Exhibit 10.6
GABLES RESIDENTIAL
TRUST
Form of Senior Executive
Severance Agreement
AGREEMENT made as of this 19th day
of April, 2005 by and among Gables Residential Trust, a Maryland
business trust with its principal place of business in Atlanta,
Georgia (the “Company”), and
(the “Executive”), an individual presently employed as
the
of the Company.
1.
Purpose . The Company considers it essential to
the best interests of its stockholders to foster the continuous
employment of key management personnel. The Board of Trustees
of the Company (the “Board”) recognizes, however, that,
as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in Section 2
hereof) exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment
of the Company and its shareholders. Therefore, the Board has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company’s management, including the Executive, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change
in Control. Nothing in this Agreement shall be construed as
creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Executive and the
Company, the Executive shall not have any right to be retained in
the employ of the Company.
2.
Change in Control
. For purposes of this
Agreement, a “Change in 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), or any trustee, fiduciary or other person or entity holding
securities under any employee benefit plan or trust 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 (“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 an acquisition of securities
directly from the Company); or
(b)
individuals who, as of the date
hereof, constitute the Board (the “Incumbent Members”)
cease for any reason to constitute at least a majority of the
Board, provided, however, that any individual becoming a trustee of
the Company subsequent to the date hereof (excluding, for this
purpose, (A) any such individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating
to the election of members of the
Board or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board,
including by reason of agreement intended to avoid or settle any
such actual or threatened contest or solicitation, and (B) any
individual whose initial assumption of office is in connection with
a merger or consolidation, involving an unrelated entity), whose
election or nomination for election by the Company’s
shareholders was approved by a vote of at least a majority of the
persons then comprising Incumbent Members shall for purposes of
this Agreement be considered an Incumbent Member; or
(c)
the consummation of a consolidation
or merger of the Company 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% or more of the voting shares of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate
parent corporation, if any) (the “Resulting
Corporation”); or
(d)
the shareholders of the Company
shall approve (A) any sale, lease, exchange or other transfer
to an unrelated party (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
(B) any plan or proposal for the liquidation or dissolution of
the Company.
Notwithstanding the foregoing, a
“Change in 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 such person
referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional Shares or Voting
Securities (other than pursuant to a stock split, stock dividend,
or similar transaction or as a result of an acquisition of
securities directly from the Company) and immediately thereafter
beneficially owns 40% or more of the combined voting power of all
the outstanding Voting Securities or 40% or more of the Shares then
outstanding, then a “Change in Control” shall be deemed
to have occurred for purposes of the foregoing clause
(a).
Notwithstanding the foregoing, a
“Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (c) if after the
consummation of a consolidation or merger of the Company where the
shareholders of the Company, immediately prior to the consolidation
or merger, would, 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 less than 50% or more of the voting
shares of the Resulting Corporation, the Incumbent Members
constitute at least 50% of the board of directors or board of
trustees of the Resulting Corporation and the Chairman and Chief
Executive Officer of the Company prior to the consolidation or
merger remains the Chief Executive Officer of the Resulting Company
immediately after the consolidation or merger.
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As used in this definition of
“Change in Control,” the term “Subsidiary”
means Gables Realty Limited Partnership, Gables Residential
Services, 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.
3.
Terminating Event
. A “Terminating
Event” shall mean any of the events provided in this
Section 3 occurring within 24 months following a Change in
Control:
(a)
termination by the Company of the
employment of the Executive with the Company and its Subsidiaries
for any reason other than for Cause or the death of the
Executive. “Cause” shall mean, and shall be
limited to, the occurrence of any one or more of the following
events:
(i)
a willful act of dishonesty by the
Executive in connection with the performance of his material duties
involving the Company or any of its Subsidiaries; or
(ii)
conviction of the Executive of a
crime involving moral turpitude or conviction of a felony and such
conviction has a material adverse affect on the interests of the
Company; or
(iii)
the deliberate or willful failure by
the Executive (other than by reason of the Executive’s
physical or mental illness, incapacity or disability) to
substantially perform the Executive’s duties with the Company
and the continuation of such failure for a period of 30 days after
delivery by the Company to the Executive of written notice
specifying the scope and nature of such failure and its intention
to terminate the Executive for Cause.
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. For purposes of
clauses (i) and (iii) of this
Section 3(a), no act, or failure to act, on the
Executive’s part shall be deemed “willful” unless
done, or omitted to be done, by the Executive without reasonable
belief that the Executive’s act, or failure to act, was in
the best interest of the Company; or
(b)
termination by the Executive of the
Executive’s employment with the Company and its Subsidiaries
for Good Reason. “Good Reason” shall mean the
occurrence of any of the following events:
(i)
a substantial adverse change in the
nature or scope of the Executive’s responsibilities,
authorities, powers, functions, or duties from the
3
responsibilities, authorities,
powers, functions, or duties exercised by the Executive immediately
prior to the Change in Control; or
(ii)
a reduction in the Executive’s
annual base salary as in effect on the date hereof or as the same
may be increased from time to time except for across-the-board
salary reductions similarly affecting all or substantially all
management employees; or
(iii)
the relocation of the
Company’s offices at which the Executive is principally
employed immediately prior to the date of a Change in Control to a
location more than 30 miles from such offices, or the requirement
by the Company for the Executive to be based anywhere other than
the Company’s offices at such location, except for required
travel on the Company’s business to an extent substantially
consistent with the Executive’s business travel obligations
immediately prior to the Change in Control; or
(iv)
the failure by the Company to pay to
the Executive any portion of his compensation or to pay to the
Executive any portion of an installment of deferred compensation
under any deferred compensation program of the Company within 15
days of the date such compensation is due without prior written
consent of the Executive; or
(v)
the failure by the Company to obtain
an effective agreement from any successor to assume and agree to
perform this Agreement.
4.
Special Termination
Payments . In the
event a Terminating Event occurs within 24 months after a Change in
Control, subject to the signing by Executive of a release of
employment-rel
