1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered into
on this 13th day of January, 1994, by and between XXXXXXX X. XXXXXXX, an
individual resident of the State of North Carolina (the "Executive"), SUMMIT
PROPERTIES INC., a Maryland corporation, and SUMMIT MANAGEMENT COMPANY, a
Maryland corporation. Summit Properties Inc. and Summit Management Company are
referred to herein collectively as the "Company";
W I T N E S S E T H:
WHEREAS, Executive has been employed by the Company or its affiliates
or certain of their predecessors for approximately twelve (12) years; and
WHEREAS, Executive will continue to be employed by the Company and one
or more of its affiliates after the initial public offering of the Common Stock
of Summit Properties Inc.; and
WHEREAS, the Company also desires to employ Executive, and Executive
desires to be employed by the Company on the terms and conditions contained in
this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement,
intending to be legally bound, hereby agree as follows:
Section 1. Employment.
Subject to the terms of this Agreement, the Company hereby employs
Executive, and Executive hereby accepts such employment with the Company.
Executive initially shall serve as an officer of the Company in the
capacity(ies) of President and Chief Executive Officer of Summit Properties Inc.
and Vice President of Summit Management Company and initially shall have the
duties, rights and responsibilities normally associated with such position(s)
consistent with the Bylaws of summit Properties Inc. and Summit Management
Company, respectively, together with such other reasonable duties relating to
the operation of the business of the Company and its affiliates as may be
assigned to him from time to time by the Board of Directors of Summit Properties
Inc. (the "Board") or as may otherwise be provided in such Bylaws. Executive
shall devote his full business time, skills and best efforts to rendering
services on behalf of the Company and its affiliates and shall exercise such
care as is customarily required by executives undertaking similar duties for
entities similar to the Company.
2
Section 2. Compensation; Expenses
2.1 Base Salary. Commencing on the Effective Date (as defined in ss.
3.1), the Company shall pay Executive during the term of Executive's employment
under this Agreement, a base salary equal to Two Hundred Twenty-Five Thousand
Dollars ($225,000) per annum (the "Base Salary"), which amount shall be subject
to adjustment, if any, in accordance with this ss. 2.1. The Compensation
Committee of the Board (the "Committee") shall review Executive's Base Salary on
an annual basis, and the Committee upon such review and in its sole discretion,
may increase or decrease Executive's Base Salary by an amount which the
Committee deems appropriate in light of the Company's and Executive's
performance during the period covered by such review; provided, however, that
Executive's Base Salary shall not be reduced below Two Hundred Twenty-Five
Thousand Dollars ($225,000) per annum. The Base Salary, less all applicable
withholding taxes, shall be paid to Executive in accordance with the payroll
procedures in effect with respect to officers of the Company.
2.2 Incentive Compensation. In addition to the Base Salary payable to
Executive pursuant to S 2.1 and any special compensatory arrangements which the
Committee provides for Executive, effective as of the Effective Date, Executive
shall be entitled to participate in any incentive compensation plans in effect
with respect to senior executive officers of the Company, with the criteria for
Executive's participation in such plans to be established by the Committee in
its sole discretion.
2.3 Stock Options. Executive shall be entitled to participate in
employee stock option plans from time to time established for the benefit of
employees of the Company in accordance with the terms and conditions of such
plans.
2.4 Expenses. Executive shall be reimbursed for all reasonable
business-related expenses incurred by Executive at the request of or on behalf
of the Company.
2.5 Participation in Employee Benefit Plans. Executive shall be
entitled to participate in such medical, dental, disability, hospitalization,
life insurance, profit sharing and other benefit plans as the Company shall
maintain from time to time for the benefit of executive officers of the Company,
on the terms and subject to the conditions set forth in such plans. In addition,
during the term of this Agreement, Executive shall be entitled to a
comprehensive annual physical performed, at the Company's expense, by the
physician or medical group of Executive's choosing.
2.6 Vacation. In addition to Company holidays, Executive shall receive
such paid vacation time each year during the term of this Agreement consistent
with vacation policies of the Company for its executive officers. Any unused
vacation days in any year may not be carried over to subsequent years, and
Executive shall receive no additional compensation for any unused vacation days.
2
3
2.7 Perquisites. Executive shall be entitled to be reimbursed for such
dining club dues and to receive such individual perquisites as are consistent
with the Company's policies applicable to its executive officers.
Section 3. Term of Employment
3.1 Term of Employment. Unless earlier terminated in accordance with
ss. 3.2, the employment of Executive under this Agreement shall commence as of
the date (the "Effective Date") Summit Properties Inc. successfully consummates
an initial public offering of its Common Stock, and shall continue up to, but
not including, the fifth anniversary of such date. Thereafter, Executives
employment under this Agreement shall be extended for such period, if any, as
agreed to by Executive and the Company.
3.2 Termination. Executive's employment under this Agreement may be
terminated
(a) by the Company upon the death of Executive (which shall be
referred to as a "Death Termination") or total disability of Executive
(total disability meaning the inability of Executive to perform his
normal required services under this Agreement for a period of six
consecutive months during the term of this Agreement by reason of
Executive's mental or physical disability, as determined by the Board
in good faith in its sole discretion) (which shall be referred to as a
"Disability Termination"); or
(b) by the Company for "cause," which shall exist only upon
the occurrence of one or more of the following: (i) Executive is
convicted of, pleads guilty to, or confesses to any felony or any act
of fraud, misappropriation or embezzlement which has an immediate and
materially adverse effect on the Company, as determined by the Board in
good faith in its sole discretion, (ii) Executive engages in a
fraudulent act to the material damage or prejudice of the Company or
any affiliate of the company or in conduct or activities materially
damaging to the property, business or reputation of the Company or any
affiliate of the Company, all as determined by the Board in good faith
in its sole discretion, (iii) any material act or omission by Executive
involving malfeasance or negligence in the performance of Executive's
duties to the Company to the material detriment of the Company, as
determined by the Board in good faith in its sole discretion, which has
not been corrected by Executive within thirty (30) days after written
notice from the Company of any such act or omission, (iv) failure by
Executive to comply in any material respect with the terms of this
Agreement or any written policies or directives of the Board as
determined by the Board in good faith in its sole discretion, which has
not been corrected by Executive within thirty (30) days after written
notice from the Company of such failure, or (v) material breach by
Executive of that certain noncompetition agreement between Executive
and the Company of even date herewith (the "Noncompetition Agreement")
as determined by the Board in good faith in its sole discretion (which
shall be referred to individually and collectively as a "For Cause
Termination"); or
3
4
(c) by the Company for any reason other than a For Cause
Termination, Death Termination or Disability Termination and after
giving 180 days' prior written notice to Executive (which shall be
referred to as a "No Cause Termination"); or
(d) by Executive voluntarily for any reason other than an
Employee-Initiated Termination (as defined in ss. 3.2(e)) at any time
on or after the third anniversary of the Effective Date and after
giving 180 days' prior written notice to the Company (which shall be
referred to as a "Voluntary Termination"); or
(e) by Executive for "cause", which shall exist upon the
occurrence of either of the following, provided that in either case the
Board has not corrected such material reduction described below within
thirty (30) days after written notice by Executive of such material
reduction: (i) there is a material reduction in Executive's duties,
rights or responsibilities under this Agreement without his consent, or
(ii) there is a material decrease in the aggregate value of Executive's
compensation and benefits package from the Company without his consent,
other than a reduction in Executive's Base Salary that is permitted
under the provisions of 5 2.1 and other than a reduction in
compensation and/or benefits affecting a broad group of employees of
the Company as determined by the Board in good faith in its sole
discretion (which shall be referred to as an "Employee-Initiated
Termination").
Section 4. Result of Termination
4.1 Termination As Result of Voluntary Termination or For Cause
Termination. If Executive's employment under this Agreement is terminated as a
result of a Voluntary Termination or a For Cause Termination, Executive shall
not thereafter be entitled to receive any Base Salary for periods following such
termination; provided, however, that Executive shall be entitled to receive any
Base Salary which may be owed to Executive but is unpaid as of the date on which
Executive's employment is terminated.
4.2 Termination As Result of No Cause Termination or Employee-Initiated
Termination. If Executive's employment under this Agreement is terminated as a
result of a No Cause Termination or an Employee-Initiated Termination, Executive
shall be entitled to receive (i) any Base Salary which may be owed to Executive
but is unpaid as of the date on which Executive's employment is terminated and
(ii) his Base Salary as in effect on the date of such termination for the period
up to, but not including, the fifth anniversary of the Effective Date or, if
later, through the remainder of his term of employment under any extension of
this Agreement. The payment of such Base Salary pursuant to clause (ii) of the
preceding sentence shall be made at such intervals in accordance with the
Company's payroll procedures in effect from time to time with respect to
officers of the Company but no less frequently than monthly. In addition, in the
event of Executive's death following a No Cause Termination or an
Employee-Initiated Termination, any Base Salary payable to Executive under this
Section 4.2 and not yet paid on the date of Executive's death shall be paid to
Executive's designated beneficiary, if any, or if none, his surviving spouse or,
if none, his estate (collectively, the
4
5
"Beneficiary"). Such payments shall be made to the Beneficiary at such times as
would otherwise have been payable to Executive under this Section 4.2; provided,
however, that the Company may in its discretion pay such Base Salary to the
Beneficiary in a lump sum payment in an amount determined in accordance with the
methodology set forth in subsection (B) of Section 4.3.
4.3 Termination as a Result of a Death Termination or a Disability
Termination. If Executive's employment under this Agreement is terminated as a
result of a Death Termination or a Disability Termination, (i) Executive (or, in
the case of a Death Termination, Executive's Beneficiary as defined in Section
4.2) shall be entitled to receive any Base Salary which may be owed to Executive
but is unpaid as of that date on which Executive's employment is terminated, and
(ii) Executive (or, in the case of a Death Termination, Executive's Beneficiary
as defined in Section 4.2) shall continue to receive Executive's Base Salary for
the period up to, but not including, the fifth anniversary of the Effective Date
or, if later, through the remainder of his term of employment under any
extension of this Agreement. In addition, the following provisions shall apply:
(A) If payment of Base Salary is to be made under clause
(ii) of this Section 4.3 due to a Disability
Termination, such Base Salary shall be paid at such
intervals in accordance with the Company's payroll
procedures in effect from time to time with respect
to officers of the Company but no less frequently
than monthly, and such Base Salary shall be offset by
any amounts payable to Executive under any long-term
disability plan sponsored by the Company or its
affiliates. In the event of Executive's death
following a Disability Termination, any Base Salary
payable to Executive under this Section 4.3 (taking
into account the offset described above, if any) and
not yet paid on the date of Executive's death shall
be paid to Executive's Beneficiary. Such payments
shall be made to the Beneficiary at such times as
would otherwise have been payable to Executive under
this subsection (A); provided, however, that the
Company may in its discretion pay such Base Salary to
the Beneficiary in a lump sum payment in an amount
determined in accordance with the methodology set
forth in subsection (B) of this Section 4.3.
(B) In the event of a Death Termination, payments to the
Beneficiary shall be made in a single lump sum as
soon as practical after Executive's's death. The
amount of such lump sum shall be equal to the present
value, determined using a 9% interest rate, of the
total amount of Base Salary payable to the
Beneficiary pursuant to this Section 4.3 and not yet
paid on the date of Executive's death.
4.4 Employee-Benefit Plans and Incentive Compensation and Other
Compensatory Arrangements. The benefits, if any, payable to or on behalf of
Executive upon his termination of employment from the Company under any employee
benefit plan or incentive compensation
5
6
or other compensatory arrangement shall be governed by the terms and conditions
for benefit payments set forth in such plans and arrangements.
Section 5. Miscellaneous
5.1 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon Executive and his executor, administrator, heirs, personal
representative and assigns, and the Company and its successors and assigns;
provided, however, that Executive shall not be entitled to assign or delegate
any of his rights or obligations hereunder without the prior written consent of
Company; and further provided that the Company shall not be entitled to assign
or delegate any of its rights or obligations hereunder except to a corporation,
partnership or other business entity that is, directly or indirectly, controlled
by or under common control with Summit Properties Inc.
5.2 Construction of Agreement. No provision of this Agreement or any
related document shall be construed against or interpreted to the disadvantage
of any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or drafted such
provision.
5.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
5.4 Survival of Agreements. All covenants and agreements made herein
shall survive the execution and delivery of this Agreement and the termination
of Executive's employment hereunder for any reason.
5.5 Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.6 Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to be given when delivered
personally or mailed first class, registered or certified mail, postage prepaid,
in either case, addressed as follows:
(a) If to Executive:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
6
7
(b) If to the Company, addressed to:
Summit Properties Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
5.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
5.8 Entire Agreement. This Agreement, together with the Noncompetition
Agreement, constitutes the entire agreement of the parties with respect to the
subject matter hereof and upon the Effective Date, will supersede and replace
all prior agreements, written and oral, between the parties hereto or with
respect to the subject matter hereof. This Agreement may be modified only by a
written instrument signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SUMMIT PROPERTIES INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
SUMMIT MANAGEMENT COMPANY
By: /s/ Xxxx X. Xxxx
----------------------------------
Name: Xxxx X. Xxxx
Title: President
Collectively, the "Company"
/s/ Xxxxxxx X. Xxxxxxx [SEAL]
--------------------------------
Xxxxxxx X. Xxxxxxx
"Executive"
7
