Document:

exv10w1

 

EXHIBIT 10.1

CHANGE IN CONTROL AGREEMENT

     THIS CHANGE IN CONTROL AGREEMENT (“Agreement”) is entered into effective
as of April 1, 2003 by and between EQUITY OFFICE MANAGEMENT, L.L.C., a Delaware
limited liability company (“Employer”), EQUITY OFFICE PROPERTIES TRUST, a
Maryland real estate investment trust (the “Trust”) and RICHARD D. KINCAID (the
“Executive”).

WITNESSETH

     WHEREAS, the Trust is the indirect ultimate controlling parent of
Employer; and

     WHEREAS, the Board of Trustees of the Trust (the “Board”) recognizes that
the possibility of a Change in Control (as hereinafter defined) exists or may
exist in the future and that the threat or the occurrence of a Change in
Control can result in significant distractions of its key management personnel
because of the uncertainties inherent in such a situation;

     WHEREAS, the Board has determined that it is essential and in the best
interest of the Trust and/or its affiliates, (including Employer, as the
context may require, collectively, the “Company”) and the Trust’s shareholders
to retain the services of the Executive in the event of a threat or occurrence
of a Change in Control and to ensure his continued dedication and efforts in
such event without undue concern for his personal financial and employment
security; and

     WHEREAS, in order to induce the Executive to remain in the employ of the
Company particularly in the event of a threat or the occurrence of a Change in
Control, the Employer desires to enter into this Agreement with the Executive
to provide the Executive with certain benefits in the event his employment is
terminated as a result of, or in connection with, a Change in Control and to
provide the Executive with certain other benefits whether or not the
Executive’s employment is terminated.

AGREEMENT

     NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein and other good and valuation consideration, the
receipt and sufficiency of which are hereby acknowledged, it is agreed as
follows:

     1. Term of Agreement. This Agreement shall commence as of the date hereof
and shall continue in effect until the date the Executive’s employment by the
Company is terminated; provided, however, that if the Executive’s employment is
terminated following, or in anticipation of, a Change in Control, the term
shall continue in effect until all payments and benefits have been made or
provided to the Executive hereunder.

     2. Definitions

          2.1 Accrued Compensation. For purposes of this Agreement, “Accrued
Compensation” shall mean an amount which shall include all amounts earned or
accrued through the “Termination Date” (as hereinafter defined) but not paid as
of the Termination Date including (i) base salary, (ii) reimbursement for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company during the period ending on the Termination Date, (iii)

 

 

paid time off (to the extent provided by Company policy or applicable law), and
(iv) 100% of any target bonus with respect to the Company’s fiscal year ended
prior to the Termination Date to the extent a bonus for such year has not been
awarded and paid prior to the Termination Date.

          2.2 Base Amount. For purposes of this Agreement, “Base Amount” shall mean
the greater of (a) the Executive’s annual base salary, at the rate in effect
immediately prior to the Change in Control and (b) the Executive’s annual base
salary, at the rate in effect on the Termination Date.

          2.3 Bonus Amount. For purposes of this Agreement, “Bonus Amount” shall
mean the annual average of the cash and fair market value (when paid or awarded
and calculated without regard to any vesting requirement) of stock or other
property paid to the Executive (including amounts that would have been paid if
they had not been deferred) under the Company’s annual incentive bonus plan for
the three years immediately preceding the year in which the Executive’s
employment terminates (disregarding for these purposes any year during such 3
year period that Executive did not work a full year), or for such shorter
period that the Executive has been employed by the Company. If the Executive’s
employment is terminated in the Executive’s first year of employment, “Bonus
Amount” shall mean 100% of the target bonus that the Executive would have been
eligible to receive for such year.

          2.4 Cause. For purposes of this Agreement, a termination of employment is
for “Cause” if the Executive has been convicted of a felony involving fraud or
dishonesty or the termination is evidenced by a resolution adopted in good
faith by at least two-thirds of the Board that the Executive: (i) intentionally
and continually failed substantially to perform his reasonably assigned duties
with the Company (other than a failure resulting from the Executive’s
incapacity due to physical or mental illness or from the Executive’s assignment
of duties that would constitute “Good Reason” as hereinafter defined) which
failure continued for a period of at least thirty (30) days after a written
notice of demand for substantial performance has been delivered to the
Executive specifying the manner in which the Executive has failed substantially
to perform or (ii) intentionally engaged in conduct which is demonstrably and
materially injurious to the Company; provided, however, that no termination of
the Executive’s employment shall be for Cause as set forth in clause (ii) above
until (x) there shall have been delivered to the Executive a copy of a written
notice setting forth that the Executive was guilty of the conduct set forth in
clause (ii) and specifying the particulars thereof in detail and (y) the
Executive shall have been provided an opportunity to be heard in person by the
Board (with the assistance of the Executive’s counsel if the Executive so
desires). Neither an act nor a failure to act, on the Executive’s part shall
be considered “intentional” unless the Executive has acted or failed to act
with a lack of good faith and with a lack of reasonable belief that the
Executive’s action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the contrary, no
failure to perform by the Executive after a Notice of Termination is given by
the Executive shall constitute Cause for purposes of this Agreement.

          2.5 Change in Control. For purposes of this Agreement, a “Change in
Control” shall mean any of the following events:

2

 

               (a) An acquisition (other than directly from the Trust) of any voting
securities of the Trust (the “Voting Securities”) by any “Person” (as the term
person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”)), immediately after which
such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 30% or more of the combined voting power of
the Trust’s then outstanding Voting Securities; provided, however, that in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A
“Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a majority of its voting power or its
equity securities or equity interest is owned directly or indirectly by the
Company (a “Subsidiary”), (ii) the Company or any Subsidiary or (iii) any
Person in connection with a “Non-Control Transaction” (as hereinafter defined).

               (b) Approval by shareholders of the Trust of:

               (i) A merger, consolidation or reorganization involving the
Trust, if:

                    (A) the shareholders of the Trust, immediately before
such 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 Voting
Securities of the entity resulting from such merger or
consolidation or reorganization (the “Surviving Corporation”)
in substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation or reorganization; and

                    (B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization do
not constitute at least a majority of the members of the
board of directors of the Surviving Corporation or a
corporation beneficially owning, directly or indirectly, a
majority of the Voting Securities of the Surviving
Corporation.

(A merger, consolidation or reorganization involving the
Trust which fails to satisfy the conditions described in
clauses (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 or
substantially all of the assets of the Trust to any Person (other
than to an entity of which the Trust directly or indirectly owns at
least 70% of the voting shares).

3

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Trust which, by reducing
the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Person, provided that if a Change
in Control would occur (but for the operation of this sentence) as a result of
the acquisition of Voting Securities by the Trust, and after such share
acquisition by the Trust, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.

               (c) The rejection by the voting Beneficial Owners of the outstanding
Shares of the entire slate of trustees that the Board proposes at a single
election of trustees.

               (d) The rejection by the voting Beneficial Owners of the outstanding
Shares of one-half or more of the trustees that the Board proposes over any two
or more consecutive elections of trustees.

               (e) Notwithstanding anything contained in this Agreement to the contrary,
if the Executive’s employment is terminated prior to a Change in Control and
the Executive reasonably demonstrates that such termination: (i) was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a
Change in Control (a “Third Party”) or (ii) otherwise occurred in connection
with, or in anticipation of, a Change in Control which actually occurs, then
for all purposes of this Agreement, the date of a Change in Control with
respect to the Executive shall mean the date immediately prior to the date of
such termination of the Executive’s employment.

          2.6 Company. For purposes of this Agreement, the “Company” shall include
the Company’s “Successors and Assigns” (as hereinafter defined).

          2.7 Disability. For purposes of this Agreement, “Disability” shall mean a
physical or mental infirmity that entitles the Executive to benefits under the
Company sponsored long-term disability plan in which he or she participates.

          2.8 Good Reason.

          (a) For purposes of this Agreement, “Good Reason” shall mean the
occurrence after a Change in Control of any of the events or conditions
described in subsections (i) through (viii) hereof:

               (i) a change in the Executive’s status, position or
responsibilities (including reporting responsibilities) which, in
the Executive’s reasonable judgment, represents an adverse change
(other than an immaterial or de minimus adverse change) from his
status, position or responsibilities as in effect at any time
within 180 days preceding the date of a Change in Control or at any
time thereafter; the Executive no longer serves as the chief
executive officer of a

4

 

publicly traded company; 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 Change in Control or at any time thereafter; or any
removal of the Executive from or failure to reappoint or reelect
him to any of such offices or positions held prior to the Change in
Control, except in connection with the termination of his
employment for Disability, Cause, as a result of his death or by
the Executive other than for Good Reason;

               (ii) a reduction in the Executive’s base salary or any failure
to pay the Executive any compensation or benefits to which he is
entitled within five days of written notice thereof;

               (iii) the Company’s requiring the Executive to be based at any
place outside a 25-mile radius from the Executive’s principal
location of business prior to the Change in Control, except for
reasonably required travel on the Company’s business which is not
materially greater than such travel requirements prior to the
Change in Control;

               (iv) the failure by the Company to provide the Executive with
compensation and benefits, in the aggregate, at least equal (in
terms of benefit levels and/or reward opportunities which
opportunities will be evaluated in light of the performance
requirements therefor) to those provided for under each other
employee compensation and benefit plan, program and practice in
which the Executive was participating at any time within 180 days
preceding the date of a Change in Control or at any time
thereafter;

               (v) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company, which
petition is not dismissed within sixty (60) days;

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

               (vii) any purported termination of the Executive’s employment
for Cause by the Company which does not comply with the terms of
Section 2.4; or

               (viii) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any Successors and Assigns to
assume and agree to perform this Agreement, as contemplated in
Section 6 hereof.

               (b) Any event or condition described in Section 2.8(a)(i) through (viii)
which occurs prior to a Change in Control but which the Executive reasonably
demonstrates (i) was at the request of a Third Party or (ii) otherwise arose in
connection with, or in anticipation of, a Change in Control which actually
occurs, shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to the Change in Control.

5

 

          (c) The Executive’s right to terminate his employment pursuant to this
Section 2.8 shall not be affected by his incapacity due to a Disability.

          2.9. Notice of Termination. For purposes of this Agreement, following a
Change in Control, “Notice of Termination” shall mean a written notice of
termination from the Company of the Executive’s employment which indicates a
specific termination provision in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated.

          2.10. Pro Rata Bonus. For purposes of this Agreement, “Pro Rata Bonus”
shall mean an amount equal to 100% of the target bonus that the Executive would
have been eligible to receive for the Company’s fiscal year in which the
Executive’s employment terminates, multiplied by a fraction, the numerator of
which is the number of days in such fiscal year through the Termination Date
and the denominator of which is 365.

          2.11. Successors and Assigns. For purposes of this Agreement, “Successors
and Assigns” shall mean a corporation or other entity acquiring all or
substantially all the Voting Securities, assets or business of the Trust
whether by operation of law or otherwise, and any affiliate of such Successors
and Assigns.

          2.12. Termination Date. For purposes of this Agreement, “Termination
Date” shall mean (a) in the case of the Executive’s death, his date of death,
(b) in the case of Good Reason, the last day of his employment and (c) in all
other cases, the date specified in the Notice of Termination or if no Notice of
Termination is sent, the last day of his employment; provided, however, that if
the Executive’s employment is terminated by the Company due to Disability, the
date specified in the Notice of Termination shall be the 30th day after receipt
of the Notice of Termination by the Executive, provided that the Executive
shall not have returned to the full-time performance of his duties within 30
days after such receipt.

          3. Termination of Employment. If the Executive’s employment with the
Company shall be terminated within twenty-four (24) months following a Change
in Control, the Executive shall be entitled to the following compensation and
benefits:

               (a) If the Executive’s employment with the Company shall be terminated (i)
by the Company for Cause or Disability, (ii) by reason of the Executive’s death
or (iii) by the Executive other than for Good Reason, the Employer shall pay to
the Executive the Accrued Compensation; provided, however, any incentive
compensation shall not be paid in the case of a termination by the Company for
Cause; and provided, further that, if an employment agreement is in existence
between the Company and the Executive on the Termination Date, the Employer
and/or its affiliates, as the case may be, shall also pay to the Executive any
amounts owed to the Executive pursuant to such employment agreement, but only
to the extent such amounts are not duplicative of amounts otherwise payable
hereunder.

6

 

               (b) If the Executive’s employment with the Company shall be terminated for
any reason other than as specified in Section 3(a), the Executive shall be
entitled to the following:

               (i) the Employer shall pay the Executive all Accrued
Compensation and a Pro Rata Bonus;

               (ii) the Employer shall pay the Executive as severance pay and
in lieu of any further compensation for periods subsequent to the
Termination Date, in a single payment an amount in cash equal to
three (3) times the sum of (A) the Base Amount and (B) the Bonus
Amount; provided, however, if an employment agreement is in
existence between the Company and the Executive on the Termination
Date, any amount due the Executive under this Section 3(b)(ii)
shall be reduced by the amount of Base Amount and Bonus Amount paid
as severance pay to Executive pursuant to such employment agreement
in lieu of compensation for periods subsequent to the Termination
Date.

               (iii) for thirty-six (36) months following the Termination
Date, (the “Continuation Period”), the Employer shall at its
expense continue on behalf of the Executive and his dependents and
beneficiaries the medical, dental, life, disability and
hospitalization benefits provided (A) to the Executive at any time
during the 90-day period prior to the Change in Control or at any
time thereafter (and if different benefits were paid during such
period, such of those benefits as are elected by the Executive) or
(B) to other similarly situated executives who continue in the
employ of the Company during the Continuation Period. The coverage
and benefits (including deductibles and costs) provided in this
Section 3(b)(iii) during the Continuation Period shall be no less
favorable to the Executive and his dependents and beneficiaries
than the most favorable of such coverages and benefits during any
of the periods referred to in clauses (A) and (B) above. The
Employer’s obligation hereunder with respect to the foregoing
benefits shall be compromised to the extent that the Executive
obtains any such benefits pursuant to a subsequent employer’s
benefit plans, in which case the Employer may reduce the coverage
of any benefits it is required to provide the Executive hereunder
as long as the aggregate coverages and benefits of the combined
benefits plans is no less favorable to the Executive than the
coverages and benefits required to be provided hereunder. This
subsection (iii) shall not be interpreted so as to limit any
benefits to which the Executive, his dependents or beneficiaries
may be otherwise entitled under any of the Company’s employee
benefit plans, programs or practices following the Executive’s
termination of employment, including without limitation, retiree
medical and life insurance benefits;

               (iv) all theretofore unvested share options, restricted
options, restricted share and other awards issued to the Executive
pursuant to the Company’s Share Option and Share Award Plan, and
all unvested benefits under any split dollar life

7

 

insurance policies insuring the Executive’s life, shall immediately
become 100% vested; and

               (v) a payment from the Employer equal to the unvested amount
contained in the Executive’s accounts in the Company’s 401(k) plan
(or any other qualified plan of the Company or an affiliate) which
he 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) shall
be paid in a single lump sum cash payment in immediately available funds within
five (5) days after the Executive’s Termination Date (or earlier, if required
by applicable law).

               (d) The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Section 3(b)(iii).

               (e) The Executive’s entitlement to any other compensation or benefits or
any indemnification shall be determined in accordance with the Company’s
employee benefit plans and other applicable programs, policies and practices or
any indemnification agreement in effect.

               4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive’s employment by the Company shall be communicated
by Notice of Termination to the Executive. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.

               5. Excise Tax Gross-Up.

               (a) Notwithstanding anything contained in this Agreement to the contrary,
in the event it is determined (pursuant to (b) below) or finally determined (as
defined in (c)(iii) below) that any payment, distribution, transfer, benefit or
other event with respect to the Company or its predecessors, successors, direct
or indirect subsidiaries or affiliates (or any predecessor, successor or
affiliate of any of them, and including any benefit plan of any of them), to or
for the benefit of Executive or Executive’s dependents, heirs or beneficiaries
(whether such payment, distribution, transfer, benefit or other event occurs
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 5) (each a
“Payment” and collectively the “Payments”) is or was subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and
any successor provision or any comparable provision of state or local income
tax law (collectively, “Section 4999”), or any interest, penalty or addition to
tax is or was incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest, penalty or addition to tax,
hereinafter collectively referred to as the “Excise Tax”), then, within 10 days
after such determination or final determination, as the case may be, the
Employer shall pay to Executive an additional cash payment (hereinafter
referred to as the “Gross-Up Payment”) in an amount such that after payment by
Executive of all taxes, interest, penalties and additions to tax imposed with
respect to the Gross-Up Payment (including, without limitation, any income and
excise taxes

8

 

imposed upon the Gross-Up Payment), Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon such Payment or Payments. This
provision is intended to put Executive in the same position as Executive would
have been had no Excise Tax been imposed upon or incurred as a result of any
Payment.

               (b) Except as provided in subsection (c) below, the determination that a
Payment is subject to an Excise Tax shall be made in writing by a nationally
recognized certified public accounting firm selected by Executive (“Executive’s
Accountant”). Such determination shall include the amount of the Gross-Up
Payment and detailed computations thereof, including any assumptions used in
such computations (the written determination of the Executive’s Accountant,
hereinafter, the “Executive’s Determination”). The Executive’s Determination
shall be reviewed on behalf of the Company by a nationally recognized certified
public accounting firm selected by the Company (the “Company’s Accountant”).
The Company shall notify Executive within 10 business days after receipt of the
Executive’s Determination of any disagreement or dispute therewith, and failure
to so notify within that period shall be considered an agreement by the Company
with the Executive’s Determination, obligating the Employer to make payment as
provided in subsection (a) above within 10 days from the expiration of such 10
business-day period. In the event of an objection by the Company to the
Executive’s Determination, any amount not in dispute shall be paid within 10
days following the 10 business-day period referred to herein, and with respect
to the amount in dispute the Executive’s Accountant and the Company’s
Accountant shall jointly select a third nationally recognized certified public
accounting firm to resolve the dispute and the decision of such third firm
shall be final, binding and conclusive upon the Executive and the Company. In
such a case, the third accounting firm’s findings shall be deemed the binding
determination with respect to the amount in dispute, obligating the Employer to
make any payment as a result thereof within 10 days following the receipt of
such third accounting firm’s determination. All fees and expenses of each of
the accounting firms referred to in this Section 5 shall be borne solely by the
Employer.

	 	(c)
	 	(i) Executive shall notify the Company in writing of any
claim by the Internal Revenue Service (or any successor thereof) or
any state or local taxing authority (individually or collectively,
the “Taxing Authority”) that, if successful, would require the
payment by the Employer of a Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than 30 days
after Executive receives written notice of such claim and shall
apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid; provided, however, that
failure by Executive to give such notice within such 30-day period
shall not result in a waiver or forfeiture of any of Executive’s
rights under this Section 5 except to the extent of actual damages
suffered by the Company as a result of such failure. Executive
shall not pay such claim prior to the expiration of the 15-day
period following the date on which Executive gives such notice to
the Company (or such shorter period ending on the date that any
payment of taxes, interest, penalties or additions to tax with
respect to such claim is due). If the Company notifies Executive in
writing prior to the expiration of such 15-day period that it
desires to contest such claim (and demonstrates to the reasonable
satisfaction of Executive its ability to make the payments to
Executive which may ultimately be required under this section before assuming
responsibility for the claim), Executive shall:

9

 

                    (A) give the Company any information reasonably requested by
the Company relating to such claim;

                    (B) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by the Company
that is reasonably acceptable to Executive;

                    (C) cooperate with the Company in good faith in order
effectively to contest such claim; and

                    (D) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Employer
(including additional interest, penalties and additions to tax)
incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for all taxes
(including, without limitation, income and excise taxes), interest,
penalties and additions to tax imposed in relation to such claim
and in relation to the payment of such costs and expenses or
indemnification. Without limitation on the foregoing provisions of
this Section 5, and to the extent its actions do not unreasonably
interfere with or prejudice Executive’s disputes with the Taxing
Authority as to other issues, the Company shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
Executive to pay the tax, interest or penalties claimed and sue for
a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Employer
shall advance an amount equal to such payment to Executive, on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from all taxes (including, without
limitation, income and excise taxes), interest, penalties and
additions to tax imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and,
further, provided, that any extension of the statute of limitations
relating to payment of taxes, interest, penalties or additions to
tax for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount; and, provided, further, that any settlement of
any claim shall be reasonably acceptable to Executive and the
Company’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and
Executive shall be entitled to settle or contest, as the case may
be, any other issue.

10

 

(ii) If, after receipt by Executive of an amount advanced by the
Employer pursuant to Section 5(c)(i), Executive receives any refund
with respect to such claim, Executive shall (subject to the
Company’s complying with the requirements of Section 5) promptly
pay to the Employer an amount equal to such refund (together with
any interest paid or credited thereon after taxes applicable
thereto), net of any taxes (including without limitation any income
or excise taxes), interest, penalties or additions to tax and any
other costs incurred by Executive in connection with such advance,
after giving effect to such repayment. If, after the receipt by
Executive of an amount advanced by the Employer pursuant to Section
5(c)(i), it is finally determined that Executive is not entitled to
any refund with respect to such claim, then such advance shall be
forgiven and shall not be required to be repaid and the amount of
such advance shall be treated as a Gross-Up Payment and shall
offset, to the extent thereof, the amount of any Gross-Up Payment
otherwise required to be paid.

(iii) For purposes of this Section 5, whether the Excise Tax is
applicable to a Payment shall be deemed to be “finally determined”
upon the earliest of: (A) the expiration of the 15-day period
referred to in paragraph (c)(i) above if the Company has not
notified Executive that it intends to contest the underlying claim,
(B) the expiration of any period following which no right of appeal
exists, (C) the date upon which a closing agreement or similar
agreement with respect to the claim is executed by Executive and
the Taxing Authority (which agreement may be executed only in
compliance with this Section 5), (D) the receipt by Executive of
notice from the Company that it no longer seeks to pursue a contest
(which notice shall be deemed received if the Company does not,
within 15 days following receipt of a written inquiry from
Executive, affirmatively indicate in writing to Executive that the
Company intends to continue to pursue such contest).

	 	(d)
	 	As a result of uncertainty in the application of Section 4999
that may exist at the time of any determination that a Gross-Up
Payment is due, it may be possible that in making the calculations
required to be made hereunder, the parties or their accountants
shall determine that a Gross-Up Payment need not be made (or shall
make no determination with respect to a Gross-Up Payment) that
properly should be made (“Underpayment”), or that a Gross-Up Payment
not properly needed to be made should be made (“Overpayment”). The
determination of any Underpayment shall be made using the procedures
set forth in paragraph (b) above and shall be paid to Executive as
an additional Gross-Up Payment. The Company shall be entitled to
use procedures similar to those available to Executive in paragraph
(b) to determine the amount of any Overpayment (provided that the
Company shall bear all costs of the accountants as provided in
paragraph (b)). In the event of a determination that an Overpayment
was made, any such Overpayment shall be treated for all purposes as
a loan to Executive with interest at the applicable Federal rate
provided for in Section 1274(d) of the Code; provided, however, that
the amount to be repaid by Executive to the

11

 

Employer shall be subject to reduction to the extent necessary to
put Executive in the same after-tax position as if such Overpayment
were never made.

          6. Successors; Binding Agreement. This Agreement shall be binding upon
and shall inure to the benefit of the Company, its Successors and Assigns, and
the Company shall require any Successors and Assigns to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal personal representative.

          7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Executive as a result of the Executive obtaining or enforcing any right or
benefit provided by this Agreement (including, but not limited to, any such
fees and expenses incurred in connection with the Dispute). Furthermore, any
amounts due Executive by the Company that are not paid when due under this
Agreement shall bear interest at the Prime Rate (as declared by Bank of
America, N.A. from time to time) plus 5% from the time when the payment is due
until the date the payment is made.

          8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, by overnight courier or by facsimile, addressed to the
respective addresses and facsimile numbers last given by each party to the
other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All
notices and communications shall be deemed to have been received on the date of
delivery thereof or on the third business day after the mailing thereof, except
that notice of change of address shall be effective only upon receipt.

          9. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company (except for any
severance or termination policies, plans, programs or practices) and for which
the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any other agreements with the Company
(except for any severance or termination agreement). Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.

          10. No Guaranteed Employment. The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is “at will” and may be terminated by either the Executive or the
Company at any time, subject, however to the rights of the Executive provided
herein in the event of any such termination.

12

 

          11. Settlement of Claims. The Employer’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.

          12. Full Satisfaction; Waiver and Release. As a condition to receiving
the payments and benefits hereunder, the Executive shall execute a document in
customary form, releasing and waiving any and all claims, causes of actions and
the like against the Company and its successors, shareholders, officers,
trustees, agents and employees, regarding all matters relating to the
Executive’s service as an employee of the Company or any affiliates and the
termination of such relationship. Such claims include, without limitation, any
claims arising under Age Discrimination in Employment Act of 1967, as amended
(the “ADEA”); Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991, as amended; the Equal Pay Act of 1962; the American
Disabilities Act of 1990; the Family Medical Leave Act, as amended; the
Employee Retirement Income Security Act of 1976, as amended; or any other
federal, state or local statute or ordinance, but exclude any claims that arise
out of an asserted breach of the terms of this Agreement or current or future
claims related to the matters described in Paragraph 9.

          13. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive, the Trust and Employer. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provisions of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.

          14. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Illinois without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in Cook County in the State of Illinois.

          15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

          16. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the Company and
Executive with respect to the subject matter hereof, including any prior
“Change in Control” agreement.

     IN WITNESS WHEREOF, the Trust and the Employer has caused this Agreement
to be executed by its duly authorized officer and the Executive has executed
this Agreement as of the day and year first above written.

13

 

	 	 	 	 	 
	 	 	EQUITY OFFICE PROPERTIES TRUST
	 	 	 	 	 
	 	 	
By:
	 	/s/ Stanley M. Stevens
	 	 	 	 	

	 	 	
Name:

Title:
	 	Stanley M. Stevens

Executive Vice President, Chief Legal Counsel

and Secretary
	 	 	 	 	 
	 	 	EQUITY OFFICE MANAGEMENT, L.L.C.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Stanley M. Stevens
	 	 	 	 	

	 	 	
Name:

Title:
	 	Stanley M. Stevens

Executive Vice President, Chief Legal

Counsel and Secretary
	 	 	 	 	 
	 	 	/s/ Richard D. Kincaid
	 	 	

	 	 	Richard D. Kincaid

     For and in consideration of the benefits hereunder to Employer, the
wholly-owned subsidiary of the undersigned, the undersigned does hereby
unconditionally guarantee the obligations of Employer hereunder.

	 	 	 	 	 
	 	 	EOP Operating Limited Partnership
	 	 	 	 	 
	 	 	
By:
	 	Equity Office Properties Trust, its general

partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ Stanley M. Stevens
	 	 	 	 	

	 	 	
Name:

Title:
	 	Stanley M. Stevens

Executive Vice President, Chief Legal

Counsel and Secretary

14exv10w1

 

     Exhibit 10.1

First Amendment to the Equity Office Properties Trust

1997 Share Option and Share Award Plan

(As Amended and Restated Effective September 1, 2003)

     WHEREAS, Equity Office Properties Trust (the “Company”) has adopted the
Equity Office Properties Trust 1997 Share Option and Share Award Plan (As
Amended and Restated Effective September 1, 2003) (the “Plan”), and has
reserved the right to amend the Plan; and

     WHEREAS, the Company desires to amend the Plan to change the definition of
“Fair Market Value” for certain purposes under the Plan and to provide that the
Plan shall expire on June 30, 2007;

     NOW THEREFORE, the Company hereby amends the Plan, effective September 20,
2003, in the following respects:

1. The last sentence of paragraph 6(d)(vi) is amended to read as follows:

For purposes of this paragraph, please reference the
definition of “Fair Market Value” provided in
paragraph 9.

2. The last sentence of paragraph 9 is deleted and the
following is added at the end of such paragraph:

Solely for the purposes of this paragraph 9 and
paragraph 6(d)(vi), if on the date the amount of tax
to be withheld is to be determined the Shares are
listed on an established national or regional stock
exchange, are admitted to quotation on The Nasdaq
Stock Market, Inc. or are publicly traded on an
established securities market, the Fair Market Value
of a Share shall be the mean between the high and low
sale prices of the Share on such exchange or in such
market (if there is more than one such exchange or
market, the Committee shall determine the appropriate
exchange or market) on the first trading day
immediately preceding the determination date or, if
there are no such reported sale prices on such trading
day, on the next preceding day on which any sale shall
have been reported.”

In addition, for the purpose of the Company’s
determining the income and appropriate withholding
under this paragraph 9, the amount of income
recognized in connection with an Option exercise shall
be based on (i) in the case of a cashless Option
exercise, the actual proceeds of the exercise, (ii) in
the case of pre-arranged transactions by which an
Option is exercised and the purchased Shares are sold
on the date of exercise, the sale price for such
Shares, and (iii) for all other Option exercise
methods, the

 

 

excess of the Fair Market Value (as defined under this
Section 9) of a Share on the exercise date over the
exercise price.

For the purpose of the Company’s determining the
income and appropriate withholding under this
paragraph 9, the amount of income recognized in
connection with the exercise of a SAR shall be based
on the Fair Market Value (as defined under this
Section 9) of a Share on of the exercise date.

For the purpose of the Company’s determining the
income and appropriate withholding under this
paragraph 9,the amount of income recognized in
connection with the vesting of a Share Award shall be
based on the closing price of a Share on the New York
Stock Exchange on the first trading day immediately
preceding the determination date, which is the Fair
Market Value of a Share as defined in paragraph 6(b).

3. Paragraph 15 is amended to provide as follows:

“This amended and restated Plan is effective September
1, 2003. Unless terminated earlier pursuant to
paragraph 16, the Plan shall expire on June 30, 2007,
and no Share Award, Option, SAR or Dividend Equivalent
may be granted after such date, or such earlier date
on which the Plan is terminated pursuant to paragraph
16. The expiration of the Plan shall not affect any
Share Award, Option, SAR or Dividend Equivalent
granted prior to the expiration of the Plan.”

     IN WITNESS WHEREOF, this Amendment has been executed by a duly authorized
officer of the Company, this 20th day of September, 2003.

	 	 	 	 	 
	 	 	EQUITY OFFICE PROPERTIES TRUST
	  	 	 	 	 
	 	 	
By:
	 	/s/ Stanley M. Stevens
	 	 	 	 	

	 	 	
Name:

Title:
	 	Stanley M. Stevens

Executive Vice President, Chief Legal
	 	 	 	 	Counsel and Secretary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]