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NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into as of December 5th, 1996
("Effective Date") by and between XXXXXXX X. XXXXXXXX ("Executive"), SUMMIT
PROPERTIES INC., a Maryland corporation, and SUMMIT MANAGEMENT COMPANY, a
Maryland corporation.
WHEREAS, on the date hereof, as a condition to the consummation of the
employment of Executive by the Company, the parties hereto desire to enter into
certain agreements restricting the activities of Executive in an effort to
eliminate potential conflicts of interest that may arise in the future, to
protect the Company's legitimate business interests, i.e., the value of its
business and its good will, and for other business purpose;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein shall have the meanings
set forth below:
"Affiliate" means (i) any entity directly or indirectly controlling
(including without limitation an entity for which Executive serves as an
officer, director, employee, consultant or other agent), controlled by, or under
common control with Executive, and (ii) each other entity in which Executive,
directly or indirectly, owns any controlling interest or of which Executive
serves as a general partner.
"Agreement" means this Noncompetition Agreement, including any
amendments hereto made in accordance with paragraph 8(d) hereof.
"Company" means (i) Summit Management Company, (ii) Summit Properties
Inc., (iii) any corporation, partnership or other business entity that is,
directly or indirectly, controlled by or under common control with Summit
Properties Inc. and (iv) their respective successors.
"Company Project" means any Multifamily Property that the Company owns,
operates or manages as of the date of Executive's termination of employment with
the Company or that the Company has in any manner taken steps to acquire,
develop, construct, operate, manage or lease (including without limitation
making market surveys of a site, talking to a owner or his agent
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concerning the purchase or joint venture of a site, optioning or contracting to
buy a site or discussions with the owner or his agent regarding managing or
leasing a property) during the twelve (12) month period immediately preceding
Executive's termination of employment with the Company.
"Multifamily Property" means any real property on which multifamily
residential-use development has been constructed or is now or hereafter proposed
to be constructed (for example, and not by way of limitation, a property of the
type managed by the Company).
2. Executive's Obligations While Employed by the Company.
(a) Sole Employment. Subject to the provisions of paragraph 2(b) below,
Executive agrees to devote his full time during the customary business hours of
the Company and give his best efforts to the business of the Company and, during
the period of his employment by the Company, Executive shall not engage in any
manner, whether as an officer, employee, owner, partner, stockholder, director,
consultant or otherwise -- directly or indirectly -- in any business other than
on behalf of the Company without the prior written approval of the President of
Summit Management Company, and Executive shall not accept any other employment
whatsoever from any other person, firm, corporation or entity.
(b) Exceptions. Notwithstanding the provisions of paragraph 2(a) above
to the contrary, Executive may during the term of his employment by the Company
and at any time thereafter (i) acquire an interest in any corporation,
partnership, venture or other business entity so long as (A) any such interest
is a passive investment of Executive not exceeding ten percent (10%) of the
total ownership interest in such entity, (B) such entity does not afford
Executive the power to influence in any material fashion the decision making
processes of the entity in which such interest is held and (C) Executive is not
the sponsor, promoter or similar initiator of such entity.
3. Executive's Obligations Following Termination of Employment with the
Company.
(a) Anti-Pirating of Employees. For a two (2) year period immediately
following the termination of Executive's employment with the Company, Executive
agrees not to hire, directly or indirectly, or entice or participate in any
efforts
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to entice to leave the Company's employ, any person who was or is a "key
employee" (as hereinafter defined) of the Company at any time during the twelve
(12) month period immediately preceding the termination date of Executive's
employment with the Company. For purposes of this Agreement, "key employee"
means an employee who has an annualized rate of base salary equaling or
exceeding fifty thousand dollars ($50,000).
(b) Anti-Pirating of Company Projects. For a period of one (1) year
immediately following the termination of Executive's employment with the
Company, Executive agrees not to engage in any manner, whether as an officer,
employee, owner, partner, stockholder, director, consultant or otherwise --
directly or indirectly -- in any business which engages or attempts to engage,
directly or indirectly, in the acquisition, development, construction,
operation, management or leasing of any Company Project.
(c) Trade Secrets and Confidential Information. Executive hereby agrees
that he will hold in a fiduciary capacity for the benefit of the Company, and
shall not directly or indirectly use or disclose any Trade Secret, as defined
hereinafter, that Executive may have acquired during the term of his employment
by the Company for so long as such information remains a Trade Secret. The term
"Trade Secret" as used in this Agreement shall mean information including, but
not limited to, technical or nontechnical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list of actual or potential
customers or suppliers which:
derives economic value, actual or potential from not being
generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value
from its disclosure or use; and is the subject of reasonable
efforts by the Company to maintain its secrecy.
In addition to the foregoing and not in limitation thereof,
Executive agrees that during the period of his employment by the Company and for
a period of one (1) year thereafter, he will hold in a fiduciary capacity for
the benefit of the Company and shall not directly or indirectly use or disclose,
any Confidential or Proprietary Information, as defined hereinafter, that
Executive may have acquired (whether or not
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developed or compiled by Executive and whether or not Executive was authorized
to have access to such Information) during the term of, in the course of or as a
result of his employment by the Company. The term "Confidential or Proprietary
Information" as used in this Agreement means any secret, confidential or
proprietary information of the Company not otherwise included in the definition
of "Trade Secret" above. The term "Confidential and Proprietary Information"
does not include information that has become generally available to the public
by the act of one who has the right to disclose such information without
violating any right of the Company.
(d) Exceptions. Notwithstanding any provision of paragraph 3(b) to the
contrary, Executive shall not be restricted at any time after his termination of
employment with the Company from engaging in any activities for which Executive
would not be restricted from performing during the term of his employment with
the Company as set forth in paragraph 2(b) above.
4. Reasonable and Necessary Restrictions. Executive acknowledges that
the restrictions, prohibitions and other provisions hereof, including without
limitation the various periods of restrictions set forth in paragraphs 3(a),
3(b) and 3(c), are reasonable, fair and equitable in scope, terms and duration,
are necessary to protect the legitimate business interests of the Company, and
are a material inducement to the Company to enter into the transactions
contemplated in the recitals hereto. Executive covenants that he will not
challenge the enforceability of this Agreement nor will he raise any equitable
defense to its enforcement.
5. Restrictions In Addition to Employment Agreement. Executive
acknowledges that the restrictions, prohibitions and other provisions hereof
shall be in addition to and not in substitution of the restrictions,
prohibitions and other provisions of that certain employment agreement between
Executive, Summit Properties Inc. and Summit Management Company of even date
herewith, as such agreement shall be amended and supplemented from time to time
(the "Employment Agreement").
6. Specific Performance. Executive acknowledges that the obligations
undertaken by him pursuant to this Agreement are unique and that the Company
likely will have no adequate remedy at law if Executive shall fail to perform
any of his obligations hereunder, and Executive therefore confirms that the
Company's right to specific performance of the terms of this Agreement is
essential to protect the rights and interests of the Company.
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Accordingly, in addition to any other remedies that the Company may have at law
or in equity, the Company shall have the right to have all obligations,
covenants, agreements and other provisions of this Agreement specifically
performed by Executive, and the Company shall have the right to obtain
preliminary and permanent injunctive relief to secure specific performance and
to prevent a breach or contemplated breach of this Agreement by Executive, and
Executive submits to the jurisdiction of the courts of the State of North
Carolina for this purpose. Said permanent injunctive relief shall have a term
which coincides with the respective periods of Executive's obligations pursuant
to the covenants, agreements and other provisions of this agreement.
7. Operations of Affiliates. Executive agrees that he will refrain from
(i) authorizing any Affiliate to perform or (ii) assisting in any manner any
Affiliate in performing any activities that would be prohibited by the terms of
this Agreement if they were performed by Executive. Notwithstanding anything to
the contrary contained in this paragraph 7 (or in any other paragraph of this
Agreement), Executive shall not be required by the terms of this Agreement to
violate any fiduciary or contractual duty he owes as a director or officer of a
corporation, as a partner of a partnership or as a trustee of a trust, which
position he holds not in violation of this Agreement or the Employment
Agreement.
8. Miscellaneous Provisions.
(a) Binding Effect. Subject to any provisions hereof restricting
assignment, all covenants and agreements in this Agreement by or on behalf of
any of the parties hereto shall bind and inure to the benefit of the respective
successors, assigns, heirs, and personal representatives. None of the parties
hereto may assign any of its rights under this Agreement or attempt to have any
other person or entity assume any of its obligations hereunder.
(b) Severability. If fulfillment of any provision of this Agreement, at
the time such fulfillment shall be due, shall transcend the limit of validity
prescribed by law, then the obligation to be fulfilled shall be reduced to the
limit of such validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement, in whole or in
part, then such clause or provision only shall be held ineffective, as though
not herein contained, and the remainder of this Agreement shall remain operative
and in full force and effect.
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(c) Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto shall be governed
by and construed in accordance with the laws of the State of North Carolina,
not including the choice-of-law rules thereof.
(d) Amendment; Waiver. Except as otherwise expressly provided in this
Agreement, no amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by each of the
parties hereto. Any waiver by any party or consent by any party to any variation
from any provision of this Agreement shall be valid only if in writing and only
in the specific instance in which it is given, and such waiver or consent shall
not be construed as a waiver of any other provision or as a consent with respect
to any similar instance or circumstance.
(e) Headings. Paragraph and subparagraph headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
(f) Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the person or entity may require.
(g) Arbitration. Any dispute or controversy arising out of or relating
to this Agreement shall be settled finally and exclusively by arbitration in
Charlotte, North Carolina in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration shall be conducted by
an arbitrator(s) appointed by the American Arbitration Association in accordance
with its rules and any finding by such arbitrator(s) shall be final and binding
upon the parties. Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof, and the parties consent to the
jurisdiction of the courts of the State of North Carolina for this purpose.
Nothing contained in this paragraph 8(g) shall be construed to preclude the
Company from obtaining injunctive or other equitable relief to secure specific
performance or to otherwise prevent a breach or contemplated breach of this
Agreement by Executive as provided in paragraph 6 hereof.
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(h) Execution in Counterparts. This Agreement may be executed in two or
more counterparts, none of which need contain the signatures of all parties
hereto and each of which shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.
SUMMIT PROPERTIES INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President
SUMMIT MANAGEMENT COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
/s/ Xxxxxxx X. Xxxxxxxx [SEAL]
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Xxxxxxx X. Xxxxxxxx
"Executive"
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