Document:

Exhibit 10.2

 

AMENDMENT

TO

EMPLOYMENT AGREEMENT

 

This Amendment to Employment Agreement (the “Amendment”)
is made as of April 19, 2005 by and between David Fitch (the “Employee”)
and Gables Residential Trust, a Maryland business trust with its principal place
of business in Atlanta, Georgia (the “Company”).

 

WHEREAS, the Company and the Employee are parties to
that certain Employment Agreement dated August 8, 2002, as subsequently
amended (the “Employment Agreement”).

 

WHEREAS, the Company and the Employee desire to amend
the Employment Agreement solely to the extent set forth herein.

 

NOW, THEREFORE, in consideration of the mutual
promises and covenants set forth in this Amendment and in the Employment
Agreement, the parties mutually agree as follows:

 

1.                                       Amendment

 

(a)                                  Section 2(a) of
the Employment Agreement is hereby amended by deleting the second sentence
thereof and substituting therefor the following:

 

“Employee
shall serve as Chief Executive Officer and President of the Company effective
as of March 1, 2005.”

 

(b)                                 Section 3(a) of
the Employment Agreement is hereby amended by deleting said subsection in
its entirety and substituting therefor the following:

 

“(a)                            Base
Salary.  Effective as of March 1,
2005, the Company shall pay Employee an annual salary of $390,000 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.”

 

2.                                       Effect
of Amendment

 

Except as amended hereby, the Employment Agreement
shall remain in full force and effect.

 

3.                                       Counterparts

 

This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

 

 

IN WITNESS WHEREOF, this Amendment to Employment
Agreement is entered into as of the date and year first above written.

 

	
   

  	
  GABLES RESIDENTIAL TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris D. Wheeler

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Chris D. Wheeler

  
	
   

  	
   

  	
  Title:

  	
  Executive Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David Fitch

  	
   

  
	
   

  	
  David Fitch

  
						

 

2Exhibit 10.3

 

April 2005 Amendment

to

Senior Executive Severance Agreement

 

WHEREAS,
Gables Residential Trust (the “Company”) and David Fitch (the “Executive”) are
parties to a Senior Executive Severance Agreement dated as of August 8,
2002 (the “Severance Agreement”);

 

WHEREAS,
pursuant to Section 14 of the Severance Agreement, the Company and the
Executive each desire to amend the Severance Agreement;

 

NOW,
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Severance Agreement is
hereby amended effective as of the date of execution, as follows:

 

1.                                       Section 3
is amended by deleting subsections (a) and (b) thereof in their
entirety and replacing such subsections with the following:

 

“(a) termination
by the Company of the employment of the Executive with the Company and its
Subsidiaries for any reason other than the death of the Executive.  A Terminating Event shall not be deemed to
have occurred pursuant to this Section 3(a) solely as a result of the
Executive being an employee of any direct or indirect successor to the business
or assets of the Company, rather than continuing as an employee of the Company
following a Change in Control; or

 

(b) termination
by the Executive of the Executive’s employment with the Company and its
Subsidiaries for any reason other than the death of the Executive.”

 

2.                                       Section 4
is amended by deleting clauses (ii) and (iii) of subsection (a) thereof
in their entirety and replacing them with the following:

 

“(ii) the
(A) average of cash bonuses earned as a percentage of Executive’s maximum cash
bonus potential for the three most recently completed fiscal years multiplied
by (B) the Executive’s maximum cash bonus potential expressed as a
percentage of annual base salary and multiplied by (C) the Executive’s
most recent annual base salary (or the Executive’s annual base salary
immediately prior to the Change in Control, if higher) and (iii) the value
of 50% of the maximum restricted equity award (determined using the fair market
value of the shares immediately prior to the Change in Control, without regard
to any restrictions thereon) for the fiscal year of the Company in which the
Change in Control occurs.”

 

 

3.                                       Section 4
is further amended by adding a new subsection (c) to immediately
follow subsection (b) thereof as follows:

 

“(c) Gross
Up Payment.

 

(i) 
In the event it shall be determined that any compensation, payment or
distribution by the Company to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (the “Severance Payments”), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”), or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Severance Payments, any Federal, state, and
local income tax, employment tax and Excise Tax upon the payment provided by
this subsection, and any interest and/or penalties assessed with respect to
such Excise Tax, shall be equal to the Severance Payments.  Notwithstanding the foregoing provisions of
this Subparagraph 4(c)(i), if it shall be determined that the Executive is
entitled to a Gross Up Payment, but the amount that equals 95% of the Severance
Payments that would be treated as “parachute payments” under Section 280G
of the Code does not exceed the Threshold Amount, then no Gross Up Payment
shall be made to the Executive, but rather, (A) if the Severance Payments,
reduced by the sum of (1) the Excise Tax and (2) the total of the
Federal, state, and local income and employment taxes payable by Executive on
the amount of the Severance Payments which are in excess of the Threshold
Amount, are greater than or equal to the Threshold Amount, the Executive shall
be entitled to 100% of the benefits payable under this Agreement; or (B) if
the Threshold Amount is less than (x) the Severance Payments, but greater than
(y) the Severance Payments reduced by the sum of (1) the Excise Tax and (2) the
total of the Federal, state, and local income and employment taxes on the
amount of the Severance Payments which are in excess of the Threshold Amount,
then the benefits payable under this Agreement shall be reduced (but not below
zero) to the extent necessary so that the maximum Severance Payments shall not
exceed the Threshold Amount.  To the
extent that there is more than one method of reducing the payments to bring
them within the Threshold Amount, the Executive shall determine which method
shall be followed; provided that if the Executive fails to make such
determination within 15 days after the Company has sent the Executive written
notice of the need for such reduction, the Company may determine the amount of
such reduction in its sole discretion. 
For the purposes of this Subparagraph, “Threshold Amount” shall mean
three times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar ($1.00).

 

2

 

(ii) Subject
to the provisions of Subparagraph (iii) below, all determinations required
to be made under this clause (ii), including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by a nationally
recognized accounting firm selected by the Company (the “Accounting Firm”),
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the Date of Termination, if applicable, or
at such earlier time as is reasonably requested by the Company or the Executive.  For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay Federal income taxes at
the highest marginal rate of Federal income taxation applicable to individuals
for the calendar year in which the Gross-Up Payment is to be made, and state
and local income taxes at the highest marginal rates of individual taxation in
the state and locality of Executive’s residence on the date of the Terminating
Event, net of the maximum reduction in Federal income taxes which could be
obtained from deduction of such state and local taxes.  The initial Gross-Up Payment, if any, as
determined pursuant to this clause (ii), shall be paid to the Executive within five
days of the receipt of the Accounting Firm’s determination.  Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (an “Underpayment”).  In the event that the Company exhausts its
remedies pursuant to Subparagraph (iii) below and the Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred, consistent with the
calculations required to be made hereunder, and any such Underpayment, and any
interest and penalties imposed on the Underpayment and required to be paid by the
Executive in connection with the proceedings described in Subparagraph (iii) below,
shall be promptly paid by the Company to or for the benefit of the Executive.

 

(iii) The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company
of the Gross-up Payment.  Such
notification shall be given as soon as practicable but no later than 10
business days after the Executive knows of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid.  The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due).  If the Company notifies the Executive
in writing prior to the expiration of such period that it desires to 

 

3

 

contest
such claim, provided that the Company has set aside adequate reserves to cover
the Underpayment and any interest and penalties thereon that may accrue, the Executive
shall: (A) give the Company any information reasonably requested by the
Company relating to such claim, (B) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by the Company, (C) cooperate
with the Company in good faith in order to effectively contest such claim, and (D) permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment of
costs and expenses.  Without limitation
on the foregoing provisions of this Subparagraph (iii), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive on an interest-free basis
(to the extent not prohibited by applicable law) and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the
Company’s control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issues raised by
the Internal Revenue Service or any other taxing authority.

 

(iv) 
If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Subparagraph (iii) above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company’s complying with the requirements of 

 

4

 

Subparagraph
(iii) above) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto).  If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Subparagraph (iii) above,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.”

 

4.                                       Section 5
is amended by deleting such Section in its entirety and replacing it with
the following:

 

“5.  Term. 
This Agreement shall take effect on the date first set forth above and
shall terminate upon the earliest of (a) the resignation or voluntary
termination of the Executive for any reason prior to a Change in Control; or (b) 24
months plus one day following a Change in Control.”

 

5.                                       Except
as amended herein, the Severance Agreement is hereby confirmed in all respects.

 

5

 

IN
WITNESS WHEREOF, this Amendment has been executed as a sealed
instrument by the Company by its duly authorized officer and by the Executive
as of the 19th day of April, 2005.

 

	
   

  	
  GABLES
  RESIDENTIAL TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris D.
  Wheeler

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Chris D. Wheeler

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David Fitch

  	
   

  
	
   

  	
  David Fitch

  
					

 

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