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EXHIBIT 10.5
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into as of February 15, 2000
("Effective Date") by and between XXXXXXX X. Xxxxxxx ("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
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making market surveys of a site, talking to a owner or his agent 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. Company agrees to provide Executive
with a list of all Company Projects within thirty (30) business day of
Executives termination of employment with the Company for any reason.
"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 Properties Inc., 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.
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(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 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 non-public
information remains a Trade Secret. The term "Trade Secret" as used in this
Agreement shall mean non-public information including, but not limited to,
technical or non-technical 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
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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 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 non-public information of the Company not
otherwise included in the definition of "Trade Secret" above. The term
"Confidential and Proprietary non-public 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.
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
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right to specific performance of the terms of this Agreement is essential to
protect the rights and interests of the Company. 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 remain-
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der of this Agreement shall remain operative and in full force and effect.
(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
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breach of this Agreement by Executive as provided in paragraph 6 hereof.
(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/ Xxxxxx X. XxXxxxx
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Name: Xxxxxx X. XxXxxxx
Title: President
SUMMIT MANAGEMENT COMPANY
By: /s/ Xxxxxx X. XxXxxxx
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Name: Xxxxxx X. XxXxxxx
Title: Vice President
/s/ Xxxxxxx X. Xxxxxxx [SEAL]
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"Executive"
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