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FORM OF EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT (this "Agreement") made as of the [INSERT DAY] day of
January, 1999 by and between [INSERT NAME] residing at [INSERT ADDRESS]
(hereinafter referred to as "Employee") and Gables Residential Trust, a Maryland
business trust, with a principal place of business at 0000 Xxxxx Xxxxx Xxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000 (hereinafter referred to as the "Company").
1. TERM.
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The term of this Agreement shall commence on January 1, 1999 (the
"Effective Date") and, unless earlier terminated as provided in Paragraph 8
below, shall terminate one (1) year from the Effective Date (the "Original
Term"). The Original Term shall be extended automatically for additional
one-year periods (each a "Renewal Term"), unless notice that this Agreement will
not be extended is given by either party to the other three (3) months prior to
the expiration of the Original Term or any Renewal Term. (The period of
Employee's employment hereunder within the Original Term and any Renewal Terms
is herein referred to as the "Employment Period".)
2. EMPLOYMENT/DUTIES.
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(a) During the Employment Period, Employee shall be employed in the
business of the Company and its affiliates. Employee shall serve as a corporate
officer with the title of [INSERT TITLE]. Employee's duties and authority shall
be commensurate with his title and position with the Company.
(b) Employee agrees to his employment as described in this Paragraph 2 and
agrees to devote substantially all of his working time and efforts to the
performance of his duties under this Agreement, except as otherwise approved by
the Board of Trustees of the Company (the "Board of Trustees"); provided that,
nothing herein shall be interpreted to preclude Employee from (i) retaining any
preexisting consulting fee contracts relating to and/or minority interests in
multifamily residential apartment properties or (ii) participating as an officer
or director of, or advisor to, any charitable or other tax exempt organization.
(c) In performing his duties hereunder, Employee shall be available for
reasonable travel as the needs of the business require. Employee shall be based
in the [INSERT LOCATION].
3. COMPENSATION/BENEFITS.
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In consideration of Employee's services hereunder, the Company shall
provide Employee the following:
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(a) Base Salary. The Company shall pay Employee an annual salary of [INSERT
SALARY] during the Employment Period ("Base Salary"). Base Salary shall be
payable in accordance with the Company's normal business practices, but in no
event less frequently than monthly. Employee's Base Salary shall be reviewed no
less frequently than annually by the Company and may be increased but not
decreased during the Employment Period.
(b) Bonuses. At the close of each fiscal year, the Company shall review the
performance of the Company and of Employee during the prior fiscal year, and the
Company may provide Employee with additional compensation as a bonus if the
Board of Trustees, or any compensation committee thereof, in its discretion,
determines that Employee's contribution to the Company warrants such additional
payment and the Company's anticipated financial performance for the present
period permits such payment. The bonuses hereunder shall be paid as a lump sum
not later than thirty (30) days after completion of the audit of the Company's
books for the fiscal year, subject to the Employee's right to defer in his sole
discretion pursuant to separate written agreement with the Company. For purposes
of Paragraph 8(c), the bonus paid in respect of any year (i) shall include cash
bonuses paid in respect of such year, unrestricted share grants made in respect
of such year (valued as of the date of grant) and any restricted shares,
whenever granted, which vested entirely or substantially in respect of service
during such year (including, without limitation, restricted shares which vested
on January 1 of the following year) (valued at the date of vesting), but (ii)
shall not include any restricted share grants made in respect of such year
(unless subsequently vested in respect of such year in accordance with the
preceding clause (i)), option grants made in respect of such year or the
exercise of any options during such year.
(c) Medical Insurance/Physical. During the Employment Period, the Company
shall provide to Employee and Employee's immediate family a comprehensive policy
of health insurance. During the Employment Period, Employee shall be entitled to
a comprehensive annual physical performed, at the expense of the Company, by the
physician or medical group of Employee's choosing.
(d) Life Insurance/Disability Insurance. During the Employment Period, the
Company shall, to the extent reasonably available on customary terms and rates,
(i) provide Employee with term life insurance in a face amount equal to
$1,000,000, and (ii) have Employee covered by reasonably comprehensive
disability insurance or, at Employee's election, otherwise reimburse Employee
for the cost of such a policy in an amount not to exceed $5,000 per year;
provided that such $5,000 amount shall be increased as the age of the Employee
increases for any year during the Employment Period as may be necessary to
maintain the same level of insurance as in effect during the first year of the
Employment Period. Employee agrees to submit to such medical examinations as may
be required in order to secure or maintain such policies of insurance.
(e) Vacations. Employee shall be entitled to reasonable paid vacations in
accordance with the then regular procedures of the Company governing executives,
not to exceed four weeks per annum, in the aggregate.
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(f) Office/Secretary. During the Employment Period, Employee shall be
entitled to secretarial services and a private office commensurate with his
title and duties.
(g) Stock and Stock Options. Employee shall be entitled to stock options in
an amount to be determined by the Board of Trustees, or any compensation
committee thereof, in its discretion.
(h) Fringe Benefits. During the Employment Period, the Company shall
provide Employee with professional assistance in tax return preparation and
financial planning not to exceed $1,000 per year of the Employment Period.
(i) Other Benefits. During the Employment Period, the Company shall provide
to Employee such other benefits, including the right to participate in such
retirement or pension plans, as are made generally available to employees of the
Company from time to time.
4. AUTOMOBILE.
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The Company shall provide Employee with a monthly car allowance of not less
than $500 per month (adjusted annually for inflation by the greater of five
percent or a factor measured by the increase, if any, in the Consumer Price
Index for Wage Earners and Clerical Workers (U.S. City Average: New York, NY)
(1982-84 = 100), as published by the Bureau of Labor Statistics, for the prior
calendar year), provided that, with Employee's consent, the Company may instead
purchase or lease, and maintain insurance on, an automobile of comparable value
for use by Employee during the Employment Period, which automobile Employee
shall operate and maintain, at his own expense, with the same standard of care
Employee applies to his own property and as may be required under any applicable
lease agreement.
5. EXPENSES/INDEMNIFICATION.
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(a) During the Employment Period, the Company shall reimburse Employee for
the reasonable business expenses incurred by Employee in the course of
performing his duties for the Company hereunder, including but not limited to
expenses incurred in connection with out-of-town business travels and related
cellular phone usage, upon submission of invoices, vouchers or other appropriate
documentation, as may be required in accordance with the policies in effect from
time to time for executive employees of the Company.
(b) To the full extent permitted by law and subject to the Company's
Amended and Restated Declaration of Trust, as amended from time to time, and
Second Amended and Restated By-Laws, as amended from time to time, the Company
shall indemnify Employee with respect to any actions commenced against Employee
in his capacity as an officer or trustee or former officer or trustee of the
Company, or any affiliate thereof for which he may serve in such capacity, and
the Company shall advance on a timely basis any expenses incurred in defending
such actions. The obligation to indemnify hereunder shall survive the
termination of this Agreement. The Company agrees to use its best efforts to
secure and maintain officers and trustees insurance with respect to Employee.
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6. EMPLOYER'S AUTHORITY/POLICIES.
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Employee agrees to observe and comply with the rules and regulations of the
Company as adopted by the Board of Trustees respecting the performance of his
duties and to carry out and perform orders, directions and policies communicated
to him from time to time by the Board. Employee agrees to abide by the Company's
xxxxxxx xxxxxxx policies and procedures and the Company's Code of Ethics, and
agrees to make annual certifications or affirmations to such effect if requested
by the Company.
7. RECORDS/NONDISCLOSURE/COMPANY POLICIES.
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(a) General. All records, financial statements and similar documents
obtained, reviewed or compiled by Employee in the course of the performance by
him of services for the Company, whether or not confidential information or
trade secrets, shall be the exclusive property of the Company. Employee shall
have no rights in such documents upon any termination of this Agreement.
(b) Confidential Information. Employee will not disclose to any person or
entity (except as required by applicable law, with the Company's consent or in
connection with the performance of his duties and responsibilities hereunder),
or use for his own benefit or gain, any confidential information of the Company
obtained by him incident to his employment with the Company. The term
"confidential information" includes, without limitation, financial information,
business plans, prospects and opportunities which have been discussed or
considered by the management of the Company but does not include any information
which has become part of the public domain by means other than the Employee's
non-observance of his obligations hereunder. This paragraph shall survive the
termination of this Agreement.
8. TERMINATION/SEVERANCE.
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(a) At-Will Employment. Employee's employment hereunder is "at will" and,
therefore, may be terminated at any time, with or without cause, at the option
of the Company, subject only to the severance obligations under this Paragraph
8. Upon any termination hereunder, the Employment Period shall expire.
(b) Termination by the Company For Good Reason or Voluntarily by Employee.
If (A) Employee is terminated by the Company for Good Reason (as defined in
Paragraph 8(d) below) or (B) if Employee shall voluntarily terminate his
employment hereunder (but other than by reason of a Force Out (as defined in
Paragraph 8(d) below), and other than pursuant to a Change of Control Event (as
defined in Paragraph 8(d) below)), then the Employment Period shall end and
Employee shall be entitled to receive his Base Salary at the rate provided
pursuant to Paragraph 3(a) for the period up to and including the date on which
such termination shall take effect.
(c) Other Terminations. If (A) Employee's employment is terminated by the
Company without Employee's consent and other than for Good Reason, or (B)
Employee terminates his employment by reason of or at any time following a Force
Out, or (C) Employee's employment is terminated by reason of his death, or (D)
Employee's employment is terminated pursuant to a Change of Control Event,
Employee, or his estate, as the case may be, shall be entitled:
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(i) to immediately vest in any outstanding stock options and
grants of restricted shares; and
(ii) to the payment of an amount (the "Severance Amount"), equal
to one times the sum of (x) his Base Salary under
Paragraph 3(a) at the rate then in effect, and (y) the
amount equal to the greater of (1) his bonus received in
respect of the immediately preceding fiscal year under
Paragraph 3(b) or (2) any bonus award that the Board of
Trustees or any committee thereof has approved for any
period that has closed prior to the date of termination but
has not yet been paid.
The Severance Amount shall be paid as a lump sum within fifteen (15) days of
such termination. In the event that any stock option plan or option agreement of
the Company provides terms for the acceleration and/or exercise of options
following a termination of employment that vary from or are otherwise
inconsistent with the foregoing, the Company shall take such actions as may be
necessary to amend such plan or option agreement. Notwithstanding the foregoing,
in the event of a termination by reason of Employee's death, the Severance
Amount shall be zero if the life insurance proceeds payable under
Paragraph (3)(d)(i) equal or exceed $1,000,000. During the remaining term of the
Employment Period (or what would have been the remaining term if Employee's
employment had not been terminated), the Company shall provide Employee with the
benefits described in Paragraph 3(c).
(d) Definitions. For purposes of this Paragraph 8, the following terms
shall have the indicated definitions:
(1) "Change of 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 the Company, any of its Subsidiaries
(as defined below), any trustee, fiduciary or other person
or entity holding securities under any employee benefit plan
of the Company or any of its Subsidiaries), 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 40% or more of either (i) the
combined voting power of the Company's then outstanding
securities having the right to vote in an election of the
Board of Trustees ("Voting Securities") or (ii) the then
outstanding common shares of beneficial interest, par value
$.01 per share, of the Company ("Shares") (in either such
case other than as a result of acquisition of securities
directly from the Company); or
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(B) persons who, as of the date hereof, constitute the Board of
Trustees (the "Incumbent Trustees") 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, provided that
any person becoming a trustee of the Company subsequent to
the date hereof whose election or nomination for election
was approved by a vote of at least a majority of the
Incumbent Trustees or was approved by a nominating committee
of the Board shall, for purposes of this Agreement, be
considered an Incumbent Trustee; or
(C) the shareholders of the Company shall approve (i) any
consolidation or merger of the Company or any Subsidiary
where the shareholders 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% of the
voting shares of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent
corporation, if any), (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of
the Company or (iii) any plan or proposal for the
liquidation or dissolution of the Company;
Notwithstanding the foregoing, a "Change of 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 or other Voting Securities outstanding, increases (x) the proportionate
number of Shares beneficially owned by any person to 40% or more of the Shares
then outstanding or (y) the proportionate voting power represented by the Voting
Securities beneficially owned by any person to 40% or more of the combined
voting power of all then outstanding Voting Securities; provided, however, that
if any person referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional Shares or other Voting Securities
(other than pursuant to a share split, stock dividend, or similar transaction),
then a "Change of Control" shall be deemed to have occurred for purposes of the
foregoing clause (A).
As used in this definition of "Change of Control," the term "Subsidiary"
means Gables Realty Limited Partnership, Central Apartment Management, Inc.,
East Apartment Management, Inc., Gables Central Construction, Inc., and Gables
East Construction, Inc., and any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
(2) A "Change of Control Event" shall mean any voluntary or
involuntary termination of Employee's employment occurring within six (6)
months following a Change of Control.
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(3) A "Force Out" shall be deemed to have occurred in the event of a
material breach by the Company of any obligation under this Agreement,
including but not limited to those under Paragraphs 2 and 3 hereof, or in
the event of a substantial diminution in the duties or responsibilities of
Employee.
(4) "Good Reason" shall mean a finding by the Board of Trustees, that
the Employee has (a) acted with gross negligence or willful misconduct in
connection with the performance of his material duties hereunder, (b)
defaulted in the performance of his material duties hereunder and has not
corrected such action within 15 days of receipt of written notice thereof;
(c) acted against the best interests of the Company or committed a material
act of common law fraud against the Company or its employees, which act in
either event has had a material and adverse impact on the financial affairs
of the Company; (d) been convicted of a felony and such conviction has a
material adverse affect on the interests of the Company; or (e) the
continuing disability of Employee following the expiration of the
Disability Period (as defined in Paragraph 8(e)) under circumstances where
Employee is entitled to benefits payable under the disability insurance
policy of the Company.
(e) Disability. If Employee shall become unable to efficiently perform his
duties hereunder because of any physical or mental disability or illness, he
shall be entitled to his regular compensation until (i) the period of disability
or illness (whether or not the same disability or illness) shall exceed 180
consecutive days during the Employment Period and (ii) the Employee has become
eligible to receive benefits under the applicable disability insurance policy
referred to in Paragraph 3(d)(ii) (the "Disability Period"). This Agreement
thereafter may be terminated by the Company as provided in Paragraph 8(b),
provided that, Employee shall immediately vest in any outstanding options and
stock grants to the same extent as if the termination had been pursuant to
Paragraph 8(c)(C).
(f) Arbitration in the Event of a Dispute Regarding the Nature of
Termination. In the event that the Company terminates Employee's employment for
Good Reason (as defined above), and Employee contends that Good Reason did not
exist, the Company's only obligation shall be to submit such claim to
arbitration before the American Arbitration Association ("AAA"). In such a
proceeding, the only issue before the arbitrator will be whether Employee was in
fact terminated for Good Reason. If the arbitrator determines that Employee was
not terminated for Good Reason, the only remedy that the arbitrator may award is
an amount equal to the Severance Payment specified in Paragraph 8(c), the costs
of arbitration, and Employee's attorneys' fees. If the arbitrator finds that
Employee was terminated for Good Reason, the arbitrator will be without
authority to award Employee anything, and the parties will each be responsible
for their own attorneys' fees, and they will divide the costs of arbitration
equally. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. This Paragraph 8(f) shall be specifically
enforceable. Notwithstanding the foregoing, this Paragraph 8(f) shall not
preclude the Company from pursuing a court action for the sole purpose of
obtaining a temporary restraining order or a preliminary injunction in
circumstances in which such relief is appropriate, provided that any other
relief shall be pursued through an arbitration proceeding pursuant to this
Paragraph 8(f).
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(g) No Mitigation. Without regard to the reason for the termination of
Employee's employment hereunder, Employee shall be under no obligation to
mitigate damages with respect to such termination under any circumstances and in
the event Employee is employed or receives income from any other source, there
shall be no offset against the amounts due from the Company hereunder.
9. NON-COMPETITION.
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Because Employee's services to the Company are special and because the
Employee has access to the Company's confidential information, Employee
covenants and agrees that if, during the Original Term or any Renewal Term, his
employment is terminated for Good Reason or if he voluntarily terminates his
employment (other than by reason of a Force Out or pursuant to a Change of
Control Event), for a period of twelve months from the date of such termination
he will not, directly or indirectly, either on his own behalf or on behalf of
any business, corporation, partnership, association, agency, or other person or
other entity with which Employee may be associated, or otherwise engage in any
business or undertaking directly competitive with the businesses being carried
on by the Company in respect of any multifamily residential real estate project
undertaken or being considered by the Company at the time of termination without
prior written consent of the Board of Trustees. Restricted activities under this
Paragraph 9 include, but are not limited to, the acquisition, development,
construction, operation, management or leasing of any multifamily residential
real estate project, including contracting or agreeing to do any of the
foregoing or advising or consulting with any person regarding the foregoing.
This Paragraph 9 shall not be interpreted to prevent the Employee from retaining
any interests in multifamily residential apartment properties permitted under
Paragraph 2(b)(i). This Paragraph 9 shall survive the termination of this
Agreement.
10. NON-SOLICITATION.
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During the Original Term or any Renewal Term and for a period of twelve
months from the date of any termination of employment (other than pursuant to a
Change of Control Event), Employee covenants and agrees that Employee (a) will
not, directly or indirectly, solicit or induce any present or future employee of
the Company or any Subsidiary to accept employment with Employee or with any
business, corporation, partnership, association, agency, or other person or
other entity with which Employee may be associated, (b) will not employ or cause
any business, corporation, partnership, association agency, or other person or
entity with which Employee may be associated to employ any present or future
employee of the Company or any Subsidiary without providing the Company with ten
(10) days' prior written notice of such proposed employment and (c) will not,
directly or indirectly, either for himself or for any other business, operation,
corporation, partnership, association, agency, or other person or entity, call
upon, compete for or solicit the third party property owners with whom the
Company or any of its subsidiaries has an existing property management agreement
as of the Effective Date as set forth in any of the schedules to the
Contribution Agreement. This Paragraph 10 shall survive the termination of this
Agreement.
11. LITIGATION AND REGULATORY COOPERATION.
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During and after the Employee's employment, the Employee shall cooperate
fully with the Company in the defense or prosecution of any claims or actions
now in existence or which may be brought in the future against or on behalf of
the Company which relate to events or occurrences that transpired while the
Employee was employed by the Company. The
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Employee's full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Company at
mutually convenient times. During or after the Employee's employment, the
Employee also shall cooperate fully with the Company in connection with any
investigation or review of any federal, state or local regulatory authority as
any such investigation or review relates to events or occurrences that
transpired while the Employee was employed by the Company. The Company shall
reimburse the Employee for any reasonable out-of-pocket expenses incurred in
connection with the Employee's performance of obligations pursuant to this
Paragraph 11. This Paragraph 11 shall survive the termination of this Agreement.
If at a time when Employee is no longer employed by the Company he is required
to devote more than one-half (1/2) of a business day to cooperation with the
Company pursuant to this Paragraph 11, the Company shall compensate Employee on
a per diem basis at a daily rate calculated as 1/365th of the Base Salary in
effect pursuant to Paragraph 3(a) as of the time Employee's employment with the
Company terminated.
12. CONFLICTING AGREEMENTS.
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Employee hereby represents and warrants that the execution of this
Agreement and the performance of his obligations hereunder will not breach or be
in conflict with any other agreement to which he is a party or is bound, and
that he is not now subject to any covenants against competition or similar
covenants which would affect the performance of his obligations hereunder. The
parties agree that this agreement supersedes and replaces any prior written
employment agreement between the Company and Employee of similar scope and
nature.
13. NOTICES.
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Any notice required or permitted hereunder shall be in writing and shall be
deemed sufficient when given by hand or by nationally recognized overnight
courier or by express, registered or certified mail, postage prepaid, return
receipt requested, and addressed to the Company or Employee, as applicable, at
the address indicated above (or to such other address as may be provided by
notice).
14. MISCELLANEOUS.
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This Agreement (i) constitutes the entire agreement between the parties
concerning the subjects hereof and supersedes any and all prior agreements or
understandings, (ii) may not be assigned by Employee without the prior written
consent of the Company, and (iii) may be assigned by the Company and shall be
binding upon, and inure to the benefit of, the Company's successors and assigns.
Headings herein are for convenience of reference only and shall not define,
limit or interpret the contents hereof.
15. AMENDMENT.
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This Agreement may be amended, modified or supplemented by the mutual
consent of the parties in writing, but no oral amendment, modification or
supplement shall be effective.
16. SPECIFIC ENFORCEMENT.
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The provisions of this Agreement are to be specifically enforced if not
performed according to their terms. Without limiting the generality of the
foregoing, the parties acknowledge that the Company would be irreparably damaged
and there would be no adequate remedy at law for Employee's breach of Paragraphs
7, 9 and 10 of this Agreement and, accordingly, Employee hereby consents to the
entry of any temporary restraining
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order or preliminary or ex parte injunction, in addition to any other remedies
available at law or in equity, to enforce the provisions thereof. This
Paragraph 14 shall survive the termination of this Agreement.
17. SEVERABILITY.
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The provisions of this Agreement are severable. The invalidity of any
provision shall not affect the validity of any other provision.
18. GOVERNING LAW .
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This Agreement shall be construed and regulated in all respects under the
laws of the State of Maryland.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and year
first above written.
GABLES RESIDENTIAL TRUST
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx,
Chief Executive Officer
By: [INSERT NAME]
-----------------------------------
Title: [INSERT TITLE]
