Exhibit 10.3
CHANGE IN CONTROL AGREEMENT
     THIS CHANGE IN CONTROL AGREEMENT (“Agreement”) is entered into effectiveas of May 1, 2003 by and between **EQUITY OFFICE MANAGEMENT, L.LC.**, a Delawarelimited liability company (“Employer”), **EQUITY OFFICE PROPERTIES TRUST**, aMaryland real estate investment trust (the “Trust”) and **JEFFREY L. JOHNSON**(the“Executive”).
WITNESSETH
     WHEREAS, the Trust is the indirect ultimate controlling parent ofEmployer; and
     WHEREAS, the Board of Trustees of the Trust (the “Board”) recognizes thatthe possibility of a Change in Control (as hereinafter defined) exists or mayexist in the future and that the threat or the occurrence of a Change inControl can result in significant distractions of its key management personnelbecause of the uncertainties inherent in such a situation;
     WHEREAS, the Board has determined that it is essential and in the bestinterest of the Trust and/or its affiliates, (including Employer, as thecontext may require, collectively, the “Company”) and the Trust’s shareholdersto retain the services of the Executive in the event of a threat or occurrenceof a Change in Control and to ensure his continued dedication and efforts insuch event without undue concern for his personal financial and employmentsecurity; and
     WHEREAS, in order to induce the Executive to remain in the employ of theCompany particularly in the event of a threat or the occurrence of a Change inControl, the Employer desires to enter into this Agreement with the Executiveto provide the Executive with certain benefits in the event his employment isterminated as a result of, or in connection with, a Change in Control and toprovide the Executive with certain other benefits whether or not theExecutive’s employment is terminated.
AGREEMENT
     NOW, THEREFORE, in consideration of the respective agreements of theparties contained herein and other good and valuation consideration, thereceipt and sufficiency of which are hereby acknowledged, it is agreed asfollows:
     1. **Term of Agreement**. This Agreement shall commence as of the date hereofand shall continue in effect until the date the Executive’s employment by theCompany is terminated; provided, however, that if the Executive’s employment isterminated following, or in anticipation of, a Change in Control, the termshall continue in effect until all payments and benefits have been made orprovided to the Executive hereunder.
 

 

     2. **Definitions**
          2.1 ***Accrued Compensation***. For purposes of this Agreement, “AccruedCompensation” shall mean an amount which shall include all amounts earned oraccrued through the “Termination Date” (as hereinafter defined) but not paid asof the Termination Date including (i) base salary, (ii) reimbursement forreasonable and necessary expenses incurred by the Executive on behalf of theCompany during the period ending on the Termination Date, (iii) paid time off(to the extent provided by Company policy or applicable law), and (iv) 100% ofany target bonus with respect to the Company’s fiscal year ended prior to theTermination Date to the extent a bonus for such year has not been awarded andpaid prior to the Termination Date.
     2.2 ***Base Amount***. For purposes of this Agreement, “Base Amount” shall meanthe greater of (a) the Executive’s annual base salary, at the rate in effectimmediately prior to the Change in Control and (b) the Executive’s annual basesalary, at the rate in effect on the Termination Date.
     2.3 ***Bonus Amount***. For purposes of this Agreement, “Bonus Amount” shallmean the annual average of the cash and fair market value (when paid or awardedand calculated without regard to any vesting requirement) of stock or otherproperty paid to the Executive (including amounts that would have been paid ifthey had not been deferred) under the Company’s annual incentive bonus plan forthe three years immediately preceding the year in which the Executive’semployment terminates (disregarding for these purposes any year during such 3year period that Executive did not work a full year), or for such shorterperiod that the Executive has been employed by the Company. If the Executive’semployment is terminated in the Executive’s first year of employment, “BonusAmount” shall mean 100% of the target bonus that the Executive would have beeneligible to receive for such year.
     2.4 ***Cause***. For purposes of this Agreement, a termination of employment isfor “Cause” if the Executive has been convicted of a felony involving fraud ordishonesty or the termination is evidenced by a resolution adopted in goodfaith by at least two-thirds of the Board that the Executive: (i) intentionallyand continually failed substantially to perform his reasonably assigned dutieswith the Company (other than a failure resulting from the Executive’sincapacity due to physical or mental illness or from the Executive’s assignmentof duties that would constitute “Good Reason” as hereinafter defined) whichfailure continued for a period of at least thirty (30) days after a writtennotice of demand for substantial performance has been delivered to theExecutive specifying the manner in which the Executive has failed substantiallyto perform or (ii) intentionally engaged in conduct which is demonstrably andmaterially injurious to the Company; provided, however, that no termination ofthe Executive’s employment shall be for Cause as set forth in clause (ii) aboveuntil (x) there shall have been delivered to the Executive a copy of a writtennotice setting forth that the Executive was guilty of the conduct set forth inclause (ii) and specifying the particulars thereof in detail and (y) theExecutive shall have been provided an opportunity to be heard in person by theBoard (with the assistance of the Executive’s counsel if the Executive sodesires). Neither an
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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 ofgood faith and with a lack of reasonable belief that the Executive’s action orfailure to act was in the best interest of the Company. Notwithstandinganything contained in this Agreement to the contrary, no failure to perform bythe Executive after a Notice of Termination is given by the Executive shallconstitute Cause for purposes of this Agreement.
     2.5 ***Change in Control***. For purposes of this Agreement, a “Change inControl” shall mean any of the following events:
          (a) An acquisition (other than directly from the Trust) of any votingsecurities of the Trust (the “Voting Securities”) by any “Person” (as the termperson is used for purposes of Section 13(d) or 14(d) of the SecuritiesExchange Act of 1934, as amended (the “1934 Act”)), immediately after whichsuch Person has “Beneficial Ownership” (within the meaning of Rule 13d-3promulgated under the 1934 Act) of 30% or more of the combined voting power ofthe Trust’s then outstanding Voting Securities; provided, however, that indetermining whether a Change in Control has occurred, Voting Securities whichare acquired in a “Non-Control Acquisition” (as hereinafter defined) shall notconstitute an acquisition which would cause a Change in Control. A“Non-Control Acquisition” shall mean an acquisition by (i) an employee benefitplan (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 itsequity securities or equity interest is owned directly or indirectly by theCompany (a “Subsidiary”), (ii) the Company or any Subsidiary or (iii) anyPerson in connection with a “Non-Control Transaction” (as hereinafter defined).
          (b) Approval by shareholders of the Trust:
     (i) A merger, consolidation or reorganization involving theTrust, if:
     (A) the shareholders of the Trust, immediately beforesuch merger, consolidation or reorganization, fail to own,directly or indirectly, immediately following such merger,consolidation or reorganization, at least seventy percent(70%) of the combined voting power of the outstanding VotingSecurities of the entity resulting from such merger orconsolidation or reorganization (the “Surviving Corporation”)in substantially the same proportion as their ownership ofthe Voting Securities immediately before such merger,consolidation or reorganization; and
     (B) the individuals who were members of the IncumbentBoard immediately prior to the execution of the agreementproviding for such merger, consolidation or reorganization donot constitute at least a majority of the members of theboard of directors of the Surviving Corporation or acorporation beneficiallyowning, directly or indirectly, a majority of the VotingSecurities of the Surviving Corporation.
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(A merger, consolidation or reorganization involving theTrust which fails to satisfy the conditions described inclauses (A) and (B) shall herein be referred to as a“Non-Control Transaction.”);
     (ii) A complete liquidation or dissolution of the Trust; or
     (iii) An agreement for the sale or other disposition of all orsubstantially all of the assets of the Trust to any Person (otherthan to an entity of which the Trust directly or indirectly owns atleast 70% of the voting shares).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occursolely because any Person (the “Subject Person”) acquired Beneficial Ownershipof more than the permitted amount of the outstanding Voting Securities as aresult of the acquisition of Voting Securities by the Trust which, by reducingthe number of Voting Securities outstanding, increases the proportional numberof shares Beneficially Owned by the Subject Person, provided that if a Changein Control would occur (but for the operation of this sentence) as a result ofthe acquisition of Voting Securities by the Trust, and after such shareacquisition by the Trust, the Subject Person becomes the Beneficial Owner ofany additional Voting Securities which increases the percentage of the thenoutstanding Voting Securities Beneficially Owned by the Subject Person, then aChange in Control shall occur.
          (c) The rejection by the voting Beneficial Owners of the outstandingShares of the entire slate of trustees that the Board proposes at a singleelection of trustees.
          (d) The rejection by the voting Beneficial Owners of the outstandingShares of one-half or more of the trustees that the Board proposes over any twoor 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 andthe Executive reasonably demonstrates that such termination: (i) was at therequest of a third party who has indicated an intention or taken stepsreasonably calculated to effect a Change in Control and who effectuates aChange in Control (a “Third Party”) or (ii) otherwise occurred in connectionwith, or in anticipation of, a Change in Control which actually occurs, thenfor all purposes of this Agreement, the date of a Change in Control withrespect to the Executive shall mean the date immediately prior to the date ofsuch termination of the Executive’s employment.
     2.6 ***Company***. For purposes of this Agreement, the “Company” shall includethe Company’s “Successors and Assigns” (as hereinafter defined).
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     2.7 ***Disability***. For purposes of this Agreement, “Disability” shall mean aphysical or mental infirmity that entitles the Executive to benefits under theCompany 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 theoccurrence after a Change in Control of any of the events or conditionsdescribed in subsections (i) through (viii) hereof:
     (i) a change in the Executive’s status, position orresponsibilities (including reporting responsibilities) which, inthe Executive’s reasonable judgment, represents an adverse change(other than an immaterial or de minimus adverse change) from hisstatus, position or responsibilities as in effect at any timewithin 180 days preceding the date of a Change in Control or at anytime thereafter; the Executive no longer reports to the chiefexecutive officer of the Company (if the Executive reported to suchofficer prior to the Change in Control); the assignment to theExecutive of any duties or responsibilities which, in theExecutive’s reasonable judgment, are inconsistent with his status,title, position or responsibilities as in effect at any time within180 days preceding the date of a Change in Control or at any timethereafter; or any removal of the Executive from or failure toreappoint or reelect him to any of such offices or positions heldprior to the Change in Control, except in connection with thetermination of his employment for Disability, Cause, as a result ofhis death or by the Executive other than for Good Reason;
     (ii) a reduction in the Executive’s base salary or any failureto pay the Executive any compensation or benefits to which he isentitled within five days of written notice thereof;
     (iii) the Company’s requiring the Executive to be based at anyplace outside a 25-mile radius from the Executive’s principallocation of business prior to the Change in Control, except forreasonably required travel on the Company’s business which is notmaterially greater than such travel requirements prior to theChange in Control;
     (iv) the failure by the Company to provide the Executive withcompensation and benefits, in the aggregate, at least equal (interms of benefit levels and/or reward opportunities whichopportunities will be evaluated in light of the performancerequirements therefor) to those provided for under each otheremployee compensation and benefit plan, program and practice inwhich the Executive was participating at any time within 180 dayspreceding the date of a Change in Control or at any timethereafter;
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     (v) the insolvency or the filing (by any party, including theCompany) of a petition for bankruptcy of the Company, whichpetition is not dismissed within sixty (60) days;
     (vi) any material breach by the Company of any provision ofthis Agreement;
     (vii) any purported termination of the Executive’s employmentfor Cause by the Company which does not comply with the terms ofSection 2.4; or
     (viii) the failure of the Company to obtain an agreement,satisfactory to the Executive, from any Successors and Assigns toassume and agree to perform this Agreement, as contemplated inSection 6 hereof.
     (b) Any event or condition described in Section 2.8(a)(i) through (viii)which occurs prior to a Change in Control but which the Executive reasonablydemonstrates (i) was at the request of a Third Party or (ii) otherwise arose inconnection with, or in anticipation of, a Change in Control which actuallyoccurs, shall constitute Good Reason for purposes of this Agreementnotwithstanding that it occurred prior to the Change in Control.
     (c) The Executive’s right to terminate his employment pursuant to thisSection 2.8 shall not be affected by his incapacity due to a Disability.
     2.9. ***Notice of Termination***. For purposes of this Agreement, following aChange in Control, “Notice of Termination” shall mean a written notice oftermination from the Company of the Executive’s employment which indicates aspecific termination provision in this Agreement relied upon and which setsforth in reasonable detail the facts and circumstances claimed to provide abasis for termination of the Executive’s employment under the provision soindicated.
     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 wouldhave been eligible to receive for the Company’s fiscal year in which theExecutive’s employment terminates, multiplied by a fraction, the numerator ofwhich is the number of days in such fiscal year through the Termination Dateand the denominator of which is 365.
     2.11. ***Successors and Assigns***. For purposes of this Agreement, “Successorsand Assigns” shall mean a corporation or other entity acquiring all orsubstantially all the Voting Securities, assets or business of the Trustwhether by operation of law or otherwise, and any affiliate of such Successorsand Assigns.
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     2.12. ***Termination Date***. For purposes of this Agreement, “TerminationDate” shall mean (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 allother cases, the date specified in the Notice of Termination or if no Notice ofTermination is sent, the last day of his employment; provided, however, that ifthe Executive’s employment is terminated by the Company due to Disability, thedate specified in the Notice of Termination shall be the 30th day after receiptof the Notice of Termination by the Executive, provided that the Executiveshall not have returned to the full-time performance of his duties within 30days after such receipt.
     3. **Termination of Employment**. If the Executive’s employment with theCompany shall be terminated within twenty-four (24) months following a Changein Control, the Executive shall be entitled to the following compensation andbenefits:
          (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 deathor (iii) by the Executive other than for Good Reason, the Employer shall pay tothe Executive the Accrued Compensation; provided, however, any incentivecompensation shall not be paid in the case of a termination by the Company forCause; and provided, further that, if an employment agreement is in existencebetween the Company and the Executive on the Termination Date, the Employerand/or its affiliates, as the case may be, shall also pay to the Executive anyamounts owed to the Executive pursuant to such employment agreement, but onlyto the extent such amounts are not duplicative of amounts otherwise payablehereunder.
          (b) If the Executive’s employment with the Company shall be terminated forany reason other than as specified in Section 3(a), the Executive shall beentitled to the following:
     (i) the Employer shall pay the Executive all AccruedCompensation and a Pro Rata Bonus;
     (ii) the Employer shall pay the Executive as severance pay andin lieu of any further compensation for periods subsequent to theTermination Date, in a single payment an amount in cash equal totwo and a half (2 1/2) times the sum of (A) the Base Amount and(B) the Bonus Amount; provided, however, if an employment agreementis in existence between the Company and the Executive on theTermination Date, any amount due the Executive under this Section3(b)(ii) shall be reduced by the amount of Base Amount and BonusAmount paid as severance pay to Executive pursuant to suchemployment agreement in lieu of compensation for periods subsequentto the Termination Date.
     (iii) for thirty (30) months following the Termination Date,(the “Continuation Period”), the Employer shall at its expensecontinue on behalf of the Executive and his dependents andbeneficiaries the medical,
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dental, life, disability and hospitalization benefits provided (A)to the Executive at any time during the 90-day period prior to theChange in Control or at any time thereafter (and if differentbenefits were paid during such period, such of those benefits asare elected by the Executive) or (B) to other similarly situatedexecutives who continue in the employ of the Company during theContinuation Period. The coverage and benefits (includingdeductibles and costs) provided in this Section 3(b)(iii) duringthe Continuation Period shall be no less favorable to the Executiveand his dependents and beneficiaries than the most favorable ofsuch coverages and benefits during any of the periods referred toin clauses (A) and (B) above. The Employer’s obligation hereunderwith respect to the foregoing benefits shall be compromised to theextent that the Executive obtains any such benefits pursuant to asubsequent employer’s benefit plans, in which case the Employer mayreduce the coverage of any benefits it is required to provide theExecutive hereunder as long as the aggregate coverages and benefitsof the combined benefits plans is no less favorable to theExecutive than the coverages and benefits required to be providedhereunder. This subsection (iii) shall not be interpreted so as tolimit any benefits to which the Executive, his dependents orbeneficiaries may be otherwise entitled under any of the Company’semployee benefit plans, programs or practices following theExecutive’s termination of employment, including withoutlimitation, retiree medical and life insurance benefits;
     (iv) all theretofore unvested share options, restrictedoptions, restricted share and other awards issued to the Executivepursuant to the Company’s Share Option and Share Award Plan, andall unvested benefits under any split dollar life insurancepolicies insuring the Executive’s life, shall immediately become100% vested; and
     (v) a payment from the Employer equal to the unvested amountcontained in the Executive’s accounts in the Company’s 401(k) plan(or any other qualified plan of the Company or an affiliate) whichhe or she will forfeit as a result of his or her termination.
     (c) The amounts provided for in Sections 3(a) and 3(b)(i) and (ii) shallbe paid in a single lump sum cash payment in immediately available funds withinfive (5) days after the Executive’s Termination Date (or earlier, if requiredby applicable law).
     (d) The Executive shall not be required to mitigate the amount of anypayment provided for in this Agreement by seeking other employment or otherwiseand no such payment shall be offset or reduced by the amount of anycompensation or benefits provided to the Executive in any subsequent employmentexcept as provided in Section 3(b)(iii).
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     (e) The Executive’s entitlement to any other compensation or benefits orany indemnification shall be determined in accordance with the Company’semployee benefit plans and other applicable programs, policies and practices orany indemnification agreement in effect.
     4. **Notice of Termination**. Following a Change in Control, any purportedtermination of the Executive’s employment by the Company shall be communicatedby Notice of Termination to the Executive. For purposes of this Agreement, nosuch purported termination shall be effective without such Notice ofTermination.
     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 (asdefined in (c)(iii) below) that any payment, distribution, transfer, benefit orother event with respect to the Company or its predecessors, successors, director indirect subsidiaries or affiliates (or any predecessor, successor oraffiliate of any of them, and including any benefit plan of any of them), to orfor the benefit of Executive or Executive’s dependents, heirs or beneficiaries(whether such payment, distribution, transfer, benefit or other event occurspursuant to the terms of this Agreement or otherwise, but determined withoutregard to any additional payments required under this Section 5) (each a“Payment” and collectively the “Payments”) is or was subject to the excise taximposed by Section 4999 of the Internal Revenue Code of 1986, as amended, andany successor provision or any comparable provision of state or local incometax law (collectively, “Section 4999”), or any interest, penalty or addition totax is or was incurred by Executive with respect to such excise tax (suchexcise tax, together with any such interest, penalty or addition to tax,hereinafter collectively referred to as the “Excise Tax”), then, within 10 daysafter such determination or final determination, as the case may be, theEmployer shall pay to Executive an additional cash payment (hereinafterreferred to as the “Gross-Up Payment”) in an amount such that after payment byExecutive of all taxes, interest, penalties and additions to tax imposed withrespect to the Gross-Up Payment (including, without limitation, any income andexcise taxes imposed upon the Gross-Up Payment), Executive retains an amount ofthe Gross-Up Payment equal to the Excise Tax imposed upon such Payment orPayments. This provision is intended to put Executive in the same position asExecutive would have been had no Excise Tax been imposed upon or incurred as aresult of any Payment.
     (b) Except as provided in subsection (c) below, the determination that aPayment is subject to an Excise Tax shall be made in writing by a nationallyrecognized certified public accounting firm selected by Executive (“Executive’sAccountant”). Such determination shall include the amount of the Gross-UpPayment and detailed computations thereof, including any assumptions used insuch computations (the written determination of the Executive’s Accountant,hereinafter, the “Executive’s Determination”). The Executive’s Determinationshall be reviewed on behalf of the Company by a nationally recognized certifiedpublic accounting firm selected by the Company (the “Company’s Accountant”).The Company shall notify Executive within 10
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business days after receipt of the Executive’s Determination of anydisagreement or dispute therewith, and failure to so notify within that periodshall be considered an agreement by the Company with the Executive’sDetermination, obligating the Employer to make payment as provided insubsection (a) above within 10 days from the expiration of such 10 business-dayperiod. In the event of an objection by the Company to the Executive’sDetermination, any amount not in dispute shall be paid within 10 days followingthe 10 business-day period referred to herein, and with respect to the amountin dispute the Executive’s Accountant and the Company’s Accountant shalljointly select a third nationally recognized certified public accounting firmto 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, thethird accounting firm’s findings shall be deemed the binding determination withrespect to the amount in dispute, obligating the Employer to make any paymentas a result thereof within 10 days following the receipt of such thirdaccounting firm’s determination. All fees and expenses of each of theaccounting firms referred to in this Section 5 shall be borne solely by theEmployer.
 (c) (i) Executive shall notify the Company in writing of anyclaim by the Internal Revenue Service (or any successor thereof) orany state or local taxing authority (individually or collectively,the “Taxing Authority”) that, if successful, would require thepayment by the Employer of a Gross-Up Payment. Such notificationshall be given as soon as practicable but no later than 30 daysafter Executive receives written notice of such claim and shallapprise the Company of the nature of such claim and the date onwhich such claim is requested to be paid; provided, however, thatfailure by Executive to give such notice within such 30-day periodshall not result in a waiver or forfeiture of any of Executive’srights under this Section 5 except to the extent of actual damagessuffered by the Company as a result of such failure. Executiveshall not pay such claim prior to the expiration of the 15-dayperiod following the date on which Executive gives such notice tothe Company (or such shorter period ending on the date that anypayment of taxes, interest, penalties or additions to tax withrespect to such claim is due). If the Company notifies Executive inwriting prior to the expiration of such 15-day period that itdesires to contest such claim (and demonstrates to the reasonablesatisfaction of Executive its ability to make the payments toExecutive which may ultimately be required under this section beforeassuming responsibility for the claim), Executive shall:
     (A) give the Company any information reasonably requested bythe Company relating to such claim;
     (B) take such action in connection with contesting such claimas the Company shall reasonably request in writing from time totime, including, without limitation, accepting legal representationwith respect to such claim by an attorney selected by the Companythat is reasonably acceptable to Executive;
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     (C) cooperate with the Company in good faith in ordereffectively to contest such claim; and
     (D) permit the Company to participate in any proceedingsrelating to such claim; provided, however, that the Employer(including additional interest, penalties and additions to tax)incurred in connection with such contest and shall indemnify andhold 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 claimand in relation to the payment of such costs and expenses orindemnification. Without limitation on the foregoing provisions ofthis Section 5, and to the extent its actions do not unreasonablyinterfere with or prejudice Executive’s disputes with the TaxingAuthority as to other issues, the Company shall control allproceedings taken in connection with such contest and, at its soleoption, may pursue or forego any and all administrative appeals,proceedings, hearings and conferences with the taxing authority inrespect of such claim and may, at its sole option, either directExecutive to pay the tax, interest or penalties claimed and sue fora refund or contest the claim in any permissible manner, andExecutive agrees to prosecute such contest to a determinationbefore any administrative tribunal, in a court of initialjurisdiction and in one or more appellate courts, as the Companyshall determine; provided, however, that if the Company directsExecutive to pay such claim and sue for a refund, the Employershall advance an amount equal to such payment to Executive, on aninterest-free basis, and shall indemnify and hold Executiveharmless, on an after-tax basis, from all taxes (including, withoutlimitation, income and excise taxes), interest, penalties andadditions to tax imposed with respect to such advance or withrespect to any imputed income with respect to such advance; and,further, provided, that any extension of the statute of limitationsrelating to payment of taxes, interest, penalties or additions totax for the taxable year of Executive with respect to which suchcontested amount is claimed to be due is limited solely to suchcontested amount; and, provided, further, that any settlement ofany claim shall be reasonably acceptable to Executive and theCompany’s control of the contest shall be limited to issues withrespect to which a Gross-Up Payment would be payable hereunder, andExecutive shall be entitled to settle or contest, as the case maybe, any other issue.
(ii) If, after receipt by Executive of an amount advanced by theEmployer pursuant to Section 5(c)(i), Executive receives any refundwith respect to such claim, Executive shall (subject to theCompany’s complying with the requirements of Section 5) promptlypay to the Employer an amount equal to such refund (together withany interest paid or credited thereon after taxes applicablethereto), net of any taxes
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(including without limitation any income or excise taxes),interest, penalties or additions to tax and any other costsincurred by Executive in connection with such advance, after givingeffect to such repayment. If, after the receipt by Executive of anamount advanced by the Employer pursuant to Section 5(c)(i), it isfinally determined that Executive is not entitled to any refundwith respect to such claim, then such advance shall be forgiven andshall not be required to be repaid and the amount of such advanceshall be treated as a Gross-Up Payment and shall offset, to theextent thereof, the amount of any Gross-Up Payment otherwiserequired to be paid.
(iii) For purposes of this Section 5, whether the Excise Tax isapplicable to a Payment shall be deemed to be “finally determined”upon the earliest of: (A) the expiration of the 15-day periodreferred to in paragraph (c)(i) above if the Company has notnotified Executive that it intends to contest the underlying claim,(B) the expiration of any period following which no right of appealexists, (C) the date upon which a closing agreement or similaragreement with respect to the claim is executed by Executive andthe Taxing Authority (which agreement may be executed only incompliance with this Section 5), (D) the receipt by Executive ofnotice 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 fromExecutive, affirmatively indicate in writing to Executive that theCompany intends to continue to pursue such contest).
 (d) As a result of uncertainty in the application of Section 4999that may exist at the time of any determination that a Gross-UpPayment is due, it may be possible that in making the calculationsrequired to be made hereunder, the parties or their accountantsshall determine that a Gross-Up Payment need not be made (or shallmake no determination with respect to a Gross-Up Payment) thatproperly should be made (“Underpayment”), or that a Gross-Up Paymentnot properly needed to be made should be made (“Overpayment”). Thedetermination of any Underpayment shall be made using the proceduresset forth in paragraph (b) above and shall be paid to Executive asan additional Gross-Up Payment. The Company shall be entitled touse procedures similar to those available to Executive in paragraph(b) to determine the amount of any Overpayment (provided that theCompany shall bear all costs of the accountants as provided inparagraph (b)). In the event of a determination that an Overpaymentwas made, any such Overpayment shall be treated for all purposes asa loan to Executive with interest at the applicable Federal rateprovided for in Section 1274(d) of the Code; provided, however, thatthe amount to be repaid by Executive to the Employer shall besubject to reduction to the extent necessary to put Executive in thesame after-tax position as if such Overpayment were never made.
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     6. **Successors; Binding Agreement**. This Agreement shall be binding uponand shall inure to the benefit of the Company, its Successors and Assigns, andthe Company shall require any Successors and Assigns to expressly assume andagree to perform this Agreement in the same manner and to the same extent thatthe Company would be required to perform it if no such succession or assignmenthad taken place. Neither this Agreement nor any right or interest hereundershall be assignable or transferable by the Executive, his beneficiaries orlegal representatives, except by will or by the laws of descent anddistribution. This Agreement shall inure to the benefit of and be enforceableby the Executive’s legal personal representative.
     7. **Fees and Expenses**. The Company shall pay all legal fees and relatedexpenses (including the costs of experts, evidence and counsel) incurred by theExecutive as a result of the Executive obtaining or enforcing any right orbenefit provided by this Agreement (including, but not limited to, any suchfees and expenses incurred in connection with the Dispute). Furthermore, anyamounts due Executive by the Company that are not paid when due under thisAgreement shall bear interest at the Prime Rate (as declared by Bank ofAmerica, N.A. from time to time) plus 5% from the time when the payment is dueuntil the date the payment is made.
     8. **Notice**. For the purposes of this Agreement, notices and all othercommunications provided for in the Agreement (including the Notice ofTermination) shall be in writing and shall be deemed to have been duly givenwhen personally delivered or sent by certified mail, return receipt requested,postage prepaid, by overnight courier or by facsimile, addressed to therespective addresses and facsimile numbers last given by each party to theother, provided that all notices to the Company shall be directed to theattention of the Board with a copy to the Secretary of the Company. Allnotices and communications shall be deemed to have been received on the date ofdelivery thereof or on the third business day after the mailing thereof, exceptthat notice of change of address shall be effective only upon receipt.
     9. **Non-Exclusivity of Rights**. Nothing in this Agreement shall prevent orlimit the Executive’s continuing or future participation in any benefit, bonus,incentive or other plan or program provided by the Company (except for anyseverance or termination policies, plans, programs or practices) and for whichthe Executive may qualify, nor shall anything herein limit or reduce suchrights as the Executive may have under any other agreements with the Company(except for any severance or termination agreement). Amounts which are vestedbenefits or which the Executive is otherwise entitled to receive under any planor program of the Company shall be payable in accordance with such plan orprogram, except as explicitly modified by this Agreement.
     10. **No Guaranteed Employment**. The Executive and the Company acknowledgethat, except as may otherwise be provided under any other written agreementbetween the Executive and the Company, the employment of the Executive by theCompany is “at will” and may be terminated by either the Executive or theCompany at any time, subject, however to the rights of the Executive providedherein in the event of any such termination.
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     11. **Settlement of Claims**. The Employer’s obligation to make the paymentsprovided for in this Agreement and otherwise to perform its obligationshereunder shall not be affected by any circumstances, including, withoutlimitation, any set-off, counterclaim, recoupment, defense or other right whichthe Company may have against the Executive or others.
     12. **Full Satisfaction; Waiver and Release**. As a condition to receivingthe payments and benefits hereunder, the Executive shall execute a document incustomary form, releasing and waiving any and all claims, causes of actions andthe like against the Company and its successors, shareholders, officers,trustees, agents and employees, regarding all matters relating to theExecutive’s service as an employee of the Company or any affiliates and thetermination of such relationship. Such claims *include, without limitation*, anyclaims 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 CivilRights Act of 1991, as amended; the Equal Pay Act of 1962; the AmericanDisabilities Act of 1990; the Family Medical Leave Act, as amended; theEmployee Retirement Income Security Act of 1976, as amended; or any otherfederal, state or local statute or ordinance, *but exclude*any claims that ariseout of an asserted breach of the terms of this Agreement or current or futureclaims related to the matters described in Paragraph 9.
     13. **Miscellaneous**. No provision of this Agreement may be modified, waivedor discharged unless such waiver, modification or discharge is agreed to inwriting and signed by the Executive, the Trust and Employer. No waiver byeither party hereto at any time of any breach by the other party hereto of, orcompliance with, any condition or provisions of this Agreement to be performedby such other party shall be deemed a waiver of similar or dissimilarprovisions or conditions at the same or at any prior or subsequent time. Noagreement or representations, oral or otherwise, express or implied, withrespect to the subject matter hereof have been made by either party which arenot expressly set forth in this Agreement.
     14. **Governing Law**. This Agreement shall be governed by and construed andenforced in accordance with the laws of the State of Illinois without givingeffect to the conflict of laws principles thereof. Any action brought by anyparty to this Agreement shall be brought and maintained in a court of competentjurisdiction in Cook County in the State of Illinois.
     15. **Severability**. The provisions of this Agreement shall be deemedseverable and the invalidity or unenforceability of any provision shall notaffect the validity or enforceability of the other provisions hereof.
     16. **Entire Agreement**. This Agreement constitutes the entire agreementbetween the parties hereto and supersedes all prior agreements, if any,understandings and arrangements, oral or written, between the Company and Executive withrespect to the subject matter hereof, including any prior “Change in Control”agreement.
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     IN WITNESS WHEREOF, the Trust and the Employer has caused this Agreementto be executed by its duly authorized officer and the Executive has executedthis Agreement as of the day and year first above written.      **EQUITY OFFICE PROPERTIES TRUST**