Exhibit 10.21


 


DEFERRED COMPENSATION
AGREEMENT


 


 


                THIS DEFERRED COMPENSATION AGREEMENT (“Agreement”) is entered into as of
January 20, 2003 between EQUITY RESIDENTIAL, a Maryland real estate investment
trust (“EQR”), and BRUCE W. DUNCAN (the “Executive”).


 


                RECITALS


 


WHEREAS, EQR desires to enter into the Agreement for deferred compensation to
the Executive for services by the Executive as President and Chief Executive
Officer of EQR, and the Executive is willing to enter into this Agreement on
the terms and conditions hereinafter set forth.


 


                NOW, THEREFORE, in
consideration of the mutual promises and considerations contained herein and
for other good and valuable consideration, the payment and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:


 


                1.             Term. 
For the purposes of this Agreement, the term of the employment of the
Executive shall begin on March 15, 2002 and shall expire on the Termination
Date (as defined below) (the “Term”).


 


                2.             Termination.


 


                (a)           Termination Date.  Unless extended by the mutual agreement of
EQR and the Executive, the Executive’s employment shall end on the Termination
Date. The “Termination Date” shall be the first to occur of: (i) the date of
the Executive’s resignation (whether or not for Good Reason (as defined
below)), (ii) the date of the death or permanent disability or incapacity of
the Executive, or (iii) the date EQR terminates the Executive’s employment
(whether or not for Cause (as defined below)).


 


                (b)           Permanent Disability or Incapacity.  The Executive shall be considered to be
permanently disabled or incapacitated if in the reasonable commercial judgment
of the Board of Trustees of EQR, the Executive becomes unable to satisfactorily
perform his duties and responsibilities in the manner currently being performed
during the Term hereof because of a mental or physical disability, or both,
that continues or is reasonably expected to continue for a period of in excess
of one hundred eighty (180) days.  In
the event the Executive does not agree with the Board of Trustees’
determination of disability or incapacity, a determination shall be made by a
panel of three doctors.  The first shall
be chosen by EQR, the second shall be chosen by the Executive, and the third
shall be chosen by the first two doctors. 
Any doctor selected by a party shall not be affiliated, associated or
related to the party selecting the doctor in any manner whatsoever.  The opinion of a majority of the panel of
doctors shall be binding on the parties hereto.  Each party shall bear the costs of the doctor chosen by them and
1/2 of the costs of the third doctor. 
The foregoing to the contrary notwithstanding, Executive shall be
considered permanently disabled or incapacitated if his employment terminates
due to his Disability, as provided under Executive’s Employment Agreement with
the Company dated as of January 20, 2003 or, if applicable, under Executive’s
Change In Control Agreement dated March 14, 2002, as either such agreement
hereafter may be amended by the parties (“Employment Agreement” and “Change In
Control Agreement,” respectively).


 


 

















 


                                                                (c)           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 of Trustees 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.


 


(d)           Good Reason.  For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any of the events or conditions described
in subsections (i) through (vii) 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 a 
termination of employment; 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 the date of a termination of employment;
or any removal of the Executive from or failure to reappoint or reelect him to
any of such offices or positions held prior to the termination of employment,
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 thirty (30) 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 in Chicago, Illinois immediately prior to the
termination of employment, except for reasonably required travel on the
Company’s business which is not materially greater than such travel
requirements prior to the termination of employment;


 


                                                                                                                (iv)          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;


 


 


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                                                                                                                (v)           any material breach by the Company of
any provision of this Agreement;


 


(vi)          any
purported termination of the Executive’s employment for Cause by the Company
which does not comply with the terms of Section 2(c);


 


(vii)         the
failure of the Company to obtain an agreement, reasonably satisfactory to
Executive, from any successors and assigns to assume and agree to perform this
Agreement as contemplated in Section 7 hereof; or


 


(viii)        in
the event of the Executive’s termination of employment following a “Change in
Control,” for “Good Reason” (as such terms are defined in the Change in Control
Agreement previously entered into by EQR and the Executive).


 


3.             Deferred Compensation.


 


                (a)           Termination without Cause; Resignation for Good
Reason; Resignation on or subsequent to December 31, 2006.  In the event that (i) the Executive’s
employment is terminated by EQR without Cause; (ii) the Executive resigns for
Good Reason; or (iii) the Executive resigns on or subsequent to December 31,
2006 (whether or not for Good Reason); the Executive shall be entitled to
annual deferred compensation for a ten (10) year period commencing on the
Termination Date (unless the Executive resigns without Good Reason on or after
December 31, 2006 but prior to December 31, 2011, in which case the ten (10)
year period shall commence on the date the Executive reaches age 62), in an
annual amount equal to the product of (x) ten (10) percentage points
(0.10) multiplied by (y) a whole number equal to the lesser
of:  (i) ten (10); or (ii) the whole
number equal to the number of calendar years (including as a whole year any
portion of a calendar year in excess of nine (9) months and including 2002)
that the Executive was employed by EQR since March 15, 2002 (which product
shall in no event exceed 100%); multiplied by (z) the Annual Base
Compensation (as defined below) for the calendar year in which the Termination
Date occurs.  By way of illustration and
not in limitation of the foregoing, Executive shall be entitled to annual
deferred compensation equal to 50% or 100% of his Annual Base Compensation upon
his resignation without Good Reason on December 31, 2006 or on December 31,
2011, respectively, payable commencing at age 62.  Such annual compensation shall be payable in equal bi-monthly
installments.  In the event of the
Executive’s death during the ten (10) year period in which he is paid annual
deferred compensation, such annual deferred compensation shall then be paid to
the estate or any other designee of the Executive.


 


                (b)           Death, Permanent Disability or Incapacity.  In the event that the Executive’s employment
is terminated as a result of his death, permanent disability or incapacity, the
Executive (or the estate or any other designee of the Executive, in the case of
death) shall be entitled to annual deferred compensation for a ten (10) year
period commencing on the Termination Date in an annual amount equal to the
product of (x) fifteen percentage points (0.15) multiplied by
(y) a whole number equal to the lesser of:  (i) ten (10); or (ii) the whole number equal to the number of
calendar years (including as a whole year any portion of a calendar year in
excess of nine (9) months and including 2002) that the Executive was employed
by EQR since March 15, 2002 (which product shall in no event exceed 100%) multiplied
by (z) the Annual Base Compensation (as defined below).  Such annual compensation shall be payable in
equal bi-monthly installments.


 


 


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                (c)           Termination with Cause or Resignation Without Good
Reason.  In the event
that (i) the Executive’s employment hereunder is terminated with Cause by EQR,
or (ii) the Executive resigns without Good Reason before December 31, 2006, the
Executive shall not be entitled to receive any deferred compensation hereunder.


 


                (d)           Annual Base Compensation.  For purposes of this Agreement, “Annual Base
Compensation” shall mean an amount equal to Seven Hundred Fifty Thousand
Dollars ($750,000.00) for calendar year 2003, which sum shall be increased as
of January 1, 2004 and as of the first day of January of each year thereafter throughout
the Term to an amount equal to the Annual Base Compensation in effect for the
immediately preceding calendar year increased by a percentage equal to the
percentage increase in the CPI (as defined below) during the immediately
preceding calendar year over the prior calendar year.


 


                (e)           CPI. 
The term “CPI” shall mean the Revised Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, for United States City Average, All Items (1982-84 =
100).  If the manner in which the CPI is
calculated shall be substantially revised EQR and the Executive shall select a
means to adjust such revised Index, which would produce results equivalent, as
practicable, to those, which would have been obtained if the CPI has not been
so revised.  If the 1982-84 average
shall no longer be used as an index of 100, such change shall constitute a
substantial revision.  If the CPI shall
become unavailable to the public because publication is discontinued, or otherwise,
EQR and the Executive shall select a comparable substitute index based upon
changes in the cost of living or purchasing power of the consumer dollar
published by any other governmental agency, or, if no such index shall then be
available, a comparable index published by a major bank or other financial
institution or by a university or a recognized financial publication.  In the event that the U.S. Department of
Labor, Bureau of Labor Statistics, changes the publication frequency of the CPI
so that a CPI is not available to make an adjustment for the period in
question, the adjustment shall be based on the percentage increase in the CPI
for the twelve (12) month period beginning with the closest month preceding the
period in question for which a CPI is available.


 


                4.             Arbitration.  Except as otherwise specifically provided herein, any controversy
or claim arising out of, or relating to this Agreement, or the breach thereof,
shall be settled by arbitration in Chicago, Illinois in accordance with the rules
of the American Arbitration Association, and judgment upon any award so
rendered may be entered in any court having jurisdiction thereof.


 


                5.             Notices.  Any notice or other communication required or permitted to be
transmitted under this Agreement shall be in writing, and personally delivered
or mailed, return receipt requested, postage prepaid, addressed to the parties
hereto at their addresses following their signatures below, or at such other
addresses as may be hereafter designated by a party by notice delivered in
accordance herewith.  Any notice
delivered personally shall be effective on the date of delivery and any notice
mailed, as aforesaid, shall be effective on the second day following posting.


 


                6.             Waiver of Breach.  The waiver by one party of a breach of any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the one party.


 


 


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                7.             Assignment.  The rights and obligations of EQR and Executive under this
Agreement shall inure to the benefit of, and shall be binding upon, EQR and its
successors and assigns and Executive and his heirs and personal
representatives.  The Company shall
require any successors and assigns (other than by operation of law in
connection with a merger or consolidation, which requirement shall be deemed
satisfied upon such merger or consolidation) 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.


 


                8.             Entire Agreement.  This instrument contains the entire
agreement between the parties.  It may
not be changed orally but only by agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.  This  Agreement supersedes and any other written or oral agreement
between EQR and the Executive concerning the subject matter of this Agreement.


 


                9.             Governing Law; Severability.  This Agreement shall be construed and
enforced, and all questions concerning compliance by any person with its terms
shall be determined under the laws of the State of Illinois.  All provisions of this Agreement are
severable and this Agreement shall be interpreted and enforced as if all
completely invalid or unenforceable provisions were not contained herein, and
partially valid and enforceable provisions shall be enforced to the extent
valid and enforceable.


 


                IN WITNESS WHEREOF, the parties
have executed this Agreement as of the day and year first above written.


 


	
   

  	
  EQR:



  
	
   

  	
  EQUITY
  RESIDENTIAL, a Maryland real estate investment trust

  

  

  



  
	
   

  	
  By:

  	
  /s/Bruce
  C. Strohm

  	 

	
   

  	
   

  	
  Bruce
  C. Strohm, Executive Vice President

  & General Counsel

  	 

	
   

  	
   

  
	
   

  	
  Address:



  
	
   

  	
  Two
  North Riverside Plaza

  Chicago, Illinois 60606

  
	
   

  	
   

  
	
   

  	
  THE
  EXECUTIVE

  



  
	
   

  	
  /s/
  Bruce W. Duncan

  
	
   

  	
  BRUCE
  W. DUNCAN

  
	
   

  	
   

  
	
   

  	
  Address:



  
	
   

  	
  Two
  North Riverside Plaza

  Chicago, Illinois 60606

  



 


 


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