Document:

Exhibit 10.16

 

FIRST AMENDMENT TO EQUITY RESIDENTIAL 2002 SHARE INCENTIVE PLAN

 

THIS FIRST AMENDMENT (“First Amendment”) TO EQUITY RESIDENTIAL 2002
SHARE INCENTIVE PLAN  (“Plan”)
is made as of the 7th day of February 2003.

 

Recitals:

 

1.       The Board of Trustees of
Equity Residential (the “Company”) has determined to adopt an amendment to the
Plan, which does not require shareholder approval as permitted under Section 16
(c).

 

2.       Terms used in this First
Amendment which are defined in the Plan have the meanings given them in the
Plan.

 

1.       AMENDMENTS.  Section 3 (b) of the Plan is hereby deleted
and the following Section 3 (b) is substituted therefore:

 

(b)        Board of Trustees. Each member of the Board of Trustees will
receive an annual award of Share Awards and Options equal to $50,000 in value
on the same day as the annual grant of Share Awards and Options to the Company’s
executive officers.  The annual $50,000
award will be allocated between Options (valued by using the same valuation
criteria utilized by the Committee in its employee option grants made as of the
same date) and Share Awards (valued at the closing price of the Company’s
common shares on the date of grant), in the same ratio as approved by the
Committee for the annual long term incentive awards to the Company’s executive
officers.  The Share Award will vest in
full on the third anniversary of the Grant Date.  The Options will vest in equal installments
six months, twelve months and twenty-four months from the Grant Date.

 

2.       PLAN IN FULL FORCE AND EFFECT.  After giving effect to this First Amendment,
the Plan remains in full force and effect.Exhibit 10.17

 

SECOND AMENDMENT TO EQUITY RESIDENTIAL 2002 SHARE INCENTIVE PLAN

 

THIS SECOND
AMENDMENT (the “Second Amendment”) to EQUITY RESIDENTIAL 2002 SHARE INCENTIVE
PLAN (“Plan”) is executed as of the 10th day of June 2003.

 

RECITALS

 

WHEREAS, the
Board of Trustees of Equity Residential (the “Company”) adopted the 2002 Share
Incentive Plan (“Plan”) on February 21, 2002, which was approved by the
shareholders of the Company at the 2002 annual meeting.

 

WHEREAS, the Company entered into a First Amendment to the Plan dated
as of February 7, 2003.

 

WHEREAS, the
Board of Trustees have adopted a resolution to amend the terms of all
outstanding Trustee Share Awards and Options as well as the annual grants of
Trustee Share Awards and Options to be made after the date of this Second
Amendment.

 

WHEREAS, each member of the Board of Trustees to be affected by this
Second Amendment has agreed to the terms hereof.

 

WHEREAS, the
Company desires to further amend the Plan pursuant to this Second Amendment.

 

NOW THEREFORE,
the Plan is further amended as follows:

 

AMENDMENTS

 

1.             Section
3 (b) of the Plan is hereby deleted in its entirely
and the following Section 3 (b) is substituted therefor:

 

(b)     Board of Trustees.  Each member of the Board of Trustees
(excluding the Chairman of the Board and the employee trustees)  will receive an
annual award (relating to the Trustee’s term as Trustee for the one-year period
following the subsequent shareholders’ meeting at which trustees are elected)
of Share Awards and Options equal to $50,000 in value on the same day as the
annual grant of Share Awards and Options to the Company’s executive
officers.  The annual $50,000 award will
be allocated between Options (valued by using the same valuation criteria
utilized by the Committee in its employee option grants made as of the same
date) and Share Awards (valued at the closing price of the Company’s common
shares on the date of grant), in the same ratio as approved by the Committee
for the annual long term incentive awards to the Company’s executive
officers.  The Share Award will vest in
full on the third anniversary of the Grant Date.  The Options will vest in equal installments
six months, twelve months and twenty-four months from the Grant Date.  The annual award of Share Awards and Options
is also subject to the Trustee receiving the grant being re-elected as a
Trustee at

 

 

the subsequent shareholders’ meeting.  If an individual first becomes a Trustee
following the annual grant, the Trustee will receive a grant of Share Awards
and Options in the same ratio as the prior annual Trustee’s grant equal to
$50,000 multiplied by a fraction, the numerator of which is the number of days
left in said one year Trustee term from the date of such Trustee’s election or
appointment to the Board of Trustees, until the anniversary of the immediately
preceding shareholders’ meeting at which trustees were re-elected, and the
denominator of which is 365.  Trustees
may, in addition to Options and Share Awards awarded under this paragraph, also
receive grants of Options and Share Awards under paragraph 3(a).

 

2.             Section
5 (a) (iii) (C) is hereby deleted in its entirety and the following 5 (a) (iii)
(C) is substituted therefor, to be effective as of February 21, 2002:

 

with respect to a Grantee who is a member of the Board (excluding
employee trustees and the Company’s Chairman of the Board) in connection with
his or her retirement at or after age 70, the Board’s decision not to
renominate him or her for re-election to the Board at any shareholders’ meeting
at which Trustees are elected, or the failure to be re-elected to the Board at
any such shareholders’ meeting, or the Trustee’s resignation from the Board by
reason of either:  (i) a material change
in the Trustee’s employment or job responsibilities; or (ii) the Trustee’s
disability.

 

3.             Section
6 (e) (iii) is hereby deleted in its entirety and the following 6 (e) (iii) is
substituted therefor, to be effective as of February 21, 2002:

 

with respect to a Grantee who is a member of the Board (excluding
employee trustees and the Company’s Chairman of the Board) in connection with
his or her retirement at or after age 70, 
the Board’s decision not to renominate him or her for re-election to the
Board at any shareholders’ meeting at which Trustees are elected, or the
failure to be re-elected to the Board at any such shareholders’ meeting, or the
Trustee’s resignation from the Board by reason of either:  (i) a material change in the Trustee’s
employment or job responsibilities; or (ii) the Trustee’s disability, in which
case it shall be exercisable until its Expiration Date.

 

4.             PLAN
IN FULL FORCE AND EFFECT.   After giving effect to this
Second Amendment, the Plan remains in full force and effect.Exhibit 10.18

 

FORM OF 2005

EQUITY RESIDENTIAL

PERFORMANCE BASED UNIT AWARD
GRANT AGREEMENT

 

 

ARTICLE 1

 

ESTABLISHMENT

 

1.1.          Pursuant
to the terms of this Grant Agreement(1) (“Grant”), effective as of
January 1, 2005 (“Grant Date”), the undersigned Participant, intending to
be legally bound, hereby accepts a Performance Unit Award (“Award”) of                 
Units (as defined below) from Equity Residential (“Trust”) in accordance with
the terms of the Trust’s 2002 Share Incentive Plan (the “Plan”). Notwithstanding
the foregoing, the actual number of Units provided under the Award shall be
determined under Article 3. The purpose of the Award is to promote the overall
financial objectives of the Trust and its shareholders by linking the financial
interests of the Participant to the achievement of long-term growth in
shareholder equity in the Trust and by enabling the Trust to retain the
services of those individuals who are instrumental in achieving this growth.

 

ARTICLE 2

 

SHARES SUBJECT TO GRANT

 

2.1.          Description
of Units.  For purposes of this
Grant, a “Unit” shall consist of the measurement of the number of common shares
of beneficial interest (“Shares”) that will be issued by the Trust to the
Participant upon the satisfaction of the criteria in this Grant.  Except as otherwise specifically provided
herein, the Participant shall have no property or ownership interest with
respect to a Unit and, accordingly, a Unit may not be assigned or transferred
to any person other than to the estate of a Participant upon his or her death.

 

2.2.          Restrictions on Shares.  Shares issued in conjunction with this Award
shall be subject to the terms and conditions specified herein and to such other
terms, conditions and restrictions as may be required under the terms of the Plan
and applicable law.  The Trust shall not
be required to issue or deliver any certificates for Shares or Units, cash or
other property prior to the satisfaction of the performance criteria associated
with the Award and any applicable income tax withholding obligation. The Trust
may cause any certificate for any Shares to be delivered to be properly marked
with a legend or other notation reflecting the limitations on transfer of such
Shares as provided in this Grant, applicable securities law or as the Committee
may otherwise require. The Committee may require the Participant to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the Shares in 

(1)                                  For purposes of this Grant, any
capitalized terms which are undefined in this Grant shall have the meaning
given to such term under the provisions of the Equity Residential 2002 Share
Incentive Plan, of which this Grant shall be considered a part.

 

 

compliance
with applicable law or otherwise. Fractional Shares shall not be delivered, but
shall be rounded to the next highest whole number of Shares with appropriate
payment for such fractional Shares as shall reasonably be determined by the
Committee.

 

2.3.          Shareholder
Rights.  No person shall have any
rights of a shareholder as to Shares or Units subject to a Award until, after
proper conversion of the Units relating to the Award or other action required,
such Shares shall have been recorded on the Trust’s official shareholder records
as having been issued or transferred. Upon conversion of the Units relating to
the Award (or any portion thereof) and the satisfaction of the requirements for
issuance of the Shares to the Participant, the Trust will have ten (10) days in
which to issue the Shares, and the Participant will not be treated as a
shareholder for any purpose whatsoever prior to such issuance. No adjustment
shall be made for cash dividends or other rights for which the record date is
prior to the date such Shares are recorded as issued or transferred in the
Trust’s official shareholder records, except as provided herein or any
subsequent written agreement.

 

ARTICLE 3

 

AWARDS

 

3.1.          Value
of Units Granted Under the Award. 
The Units granted under the Award shall have no initial value.

 

3.2.          Adjustment
of Number of Units Granted Under Award. 
Except as specifically indicated below, if the Participant is not
employed by the Trust or a Subsidiary of the Trust during the entire period
from the Grant Date to the third annual anniversary thereof (the “Third
Anniversary”), the Participant’s total number of Units will be zero.  Otherwise, the total number of Units actually
issued under the Award will be determined as of the Third Anniversary in accordance
with the following:

 

 

	
  If the Trust’s Average Annual
  Return exceeds the Average T-Note Rate by:

  	
   

  	
  less
  than .99%

  	
   

  	
  1-1.99%

  	
   

  	
  2%

  	
   

  	
  3%

  	
   

  	
  4%

  	
   

  	
  5%

  	
   

  	
  6%

  	
   

  	
  7% or
  greater

  
	
  Then, Participant will
  receive a number of Units equal to the number of Units initially granted
  under Article 1.1 times the following percentage:

  	
   

  	
  0%

  	
   

  	
  50%

  	
   

  	
  100%

  	
   

  	
  115%

  	
   

  	
  135%

  	
   

  	
  165%

  	
   

  	
  190%

  	
   

  	
  225%

  

 

Any fractional or partial Units will be rounded
to the next highest whole number.  The
percentages set forth above serve as measurement guidelines.  Accordingly, if the Trust’s Average Annual
Return exceeds the Average T-Note Rate by an amount which falls between any of
the percentages sets forth in this Section 3.2 in excess of 2%, the
Participant’s award will be determined by extrapolation by multiplying the
Award on a pro-rata basis by a percentage which directly corresponds to
the Trust’s actual Average Annual Return based upon the guidelines set forth
above.

 

 

2

 

For example, if the Trust’s Average Annual Return
exceeds the Average T-Note Rate by 2.5% for the three-year period, the
Participant’s initial number of Units will be multiplied by 107.5%.

 

3.3.          Definitions.
The “Average Annual Return” will be expressed as an annual percentage (i.e.,
the average of the 2005, 2006 and 2007 calendar years) utilizing the sum of the
following two numbers:  (i) the average
of the Common Share dividends paid or declared during each calendar year as a
percentage of the closing price of a Share as of January 3, 2005 -  the first business day in January, 2005 (i.e.
$35.45); and (ii) the average percentage change in Funds from Operation as
announced by the Trust (“FFO”) calculated for each calendar year per Share over
the prior calendar year.  In the event of
a change in the Trust’s calculation of FFO, the Trust shall calculate the
percentage change in FFO on a consistent basis most favorable to the
Participant.  The “Average T-Note Rate”
will be expressed as an annual percentage (i.e., the average of the 2005, 2006
and 2007 calendar years) utilizing the 10-year Treasury Note interest rate as
of the first business day in January of each calendar year.

 

                3.4.          Conversion of
Awards. On the Third Anniversary, the final number of Units granted
pursuant to this Award (if any) will be converted into Shares that are subject
to the restrictions set forth in Section 4.3 (“Restricted Shares”).  The number of Units which convert shall equal
the number of Restricted Shares to be received by the Participant upon
conversion.

 

                3.5.          Conversion of
Units Upon Death, Disability, Retirement or Change in Control.  Notwithstanding the foregoing, in the event
of the Participant’s termination of employment with the Trust or any Subsidiary
prior to the Valuation Date due to Death, Disability or retirement at or after
age 62, the greater of:  (i) the number
of Units initially granted under the Award or (ii) the number of Units a
Participant would receive pursuant to Section 3.2 calculated as of said date;
shall become fully convertible into fully vested, non-restricted Shares.  Furthermore, in the event of a Change in
Control prior to the Valuation Date, 225% of the Units initially granted under
the Award shall become fully convertible into fully vested non-restricted
Shares as of said Date.

 

ARTICLE 4

 

RESTRICTED SHARES

 

                4.1.          General. Upon
the Third Anniversary, the Trust shall issue Shares to the Participant in an
amount equal to the number of Units determined under Section 3.2, provided
the Participant remains employed by the Trust or a Subsidiary of the Trust on
such date. Fifty percent of the Shares shall vest immediately upon the Third
Anniversary and 50% of the Shares shall be issued as Restricted Shares.  Thereafter, 50% of the total number of
Restricted Shares shall vest upon each subsequent anniversary of the Grant Date
provided the Participant remains employed by the Trust or a Subsidiary of the
Trust on such date (the “Restriction Period”).

 

                4.2.          Awards and
Certificates. Upon conversion of the Units granted under Section 3.2, the
Participant shall be issued a certificate for the number of his or her
Restricted Shares.  Such certificate
shall be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Shares. The Committee may require that the
certificates evidencing Restricted Shares be held in custody by the 

 

 

3

 

Trust until the restrictions thereon shall have lapsed
and that, as a condition of any award of Restricted Shares, the Participant
shall have delivered a stock power, endorsed in blank, relating to the Shares
covered by such Award.

 

                4.3.          Terms and
Conditions. Restricted Shares shall be subject to the following terms and
conditions:

 

                                                                (a)           Limitations on Transferability.
Subject to the provisions of the Plan and Section 4.3(b), during the vesting
period described in Section 4.1, the Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber any unvested interest in
the Restricted Shares.

 

                                                                (b)           Rights. Except as provided in
Section 4.3(a), the Participant shall have, with respect to the Restricted
Shares, all of the rights of a shareholder of the Trust holding the class of
Shares that is the subject of the Restricted Shares, including, but not limited
to, the right to vote the Shares, the right to receive any dividends on the
Shares or tender the Shares pursuant to a tender offer extended to all
shareholders of the Trust.

 

                                                                (c)           Acceleration. Based on
service, performance by the Participant or by the Trust, including any division
or department for which the Participant is employed, or such other factors or
criteria as the Committee may determine, the Committee may, in its sole
discretion, provide for the lapse of restrictions in installments and may
accelerate the vesting of all or any part of any Award and waive the
restrictions for all or any part of such Award.

 

                                                                (d)           Forfeiture.  The restrictions shall lapse and the
Participant shall be fully vested in the Restricted Shares if during the
Restricted Period:  (i) a Change in
Control of the Company occurs; or (ii) in the event of the Participant’s
termination of employment with the Trust or any Subsidiary due to Death,
Disability, or retirement at or after age 62. Upon a Participant’s termination
of employment for any other reason during the Restriction Period (excluding a
termination of employment following a Change in Control), all Restricted Shares
shall be forfeited by the Participant, except the Committee shall have the sole
discretion to waive in whole or in part any or all remaining restrictions with
respect to any or all of the Participant’s Restricted Shares.

 

                                                                (e)           Delivery. If and when the
Restriction Period expires without a prior forfeiture of the Restricted Shares
subject to such Restriction Period, unlegended certificates (except for legends
relating to applicable securities laws) for such Shares shall be delivered to
the Participant.

 

ARTICLE 5

 

MISCELLANEOUS

 

                5.1.          Amendments and
Termination. This Grant may be amended, altered or discontinued upon
subsequent written agreement executed by the Committee and the
Participant.  However, no amendment,
alteration or discontinuation shall be made which would (a) impair the rights
of a 

 

 

4

 

Participant under this Grant without the Participant’s
consent, except such an amendment made to cause the Plan to qualify for the
exemption provided by Rule 16b-3 of the Act or (b) disqualify the Plan
from the exemption provided by Rule 16b-3. In addition, no such amendment
shall be made without the approval of the Trust’s shareholders to the extent
such approval is required by law or agreement.

 

                5.2.          General
Provisions.

 

                                                                (a)           Withholding. No later than the
date as of which an amount first becomes includible in the gross income of the
Participant for Federal income tax purposes with respect to any Award, the
Participant shall pay to the Trust (or other entity identified by the
Committee), or make arrangements satisfactory to the Trust or other entity
identified by the Committee regarding the payment of, any Federal, state, local
or foreign taxes of any kind required by law to be withheld with respect to
such amount required in order for the Trust or an Affiliate to obtain a current
deduction.  Unless otherwise determined
by the Committee, withholding obligations may be settled with Shares, including
Shares that are part of the Award that gives rise to the withholding
requirement, provided that any applicable requirements under Section 16 of the
Act are satisfied. The obligations of the Trust under the Plan shall be
conditional on such payment or arrangements, and the Trust or any Subsidiary of
the Trust shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the Participant.

 

                                                                (b)           Designation of Representative.
Pursuant to a form provided by the Committee, a Participant shall designate a
beneficiary (“Beneficiary”) to whom any amounts payable in the event of the
Participant’s death are to be paid.

 

                                                                (c)           Controlling Law. This Grant
shall be governed by and construed in accordance with the laws of the State of
Maryland (other than its law respecting choice of law) to the extent not
governed by Federal law. The Grant shall be construed to comply with all
applicable law and to avoid liability to the Trust or the Participant,
including, without limitation, liability under Section 16(b) of the Act.

 

                                                                (d)           Fail Safe. If the Participant
is subject to Section 16 of the Act, transactions under this Grant will comply
with all applicable conditions of Rule 16b-3 or Rule 16a-l(c)(3),
as applicable. To the extent any provision of the Grant or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee. Moreover, in the event this Grant
does not include a provision required by Rule 16b-3 or Rule 16a-­1 (c)(3)
to be stated herein, such provision (other than one relating to eligibility
requirements or the price and amount of Awards) shall be deemed to be
incorporated by reference into this Grant with respect to the Participant.

 

                5.3.          No Rights with
Respect to Continuance of Employment. 
Nothing contained herein shall be deemed to alter the relationship
between the Trust or a Subsidiary of the Trust and the Participant, or the
contractual relationship between a Participant and the Trust or a Subsidiary of
the Trust (written or otherwise) regarding such relationship. Nothing contained
herein shall be 

 

 

5

 

construed to constitute a contract of employment between
the Trust or a Subsidiary of the Trust and the Participant. The Trust or a
Subsidiary of the Trust and the Participant continues to have the right to
terminate the employment or service relationship at any time for any reason,
except as provided in a written contract. The Trust or a Subsidiary of the
Trust shall have no obligation to retain the Participant in its employ or
service as a result of this Grant.  There
shall be no inference as to the length of employment or service hereby, and the
Trust or a Subsidiary of the Trust reserves the same rights to terminate the Participant’s
employment or service as existed prior to the individual’s becoming a
Participant in the Plan.

 

                5.4.          Delay. If at
the time the Participant incurs a termination of employment (other than due to
Cause) or if at the time of a Change in Control, the Participant is subject to
“short-­swing” liability under Section 16(b) of the Act, any time period
provided for under the Plan or the Grant to the extent necessary to avoid the
imposition of liability shall be suspended and delayed during the period the
Participant would be subject to such liability, but not more than six (6)
months and one (1) day.  The Trust shall
have the right to suspend or delay any time period described in the Plan or
this Grant if the Committee shall determine that the action may constitute a
violation of any law or result in liability under any law to the Trust, a
Subsidiary of the Trust or a shareholder of the Trust until such time as the
action required or permitted shall not constitute a violation of law or result in
liability to the Trust, a Subsidiary of the Trust or a shareholder of the
Trust. The Committee shall have the discretion to suspend the application of
the provisions of the Plan required solely to comply with Rule 16b-3 if
the Committee shall determine that Rule 16b-3 does not apply to this
Grant.

 

                5.5.          Headings.  The headings contained in this Grant are for
reference purposes only and shall not affect the meaning or interpretation of
this Grant.

 

                5.6.          Severability.  If any provision of this Grant shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provision hereby, and this Grant
shall be construed as if such invalid or unenforceable provision were omitted.

 

                5.7.          Successors and
Assigns. This Grant shall inure to the benefit of and be binding upon each
successor and assign of the Trust. All obligations imposed upon a Participant,
and all rights granted to the Trust hereunder, shall be binding upon the
Participant’s heirs, legal representatives and successors.

 

 

6

 

 

                5.8.          Entire Grant.
The Plan and this Grant constitute the entire agreement with respect to the
subject matter hereof and thereof, provided that in the event of any
inconsistency between the Plan and the Grant, the terms and conditions of this
Plan shall control unless specific contrary reference has been made in this
Grant.

 

                Executed
on this          day of March, 2005.

 

	
   

  	
  EQUITY RESIDENTIAL

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  John Powers

  
	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted this               
  day of March, 2005.

  	
   

  	
   

  

 

 

7

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