ESSEX PROPERTY TRUST,
INC.
Executive Severance
Plan
as Amended and Restated Effective
December 31, 2008
1.
Purpose
. Essex Property Trust, Inc. (the “Company”)
considers it essential to the best interests of its stockholders to
foster the continuous employment of key management
personnel. The Board of Directors of the Company (the
“Board”) recognizes, however, that, as is the case with
many publicly held corporations, the possibility of a Change in
Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders. Therefore, the Board has determined that
the Essex Property Trust, Inc. Executive Severance Plan (the
“Plan”) should be adopted to reinforce and encourage
the continued attention and dedication of the President, Chief
Financial Officer, any Executive Vice President, any Senior Vice
President and any Vice President with ten (10) or more years of
service with the Company (each, a “Covered Employee”;
collectively, the “Covered Employees”), to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change
in Control. Nothing in this Plan shall be construed as
creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Covered Employee and the
Company or any of its subsidiaries or affiliates (together with the
Company, the “Employers”), the Covered Employee shall
not have any right to be retained in the employ of the
Employers. The Plan has been amended and restated,
effective as of December 31, 2008, in order to satisfy the
requirements of Section 409A of the Internal Revenue Code of 1986,
as amended and the Treasury Regulations promulgated thereunder, as
amended (the “Code”).
2.
Change in Control
. For purposes of this Plan, a “Change in
Control” shall mean the occurrence of any one of the
following events:
(a) Any
“person,” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
“Act”) other than any trustee, fiduciary or other
person or entity holding securities under any employee benefit plan
or trust of any of the Employers), together with all
“affiliates” and “associates” (as such
terms are defined in Rule 12b-2 under the Act) of such person,
shall become the “beneficial owner” (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Company representing 30 percent or more of the
combined voting power of the Company’s then outstanding
securities having the right to vote in an election of the
Company’s Board of Directors (“Voting
Securities”) (other than as a result of an acquisition of
securities directly from the Company); or
(b) persons
who, as of July 1, 2000, constitute the Company’s Board of
Directors (the “Incumbent Directors”) cease for any
reason, including, without limitation, as a result of a tender
offer, proxy contest, merger or similar transaction, to constitute
at least a majority of the Board (rounded up to the next whole
number), provided that any person becoming a director of the
Company subsequent to such date shall be considered an Incumbent
Director if such person’s election was approved by or such
person was nominated for election by a vote of a majority of the
Incumbent Directors; provided, however, that any person whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of members of
the Board of Directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a “person”
other than the Board of Directors, including by reason of agreement
intended to avoid or settle any such actual or threatened contest
or solicitation, shall not be considered an Incumbent Director;
or
(c) the
consummation of any consolidation or merger of the Company where
the stockholders of the Company, immediately prior to the
consolidation or merger, would not, immediately after the
consolidation or merger, “beneficially own” (as such
term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate 50 percent or more
of the voting shares of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent
corporation, if any).
Notwithstanding the foregoing, a “Change
in Control” shall not be deemed to have occurred for purposes
of the foregoing clause (a) solely as the result of an acquisition
of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the
proportionate number of shares of Voting Securities beneficially
owned by any person (as defined in the foregoing clause (a)) to 30
percent or more of the combined voting power of all then
outstanding Voting Securities; provided, however, that if such
person shall thereafter become the beneficial owner of any
additional shares of Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction or as a result
of an acquisition of securities directly from the Company) and
immediately thereafter beneficially owns 30 percent or more of the
combined voting power of all then outstanding Voting Securities,
then a “Change in Control” shall be deemed to have
occurred for purposes of the foregoing clause (a).
3.
Effect of a Change in Control
. Upon a Change in Control, all loans to Covered
Employees in connection with transactions in shares of common stock
of the Company, or securities convertible into common stock, shall
be forgiven. All stock options granted to Covered
Employees to purchase shares of common stock of the Company shall
become fully exercisable and shall remain outstanding for the
remainder of their original terms, regardless of any subsequent
termination of employment of the Covered
Employees. Notwithstanding the foregoing, in the event
of any corporate merger that constitutes a Change in Control, if
the stock options are terminated without being assumed by the
successor to the Company, the Covered Employees shall receive
payment equal to the value of the cancelled stock options no later
than 10 days after the Change in Control. The value of
such stock options (based on acceptable option valuation
methodology) shall be determined by a financial advisor selected by
the Company and approved by a majority of the Covered Employees
whose approval shall not be unreasonably withheld.
4.
Terminating Event . A
“Terminating Event” shall mean the termination of
employment of a Covered Employee in connection with any of the
events provided in this Section 4 occurring within 12 months
following a Change in Control:
(a) termination
by the Employers of the employment of the Covered Employee with the
Employers for any reason other than for Cause or the death or
disability (as determined under the Employers’ then existing
long-term disability coverage) of such Covered
Employee. “Cause” shall mean, and shall be
limited to, the occurrence of any one or more of the following
events:
(i) a
willful act of dishonesty by the Covered Employee with respect to
any matter involving any of the Employers; or
(ii) conviction
of the Covered Employee of a crime involving moral turpitude;
or
(iii) the
deliberate or willful failure by the Covered Employee (other than
by reason of the Covered Employee’s physical or mental
illness, incapacity or disability) to substantially perform the
Covered Employee’s duties with the Employers and the
continuation of such failure for a period of 30 days after delivery
by the Employers to the Covered Employee of written notice
specifying the scope and nature of such failure and their intention
to terminate the Covered Employee for Cause.
A Terminating Event shall not be deemed to have
occurred pursuant to this Section 4(a) solely as a result of
the Covered Employee being an employee of any direct or indirect
successor to the business or assets of either of the Employers,
rather than continuing as an employee of the Employers following a
Change in Control. For purposes of clauses (i) and (iii)
of this Section 4(a), no act, or failure to act, on the Covered
Employee’s part shall be deemed “willful” unless
done, or omitted to be done, by the Covered Employee without
reasonable belief that the Covered Employee’s act, or failure
to act, was in the best interest of the Employers; or
(b) termination
by the Covered Employee of the Covered Employee’s employment
with the Employers for Good Reason. “Good
Reason” shall mean the occurrence of any of the following
events:
(i) a
substantial adverse change in the nature or scope of the Covered
Employee’s responsibilities, authorities, title, powers,
functions, or duties from the responsibilities, authorities,
powers, functions, or duties exercised by the Covered Employee
immediately prior to the Change in Control; or
(ii) a
reduction in the Covered Employee’s annual base salary as in
effect on the date hereof or as the same may be increased from time
to time except for across-the-board salary reductions similarly
affecting all or substantially all management employees;
or
(iii) the
relocation of the Employers’ offices at which the Covered
Employee is principally employed immediately prior to the date of a
Change in Control to a location more than 30 miles from such
offices, or the requirement by the Employers for the Covered
Employee to be based anywhere other than the Employers’
offices at such location, except for required travel on the
Employers’ business to an extent substantially consistent
with the Covered Employee’s business travel obligations
immediately prior to the Change in Control; or
(iv) the
failure by the Employers to pay to the Covered Employee any portion
of his compensation or to pay to the Covered Employee any portion
of an installment of deferred compensation under any deferred
compensation program of the Employers within 15 days of the date
such compensation is due without prior written consent of the
Covered Employee; or
(v) the
failure by the Employers to obtain an effective agreement from any
successor to assume and agree to perform this Agreement.
Notwithstanding the foregoing to the contrary,
none of the circumstances described above will constitute Good
Reason unless the Covered Employee has provided written notice to
the Company that such circumstances exist within ninety (90) days
of the Covered Employee’s learning of such circumstances and
the Company has failed to cure such circumstances within thirty
(30) days following its receipt of such notice; and provided
further, that the Covered Employee did not previously consent in
writing to the action leading to his or her claim of resignation
for Good Reason.
5.
Special Termination Benefits
. In the event a Terminating Event occurs within 12
months after a Change in Control with respect to a Covered
Employee,
(a) the
Employers shall pay to the Covered Employee an amount equal to the
sum of the following:
(i) two
(2) times the amount of the current annual base salary of the
Covered Employee, determined prior to any reductions for pre-tax
contributions to a cash or deferred arrangement or a cafeteria
plan; and
(ii) two
(2) times the amount of the Covered Employee’s targeted
annual bonus.
Said amount
shall be paid in one lump sum payment no later than 31 days
following the Date of Termination (as such term is defined in
Section 8(b)); and
