Employment Agreement



 
EXHIBIT 10.13

 
EMPLOYMENT AGREEMENT

 
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is made and entered into as of June 23, 2000 (the “Effective Date”), by and between BRE PROPERTIES, INC., a Delaware corporation (the “Company”), and EDWARD F. LANGE, JR. (the
“Executive”). 
 
Background

 
WHEREAS, the Company desires to employ
Executive, and Executive desires to be employed by the Company, on the terms and subject to the conditions of this Agreement. 
 
NOW, THEREFORE, in consideration of the covenants, duties, terms, and conditions set forth in this Agreement, the parties agree as
follows: 
 
1.    Term.    The term of this Agreement is from June 23, 2000 to June 23, 2003, unless earlier terminated pursuant to Section 7 (the “Term”). Executive shall commence
the rendering of services under this Agreement no later than July 24, 2000. 
 
2.    Duties.    Executive shall be employed by the Company as its Executive Vice-President and Chief Financial Officer. Executive shall be under the
direction and supervision of the Company’s Chief Executive Officer (“CEO”) and its Board of Directors (the “Board”). Executive shall devote his full business time and best efforts to the Company, with his powers and
duties to be determined by the CEO. Executive shall not, except for incidental management of his personal financial affairs, engage in any other business, nor shall he serve in any position with any other corporation or entity, without the prior
written consent of the CEO. 
 
3.    Compensation.    During the Term, Executive shall be entitled to receive compensation in accordance with this Section 3. 
 
3.1    Base
Salary.    Executive shall receive an annual base salary (“Base Salary”) of $250,000 commencing on his first day of work. The Board, in its discretion, may review the Base Salary annually and increase the
Base Salary based on relevant circumstances. 
 

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The Base Salary shall be
payable by the Company to the Executive in equal installments on the dates payments of salary are regularly made by the Company to its executive employees. 
 
3.2    Annual Performance Bonus.    Executive shall be eligible to receive
an annual incentive bonus (the “Annual Bonus”) targeted at 40% of Base Salary for each fiscal year of the Company during the Term (except that the initial Annual Bonus shall be computed on a pro rata basis for fiscal year 2000). The
amount of the Annual Bonus shall be based on the achievement of management by objective criteria established by the Board (the “MBO Criteria”). It is anticipated that, for any given year, the amount of the Annual Bonus could range
from 0% of Base Salary (in the event of a failure to achieve the Annual Criteria), to 40% of Base Salary (in the event of achievement of the Annual Criteria), to between 40% and 80% of Base Salary (in the event the Annual Criteria are exceeded).
Except as otherwise specified in this Agreement, Executive shall earn the Annual Bonus only at the end of each of the Company’s fiscal years during the Term. The Annual Bonus, if earned, shall be paid within 90 days after the end of each fiscal
year. 
 
3.3    Initial Long-Term Incentive Awards. 
 
(a)    On the Effective Date of this Agreement and subject to Executive commencing work, pursuant to
the 1999 BRE Stock Incentive Plan, the Company shall grant Executive an incentive stock option to purchase 50,000 shares of the Company’s Common Stock (“Common Stock”) at an exercise price equal to the Market Value on the date
of this Agreement which shall vest in equal annual 10,000 share installments over five years (the “Options”) and the Options shall be evidenced by a stock option agreement containing the terms and provisions of such Options
(including, without limitation, term and termination provisions) together with such other terms and conditions as the Company may reasonable require to assure compliance with applicable law and stock exchange requirements. 
 
(b)    The Company shall
also make a full recourse, five-year loan to Executive in an amount equal to the aggregate price for 10,000 shares of Common Stock at Market Value on the Effective Date of this Agreement (the “Stock Loan”). The Stock Loan shall be
made pursuant to a loan agreement between Company and Executive in the form of 

 

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Exhibit A to this Agreement (the “StockLoan Agreement”), under which the shares so acquired (and any securities
resulting from ownership of such shares) shall be pledged by Executive to the Company as collateral for amounts payable under the Stock Loan Agreement. 


 
(c)    Within five days of each of the Company’s dividend payment
dates, commencing September 1, 2000, during the term of this Agreement, and provided that Executive has not exercised any of the stock options granted to him pursuant to Section 3.3(a), Executive shall be entitled to receive a bonus equal to the
dividend a shareholder of the Company would receive on 10,000 shares of Common Stock. In the event Executive exercises his option in whole or in part, the number of deemed shares on which the dividend is based would be reduced pro rata based on the
ratio of the number of options exercised as compared to 50,000. This benefit will terminate on the first to occur of the following: (i) the fifth anniversary of the Effective Date; (ii) the termination of Executive’s employment for any reason;
or (iii) the exercise or termination of all of the options granted to Executive pursuant to Section 3.3(a). 
 
3.4    Future Long-Term Incentive Awards.    Beginning with the year
commencing on January 1, 2001, and continuing with each subsequent fiscal year during the Term, Executive shall be eligible to receive additional long-term incentive awards at the discretion of the Board. It is contemplated that such awards will
take into account financial, operating, and other results achieved during the preceding fiscal year as well as future long-term performance goals. Such awards may be in the form of options, restricted shares, SARs, stock sales, stock grants,
forgivable loans, or any other form of long-term compensation, as determined by the Board. However, regardless of form, it is contemplated that the annual awards to Executive will provide Executive with the opportunity to receive, assuming
achievement of all applicable performance goals, the financial equivalent of (i) a forgivable performance-based five-year loan to purchase 6,000 shares of Common Stock (with interest payable quarterly), and (ii) options to purchase 25,000 shares of
Common Stock at Market Value on the date of award. 
 
4.    Benefits.    During the Term, Executive shall be entitled to receive such other benefits and to participate in such benefit plans as are generally provided by the Company to its
executive employees, including, without limitation, parking and profit sharing and insurance plans. Executive shall be entitled to four weeks vacation for each calendar year. 
 

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5.    Expenses.    The Company shall pay or reimburse Executive for all reasonable travel and other expenses incurred by Executive in performing his duties under this Agreement in
accordance with Company policy. In addition, Executive shall be reimbursed by the Company (upon presentation of appropriate documentation) for reasonable out-of-pocket expenses related to relocating to the San Francisco Bay Area for moving expenses
for household goods, travel for Executive and family to the San Francisco Bay Area, trips for locating housing, and either, at Company’s election, a temporary housing allowance not to exceed $3,000 per month for a period of up to six months or
the right to occupy an apartment reasonably selected by the Company on a rent-free basis for six months. In addition, Executive shall be reimbursed for a maximum of $25,000 of brokerage commissions on the sale of his Ohio residence. 
 
6.    Moving
Assistance.    The Company shall provide Executive with a five year, full recourse loan (the “Moving Assistance Loan”) in an original principal amount of $150,000 at an interest rate equal to the mid-term
federal rate as defined in Section 1274 of the Internal Revenue Code. Interest shall accrue and shall be payable solely at the election of Executive. 
 
The Moving Assistance Loan documentation shall contain provisions for acceleration upon termination of employment by the Company with
cause or upon termination by the Executive without good reason as specified below and for forgiveness on a pro-rata basis of the principal amount of the loan and all accrued interest on each anniversary of the Effective Date and full forgiveness in
the event Executive remains continuously employed by the Company for five years, dies, becomes disabled, is terminated without cause or terminates his employment with good reason pursuant to Section 8.2(c). 
 
7.    Termination of Employment.

 
7.1    Termination Due to Death or Disability; Voluntary Termination.    If at any time during the Term, Executive shall die, suffer any Disability (as defined below), or voluntarily
terminate his employment by the Company, then, in any such event, his employment under this Agreement shall automatically terminate on the date of death, upon any Disability, or the date of voluntary termination, as the case may be. As used herein,
the term “Disability” shall mean the 

 

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inability of Executive to perform his duties because of physical or mental illness or incapacity as determined by the Board.



 
7.2    Termination by the Company for Good Cause.    The Company may terminate this Agreement and Executive’s employment at any time for Good Cause. In such event, this Agreement
shall terminate on such date as shall be specified in writing by the Company. As used herein, the term “Good Cause” shall mean (i) any act or omission of gross negligence, willful misconduct, dishonesty, or fraud by Executive in the
performance of his duties hereunder or in material violation of the Company’s employment policies and practices, (ii) the failure or refusal of Executive to perform the duties or to render the services assigned to him from time to time by the
CEO or the Board, (iii) the charging or indictment of Executive in connection with a felony or any misdemeanor involving dishonesty or moral turpitude, or (iv) the material breach by Executive of this Agreement or the breach of Executive’s
fiduciary duty or duty of trust to the Company. 
 
7.3    Termination by the Company Other Than for Good Cause.    The Company may terminate this Agreement and Executive’s employment for any reason other than for Good Cause. In such
event, this Agreement shall terminate on the 30th day following written notice of such termination by the Company. 
 
8.    Compensation upon Termination. 
 
8.1    Termination Other Than in Connection With a Change in
Control. 
 
(a)    In the event of termination of Executive’s employment pursuant to Section 7.1 or 7.2, the Company shall not be obligated, from and after the date of termination, to provide to Executive, and Executive
shall not be entitled to receive from the Company, any compensation (including any payments of Base Salary, Annual Bonus, or other awards) or other benefits; except that if termination pursuant to Section 7.1 is due to death or Disability, Executive
or his estate shall receive, within 90 days after the close of the fiscal year in which the death or Disability occurred, a lump-sum payment equal to the estimated Annual Bonus that the Executive would have earned for the fiscal year in question
(based on actual performance relative to MBO Criteria for the fiscal year and Executive’s contribution up to the date of death or 

 

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Disability), calculated on a pro-rated basis to the date of termination. In the case of any termination of employment pursuant to Sections
7.1 prior to the fifth anniversary of this Agreement, the outstanding principal balance (but not accrued interest which shall be forgiven) of the Moving Assistance Loan shall be due and payable in full 180 days following the termination date;
provided, however, that in the case of termination based upon death or Disability, the outstanding balance on the Moving Assistance Loan shall be forgiven. In the case of any termination of employment pursuant to Sections 7.2 prior to the fifth
anniversary of this Agreement, the outstanding principal balance (but not accrued interest which shall be forgiven) of the Moving Assistance Loan shall be due and payable in full 15 days following the termination date. In the case of any termination
of employment pursuant to Sections 7.1 or 7.2, the outstanding balance under the Stock Loan Agreements set forth in Exhibit A, and any other similar agreements Executive and the Company enter into pursuant to Section 3.3 (collectively the
“Stock Loan Agreements”), and all accrued interest, shall be due and payable in full 15 days following the termination date; provided, however, that in the case of termination based upon death or Disability, the outstanding balance
on each such Loan shall be reduced by such amount by the Pro Rata Calculation (in which case, the Company may delay the due date to complete the Pro Rata Calculation). For the purpose of this Agreement, “Pro Rata Calculation” shall
mean a pro rata application of Sections 6.1, 6.2, and 6.3 of each of the Loan Agreements as described in Exhibit B to this Agreement, taking into consideration the number of full months worked and the Company’s performance data through
the last quarter having ended 45 days or more prior to the termination date, not withstanding the fact that such sections of the Loan Agreements may not provide for such pro rata application. 


 
(b)    In the event of
termination of Executive’s employment pursuant to Section 7.3, provided that Executive provides to the Company a full and complete release of all known and unknown claims against the Company and its representatives, the Company shall provide
Executive with the following compensation within fifteen (15) days after such termination: 
 
(i)    Executive shall be entitled to receive a lump-sum payment from the Company equal to (a) one
hundred and forty percent (140%) of his then Base Salary if 

 

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termination occurs prior to Executive’s first Annual Bonus being determined pursuant to Section 3.2; (b) his then Base Salary plus the
amount of the Annual Performance Bonus awarded in the immediately preceding year if termination occurs subsequent to the determination of the Annual Performance Bonus for his first full year and prior to the determination for the second full year;
or (c) for any subsequent termination, his then Base Salary plus the average of the Annual Performance Bonus awarded in the prior two years; 


 
(ii)    all restrictions (other than applicable federal and state securities laws) on the shares of
any Common Stock awarded to Employee under Section 3.3 would be eliminated and such shares would fully vest in Executive; 
 
(iii)    the amount payable under the Moving Assistance Loan shall be forgiven; and 
 
(iv)    the amount
payable under each Stock Loan Agreement shall be reduced by the Pro Rata Calculation, and the balance of each Stock Loan shall be due and payable within fifteen (15) days after such termination. 
 
8.2    Termination
Following a Change in Control.    The following provisions shall apply in lieu of Section 8.1 if, and only if, the termination of Executive’s employment occurs within 12 months following a Change in Control (as defined
in Section 8.2(d)): 
 
(a)    In the event of termination of Executive’s employment pursuant to Section 7.1 due to death or disability, or pursuant to Section 7.2, the provisions of Section 8.1(a) apply. 
 
(b)    In the event of
termination of Executive’s employment pursuant to Section 7.1 due to voluntary termination by Executive without Good Reason (as defined below), the provisions of Section 8.1(a) shall apply except that the Company shall pay Executive within 15
days after such termination: a lump-sum payment from the Company equal to: (x) one hundred and forty percent (140%) of his then Base Salary if termination occurs prior to Executive’s first Annual Bonus being determined pursuant to Section 3.2;
(y) his then Base Salary plus the amount of the Annual Performance Bonus awarded in the immediately preceding 

 

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year if termination occurs subsequent to the determination of the Annual Performance Bonus for his first full year and prior to the
determination for the second full year; or (z) for any subsequent termination, his then Base Salary plus the average of the Annual Performance Bonus awarded in the prior two years. As used herein, the term “Good Reason” means (i) a
material change in Executive’s duties, responsibilities, or authority, or (ii) the Company’s relocation of the Executive, without the Executive’s consent, to a location outside of the San Francisco metropolitan area.



 
(c)    In the event of termination of Executive’s employment pursuant to Section 7.1 due to voluntary termination by Executive with Good Reason, or pursuant to Section 7.3, provided that Executive provides to
the Company a full and complete release of all known and unknown claims against the Company and its representatives, the Company shall provide Executive with the following compensation within 15 days after such termination: 
 
(i)    Executive shall
be entitled to receive a lump-sum payment from the Company equal to: (x) two hundred and eighty percent (280%) of his then Base Salary if termination occurs prior to Executive’s first Annual Bonus being determined pursuant to Section 3.2; (y)
two times his then Base Salary plus two times the amount of the Annual Performance Bonus awarded in the immediately preceding year if termination occurs subsequent to the determination of the Annual Performance Bonus for his first full year and
prior to the determination for the second full year; or (z) for any subsequent termination, two times his then Base Salary plus the sum of the Annual Performance Bonus awarded in the prior two years; 
 
(ii)    all restrictions
(except applicable federal and state securities law) on any shares of Common Stock awarded to Employee under Section 3 would be eliminated and such shares would fully vest in Executive; 
 
(iii)    any unvested stock options (including the Options) held by
Executive at the date of termination, would vest and become fully exercisable for a period of three months from the date of termination; 
 
(iv)    the amount payable under the Moving Assistance Loan shall be forgiven; and 
 

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(v)    the amount payable under each Stock Loan Agreement shall be reduced by the Pro Rata Calculation, and the balance of each Stock Loan shall be due and payable within fifteen (15) days of termination.

 
(d)    As
used herein, a “Change in Control” shall be deemed to have occurred when any of the following events occur: 
 
(i)    any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”), as in effect on the date hereof, (a “Person”)) acquiring “beneficial ownership” (as defined in Rule 13D-3 under the Exchange Act), of securities of the Company
representing 50% or more of the combined voting power of the Company’s then outstanding securities; or 
 
(ii)    a change in the Board that is the result of a proxy solicitation(s) or other action(s) to
influence voting at a shareholders’ meeting of the Company (other than by voting one’s own stock) by a Person or group of Persons who has Beneficial Ownership of 5% or more of the combined voting power of the securities of the Company and
which causes the Continuing Directors (as defined below) to cease to constitute a majority of the Board; provided, however, that neither of the events described in (i) or (ii) of this Section 8.2(d) shall be deemed to be a Change in Control if the
event(s) or election(s) causing such change shall have been approved specifically for purposes of this Agreement by the affirmative vote of at least a majority of the members of the Continuing Directors. For these purposes, a “Continuing
Director” shall mean a member of the Board (i) who is a member of the Board on the date of this Agreement, or (ii) who subsequently becomes a member of the Board and who either (x) is appointed or recommended for election with the
affirmative vote of a majority of the Directors then in office who are Directors on the date hereof, or (y) is appointed or recommended for election with the affirmative vote of a majority of the Directors then in office who are described in clauses
(i) and (ii) (including clause (ii)(y)), as applicable. 
 
(e)    Notwithstanding anything to the contrary in this Section 8.2, if any of the payments or other compensation to be made to Executive pursuant to this Section 8.2 are determined to be “parachute
payments” as defined in Section 280G of the Internal Revenue Code 

 

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of 1986, as amended (the “Code”), then the amount of such payments or other compensation shall be reduced to the largest
amount which would not constitute “parachute payments” as so defined. 


 
9.    Confidentiality.    It is specifically understood and agreed that some of the
Company’s business activities are secret in nature and constitute trade secrets, or are otherwise confidential and/or proprietary in nature, including but not limited to the Company’s “know-how,” methods of business and
operations, and property and financial analyses and reports (all such information, “Proprietary Information”). All of the Company’s Proprietary Information is and shall be the sole property of the Company for its own exclusive
use and benefit, and Executive agrees that upon termination of his employment for any reason whatsoever, he shall return to the Company all Proprietary Information in his possession or under his control. Executive further agrees that he shall hold
all of the Company’s Proprietary Information in strictest confidence and shall not at any time, either during or after his employment by the Company, use or disclose, or permit the use or disclosure of, the same for his own benefit or for the
benefit of others, unless authorized to do so by the Company’s written consent or by a contract or agreement to which the Company is a party or by which it is bound. The provisions of this Section 9 shall perpetually survive the termination of
the Agreement, and Executive shall likewise be bound by all other agreements between him and the Company relating in any way to the protection of the Company’s Proprietary Information. 
 
10.    Arbitration.    If a dispute arises between Company and Executive concerning this Agreement, or in any way relating to Executive’s employment by the Company and/or the
termination thereof, the disputed matter shall first be submitted to mandatory mediation, such mediation to be conducted in the City of San Francisco pursuant to the then-current rules of the Judicial Arbitration and Mediation Services
(“JAMS”) by a mediator affiliated with JAMS, or by such other mediator as is mutually agreeable to the parties. If the mediation does not successfully resolve such dispute, then the dispute shall be submitted to mandatory, final, and
binding arbitration in the City of San Francisco, California in accordance with the employment arbitration rules of the American Arbitration Association (“AAA Rules”). Any judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The 

 

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arbitrators shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted
to resolve the disputed matter. The arbitrators shall apply the law of the State of California in making any determination hereunder. Notwithstanding anything to the contrary which may now or hereafter be contained in the AAA Rules, the parties
agree any such arbitration shall be conducted before a panel of three arbitrators, who shall be compensated for their services at a rate to be determined by the American Arbitration Association in the event the parties are not able to agree upon
their rate of compensation. Each party shall have the right to appoint one arbitrator (to be appointed within twenty days of the notice of a dispute to be resolved by arbitration hereunder), and the two arbitrators so chosen shall mutually agree
upon the selection of the third, impartial arbitrator. The majority decision of the arbitrators will be final and conclusive upon the parties hereto. The parties hereby acknowledge and agree that final and binding arbitration shall be the sole and
exclusive means of resolving any such dispute, that they waive all rights to a civil court action, and that the dispute shall be fully and finally resolved by the arbitrators and shall not be resolved by a jury or a court. 
 
11.    Taxes;
Withholdings.    All compensation payable by the Company to the Executive under this Agreement which is or may become subject to withholding under the Code or other pertinent provisions of laws or regulation shall be reduced
for all applicable income and/or employment taxes required to be withheld. 
 
12.    Administration by the Board.    The Board, or its Compensation Committee as determined by the Board, shall be (i) solely responsible for the
interpretation and administration of this Agreement, the Moving Assistance Loan and the Stock Loans, and (ii) entitled to modify this Agreement and the (including, without limitation, performance criteria and targets) as necessary or appropriate to
achieve the purposes and intents of the same in light of changing or extenuating circumstances. All such actions, decisions, and modifications regarding this Agreement, the Moving Assistance Loan or the Stock Loans made in good faith by the Board,
or by its Compensation Committee, shall be final and binding on Executive. 
 
13.    Upon Termination of this Agreement.    The Company shall have the right, without any notice to the Executive, to offset any amounts payable to the
Company under any of the 

 

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Stock Loans or Moving Assistance Loan against any amount payable to the Executive pursuant to this Agreement. 
 
14.    Miscellaneous. 
 
14.1    Written notices
required by this Agreement shall be sent to Company or Executive by certified mail, with a return receipt requested, to Company’s registered address and to Executive’s last shown address on Company’s records, respectively. Such notice
shall be deemed to be delivered two days after mailing. 
 

	 If to Company:
	  	 BRE Properties, Inc.
 Forty Four Montgomery Street, Suite 3600
 San Francisco, CA
94104-4809
 Attn:  Frank McDowell

	
	 With Copy to:
	  	 Farella Braun & Martel LLP
 235 Montgomery Street, Suite 3000
 San Francisco, CA 94104
 Attn:  Daniel E. Cohn, Esq.

	
	 If to Executive:
	  	 Edward F. Lange, Jr.
 29672 Durham Drive
 Perrysburg, OH 43551


 
14.2    This Agreement contains the full and complete understanding of the parties and supersede all prior representations, promises, agreements, and warranties, whether oral or written. 
 
14.3    This Agreement
shall be governed by and interpreted according to the laws of the State of California. 
 
14.4    With respect to the Company, this Agreement shall inure to the benefit of and be binding upon
any successors or assigns of Company. With respect to Executive, this Agreement shall not be assignable but shall inure to the benefit of estate of Executive or his legal successor upon death or disability. 
 
14.5    The captions of
the various sections of this Agreement are inserted only for convenience and shall not be considered in construing this Agreement. 
 

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14.6    This Agreement can be modified, amended, or any of its terms waived only by a writing signed by both parties. 
 
14.7    If any provision of this Agreement shall be held invalid, illegal, or unenforceable, the
remaining provisions of the Agreement shall remain in full force and effect, and the invalid, illegal, or unenforceable provision shall be limited or eliminated only to the extent necessary to remove such invalidity, illegality, or unenforceability
in accordance with the applicable law at that time. 
 
14.8    Without limiting the provisions of Section 10, if either party institutes arbitration proceedings pursuant to Section 10 or an action to enforce the terms of this Agreement, the prevailing party
in such proceeding or action shall be entitled to recover reasonable attorneys’ fees, costs, and expenses. 
 
14.9    No remedy made available to Company by any of the provisions of this Agreement is intended to
be exclusive of any other remedy. Each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder as well as those remedies existing at law, in equity, by statute, or otherwise. 
 
14.10    Executive
represents that the execution of this Agreement by Executive will not violate any other agreement to which Executive is a party. 
 

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IN WITNESS
WHEREOF, this Agreement has been executed as of the date specified in the first paragraph. 
 

	 COMPANY:  BRE PROPERTIES, INC.

	
	 By:
	 	 /s/    Frank C. McDowell

	 	 	

	
	 Its:
	 	 President and Chief Executive Officer

	 	 	

	
	 EXECUTIVE:  EDWARD F. LANGE, JR.

	
	 	 	 /s/    Edward F. Lange, Jr.

	



 

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