EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into on
this 1st day of July, 1998, ("Effective Date") by and between XXXXXX X.
XXXXXXX, an individual resident of the State of Georgia (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, the Company 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 Operating 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 positions
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.
Section 2. Compensation; Expenses
2.1 Base Salary. Commencing on the Effective Date, the Company shall
pay Executive during the term of Executive's employment under this Agreement, a
base salary equal to Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
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 Fifty Thousand
and 00/100 Dollars ($250,000.00) 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 ss.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. The Committee has determined that Executive's cash bonus
component of the above executive compensation plan for calendar year 1998 will
be calculated as a percentage of Executive's Base Salary which corresponds to
the actual per share growth in Funds Flow from Operations ("FFO") during the
period from December 31, 1997 to December 31, 1998 as set forth in the following
table:
FFO Growth % 4 5 6 7 8 9 10 11
Cash Bonus as % of Base Salary 30 40 50 60 70 80 90 100
With such cash bonus for 1998 as calculated above then prorated by multiplying
said cash bonus by a fraction, the numerator of which will be the number of days
occurring between the Effective Date and December 31 1998 and the denominator of
which will be 365. Such cash bonus for calendar year 1998 subsequent to
proration as described above shall not be less than Seventy-five thousand
dollars ($75,000.00). The payment of said prorated cash bonus shall be
conditioned upon Executive's continuing employment with the Company through
December 31, 1998. For all years subsequent to 1998, Executives Cash Bonus shall
be determined by the Committee.
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. Executive shall receive $100,000 as complete and total
compensation for any and all relocation costs associated with Executives
relocation to Charlotte, NC. Said $100,000 shall be paid by Company to Executive
no later than five (5) business days after the Effective Date. To the extent
actual relocation costs are less than $100,000 Executive shall retain the
difference between such actual costs and $100,000. To the extent that actual
relocation costs exceed $100,000 Executive shall be responsible for the payment
thereof.
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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. Said paid
vacation time shall initially be twenty days. 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.
2.7 Perquisites. Executive shall be entitled 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 Effective Date, and shall continue up to, but not including, the third
anniversary of such date (the "Original Term"). Following the Original Term, the
employment relationship under this Agreement shall automatically continue for
consecutive one-year terms unless and until terminated in accordance with ss.
3.2.
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
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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
(c) by the Company for any reason other than a For Cause
Termination, Death Termination or Disability Termination and after
giving 90 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
after the Original Term and after giving 90 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 ss. 2.1 and other than a reduction in
compensation, including but not limited to a reduction in Base Salary
as permitted under the provisions of ss. 2.1, 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 For Cause Termination or Voluntary 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 owned to Executive but is unpaid as of the date on which
Executive's employment is terminated.
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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 owned to Executive
but is unpaid as of the date on which Executive's employment is terminated; (ii)
his Base Salary as in effect on the date of such termination for the period up
to, but not including (I) the later of (a) the third anniversary of the
Effective Date or (b) the first anniversary of the date of Termination or (II)
if Termination occurs later than (a) or (b) above, the later of (x) the end of
the one year term of employment under any extension of this Agreement or (y) the
first anniversary of the date of Termination; and (iii) a bonus amount ("Bonus")
consisting of cash equal to the cash bonus, if any, paid to the Executive
pursuant to ss. 2.2 of this Agreement for the calendar year immediately
preceding the calendar year in which the Termination occurred. The Bonus amount
shall include the cash value of shares of common stock of the Company, if any,
issued in lieu of a portion of the above mentioned cash bonus. The payment of
such Base Salary pursuant to clause (ii) above and Bonus amount pursuant to
clause (iii) above 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
clauses (i) and (ii) above and Bonus payable to Executive under clause (iii)
above 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 "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 and Bonus 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 During Original Term. If Executive's employment under this Agreement
is terminated as a result of a Death Termination or Disability Termination
during the Original Term, (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 and cash bonus which may be owed to Executive but is unpaid as
of the date on which Executive's employment is terminated; (ii) his Base Salary
as in effect on the date of such termination for the period up to, but not
including (I) the later of (a) the third anniversary of the Effective Date or
(b) the first anniversary of the date of Termination or (II) if the above said
Termination occurs later than (a) or (b) above, the later of (x) the end of his
one year term of employment under any extension of this Agreement or (y) the
first anniversary of the date of Termination, and (iii) a bonus amount ("Bonus")
consisting of cash equal to the cash bonus, if any, paid to the Executive
pursuant to of ss. 2.2 of this Agreement for the calendar year immediately
preceding the calendar year in which the Termination occurred. The Bonus amount
shall include the cash value of shares of common stock of the Company, if any,
issued in lieu of a portion of the above mentioned cash bonus. In addition, the
following provisions shall apply:
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(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 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 or other compensatory arrangement shall
be governed by the terms and conditions for benefit payments set forth in such
plans and arrangements.
4.5 Special Provision for Terminations on or Prior to December 31,
1998. If Executive's Employment under this Agreement is terminated as a result
of a No-Cause Termination or an Employee Initiated Termination on or prior to
December 31, 1998, Executive shall be entitled to a Bonus amount, under Section
4.2(iii) of this Agreement, of $75,000. If Executive's Employment under this
Agreement is terminated as a result of a Death Termination or Disability
Termination on or prior to December 31, 1998, Executive (or, in the case of a
Death Termination, Executive's Beneficiary as defined in Section 4.2) shall be
entitled to a Bonus amount, under Section 4.3(iii) of this Agreement, of
$75,000.
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
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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
or 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 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 an 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 no such waiver or consent
shall be construed as a waiver of any other provision or as a consent with
respect to any similar instance or circumstance.
5.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
5.5 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.
5.6 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.
5.7 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:
Xxxxxx X. XxXxxxx
At last known address as reflected in the Company's
records.
(b) If to the Company, addressed to:
Summit Properties Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
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Attn: Xxxxxxx X. Xxxxxx
5.8 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.
5.9 Entire Agreement. This Agreement, together with the Noncompetition
Agreement and Executive Severance Agreement, constitute 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/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Collectively, the "Company"
/s/ Xxxxxx X. XxXxxxx (SEAL]
----------------------------------
Xxxxxx X. XxXxxxx
"Executive"
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