following compensation and benefits:
(a) If the Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, (ii) by reason of the
Executive's death or (iii) by the Executive other than for Good Reason, the
Company shall pay to the Executive the Accrued Compensation and, if such
termination is other than by the Company for Cause, the Pro Rata Bonus;
PROVIDED, HOWEVER, if an employment agreement is in existence between the
Company and/or any of its affiliates and the Executive on the Termination Date,
the Company and/or its affiliates, as the case may be, shall also pay to the
Executive any amounts owed to the Executive pursuant to such employment
agreement.
(b) If the Executive's employment with the Company shall
be terminated for any reason other than as specified in Section 3(a), the
Executive shall be entitled to the following:
(i) the Company shall pay the Executive the
Accrued Compensation and a Pro-Rata Bonus;
(ii) the Company shall pay the Executive as
severance pay and in lieu of any further compensation for
periods subsequent to the Termination Date, in a single
payment an amount in cash equal to __________ times the sum of
(A) the Base Amount and (B) the Bonus Amount; PROVIDED,
HOWEVER, if an employment agreement is in existence between
the Company and/or any of its affiliates and the Executive on
the Termination Date, any amount due the Executive under this
Section 3(b)(ii) shall be reduced by the amount of Base Amount
and Bonus Amount paid as severance pay to Executive pursuant
to such employment agreement in lieu of compensation for
periods subsequent to the Termination Date.
(iii) for __ months following the Termination
Date, (the "Continuation Period"), the Company shall at its
expense continue on behalf of the Executive and his dependents
and beneficiaries the same
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medical, dental, life, disability and hospitalization benefits
provided (A) to the Executive at any time during the 90 day
period prior to either the Change in Control or the hiring of
a new Chief Executive Officer or at any time thereafter (and
if different benefits were paid during such period, such of
those benefits as are elected by the Executive) or (B) to
other similarly situated executives who continue in the employ
of the Company during the Continuation Period. The coverage
and benefits (including deductibles and costs) provided in
this Section 3(b)(iii) during the Continuation Period shall be
no less favorable to the Executive and his dependents and
beneficiaries than the most favorable of such coverages and
benefits during any of the periods referred to in clauses (A)
and (B) above. The Company's obligation hereunder with respect
to the foregoing benefits shall be limited to the extent that
the Executive obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case the Company
may reduce the coverage of any benefits it is required to
provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefits plans is no
less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection
(iii) shall not be interpreted so as to limit any benefits to
which the Executive, his dependents or beneficiaries may be
otherwise entitled under any of the Company's employee benefit
plans, programs or practices following the Executive's
termination of employment, including without limitation,
retiree medical and life insurance benefits;
(iv) all theretofore unvested stock options,
restricted options, restricted stock, performance shares,
phantom share awards, share appreciation rights, dividend
equivalents and any other awards issued to the Executive
pursuant to the Company's Share Option and Share Award Plan,
as amended or replaced time to time, and all unvested benefits
under any split dollar life insurance policies insuring the
Executive's life, shall immediately vest at the maximum
possible amount; and
(v) a payment from the Company equal to the
unvested amount contained in the Executive's accounts in the
Company's 401(k) plan (or any other qualified plan of the
Company or an affiliate) which he will forfeit as a result of
such termination.
(c) The amounts provided for in Sections 3(a) and 3(b)(i) and (ii)
shall be paid in a single lump sum cash payment in immediately available funds
within five (5) days following the expiration of any required waiting period
under the release agreement referenced in Section 12 hereof (or earlier, if
required by applicable law).
(d) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Section 3(b)(iii).
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(e) The Executive's entitlement to any other compensation or
benefits or any indemnification shall be determined in accordance with the
Company's employee benefit plans and other applicable programs, policies and
practices or any indemnification agreement in effect.
(f) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior to the hiring of a
new Chief Executive Officer and the Executive reasonably demonstrates that such
termination occurred in connection with, or in anticipation of the hiring of a
new Chief Executive Officer which actually occurs, then for all purposes of this
Agreement, the date of the hiring of a new Chief Executive Officer with respect
to the Executive shall mean the date immediately prior to the date of such
termination of the Executive's employment.
4. NOTICE OF TERMINATION. Following either a Change in Control or
the hiring of a new Chief Executive Officer, any purported termination of the
Executive's employment by the Company shall be communicated by Notice of
Termination to the Executive. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of Termination.
5. EXCISE TAX GROSS-UP.
(a) Notwithstanding anything contained in this Agreement to the
contrary, in the event it is determined (pursuant to (b) below) or finally
determined (as defined in (c)(iii) below) that any payment, distribution,
transfer, benefit or other event with respect to the Company or its
predecessors, successors, direct or indirect subsidiaries or affiliates (or any
predecessor, successor or affiliate of any of them, and including any benefit
plan of any of them), to or for the benefit of Executive or Executive's
dependents, heirs or beneficiaries (whether such payment, distribution,
transfer, benefit or other event occurs pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 5) (each a "Payment" and collectively the "Payments") is or
was subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, and any successor provision or any comparable
provision of state or local income tax law (collectively, "Section 4999"), or
any interest, penalty or addition to tax is or was incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest,
penalty or addition to tax, hereinafter collectively referred to as the "Excise
Tax"), then, within 10 days after such determination or final determination, as
the case may be, the Company shall pay to Executive an additional cash payment
(hereinafter referred to as the "Gross-Up Payment") in an amount such that after
payment by Executive of all taxes, interest, penalties and additions to tax
imposed with respect to the Gross-Up Payment (including, without limitation, any
income and excise taxes imposed upon the Gross-Up Payment), Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon such Payment
or Payments. This provision is intended to put Executive in the same position as
Executive would have been had no Excise Tax been imposed upon or incurred as a
result of any Payment.
(b) Except as provided in subsection (c) below, the determination
that a Payment is subject to an Excise Tax shall be made in writing by a
certified public accounting firm selected by Executive ("Executive's
Accountant"). Such determination shall include the amount of the Gross-Up
Payment and detailed computations thereof, including any assumptions used in
such computations (the written determination of the Executive's Accountant,
hereinafter, the "Executive's Determination"). The Executive's Determination
shall be reviewed on behalf of the
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Company by a certified public accounting firm selected by the Company (the
"Company's Accountant"). The Company shall notify Executive within 10 business
days after receipt of the Executive's Determination of any disagreement or
dispute therewith, and failure to so notify within that period shall be
considered an agreement by the Company with the Executive's Determination,
obligating the Company to make payment as provided in subsection (a) above
within 10 days from the expiration of such 10 business-day period. In the event
of an objection by the Company to the Executive's Determination, any amount not
in dispute shall be paid within 10 days following the 10 business-day period
referred to herein, and with respect to the amount in dispute the Executive's
Accountant and the Company's Accountant shall jointly select a third nationally
recognized certified public accounting firm to resolve the dispute and the
decision of such third firm shall be final, binding and conclusive upon the
Executive and the Company. In such a case, the third accounting firm's findings
shall be deemed the binding determination with respect to the amount in dispute,
obligating the Company to make any payment as a result thereof within 10 days
following the receipt of such third accounting firm's determination. All fees
and expenses of each of the accounting firms referred to in this Section 5 shall
be borne solely by the Company.
(c) (i) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service (or any successor thereof) or
any state or local taxing authority (individually or
collectively, the "Taxing Authority") that, if successful,
would require the payment by the Company of a Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than 30 days after Executive receives
written notice of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is
requested to be paid; provided, however, that failure by
Executive to give such notice within such 30-day period shall
not result in a waiver or forfeiture of any of Executive's
rights under this Section 5 except to the extent of actual
damages suffered by the Company as a result of such failure.
Executive shall not pay such claim prior to the expiration of
the 15-day period following the date on which Executive gives
such notice to the Company (or such shorter period ending on
the date that any payment of taxes, interest, penalties or
additions to tax with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration
of such 15-day period that its desires to contest such claim
(and demonstrates to the reasonable satisfaction of Executive
its ability to make the payments to Executive which may
ultimately be required under this section before assuming
responsibility for the claim), Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim;
(B) take such action in connection with
contesting such claim as the Company shall reasonably request
in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by
an attorney selected by the Company that is reasonably
acceptable to Executive;
(C) cooperate with the Company in good faith in
order effectively to contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claim; provided, however, that
the Company shall bear and pay directly all
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attorneys fees, costs and expenses (including additional
interest, penalties and additions to tax) incurred in
connection with such contest and shall indemnify and hold
Executive harmless, on an after-tax basis, for all taxes
(including, without limitation, income and excise taxes),
interest, penalties and additions to tax imposed in relation
to such claim and in relation to the payment of such costs and
expenses or indemnification. Without limitation on the
foregoing provisions of this Section 5, and to the extent its
actions do not unreasonably interfere with or prejudice
Executive's disputes with the Taxing Authority as to other
issues, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct Executive to pay the tax, interest or
penalties claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance an
amount equal to such payment to Executive, on an interest-free
basis, and shall indemnify and hold Executive harmless, on an
after-tax basis, from all taxes (including, without
limitation, income and excise taxes), interest, penalties and
additions to tax imposed with respect to such advance or with
respect to any imputed income with respect to such advance;
and, further, provided, that any extension of the statute of
limitations relating to payment of taxes, interest, penalties
or additions to tax for the taxable year of Executive with
respect to which such contested amount is claimed to be due is
limited solely to such contested amount; and, provided,
further, that any settlement of any claim shall be reasonably
acceptable to Executive and the Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and Executive
shall be entitled to settle or contest, as the case may be,
any other issue.
(ii) If, after receipt by Executive of an amount advanced
by the Company pursuant to Section 5(c)(i), Executive receives
any refund with respect to such claim, Executive shall
(subject to the Company's complying with the requirements of
Section 5) promptly pay to the Company an amount equal to such
refund (together with any interest paid or credited thereon
after taxes applicable thereto), net of any taxes (including
without limitation any income or excise taxes), interest,
penalties or additions to tax and any other costs incurred by
Executive in connection with such advance, after giving effect
to such repayment. If, after the receipt by Executive of an
amount advanced by the Company pursuant to Section 5(c)(i), it
is finally determined that Executive is not entitled to any
refund with respect to such claim, then such advance shall be
forgiven and shall not be required to be repaid and the amount
of such advance shall be treated as a Gross-Up Payment and
shall offset, to the extent thereof, the amount of any
Gross-Up Payment otherwise required to be paid.
(iii) For purposes of this Section 5, whether the Excise
Tax is applicable to a Payment shall be deemed to be "finally
determined" upon the earliest of: (A) the expiration of the
15-day period referred to in paragraph (c)(i) above if the
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Company has not notified Executive that it intends to contest
the underlying claim, (B) the expiration of any period
following which no right of appeal exists, (C) the date upon
which a closing agreement or similar agreement with respect to
the claim is executed by Executive and the Taxing Authority
(which agreement may be executed only in compliance with this
Section 5), (D) the receipt by Executive of notice from the
Company that it no longer seeks to pursue a contest (which
notice shall be deemed received if the Company does not,
within 15 days following receipt of a written inquiry from
Executive, affirmatively indicate in writing to Executive that
the Company intends to continue to pursue such contest).
(d) As a result of uncertainty in the application of Section 4999
that may exist at the time of any determination that a
Gross-Up Payment is due, it may be possible that in making the
calculations required to be made hereunder, the parties or
their accountants shall determine that a Gross-Up Payment need
not be made (or shall make no determination with respect to a
Gross-Up Payment) that properly should be made
("Underpayment"), or that a Gross-Up Payment not properly
needed to be made should be made ("Overpayment"). The
determination of any Underpayment shall be made using the
procedures set forth in paragraph (b) above and shall be paid
to Executive as an additional Gross-Up Payment. The Company
shall be entitled to use procedures similar to those available
to Executive in paragraph (b) to determine the amount of any
Overpayment (provided that the Company shall bear all costs of
the accountants as provided in paragraph (b)). In the event of
a determination that an Overpayment was made, any such
Overpayment shall be treated for all purposes as a loan to
Executive with interest at the applicable Federal rate
provided for in Section 1274(d) of the Code; provided,
however, that the amount to be repaid by Executive to the
Company shall be subject to reduction to the extent necessary
to put Executive in the same after-tax position as if such
Overpayment were never made.
6. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and shall inure to the benefit of the Company, its Successors and Assigns,
and the Company shall require any Successors and Assigns to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
7. FEES AND EXPENSES. The Company shall pay all legal fees and
related expenses (including the costs of experts, evidence and counsel) incurred
by the Executive as a result of the Executive obtaining or enforcing any right
or benefit provided by this Agreement. Furthermore, any amounts due Executive by
the Company that are not paid when due under this Agreement shall bear interest
at the Prime Rate (as declared by Bank of America, N.A. from time to time) plus
5% from the time when the payment is due until the date the payment is made.
8. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including the Notice of
Termination) shall be in
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writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, return receipt requested, postage prepaid, by overnight
courier or by facsimile, addressed to the respective addresses and facsimile
numbers last given by each party to the other, provided that all notices to the
Company shall be directed to the attention of the Chairman of the Board with a
copy to the Secretary of the Company. All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the third
business day after the mailing thereof, except that notice of change of address
shall be effective only upon receipt.
9. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company
(except for any severance or termination policies, plans, programs or practices)
and for which the Executive may qualify, nor shall anything herein limit or
reduce such rights as the Executive may have under any other agreements with the
Company (except for any severance or termination agreement). Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company shall be payable in accordance with such plan
or program, except as explicitly modified by this Agreement.
10. NO GUARANTEED EMPLOYMENT. The Executive and the Company
acknowledge that, except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment of the Executive
by the Company is "at will" and may be terminated by either the Executive or the
Company at any time, subject, however to the rights of the Executive provided
herein in the event of any such termination.
11. SETTLEMENT OF CLAIMS. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
12. FULL SATISFACTION; WAIVER AND RELEASE. As a condition to
receiving the payments and benefits hereunder, the Executive shall execute a
document in customary form, releasing and waiving any and all claims, causes of
actions and the like against the Company and its successors, shareholders,
officers, trustees, agents and employees, regarding all matters relating to the
Executive's service as an employee of the Company or any affiliates and the
termination of such relationship. Such claims INCLUDE, WITHOUT LIMITATION, any
claims arising under Age Discrimination in Employment Act of 1967, as amended
(the "ADEA"); Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991, as amended; the Equal Pay Act of 1962; the American
Disabilities Act of 1990; the Family Medical Leave Act, as amended; the Employee
Retirement Income Security Act of 1976, as amended; or any other federal, state
or local statute or ordinance, BUT EXCLUDE any claims that arise out of an
asserted breach of the terms of this Agreement or current or future claims
related to the matters described in Section 9.
13. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provisions of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreement or
representations,
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oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in Cook County in the State of Illinois.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
EQUITY RESIDENTIAL PROPERTIES TRUST
By:
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Douglas Crocker II
President and CEO
By:
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Executive
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