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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered into
on this 5th day of December, 1996, ("Effective Date") by and between XXXXXXX
X. XXXXXXXX, 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:
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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
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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 Executive Vice President, Property Services of Summit
Properties Inc. and 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.
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SECTION 2.
Compensation; Expenses
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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 $173,000.00 per annum (the "Base Salary"), which amount
shall be subject to adjustment, if any, in accordance with this Section 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 One Hundred Seventy-Three
Thousand Dollars ($173,000) 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 Section 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, including but not limited to reimbursement of those relocation
expenses incurred by Executive as set forth on the attached Exhibit "A" hereto.
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
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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 three weeks. 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
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3.1. Term of Employment. Unless earlier terminated in accordance with
Section 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 second
anniversary of such date (the "Original Term"). Following the Original Term, the
employment relationship under this Agreement shall automatically continue unless
terminated in accordance with Section 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
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(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
(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 Section 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
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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 Section 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 Section 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
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4.1. For Cause Termination or Termination Following Original Term. If
Executive's employment under this Agreement is terminated as a result of 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 During Original Term. If Executive's employment under this Agreement
is terminated as a result of a No Cause Termination or an Employee-Initiated
Termination during the Original Term, 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 a twelve month period. If Executive's
employment under this agreement is terminated as a result of a No Cause
termination or an employee initiated termination, subsequent to the Original
Term, Executive shall be entitled to receive (i) any base salary which may be
owed to Executive that was 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 a six month period. The payment of such Base Salary pursuant to
clause (ii) of the preceding sentences shall be made at such intervals in
accordance with the Company's payroll procedures in effect from time to time
with respect to
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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 "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 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 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 a 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,
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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.
SECTION 5.
Miscellaneous
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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
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.
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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. Xxxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
(b) If to the Company, addressed to:
Summit Properties Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
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 other than that letter agreement from
Xxxxxxx X. Xxxxxxx to Xxxxxxx X. Xxxxxxxx dated November 25, 1996 attached
hereto as Exhibit "B". This Agreement
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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
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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
Collectively, the "Company"
/s/ Xxxxxxx X. Xxxxxxxx [SEAL]
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Xxxxxxx X. Xxxxxxxx
"Executive"
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EXHIBIT "A"
September 10, 1996
SUMMIT PROPERTIES
EXECUTIVE RELOCATION POLICY FOR TRANSFERRED EMPLOYEES AND NEW HIRES
1. Summit will pay the broker's fee for selling the employee's home. The
remaining closing costs are the responsibility of the employee. In the
event an employee experiences a loss on the sale of a home, the Company
will reimburse the employee up to $5,000.
2. Summit will pay the origination fee for a new mortgage loan up to a
maximum of 1%. All other costs for obtaining a loan or purchasing a new
home is the responsibility of the employee.
3. Summit will provide a rental home (if employee has two children or
more) or an apartment (if employee has one child or less) and
associated expenses (electric, phone, cable TV, water/sewer fees) in
the new city:
a. First six (6) months paid 100%;
b. Second five (5) months paid 50%;
The objective of this policy is for the employee to
only be responsible for one household expense. If the
home is not sold after six (6) months, the employee
will only receive 1/2 of the new rental's operating
expenses. After 12 months, the employee will be
responsible for 100% of his housing expense in the
new location.
c. Summit will pay for two (2) trips for the employee
and his/her spouse to search for a new home -
Airfare, Car, Meals, Hotel, etc. If employee drives
to new city for house hunting, five (5) trips will be
reimbursable.
All moving expenses will be paid by Summit. The Company will pay for moving
expenses from your existing home to a new home or to a rental in the new
location, and from that rental to your new home once it is purchased. if the
employee goes past 12 months and still hasn't found a home, even though the new
rental's expenses are no longer covered, one more move is still reimbursable by
the Company. Employee shall receive at least two (2) bids for packing and
moving.
If the employee is still renting at the end of 12 months, even though the rental
expenses are no longer covered, the expenses for one more move is still
reimbursable by the Company.
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EXHIBIT "B"
Summit Properties
[Letterhead]
November 25, 1996
Xx. Xxxxxxx X. Xxxxxxxx
Summit Properties Inc.
000 X. Xxxxx Xxxxxx, #000
Xxxxxxxxx, XX 00000
RE: RESTRICTED STOCK GRANTS
Dear Xxxx:
This letter will substantiate my commitment to you regarding your restricted
grant of stock of Summit Properties Inc. (the "Company").
Restricted stock grants such as this, which are awarded pursuant to the
company's 1994 Stock Option and Incentive Plan, must be approved by the
Compensation Committee, which consists of the independent directors of the Board
of Directors of the Company. It is my intention to obtain this approval for your
restricted stock grant in the amount of 8,200 shares from the Compensation
Committee when it meets at the next meting of the Board of Directors on December
9, 1996. These shares would vest in three equal amounts on January 1, 1998;
January 1, 1999; and January 1, 2000.
The grant of this same quantity of restricted shares had already been allocated
and approved by the committee for your predecessor. The three-year total vesting
period for your shares is, however, somewhat shorter than the vesting period
attached to the pending grant to your predecessor. However, I don't believe this
will be perceived by the Compensation Committee to be a material change and,
therefore, since these shares have already been allocated, I believe that the
Compensation Committee will approve the award of a restricted stock grant in the
amount of 8,200 vesting over three years. Upon such approval, your restricted
stock grant, as well as several other pending and approved restricted stock
grants, would become effective as of January, 2, 1997.
In the unlikely event that the Compensation Committee would not approve this
award to you as described above, I personally will convey to you any shortfall
between the 8,200 share amount and the amount of shares the Compensation
Committee actually approves, as well as any shortfall in the vesting of those
shares should the Compensation Committee approve the restricted stock grant,
however over a longer vesting period. My conveyance of these shares to you
would, of course, be subject to the same terms and conditions as would have
existed had you received these shares directly from the company pursuant to
approval by the Compensation Committee, including the specific terms and
conditions of the 1994 Stock Option and Incentive
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Plan.
If the Compensation Committee does, in fact, approve the award to you of 8,200
shares of restricted stock of the Company over a three year vesting period as
outlined above, my commitment to you as contained in this letter would be of no
further effect as of the date of that approval by the Compensation Committee.
Xxxx, I hope my commitment to you as contained in this letter reflects not only
how much the Company, but also I personally, value your role in the executive
management team that will make Summit an outstanding success.
Sincerely yours,
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
President and Chief executive Officer
