Document:

Exhibit 10.4

 

AMENDMENT

TO

EMPLOYMENT AGREEMENT

 

This Amendment to Employment Agreement (the “Amendment”)
is made as of April 19, 2005 by and between Chris D. Wheeler (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 March 16, 1998, 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 1 of the Employment
Agreement is hereby amended by adding the following sentence at the end
thereof:

 

“Notwithstanding the
foregoing, the Employment Period shall expire on December 31, 2005 unless
the parties agree in advance in writing to extend the Employment Period.”

 

(b)           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
Executive Chairman of the Company effective as of March 1, 2005.”

 

(c)           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 $273,000 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.”

 

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/ David Fitch

  	
   

  
	
   

  	
   

  	
  Name:  David Fitch

  
	
   

  	
   

  	
  Title:  Chief Executive Officer and President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Chris D.
  Wheeler

  	
   

  
	
   

  	
  Chris D. Wheeler

  

 

2Exhibit 10.5

 

Form of April 2005 Amendment

to

Senior Executive Severance Agreement

 

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

 

WHEREAS,
pursuant to Section       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 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.”

 

2.                                       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).

 

(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 

 

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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 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 

 

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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 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.”

 

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

 

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:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  

 

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