THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.9
The Employment Agreement (the “Agreement”) made as of the 1st day of July, 2003 by
and between AvalonBay Communities, Inc., a Maryland corporation (the “Company”), and Xxxxxx X.
Xxxxxxxx (“Executive”), as previously amended, is hereby further amended as follows (new language
is bold and underlined and deleted language is struck through):
1. Section 3(b) of the Agreement is hereby amended by deleting the last sentence thereof and
substituting the following in lieu thereof:
“Any Cash Bonuses for a fiscal year hereunder shall be paid
as a lump sum no later than 75 days after the end of the Company’s
preceding fiscal year but not later than March 14 after the end
of the fiscal year.”
2. Section 7(c)(i)(b)(A) of the Agreement is hereby amended to read as follows:
“The Company may defer the determination of the Cash Bonus and the
restricted stock portion of the LT Equity Bonus until such bonuses
in respect of such year are determined for other officers, and at
such time the amounts to be used for determining Executive’s pro
rata bonuses shall be a percentage of his target Cash Bonus and a
percentage of his target number of restricted shares with such
percentages being equal to the average of the percentages that apply
to the Cash Bonus and restricted shares, respectively, of other
officers ranked Senior Vice President or higher, but in no event
shall such Cash Bonus and the restricted stock portion of the LT
Equity Bonus be paid to Executive later than March 14 of the
calendar year following the calendar year that includes the Date of
Termination; and”
3. The first sentence of Section 7(c)(iii) of the Agreement is hereby amended to read as
follows:
“In the event the Company elects to terminate Executive’s employment
during the Employment Period on account of Disability, the Company
shall, in addition to paying the amounts set forth in Section
7(c)(i) and subject to Executive first entering into a separation
agreement, including a general release of all claims, in a form
reasonably acceptable to the Company (‘Separation
Agreement‘) within 21 days of the Date of Termination,
pay to Executive, in one lump sum, no later than the later of the
effective date of said Separation Agreement or 31 days
following the Date of Termination, an amount equal to two times
Covered Average Compensation.”
4. Section 7(c)(iv) of the Agreement is hereby amended to read as follows:
"(iv) Non-Renewal. In the event the Company gives
Executive a notice of non-renewal pursuant to Section 1 above, the
Company shall, in addition to paying the amounts provided under
Section 7(c)(i), subject to Executive entering into a Separation
Agreement within 21 days of the Date of Termination, pay to
Executive, in one lump sum 31 days following the Date of
Termination, an amount equal to Covered Average Compensation. The
Company shall also, subject to the Executive entering into a
Separation Agreement, commencing upon the Date of Termination,
2
employment), reimburse Executive for an amount equal to the
difference between (i) the monthly premiums for such
disability policy, less (ii) such amount as may be paid,
prior the Date of Termination, by Executive in respect of a
portion of the premiums on the Base Disability Policy
provided by the Company prior to the Date of Termination;
and
5. The first sentence of Section 7(c)(v) of the Agreement is hereby amended to read as
follows:
“In the event the Company or any successor to the Company terminates
Executive’s employment without Cause, or if Executive terminates his
employment in a Constructive Termination without Cause, the Company
shall, in addition to paying the amounts provided under Section
7(c)(i), and subject to Executive first entering into a Separation
Agreement within 21 days of the Date of Termination, pay to
Executive, in one lump sum, no later than the later of the effective
date of a Separation Agreement or31 days following the Date of
Termination, an amount equal to three times Covered Average
Compensation.”
6. The second sentence of Section 7(d)(ii) of the Agreement is hereby amended to read as
follows:
“The initial Partial Gross-Up Payment, if any, as determined
pursuant to this 7(d)(ii), shall be paid to the Executive within
five days of the receipt of the Accounting Firm’s determination the appropriate tax authorities as withholding taxes on behalf
of Executive at such time or times when each Excise Tax payment is
due.”
7. The following section shall be inserted as a new Section 7(i) to the Agreement:
“(i) Section 409A.
(a) Anything in this Agreement to the
contrary notwithstanding, if at the time of Executive’s
‘separation from service’ within the meaning of Section 409A
of the Code, the Company determines that Executive is a
‘specified employee’ within the meaning
3
of Section 409A(a)(2)(B)(i) of the Code, then to the
extent any payment or benefit that Executive becomes
entitled to under this Agreement would be considered
deferred compensation subject to the 20 percent additional
tax imposed pursuant to Section 409A(a) of the Code as a
result of the application of Section 409A(a)(2)(B)(i) of the
Code, such payment shall not be payable and such benefit
shall not be provided prior to the date that is the earlier
of (A) six months and one day after Executive’s separation
from service, or (B) Executive’s death. Any such delayed
cash payment shall earn interest at an annual rate equal to
the applicable federal short-term rate published by the
Internal Revenue Service for the month in which separation
from service occurs, from the date of separation from
service until the payment date.
(b) The right to reimbursement or in-kind
benefits under this Agreement is not subject to liquidation
or exchange for another benefit and does not affect the
expenses eligible for reimbursement, or in-kind benefits, to
be provided in any other taxable year.
(c) The reimbursement of expenses under
this Agreement will be made on or before the last day of
Executive’s taxable year following the taxable year in which
the expense was incurred.
(d) The parties intend that this Agreement
will be administered in accordance with Section 409A of the
Code. The determination of whether and when a separation
from service has occurred shall be made in accordance with
the presumptions set forth in Treasury Regulation Section
1.409(A)-1(h). The parties agree that this Agreement may be
amended, as reasonably requested by either party, and as may
be necessary to fully comply with Section 409A of the Code
and all related rules and regulations in order to preserve
the payments and benefits provided hereunder without
additional cost to either party.”
8. Except as amended herein, the Agreement is hereby confirmed in all other respects.
4
IN WITNESS WHEREOF, this Amendment is entered into this 14th day of December, 2008.
| AVALONBAY COMMUNITIES, INC. |
||||
| By: | /s/ Xxxxxxxx Xxxxxxxx | |||
| Name: | Xxxxxxxx Xxxxxxxx | |||
| Title: | EVP-Human Resources | |||
| By: | /s/ Xxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxxx | |||
| Title: | SVP, General Counsel & Secretary | |||
| /s/ Xxxxxx X. Xxxxxxxx | ||||
| Executive | ||||
5
