This excerpt taken from the EQR 10-K filed Mar 14, 2005.
3.1. Value of Units Granted Under the Award. The Units granted under the Award shall have no initial value.
3.2. Adjustment of Number of Units Granted Under Award. Except as specifically indicated below, if the Participant is not employed by the Trust or a Subsidiary of the Trust during the entire period from the Grant Date to the third annual anniversary thereof (the Third Anniversary), the Participants total number of Units will be zero. Otherwise, the total number of Units actually issued under the Award will be determined as of the Third Anniversary in accordance with the following:
Any fractional or partial Units will be rounded to the next highest whole number. The percentages set forth above serve as measurement guidelines. Accordingly, if the Trusts Average Annual Return exceeds the Average T-Note Rate by an amount which falls between any of the percentages sets forth in this Section 3.2 in excess of 2%, the Participants award will be determined by extrapolation by multiplying the Award on a pro-rata basis by a percentage which directly corresponds to the Trusts actual Average Annual Return based upon the guidelines set forth above.
For example, if the Trusts Average Annual Return exceeds the Average T-Note Rate by 2.5% for the three-year period, the Participants initial number of Units will be multiplied by 107.5%.
3.3. Definitions. The Average Annual Return will be expressed as an annual percentage (i.e., the average of the 2005, 2006 and 2007 calendar years) utilizing the sum of the following two numbers: (i) the average of the Common Share dividends paid or declared during each calendar year as a percentage of the closing price of a Share as of January 3, 2005 - the first business day in January, 2005 (i.e. $35.45); and (ii) the average percentage change in Funds from Operation as announced by the Trust (FFO) calculated for each calendar year per Share over the prior calendar year. In the event of a change in the Trusts calculation of FFO, the Trust shall calculate the percentage change in FFO on a consistent basis most favorable to the Participant. The Average T-Note Rate will be expressed as an annual percentage (i.e., the average of the 2005, 2006 and 2007 calendar years) utilizing the 10-year Treasury Note interest rate as of the first business day in January of each calendar year.
3.4. Conversion of Awards. On the Third Anniversary, the final number of Units granted pursuant to this Award (if any) will be converted into Shares that are subject to the restrictions set forth in Section 4.3 (Restricted Shares). The number of Units which convert shall equal the number of Restricted Shares to be received by the Participant upon conversion.
3.5. Conversion of Units Upon Death, Disability, Retirement or Change in Control. Notwithstanding the foregoing, in the event of the Participants termination of employment with the Trust or any Subsidiary prior to the Valuation Date due to Death, Disability or retirement at or after age 62, the greater of: (i) the number of Units initially granted under the Award or (ii) the number of Units a Participant would receive pursuant to Section 3.2 calculated as of said date; shall become fully convertible into fully vested, non-restricted Shares. Furthermore, in the event of a Change in Control prior to the Valuation Date, 225% of the Units initially granted under the Award shall become fully convertible into fully vested non-restricted Shares as of said Date.