Document:

eqr-ex101_301.htm

 

Exhibit 10.1

 

EQUITY RESIDENTIAL 
2018 LONG-TERM INCENTIVE PLAN AWARD AGREEMENT

 

This 2018 Long-Term Incentive Plan Award Agreement (the “Award Agreement”) is made as of January 1, 2018 between Equity Residential (the “Company”) and _______________ (the “Grantee”).

 

RECITALS

 

A.The Company, acting pursuant to authorization from its Board of Trustees and its Compensation Committee (the “Compensation Committee”), hereby grants the Grantee a Long-Term Incentive Plan Award (“Award”) as of the date hereof and as more fully set forth on Schedule A.

 

B.The Grantee can be issued, or retain, as the case may be, from 0% to 200% of the target number of Restricted Shares and/or Restricted Units that comprise the Award based on the Company’s absolute and relative Total Shareholder Return (“TSR”) and achievement of Normalized Funds From Operations (“NFFO”) relative to a target, as further described herein for the period beginning January 1, 2018 and ending December 31, 2020 (the “Performance Period”).  

 

C.Restricted Shares are unvested common shares of beneficial interest of the Company.  Restricted Units are a special class of interest in ERP Operating Limited Partnership (“ERP”), the Company’s operating partnership.  Both Restricted Shares and Restricted Units are subject to vesting and other tax considerations.  Each Restricted Unit is convertible, under certain conditions, into one OP Unit, which is a class of partnership interest in ERP that can be exchanged for an EQR common share.   Any Restricted Units issued under the Award will be known as the Series 2018A Restricted Units and are issued subject to the terms and conditions contained in the Certificate of Designation of Series 2018A Restricted Units of ERP Operating Limited Partnership dated of even date herewith. 

 

D.The Award, issued pursuant to the Company’s 2018 Long-Term Incentive Plan (“LTI Plan”) and its 2011 Share Incentive Plan (“2011 Share Plan”), references a target number of Restricted Shares and/or Restricted Units.  The Grantee previously made an election to have the Award settled after the end of the Performance Period in the form of either Restricted Shares and/or Restricted Units. To the extent that the Grantee elected to receive Restricted Units, the Restricted Units are being issued as of the date hereof at the maximum 200% of the target amount, but the ultimate number of Restricted Units to be retained by Grantee is subject to final determination at the end of the Performance Period as provided in Section 1(f) hereof.  To the extent that the Grantee elected to receive Restricted Shares, such shares are not being issued as of the date hereof, but the Award will be settled after the end of the Performance Period in the form of Restricted Shares. 

 

 

 

 

 

 

 

 

NOW, THEREFORE, the Company and the Grantee agree as follows:

 

	
1.
	
Performance Metrics
	
 

The following “Performance Metrics” will determine the actual number of Restricted Shares and/or Restricted Units the Grantee may earn pursuant to the Award at the end of the Performance Period:

a.Company TSR relative to Apartment Index Weighted Average TSR:   A percentage of 35% of the target Award will be earned based on the relative performance of the Company’s TSR to the weighted average of the TSR of the member companies comprising the FTSE NAREIT Equity Apartments Index, as adjusted to exclude the Company from the index, (the “Apartment Index”) for the Performance Period as follows:

 

		
	
Company TSR Performance relative to Apartment Index Weighted Average TSR
	
Percentage of

35% Earned

	
more than 400 basis points below average 
	
     0%

	
400 basis points below average  (“threshold”)
	
   50%

	
Equal to the average  (“target”)
	
 100%

	
400 basis points or more above average  (“maximum”)
	
 200%

 

b.Company TSR relative to Equity Index Weighted Average TSR:   A percentage of 22.5% of the target Award will be earned based on the relative performance of the Company’s TSR to the weighted average of the TSR of the member companies comprising the FTSE NAREIT Equity REIT Index, including the Company (the “Equity Index”) for the Performance Period as follows:

 

		
	
Company TSR Performance relative to Equity Index Weighted Average TSR
	
Percentage of

22.5% Earned

	
more than 400 basis points below average 
	
     0%

	
400 basis points below average  (“threshold”)
	
   50%

	
Equal to the average  (“target”)
	
 100%

	
400 basis points or more above average  (“maximum”)
	
 200%

 

c.Absolute Company TSR:  A percentage of 22.5% of the target Award will be earned based on comparing the Company’s TSR over the Performance Period to absolute targets as follows:

					
	
 

Absolute Company TSR
	
  Percentage of 

   22.5% Earned

	
< 4%
	
  0%

	
4% (“threshold”)
	
50%

	
8% (“target”)
	
100%

	
12% or > (“maximum”)
	
200%

 

 

 

 

d.NFFO relative to a target established for each calendar year:  A percentage of 20% of the target Award will be earned based on the Company’s achievement of NFFO relative to a target established by the Compensation Committee for each year of the three-year period. 

 

No later than March 31 of each calendar year, the Compensation Committee shall establish the threshold, target and maximum NFFO performance level metrics for such calendar year. In no event will target be less than the midpoint of the Company’s range of NFFO expectations for the year except as provided in Section 2(c). The achievement of this metric shall be determined on an annual basis and the average of the three years shall be used in the final determination of the Award.

 

To the extent the Company is using a NFFO performance metric with threshold (50%) and maximum (200%) limits in its Annual Incentive Plan Corporate Goals for any calendar year, it shall use the same threshold and maximum metrics in the NFFO metric hereunder. 

 

The following is an example of a sample NFFO performance metric:

 

		
	
 

NFFO relative to Company’s target NFFO expectations
	
 Percentage of

    20% Earned

	
Less than threshold  
	
0%

	
$XXXX (“threshold”)
	
50%

	
$XXXX(“target”)
	
100%

	
$XXXX (“maximum”)
	
200%

 

e.       For results between threshold and target, or between target and maximum, the appropriate percentage of the target Award earned shall be based on interpolation. Performance against each metric is also measured separately of the others.  As an example:

 

				
	
TSR relative to 

Apartment Index Average TSR  

(35% of Award)
	
TSR relative to 

Equity Index Average TSR 

(22.5% of Award)
	
Absolute Company TSR 

(22.5% of Award)

 
	
NFFO relative to 

guidance midpoint 

(20% of Award)

	
Result = 50th percentile

50th = 100% of target

Pct of 50% earned = 100%

35% x 100% = 35%

 
	
Result = 58th percentile

58th =  127% of target

Pct of 25% earned =127%

22.5% x 127% =28.575%
	
Result = 7.6% TSR

7.6% = 95% of target

Pct of 22.5% earned = 95%

22.5% x 95% = 21.375%
	
Result = target (100%)

Pct of 20% earned = 100%

20% x 100% = 20%

	
Final Calculation of Award = 21.375% + 35% + 28.575% + 20% = 104.95% of Target

 

f.The Compensation Committee as promptly as practicable (but in no event later than 45 days) following the conclusion of the Performance Period shall (i) determine the performance of the Company’s TSR and NFFO over the Performance Period as compared against the Performance Metrics established for the period; (ii) determine and issue to the Grantee the number of  resulting Restricted Shares in settlement of the Award; (iii) determine the actual number of Restricted Units that are retained by the Grantee; and (iv) make any dividend equivalent payments and cash distributions required pursuant to Section 5(a) and 5(b) hereof.  Any Restricted Units the Grantee was awarded that are in excess of the actual resulting number at the end of the Performance Period, as determined by the Compensation Committee, shall be forfeited and become null and void.  Fractional shares and units will not be issued, with any securities issued as an Award rounded down to the nearest whole amount.

 

 

 

g.To the extent the Company changes or discontinues its use of any of the above Performance Metrics, or if any of such Performance Metrics become inapplicable for its intended purpose, the Compensation Committee retains the discretion to substitute alternate metrics, so long as the substitution is done in an equitable manner.

 

	
2.
	
Definitions of Performance Metrics; Adjustments
	
 

 

a.TSR.   The Company’s TSR represents the compounded annual return of an investment in one common share of Equity Residential over the Performance Period, expressed as a percentage (and sometimes commonly referred to as the “compound annual growth rate”, or “CAGR”), assuming the following:

 

	
 
	
(i)
	
Beginning Share Price:  average closing price of a common share of Equity Residential over the first 20 trading days of the Performance Period.
	
 

 

	
 
	
(ii)
	
Ending Share Price:  average closing price of a common share of Equity Residential over the last 20 trading days of the Performance Period, except as set forth in the Change in Control provisions of Section 3.
	
 

 

	
 
	
(iii)
	
Dividends are reinvested in additional common shares of Equity Residential on the ex-dividend date for such dividend at the closing price of a common share of Equity Residential.
	
 

 

The TSR of each of the member companies comprising the Apartment Index and Equity Index over the Performance Period shall be calculated using the methodologies analogous in all material respects to those used for the calculation of the Company’s TSR as described in Section 2(a) to provide a fair comparison of TSRs, and as is the case with the Company (see Section 2(c)), the Compensation Committee shall make equitable adjustments to the TSR of such member companies to take into account any extraordinary, unusual or non-recurring corporate events as described in Section 13 of the 2011 Share Plan affecting such member companies, such as spin-offs, stock splits, reverse splits, special dividends, recapitalizations, reclassifications and similar events.  The Compensation Committee has discretion in how the required adjustments are determined as long as they are done equitably.  

  

The Company’s TSR will be compared to the Apartment Index using a same store approach (all constituents must be included in the index for all three years), while the comparison to the Equity Index will not use this same store approach.  In comparison to the Apartment Index, the Equity Index is much larger and weighted through daily rebalancing so no further adjustments are necessary for changes in the constituents who comprise the index. Accordingly, for purposes of the Apartment Index, companies that are not public throughout the entire Performance Period will be excluded from the TSR calculations.  In addition, a member company of the Apartment Index will be excluded from the TSR calculations if on the last day of the Performance Period such company is under a definitive agreement to be acquired or merged out of existence during the next 12 months.  Also, any such member company that files for bankruptcy during the Performance Period shall have a minus 100% value assigned to its TSR for purposes of the TSR calculations. 

The market capitalization of the companies in the Apartment Index shall be weighted 

​based on the market capitalization weighting method used by FTSE one time at the beginning of 

 

 

the three-year performance period (using the average of the first 20 trading days) to determine each company's weighted share of the final results.  For example, if there are five companies in the index as of the beginning of the three-year performance period with the identical market capitalization, each company's share of the final results shall be 20%.  If one of the companies is excluded from the TSR calculations, as provided above, then each of the remaining company's weighted share shall be 25%.

 

b.NFFO.   "NFFO" means the Company’s “Normalized Funds from Operations” as defined in the Company’s most recent Form 10-K or 10-Q at any given time, subject to adjustment as described in Section 1(g) herein.  

 

c.Adjustments.   The Compensation Committee shall make equitable adjustments to the Award granted hereunder and/or the Performance Metrics contained herein to take into account any extraordinary, unusual or non-recurring corporate events affecting the Company as described in Section 13 of the 2011 Share Plan (such as spin-offs, stock splits, reverse splits, special dividends, recapitalizations, reclassifications and similar events), so that the total value of the Award shall not be changed by such events.  

 

Furthermore, the Compensation Committee shall make equitable adjustments to the Award granted hereunder and/or the Performance Metrics contained herein to take into account any other significant or unforeseen events which occur (as an example only, such as a purchase or sale of a significant number of assets which would justify a change in the NFFO Performance Metric), so that the total value of the Award shall not be changed by such events.  

 

The Compensation Committee has discretion in how the required adjustments are determined as long as they are done equitably.

 

3.Change in Control

 

	

	
If a Change in Control occurs at any time prior to the end of the Performance Period, the Award shall fully vest on the date of the Change in Control, and the Award shall be valued as though the Performance Period had ended on the date of the Change in Control, and for purposes of calculating TSR, the Ending Share Price for the Company and the relevant index companies shall be the closing price of each company’s common shares on the date of the Change in Control (as opposed to a trailing average), which together with the NFFO performance metric (as appropriately prorated) shall determine the actual number of Restricted Shares issued and/or Restricted Units retained by the Grantee, which shall be a percentage (from zero to 200%) of the target Award.  Dividend equivalent payments and distributions payable pursuant to Section 5 hereof would be paid based on the actual number of Restricted Shares issued and/or Restricted Units retained.  In the event of any conflict between the terms of this Section 3 and the terms set forth in the 2011 Share Plan and any “change in control” agreement between the Company and the Grantee entered into prior to or as of the date hereof, the terms of this Section 3 shall control, provided however that any Restricted Shares issued, Restricted Units retained, and other payments made pursuant to this Section 3 are expressly subject to “modified cutback” language contained in any “change in control” agreement between the Company and the Grantee.
	
 

 

 

 

 

 

4.Vesting

 

a.Employees.  All Restricted Shares and/or Restricted Units that are the result of the settlement of an Award to a grantee who is an employee of the Company or any of its affiliates (an “Employee Grantee”) shall, subject to the proration provisions in Section 4(c) below, fully vest on the issuance date for Restricted Shares and on the date of the determination of the resulting number of retained Restricted Units, as provided in Section 1 hereof, subject to continued employment, and the other vesting provisions described below in Section 4(c)(i), provided that if the vesting date occurs within a trading lockout imposed by the Company, the vesting date for current employees will be automatically extended to the first business day after expiration of the lockout.

 

b.Chairman of the Board of Trustees.  All Restricted Shares and/or Restricted Units that are the result of the settlement of an Award to a grantee who is the Chairman of the Board of Trustees of the Company (the “Chairman”) at the time of the grant of an Award hereunder shall fully vest on the issuance date for Restricted Shares and on the date of the determination of the resulting number of retained Restricted Units, as provided in Section 1 hereof, subject to continued service as Chairman and the proration provisions in Section 4(c) below.  Notwithstanding the foregoing, any unvested Restricted Shares and/or Restricted Units that comprise an Award to the Chairman shall fully accelerate and vest in advance of the vesting specified above upon the following events: (i) the death of the Chairman; (ii) the Chairman’s voluntary retirement from the Board of Trustees, or the Chairman’s decision not to stand for re-election to the Board of Trustees; (iii) the failure of the Chairman to be re-nominated to the Board of Trustees or named as Chairman of the Board of Trustees; or (iv) the failure of the Chairman to be re-elected to the Board of Trustees if the Chairman is re-nominated to the Board of Trustees.

 

c.Termination of Employment.    If a “Qualified Termination” of employment (or, in the case of the Chairman, in relation to service on the Board of Trustees) occurs during the first year of the Performance Period, the Grantee’s Award shall be prorated in the proportion that the number of days employed during such year bears to 365 (or 366 if such year is a leap year), as the award represents payment for services to be provided during the first year of the Performance Period. For example, if the Grantee had a Qualified Termination of employment on October 1, 2018, Grantee would have earned 9/12 of the Award, and 3/12 of the Award would be forfeited.  The number of resulting Restricted Shares and/or Restricted Units (based on the pro-rated Award) will continue to be determined at the end of the Performance Period.   All dividend equivalent payments and Partial Distributions described in Section 5 shall be based on the pro-rated Award from and after the date of the Qualified Termination.  Qualified Termination is defined as follows:

 

(i)   For an Employee Grantee, a Qualified Termination is termination of employment due to:

 

(a)   Death,

(b)   Disability, 

(c)   Retirement at or after age 62, provided that the Employee Grantee’s service at the Company commenced prior to January 1, 2009, or 

(d)   Retirement in accordance with the Rule of 70.  

 

 

 

Vesting is immediate for a Qualified Termination due to (i) Death or Disability and (ii) retirement at or after age 62, provided the Grantee signs a release in a form that is reasonably satisfactory to the Company releasing the Company from customary claims.

For a Qualified Termination due to a Rule of 70 retirement, vesting continues after retirement, provided the Grantee signs a release in a form that is reasonably satisfactory to the Company releasing the Company from customary claims and also containing non-competition and employee non-solicitation provisions and complies with such non-competition and employee non-solicitation provisions. 

 

(ii)  For the Chairman, a Qualified Termination means the events described above in Section 4 (b)(i)-(iv). 

 

(iii)  If a Grantee’s employment (or service in the case of the Chairman) terminates prior to vesting of the Award for any reason other than pursuant to a Qualified Termination, any unvested Awards shall be forfeited, unless the Compensation Committee determines otherwise.

  

5.Dividend Equivalent Payments/Cash Distributions

 

a.With respect to an Award granted to the Grantee which will be settled in the form of Restricted Shares after the end of the Performance Period, the Company shall not pay the Grantee any dividends on such Award.  Once the number of  resulting Restricted Shares has been determined by the Compensation Committee after the end of the Performance Period pursuant to Section 1(f) hereof, the Company shall make a payment  without interest to the Grantee, as required under Section 1,  in an amount equal to the amount of any and all dividends that would have been paid on those Restricted Shares had they been outstanding and entitled to dividends during the period from the grant date of the Award to the date of issuance, except to the extent such dividends have already been taken into account in adjustments made to the target number of Restricted Shares as required by Section 2(c) for purposes of ensuring that the total value of the Award has not changed, and except as set forth in Section 5(c).  This payment will be considered compensation for all purposes, and will be received by the Grantee in its capacity as an employee, or as the Chairman of the Board, and not in such person’s capacity as a shareholder. 

 

b.With respect to any Restricted Units granted to the Grantee, the Company shall cause ERP to pay the Grantee a distribution in the amount of 10 percent of any and all cash distributions (“Partial Distributions”) paid on OP Units during the period from the grant date to the date of final determination of resulting Restricted Units except as set forth in Section 5(c).  Partial Distributions are non-forfeitable when paid, whether or not the underlying Restricted Units are eventually retained pursuant to the terms of this Award Agreement.  Once the number of resulting Restricted Units has been determined by the Compensation Committee at the end of the Performance Period pursuant to Section 1(f) hereof, ERP shall promptly make a payment in cash without interest to the Grantee, as required under Section 1,  in the amount of any and all cash distributions that would have been paid on those resulting Restricted Units had they been outstanding and entitled to full distributions during the period from the grant date of the Award to such determination, less any previously paid Partial Distributions, except to the extent any such distributions have already been taken into account in adjustments made to the target number of Restricted Units as required by Section 2(c) for purposes of ensuring that the total value of the Award has not changed, and except as set forth in Section 5(c). 

 

 

 

c.Notwithstanding the foregoing, for purposes of this Award Agreement the Grantee shall not be entitled to any Dividend Equivalent Payments or distributions (including, without limitation, any Partial Distributions) that relate to the dividends and/or distributions declared by the Company on December 19, 2017.  

 

d.It is the intention of this Award Agreement, subject to the discretion of the Compensation Committee to make equitable adjustments, that the Dividend Equivalent Payments and distributions payable to grantees under Section 5 should normally take into account dividends and distributions that have been or would have been typically and customarily paid on issued Restricted Shares and retained Restricted Units had the determination of the number of Restricted Shares issued and Restricted Units retained hereunder been finalized as of close of business on December 31, 2020.

 

6.Notices

 

Any notice to be given under the terms of this Award Agreement to the Company shall be addressed to the Company in care of its Secretary, and any notice to be given to the Grantee shall be addressed to the address as set forth in the Company’s records.  Either party may hereafter designate a different address for notices to be given to it or him or her.  

 

7.Titles

 

Titles and captions are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Award Agreement.  Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the 2011 Share Plan or as the context otherwise reasonably indicates.

 

8.Amendment

 

This Award Agreement may be amended only by a writing executed by the parties hereto which specifically states that it is amending this Award Agreement. 

 

9.Governing Law

 

The laws of the State of Maryland shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Award Agreement regardless of the law that might be applied under principles of conflicts of laws.

 

 

[Signature Page Follows]

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to be executed as of the aforesaid date.

 

EQUITY RESIDENTIAL 

 

By:  

         

 

                                 

The foregoing Award Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  

 

GRANTEE

 

 

 

  

 

 

 

 

SCHEDULE A

 

 

		
	
Name of Grantee
	
 

 

	
Target number of Restricted Units 
	
 _______

 

200% of this target number, or _______ Restricted Units, will be issued to the Grantee, subject to the Compensation Committee’s determination of the Company’s performance results for the Performance Period and the determination of the resulting number of retained Restricted Units.

 

	
Target number of Restricted Shares 

 

 
	
________

	
Performance Period                     
	
January 1, 2018 to December 31, 2020eqr-ex102_300.htm

 

Exhibit 10.2

      

RULE OF 70 RETIREMENT AGREEMENT  

 

 

This Rule of 70 Retirement Agreement (this “Agreement”) is entered into by and between Equity Residential (“Equity” or the “Company”) and David Santee (“Executive”) as of February 28, 2018.

 

Witnesseth

 

Whereas, Executive is currently an officer of Equity and an employee of an Equity affiliate;

 

Whereas, Executive is under the age of 62 and has elected to voluntarily retire, effective January 1, 2019, (the “Retirement Date”), in accordance with the Rule of 70 retirement provisions of Equity’s Share Incentive Plans, after which he will no longer will be an officer or employee; and 

 

Whereas, Executive and Equity wish to memorialize certain terms and conditions relating to Executive’s retirement;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Equity and Executive voluntarily and knowingly agree as follows:

 

	
1.
	
Through and including June 30, 2018 (the “COO Transition Date”), Executive will continue to serve as Chief Operating Officer of the Company and fulfill all of the customary duties and responsibilities of that position, while also assisting in the orderly transition of his responsibilities to Michael Manelis (“New COO”), currently Executive Vice President-Property Operations of the Company.  After the COO Transition Date and through the Retirement Date, Executive shall serve the Company as Executive Vice President-Property Operations reporting to the Chief Executive Officer, and in such position shall provide ongoing services to the Company regarding property management operations as requested from time to time by the Chief Executive Officer, such as continuing the orderly transition of responsibilities, providing support for earnings calls, budgeting, personnel matters, expense management, and other duties. 

	
2.
	
Executive will receive his regular base pay for service through and including the Retirement Date, will not receive any severance relating to his or her retirement, and will continue to be reimbursed for reasonable and necessary business expenses incurred between the date hereof and the Retirement Date (so long as any final travel and expense reports are submitted to Equity no later than 90 days following the Retirement Date). Executive shall also be paid for unused vacation days and trading days pursuant to Equity policy.

3.Executive is entitled to receive an annual performance equity grant and annual performance bonus for services provided during the full year 2018 (as determined under the Company’s Annual Incentive Plan which is part of the Company’s 2018 Executive Compensation Program with goals, weightings and metrics approved by Equity’s Compensation Committee and Board of Trustees anticipated to occur in March, 2018), if, and at a time of payment and/or grant, approved by Equity’s Compensation Committee and Board of Trustees for all executive officers as part of the normal year-end process, subject to normal pool adjustments.  

 

4.As a condition to the receipt of the benefits described in sections 3 and 5 of this Agreement, Executive agrees that within twenty-one (21) days after the Retirement Date, he will sign and be bound by the original of the General Release and Waiver Agreement (“Release”) attached to this Agreement as Exhibit A. The benefits hereunder shall be effective following the effective date of such Release.

 

	
5.
	
All of Executive’s current and future grants of equity-linked compensation, including any shares to be issued or restricted units to be retained under Equity’s 2016, 2017 and 2018 LTI Plans (a/k/a Performance Share Plans), will continue to vest per their original vesting schedule (subject to immediate vesting 

 

 

		
upon the occurrence of Executive’s death or disability), any restricted units shall continue to be subject to any potential book-up events, and all share options will continue to be exercisable for the balance of the applicable ten-year option period, subject in each case to Executive’s compliance with this Agreement’s non-competition and employee non-solicitation provisions as well as the covenants in Section 9(c).  The non-competition and employee non-solicitation provisions shall remain in effect until such time as Executive no longer has any unvested equity-linked compensation or vested but un-exercised share options. Executive, at any time, may forfeit his or her unvested equity-linked compensation or vested but un-exercised share options by providing written notice to Equity’s General Counsel, after which the non-competition and employee non-solicitation restrictions shall be void.  If Executive violates the non-competition and non-solicitation restrictions or the covenants in Section 9(c) after the Retirement Date, in addition to Equity’s other remedies, all Executive’s unvested equity-linked compensation and vested but un-exercised share options at the time of the violation will be void unless Equity’s Compensation Committee agrees otherwise.

	
6.
	
Executive agrees that from the Retirement Date until such time as Executive no longer has any unvested equity-linked compensation or vested but un-exercised share options, Executive shall not engage in any activity or investment that competes with the business of Equity, which shall be defined as the acquisition, development and management of residential properties in various markets within the United States. Whether a particular activity or investment is prohibited by this Agreement will be based on the totality of the facts and circumstances relating to that activity or investment, provided that the following activities and investments will not be deemed prohibited:

	
i. 
	
passive and non-controlling investments in residential companies or properties; and

	
ii. 
	
activities, or active or controlling investments, in residential companies or properties that meet all of the following requirements:

	
 
	
a)
	
do not, in the aggregate, have a gross asset value in excess of $250 million; and

	
 
	
b)
	
at the time of such investment/commencement of activity, are not located in: (1) any of Equity’s markets; or (2) any other market in which Equity conducted business since January 1, 2010.

	
7.
	
Executive further agrees that for the time period referenced in paragraph 6 above, he will not, either directly or indirectly, either on his or her own behalf or on behalf of any other party, induce any Equity employee to leave Equity’s employ or solicit for employment any employee of Equity.

	
8.
	
Executive understands that if he fails to fulfill the obligations under Sections 6 and 7 above and 9(c) below, Equity will suffer irreparable injury, and the damages to Equity would be difficult to ascertain.  Executive acknowledges and agrees that due to the uniqueness of his or her services and the confidential, proprietary and material nature of company information, trade secrets, and business relationships he possesses, the covenants set forth herein are reasonable and necessary for the protection of the legitimate business interests of Equity.

	
9.
	
a.If Executive is a participant under the Company’s Development Incentive Plan (“DIP Plan”), this retirement shall qualify as a “Qualified Termination” of employment under the DIP Plan and the proration, payout and vesting provisions in such DIP Plan (as it may have been modified from time to time) shall control.  

b.As Executive is a participant under the Company’s LTI Plan (a/k/a Performance Share Plan), this retirement shall qualify as a “Qualified Termination” of employment under such Plan as of the Retirement Date and the proration, payout and vesting provisions in such plan shall control.  Notwithstanding anything in this Agreement to the contrary, Executive will not receive a grant or award under the 2019 LTI Plan expected to be established on January 1, 2019. 

 

 

c.Executive agrees that after the Retirement Date, and upon request, he will cooperate with and assist Equity from time to time in the investigation and defense of claims brought by or against Equity, and Equity shall reasonably compensate Executive for his time and efforts.  Executive agrees to immediately notify Equity’s General Counsel in the event he is contacted by any party (including, without limitation, process servers) seeking to institute or associate Executive with legal proceedings that involve Equity or Executive’s service at Equity.  Executive agrees not to make false or disparaging remarks about Equity or any Equity executive officer or trustee, and furthermore Executive will not use for his own benefit or disclose to any third party any confidential information regarding Equity, including without limitation, information regarding Equity’s internal policies and procedures, financial performance or condition, business plans or strategies, or employees, unless required to do so by law, in which case he shall promptly notify Equity’s General Counsel prior to such disclosure if reasonably practicable.

	
10.
	
This Agreement sets forth all of the terms and conditions of the agreement between the parties on the matters set forth in this Agreement and shall be considered and understood to be a contractual commitment and not a mere recital.  This Agreement shall be binding upon Equity and its successors and assigns and upon Executive and his agents, heirs, executors, representatives and assigns.  Each party shall bear and pay his or its own costs and attorneys’ fees with regard to the negotiations involved with entering into this Agreement.

	
11.
	
A waiver of any right under this Agreement must be in writing to be effective.  If any portion of this Agreement is held invalid by operation of law, the remaining terms of this Agreement shall not be affected.  The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either of the parties. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, (without giving effect to the conflict of laws principles thereof) except to the extent federal laws apply.

	
12.
	
Equity and Executive agree that any claim, lawsuit or other litigation directly or indirectly arising from or related to this Agreement shall not be governed by any arbitration agreement that may exist between Equity and the Executive, but rather shall be instituted exclusively in a federal or state court of competent jurisdiction in Cook County, Illinois.  In the event of a breach by either party of any term of this Agreement, in addition to injunctive relief or any other damages, the non-breaching party may recover all costs and expense reasonably incurred by it in enforcing this Agreement or defending against a suit brought in violation of this Agreement, including reasonable attorneys’ fees.

	
13.
	
Executive acknowledges that this Agreement constitutes written notice from Equity that it advises Executive to seek legal counsel before signing this Agreement, and that he has had an opportunity to do so.

	
14. 
	
In case any one or more of the provisions contained in this Agreement shall, for any reason under the laws of the jurisdiction, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability under the laws of such jurisdiction shall not affect any other provisions of this Agreement, but this Agreement shall be construed to minimize the effect of such invalid, illegal or unenforceable provision and to give the greatest effect to the transactions contemplated by this Agreement; provided, however, that any such invalidity, illegality or unenforceability in any jurisdiction shall not invalidate such provision in any other jurisdiction.

	
15.
	
This Agreement cannot be modified, withdrawn, rescinded or supplemented in any manner after the date upon which it is executed except in a writing signed by both parties.  Executive acknowledges that in executing this Agreement he does not rely on any inducements, promises or representations made by Equity other than those expressly stated herein.  Executive further declares that he has read this Agreement and fully understands its terms and contents, including his or her rights and obligations hereunder, and freely, voluntarily and without coercion enters into this Agreement.

 

 

	
16. 
	
For the purposes of this Agreement, the term “Equity” includes:  Equity Residential, Equity Residential Management, L.L.C., Equity Residential Services, L.L.C., Equity Residential Properties Management Limited Partnership, ERP Operating Limited Partnership, Equity Residential Properties Management Limited Partnership II, Equity Residential Properties Management Corp., Equity Residential Properties Management Corp. II, ERP Holding Co. Inc., Equity Residential Services II, L.L.C. and to the extent applicable, as direct intended and third party beneficiaries hereof, their past and present owners, directors, officers, managers, agents, attorneys, insurers, employees, representatives, trustees, administrators, fiduciaries, parents, subsidiaries, divisions, partners, joint ventures, sister corporations and/or affiliated business entities, predecessors, successors, heirs, and assigns, jointly and severally, in both their personal and corporate capacities.

 

In Witness Whereof, this Agreement has been executed as of the above date.

 

 

EQUITY RESIDENTIAL               EXECUTIVE

 

 

	
By:
	
/s/ Scott J. Fenster
	
 
	
By:
	
/s/ David S. Santee

	
 
	
Scott J. Fenster
	
 
	
 
	
David S. Santee

	
 
	
Executive Vice President and 

General Counsel
	
 
	
 
	
Executive Vice President and 

Chief Operating Officer 

 

 

 

EXHIBIT A

 

 

GENERAL RELEASE AND WAIVER AGREEMENT

 

THIS GENERAL RELEASE AND WAIVER AGREEMENT (this “Agreement”) is entered into by and between EQUITY RESIDENTIAL (“Equity”), and ___________________(“Executive”) on ____________ and shall be effective upon the expiration of the revocation period referred to herein (the “Effective Date”).

WHEREAS, Executive and Equity entered into a Retirement Agreement dated ____________________(the “Retirement Agreement”), to document Executive’s retirement from Equity effective as of _____________; and

 

WHEREAS, Executive agreed in the Retirement Agreement to execute a General Release and Waiver Agreement to receive certain benefits thereunder; 

 

NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and in the Retirement Agreement, and for other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, Executive and Equity voluntarily and knowingly agree as follows:

 

	
1.
	
For the purposes of this Agreement, the term “Equity” includes:  Equity Residential, Equity Residential Management, L.L.C., Equity Residential Services, L.L.C., Equity Residential Properties Management Limited Partnership, ERP Operating Limited Partnership, Equity Residential Properties Management Limited Partnership II, Equity Residential Properties Management Corp., Equity Residential Properties Management Corp. II, ERP Holding Co. Inc., Equity Residential Services II, L.L.C. and to the extent applicable, as direct intended and third party beneficiaries hereof, their past and present owners, directors, officers, managers, agents, attorneys, insurers, employees, representatives, trustees, administrators, fiduciaries, parents, subsidiaries, divisions, partners, joint ventures, sister corporations and/or affiliated business entities, predecessors, successors, heirs, and assigns, jointly and severally, in both their personal and corporate capacities.

	
2.
	
Except as provided below, Executive hereby fully, finally, and unconditionally releases Equity from any and all claims, suits, demands, charges, debts, grievances, costs, attorneys’ fees or injuries of every kind or nature, whether known or unknown, absolute or contingent, suspected or unsuspected, which Executive had or now has against Equity based on any matter or thing occurring or arising prior to the date of this Agreement, including but not limited to claims arising out of or relating to Executive’s employment with Equity.  This release includes, but is not limited to, claims for breach of contract, wrongful discharge or layoff, constructive discharge, retaliatory discharge; claims for wages, bonuses or other compensation; and claims of any discrimination based on age, color, disability, national origin, race, religion, sex, sexual orientation, including but not limited to claims arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Age Discrimination In Employment Act Of 1967, the Older Workers Benefit Protection Act, the Equal Pay Act, the Family And Medical Leave Act, and any amendments to any of these statutes, as well as any state and local statutes and ordinances pertaining to the employment relationship or prohibiting discrimination in employment, including but not limited to the laws of the states of  Illinois, any state in which Executive currently works or lives and any other states or locales in which Equity conducts business. Nothing in this paragraph shall affect or be deemed to compromise Executive’s rights or remedies under any Equity benefit plan or compensation program in which he participates, including but not limited to the Supplemental Executive Retirement Plan, Advantage Retirement Plan (“401K”), Executive Long-Term Incentive Plan, provisions of the limited partnership agreement of ERP Operating Limited Partnership relating to LTIP Units, and the 2011 Share Incentive Plan.  Also excluded from this release are any claims or administrative charges which cannot be waived by law, claims relating to enforcement of the Retirement Agreement or this Agreement, and claims for indemnification arising under law, by-laws or contract.  EXECUTIVE UNDERSTANDS AND AGREES THAT THIS RELEASE FOREVER BARS EXECUTIVE 

 

 

		
FROM SUING, ARBITRATING OR OTHERWISE ASSERTING A CLAIM AGAINST EQUITY ON ANY RELEASED CLAIM.

	
3.
	
The parties agree and acknowledge that should either party violate any term of this Agreement, the amount of damages that the other party would suffer as a result of such violation would be difficult to ascertain.  In the event of a breach by either party of any term of this Agreement, in addition to injunctive relief or any other damages, the non-breaching party may recover all costs and expenses reasonably incurred by it in enforcing this Agreement or defending against a suit brought in violation of this Agreement, including reasonable attorneys’ fees.

	
4.
	
Executive acknowledges that he has been given twenty-one (21) days from the date he received this Agreement to consider its terms and decide whether or not to sign it.  The twenty-one (21) day period started on the day Executive received this Agreement, and any changes to this Agreement, whether or not material, do not restart the running of the twenty-one (21) day period. Executive understands that he may revoke this Agreement at any time within the seven (7) day period following execution thereof and that this Agreement shall become effective and enforceable only when the revocation period has expired and Executive has not revoked this Agreement.   

	
5.
	
This Agreement shall be binding upon Equity and its successors and assigns and upon Executive and his or her respective agents, heirs, executors, representatives, and assigns. A waiver of any right under this Agreement must be in writing to be effective. If any portion of this Agreement is held invalid by operation of law, the remaining terms of this Agreement shall not be affected.  The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either of the parties.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, (without giving effect to the conflict of laws principles thereof) except to the extent that federal laws apply. This Agreement cannot be modified, withdrawn, rescinded or supplemented in any manner after the date upon which it is executed except in a writing signed by both parties.

 

EQUITY RESIDENTIALEXECUTIVE

 

By:

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