UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 21, 2014
Landmark Apartment Trust of America, Inc.
(Exact name of registrant as specified in its charter)
Maryland | 000-52612 | 20-3975609 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
3505 E Frontage Road, Suite 150 Tampa, Florida |
33607 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (804) 237-1335
Former name or former address, if changed since last report: Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 | Departure of Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements with Certain Officers. |
Employment Agreements with Executive Officers
Landmark Apartment Trust of America, Inc. (the Company) entered into new employment agreements (the Employment Agreements) on July 21, 2014 with each of (i) Joseph G. Lubeck, the Executive Chairman and a Director of the Company, and (ii) Stanley J. Olander, the Chief Executive Officer, Chief Financial Officer and a Director of the Company, and on July 23, 2014, with each of (i) James G. Miller, the Chief Operating Officer and Chief Accounting Officer of the Company, and (ii) Elizabeth Truong, the Chief Investment Officer of the Company. The Employment Agreements replace the existing employment agreements of Messrs. Lubeck and Olander, each dated as of August 3, 2012, and of Mr. Miller and Ms. Truong, each dated as of July 1, 2012 and amended on February 25, 2013.
The Employment Agreements have an initial term expiring on December 31, 2017 (for Messrs. Lubeck and Olander) or December 31, 2016 (for Mr. Miller and Ms. Truong). Each Employment Agreement provides for automatic one-year extensions after the expiration of the initial term, unless either party provides the other with prior written notice of non-renewal (90 days in the case of non-renewal by the executive and 180 days in the case of non-renewal by the Company). Mr. Lubecks Employment Agreement provides that he will be nominated for re-election to the Board of Directors of the Company (the Board) at each annual meeting of the Companys shareholders during the employment term and, upon election, will be appointed Chairman of the Board. Mr. Olanders Employment Agreement provides that he will be nominated for re-election to the Board at each annual meeting of the Companys shareholders for so long as he serves as the Chief Executive Officer of the Company. The Employment Agreements require the executives to devote substantially all of their business time and effort to the performance of their duties with the Company, provided that Mr. Lubeck may continue in his role as the President of Elco Landmark Residential Holdings, LLC and Elco Landmark Residential Management, LLC until December 31, 2014.
The Employment Agreements provide for, among other things:
| an annual base salary of $675,000 for Mr. Lubeck, $625,000 for Mr. Olander, $350,000 for Mr. Miller and $300,000 for Ms. Truong, subject to future increases from time to time at the discretion of the Board or the Compensation Committee of the Board (the Committee); |
| eligibility to receive annual cash and equity bonus compensation, subject to the terms and conditions established annually by the Board or the Committee and any applicable award agreement; |
| eligibility to participate in the Companys equity incentive plans, subject to the terms and conditions of such plans and any applicable award agreement; and |
| the entitlement to receive all employee benefits and perquisites made available to the Companys other senior executives, and payment by the Company of 100% of the premium costs of the health insurance coverage provided to the executive and his or her dependents. |
Annual cash and equity bonus compensation will be subject to the achievement of performance criteria established annually by the Board or the Committee, which will be based 80% on corporate goals and 20% on individual goals. The threshold, target and maximum annual bonus levels for the executives for calendar year 2014 will be: $325,000, $650,000 and $975,000 for Mr. Lubeck; $350,000, $700,000 and $1,050,000 for Mr. Olander; $150,000, $300,000 and $450,000 for Mr. Miller; and $125,000, $250,000 and $375,000 for Ms. Truong. Each executives annual bonus, if any, will be paid 50% in cash and 50% in shares of the Companys common stock.
Equity compensation awards will be subject to the executives achievement of performance criteria over a three-year performance period. The threshold, target and maximum equity compensation levels for the executives for calendar year 2014 will be: $300,000, $600,000 and $900,000 for Mr. Lubeck; $300,000, $600,000 and $900,000 for Mr. Olander; $125,000, $250,000 and $375,000 for Mr. Miller; and $100,000, $200,000 and $300,000 for Ms. Truong. Equity compensation awards earned by the executives will vest 50% on the conclusion of the performance period and 50% on the first anniversary of the conclusion of the performance period. The executives will also be granted a one-time equity compensation award in the following amounts, subject to such vesting or forfeiture restrictions as the Committee will determine: $1,000,000 for Mr. Lubeck; $1,000,000 for Mr. Olander; $250,000 for Mr. Miller; and $200,000 for Ms. Truong.
If the Company terminates an executives employment for cause (as defined in the Employment Agreements) or if the executives employment terminates as a result of the expiration and non-renewal of the Employment Agreement, the executive will be entitled to receive his or her annual base salary and other benefits that have been earned and accrued prior to the date of termination
and reimbursement of expenses incurred prior to the date of termination (the Accrued Benefits), as well as any earned and accrued bonus. However, if the executive is terminated for certain types of cause, the executive will not be entitled to receive any earned and accrued bonus. If the executive resigns without good reason (as defined in the Employment Agreements), the executive will be entitled to receive the Accrued Benefits.
If the Company terminates an executives employment without cause or the executive resigns for good reason, the executive will be entitled receive the Accrued Benefits, any earned and accrued bonus, and, subject to the executives execution and non-revocation of a general release of claims in favor of the Company, the following severance benefits:
| A cash payment equal to one and one-half (1.5) times (for Messrs. Lubeck and Olander) or one (1) times (for Mr. Miller and Ms. Truong) the sum of (i) the executives then-current annual base salary plus (ii) the greater of (x) the annual bonus compensation most recently earned (whether or not paid) and (y) the average annual bonus compensation actually paid for the last three full fiscal years, provided that, if at the time of termination at least three full fiscal years have not occurred, then the average annual bonus will be determined using the target bonus level for calendar year 2014 for the missing years. The cash payment will be payable in equal installments over 18 months (for Messrs. Lubeck and Olander) or 12 months (for Mr. Miller and Ms. Truong). |
| The Company will (i) reimburse the COBRA premium for the executive and his or her dependents under its major medical group health and dental plan and (ii) provide such additional continuing health, dental, disability and life insurance benefits as the executive and his or her dependents would have received (and at the same cost as payable by the Companys other executives) in the absence of the executives termination, in each case for 18 months (for Messrs. Lubeck and Olander) or 12 months (for Mr. Miller and Ms. Truong), provided that such reimbursements and coverage will cease if the executive becomes entitled to health benefits from another employer. |
| Equity awards granted to the executive (the Equity Awards) that vest solely based on the passage of time will become fully vested and Equity Awards that vest based on the achievement of performance criteria and for which the performance period is incomplete will be deemed earned based on the actual levels of achievement of the performance criteria as of the date of termination (or the target levels of achievement with respect to performance criteria relating to strategic objectives). The Equity Awards will be pro-rated based on the portion of the performance period that has elapsed through the date of termination. Equity Awards for which the performance period is complete but for which the additional vesting period is incomplete will become fully vested as of the date of termination. |
The executive or his or her estate or beneficiaries, as applicable, will be entitled to receive the following benefits in the event of the executives death or disability:
| The Accrued Benefits and any earned and accrued bonus. |
| An amount equal to the sum of (i) one year of the executives then-current annual base salary plus (ii) the executives annual bonus at the target level for the year in which his or her death or disability occurs, or, if no target level has been established for that year, based on the target level for calendar year 2014, provided that in no event will such amount be less than the annual bonus (if any) earned by the executive for the prior year. |
| Equity Awards that vest solely based on the passage of time will become fully vested and Equity Awards that vest based on the achievement of performance criteria and for which the performance period is incomplete will be deemed earned based on the actual levels of achievement of the performance criteria as of the date of the termination (or the target levels of achievement with respect to the performance criteria relating to strategic objectives). The Equity Awards will be pro-rated based on the portion of the performance period that has elapsed through the date of termination. Equity Awards for which the performance period is complete but for which the additional vesting period is incomplete will become fully vested as of the date of termination. |
| Reimbursement of the COBRA premium for the executive and his or her dependents under the Companys major medical group health and dental plan and such additional continuing benefits as the executive and his or her dependents would have been entitled to receive in the absence of the executives termination, in each case for 18 months (for Messrs. Lubeck and Olander) or 12 months (for Mr. Miller and Ms. Truong). |
The Employment Agreements provide that if a change in control (as defined in the Employment Agreements) occurs, then, with respect to each Equity Award held by an executive as of the date of such change in control for which vesting is solely based on
the passage of time, 100% of such Equity Award will vest, and for which vesting is based on the achievement of performance criteria and for which the performance period is incomplete, the performance period will end on the date of the change in control and the Equity Award will be deemed earned based on the actual levels of achievement of the performance criteria as of such date (or the target levels of achievement with respect to the performance criteria relating to strategic objectives). The Employment Agreements provide that a change in control will not include (i) the consummation of any transaction for which an offer is made and accepted in the ninety (90) days following execution of the Employment Agreement and which closes before January 15, 2015, provided that the Employment Agreements are assumed in such transaction, and provided further that, if, as a result of any such transaction, the Company or surviving entity is no longer a company whose common equity is registered under Section 12 of the Securities Exchange Act of 1934, then, upon the vesting of each Equity Award held by the executive, the executive will be entitled to payment of such award in cash in an amount equal to the fair value of the equity of the Company or the surviving entity that the executive would otherwise be entitled to receive, or (ii) an initial public offering of the Company (an IPO).
The Employment Agreements of Messrs. Lubeck and Olander provide that, prior to the effective time of an IPO, if the executive incurs any excise tax liability under Section 4999 of the Internal Revenue Code of 1986, as amended (the Code), as a result of receiving any parachute payments (as defined in Section 280G of the Code) from the Company, the Company will pay the executive an amount equal to the sum of such excise tax liability plus the amount necessary to put the executive in the same after-tax position (taking into account any additional tax liability incurred by the executive as a result of the Companys payment of the excise tax liability) as if no excise taxes had been imposed with respect to such parachute payments. The Employment Agreements of Messrs. Lubeck and Olander, with respect to the period of time from and after the effective time of an IPO, and the Employment Agreements of Mr. Miller and Ms. Truong, provide that the Company will reduce any payments to the executive to the extent necessary to prevent such payments from being subject to the excise tax under Section 4999 of the Code, but only if such reduction would give the executive a better after-tax result then if he or she received the full amount of the payments.
The Employment Agreements contain standard confidentiality provisions, which apply indefinitely, and non-competition and non-solicitation provisions, which apply during the term of the Employment Agreement and for 18 months (for Messrs. Lubeck and Olander or 12 months (for Mr. Miller and Ms. Truong) following the executives termination of employment for any reason (other than due to the executives death).
The foregoing summary description of the material terms of the Employment Agreements is qualified in its entirety by the actual terms of the Employment Agreements, copies of which are filed as Exhibit 10.1 through Exhibit 10.4, inclusive, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. |
10.1 | Employment Agreement, dated as of July 21, 2014, by and between Landmark Apartment Trust of America, Inc. and Joseph G. Lubeck. | |
10.2 | Employment Agreement, dated as of July 21, 2014, by and between Landmark Apartment Trust of America, Inc. and Stanley J. Olander, Jr. | |
10.3 | Employment Agreement, dated as of July 23, 2014, by and between Landmark Apartment Trust of America, Inc. and James G. Miller | |
10.4 | Employment Agreement, dated as of July 23, 2014, by and between Landmark Apartment Trust of America, Inc. and Elizabeth Truong |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
July 25, 2014 | Landmark Apartment Trust of America, Inc. | |||
By: | /s/ Stanley J. Olander, Jr. | |||
Name: | Stanley J. Olander, Jr. | |||
Title: | Chief Executive Officer & Chief Financial Officer |
Exhibit Index
Exhibit |
Description | |
10.1 | Employment Agreement, dated as of July 21, 2014, by and between Landmark Apartment Trust of America, Inc. and Joseph G. Lubeck | |
10.2 | Employment Agreement, dated as of July 21, 2014, by and between Landmark Apartment Trust of America, Inc. and Stanley J. Olander, Jr. | |
10.3 | Employment Agreement, dated as of July 23, 2014, by and between Landmark Apartment Trust of America, Inc. and James G. Miller | |
10.4 | Employment Agreement, dated as of July 23, 2014, by and between Landmark Apartment Trust of America, Inc. and Elizabeth Truong |
Exhibit 10.1
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Joseph Lubeck)
THIS EMPLOYMENT AGREEMENT (the Agreement) is entered into by and between LANDMARK APARTMENT TRUST OF AMERICA, INC., a Maryland corporation (hereinafter referred to as the Company), and JOSEPH LUBECK (hereinafter referred to as the Executive) and is effective as of the Effective Date defined in Section 1 below.
WHEREAS, the Executive is a party to that certain Employment Agreement, dated as of August 3, 2012, by and between the Company and the Executive (the Original Employment Agreement); and
WHEREAS, the parties desire to amend the terms of the Original Employment Agreement on the terms and conditions set forth in this Agreement.
Accordingly, the parties hereto agree as follows:
1. Term. The Company hereby employs the Executive and the Executive hereby accepts such employment for an initial term commencing as of January 1, 2014 (the Effective Date) and ending on December 31, 2017, unless sooner terminated in accordance with the provisions of Section 4 (the period during which the Executive is employed hereunder being hereinafter referred to as the Term). The Term shall be subject to automatic one (1) year renewals unless notice of non-renewal is provided between the parties in accordance with the notice provisions of Section 7.4, as follows (if elected by the Executive or the Company, a Non-Renewal): (a) if elected by the Executive, the Executive will notify the Company of the Non-Renewal at least ninety (90) days prior to the end of any such Term, or (b) if elected by the Company, the Company will notify the Executive of the Non-Renewal at least one-hundred-eighty (180) days prior to the end of any such Term.
2. Duties. The Executive has been elected to serve as a member of the Board of Directors of the Company (the Board) and has been appointed by the other members of the Board to serve as the Chairman of the Board. In addition to his customary duties as Chairman of the Board, the Executive shall have certain executive duties and responsibilities with respect to the strategic direction of the Company and, as such, will be deemed to be an officer of the Company having the title Executive Chairman. The Executive shall faithfully perform for the Company the duties of said office and shall perform such other duties of an executive, managerial or administrative nature consistent with the office of Executive Chairman as shall be specified and designated from time to time by the Board. Such duties may include, without limitation, the performance of services for, and serving on the board of directors of, any subsidiary of the Company without any additional compensation. The Executive shall devote substantially all of the Executives business time and effort to the performance of the Executives duties hereunder; provided, however, that the Company acknowledges and agrees that, so long as such activities do not materially interfere with the Executives ability to perform his duties and responsibilities hereunder or violate the Executives covenant against competition as described at Section 6.2 hereof, the Executive shall have the right to continue to serve as the President of Elco Landmark Residential Holdings, LLC and Elco Landmark Residential Management, LLC (together, the ELRH Companies) during calendar year 2014 and shall be permitted to devote such of his business time and efforts during calendar year 2014 as he shall deem necessary to fulfill his duties and responsibilities with respect thereto; provided, further, that the Executive agrees that he shall resign from his position as President of the ELRH Companies and from any other position(s) he holds with the ELRH Companies with an
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effective date no later than December 31, 2014, and shall not receive any compensation or benefits from the ELRH Companies for any period of time after the effective date of such resignation. During calendar year 2014, the Executive may reside in and perform his duties out of an ELRH company office located in the State of Florida. In addition, notwithstanding the foregoing, so long as the following activities do not interfere with the Executives duties to the Company and provided that the following activities do not violate the Executives covenant against competition as described at Section 6.2 hereof, during the Term the Executive may perform personal, charitable and other business activities, including, without limitation, serving as a member of one or more boards of directors of charitable or other professional organizations and engaging in any activities permitted by Section 6.2(d)(i), may engage in personal investment activities consistent with Company policies on personal securities trading by Company personnel, may serve on the boards of directors/advisors or as a consultant to other business organizations that are not engaged in any aspect of the multi-family residential industry, and may engage in such other board or professional assignments which are disclosed to and approved by the Board, provided, however, that service in such capacities for other business organizations shall require the consent of the Board, such consent not to be unreasonably withheld. The Company agrees that, during the Term, the Executive shall be nominated by the Nominating and Corporate Governance Committee of the Board for re-election to the Board of Directors at each annual meeting of the Companys shareholders and, upon election, shall be appointed as the Chairman of the Board, provided that, at the time of each annual meeting, (a) if the Executive is unable to perform his duties hereunder due to a disability or other incapacity, it is reasonably certain that the Executive will be able to resume his duties on a regular full-time basis prior to such time as the Executives employment hereunder may be terminated by the Company due to disability, (b) the Company has not notified the Executive of its intention to terminate the Executives employment for cause, and (c) the Executive has not notified the Company of his intention resign from his position of Executive Chairman of the Company.
3. Compensation.
3.1 Salary. The Company shall pay the Executive during the Term a salary at the rate of $675,000 per annum (the Annual Salary), in accordance with the customary payroll practices of the Company applicable to senior executives generally. The Annual Salary may be increased from time to time by an amount and on such conditions as may be approved by the Board or the Compensation Committee of the Board (the Compensation Committee), and upon such increase, the increased amount shall thereafter be deemed to be the Annual Salary. The Executives Annual Salary shall be reviewed at least every two (2) years by the Board or the Compensation Committee. Annual Salary will be paid in monthly or bi-monthly installments as determined by the Board, and no Annual Salary will be paid later than 75 days after the conclusion of any calendar year in which such Annual Salary is deemed earned and payable to the Executive.
3.2 Short-Term and Long-Term Incentive Compensation. The Executive will be eligible to receive annual cash and equity bonus compensation. The annual bonus threshold, target and maximum levels for the Executive for calendar year 2014 are described on Attachment A. Additionally, the Executive will be eligible to participate in the Companys 2012 Other Equity-Based Award Plan, as amended (the 2012 LTIP Plan) and any subsequent equity incentive plan approved by the Board (each and any of the foregoing is a Company Incentive Plan) for long-term equity incentive compensation (any equity compensation granted to the Executive by the Company, whether under a Company Incentive Plan or otherwise approved by the Board, and whether in the form of restricted stock, stock options, long-term incentive plan units, stock appreciation rights or other equity or equity-linked awards, is, collectively, Equity Compensation). The Equity Compensation threshold, target and maximum award levels for the Executive for calendar year 2014 are set forth on Attachment A. The terms of the Executives annual bonus compensation, any Company Incentive Plan and any awards made under such programs will be subject to the approval of the Board or the Compensation Committee.
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3.3 BenefitsIn General. During the Term, except to the extent that the Executive elects for calendar year 2014 to receive the same or similar benefits from the ELRH Companies, the Executive will be entitled to all employee benefits and perquisites made available to senior executives of the Company, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. To the extent the Executive is eligible to participate in a Company-sponsored group medical insurance plan, the Company shall pay 100% of the premium cost of the Companys health insurance coverage provided to the Executive (and the Executives dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement will prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
3.4 Paid Time Off. The Executive shall be entitled to twenty-five (25) days of paid time off per calendar year, plus Company-scheduled holidays. Fifty percent (50%) of any unused paid time-off will be forfeited at the end of the calendar year.
3.5 Disability Benefits and Life Insurance. Except to the extent that the Executive elects for calendar year 2014 to receive the same or similar benefits from the ELRH Companies, Executive shall receive the disability benefits and group life insurance benefits applicable to senior executives at the Company. To the extent the Companys group life and disability insurance plans do not provide this level of benefits, the Executive shall be entitled to additional benefits so that his long-term disability coverage provides benefits (to continue for such period as is provided in the applicable disability plan or program, as amended from time to time, and with waiting periods and pre-existing condition exceptions waived to the extent such coverage is available on commercially reasonable terms) equal to sixty-six and two-thirds percent (66 2/3 %) of his Annual Salary in the case of a covered disability, and life insurance coverage with a face amount equal to $1,000,000. Premiums on all primary or supplemental disability policies provided by the Company under this Agreement shall be paid by the Company, provided that the value of such premiums shall be taxed as income to the Executive.
3.6 Expenses. The Company shall pay or reimburse the Executive for all ordinary and reasonable out-of-pocket expenses actually incurred and, in the case of reimbursement, actually paid by the Executive during the Term in connection with the performance of the Executives services under this Agreement, provided that the Executive shall submit such expenses in accordance with the policies applicable to senior executives of the Company generally.
3.7 Earned and Accrued Bonus. For purposes of this Agreement, with respect to Earned and Accrued Bonus payments to be made to the Executive in connection with the termination of his employment, annual bonus payments and Equity Compensation awards shall be deemed to be earned and accrued (a) if, with respect to annual bonus payments, the Executive is employed with the Company as of the date of the last day of the period in respect of which a bonus payment shall be made and, with respect to Equity Compensation awards, the Executive is employed with the Company as of the date such award vests; and (b) to the extent that the criteria or performance goals for determining the amount of such payment or award are objective and measurable criteria, and such objective and measurable criteria have been satisfied or achieved. Earned and Accrued Bonus specifically includes, without limitation, any cash payments or shares of the Companys common stock payable to Executive in connection with any annual bonus compensation and Equity Compensation that is awarded and vested. A prorated portion of the Executives annual bonus will be paid in accordance with the termination provisions of this Agreement.
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3.8 Acceleration of Rights upon Change in Control. Upon the occurrence of a Change in Control (as such term is defined in the 2012 LTIP Plan, as amended and in effect as of the Effective Date hereof), with respect to each Equity Compensation award held by the Executive as of the date of such Change in Control: (i) for which the vesting period is based on the passage of time, 100% of such Equity Compensation shall vest, and to the extent applicable, become exercisable and (ii) for which vesting is based on performance and for which the performance period is incomplete, the performance period in respect of such Equity Compensation award shall end on the date of the Change in Control and such Equity Compensation award shall be deemed earned based on the actual levels of achievement of the applicable performance criteria as of the date of such Change in Control, as determined by the Committee; provided, that such Equity Compensation award shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. With respect to Equity Compensation that is settled in shares of the Companys common stock, the Executive shall be issued fully vested shares of the Companys common stock in respect of each such earned Equity Compensation award on the date of the Change in Control. The number of shares of the Companys common stock that will be issued to the Executive in respect of each such earned Equity Compensation award shall be calculated based on the closing price per share on the trading date coinciding with (or, if such date is not a trading day, next following) the date of the Change in Control; provided, that if the Companys common stock is not, or is no longer, traded on an exchange as of the date of the Change in Control, then the number of shares that will be issued to the Executive in respect of each such earned Equity Compensation award shall be calculated based on the value determined by the Compensation Committee in its reasonable discretion based on the actual or implied price paid to the Companys shareholders in the Change in Control transaction. For purposes of this Agreement, a Change in Control shall not include the consummation of any transaction for which an offer is made and accepted in the ninety (90) days following execution of this Agreement and which closes before January 15, 2015, provided that this Agreement is assumed in such transaction, and provided further that, if, as a result of any such transaction, the Company or surviving entity is no longer a company whose common equity is registered under Section 12 of the Securities Exchange Act of 1934, then, upon the vesting of each Equity Compensation award held by the Executive, the Executive shall be entitled to payment of such award in cash in an amount equal to the fair value of the equity of the Company or the surviving entity that the Executive would otherwise be entitled to receive as determined in good faith by the board of directors of the Company or surviving entity. For purposes of this Agreement, a Change in Control shall not include an initial public offering of the Company. Notwithstanding the foregoing, to the extent necessary for the Executive to avoid taxes and/or penalties under Section 409A of the Internal Revenue Code of 1986, as amended (the Tax Code), a Change in Control shall not be deemed to occur unless it constitutes a change in control event within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations promulgated under Section 409A of the Tax Code.
4. Termination of Employment. The Company may terminate the Executives employment for any reason or for no reason and with or without Cause (as defined herein below). The Executive may terminate the Executives employment with the Company for Good Reason (as defined herein below) or without Good Reason. The Company or the Executive may terminate the Executives employment upon the Executives disability as provided in Section 4.1, or by Non-Renewal. The survival provisions of this Agreement described at Section 7.13 contemplate without limitation that upon the termination his employment the Executive shall be subject to the provisions of the Covenant Against Competition set forth in Section 6.2.
4.1 Termination upon the Executives Death or Disability.
(a) If the Executive dies during the Term, the obligations of the Company to or with respect to the Executive shall terminate in their entirety except as otherwise provided in this Section 4.1 and except for the surviving provisions of this Agreement as described at Section 7.13.
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(b) If the Executive becomes eligible for disability benefits under the Companys long-term disability plans and arrangements (or, if none apply, would have been so eligible under a competitive plan as reasonably determined by the Compensation Committee), the Company or the Executive shall have the right, to the extent permitted by law, to terminate the employment of the Executive upon at least ninety (90) days prior written notice to the other party, provided that the Company shall not have the right to terminate the Executives employment in accordance with this Section 4.1(b) if, (i) in the opinion of a qualified physician reasonably acceptable to both parties, it is reasonably certain that the Executive will be able to resume his duties on a regular full-time basis within one hundred eighty (180) days of the date that the notice of such termination is delivered, and (ii) upon the expiration of such one hundred eighty (180) day period, the Executive has resumed his duties on a regular full-time basis.
(c) Upon the Executives death or the termination of the Executives employment by virtue of disability, all of the following shall apply:
(i) the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for his dependents), and the Company will continue to provide such additional continuing benefits (including without limitation life insurance benefits) as the Executive and his dependents would have been entitled to under this Agreement, as on a monthly basis for a period of eighteen (18) months after the termination, and the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall be entitled to receive the Executives Annual Salary and other benefits that are earned and accrued under this Agreement prior to the date of termination, the Executives Earned and Accrued Bonuses, vesting of or lapsing of any forfeiture restrictions on any Equity Compensation as provided in clause (ii) below, reimbursement under this Agreement for expenses incurred prior to the date of such termination; and an additional amount equal to one (1) year of the Executives then-current Annual Salary plus an amount equal to the Executives annual bonus for the year in which his death or disability occurs based on the Executives then-current annual bonus target level for such year, or if no target level has been established for that year, based on the initial target level specified on Attachment A; provided, that in no event shall such amount be less than the annual bonus (if any) earned by the Executive for the prior year, provided further, that if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)), if any deferral is required, shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h), or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following his death, if a delay in payment is required to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period). If no deferral is required pursuant to the preceding sentence, the payment will be made within five (5) business days after the date of termination.
(ii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the
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performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y) the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
(iii) this Agreement shall otherwise terminate and there shall be no further rights with respect to the Executive hereunder except for the surviving provisions of this Agreement as provided in Section 7.13. The payments to be made in this Section 4.1(c) shall be in addition to, rather than in lieu of, the entitlement of Executive or his estate to any other insurance or benefit proceeds as a result of his death or disability.
4.2 Termination by the Company for Cause. The Company may terminate the Executives employment at any time for Cause if any of the following have occurred:
(a) the Executives conviction for (or pleading guilty or nolo contendere to) any felony or misdemeanor which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company (not including violations of routine vehicular laws);
(b) the Executives indictment for any felony or misdemeanor involving moral turpitude (which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company), if such indictment is not discharged or otherwise resolved within eighteen (18) months;
(c) the Executives commission of an act of fraud, theft, dishonesty or breach of fiduciary duty related to the Company, its Business (as defined in Section 6.1) or the performance of the Executives duties hereunder;
(d) the continuing failure or habitual neglect by the Executive to perform the Executives duties hereunder, except that, if such failure or neglect is curable, the Executive shall have thirty (30) days from his receipt of a notice of such failure or neglect to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board (such cure opportunity being available only once), then such failure or neglect shall not constitute Cause hereunder;
(e) any violation by the Executive of the Restrictive Covenants set forth in Section 6 except that the Executive shall first have thirty (30) days from his receipt of notice of such violation to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board, such violation shall not constitute Cause hereunder; or
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(f) the Executives material breach of this Agreement, except that, if such breach is curable, the Executive shall first have thirty (30) days from his receipt of such notice of such breach to cure such breach and, if the Executive does so to the reasonable satisfaction of the Board, such breach shall not constitute Cause hereunder.
Prior to the effectiveness of any termination for Cause, the Executive shall have the right to meet with the Board to discuss the Companys basis for a termination for Cause and to present evidence to refute such basis, which the Board shall reasonably consider prior to any final decision regarding termination of the Executive for Cause.
If the Company terminates the Executives employment for Cause, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination, provided, however, that if the Company terminates the Executives employment for Cause specifically pursuant to Section 4.2(a), (b), or (c) above, then no Earned and Accrued Bonus shall be payable hereunder. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.3 Termination by the Company without Cause. The Company may terminate the Executives employment at any time without Cause upon sixty (60) days prior written notice to the Executive. If the Company terminates the Executives employment without the occurrence of any of the events constituting Cause and the termination is not due to the Executives death or disability or is not a Non-Renewal, then the termination by the Company is without Cause. If the Company terminates the Executives employment without Cause, then the Severance Package provisions of Section 5 shall apply, and this Agreement shall otherwise terminate and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.4 Termination of Employment by the Executive for Good Reason. Subject to the notice and cure provisions set forth below, the Executive may terminate the Executives employment with the Company for Good Reason and receive the Severance Package provisions of Section 5 if any of the following have occurred without the Executives written consent (Good Reason):
(a) any material and significant diminution in the Executives title, authorities, duties or responsibilities (including without limitation the assignment of duties inconsistent with his position, or a significant adverse alteration of the nature or status of his responsibilities, or a significant adverse alteration of the conditions of his employment), including any failure of the Nominating and Corporate Governance Committee of the Board to nominate the Executive for re-election to the Board of Directors at any annual meeting of the Companys shareholders during the Term and any failure of the Board to appoint the Executive as the Executive Chairman of the Board following re-election, provided that, at the time of each annual meeting, (i) if the Executive is unable to perform his duties hereunder due to a disability or other incapacity, it is reasonably certain that the Executive will be able to resume his duties on a regular full-time basis prior to such time as the Executives employment hereunder may be terminated by the Company due to disability, (ii) the Company has not notified the Executive of its intention to terminate the Executives employment for Cause, and (iii) the Executive has not notified the Company of his intention to resign from his position of Executive Chairman of the Company; or
(b) the Companys material breach of this Agreement.
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Notwithstanding the foregoing, the Executive shall not be deemed to have terminated this Agreement for Good Reason unless: (y) the Executive terminates this Agreement no later than three (3) months after the initial occurrence of the above referenced event or condition which is the basis for such termination (it being understood that each instance of any such event shall constitute a separate basis for such termination and a separate event or condition occurring on the date of such instance for purposes of calculating the three (3)-month period); and (z) the Executive provides to the Company a written notice of the existence of the above referenced event or condition which is the basis for the termination within sixty (60) days following the initial existence of such event or condition, and the Company fails to remedy such event or condition within 30 days following the receipt of such notice. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.5 Termination of Employment by the Executive without Good Reason. The Executive may terminate the Executives employment with the Company at any time without Good Reason. If the Executive terminates his employment without the occurrence of any of the events constituting Good Reason and the termination is not due to the Executives death or disability, then the termination by the Executive is without Good Reason. If the Executive terminates the Executives employment with the Company without Good Reason, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.6 Termination upon Expiration and Non-Renewal of Agreement. If either the Company or the Executive provides the other party with notice of Non-Renewal in accordance with the provisions of Section 1 and Section 7.4 hereof, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement (including Earned and Accrued Bonus, if any) or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This Agreement shall otherwise terminate upon the termination of the Executives employment, and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Sections 6 and 7.14.
5. Severance Package for Certain Terminations of Employment. The Executive shall be entitled to certain rights and shall be bound by certain obligations as described in this Section 5 (the Severance Package) if the Executives employment terminates under either of the following conditions: (y) if the Company terminates the Executives employment without Cause, or (z) if the Executive terminates the Executives employment for Good Reason. For purposes of this Agreement, the Severance Package shall consist of all of the following rights and obligations:
(a) The Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement and under applicable Company benefit plans prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination;
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(b) If the Executive signs the general release of claims in favor of the Company in the form set forth in Attachment B and the general release becomes irrevocably effective not later than forty-five (45) days of the date of the termination event, the Executive shall also be entitled to all of the following:
(i) a cash payment equal to one and one-half (1.5) times the sum of the Executives Annual Salary (as in effect on the effective date of such termination excluding any reduction not permitted by this Agreement), plus the greater of (A) the annual bonus most recently earned by the Executive, whether paid or unpaid, and (B) the average annual bonus actually paid for the last three full fiscal years (Average Annual Bonus), payable in equal installments over the period that corresponds to the period during which the covenants provided in Section 6.2 hereof are to be applicable in accordance with the Companys usual and customary salary payroll practices. If, at the time of a termination to which this sub-subparagraph b(i) applies (y or z in this section 5 above), at least three full fiscal years have not occurred, then to the extent necessary to calculate the Average Annual Bonus for the last three years as set forth above, the target annual bonus set forth on Attachment A shall be used for the missing years. Notwithstanding the foregoing, if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)), shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h)) to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period); and
(ii) for a period of eighteen (18) months after termination of employment, the Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for his dependents), and the Company will provide such additional continuing health, dental, disability and life insurance benefits applicable to senior executives of the Company generally as the Executive and his dependents would have received under this Agreement (and for such additional benefits, at such costs to the Company, provided that the value of premiums on all primary or supplemental disability policies shall be taxed as income to the Executive) as would have applied in the absence of such termination or expiration (but not taking into account any post-termination increases in Annual Salary that may otherwise have occurred without regard to such termination and that may have favorably affected such benefits), it being expressly understood and agreed that nothing in this clause (b)(ii) shall restrict the ability of the Company to generally amend or terminate such plans and programs from time to time in its sole discretion; provided, however, that the Company shall in no event be required to provide such reimbursements or coverage after such time as the Executive becomes entitled to receive health benefits from another employer or recipient of the Executives services (and provided, further, that such entitlement shall be determined without regard to any individual waivers or other arrangements);
(iii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y)
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the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
Unless delayed pursuant to Section 7.18 of this Agreement, payments due under the Severance Package shall be paid to the Executive (or installment payments shall commence) on the fiftieth (50th) day following the date of the termination event. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights hereunder except for surviving provisions of this Agreement as provided in Section 7.13.
6. Covenants of the Executive.
6.1 General Covenants of the Executive. The Executive acknowledges that (a) the principal business of the Company is the acquisition, development and ownership of multi-family residential properties (such business, and any and all other businesses that after the date hereof, and from time to time during the Term, become material with respect to the Companys then-overall business, herein being collectively referred to as the Business) (for purposes of this Agreement, Multi-family REIT shall mean a company that invests in primarily multi-family residential properties and that is qualified as a real estate investment trust for purposes of federal income taxation); (b) the Company knows of a limited number of persons who have developed the Business; (c) the Business is, in part, national in scope; (d) the Executives work for the Company and its subsidiaries has given and will continue to give the Executive access to the confidential affairs and proprietary information of the Company and to trade secrets, (as defined under the laws of the State of Maryland) of the Company and its subsidiaries; (e) the covenants and agreements of the Executive contained in this Section 6 are essential to the business and goodwill of the Company; and (f) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 6.
6.2 Covenant Against Competition. The covenant against competition herein described shall apply as follows:
(a) during the Term;
(b) as to Section 6.2(d)(i), for a period of eighteen (18) months following a termination of the Executives employment for any reason (other than due to the Executives death);
(c) as to Section 6.2(d)(iii), for a period of eighteen (18) months following a termination of the Executives employment for any reason (other than due to the Executives death); and
(d) as to Section 6.2(d)(ii) and 6.2(d)(iv), at any time during and after the Executives employment with the Company and its subsidiaries (and the predecessors of either).
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During the time periods described hereinabove, the Executive covenants as follows:
(i) The Executive shall not, directly or indirectly, own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, engage or participate in: (1) any Multi-family REIT; or (2) other financial investment business which owns multi-family residential properties as its primary business if such business is in competition in any manner whatsoever with the Business of the Company in any state or country or other jurisdiction in which the Company conducts its Business as of the date of termination (an Other Competitive Business); provided, however, that, notwithstanding the foregoing, (i) the restriction described in clause (1) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Multi-family REIT the shares of which are traded on a national securities exchange, (ii) the restriction described in clause (2) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Other Competitive Business that has assets in excess of Eight Hundred Million and No/00 Dollars ($800,000,000), (iii) with the express written consent of the Board as to each such entity, the Executive may, solely for investment purposes and without participating in the business thereof actively or passively, directly or indirectly, own or participate in the ownership of any entity which he owned or managed or participated in the ownership or management of, or served as a consultant to prior to the Effective Date, which ownership, management, participation or consulting relationship has been disclosed to the Company; and (iv) the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers Automated Quotation System or equivalent non-U.S. securities exchange, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own one percent (1%) or more of any class of securities of such entity. In addition, notwithstanding the foregoing, during calendar year 2014, the Executive shall have the right to continue to act as the President of the ELRH Companies and as a principal of certain of their affiliates and, in such capacity, to acquire and beneficially own interests in multi-family residential properties, subject to the requirement that, during the Term hereof, the Executive first offer to the Company any acquisition opportunity that could reasonably be considered to be a corporate opportunity of the Company based on its then current investment strategy and guidelines.
(ii) Except in connection with the business and affairs of the Company and its affiliates: the Executive shall keep secret and retain in strictest confidence, and shall not use for his benefit or the benefit of others, all confidential matters relating to the Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Executive heretofore or hereafter directly or indirectly from the Company or any of its subsidiaries (or any predecessor of either) (the Confidential Company Information), including, without limitation, information with respect to the Business and any aspect thereof, profit or loss figures, and the Companys or its affiliates (or any of their predecessors) properties, and shall not disclose such Confidential Company Information to anyone outside of the Company except with the Companys express written consent and except for Confidential Company Information which (i) at the time of receipt or thereafter becomes publicly known through no wrongful act of the Executive; (ii) is clearly obtainable in the public domain; (iii) was not acquired by the Executive in connection with the Executives employment or affiliation with the Company; (iv) was not acquired by the Executive from the Company or its representatives or from a third-party who has an agreement with the Company not to disclose such information; (v) was legally in the possession of or developed by the Executive prior to the Effective Date; or (vi) is required to be disclosed by rule of law or by order of a court or governmental body or agency. For purposes of this Agreement, affiliate means, with respect to the Company, any person, partnership, corporation or other entity that controls, is controlled by or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act of 1933, as now in effect or as hereafter amended.
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(iii) The Executive shall not, without the Companys prior written consent, directly or indirectly, (i) knowingly solicit or knowingly encourage to leave the employment or other service of the Company or any of its affiliates, any employee employed by the Company at the time of the termination thereof or knowingly hire (on behalf of the Executive or any other person or entity) any employee employed by the Company at the time of the termination who has left the employment or other service of the Company or any of its affiliates (or any predecessor of either) within one (1) year of the termination of such employees or independent contractors employment or other service with the Company and its affiliates; or (ii) whether for the Executives own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the Companys or any of its affiliates, relationship with, or endeavor to entice away from the Company or any of its affiliates, any person who during the Executives employment with the Company is or was a customer or client of the Company or any of its affiliates (or any predecessor of either). Notwithstanding the above, nothing shall prevent the Executive from soliciting loans, investment capital, or the provision of management services from third parties engaged in the Business if the activities of the Executive facilitated thereby do not otherwise adversely interfere with the operations of the Business. Advertising to fill employment openings by television, newspaper, Internet or similar general advertising will not be deemed to violate this Section.
(iv) All memoranda, notes, lists, records, property and any other tangible product and documents (and all copies thereof) made, produced or compiled by the Executive or made available to the Executive during the Term concerning the Business of the Company and its affiliates shall be the Companys property and shall be delivered to the Company at any time on request. Notwithstanding the above, the Executives contacts and contact data base shall not be the Companys property. Notwithstanding the above, software, methods and material developed by the Executive prior to the Term of the Agreement shall not be the Companys property.
6.3 Rights and Remedies upon Breach. The Executive acknowledges and agrees that any breach by him of any of the provisions of Sections 6.1 or 6.2 (the Restrictive Covenants) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if the Executive breaches, or threatens to commit a breach of, any of the Restrictive Covenants, the Company and its affiliates shall have the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants. This right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages). The existence of any claim or cause of action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants. The Company has the right to cease making the payments provided as part of the Severance Package in the event of a material breach of any of the Restrictive Covenants. The Company shall be entitled to recover from Executive the costs and attorneys fees it incurs to enforce the provisions of this section.
7. Other Provisions.
7.1 Severability. The Executive acknowledges and agrees that the Executive has had an opportunity to seek advice of counsel in connection with this Agreement and that the Restrictive Covenants are reasonable in geographical and temporal scope and in all other respects. If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions.
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7.2 Duration and Scope of Covenants. If any court or other decision maker of competent jurisdiction determines that any of the Executives covenants contained in this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, are unenforceable because of the duration or geographical scope of such provision, then, after such determination has become final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced.
7.3 Arbitration. Except with respect to any claims or disputes arising from or relating to the Restrictive Covenants or arising after a Change in Control, any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Baltimore, Maryland in accordance with the Commercial Arbitration Rules, as amended from time to time, of the American Arbitration Association (the AAA). The Company and the Executive will each select an arbitrator, and a third arbitrator will be selected jointly by the arbitrators selected by the Company and the Executive within 15 days after demand for arbitration is made by a Party. If the arbitrators selected by the Company and the Executive are unable to agree on a third arbitrator within that period, then either the Company or the Executive may request that the AAA select the third arbitrator. The arbitrators will possess substantive legal experience in the principle issues in dispute and will be independent of the Company and the Executive. To the extent permitted by applicable law and not prohibited by the Companys certificate of incorporation and bylaws, the Company will pay all expenses (including the reasonable expenses of the Executive, including his reasonable legal fees, if the Executive is the prevailing party in such arbitration) incurred in connection with arbitration and the fees and expenses of the arbitrators and will advance such expenses from time to time as required. Except as may otherwise be agreed in writing by the parties or as ordered by the arbitrators upon substantial justification shown, the hearing for the dispute will be held within 60 days of submission of the dispute to arbitration. The arbitrators will render their final award within 30 days following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrators. The arbitrators will state the factual and legal basis for the award. The decision of the arbitrators will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective.
7.4 Notices. Any notice, consent or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice, consent or other communication shall be deemed given when so delivered personally, delivered by overnight courier, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the United States mails as follows:
(a) | If to the Company, to: | |||
Landmark Apartment Trust of America, Inc. 3505 E. Frontage Road Suite 150 Tampa, Florida 33607 Attention: Board of Directors c/o Secretary Fax: (813) 287-2178 Email: mlafon@latapts.com |
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with a copy, in the case of notice, to:
Hogan Lovells US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 Attention: Stuart A. Barr, Esq. Fax: (202) 637-5910 Email: stuart.barr@hoganlovells.com |
||||
(b) | If to the Executive, to:
Joseph Lubeck
with a copy in either case to: |
|
Any such person may by notice given in accordance with this Section to the other parties hereto designate another address or person for receipt by such person of notices hereunder.
7.5 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with the Company or its subsidiaries (or any predecessor of either).
7.6 Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED EXCLUSIVELY IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Subject to the parties obligations under Section 7.3, the Executive and the Company each hereby expressly consents to the exclusive venue and jurisdiction of the state and federal courts located in Baltimore, Maryland, for any lawsuit arising from or relating to this Agreement.
7.8 Assignment. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall not be assignable either by the Company (except to an affiliate of the Company, in which event the Company shall remain liable if the affiliate fails to meet any of the Companys obligations hereunder, including without limitation to provide the employment opportunities offered hereby and to make payments or provide benefits or otherwise) or by the Executive. In the event that the Executive consents to the assignment of this Agreement to a successor in interest of the Company upon a Change in Control, such consent shall not be deemed to waive or diminish the Executives rights under Section 3.8.
7.9 Withholding. The Company shall be entitled to withhold from any payments or deemed payments any amount of withholding required by law. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to
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the vesting in or delivery of any Equity Compensation, the Company shall have the right to require such payments from the Executive or withhold such amounts from other payments due to the Executive from the Company or any affiliate, or to withhold such Equity Compensation that would otherwise have been issued to the Executive. The Executive shall have the right to elect, in his discretion, the manner in which such payments shall be made or withheld. No other taxes, fees, impositions, duties or other charges or offsets of any kind shall be deducted or withheld from amounts payable hereunder, unless otherwise required by law.
7.10 No Duty to Mitigate. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in the event the Executive does mitigate.
7.11 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, executors and legal representatives.
7.12 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by one of the parties hereto.
7.13 Survival. The rights and obligations of the parties under this Agreement, which by their nature would continue beyond the termination or expiration of this Agreement, shall survive the termination or expiration of this Agreement. The Companys obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to the Company. This Agreement shall not be terminated by any merger or consolidation or other reorganization of the Company. In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person.
7.14 Existing Agreements. Executive represents to the Company that the Executive is not subject or a party to any employment or consulting agreement, non-competition covenant or other agreement, covenant or understanding which might prohibit the Executive from executing this Agreement or limit the Executives ability to fulfill the Executives responsibilities hereunder.
7.15 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
7.16 Parachute Provisions.
(a) The provisions of this Section 7.16(a) shall apply prior to the effective time of an initial public offering of the Company. If any amount payable to or other benefit receivable by the Executive pursuant to this Agreement is deemed to constitute a Parachute Payment (as defined below), alone or when added to any other amount payable or paid to or other benefit receivable or received by the Executive which is deemed to constitute a Parachute Payment (whether or not under an existing plan, arrangement or other agreement), and would result in the imposition on the Executive of an excise tax under Section 4999 of the Tax Code (the Excise Tax), then, in addition to any other benefits to which the Executive is entitled under this Agreement, the Executive shall be paid by the Company an amount in cash equal to the sum of the excise taxes payable by the Executive by reason of receiving Parachute Payments plus the amount necessary to
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put the Executive in the same after-tax position (taking into account any and all applicable federal, state and local excise, income or other taxes at the highest applicable rates on such Parachute Payments and on any payments under this Section 7.16(a)) as if no excise taxes had been imposed with respect to Parachute Payments. The amount of any payment under this Section 7.16(a) shall be computed by a certified public accounting firm mutually and reasonably acceptable to the Executive and the Company, the computation expenses of which shall be paid by the Company. Parachute Payment shall mean any payment deemed to constitute a parachute payment as defined in Section 280G of the Tax Code.
(b) The provisions of this Section 7.16(b) shall apply from and after the effective time of an initial public offering of the Company. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any 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) (a Payment) would be subject to the Excise Tax, then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the Reduced Amount). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined below). For purposes of this Section 7.16(b), present value shall be determined in accordance with Section 280G(d)(4) of the Tax Code. For purposes of this Section 7.16(b), the Parachute Value of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a parachute payment under Section 280G(b)(2) of the Tax Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in this Section 7.16(b) above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the Determination Firm) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Tax Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to this Section 7.16(b), could have been made without the imposition of the Excise Tax (Underpayment). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises. In the event that Tax Code Sections 280G and 4999 or any successor provisions are repealed without succession, this Section 7.16 shall be of no further force or effect.
7.17 Indemnification; Directors and Officers Insurance. The Executive shall be entitled to indemnification in all instances in which the Executive is acting within the scope of his authority to the fullest extent permitted by applicable law and not prohibited by the Companys charter and bylaws, from and against any damages or liabilities, including reasonable attorneys fees; provided, however, that the Executive shall not be entitled to indemnification for damages or liabilities which result from or arise out of the Executives willful misconduct or gross negligence. During the Term, the Company will maintain directors and officers liability insurance in a coverage amount of not less than Ten Million and No/00 Dollars ($10,000,000) unless Executives termination is for Cause, and if the policy is issued on a claims made basis, the Company will provide a tail policy covering Executive in the same amount for at least three (3) years following the Term.
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7.18 409A. This Agreement and the amounts payable and other benefits hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Tax Code. This Agreement shall be administered, interpreted and construed in a manner consistent with Section 409A. If any provision of this Agreement is found not to comply with, or otherwise not to be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole discretion of the Board or Compensation Committee thereof and without requiring the Executives consent, in such manner as the Board or Compensation Committee determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A. Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A. The preceding provisions shall not be construed as a guarantee by the Company of any particular tax effect to the Executive of the payments and other benefits under this Agreement.
(a) With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (a) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Tax Code; (b) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (c) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(b) If a payment obligation under this Agreement arises on account of the Executives termination of employment and if such payment is subject to Section 409A, the payment shall be paid only in connection with the Executives separation from service (as defined in Treas. Reg. Section 1.409A-1(h)). If a payment obligation under this Agreement arises on account of the Executives separation from service (as defined under Treas. Reg. Section 1.409A-1(h)) while the Executive is a specified employee (as defined under Treas. Reg. Section 1.409A-1(h)), any payment of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six months after such separation from service shall accrue without interest and shall be paid on the first day of the seventh month beginning after the date of the Executives separation from service or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following his death.
7.19 Expenses. The Company agrees to reimburse the Executive for legal fees and expenses incurred by him in the review and negotiation of this Agreement, not to exceed Eight Thousand Dollars ($8,000).
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have signed their names to this Employment Agreement as of the day and year set forth below.
COMPANY: | ||||||||
LANDMARK APARTMENT TRUST OF AMERICA, INC., | ||||||||
a Maryland corporation: | ||||||||
Date: | July 21, 2014 |
By: | /s/ Stanley J. Olander, Jr. | |||||
Name: | Stanley J. Olander, Jr. | |||||||
Title: | Chief Executive Officer and Chief Financial Officer | |||||||
EXECUTIVE: | ||||||||
JOSEPH LUBECK | ||||||||
Date: | July 21, 2014 |
/s/ Joseph Lubeck | ||||||
Signature |
Signature Page to Lubeck Employment Agreement
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ATTACHMENT A
to
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Joseph Lubeck)
1. Annual Cash and Equity Bonus Compensation. Executive shall be eligible to receive annual cash and equity bonus compensation during the term of this Agreement, subject to the terms and conditions established annually by the Board or Compensation Committee and any applicable award agreement. Executives bonus will be subject to Executives achievement of performance criteria established annually by the Board or Compensation Committee, which will be based 80% on corporate goals and 20% on individual goals. The threshold, target and maximum annual bonus levels for Executive for calendar year 2014 shall be equal to $325,000, $650,000 and $975,000, respectively. Executives bonus will be paid 50% in cash and 50% in shares of the Companys common stock. For each fiscal year, Executives bonus, if any, will be paid to Executive in a lump sum on or before seventy five (75) days after the end of such fiscal year. For the avoidance of doubt, if Executive is employed on the last day of the calendar year in which such bonus relates, he will be paid the bonus at the same time as other similarly situated employees were scheduled to be paid their bonuses regardless of whether Executive is then employed on such payment date.
2. Equity Compensation. Executive shall be eligible to participate in any Company Incentive Plan during the term of this Agreement, subject to the terms and conditions of such Company Incentive Plan and any applicable award agreement. Equity Compensation awards granted to Executive under any Company Incentive Plan will be subject to Executives achievement of performance criteria over a three-year performance period, which performance criteria will be established by the Board or Compensation Committee. The threshold, target and maximum Equity Compensation award levels for Executive for calendar year 2014 shall be equal to $300,000, $600,000 and $900,000, respectively, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine. 50% of earned Equity Compensation awards will vest upon the conclusion of the performance period and 50% of earned Equity Compensation awards will vest on the first anniversary of the conclusion of the performance period. Executive will also be granted a one-time Equity Compensation award in an amount equal to $1,000,000, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine.
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ATTACHMENT B
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Joseph Lubeck)
General Release of Claims
Consistent with Section 5 of the Employment Agreement dated July 21, 2014, between Landmark Apartment Trust of America, Inc. (the Company) and me (the Employment Agreement) and in consideration for and contingent upon my receipt of the Severance Package set forth in Sections 5(b) of the Employment Agreement, I, for myself, my attorneys, heirs, executors, administrators, successors, and assigns, do hereby fully and forever release and discharge the Company and its affiliated entities (as defined in the Employment Agreement), as well as their predecessors, successors, assigns, and their current or former directors, officers, partners, agents, employees, attorneys, and administrators from all suits, causes of action, and/or claims, demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which I have or may have against any of them arising out of or in connection with my employment by the Company, the Employment Agreement, the termination of my employment with the Company, or any event, transaction, or matter occurring or existing on or before the date of my signing of this General Release, except that I am not releasing any (a) right to indemnification that I may otherwise have, (b) right to Annual Salary and benefits under applicable benefit plans that are earned and accrued but unpaid as of the date of my signing this General Release, (c) right to reimbursement for business expenses incurred and not reimbursed as of the date of my signing this General Release, (d) right to any bonus payment(s) or other compensation due under the Employment Agreement or any Company Incentive Plan that is earned and accrued for the most recent completed calendar year for which a bonus payment has not then been paid as of the date of my signing this General Release, or (e) claims arising after the date of my signing this General Release. I agree not to file or otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to otherwise assert any claims, demands or entitlements that are lawfully released herein. I further hereby irrevocably and unconditionally waive any and all rights to recover any relief or damages concerning the claims, demands or entitlements that are lawfully released herein. I represent and warrant that I have not previously filed or joined in any such claims, demands or entitlements against the Company or the other persons released herein and that I will indemnify and hold them harmless from all liabilities, claims, demands, costs, expenses and/or attorneys fees incurred as a result of any such claims, demands or lawsuits.
Except as otherwise expressly provided above, this General Release specifically includes, but is not limited to, all claims of breach of contract, employment discrimination (including any claims coming within the scope of Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and any comparable Maryland law, all as amended, or any other applicable federal, state, or local law), claims under the Employee Retirement Income Security Act, as amended, claims under the Fair Labor Standards Act, as amended (or any other applicable federal, state or local statute relating to payment of wages), claims concerning recruitment, hiring, termination, salary rate, severance pay, stock options, wages or benefits due, sick leave, holiday pay, vacation pay, life insurance, group medical insurance, any other fringe benefits, workers compensation, termination, employment status, libel, slander, defamation, intentional or negligent misrepresentation and/or infliction of emotional distress, together with any and all tort, contract, or other claims which might have been asserted by me or on my behalf in any suit, charge of discrimination, or claim against the Company or the persons released herein.
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I acknowledge that I have been given an opportunity of twenty-one (21) days to consider this General Release and that I have been encouraged by the Company to discuss fully the terms of this General Release with legal counsel of my own choosing. Moreover, for a period of seven (7) days following my execution of this General Release, I shall have the right to revoke the waiver of claims arising under the Age Discrimination in Employment Act, a federal statute that prohibits employers from discriminating against employees who are age 40 or over. If I elect to revoke this General Release within this seven-day period, I must inform the Company by delivering a written notice of revocation to the Companys Director of Human Resources, , no later than 11:59 p.m. on the seventh calendar day after I sign this General Release. I understand that, if I elect to exercise this revocation right, this General Release shall be voided in its entirety and the Company shall be relieved of all obligations to make the portion of the Severance Package described in Section 5(b) of the Employment Agreement. I may, if I wish, elect to sign this General Release prior to the expiration of the 21-day consideration period, and I agree that if I elect to do so, my election is made freely and voluntarily and after having an opportunity to consult counsel.
AGREED: | ||||
[Form of Agreement Only Do Not Execute] | ||||
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Date |
B-2
Exhibit 10.2
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Stanley J. Olander, Jr.)
THIS EMPLOYMENT AGREEMENT (the Agreement) is entered into by and between LANDMARK APARTMENT TRUST OF AMERICA, INC., a Maryland corporation (hereinafter referred to as the Company), and STANLEY J. OLANDER, JR. (hereinafter referred to as the Executive) and is effective as of the Effective Date defined in Section 1 below.
WHEREAS, the Executive is a party to that certain Employment Agreement, dated as of August 3, 2012, by and between the Company and the Executive (the Original Employment Agreement); and
WHEREAS, the parties desire to amend the terms of the Original Employment Agreement on the terms and conditions set forth in this Agreement.
Accordingly, the parties hereto agree as follows:
1. Term. The Company hereby employs the Executive and the Executive hereby accepts such employment for an initial term commencing as of January 1, 2014 (the Effective Date) and ending on December 31, 2017, unless sooner terminated in accordance with the provisions of Section 4 (the period during which the Executive is employed hereunder being hereinafter referred to as the Term). The Term shall be subject to automatic one (1) year renewals unless notice of non-renewal is provided between the parties in accordance with the notice provisions of Section 7.4, as follows (if elected by the Executive or the Company, a Non-Renewal): (a) if elected by the Executive, the Executive will notify the Company of the Non-Renewal at least ninety (90) days prior to the end of any such Term, or (b) if elected by the Company, the Company will notify the Executive of the Non-Renewal at least one-hundred-eighty (180) days prior to the end of any such Term.
2. Duties. The Executive, in his capacity as Chief Executive Officer and Chief Financial Officer of the Company, shall faithfully perform for the Company the duties of said offices and shall perform such other duties of an executive, managerial or administrative nature consistent with the offices of Chief Executive Officer and Chief Financial Officer, as applicable, as shall be specified and designated from time to time by the Board of Directors of the Company (the Board). Such duties may include, without limitation, the performance of services for, and serving on the board of directors of, any subsidiary of the Company without any additional compensation. The Executive shall devote substantially all of the Executives business time and effort to the performance of the Executives duties hereunder. Provided that the following activities do not interfere with the Executives duties to the Company and provided that the following activities do not violate the Executives covenant against competition as described at Section 6.2 hereof, during the Term the Executive may perform personal, charitable and other business activities, including, without limitation, serving as a member of one or more boards of directors of charitable or other professional organizations and engaging in any activities permitted by Section 6.2(d)(i), may engage in personal investment activities consistent with Company policies on personal securities trading by Company personnel, may serve on the boards of directors/advisors or as a consultant to other business organizations that are not engaged in any aspect of the multi-family residential industry, and may engage in such other board or professional assignments which are disclosed to and approved by the Board, provided, however, that service in such capacities for other business organizations shall require the consent of the Board, such consent not to be unreasonably withheld. The Company acknowledges that the Executive currently serves as a director of the Company. The Company agrees that the Executive
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shall be nominated by the Nominating and Corporate Governance Committee of the Board for re-election to the Board of Directors at each annual meeting of the Companys shareholders for so long as the Executive serves as the Chief Executive Officer of the Company; provided that, at the time of each annual meeting, (a) if the Executive is unable to perform his duties hereunder due to a disability or other incapacity, it is reasonably certain that the Executive will be able to resume his duties on a regular full-time basis prior to such time as the Executives employment hereunder may be terminated by the Company due to disability, (b) the Company has not notified the Executive of its intention to terminate the Executives employment for cause, and (c) the Executive has not notified the Company of his intention resign from his position of Chief Executive Officer of the Company.
3. Compensation.
3.1 Salary. The Company shall pay the Executive during the Term a salary at the rate of $625,000 per annum (the Annual Salary), in accordance with the customary payroll practices of the Company applicable to senior executives generally. The Annual Salary may be increased from time to time by an amount and on such conditions as may be approved by the Board or the Compensation Committee of the Board (the Compensation Committee), and upon such increase, the increased amount shall thereafter be deemed to be the Annual Salary. The Executives Annual Salary shall be reviewed at least every two (2) years by the Board or the Compensation Committee. Annual Salary will be paid in monthly or bi-monthly installments as determined by the Board, and no Annual Salary will be paid later than 75 days after the conclusion of any calendar year in which such Annual Salary is deemed earned and payable to the Executive.
3.2 Short-Term and Long-Term Incentive Compensation. The Executive will be eligible to receive annual cash and equity bonus compensation. The annual bonus threshold, target and maximum levels for the Executive for calendar year 2014 are described on Attachment A. Additionally, the Executive will be eligible to participate in the Companys 2012 Other Equity-Based Award Plan, as amended (the 2012 LTIP Plan) and any subsequent equity incentive plan approved by the Board (each and any of the foregoing is a Company Incentive Plan) for long-term equity incentive compensation (any equity compensation granted to the Executive by the Company, whether under a Company Incentive Plan or otherwise approved by the Board, and whether in the form of restricted stock, stock options, long-term incentive plan units, stock appreciation rights or other equity or equity-linked awards, is, collectively, Equity Compensation). The Equity Compensation threshold, target and maximum award levels for the Executive for calendar year 2014 are set forth on Attachment A. The terms of the Executives annual bonus compensation, any Company Incentive Plan and any awards made under such programs will be subject to the approval of the Board or the Compensation Committee.
3.3 BenefitsIn General. During the Term, the Executive will be entitled to all employee benefits and perquisites made available to senior executives of the Company, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. The Company shall pay 100% of the premium cost of the Companys health insurance coverage provided to the Executive (and the Executives dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement will prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
3.4 Paid Time Off. The Executive shall be entitled to twenty-five (25) days of paid time off per calendar year, plus Company-scheduled holidays. Fifty percent (50%) of any unused paid time-off will be forfeited at the end of the calendar year.
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3.5 Disability Benefits and Life Insurance. Executive shall receive the disability benefits and group life insurance benefits applicable to senior executives at the Company. To the extent the Companys group life and disability insurance plans do not provide this level of benefits, the Executive shall be entitled to additional benefits so that his long-term disability coverage provides benefits (to continue for such period as is provided in the applicable disability plan or program, as amended from time to time, and with waiting periods and pre-existing condition exceptions waived to the extent such coverage is available on commercially reasonable terms) equal to sixty-six and two-thirds percent (66 2/3 %) of his Annual Salary in the case of a covered disability, and life insurance coverage with a face amount equal to $1,000,000. Premiums on all primary or supplemental disability policies provided by the Company under this Agreement shall be paid by the Company, provided that the value of such premiums shall be taxed as income to the Executive.
3.6 Expenses. The Company shall pay or reimburse the Executive for all ordinary and reasonable out-of-pocket expenses actually incurred and, in the case of reimbursement, actually paid by the Executive during the Term in connection with the performance of the Executives services under this Agreement, provided that the Executive shall submit such expenses in accordance with the policies applicable to senior executives of the Company generally.
3.7 Earned and Accrued Bonus. For purposes of this Agreement, with respect to Earned and Accrued Bonus payments to be made to the Executive in connection with the termination of his employment, annual bonus payments and Equity Compensation awards shall be deemed to be earned and accrued (a) if, with respect to annual bonus payments, the Executive is employed with the Company as of the date of the last day of the period in respect of which a bonus payment shall be made and, with respect to Equity Compensation awards, the Executive is employed with the Company as of the date such award vests; and (b) to the extent that the criteria or performance goals for determining the amount of such payment or award are objective and measurable criteria, and such objective and measurable criteria have been satisfied or achieved. Earned and Accrued Bonus specifically includes, without limitation, any cash payments or shares of the Companys common stock payable to Executive in connection with any annual bonus compensation and Equity Compensation that is awarded and vested. A prorated portion of the Executives annual bonus will be paid in accordance with the termination provisions of this Agreement.
3.8 Acceleration of Rights upon Change in Control. Upon the occurrence of a Change in Control (as such term is defined in the 2012 LTIP Plan, as amended and in effect as of the Effective Date hereof), with respect to each Equity Compensation award held by the Executive as of the date of such Change in Control: (i) for which the vesting period is based on the passage of time, 100% of such Equity Compensation shall vest, and to the extent applicable, become exercisable and (ii) for which vesting is based on performance and for which the performance period is incomplete, the performance period in respect of such Equity Compensation award shall end on the date of the Change in Control and such Equity Compensation award shall be deemed earned based on the actual levels of achievement of the applicable performance criteria as of the date of such Change in Control, as determined by the Committee; provided, that such Equity Compensation award shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. With respect to Equity Compensation that is settled in shares of the Companys common stock, the Executive shall be issued fully vested shares of the Companys common stock in respect of each such earned Equity Compensation award on the date of the Change in Control. The number of shares of the Companys common stock that will be issued to the Executive in respect of each such earned Equity Compensation award shall be calculated based on the closing price per share on the trading date coinciding with (or, if such date is not a trading day, next following) the date of the Change in Control; provided, that if the Companys common stock is not, or is longer, traded on an exchange as of the date of the Change in Control, then the number of shares that will be issued to the Executive in respect of each such earned Equity
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Compensation award shall be calculated based on the value determined by the Compensation Committee in its reasonable discretion based on the actual or implied price paid to the Companys shareholders in the Change in Control transaction. For purposes of this Agreement, a Change in Control shall not include the consummation of any transaction for which an offer is made and accepted in the ninety (90) days following execution of this Agreement and which closes before January 15, 2015, provided that this Agreement is assumed in such transaction, and provided further that, if, as a result of any such transaction, the Company or surviving entity is no longer a company whose common equity is registered under Section 12 of the Securities Exchange Act of 1934, then, upon the vesting of each Equity Compensation award held by the Executive, the Executive shall be entitled to payment of such award in cash in an amount equal to the fair value of the equity of the Company or the surviving entity that the Executive would otherwise be entitled to receive as determined in good faith by the board of directors of the Company or surviving entity. For purposes of this Agreement, a Change in Control shall not include an initial public offering of the Company. Notwithstanding the foregoing, to the extent necessary for the Executive to avoid taxes and/or penalties under Section 409A of the Internal Revenue Code of 1986, as amended (the Tax Code), a Change in Control shall not be deemed to occur unless it constitutes a change in control event within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations promulgated under Section 409A of the Tax Code.
4. Termination of Employment. The Company may terminate the Executives employment for any reason or for no reason and with or without Cause (as defined herein below). The Executive may terminate the Executives employment with the Company for Good Reason (as defined herein below) or without Good Reason. The Company or the Executive may terminate the Executives employment upon the Executives disability as provided in Section 4.1, or by Non-Renewal. The survival provisions of this Agreement described at Section 7.13 contemplate without limitation that upon the termination his employment the Executive shall be subject to the provisions of the Covenant Against Competition set forth in Section 6.2.
4.1 Termination upon the Executives Death or Disability.
(a) If the Executive dies during the Term, the obligations of the Company to or with respect to the Executive shall terminate in their entirety except as otherwise provided in this Section 4.1 and except for the surviving provisions of this Agreement as described at Section 7.13.
(b) If the Executive becomes eligible for disability benefits under the Companys long-term disability plans and arrangements (or, if none apply, would have been so eligible under a competitive plan as reasonably determined by the Compensation Committee), the Company or the Executive shall have the right, to the extent permitted by law, to terminate the employment of the Executive upon at least ninety (90) days prior written notice to the other party, provided that the Company shall not have the right to terminate the Executives employment in accordance with this Section 4.1(b) if, (i) in the opinion of a qualified physician reasonably acceptable to both parties, it is reasonably certain that the Executive will be able to resume his duties on a regular full-time basis within one hundred eighty (180) days of the date that the notice of such termination is delivered, and (ii) upon the expiration of such one hundred eighty (180) day period, the Executive has resumed his duties on a regular full-time basis.
(c) Upon the Executives death or the termination of the Executives employment by virtue of disability, all of the following shall apply:
(i) the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the
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Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for his dependents), and the Company will continue to provide such additional continuing benefits (including without limitation life insurance benefits) as the Executive and his dependents would have been entitled to under this Agreement, as on a monthly basis for a period of eighteen (18) months after the termination, and the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall be entitled to receive the Executives Annual Salary and other benefits that are earned and accrued under this Agreement prior to the date of termination, the Executives Earned and Accrued Bonuses, vesting of or lapsing of any forfeiture restrictions on any Equity Compensation as provided in clause (ii) below, reimbursement under this Agreement for expenses incurred prior to the date of such termination; and an additional amount equal to one (1) year of the Executives then-current Annual Salary plus an amount equal to the Executives annual bonus for the year in which his death or disability occurs based on the Executives then-current annual bonus target level for such year, or if no target level has been established for that year, based on the initial target level specified on Attachment A; provided, that in no event shall such amount be less than the annual bonus (if any) earned by the Executive for the prior year, provided further, that if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)), if any deferral is required, shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h), or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following his death, if a delay in payment is required to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period). If no deferral is required pursuant to the preceding sentence, the payment will be made within five (5) business days after the date of termination.
(ii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y) the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
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(iii) this Agreement shall otherwise terminate and there shall be no further rights with respect to the Executive hereunder except for the surviving provisions of this Agreement as provided in Section 7.13. The payments to be made in this Section 4.1(c) shall be in addition to, rather than in lieu of, the entitlement of Executive or his estate to any other insurance or benefit proceeds as a result of his death or disability.
4.2 Termination by the Company for Cause. The Company may terminate the Executives employment at any time for Cause if any of the following have occurred:
(a) the Executives conviction for (or pleading guilty or nolo contendere to) any felony or misdemeanor which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company (not including violations of routine vehicular laws);
(b) the Executives indictment for any felony or misdemeanor involving moral turpitude (which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company), if such indictment is not discharged or otherwise resolved within eighteen (18) months;
(c) the Executives commission of an act of fraud, theft, dishonesty or breach of fiduciary duty related to the Company, its Business (as defined in Section 6.1) or the performance of the Executives duties hereunder;
(d) the continuing failure or habitual neglect by the Executive to perform the Executives duties hereunder, except that, if such failure or neglect is curable, the Executive shall have thirty (30) days from his receipt of a notice of such failure or neglect to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board (such cure opportunity being available only once), then such failure or neglect shall not constitute Cause hereunder;
(e) any violation by the Executive of the Restrictive Covenants set forth in Section 6 except that the Executive shall first have thirty (30) days from his receipt of notice of such violation to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board, such violation shall not constitute Cause hereunder; or
(f) the Executives material breach of this Agreement, except that, if such breach is curable, the Executive shall first have thirty (30) days from his receipt of such notice of such breach to cure such breach and, if the Executive does so to the reasonable satisfaction of the Board, such breach shall not constitute Cause hereunder.
Prior to the effectiveness of any termination for Cause, the Executive shall have the right to meet with the Board to discuss the Companys basis for a termination for Cause and to present evidence to refute such basis, which the Board shall reasonably consider prior to any final decision regarding termination of the Executive for Cause.
If the Company terminates the Executives employment for Cause, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination, provided, however, that if the Company terminates the Executives employment for Cause specifically pursuant to Section 4.2(a), (b), or (c) above, then no Earned and Accrued Bonus shall be payable hereunder. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
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4.3 Termination by the Company without Cause. The Company may terminate the Executives employment at any time without Cause upon sixty (60) days prior written notice to the Executive. If the Company terminates the Executives employment without the occurrence of any of the events constituting Cause and the termination is not due to the Executives death or disability or is not a Non-Renewal, then the termination by the Company is without Cause. If the Company terminates the Executives employment without Cause, then the Severance Package provisions of Section 5 shall apply, and this Agreement shall otherwise terminate and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.4 Termination of Employment by the Executive for Good Reason. Subject to the notice and cure provisions set forth below, the Executive may terminate the Executives employment with the Company for Good Reason and receive the Severance Package provisions of Section 5 if any of the following have occurred without the Executives written consent (Good Reason):
(a) any material and significant diminution in the Executives title, authorities, duties or responsibilities (including without limitation the assignment of duties inconsistent with his position, or a significant adverse alteration of the nature or status of his responsibilities, or a significant adverse alteration of the conditions of his employment), including any failure of the Nominating and Corporate Governance Committee of the Board to nominate the Executive for re-election to the Board of Directors at any annual meeting of the Companys shareholders while the Executive serves as the Chief Executive Officer of the Company, provided that, at the time of each annual meeting, (i) if the Executive is unable to perform his duties hereunder due to a disability or other incapacity, it is reasonably certain that the Executive will be able to resume his duties on a regular full-time basis prior to such time as the Executives employment hereunder may be terminated by the Company due to disability, (ii) the Company has not notified the Executive of its intention to terminate the Executives employment for Cause, and (iii) the Executive has not notified the Company of his intention to resign from his position of Chief Executive Officer of the Company; or
(b) the Companys material breach of this Agreement.
Notwithstanding the foregoing, the Executive shall not be deemed to have terminated this Agreement for Good Reason unless: (y) the Executive terminates this Agreement no later than three (3) months after the initial occurrence of the above referenced event or condition which is the basis for such termination (it being understood that each instance of any such event shall constitute a separate basis for such termination and a separate event or condition occurring on the date of such instance for purposes of calculating the three (3)-month period); and (z) the Executive provides to the Company a written notice of the existence of the above referenced event or condition which is the basis for the termination within sixty (60) days following the initial existence of such event or condition, and the Company fails to remedy such event or condition within 30 days following the receipt of such notice. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.5 Termination of Employment by the Executive without Good Reason. The Executive may terminate the Executives employment with the Company at any time without Good Reason. If the Executive terminates his employment without the occurrence of any of the events constituting Good Reason and the termination is not due to the Executives death or disability, then
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the termination by the Executive is without Good Reason. If the Executive terminates the Executives employment with the Company without Good Reason, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.6 Termination upon Expiration and Non-Renewal of Agreement. If either the Company or the Executive provides the other party with notice of Non-Renewal in accordance with the provisions of Section 1 and Section 7.4 hereof, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement (including Earned and Accrued Bonus, if any) or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This Agreement shall otherwise terminate upon the termination of the Executives employment, and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Sections 6 and 7.14.
5. Severance Package for Certain Terminations of Employment. The Executive shall be entitled to certain rights and shall be bound by certain obligations as described in this Section 5 (the Severance Package) if the Executives employment terminates under either of the following conditions: (y) if the Company terminates the Executives employment without Cause, or (z) if the Executive terminates the Executives employment for Good Reason. For purposes of this Agreement, the Severance Package shall consist of all of the following rights and obligations:
(a) The Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement and under applicable Company benefit plans prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination;
(b) If the Executive signs the general release of claims in favor of the Company in the form set forth in Attachment B and the general release becomes irrevocably effective not later than forty-five (45) days of the date of the termination event, the Executive shall also be entitled to all of the following:
(i) a cash payment equal to one and one-half (1.5) times the sum of the Executives Annual Salary (as in effect on the effective date of such termination excluding any reduction not permitted by this Agreement), plus the greater of (A) the annual bonus most recently earned by the Executive, whether paid or unpaid, and (B) the average annual bonus actually paid for the last three full fiscal years (Average Annual Bonus), payable in equal installments over the period that corresponds to the period during which the covenants provided in Section 6.2 hereof are to be applicable in accordance with the Companys usual and customary salary payroll practices. If, at the time of a termination to which this sub-subparagraph b(i) applies (y or z in this section 5 above), at least three full fiscal years have not occurred, then to the extent necessary to calculate the Average Annual Bonus for the last three years as set forth above, the target annual bonus set forth on Attachment A shall be used for the missing years. Notwithstanding the foregoing, if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3)
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through (b)(12)), shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h)) to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period); and
(ii) for a period of eighteen (18) months after termination of employment, the Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for his dependents), and the Company will provide such additional continuing health, dental, disability and life insurance benefits applicable to senior executives of the Company generally as the Executive and his dependents would have received under this Agreement (and for such additional benefits, at such costs to the Company, provided that the value of premiums on all primary or supplemental disability policies shall be taxed as income to the Executive) as would have applied in the absence of such termination or expiration (but not taking into account any post-termination increases in Annual Salary that may otherwise have occurred without regard to such termination and that may have favorably affected such benefits), it being expressly understood and agreed that nothing in this clause (b)(ii) shall restrict the ability of the Company to generally amend or terminate such plans and programs from time to time in its sole discretion; provided, however, that the Company shall in no event be required to provide such reimbursements or coverage after such time as the Executive becomes entitled to receive health benefits from another employer or recipient of the Executives services (and provided, further, that such entitlement shall be determined without regard to any individual waivers or other arrangements);
(iii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y) the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
Unless delayed pursuant to Section 7.18 of this Agreement, payments due under the Severance Package shall be paid to the Executive (or installment payments shall commence) on the fiftieth (50th) day following the date of the termination event. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights hereunder except for surviving provisions of this Agreement as provided in Section 7.13.
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6. Covenants of the Executive.
6.1 General Covenants of the Executive. The Executive acknowledges that (a) the principal business of the Company is the acquisition, development and ownership of multi-family residential properties (such business, and any and all other businesses that after the date hereof, and from time to time during the Term, become material with respect to the Companys then-overall business, herein being collectively referred to as the Business) (for purposes of this Agreement, Multi-family REIT shall mean a company that invests in primarily multi-family residential properties and that is qualified as a real estate investment trust for purposes of federal income taxation); (b) the Company knows of a limited number of persons who have developed the Business; (c) the Business is, in part, national in scope; (d) the Executives work for the Company and its subsidiaries has given and will continue to give the Executive access to the confidential affairs and proprietary information of the Company and to trade secrets, (as defined under the laws of the State of Maryland) of the Company and its subsidiaries; (e) the covenants and agreements of the Executive contained in this Section 6 are essential to the business and goodwill of the Company; and (f) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 6.
6.2 Covenant Against Competition. The covenant against competition herein described shall apply as follows:
(a) during the Term;
(b) as to Section 6.2(d)(i), for a period of eighteen (18) months following a termination of the Executives employment for any reason (other than due to the Executives death);
(c) as to Section 6.2(d)(iii), for a period of eighteen (18) months following a termination of the Executives employment for any reason (other than due to the Executives death); and
(d) as to Section 6.2(d)(ii) and 6.2(d)(iv), at any time during and after the Executives employment with the Company and its subsidiaries (and the predecessors of either).
During the time periods described hereinabove, the Executive covenants as follows:
(i) The Executive shall not, directly or indirectly, own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, engage or participate in: (1) any Multi-family REIT; or (2) other financial investment business which owns multi-family residential properties as its primary business if such business is in competition in any manner whatsoever with the Business of the Company in any state or country or other jurisdiction in which the Company conducts its Business as of the date of termination (an Other Competitive Business); provided, however, that, notwithstanding the foregoing, (i) the restriction described in clause (1) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Multi-family REIT the shares of which are traded on a national securities exchange, (ii) the restriction described in clause (2) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Other Competitive Business that has assets in excess of Eight Hundred Million and No/00 Dollars ($800,000,000), (iii) with the express written consent of the Board as to each such entity, the Executive may, solely for investment purposes and without participating in the business thereof actively or passively, directly or indirectly, own or participate in the ownership of any entity which he owned or managed or participated in the
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ownership or management of, or served as a consultant to prior to the Effective Date, which ownership, management, participation or consulting relationship has been disclosed to the Company; and (iv) the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers Automated Quotation System or equivalent non-U.S. securities exchange, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own one percent (1%) or more of any class of securities of such entity.
(ii) Except in connection with the business and affairs of the Company and its affiliates: the Executive shall keep secret and retain in strictest confidence, and shall not use for his benefit or the benefit of others, all confidential matters relating to the Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Executive heretofore or hereafter directly or indirectly from the Company or any of its subsidiaries (or any predecessor of either) (the Confidential Company Information), including, without limitation, information with respect to the Business and any aspect thereof, profit or loss figures, and the Companys or its affiliates (or any of their predecessors) properties, and shall not disclose such Confidential Company Information to anyone outside of the Company except with the Companys express written consent and except for Confidential Company Information which (i) at the time of receipt or thereafter becomes publicly known through no wrongful act of the Executive; (ii) is clearly obtainable in the public domain; (iii) was not acquired by the Executive in connection with the Executives employment or affiliation with the Company; (iv) was not acquired by the Executive from the Company or its representatives or from a third-party who has an agreement with the Company not to disclose such information; (v) was legally in the possession of or developed by the Executive prior to the Effective Date; or (vi) is required to be disclosed by rule of law or by order of a court or governmental body or agency. For purposes of this Agreement, affiliate means, with respect to the Company, any person, partnership, corporation or other entity that controls, is controlled by or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act of 1933, as now in effect or as hereafter amended.
(iii) The Executive shall not, without the Companys prior written consent, directly or indirectly, (i) knowingly solicit or knowingly encourage to leave the employment or other service of the Company or any of its affiliates, any employee employed by the Company at the time of the termination thereof or knowingly hire (on behalf of the Executive or any other person or entity) any employee employed by the Company at the time of the termination who has left the employment or other service of the Company or any of its affiliates (or any predecessor of either) within one (1) year of the termination of such employees or independent contractors employment or other service with the Company and its affiliates; or (ii) whether for the Executives own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the Companys or any of its affiliates, relationship with, or endeavor to entice away from the Company or any of its affiliates, any person who during the Executives employment with the Company is or was a customer or client of the Company or any of its affiliates (or any predecessor of either). Notwithstanding the above, nothing shall prevent the Executive from soliciting loans, investment capital, or the provision of management services from third parties engaged in the Business if the activities of the Executive facilitated thereby do not otherwise adversely interfere with the operations of the Business. Advertising to fill employment openings by television, newspaper, Internet or similar general advertising will not be deemed to violate this Section.
(iv) All memoranda, notes, lists, records, property and any other tangible product and documents (and all copies thereof) made, produced or compiled by the Executive or made available to the Executive during the Term concerning the Business of the Company and its affiliates shall be the Companys property and shall be delivered to the Company at any time on request. Notwithstanding the above, the Executives contacts and contact data base shall not be the Companys property. Notwithstanding the above, software, methods and material developed by the Executive prior to the Term of the Agreement shall not be the Companys property.
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6.3 Rights and Remedies upon Breach. The Executive acknowledges and agrees that any breach by him of any of the provisions of Sections 6.1 or 6.2 (the Restrictive Covenants) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if the Executive breaches, or threatens to commit a breach of, any of the Restrictive Covenants, the Company and its affiliates shall have the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants. This right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages). The existence of any claim or cause of action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants. The Company has the right to cease making the payments provided as part of the Severance Package in the event of a material breach of any of the Restrictive Covenants. The Company shall be entitled to recover from Executive the costs and attorneys fees it incurs to enforce the provisions of this section.
7. Other Provisions.
7.1 Severability. The Executive acknowledges and agrees that the Executive has had an opportunity to seek advice of counsel in connection with this Agreement and that the Restrictive Covenants are reasonable in geographical and temporal scope and in all other respects. If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions.
7.2 Duration and Scope of Covenants. If any court or other decision maker of competent jurisdiction determines that any of the Executives covenants contained in this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, are unenforceable because of the duration or geographical scope of such provision, then, after such determination has become final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced.
7.3 Arbitration. Except with respect to any claims or disputes arising from or relating to the Restrictive Covenants or arising after a Change in Control, any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Baltimore, Maryland in accordance with the Commercial Arbitration Rules, as amended from time to time, of the American Arbitration Association (the AAA). The Company and the Executive will each select an arbitrator, and a third arbitrator will be selected jointly by the arbitrators selected by the Company and the Executive within 15 days after demand for arbitration is made by a Party. If the arbitrators selected by the Company and the Executive are unable to agree on a third arbitrator within that period, then either the Company or the Executive may request that the AAA select the third arbitrator. The arbitrators will possess substantive legal experience in the principle issues in dispute and will be independent of the Company and the Executive. To the extent permitted by applicable law and not prohibited by the Companys certificate of incorporation and bylaws, the Company will pay all expenses (including the reasonable expenses of the Executive, including his reasonable legal fees, if the Executive is the prevailing party in such arbitration) incurred in connection with arbitration
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and the fees and expenses of the arbitrators and will advance such expenses from time to time as required. Except as may otherwise be agreed in writing by the parties or as ordered by the arbitrators upon substantial justification shown, the hearing for the dispute will be held within 60 days of submission of the dispute to arbitration. The arbitrators will render their final award within 30 days following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrators. The arbitrators will state the factual and legal basis for the award. The decision of the arbitrators will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective.
7.4 Notices. Any notice, consent or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice, consent or other communication shall be deemed given when so delivered personally, delivered by overnight courier, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the United States mails as follows:
(a) | If to the Company, to: | |||
Landmark Apartment Trust of America, Inc. | ||||
3505 E. Frontage Road | ||||
Suite 150 | ||||
Tampa, Florida 33607 | ||||
Attention: Board of Directors c/o Secretary | ||||
Fax: (813) 287-2178 | ||||
Email: mlafon@latapts.com | ||||
with a copy, in the case of notice, to: | ||||
Hogan Lovells US LLP | ||||
Columbia Square | ||||
555 Thirteenth Street, NW | ||||
Washington, DC 20004 | ||||
Attention: Stuart A. Barr, Esq. | ||||
Fax: (202) 637-5910 | ||||
Email: stuart.barr@hoganlovells.com | ||||
(b) | If to the Executive, to: | |||
Stanley J. Olander, Jr. | ||||
with a copy in either case to: |
|
Any such person may by notice given in accordance with this Section to the other parties hereto designate another address or person for receipt by such person of notices hereunder.
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7.5 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with the Company or its subsidiaries (or any predecessor of either).
7.6 Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED EXCLUSIVELY IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Subject to the parties obligations under Section 7.3, the Executive and the Company each hereby expressly consents to the exclusive venue and jurisdiction of the state and federal courts located in Baltimore, Maryland, for any lawsuit arising from or relating to this Agreement.
7.8 Assignment. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall not be assignable either by the Company (except to an affiliate of the Company, in which event the Company shall remain liable if the affiliate fails to meet any of the Companys obligations hereunder, including without limitation to provide the employment opportunities offered hereby and to make payments or provide benefits or otherwise) or by the Executive. In the event that the Executive consents to the assignment of this Agreement to a successor in interest of the Company upon a Change in Control, such consent shall not be deemed to waive or diminish the Executives rights under Section 3.8.
7.9 Withholding. The Company shall be entitled to withhold from any payments or deemed payments any amount of withholding required by law. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting in or delivery of any Equity Compensation, the Company shall have the right to require such payments from the Executive or withhold such amounts from other payments due to the Executive from the Company or any affiliate, or to withhold such Equity Compensation that would otherwise have been issued to the Executive. The Executive shall have the right to elect, in his discretion, the manner in which such payments shall be made or withheld. No other taxes, fees, impositions, duties or other charges or offsets of any kind shall be deducted or withheld from amounts payable hereunder, unless otherwise required by law.
7.10 No Duty to Mitigate. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in the event the Executive does mitigate.
7.11 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, executors and legal representatives.
7.12 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by one of the parties hereto.
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7.13 Survival. The rights and obligations of the parties under this Agreement, which by their nature would continue beyond the termination or expiration of this Agreement, shall survive the termination or expiration of this Agreement. The Companys obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to the Company. This Agreement shall not be terminated by any merger or consolidation or other reorganization of the Company. In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person.
7.14 Existing Agreements. Executive represents to the Company that the Executive is not subject or a party to any employment or consulting agreement, non-competition covenant or other agreement, covenant or understanding which might prohibit the Executive from executing this Agreement or limit the Executives ability to fulfill the Executives responsibilities hereunder.
7.15 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
7.16 Parachute Provisions.
(a) The provisions of this Section 7.16(a) shall apply prior to the effective time of an initial public offering of the Company. If any amount payable to or other benefit receivable by the Executive pursuant to this Agreement is deemed to constitute a Parachute Payment (as defined below), alone or when added to any other amount payable or paid to or other benefit receivable or received by the Executive which is deemed to constitute a Parachute Payment (whether or not under an existing plan, arrangement or other agreement), and would result in the imposition on the Executive of an excise tax under Section 4999 of the Tax Code (the Excise Tax), then, in addition to any other benefits to which the Executive is entitled under this Agreement, the Executive shall be paid by the Company an amount in cash equal to the sum of the excise taxes payable by the Executive by reason of receiving Parachute Payments plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state and local excise, income or other taxes at the highest applicable rates on such Parachute Payments and on any payments under this Section 7.16(a)) as if no excise taxes had been imposed with respect to Parachute Payments. The amount of any payment under this Section 7.16(a) shall be computed by a certified public accounting firm mutually and reasonably acceptable to the Executive and the Company, the computation expenses of which shall be paid by the Company. Parachute Payment shall mean any payment deemed to constitute a parachute payment as defined in Section 280G of the Tax Code.
(b) The provisions of this Section 7.16(b) shall apply from and after the effective time of an initial public offering of the Company. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any 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) (a Payment) would be subject to the Excise Tax, then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the Reduced Amount). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such
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Payments as of the date of the change of control, as determined by the Determination Firm (as defined below). For purposes of this Section 7.16(b), present value shall be determined in accordance with Section 280G(d)(4) of the Tax Code. For purposes of this Section 7.16(b), the Parachute Value of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a parachute payment under Section 280G(b)(2) of the Tax Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in this Section 7.16(b) above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the Determination Firm) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Tax Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to this Section 7.16(b), could have been made without the imposition of the Excise Tax (Underpayment). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises. In the event that Tax Code Sections 280G and 4999 or any successor provisions are repealed without succession, this Section 7.16 shall be of no further force or effect.
7.17 Indemnification; Directors and Officers Insurance. The Executive shall be entitled to indemnification in all instances in which the Executive is acting within the scope of his authority to the fullest extent permitted by applicable law and not prohibited by the Companys charter and bylaws, from and against any damages or liabilities, including reasonable attorneys fees; provided, however, that the Executive shall not be entitled to indemnification for damages or liabilities which result from or arise out of the Executives willful misconduct or gross negligence. During the Term, the Company will maintain directors and officers liability insurance in a coverage amount of not less than Ten Million and No/00 Dollars ($10,000,000) unless Executives termination is for Cause, and if the policy is issued on a claims made basis, the Company will provide a tail policy covering Executive in the same amount for at least three (3) years following the Term.
7.18 409A. This Agreement and the amounts payable and other benefits hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Tax Code. This Agreement shall be administered, interpreted and construed in a manner consistent with Section 409A. If any provision of this Agreement is found not to comply with, or otherwise not to be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole discretion of the Board or Compensation Committee thereof and without requiring the Executives consent, in such manner as the Board or Compensation Committee determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A. Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A. The preceding provisions shall not be construed as a guarantee by the Company of any particular tax effect to the Executive of the payments and other benefits under this Agreement.
(a) With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (a) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Tax Code; (b) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (c) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
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(b) If a payment obligation under this Agreement arises on account of the Executives termination of employment and if such payment is subject to Section 409A, the payment shall be paid only in connection with the Executives separation from service (as defined in Treas. Reg. Section 1.409A-1(h)). If a payment obligation under this Agreement arises on account of the Executives separation from service (as defined under Treas. Reg. Section 1.409A-1(h)) while the Executive is a specified employee (as defined under Treas. Reg. Section 1.409A-1(h)), any payment of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six months after such separation from service shall accrue without interest and shall be paid on the first day of the seventh month beginning after the date of the Executives separation from service or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following his death.
7.19 Expenses. The Company agrees to reimburse the Executive for legal fees and expenses incurred by him in the review and negotiation of this Agreement, not to exceed Eight Thousand Dollars ($8,000).
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have signed their names to this Employment Agreement as of the day and year set forth below.
COMPANY: | ||||||||
LANDMARK APARTMENT TRUST OF AMERICA, INC., a Maryland corporation: | ||||||||
Date: | July 21, 2014 |
By: | /s/ Joseph Lubeck | |||||
Name: | Joseph Lubeck | |||||||
Title: | Executive Chairman | |||||||
EXECUTIVE: | ||||||||
STANLEY J. OLANDER, JR. | ||||||||
Date: | July 21, 2014 |
/s/ Stanley J. Olander, Jr. | ||||||
Signature |
Signature Page to Olander Employment Agreement
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ATTACHMENT A
to
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Stanley J. Olander, Jr.)
1. Annual Cash and Equity Bonus Compensation. Executive shall be eligible to receive annual cash and equity bonus compensation during the term of this Agreement, subject to the terms and conditions established annually by the Board or Compensation Committee and any applicable award agreement. Executives bonus will be subject to Executives achievement of performance criteria established annually by the Board or Compensation Committee, which will be based 80% on corporate goals and 20% on individual goals. The threshold, target and maximum annual bonus levels for Executive for calendar year 2014 shall be equal to $350,000, $700,000 and $1,050,000, respectively. Executives bonus will be paid 50% in cash and 50% in shares of the Companys common stock. For each fiscal year, Executives bonus, if any, will be paid to Executive in a lump sum on or before seventy five (75) days after the end of such fiscal year. For the avoidance of doubt, if Executive is employed on the last day of the calendar year in which such bonus relates, he will be paid the bonus at the same time as other similarly situated employees were scheduled to be paid their bonuses regardless of whether Executive is then employed on such payment date.
2. Equity Compensation. Executive shall be eligible to participate in any Company Incentive Plan during the term of this Agreement, subject to the terms and conditions of such Company Incentive Plan and any applicable award agreement. Equity Compensation awards granted to Executive under any Company Incentive Plan will be subject to Executives achievement of performance criteria over a three-year performance period, which performance criteria will be established by the Board or Compensation Committee. The threshold, target and maximum Equity Compensation award levels for Executive for calendar year 2014 shall be equal to $300,000, $600,000 and $900,000, respectively, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine. 50% of earned Equity Compensation awards will vest upon the conclusion of the performance period and 50% of earned Equity Compensation awards will vest on the first anniversary of the conclusion of the performance period. Executive will also be granted a one-time Equity Compensation award in an amount equal to $1,000,000, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine.
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ATTACHMENT B
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Stanley J. Olander, Jr.)
General Release of Claims
Consistent with Section 5 of the Employment Agreement dated July 21, 2014, between Landmark Apartment Trust of America, Inc. (the Company) and me (the Employment Agreement) and in consideration for and contingent upon my receipt of the Severance Package set forth in Sections 5(b) of the Employment Agreement, I, for myself, my attorneys, heirs, executors, administrators, successors, and assigns, do hereby fully and forever release and discharge the Company and its affiliated entities (as defined in the Employment Agreement), as well as their predecessors, successors, assigns, and their current or former directors, officers, partners, agents, employees, attorneys, and administrators from all suits, causes of action, and/or claims, demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which I have or may have against any of them arising out of or in connection with my employment by the Company, the Employment Agreement, the termination of my employment with the Company, or any event, transaction, or matter occurring or existing on or before the date of my signing of this General Release, except that I am not releasing any (a) right to indemnification that I may otherwise have, (b) right to Annual Salary and benefits under applicable benefit plans that are earned and accrued but unpaid as of the date of my signing this General Release, (c) right to reimbursement for business expenses incurred and not reimbursed as of the date of my signing this General Release, (d) right to any bonus payment(s) or other compensation due under the Employment Agreement or any Company Incentive Plan that is earned and accrued for the most recent completed calendar year for which a bonus payment has not then been paid as of the date of my signing this General Release, or (e) claims arising after the date of my signing this General Release. I agree not to file or otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to otherwise assert any claims, demands or entitlements that are lawfully released herein. I further hereby irrevocably and unconditionally waive any and all rights to recover any relief or damages concerning the claims, demands or entitlements that are lawfully released herein. I represent and warrant that I have not previously filed or joined in any such claims, demands or entitlements against the Company or the other persons released herein and that I will indemnify and hold them harmless from all liabilities, claims, demands, costs, expenses and/or attorneys fees incurred as a result of any such claims, demands or lawsuits.
Except as otherwise expressly provided above, this General Release specifically includes, but is not limited to, all claims of breach of contract, employment discrimination (including any claims coming within the scope of Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and any comparable Maryland law, all as amended, or any other applicable federal, state, or local law), claims under the Employee Retirement Income Security Act, as amended, claims under the Fair Labor Standards Act, as amended (or any other applicable federal, state or local statute relating to payment of wages), claims concerning recruitment, hiring, termination, salary rate, severance pay, stock options, wages or benefits due, sick leave, holiday pay, vacation pay, life insurance, group medical insurance, any other fringe benefits, workers compensation, termination, employment status, libel, slander, defamation, intentional or negligent misrepresentation and/or infliction of emotional distress, together with any and all tort, contract, or other claims which might have been asserted by me or on my behalf in any suit, charge of discrimination, or claim against the Company or the persons released herein.
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I acknowledge that I have been given an opportunity of twenty-one (21) days to consider this General Release and that I have been encouraged by the Company to discuss fully the terms of this General Release with legal counsel of my own choosing. Moreover, for a period of seven (7) days following my execution of this General Release, I shall have the right to revoke the waiver of claims arising under the Age Discrimination in Employment Act, a federal statute that prohibits employers from discriminating against employees who are age 40 or over. If I elect to revoke this General Release within this seven-day period, I must inform the Company by delivering a written notice of revocation to the Companys Director of Human Resources, , no later than 11:59 p.m. on the seventh calendar day after I sign this General Release. I understand that, if I elect to exercise this revocation right, this General Release shall be voided in its entirety and the Company shall be relieved of all obligations to make the portion of the Severance Package described in Section 5(b) of the Employment Agreement. I may, if I wish, elect to sign this General Release prior to the expiration of the 21-day consideration period, and I agree that if I elect to do so, my election is made freely and voluntarily and after having an opportunity to consult counsel.
AGREED: | ||||
[Form of Agreement Only Do Not Execute] | ||||
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Date |
B-2
Exhibit 10.3
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(James Miller)
THIS EMPLOYMENT AGREEMENT (the Agreement) is entered into by and between LANDMARK APARTMENT TRUST OF AMERICA, INC., a Maryland corporation (hereinafter referred to as the Company), and JAMES MILLER (hereinafter referred to as the Executive) and is effective as of the Effective Date defined in Section 1 below.
WHEREAS, the Executive is a party to that certain Employment Agreement, dated as of July 1, 2012 and amended on February 25, 2013, by and between Elco Landmark Residential Holdings LLC and the Executive (the Original Employment Agreement); and
WHEREAS, the parties desire to amend the terms of the Original Employment Agreement on the terms and conditions set forth in this Agreement.
Accordingly, the parties hereto agree as follows:
1. Term. The Company hereby employs the Executive and the Executive hereby accepts such employment for an initial term commencing as of January 1, 2014 (the Effective Date) and ending on December 31, 2016, unless sooner terminated in accordance with the provisions of Section 4 (the period during which the Executive is employed hereunder being hereinafter referred to as the Term). The Term shall be subject to automatic one (1) year renewals unless notice of non-renewal is provided between the parties in accordance with the notice provisions of Section 7.4, as follows (if elected by the Executive or the Company, a Non-Renewal): (a) if elected by the Executive, the Executive will notify the Company of the Non-Renewal at least ninety (90) days prior to the end of any such Term, or (b) if elected by the Company, the Company will notify the Executive of the Non-Renewal at least one-hundred-eighty (180) days prior to the end of any such Term.
2. Duties. The Executive, in his capacity as Chief Operating Officer and Chief Accounting Officer of the Company, shall faithfully perform for the Company the duties of said offices and shall perform such other duties of an executive, managerial or administrative nature consistent with the offices of Chief Operating Officer and Chief Accounting Officer as shall be specified and designated from time to time by the Board of Directors of the Company (the Board). Such duties may include, without limitation, the performance of services for, and serving on the board of directors of, any subsidiary of the Company without any additional compensation. The Executive shall devote substantially all of the Executives business time and effort to the performance of the Executives duties hereunder. Provided that the following activities do not interfere with the Executives duties to the Company and provided that the following activities do not violate the Executives covenant against competition as described at Section 6.2 hereof, during the Term the Executive may perform personal, charitable and other business activities, including, without limitation, serving as a member of one or more boards of directors of charitable or other professional organizations and engaging in any activities permitted by Section 6.2(d)(i), may engage in personal investment activities consistent with Company policies on personal securities trading by Company personnel, may serve on the boards of directors/advisors or as a consultant to other business organizations that are not engaged in any aspect of the multi-family residential industry, and may engage in such other board or professional assignments which are disclosed to and approved by the Board, provided, however, that service in such capacities for other business organizations shall require the consent of the Board, such consent not to be unreasonably withheld.
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3. Compensation.
3.1 Salary. The Company shall pay the Executive during the Term a salary at the rate of $350,000 per annum (the Annual Salary), in accordance with the customary payroll practices of the Company applicable to senior executives generally. The Annual Salary may be increased from time to time by an amount and on such conditions as may be approved by the Board or the Compensation Committee of the Board (the Compensation Committee), and upon such increase, the increased amount shall thereafter be deemed to be the Annual Salary. The Executives Annual Salary shall be reviewed at least every two (2) years by the Board or the Compensation Committee. Annual Salary will be paid in monthly or bi-monthly installments as determined by the Board, and no Annual Salary will be paid later than 75 days after the conclusion of any calendar year in which such Annual Salary is deemed earned and payable to the Executive.
3.2 Short-Term and Long-Term Incentive Compensation. The Executive will be eligible to receive annual cash and equity bonus compensation. The annual bonus threshold, target and maximum levels for the Executive for calendar year 2014 are described on Attachment A. Additionally, the Executive will be eligible to participate in the Companys 2012 Other Equity-Based Award Plan, as amended (the 2012 LTIP Plan) and any subsequent equity incentive plan approved by the Board (each and any of the foregoing is a Company Incentive Plan) for long-term equity incentive compensation (any equity compensation granted to the Executive by the Company, whether under a Company Incentive Plan or otherwise approved by the Board, and whether in the form of restricted stock, stock options, long-term incentive plan units, stock appreciation rights or other equity or equity-linked awards, is, collectively, Equity Compensation). The Equity Compensation threshold, target and maximum award levels for the Executive for calendar year 2014 are set forth on Attachment A. The terms of the Executives annual bonus compensation, any Company Incentive Plan and any awards made under such programs will be subject to the approval of the Board or the Compensation Committee.
3.3 BenefitsIn General. During the Term, the Executive will be entitled to all employee benefits and perquisites made available to senior executives of the Company, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. The Company shall pay 100% of the premium cost of the Companys health insurance coverage provided to the Executive (and the Executives dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement will prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
3.4 Paid Time Off. The Executive shall be entitled to twenty-five (25) days of paid time off per calendar year, plus Company-scheduled holidays. Fifty percent (50%) of any unused paid time-off will be forfeited at the end of the calendar year.
3.5 Disability Benefits and Life Insurance. Executive shall receive the disability benefits and group life insurance benefits applicable to senior executives at the Company. To the extent the Companys group life and disability insurance plans do not provide this level of benefits, the Executive shall be entitled to additional benefits so that his long-term disability coverage provides benefits (to continue for such period as is provided in the applicable disability plan or program, as amended from time to time, and with waiting periods and pre-existing condition exceptions waived to the extent such coverage is available on commercially reasonable terms) equal to sixty-six and two-thirds percent (66 2/3 %) of his Annual Salary in the case of a covered disability, and life insurance coverage with a face amount equal to $1,000,000. Premiums on all primary or supplemental disability policies provided by the Company under this Agreement shall be paid by the Company, provided that the value of such premiums shall be taxed as income to the Executive.
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3.6 Expenses. The Company shall pay or reimburse the Executive for all ordinary and reasonable out-of-pocket expenses actually incurred and, in the case of reimbursement, actually paid by the Executive during the Term in connection with the performance of the Executives services under this Agreement, provided that the Executive shall submit such expenses in accordance with the policies applicable to senior executives of the Company generally.
3.7 Earned and Accrued Bonus. For purposes of this Agreement, with respect to Earned and Accrued Bonus payments to be made to the Executive in connection with the termination of his employment, annual bonus payments and Equity Compensation awards shall be deemed to be earned and accrued (a) if, with respect to annual bonus payments, the Executive is employed with the Company as of the date of the last day of the period in respect of which a bonus payment shall be made and, with respect to Equity Compensation awards, the Executive is employed with the Company as of the date such award vests; and (b) to the extent that the criteria or performance goals for determining the amount of such payment or award are objective and measurable criteria, and such objective and measurable criteria have been satisfied or achieved. Earned and Accrued Bonus specifically includes, without limitation, any cash payments or shares of the Companys common stock payable to Executive in connection with any annual bonus compensation and Equity Compensation that is awarded and vested. A prorated portion of the Executives annual bonus will be paid in accordance with the termination provisions of this Agreement.
3.8 Acceleration of Rights upon Change in Control. Upon the occurrence of a Change in Control (as such term is defined in the 2012 LTIP Plan, as amended and in effect as of the Effective Date hereof), with respect to each Equity Compensation award held by the Executive as of the date of such Change in Control: (i) for which the vesting period is based on the passage of time, 100% of such Equity Compensation shall vest, and to the extent applicable, become exercisable and (ii) for which vesting is based on performance and for which the performance period is incomplete, the performance period in respect of such Equity Compensation award shall end on the date of the Change in Control and such Equity Compensation award shall be deemed earned based on the actual levels of achievement of the applicable performance criteria as of the date of such Change in Control, as determined by the Committee; provided, that such Equity Compensation award shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. With respect to Equity Compensation that is settled in shares of the Companys common stock, the Executive shall be issued fully vested shares of the Companys common stock in respect of each such earned Equity Compensation award on the date of the Change in Control. The number of shares of the Companys common stock that will be issued to the Executive in respect of each such earned Equity Compensation award shall be calculated based on the closing price per share on the trading date coinciding with (or, if such date is not a trading day, next following) the date of the Change in Control; provided, that if the Companys common stock is not, or is no longer, traded on an exchange as of the date of the Change in Control, then the number of shares that will be issued to the Executive in respect of each such earned Equity Compensation award shall be calculated based on the value determined by the Compensation Committee in its reasonable discretion based on the actual or implied price paid to the Companys shareholders in the Change in Control transaction. For purposes of this Agreement, a Change in Control shall not include the consummation of any transaction for which an offer is made and accepted in the ninety (90) days following execution of this Agreement and which closes before January 15, 2015, provided that this Agreement is assumed in such transaction, and provided further that, if, as a result of any such transaction, the Company or surviving entity is no longer a company whose common equity is registered under Section 12 of the Securities Exchange Act of 1934, then, upon the vesting of each Equity Compensation award held by the Executive, the Executive shall be
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entitled to payment of such award in cash in an amount equal to the fair value of the equity of the Company or the surviving entity that the Executive would otherwise be entitled to receive as determined in good faith by the board of directors of the Company or surviving entity. For purposes of this Agreement, a Change in Control shall not include an initial public offering of the Company. Notwithstanding the foregoing, to the extent necessary for the Executive to avoid taxes and/or penalties under Section 409A of the Internal Revenue Code of 1986, as amended (the Tax Code), a Change in Control shall not be deemed to occur unless it constitutes a change in control event within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations promulgated under Section 409A of the Tax Code.
4. Termination of Employment. The Company may terminate the Executives employment for any reason or for no reason and with or without Cause (as defined herein below). The Executive may terminate the Executives employment with the Company for Good Reason (as defined herein below) or without Good Reason. The Company or the Executive may terminate the Executives employment upon the Executives disability as provided in Section 4.1, or by Non-Renewal. The survival provisions of this Agreement described at Section 7.13 contemplate without limitation that upon the termination his employment the Executive shall be subject to the provisions of the Covenant Against Competition set forth in Section 6.2.
4.1 Termination upon the Executives Death or Disability.
(a) If the Executive dies during the Term, the obligations of the Company to or with respect to the Executive shall terminate in their entirety except as otherwise provided in this Section 4.1 and except for the surviving provisions of this Agreement as described at Section 7.13.
(b) If the Executive becomes eligible for disability benefits under the Companys long-term disability plans and arrangements (or, if none apply, would have been so eligible under a competitive plan as reasonably determined by the Compensation Committee), the Company or the Executive shall have the right, to the extent permitted by law, to terminate the employment of the Executive upon at least ninety (90) days prior written notice to the other party, provided that the Company shall not have the right to terminate the Executives employment in accordance with this Section 4.1(b) if, (i) in the opinion of a qualified physician reasonably acceptable to both parties, it is reasonably certain that the Executive will be able to resume his duties on a regular full-time basis within one hundred eighty (180) days of the date that the notice of such termination is delivered, and (ii) upon the expiration of such one hundred eighty (180) day period, the Executive has resumed his duties on a regular full-time basis.
(c) Upon the Executives death or the termination of the Executives employment by virtue of disability, all of the following shall apply:
(i) the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for his dependents), and the Company will continue to provide such additional continuing benefits (including without limitation life insurance benefits) as the Executive and his dependents would have been entitled to under this Agreement, as on a monthly basis for a period of twelve (12) months after the termination, and the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall be entitled to receive the Executives Annual Salary and other benefits that are earned and accrued under this Agreement prior to the date of termination, the Executives Earned and Accrued Bonuses, vesting of or lapsing of any forfeiture restrictions on any Equity
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Compensation as provided in clause (ii) below, reimbursement under this Agreement for expenses incurred prior to the date of such termination; and an additional amount equal to one (1) year of the Executives then-current Annual Salary plus an amount equal to the Executives annual bonus for the year in which his death or disability occurs based on the Executives then-current annual bonus target level for such year, or if no target level has been established for that year, based on the initial target level specified on Attachment A; provided, that in no event shall such amount be less than the annual bonus (if any) earned by the Executive for the prior year, provided further, that if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)), if any deferral is required, shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h), or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following his death, if a delay in payment is required to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period). If no deferral is required pursuant to the preceding sentence, the payment will be made within five (5) business days after the date of termination.
(ii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y) the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
(iii) this Agreement shall otherwise terminate and there shall be no further rights with respect to the Executive hereunder except for the surviving provisions of this Agreement as provided in Section 7.13. The payments to be made in this Section 4.1(c) shall be in addition to, rather than in lieu of, the entitlement of Executive or his estate to any other insurance or benefit proceeds as a result of his death or disability.
4.2 Termination by the Company for Cause. The Company may terminate the Executives employment at any time for Cause if any of the following have occurred:
(a) the Executives conviction for (or pleading guilty or nolo contendere to) any felony or misdemeanor which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company (not including violations of routine vehicular laws);
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(b) the Executives indictment for any felony or misdemeanor involving moral turpitude (which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company), if such indictment is not discharged or otherwise resolved within eighteen (18) months;
(c) the Executives commission of an act of fraud, theft, dishonesty or breach of fiduciary duty related to the Company, its Business (as defined in Section 6.1) or the performance of the Executives duties hereunder;
(d) the continuing failure or habitual neglect by the Executive to perform the Executives duties hereunder, except that, if such failure or neglect is curable, the Executive shall have thirty (30) days from his receipt of a notice of such failure or neglect to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board (such cure opportunity being available only once), then such failure or neglect shall not constitute Cause hereunder;
(e) any violation by the Executive of the Restrictive Covenants set forth in Section 6 except that the Executive shall first have thirty (30) days from his receipt of notice of such violation to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board, such violation shall not constitute Cause hereunder; or
(f) the Executives material breach of this Agreement, except that, if such breach is curable, the Executive shall first have thirty (30) days from his receipt of such notice of such breach to cure such breach and, if the Executive does so to the reasonable satisfaction of the Board, such breach shall not constitute Cause hereunder.
Prior to the effectiveness of any termination for Cause, the Executive shall have the right to meet with the Board to discuss the Companys basis for a termination for Cause and to present evidence to refute such basis, which the Board shall reasonably consider prior to any final decision regarding termination of the Executive for Cause.
If the Company terminates the Executives employment for Cause, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination, provided, however, that if the Company terminates the Executives employment for Cause specifically pursuant to Section 4.2(a), (b), or (c) above, then no Earned and Accrued Bonus shall be payable hereunder. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.3 Termination by the Company without Cause. The Company may terminate the Executives employment at any time without Cause upon sixty (60) days prior written notice to the Executive. If the Company terminates the Executives employment without the occurrence of any of the events constituting Cause and the termination is not due to the Executives death or disability or is not a Non-Renewal, then the termination by the Company is without Cause. If the Company terminates the Executives employment without Cause, then the Severance Package
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provisions of Section 5 shall apply, and this Agreement shall otherwise terminate and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.4 Termination of Employment by the Executive for Good Reason. Subject to the notice and cure provisions set forth below, the Executive may terminate the Executives employment with the Company for Good Reason and receive the Severance Package provisions of Section 5 if any of the following have occurred without the Executives written consent (Good Reason):
(a) any material and significant diminution in the Executives title, authorities, duties or responsibilities (including without limitation the assignment of duties inconsistent with his position, or a significant adverse alteration of the nature or status of his responsibilities, or a significant adverse alteration of the conditions of his employment); or
(b) the Companys material breach of this Agreement.
Notwithstanding the foregoing, the Executive shall not be deemed to have terminated this Agreement for Good Reason unless: (y) the Executive terminates this Agreement no later than three (3) months after the initial occurrence of the above referenced event or condition which is the basis for such termination (it being understood that each instance of any such event shall constitute a separate basis for such termination and a separate event or condition occurring on the date of such instance for purposes of calculating the three (3)-month period); and (z) the Executive provides to the Company a written notice of the existence of the above referenced event or condition which is the basis for the termination within sixty (60) days following the initial existence of such event or condition, and the Company fails to remedy such event or condition within 30 days following the receipt of such notice. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.5 Termination of Employment by the Executive without Good Reason. The Executive may terminate the Executives employment with the Company at any time without Good Reason. If the Executive terminates his employment without the occurrence of any of the events constituting Good Reason and the termination is not due to the Executives death or disability, then the termination by the Executive is without Good Reason. If the Executive terminates the Executives employment with the Company without Good Reason, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.6 Termination upon Expiration and Non-Renewal of Agreement. If either the Company or the Executive provides the other party with notice of Non-Renewal in accordance with the provisions of Section 1 and Section 7.4 hereof, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement (including Earned and Accrued Bonus, if any) or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This Agreement shall otherwise terminate upon the termination of the Executives employment, and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Sections 6 and 7.14.
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5. Severance Package for Certain Terminations of Employment. The Executive shall be entitled to certain rights and shall be bound by certain obligations as described in this Section 5 (the Severance Package) if the Executives employment terminates under either of the following conditions: (y) if the Company terminates the Executives employment without Cause, or (z) if the Executive terminates the Executives employment for Good Reason. For purposes of this Agreement, the Severance Package shall consist of all of the following rights and obligations:
(a) The Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement and under applicable Company benefit plans prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination;
(b) If the Executive signs the general release of claims in favor of the Company in the form set forth in Attachment B and the general release becomes irrevocably effective not later than forty-five (45) days of the date of the termination event, the Executive shall also be entitled to all of the following:
(i) a cash payment equal to one (1) times the sum of the Executives Annual Salary (as in effect on the effective date of such termination excluding any reduction not permitted by this Agreement), plus the greater of (A) the annual bonus most recently earned by the Executive, whether paid or unpaid, and (B) the average annual bonus actually paid for the last three full fiscal years (Average Annual Bonus), payable in equal installments over the period that corresponds to the period during which the covenants provided in Section 6.2 hereof are to be applicable in accordance with the Companys usual and customary salary payroll practices. If, at the time of a termination to which this sub-subparagraph b(i) applies (y or z in this section 5 above), at least three full fiscal years have not occurred, then to the extent necessary to calculate the Average Annual Bonus for the last three years as set forth above, the target annual bonus set forth on Attachment A shall be used for the missing years. Notwithstanding the foregoing, if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)), shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h)) to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period); and
(ii) for a period of twelve (12) months after termination of employment, the Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for his dependents), and the Company will provide such additional continuing health, dental, disability and life insurance benefits applicable to senior executives of the Company generally as the Executive and his dependents would have received under this Agreement (and for such additional benefits, at such costs to the Company, provided that the value of premiums on all primary or supplemental disability policies shall be taxed as income to the Executive) as would have applied in the absence of such termination or expiration (but not taking into account any post-termination increases in Annual Salary that may otherwise have occurred without regard to such termination and that may have favorably affected such benefits), it being expressly understood and agreed that nothing in this clause (b)(ii) shall restrict the ability of the Company to generally amend or terminate such plans and programs from time to time in its sole discretion; provided, however, that
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the Company shall in no event be required to provide such reimbursements or coverage after such time as the Executive becomes entitled to receive health benefits from another employer or recipient of the Executives services (and provided, further, that such entitlement shall be determined without regard to any individual waivers or other arrangements);
(iii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y) the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
Unless delayed pursuant to Section 7.18 of this Agreement, payments due under the Severance Package shall be paid to the Executive (or installment payments shall commence) on the fiftieth (50th) day following the date of the termination event. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights hereunder except for surviving provisions of this Agreement as provided in Section 7.13.
6. Covenants of the Executive.
6.1 General Covenants of the Executive. The Executive acknowledges that (a) the principal business of the Company is the acquisition, development and ownership of multi-family residential properties (such business, and any and all other businesses that after the date hereof, and from time to time during the Term, become material with respect to the Companys then-overall business, herein being collectively referred to as the Business) (for purposes of this Agreement, Multi-family REIT shall mean a company that invests in primarily multi-family residential properties and that is qualified as a real estate investment trust for purposes of federal income taxation); (b) the Company knows of a limited number of persons who have developed the Business; (c) the Business is, in part, national in scope; (d) the Executives work for the Company and its subsidiaries has given and will continue to give the Executive access to the confidential affairs and proprietary information of the Company and to trade secrets, (as defined under the laws of the State of Maryland) of the Company and its subsidiaries; (e) the covenants and agreements of the Executive contained in this Section 6 are essential to the business and goodwill of the Company; and (f) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 6.
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6.2 Covenant Against Competition. The covenant against competition herein described shall apply as follows:
(a) during the Term;
(b) as to Section 6.2(d)(i), for a period of twelve (12) months following a termination of the Executives employment for any reason (other than due to the Executives death);
(c) as to Section 6.2(d)(iii), for a period of twelve (12) months following a termination of the Executives employment for any reason (other than due to the Executives death); and
(d) as to Section 6.2(d)(ii) and 6.2(d)(iv), at any time during and after the Executives employment with the Company and its subsidiaries (and the predecessors of either).
During the time periods described hereinabove, the Executive covenants as follows:
(i) The Executive shall not, directly or indirectly, own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, engage or participate in: (1) any Multi-family REIT; or (2) other financial investment business which owns multi-family residential properties as its primary business if such business is in competition in any manner whatsoever with the Business of the Company in any state or country or other jurisdiction in which the Company conducts its Business as of the date of termination (an Other Competitive Business); provided, however, that, notwithstanding the foregoing, (i) the restriction described in clause (1) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Multi-family REIT the shares of which are traded on a national securities exchange, (ii) the restriction described in clause (2) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Other Competitive Business that has assets in excess of Eight Hundred Million and No/00 Dollars ($800,000,000), (iii) with the express written consent of the Board as to each such entity, the Executive may, solely for investment purposes and without participating in the business thereof actively or passively, directly or indirectly, own or participate in the ownership of any entity which he owned or managed or participated in the ownership or management of, or served as a consultant to prior to the Effective Date, which ownership, management, participation or consulting relationship has been disclosed to the Company; and (iv) the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers Automated Quotation System or equivalent non-U.S. securities exchange, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own one percent (1%) or more of any class of securities of such entity.
(ii) Except in connection with the business and affairs of the Company and its affiliates: the Executive shall keep secret and retain in strictest confidence, and shall not use for his benefit or the benefit of others, all confidential matters relating to the Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Executive heretofore or hereafter directly or indirectly from the Company or any of its subsidiaries (or any predecessor of either) (the Confidential Company Information), including, without limitation, information with respect to the Business and any aspect thereof, profit or loss figures, and the Companys or its affiliates (or any of their predecessors) properties, and shall not disclose such Confidential Company Information to anyone outside of the Company except with the Companys
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express written consent and except for Confidential Company Information which (i) at the time of receipt or thereafter becomes publicly known through no wrongful act of the Executive; (ii) is clearly obtainable in the public domain; (iii) was not acquired by the Executive in connection with the Executives employment or affiliation with the Company; (iv) was not acquired by the Executive from the Company or its representatives or from a third-party who has an agreement with the Company not to disclose such information; (v) was legally in the possession of or developed by the Executive prior to the Effective Date; or (vi) is required to be disclosed by rule of law or by order of a court or governmental body or agency. For purposes of this Agreement, affiliate means, with respect to the Company, any person, partnership, corporation or other entity that controls, is controlled by or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act of 1933, as now in effect or as hereafter amended.
(iii) The Executive shall not, without the Companys prior written consent, directly or indirectly, (i) knowingly solicit or knowingly encourage to leave the employment or other service of the Company or any of its affiliates, any employee employed by the Company at the time of the termination thereof or knowingly hire (on behalf of the Executive or any other person or entity) any employee employed by the Company at the time of the termination who has left the employment or other service of the Company or any of its affiliates (or any predecessor of either) within one (1) year of the termination of such employees or independent contractors employment or other service with the Company and its affiliates; or (ii) whether for the Executives own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the Companys or any of its affiliates, relationship with, or endeavor to entice away from the Company or any of its affiliates, any person who during the Executives employment with the Company is or was a customer or client of the Company or any of its affiliates (or any predecessor of either). Notwithstanding the above, nothing shall prevent the Executive from soliciting loans, investment capital, or the provision of management services from third parties engaged in the Business if the activities of the Executive facilitated thereby do not otherwise adversely interfere with the operations of the Business. Advertising to fill employment openings by television, newspaper, Internet or similar general advertising will not be deemed to violate this Section.
(iv) All memoranda, notes, lists, records, property and any other tangible product and documents (and all copies thereof) made, produced or compiled by the Executive or made available to the Executive during the Term concerning the Business of the Company and its affiliates shall be the Companys property and shall be delivered to the Company at any time on request. Notwithstanding the above, the Executives contacts and contact data base shall not be the Companys property. Notwithstanding the above, software, methods and material developed by the Executive prior to the Term of the Agreement shall not be the Companys property.
6.3 Rights and Remedies upon Breach. The Executive acknowledges and agrees that any breach by him of any of the provisions of Sections 6.1 or 6.2 (the Restrictive Covenants) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if the Executive breaches, or threatens to commit a breach of, any of the Restrictive Covenants, the Company and its affiliates shall have the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants. This right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages). The existence of any claim or cause of action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants. The Company has the right to cease making the payments provided as part of the Severance Package in the event of a material breach of any of the Restrictive Covenants. The Company shall be entitled to recover from Executive the costs and attorneys fees it incurs to enforce the provisions of this section.
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7. Other Provisions.
7.1 Severability. The Executive acknowledges and agrees that the Executive has had an opportunity to seek advice of counsel in connection with this Agreement and that the Restrictive Covenants are reasonable in geographical and temporal scope and in all other respects. If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions.
7.2 Duration and Scope of Covenants. If any court or other decision maker of competent jurisdiction determines that any of the Executives covenants contained in this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, are unenforceable because of the duration or geographical scope of such provision, then, after such determination has become final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced.
7.3 Arbitration. Except with respect to any claims or disputes arising from or relating to the Restrictive Covenants or arising after a Change in Control, any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Baltimore, Maryland in accordance with the Commercial Arbitration Rules, as amended from time to time, of the American Arbitration Association (the AAA). The Company and the Executive will each select an arbitrator, and a third arbitrator will be selected jointly by the arbitrators selected by the Company and the Executive within 15 days after demand for arbitration is made by a Party. If the arbitrators selected by the Company and the Executive are unable to agree on a third arbitrator within that period, then either the Company or the Executive may request that the AAA select the third arbitrator. The arbitrators will possess substantive legal experience in the principle issues in dispute and will be independent of the Company and the Executive. To the extent permitted by applicable law and not prohibited by the Companys certificate of incorporation and bylaws, the Company will pay all expenses (including the reasonable expenses of the Executive, including his reasonable legal fees, if the Executive is the prevailing party in such arbitration) incurred in connection with arbitration and the fees and expenses of the arbitrators and will advance such expenses from time to time as required. Except as may otherwise be agreed in writing by the parties or as ordered by the arbitrators upon substantial justification shown, the hearing for the dispute will be held within 60 days of submission of the dispute to arbitration. The arbitrators will render their final award within 30 days following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrators. The arbitrators will state the factual and legal basis for the award. The decision of the arbitrators will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective.
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7.4 Notices. Any notice, consent or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice, consent or other communication shall be deemed given when so delivered personally, delivered by overnight courier, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the United States mails as follows:
(a) | If to the Company, to: | |||
Landmark Apartment Trust of America, Inc. | ||||
3505 E. Frontage Road | ||||
Suite 150 | ||||
Tampa, Florida 33607 | ||||
Attention: Board of Directors c/o Secretary | ||||
Fax: (813) 287-2178 | ||||
Email: mlafon@latapts.com | ||||
with a copy, in the case of notice, to: | ||||
Hogan Lovells US LLP | ||||
Columbia Square | ||||
555 Thirteenth Street, NW | ||||
Washington, DC 20004 | ||||
Attention: Stuart A. Barr, Esq. | ||||
Fax: (202) 637-5910 | ||||
Email: stuart.barr@hoganlovells.com | ||||
(b) | If to the Executive, to: | |||
James Miller | ||||
with a copy in either case to: |
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Any such person may by notice given in accordance with this Section to the other parties hereto designate another address or person for receipt by such person of notices hereunder.
7.5 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with the Company or its subsidiaries (or any predecessor of either).
7.6 Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED EXCLUSIVELY IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Subject to the parties obligations under Section 7.3, the Executive and the Company each hereby expressly consents to the exclusive venue and jurisdiction of the state and federal courts located in Baltimore, Maryland, for any lawsuit arising from or relating to this Agreement.
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7.8 Assignment. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall not be assignable either by the Company (except to an affiliate of the Company, in which event the Company shall remain liable if the affiliate fails to meet any of the Companys obligations hereunder, including without limitation to provide the employment opportunities offered hereby and to make payments or provide benefits or otherwise) or by the Executive. In the event that the Executive consents to the assignment of this Agreement to a successor in interest of the Company upon a Change in Control, such consent shall not be deemed to waive or diminish the Executives rights under Section 3.8.
7.9 Withholding. The Company shall be entitled to withhold from any payments or deemed payments any amount of withholding required by law. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting in or delivery of any Equity Compensation, the Company shall have the right to require such payments from the Executive or withhold such amounts from other payments due to the Executive from the Company or any affiliate, or to withhold such Equity Compensation that would otherwise have been issued to the Executive. The Executive shall have the right to elect, in his discretion, the manner in which such payments shall be made or withheld. No other taxes, fees, impositions, duties or other charges or offsets of any kind shall be deducted or withheld from amounts payable hereunder, unless otherwise required by law.
7.10 No Duty to Mitigate. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in the event the Executive does mitigate.
7.11 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, executors and legal representatives.
7.12 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by one of the parties hereto.
7.13 Survival. The rights and obligations of the parties under this Agreement, which by their nature would continue beyond the termination or expiration of this Agreement, shall survive the termination or expiration of this Agreement. The Companys obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to the Company. This Agreement shall not be terminated by any merger or consolidation or other reorganization of the Company. In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person.
7.14 Existing Agreements. Executive represents to the Company that the Executive is not subject or a party to any employment or consulting agreement, non-competition covenant or other agreement, covenant or understanding which might prohibit the Executive from executing this Agreement or limit the Executives ability to fulfill the Executives responsibilities hereunder.
7.15 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
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7.16 Parachute Provisions. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any 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) (a Payment) would be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the Reduced Amount). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined below). For purposes of this Section 7.16, present value shall be determined in accordance with Section 280G(d)(4) of the Tax Code. For purposes of this Section 7.16, the Parachute Value of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a parachute payment under Section 280G(b)(2) of the Tax Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in this Section 7.16 above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the Determination Firm) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Tax Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to this Section 7.16, could have been made without the imposition of the Excise Tax (Underpayment). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises. In the event that Tax Code Sections 280G and 4999 or any successor provisions are repealed without succession, this Section 7.16 shall be of no further force or effect.
7.17 Indemnification; Directors and Officers Insurance. The Executive shall be entitled to indemnification in all instances in which the Executive is acting within the scope of his authority to the fullest extent permitted by applicable law and not prohibited by the Companys charter and bylaws, from and against any damages or liabilities, including reasonable attorneys fees; provided, however, that the Executive shall not be entitled to indemnification for damages or liabilities which result from or arise out of the Executives willful misconduct or gross negligence. During the Term, the Company will maintain directors and officers liability insurance in a coverage amount of not less than Ten Million and No/00 Dollars ($10,000,000) unless Executives termination is for Cause, and if the policy is issued on a claims made basis, the Company will provide a tail policy covering Executive in the same amount for at least three (3) years following the Term.
7.18 409A. This Agreement and the amounts payable and other benefits hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Tax Code. This Agreement shall be administered, interpreted and construed in a manner consistent with Section 409A. If any provision of this Agreement is found not to comply with, or otherwise not to be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole discretion of the Board or Compensation Committee thereof and without requiring the Executives consent, in such manner as the Board or Compensation Committee determines to be necessary or
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appropriate to comply with, or to effectuate an exemption from, Section 409A. Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A. The preceding provisions shall not be construed as a guarantee by the Company of any particular tax effect to the Executive of the payments and other benefits under this Agreement.
(a) With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (a) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Tax Code; (b) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (c) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(b) If a payment obligation under this Agreement arises on account of the Executives termination of employment and if such payment is subject to Section 409A, the payment shall be paid only in connection with the Executives separation from service (as defined in Treas. Reg. Section 1.409A-1(h)). If a payment obligation under this Agreement arises on account of the Executives separation from service (as defined under Treas. Reg. Section 1.409A-1(h)) while the Executive is a specified employee (as defined under Treas. Reg. Section 1.409A-1(h)), any payment of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six months after such separation from service shall accrue without interest and shall be paid on the first day of the seventh month beginning after the date of the Executives separation from service or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following his death.
7.19 Expenses. The Company agrees to reimburse the Executive for legal fees and expenses incurred by him in the review and negotiation of this Agreement, not to exceed Eight Thousand Dollars ($8,000).
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have signed their names to this Employment Agreement as of the day and year set forth below.
COMPANY: | ||||||||
LANDMARK APARTMENT TRUST OF AMERICA, INC., | ||||||||
a Maryland corporation: | ||||||||
Date: | July 23, 2014 |
By: | /s/ Stanley J. Olander, Jr. | |||||
Name: | Stanley J. Olander, Jr. | |||||||
Title: | Chief Executive Officer and Chief Financial Officer | |||||||
EXECUTIVE: | ||||||||
JAMES MILLER | ||||||||
Date: | July 23, 2014 |
/s/ James Miller | ||||||
Signature |
Signature Page to Miller Employment Agreement
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ATTACHMENT A
to
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(James Miller)
1. Annual Cash and Equity Bonus Compensation. Executive shall be eligible to receive annual cash and equity bonus compensation during the term of this Agreement, subject to the terms and conditions established annually by the Board or Compensation Committee and any applicable award agreement. Executives bonus will be subject to Executives achievement of performance criteria established annually by the Board or Compensation Committee, which will be based 80% on corporate goals and 20% on individual goals. The threshold, target and maximum annual bonus levels for Executive for calendar year 2014 shall be equal to $150,000, $300,000 and $450,000, respectively. Executives bonus will be paid 50% in cash and 50% in shares of the Companys common stock. For each fiscal year, Executives bonus, if any, will be paid to Executive in a lump sum on or before seventy five (75) days after the end of such fiscal year. For the avoidance of doubt, if Executive is employed on the last day of the calendar year in which such bonus relates, he will be paid the bonus at the same time as other similarly situated employees were scheduled to be paid their bonuses regardless of whether Executive is then employed on such payment date.
2. Equity Compensation. Executive shall be eligible to participate in any Company Incentive Plan during the term of this Agreement, subject to the terms and conditions of such Company Incentive Plan and any applicable award agreement. Equity Compensation awards granted to Executive under any Company Incentive Plan will be subject to Executives achievement of performance criteria over a three-year performance period, which performance criteria will be established by the Board or Compensation Committee. The threshold, target and maximum Equity Compensation award levels for Executive for calendar year 2014 shall be equal to $125,000, $250,000 and $375,000, respectively, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine. 50% of earned Equity Compensation awards will vest upon the conclusion of the performance period and 50% of earned Equity Compensation awards will vest on the first anniversary of the conclusion of the performance period. Executive will also be granted a one-time Equity Compensation award in an amount equal to $250,000, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine.
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ATTACHMENT B
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(James Miller)
General Release of Claims
Consistent with Section 5 of the Employment Agreement dated July 23, 2014, between Landmark Apartment Trust of America, Inc. (the Company) and me (the Employment Agreement) and in consideration for and contingent upon my receipt of the Severance Package set forth in Sections 5(b) of the Employment Agreement, I, for myself, my attorneys, heirs, executors, administrators, successors, and assigns, do hereby fully and forever release and discharge the Company and its affiliated entities (as defined in the Employment Agreement), as well as their predecessors, successors, assigns, and their current or former directors, officers, partners, agents, employees, attorneys, and administrators from all suits, causes of action, and/or claims, demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which I have or may have against any of them arising out of or in connection with my employment by the Company, the Employment Agreement, the termination of my employment with the Company, or any event, transaction, or matter occurring or existing on or before the date of my signing of this General Release, except that I am not releasing any (a) right to indemnification that I may otherwise have, (b) right to Annual Salary and benefits under applicable benefit plans that are earned and accrued but unpaid as of the date of my signing this General Release, (c) right to reimbursement for business expenses incurred and not reimbursed as of the date of my signing this General Release, (d) right to any bonus payment(s) or other compensation due under the Employment Agreement or any Company Incentive Plan that is earned and accrued for the most recent completed calendar year for which a bonus payment has not then been paid as of the date of my signing this General Release, or (e) claims arising after the date of my signing this General Release. I agree not to file or otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to otherwise assert any claims, demands or entitlements that are lawfully released herein. I further hereby irrevocably and unconditionally waive any and all rights to recover any relief or damages concerning the claims, demands or entitlements that are lawfully released herein. I represent and warrant that I have not previously filed or joined in any such claims, demands or entitlements against the Company or the other persons released herein and that I will indemnify and hold them harmless from all liabilities, claims, demands, costs, expenses and/or attorneys fees incurred as a result of any such claims, demands or lawsuits.
Except as otherwise expressly provided above, this General Release specifically includes, but is not limited to, all claims of breach of contract, employment discrimination (including any claims coming within the scope of Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and any comparable Maryland law, all as amended, or any other applicable federal, state, or local law), claims under the Employee Retirement Income Security Act, as amended, claims under the Fair Labor Standards Act, as amended (or any other applicable federal, state or local statute relating to payment of wages), claims concerning recruitment, hiring, termination, salary rate, severance pay, stock options, wages or benefits due, sick leave, holiday pay, vacation pay, life insurance, group medical insurance, any other fringe benefits, workers compensation, termination, employment status, libel, slander, defamation, intentional or negligent misrepresentation and/or infliction of emotional distress, together with any and all tort, contract, or other claims which might have been asserted by me or on my behalf in any suit, charge of discrimination, or claim against the Company or the persons released herein.
B-1
I acknowledge that I have been given an opportunity of twenty-one (21) days to consider this General Release and that I have been encouraged by the Company to discuss fully the terms of this General Release with legal counsel of my own choosing. Moreover, for a period of seven (7) days following my execution of this General Release, I shall have the right to revoke the waiver of claims arising under the Age Discrimination in Employment Act, a federal statute that prohibits employers from discriminating against employees who are age 40 or over. If I elect to revoke this General Release within this seven-day period, I must inform the Company by delivering a written notice of revocation to the Companys Director of Human Resources, , no later than 11:59 p.m. on the seventh calendar day after I sign this General Release. I understand that, if I elect to exercise this revocation right, this General Release shall be voided in its entirety and the Company shall be relieved of all obligations to make the portion of the Severance Package described in Section 5(b) of the Employment Agreement. I may, if I wish, elect to sign this General Release prior to the expiration of the 21-day consideration period, and I agree that if I elect to do so, my election is made freely and voluntarily and after having an opportunity to consult counsel.
AGREED: | ||||
[Form of Agreement Only Do Not Execute] | ||||
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Date |
B-2
Exhibit 10.4
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Elizabeth Truong)
THIS EMPLOYMENT AGREEMENT (the Agreement) is entered into by and between LANDMARK APARTMENT TRUST OF AMERICA, INC., a Maryland corporation (hereinafter referred to as the Company), and ELIZABETH TRUONG (hereinafter referred to as the Executive) and is effective as of the Effective Date defined in Section 1 below.
WHEREAS, the Executive is a party to that certain Employment Agreement, dated as of July 1, 2012 and amended on February 25, 2013, by and between Elco Landmark Residential Holdings LLC and the Executive (the Original Employment Agreement); and
WHEREAS, the parties desire to amend the terms of the Original Employment Agreement on the terms and conditions set forth in this Agreement.
Accordingly, the parties hereto agree as follows:
1. Term. The Company hereby employs the Executive and the Executive hereby accepts such employment for an initial term commencing as of January 1, 2014 (the Effective Date) and ending on December 31, 2016, unless sooner terminated in accordance with the provisions of Section 4 (the period during which the Executive is employed hereunder being hereinafter referred to as the Term). The Term shall be subject to automatic one (1) year renewals unless notice of non-renewal is provided between the parties in accordance with the notice provisions of Section 7.4, as follows (if elected by the Executive or the Company, a Non-Renewal): (a) if elected by the Executive, the Executive will notify the Company of the Non-Renewal at least ninety (90) days prior to the end of any such Term, or (b) if elected by the Company, the Company will notify the Executive of the Non-Renewal at least one-hundred-eighty (180) days prior to the end of any such Term.
2. Duties. The Executive, in her capacity as Chief Investment Officer of the Company, shall faithfully perform for the Company the duties of said office and shall perform such other duties of an executive, managerial or administrative nature consistent with the office of Chief Investment Officer as shall be specified and designated from time to time by the Board of Directors of the Company (the Board). Such duties may include, without limitation, the performance of services for, and serving on the board of directors of, any subsidiary of the Company without any additional compensation. The Executive shall devote substantially all of the Executives business time and effort to the performance of the Executives duties hereunder. Provided that the following activities do not interfere with the Executives duties to the Company and provided that the following activities do not violate the Executives covenant against competition as described at Section 6.2 hereof, during the Term the Executive may perform personal, charitable and other business activities, including, without limitation, serving as a member of one or more boards of directors of charitable or other professional organizations and engaging in any activities permitted by Section 6.2(d)(i), may engage in personal investment activities consistent with Company policies on personal securities trading by Company personnel, may serve on the boards of directors/advisors or as a consultant to other business organizations that are not engaged in any aspect of the multi-family residential industry, and may engage in such other board or professional assignments which are disclosed to and approved by the Board, provided, however, that service in such capacities for other business organizations shall require the consent of the Board, such consent not to be unreasonably withheld.
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3. Compensation.
3.1 Salary. The Company shall pay the Executive during the Term a salary at the rate of $300,000 per annum (the Annual Salary), in accordance with the customary payroll practices of the Company applicable to senior executives generally. The Annual Salary may be increased from time to time by an amount and on such conditions as may be approved by the Board or the Compensation Committee of the Board (the Compensation Committee), and upon such increase, the increased amount shall thereafter be deemed to be the Annual Salary. The Executives Annual Salary shall be reviewed at least every two (2) years by the Board or the Compensation Committee. Annual Salary will be paid in monthly or bi-monthly installments as determined by the Board, and no Annual Salary will be paid later than 75 days after the conclusion of any calendar year in which such Annual Salary is deemed earned and payable to the Executive.
3.2 Short-Term and Long-Term Incentive Compensation. The Executive will be eligible to receive annual cash and equity bonus compensation. The annual bonus threshold, target and maximum levels for the Executive for calendar year 2014 are described on Attachment A. Additionally, the Executive will be eligible to participate in the Companys 2012 Other Equity-Based Award Plan, as amended (the 2012 LTIP Plan) and any subsequent equity incentive plan approved by the Board (each and any of the foregoing is a Company Incentive Plan) for long-term equity incentive compensation (any equity compensation granted to the Executive by the Company, whether under a Company Incentive Plan or otherwise approved by the Board, and whether in the form of restricted stock, stock options, long-term incentive plan units, stock appreciation rights or other equity or equity-linked awards, is, collectively, Equity Compensation). The Equity Compensation threshold, target and maximum award levels for the Executive for calendar year 2014 are set forth on Attachment A. The terms of the Executives annual bonus compensation, any Company Incentive Plan and any awards made under such programs will be subject to the approval of the Board or the Compensation Committee.
3.3 BenefitsIn General. During the Term, the Executive will be entitled to all employee benefits and perquisites made available to senior executives of the Company, including, without limitation, group medical, dental, vision, life insurance, long-term disability insurance, retirement, pension, 401(k) savings plans and/or prescription drug plan coverage, subject to the condition that the Executive is eligible for participation in any such plans. The Company shall pay 100% of the premium cost of the Companys health insurance coverage provided to the Executive (and the Executives dependents, if applicable) by the Company from time to time. Nothing contained in this Agreement will prevent the Company from terminating plans, changing carriers or effecting modifications in employee benefits coverage for the Executive as long as such modifications affect all similarly situated senior executives of the Company.
3.4 Paid Time Off. The Executive shall be entitled to twenty-five (25) days of paid time off per calendar year, plus Company-scheduled holidays. Fifty percent (50%) of any unused paid time-off will be forfeited at the end of the calendar year.
3.5 Disability Benefits and Life Insurance. Executive shall receive the disability benefits and group life insurance benefits applicable to senior executives at the Company. To the extent the Companys group life and disability insurance plans do not provide this level of benefits, the Executive shall be entitled to additional benefits so that her long-term disability coverage provides benefits (to continue for such period as is provided in the applicable disability plan or program, as amended from time to time, and with waiting periods and pre-existing condition exceptions waived to the extent such coverage is available on commercially reasonable terms) equal to sixty-six and two-thirds percent (66 2/3 %) of her Annual Salary in the case of a covered disability, and life insurance coverage with a face amount equal to $1,000,000. Premiums on all primary or supplemental disability policies provided by the Company under this Agreement shall be paid by the Company, provided that the value of such premiums shall be taxed as income to the Executive.
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3.6 Expenses. The Company shall pay or reimburse the Executive for all ordinary and reasonable out-of-pocket expenses actually incurred and, in the case of reimbursement, actually paid by the Executive during the Term in connection with the performance of the Executives services under this Agreement, provided that the Executive shall submit such expenses in accordance with the policies applicable to senior executives of the Company generally.
3.7 Earned and Accrued Bonus. For purposes of this Agreement, with respect to Earned and Accrued Bonus payments to be made to the Executive in connection with the termination of her employment, annual bonus payments and Equity Compensation awards shall be deemed to be earned and accrued (a) if, with respect to annual bonus payments, the Executive is employed with the Company as of the date of the last day of the period in respect of which a bonus payment shall be made and, with respect to Equity Compensation awards, the Executive is employed with the Company as of the date such award vests; and (b) to the extent that the criteria or performance goals for determining the amount of such payment or award are objective and measurable criteria, and such objective and measurable criteria have been satisfied or achieved. Earned and Accrued Bonus specifically includes, without limitation, any cash payments or shares of the Companys common stock payable to Executive in connection with any annual bonus compensation and Equity Compensation that is awarded and vested. A prorated portion of the Executives annual bonus will be paid in accordance with the termination provisions of this Agreement.
3.8 Acceleration of Rights upon Change in Control. Upon the occurrence of a Change in Control (as such term is defined in the 2012 LTIP Plan, as amended and in effect as of the Effective Date hereof), with respect to each Equity Compensation award held by the Executive as of the date of such Change in Control: (i) for which the vesting period is based on the passage of time, 100% of such Equity Compensation shall vest, and to the extent applicable, become exercisable and (ii) for which vesting is based on performance and for which the performance period is incomplete, the performance period in respect of such Equity Compensation award shall end on the date of the Change in Control and such Equity Compensation award shall be deemed earned based on the actual levels of achievement of the applicable performance criteria as of the date of such Change in Control, as determined by the Committee; provided, that such Equity Compensation award shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. With respect to Equity Compensation that is settled in shares of the Companys common stock, the Executive shall be issued fully vested shares of the Companys common stock in respect of each such earned Equity Compensation award on the date of the Change in Control. The number of shares of the Companys common stock that will be issued to the Executive in respect of each such earned Equity Compensation award shall be calculated based on the closing price per share on the trading date coinciding with (or, if such date is not a trading day, next following) the date of the Change in Control; provided, that if the Companys common stock is not, or is no longer, traded on an exchange as of the date of the Change in Control, then the number of shares that will be issued to the Executive in respect of each such earned Equity Compensation award shall be calculated based on the value determined by the Compensation Committee in its reasonable discretion based on the actual or implied price paid to the Companys shareholders in the Change in Control transaction. For purposes of this Agreement, a Change in Control shall not include the consummation of any transaction for which an offer is made and accepted in the ninety (90) days following execution of this Agreement and which closes before January 15, 2015, provided that this Agreement is assumed in such transaction, and provided further that, if, as a result of any such transaction, the Company or surviving entity is no longer a company whose common equity is registered under Section 12 of the Securities Exchange Act of 1934, then, upon the vesting of each Equity Compensation award held by the Executive, the Executive shall be
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entitled to payment of such award in cash in an amount equal to the fair value of the equity of the Company or the surviving entity that the Executive would otherwise be entitled to receive as determined in good faith by the board of directors of the Company or surviving entity. For purposes of this Agreement, a Change in Control shall not include an initial public offering of the Company. Notwithstanding the foregoing, to the extent necessary for the Executive to avoid taxes and/or penalties under Section 409A of the Internal Revenue Code of 1986, as amended (the Tax Code), a Change in Control shall not be deemed to occur unless it constitutes a change in control event within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations promulgated under Section 409A of the Tax Code.
4. Termination of Employment. The Company may terminate the Executives employment for any reason or for no reason and with or without Cause (as defined herein below). The Executive may terminate the Executives employment with the Company for Good Reason (as defined herein below) or without Good Reason. The Company or the Executive may terminate the Executives employment upon the Executives disability as provided in Section 4.1, or by Non-Renewal. The survival provisions of this Agreement described at Section 7.13 contemplate without limitation that upon the termination her employment the Executive shall be subject to the provisions of the Covenant Against Competition set forth in Section 6.2.
4.1 Termination upon the Executives Death or Disability.
(a) If the Executive dies during the Term, the obligations of the Company to or with respect to the Executive shall terminate in their entirety except as otherwise provided in this Section 4.1 and except for the surviving provisions of this Agreement as described at Section 7.13.
(b) If the Executive becomes eligible for disability benefits under the Companys long-term disability plans and arrangements (or, if none apply, would have been so eligible under a competitive plan as reasonably determined by the Compensation Committee), the Company or the Executive shall have the right, to the extent permitted by law, to terminate the employment of the Executive upon at least ninety (90) days prior written notice to the other party, provided that the Company shall not have the right to terminate the Executives employment in accordance with this Section 4.1(b) if, (i) in the opinion of a qualified physician reasonably acceptable to both parties, it is reasonably certain that the Executive will be able to resume her duties on a regular full-time basis within one hundred eighty (180) days of the date that the notice of such termination is delivered, and (ii) upon the expiration of such one hundred eighty (180) day period, the Executive has resumed her duties on a regular full-time basis.
(c) Upon the Executives death or the termination of the Executives employment by virtue of disability, all of the following shall apply:
(i) the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for her dependents), and the Company will continue to provide such additional continuing benefits (including without limitation life insurance benefits) as the Executive and her dependents would have been entitled to under this Agreement, as on a monthly basis for a period of twelve (12) months after the termination, and the Executive, or the Executives estate or beneficiaries in the case of the death of the Executive, shall be entitled to receive the Executives Annual Salary and other benefits that are earned and accrued under this Agreement prior to the date of termination, the Executives Earned and Accrued Bonuses, vesting of or lapsing of any forfeiture restrictions on any Equity
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Compensation as provided in clause (ii) below, reimbursement under this Agreement for expenses incurred prior to the date of such termination; and an additional amount equal to one (1) year of the Executives then-current Annual Salary plus an amount equal to the Executives annual bonus for the year in which her death or disability occurs based on the Executives then-current annual bonus target level for such year, or if no target level has been established for that year, based on the initial target level specified on Attachment A; provided, that in no event shall such amount be less than the annual bonus (if any) earned by the Executive for the prior year, provided further, that if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)), if any deferral is required, shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h), or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following her death, if a delay in payment is required to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period). If no deferral is required pursuant to the preceding sentence, the payment will be made within five (5) business days after the date of termination.
(ii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y) the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
(iii) this Agreement shall otherwise terminate and there shall be no further rights with respect to the Executive hereunder except for the surviving provisions of this Agreement as provided in Section 7.13. The payments to be made in this Section 4.1(c) shall be in addition to, rather than in lieu of, the entitlement of Executive or her estate to any other insurance or benefit proceeds as a result of her death or disability.
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4.2 Termination by the Company for Cause. The Company may terminate the Executives employment at any time for Cause if any of the following have occurred:
(a) the Executives conviction for (or pleading guilty or nolo contendere to) any felony or misdemeanor which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company (not including violations of routine vehicular laws);
(b) the Executives indictment for any felony or misdemeanor involving moral turpitude (which the Board reasonably concludes brings the Executive into disrepute or is likely to cause material harm to the Company), if such indictment is not discharged or otherwise resolved within eighteen (18) months;
(c) the Executives commission of an act of fraud, theft, dishonesty or breach of fiduciary duty related to the Company, its Business (as defined in Section 6.1) or the performance of the Executives duties hereunder;
(d) the continuing failure or habitual neglect by the Executive to perform the Executives duties hereunder, except that, if such failure or neglect is curable, the Executive shall have thirty (30) days from her receipt of a notice of such failure or neglect to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board (such cure opportunity being available only once), then such failure or neglect shall not constitute Cause hereunder;
(e) any violation by the Executive of the Restrictive Covenants set forth in Section 6 except that the Executive shall first have thirty (30) days from her receipt of notice of such violation to cure such condition and, if the Executive does so to the reasonable, but sole, satisfaction of the Board, such violation shall not constitute Cause hereunder; or
(f) the Executives material breach of this Agreement, except that, if such breach is curable, the Executive shall first have thirty (30) days from her receipt of such notice of such breach to cure such breach and, if the Executive does so to the reasonable satisfaction of the Board, such breach shall not constitute Cause hereunder.
Prior to the effectiveness of any termination for Cause, the Executive shall have the right to meet with the Board to discuss the Companys basis for a termination for Cause and to present evidence to refute such basis, which the Board shall reasonably consider prior to any final decision regarding termination of the Executive for Cause.
If the Company terminates the Executives employment for Cause, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination, provided, however, that if the Company terminates the Executives employment for Cause specifically pursuant to Section 4.2(a), (b), or (c) above, then no Earned and Accrued Bonus shall be payable hereunder. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.3 Termination by the Company without Cause. The Company may terminate the Executives employment at any time without Cause upon sixty (60) days prior written notice to the Executive. If the Company terminates the Executives employment without the occurrence of any of the events constituting Cause and the termination is not due to the Executives death or disability or is not a Non-Renewal, then the termination by the Company is without Cause. If
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the Company terminates the Executives employment without Cause, then the Severance Package provisions of Section 5 shall apply, and this Agreement shall otherwise terminate and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.4 Termination of Employment by the Executive for Good Reason. Subject to the notice and cure provisions set forth below, the Executive may terminate the Executives employment with the Company for Good Reason and receive the Severance Package provisions of Section 5 if any of the following have occurred without the Executives written consent (Good Reason):
(a) any material and significant diminution in the Executives title, authorities, duties or responsibilities (including without limitation the assignment of duties inconsistent with her position, or a significant adverse alteration of the nature or status of her responsibilities, or a significant adverse alteration of the conditions of her employment); or
(b) the Companys material breach of this Agreement.
Notwithstanding the foregoing, the Executive shall not be deemed to have terminated this Agreement for Good Reason unless: (y) the Executive terminates this Agreement no later than three (3) months after the initial occurrence of the above referenced event or condition which is the basis for such termination (it being understood that each instance of any such event shall constitute a separate basis for such termination and a separate event or condition occurring on the date of such instance for purposes of calculating the three (3)-month period); and (z) the Executive provides to the Company a written notice of the existence of the above referenced event or condition which is the basis for the termination within sixty (60) days following the initial existence of such event or condition, and the Company fails to remedy such event or condition within 30 days following the receipt of such notice. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.5 Termination of Employment by the Executive without Good Reason. The Executive may terminate the Executives employment with the Company at any time without Good Reason. If the Executive terminates her employment without the occurrence of any of the events constituting Good Reason and the termination is not due to the Executives death or disability, then the termination by the Executive is without Good Reason. If the Executive terminates the Executives employment with the Company without Good Reason, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Section 7.13.
4.6 Termination upon Expiration and Non-Renewal of Agreement. If either the Company or the Executive provides the other party with notice of Non-Renewal in accordance with the provisions of Section 1 and Section 7.4 hereof, the Executive shall have no right to receive any compensation or benefit hereunder on and after the effective date of the termination of employment, except that the Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement (including Earned and Accrued Bonus, if any) or under applicable Company benefit plans prior to the date of termination and reimbursement under this Agreement for expenses incurred prior to the date of termination. This
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Agreement shall otherwise terminate upon the termination of the Executives employment, and the Executive shall have no further rights or obligations hereunder except for the surviving provisions of this Agreement as described at Sections 6 and 7.14.
5. Severance Package for Certain Terminations of Employment. The Executive shall be entitled to certain rights and shall be bound by certain obligations as described in this Section 5 (the Severance Package) if the Executives employment terminates under either of the following conditions: (y) if the Company terminates the Executives employment without Cause, or (z) if the Executive terminates the Executives employment for Good Reason. For purposes of this Agreement, the Severance Package shall consist of all of the following rights and obligations:
(a) The Executive shall be entitled to receive the Executives Annual Salary, and other benefits that are earned and accrued under this Agreement and under applicable Company benefit plans prior to the date of termination, any Earned and Accrued Bonus, and reimbursement under this Agreement for expenses incurred prior to the date of termination;
(b) If the Executive signs the general release of claims in favor of the Company in the form set forth in Attachment B and the general release becomes irrevocably effective not later than forty-five (45) days of the date of the termination event, the Executive shall also be entitled to all of the following:
(i) a cash payment equal to one (1) times the sum of the Executives Annual Salary (as in effect on the effective date of such termination excluding any reduction not permitted by this Agreement), plus the greater of (A) the annual bonus most recently earned by the Executive, whether paid or unpaid, and (B) the average annual bonus actually paid for the last three full fiscal years (Average Annual Bonus), payable in equal installments over the period that corresponds to the period during which the covenants provided in Section 6.2 hereof are to be applicable in accordance with the Companys usual and customary salary payroll practices. If, at the time of a termination to which this sub-subparagraph b(i) applies (y or z in this section 5 above), at least three full fiscal years have not occurred, then to the extent necessary to calculate the Average Annual Bonus for the last three years as set forth above, the target annual bonus set forth on Attachment A shall be used for the missing years. Notwithstanding the foregoing, if the Executive is a specified employee within the meaning of Section 409A of the Tax Code, any payments of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)), shall not commence until the first day of the seventh month beginning after the date of the Executives separation from service (as defined under Treasury Regulation Section 1.409A-1(h)) to avoid the imposition of the additional 20% tax under Section 409A of the Tax Code (and in the case of installment payments, the first payment shall include all installment payments required by this subsection that otherwise would have been made during such period); and
(ii) for a period of twelve (12) months after termination of employment, the Company shall reimburse Executives COBRA premium under the Companys major medical group health and dental plan (including the costs of Executives premium required to maintain coverage for her dependents), and the Company will provide such additional continuing health, dental, disability and life insurance benefits applicable to senior executives of the Company generally as the Executive and her dependents would have received under this Agreement (and for such additional benefits, at such costs to the Company, provided that the value of premiums on all primary or supplemental disability policies shall be taxed as income to the Executive) as would have applied in the absence of such termination or expiration (but not taking into account any post-termination increases in Annual Salary that may otherwise have occurred without regard to such termination and that may have favorably affected such benefits), it being expressly understood and agreed that nothing in this clause (b)(ii) shall restrict the ability of the Company to generally amend
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or terminate such plans and programs from time to time in its sole discretion; provided, however, that the Company shall in no event be required to provide such reimbursements or coverage after such time as the Executive becomes entitled to receive health benefits from another employer or recipient of the Executives services (and provided, further, that such entitlement shall be determined without regard to any individual waivers or other arrangements);
(iii) all of the outstanding Equity Compensation awards held by the Executive for which (a) vesting is based on the passage of time shall become fully vested and if applicable, exercisable and (b) vesting is based on establishment of performance goals and the performance period is incomplete shall be deemed earned based on the actual levels of achievement of pro-rated performance criteria as of the date of the termination of the Executives employment, as determined by the Committee; provided, that such Equity Compensation awards shall be deemed earned based on the target level of achievement with respect to the performance criteria relating to strategic objectives. Such Equity Compensation awards shall be pro-rated based on (x) the number of days that have elapsed from the beginning of the applicable performance period through the date the Executive ceases to be an employee of the Company, compared to (y) the total number of days in such performance period. The number of shares of the Companys common stock that will be issued to the Executive in respect of such earned Equity Compensation awards which are otherwise settled in Company common stock shall be calculated based on the closing price per share on the trading date coinciding with (or if such date is not a trading day, next following) the date of the termination of the Executives employment, or, if the common stock is not trading, based on the fair market value of the Companys common stock as determined in the reasonable discretion of the Board (or Compensation Committee) without reduction for minority discounts and/or lack of liquidity. With respect to all Equity Compensation awards held by the Executive for which the performance period is complete but for which the additional vesting period is incomplete, any restrictions on the earned portion of such awards shall lapse and such earned awards, unless earlier terminated or forfeited and to the extent not otherwise vested, shall automatically become fully vested as of the date of the termination of the Executives employment.
Unless delayed pursuant to Section 7.18 of this Agreement, payments due under the Severance Package shall be paid to the Executive (or installment payments shall commence) on the fiftieth (50th) day following the date of the termination event. This Agreement shall otherwise terminate upon such termination of employment and the Executive shall have no further rights hereunder except for surviving provisions of this Agreement as provided in Section 7.13.
6. Covenants of the Executive.
6.1 General Covenants of the Executive. The Executive acknowledges that (a) the principal business of the Company is the acquisition, development and ownership of multi-family residential properties (such business, and any and all other businesses that after the date hereof, and from time to time during the Term, become material with respect to the Companys then-overall business, herein being collectively referred to as the Business) (for purposes of this Agreement, Multi-family REIT shall mean a company that invests in primarily multi-family residential properties and that is qualified as a real estate investment trust for purposes of federal income taxation); (b) the Company knows of a limited number of persons who have developed the Business; (c) the Business is, in part, national in scope; (d) the Executives work for the Company and its subsidiaries has given and will continue to give the Executive access to the confidential affairs and proprietary information of the Company and to trade secrets, (as defined under the laws of the State of Maryland) of the Company and its subsidiaries; (e) the covenants and agreements of the Executive contained in this Section 6 are essential to the business and goodwill of the Company; and (f) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 6.
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6.2 Covenant Against Competition. The covenant against competition herein described shall apply as follows:
(a) during the Term;
(b) as to Section 6.2(d)(i), for a period of twelve (12) months following a termination of the Executives employment for any reason (other than due to the Executives death);
(c) as to Section 6.2(d)(iii), for a period of twelve (12) months following a termination of the Executives employment for any reason (other than due to the Executives death); and
(d) as to Section 6.2(d)(ii) and 6.2(d)(iv), at any time during and after the Executives employment with the Company and its subsidiaries (and the predecessors of either).
During the time periods described hereinabove, the Executive covenants as follows:
(i) The Executive shall not, directly or indirectly, own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, engage or participate in: (1) any Multi-family REIT; or (2) other financial investment business which owns multi-family residential properties as its primary business if such business is in competition in any manner whatsoever with the Business of the Company in any state or country or other jurisdiction in which the Company conducts its Business as of the date of termination (an Other Competitive Business); provided, however, that, notwithstanding the foregoing, (i) the restriction described in clause (1) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Multi-family REIT the shares of which are traded on a national securities exchange, (ii) the restriction described in clause (2) of this Section 6.2(d)(i) shall, following any termination of the Executives employment described in Section 6.2(b) above, be limited so as to apply only to any Other Competitive Business that has assets in excess of Eight Hundred Million and No/00 Dollars ($800,000,000), (iii) with the express written consent of the Board as to each such entity, the Executive may, solely for investment purposes and without participating in the business thereof actively or passively, directly or indirectly, own or participate in the ownership of any entity which she owned or managed or participated in the ownership or management of, or served as a consultant to prior to the Effective Date, which ownership, management, participation or consulting relationship has been disclosed to the Company; and (iv) the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers Automated Quotation System or equivalent non-U.S. securities exchange, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own one percent (1%) or more of any class of securities of such entity.
(ii) Except in connection with the business and affairs of the Company and its affiliates: the Executive shall keep secret and retain in strictest confidence, and shall not use for her benefit or the benefit of others, all confidential matters relating to the Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Executive heretofore or hereafter directly or indirectly from the Company or any of its subsidiaries (or any predecessor of either) (the Confidential Company Information), including, without limitation, information with respect to the Business and any aspect thereof, profit or loss figures, and the Companys or its affiliates (or any of their predecessors) properties, and shall not disclose such Confidential Company Information to anyone outside of the Company except with the Companys
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express written consent and except for Confidential Company Information which (i) at the time of receipt or thereafter becomes publicly known through no wrongful act of the Executive; (ii) is clearly obtainable in the public domain; (iii) was not acquired by the Executive in connection with the Executives employment or affiliation with the Company; (iv) was not acquired by the Executive from the Company or its representatives or from a third-party who has an agreement with the Company not to disclose such information; (v) was legally in the possession of or developed by the Executive prior to the Effective Date; or (vi) is required to be disclosed by rule of law or by order of a court or governmental body or agency. For purposes of this Agreement, affiliate means, with respect to the Company, any person, partnership, corporation or other entity that controls, is controlled by or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act of 1933, as now in effect or as hereafter amended.
(iii) The Executive shall not, without the Companys prior written consent, directly or indirectly, (i) knowingly solicit or knowingly encourage to leave the employment or other service of the Company or any of its affiliates, any employee employed by the Company at the time of the termination thereof or knowingly hire (on behalf of the Executive or any other person or entity) any employee employed by the Company at the time of the termination who has left the employment or other service of the Company or any of its affiliates (or any predecessor of either) within one (1) year of the termination of such employees or independent contractors employment or other service with the Company and its affiliates; or (ii) whether for the Executives own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the Companys or any of its affiliates, relationship with, or endeavor to entice away from the Company or any of its affiliates, any person who during the Executives employment with the Company is or was a customer or client of the Company or any of its affiliates (or any predecessor of either). Notwithstanding the above, nothing shall prevent the Executive from soliciting loans, investment capital, or the provision of management services from third parties engaged in the Business if the activities of the Executive facilitated thereby do not otherwise adversely interfere with the operations of the Business. Advertising to fill employment openings by television, newspaper, Internet or similar general advertising will not be deemed to violate this Section.
(iv) All memoranda, notes, lists, records, property and any other tangible product and documents (and all copies thereof) made, produced or compiled by the Executive or made available to the Executive during the Term concerning the Business of the Company and its affiliates shall be the Companys property and shall be delivered to the Company at any time on request. Notwithstanding the above, the Executives contacts and contact data base shall not be the Companys property. Notwithstanding the above, software, methods and material developed by the Executive prior to the Term of the Agreement shall not be the Companys property.
6.3 Rights and Remedies upon Breach. The Executive acknowledges and agrees that any breach by her of any of the provisions of Sections 6.1 or 6.2 (the Restrictive Covenants) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if the Executive breaches, or threatens to commit a breach of, any of the Restrictive Covenants, the Company and its affiliates shall have the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants. This right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages). The existence of any claim or cause of action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants. The Company has the right to cease making the payments provided as part of the Severance Package in the event of a material breach of any of the Restrictive Covenants. The Company shall be entitled to recover from Executive the costs and attorneys fees it incurs to enforce the provisions of this section.
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7. Other Provisions.
7.1 Severability. The Executive acknowledges and agrees that the Executive has had an opportunity to seek advice of counsel in connection with this Agreement and that the Restrictive Covenants are reasonable in geographical and temporal scope and in all other respects. If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions.
7.2 Duration and Scope of Covenants. If any court or other decision maker of competent jurisdiction determines that any of the Executives covenants contained in this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, are unenforceable because of the duration or geographical scope of such provision, then, after such determination has become final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced.
7.3 Arbitration. Except with respect to any claims or disputes arising from or relating to the Restrictive Covenants or arising after a Change in Control, any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Baltimore, Maryland in accordance with the Commercial Arbitration Rules, as amended from time to time, of the American Arbitration Association (the AAA). The Company and the Executive will each select an arbitrator, and a third arbitrator will be selected jointly by the arbitrators selected by the Company and the Executive within 15 days after demand for arbitration is made by a Party. If the arbitrators selected by the Company and the Executive are unable to agree on a third arbitrator within that period, then either the Company or the Executive may request that the AAA select the third arbitrator. The arbitrators will possess substantive legal experience in the principle issues in dispute and will be independent of the Company and the Executive. To the extent permitted by applicable law and not prohibited by the Companys certificate of incorporation and bylaws, the Company will pay all expenses (including the reasonable expenses of the Executive, including her reasonable legal fees, if the Executive is the prevailing party in such arbitration) incurred in connection with arbitration and the fees and expenses of the arbitrators and will advance such expenses from time to time as required. Except as may otherwise be agreed in writing by the parties or as ordered by the arbitrators upon substantial justification shown, the hearing for the dispute will be held within 60 days of submission of the dispute to arbitration. The arbitrators will render their final award within 30 days following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrators. The arbitrators will state the factual and legal basis for the award. The decision of the arbitrators will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective.
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7.4 Notices. Any notice, consent or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice, consent or other communication shall be deemed given when so delivered personally, delivered by overnight courier, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the United States mails as follows:
(a) | If to the Company, to: |
Landmark Apartment Trust of America, Inc.
3505 E. Frontage Road
Suite 150
Tampa, Florida 33607
Attention: Board of Directors c/o Secretary
Fax: (813) 287-2178
Email: mlafon@latapts.com
with a copy, in the case of notice, to:
Hogan Lovells US LLP
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004
Attention: Stuart A. Barr, Esq.
Fax: (202) 637-5910
Email: stuart.barr@hoganlovells.com
(b) | If to the Executive, to: |
Elizabeth Truong
with a copy in either case to:
|
Any such person may by notice given in accordance with this Section to the other parties hereto designate another address or person for receipt by such person of notices hereunder.
7.5 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with the Company or its subsidiaries (or any predecessor of either).
7.6 Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED EXCLUSIVELY IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Subject to the parties obligations under Section 7.3, the Executive and the Company each hereby expressly consents to the exclusive venue and jurisdiction of the state and federal courts located in Baltimore, Maryland, for any lawsuit arising from or relating to this Agreement.
7.8 Assignment. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties; provided, however,
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that except as herein expressly provided, this Agreement shall not be assignable either by the Company (except to an affiliate of the Company, in which event the Company shall remain liable if the affiliate fails to meet any of the Companys obligations hereunder, including without limitation to provide the employment opportunities offered hereby and to make payments or provide benefits or otherwise) or by the Executive. In the event that the Executive consents to the assignment of this Agreement to a successor in interest of the Company upon a Change in Control, such consent shall not be deemed to waive or diminish the Executives rights under Section 3.8.
7.9 Withholding. The Company shall be entitled to withhold from any payments or deemed payments any amount of withholding required by law. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting in or delivery of any Equity Compensation, the Company shall have the right to require such payments from the Executive or withhold such amounts from other payments due to the Executive from the Company or any affiliate, or to withhold such Equity Compensation that would otherwise have been issued to the Executive. The Executive shall have the right to elect, in her discretion, the manner in which such payments shall be made or withheld. No other taxes, fees, impositions, duties or other charges or offsets of any kind shall be deducted or withheld from amounts payable hereunder, unless otherwise required by law.
7.10 No Duty to Mitigate. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in the event the Executive does mitigate.
7.11 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, executors and legal representatives.
7.12 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by one of the parties hereto.
7.13 Survival. The rights and obligations of the parties under this Agreement, which by their nature would continue beyond the termination or expiration of this Agreement, shall survive the termination or expiration of this Agreement. The Companys obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to the Company. This Agreement shall not be terminated by any merger or consolidation or other reorganization of the Company. In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person.
7.14 Existing Agreements. Executive represents to the Company that the Executive is not subject or a party to any employment or consulting agreement, non-competition covenant or other agreement, covenant or understanding which might prohibit the Executive from executing this Agreement or limit the Executives ability to fulfill the Executives responsibilities hereunder.
7.15 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
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7.16 Parachute Provisions. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any 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) (a Payment) would be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net benefit to the Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to the Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the Reduced Amount). The reduction of the Payments due hereunder, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the change of control, as determined by the Determination Firm (as defined below). For purposes of this Section 7.16, present value shall be determined in accordance with Section 280G(d)(4) of the Tax Code. For purposes of this Section 7.16, the Parachute Value of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a parachute payment under Section 280G(b)(2) of the Tax Code, as determined by the Determination Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment. The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to in this Section 7.16 above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and the Executive (the Determination Firm) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Tax Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to this Section 7.16, could have been made without the imposition of the Excise Tax (Underpayment). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises. In the event that Tax Code Sections 280G and 4999 or any successor provisions are repealed without succession, this Section 7.16 shall be of no further force or effect.
7.17 Indemnification; Directors and Officers Insurance. The Executive shall be entitled to indemnification in all instances in which the Executive is acting within the scope of her authority to the fullest extent permitted by applicable law and not prohibited by the Companys charter and bylaws, from and against any damages or liabilities, including reasonable attorneys fees; provided, however, that the Executive shall not be entitled to indemnification for damages or liabilities which result from or arise out of the Executives willful misconduct or gross negligence. During the Term, the Company will maintain directors and officers liability insurance in a coverage amount of not less than Ten Million and No/00 Dollars ($10,000,000) unless Executives termination is for Cause, and if the policy is issued on a claims made basis, the Company will provide a tail policy covering Executive in the same amount for at least three (3) years following the Term.
7.18 409A. This Agreement and the amounts payable and other benefits hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Tax Code. This Agreement shall be administered, interpreted and construed in a manner consistent with Section 409A. If any provision of this Agreement is found not to comply with, or otherwise not to be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole discretion of the Board or Compensation Committee thereof and without requiring the Executives consent, in such manner as the Board or Compensation Committee determines to be necessary or
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appropriate to comply with, or to effectuate an exemption from, Section 409A. Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A. The preceding provisions shall not be construed as a guarantee by the Company of any particular tax effect to the Executive of the payments and other benefits under this Agreement.
(a) With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (a) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Tax Code; (b) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (c) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(b) If a payment obligation under this Agreement arises on account of the Executives termination of employment and if such payment is subject to Section 409A, the payment shall be paid only in connection with the Executives separation from service (as defined in Treas. Reg. Section 1.409A-1(h)). If a payment obligation under this Agreement arises on account of the Executives separation from service (as defined under Treas. Reg. Section 1.409A-1(h)) while the Executive is a specified employee (as defined under Treas. Reg. Section 1.409A-1(h)), any payment of deferred compensation (as defined under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six months after such separation from service shall accrue without interest and shall be paid on the first day of the seventh month beginning after the date of the Executives separation from service or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executives estate following her death.
7.19 Expenses. The Company agrees to reimburse the Executive for legal fees and expenses incurred by her in the review and negotiation of this Agreement, not to exceed Eight Thousand Dollars ($8,000).
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have signed their names to this Employment Agreement as of the day and year set forth below.
COMPANY: | ||||||||
LANDMARK APARTMENT TRUST OF AMERICA, INC., | ||||||||
a Maryland corporation: | ||||||||
Date: | July 23, 2014 |
By: | /s/ Stanley J. Olander, Jr. | |||||
Name: | Stanley J. Olander, Jr. | |||||||
Title: | Chief Executive Officer and Chief Financial Officer | |||||||
EXECUTIVE: | ||||||||
ELIZABETH TRUONG | ||||||||
Date: | July 23, 2014 |
/s/ Elizabeth Truong | ||||||
Signature |
Signature Page to Truong Employment Agreement
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ATTACHMENT A
to
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Elizabeth Truong)
1. Annual Cash and Equity Bonus Compensation. Executive shall be eligible to receive annual cash and equity bonus compensation during the term of this Agreement, subject to the terms and conditions established annually by the Board or Compensation Committee and any applicable award agreement. Executives bonus will be subject to Executives achievement of performance criteria established annually by the Board or Compensation Committee, which will be based 80% on corporate goals and 20% on individual goals. The threshold, target and maximum annual bonus levels for Executive for calendar year 2014 shall be equal to $125,000, $250,000 and $375,000, respectively. Executives bonus will be paid 50% in cash and 50% in shares of the Companys common stock. For each fiscal year, Executives bonus, if any, will be paid to Executive in a lump sum on or before seventy five (75) days after the end of such fiscal year. For the avoidance of doubt, if Executive is employed on the last day of the calendar year in which such bonus relates, she will be paid the bonus at the same time as other similarly situated employees were scheduled to be paid their bonuses regardless of whether Executive is then employed on such payment date.
2. Equity Compensation. Executive shall be eligible to participate in any Company Incentive Plan during the term of this Agreement, subject to the terms and conditions of such Company Incentive Plan and any applicable award agreement. Equity Compensation awards granted to Executive under any Company Incentive Plan will be subject to Executives achievement of performance criteria over a three-year performance period, which performance criteria will be established by the Board or Compensation Committee. The threshold, target and maximum Equity Compensation award levels for Executive for calendar year 2014 shall be equal to $100,000, $200,000 and $300,000, respectively, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine. 50% of earned Equity Compensation awards will vest upon the conclusion of the performance period and 50% of earned Equity Compensation awards will vest on the first anniversary of the conclusion of the performance period. Executive will also be granted a one-time Equity Compensation award in an amount equal to $200,000, subject to such vesting or forfeiture restrictions as the Compensation Committee shall determine.
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ATTACHMENT B
LANDMARK APARTMENT TRUST OF AMERICA, INC.
EMPLOYMENT AGREEMENT
(Elizabeth Truong)
General Release of Claims
Consistent with Section 5 of the Employment Agreement dated July 23, 2014, between Landmark Apartment Trust of America, Inc. (the Company) and me (the Employment Agreement) and in consideration for and contingent upon my receipt of the Severance Package set forth in Sections 5(b) of the Employment Agreement, I, for myself, my attorneys, heirs, executors, administrators, successors, and assigns, do hereby fully and forever release and discharge the Company and its affiliated entities (as defined in the Employment Agreement), as well as their predecessors, successors, assigns, and their current or former directors, officers, partners, agents, employees, attorneys, and administrators from all suits, causes of action, and/or claims, demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which I have or may have against any of them arising out of or in connection with my employment by the Company, the Employment Agreement, the termination of my employment with the Company, or any event, transaction, or matter occurring or existing on or before the date of my signing of this General Release, except that I am not releasing any (a) right to indemnification that I may otherwise have, (b) right to Annual Salary and benefits under applicable benefit plans that are earned and accrued but unpaid as of the date of my signing this General Release, (c) right to reimbursement for business expenses incurred and not reimbursed as of the date of my signing this General Release, (d) right to any bonus payment(s) or other compensation due under the Employment Agreement or any Company Incentive Plan that is earned and accrued for the most recent completed calendar year for which a bonus payment has not then been paid as of the date of my signing this General Release, or (e) claims arising after the date of my signing this General Release. I agree not to file or otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to otherwise assert any claims, demands or entitlements that are lawfully released herein. I further hereby irrevocably and unconditionally waive any and all rights to recover any relief or damages concerning the claims, demands or entitlements that are lawfully released herein. I represent and warrant that I have not previously filed or joined in any such claims, demands or entitlements against the Company or the other persons released herein and that I will indemnify and hold them harmless from all liabilities, claims, demands, costs, expenses and/or attorneys fees incurred as a result of any such claims, demands or lawsuits.
Except as otherwise expressly provided above, this General Release specifically includes, but is not limited to, all claims of breach of contract, employment discrimination (including any claims coming within the scope of Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and any comparable Maryland law, all as amended, or any other applicable federal, state, or local law), claims under the Employee Retirement Income Security Act, as amended, claims under the Fair Labor Standards Act, as amended (or any other applicable federal, state or local statute relating to payment of wages), claims concerning recruitment, hiring, termination, salary rate, severance pay, stock options, wages or benefits due, sick leave, holiday pay, vacation pay, life insurance, group medical insurance, any other fringe benefits, workers compensation, termination, employment status, libel, slander, defamation, intentional or negligent misrepresentation and/or infliction of emotional distress, together with any and all tort, contract, or other claims which might have been asserted by me or on my behalf in any suit, charge of discrimination, or claim against the Company or the persons released herein.
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I acknowledge that I have been given an opportunity of twenty-one (21) days to consider this General Release and that I have been encouraged by the Company to discuss fully the terms of this General Release with legal counsel of my own choosing. Moreover, for a period of seven (7) days following my execution of this General Release, I shall have the right to revoke the waiver of claims arising under the Age Discrimination in Employment Act, a federal statute that prohibits employers from discriminating against employees who are age 40 or over. If I elect to revoke this General Release within this seven-day period, I must inform the Company by delivering a written notice of revocation to the Companys Director of Human Resources, , no later than 11:59 p.m. on the seventh calendar day after I sign this General Release. I understand that, if I elect to exercise this revocation right, this General Release shall be voided in its entirety and the Company shall be relieved of all obligations to make the portion of the Severance Package described in Section 5(b) of the Employment Agreement. I may, if I wish, elect to sign this General Release prior to the expiration of the 21-day consideration period, and I agree that if I elect to do so, my election is made freely and voluntarily and after having an opportunity to consult counsel.
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