EXHIBIT 99.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of April 28, 2005 by and between American Campus Communities,
Inc. (the "Company") and Xxxx X. Xxxxxx ("Executive").
W I T N E S S E T H:
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WHEREAS, the Company desires to employ Executive and to enter
into an agreement embodying the terms of such employment and Executive desires
to enter into this Agreement and to accept such employment, subject to the terms
and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
receipt of which is mutually acknowledged, the Company and Executive agree as
follows:
Section 1. Definitions.
(a) "Accrued Obligations" shall mean (i) all accrued but
unpaid Base Salary through the date of termination of Executive's employment,
(ii) any unpaid Annual Bonus in respect to any completed fiscal year which has
ended prior to the date of termination of Executive's employment, (iii) any
earned but unpaid holiday, vacation or paid time off; and (iv) any expenses
incurred in accordance with Section 7, below, that remain unpaid or unreimbursed
as of the date of termination of Executive's employment. The Accrued Obligations
shall be paid within five (5) business days of the termination of Executive's
employment under this Agreement, except amounts payable with respect to unpaid
Annual Bonus, which shall be paid on the earlier of (i) the first (1st)
anniversary of the date upon which Executive's Annual Bonus was paid in respect
of the prior year, or (ii) at such time Annual Bonus amounts are paid to other
senior executives.
(b) "Aggregate Payment" shall have the meaning set forth in
Section 9 below.
(c) "Additional Payment" shall have the meaning set forth in
Section 9 below.
(d) "Auditor" shall mean a nationally recognized United States
public accounting firm, jointly selected by the Company and Executive, which has
not, during the two years preceding the date of its selection, acted in any way
on behalf of the Company. If Executive and the Company cannot agree on the firm
to serve as the Auditor, then Executive and the Company shall each select one
accounting firm and those two firms shall jointly select the. accounting firm to
serve as the Auditor.
(e) "Base Salary" shall mean the salary provided for in
Section 4(a) below or any increased salary granted to Executive pursuant to
Section 4(a).
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Cause" shall mean (i) Executive's act of gross negligence
or gross misconduct that that has the effect of injuring the business of the
Company and its affiliates, taken as a whole, in any material respect; (ii)
Executive's conviction of, or plea of guilty or nolo contendere to, the
commission of a felony by Executive; (iii) the commission by Executive of an act
of fraud or embezzlement against the Company or its affiliates; or (iv)
Executive's willful breach of any material provision of this Agreement or the
Noncompete Agreement.
(h) "Change in Control" shall mean:
(i) The acquisition by any individual,
entity or group (other than the Company or any employee benefit plan of the
Company) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of securities representing more than
50% of the voting securities of the Company entitled to vote generally in the
election of directors , determined on a fully-diluted basis ("Company Voting
Securities"); provided, however, that such acquisition shall not constitute a
Change in Control hereunder if a majority of the holders of the Company Voting
Securities immediately prior to such acquisition retain directly or through
ownership of one or more holding companies, immediately following such
acquisition, a majority of the voting securities entitled to vote generally in
the election of directors of the successor entity;
(ii) The date upon which individuals who as
of the date hereof constitute a majority of the Board (the "Incumbent Board")
cease to constitute at least a majority of the Board, provided, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board; or
(iii) Consummation of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, all or substantially all of the individuals
or entities who were the beneficial owners, respectively, of the Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries).
(i) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(j) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(k) "Disability" shall mean any physical or mental disability
or infirmity that prevents the performance of Executive's duties for a period of
(i) six (6) consecutive months or (ii) an aggregate of twelve (12) months in any
twenty-four consecutive month period. Any question as to the existence, extent
or potentiality of Executive's Disability upon which Executive and the Company
cannot agree shall be determined by a qualified, independent physician selected
by the Company and approved by Executive (which approval shall not be
unreasonably withheld). The determination of any such physician shall be final
and conclusive for all purposes of this Agreement.
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(l) "Effective Date" shall mean May 1, 2005.
(m) "Excise Tax" shall mean any tax imposed under Section 4999
of the Code or any similar tax that may hereafter be imposed.
(n) "Good Reason" shall mean, without Executive's consent, (i)
any material diminution or change in the nature or scope of Executive's
functions, duties, position, responsibilities, or reporting relationships that
are inconsistent with Executive's titles or this Agreement; (ii) the relocation
of Executive's principal office location more than fifty (50) miles from its
current location; (iii) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all or
substantially all of the assets of the Company; or (iv) a breach by the Company
of any material provision of this Agreement.
(o) "Noncompete Agreement" shall mean the Confidentiality and
Noncompetition Agreement attached hereto as Exhibit A.
(p) "Restricted Period" shall have the meaning set forth in
the Noncompete Agreement.
(q) "Severance Term" shall have the period specified in
Section 8(d)(ii) below.
(r) "Term of Employment" shall mean the period specified in
Section 2 below.
Section 2. Acceptance and Term of Employment.
The Company agrees to employ Executive and Executive agrees to
serve the Company on the terms and conditions set forth herein. The Term of
Employment hereunder shall commence on the Effective Date and shall continue
until terminated as provided in Section 8 hereof.
Section 3. Position, Duties and Responsibilities; Place of
Performance.
(a) During the Term of Employment, Executive shall be employed
and serve as the Executive Vice President and Chief of Operations of the Company
(together with such other position or positions consistent with Executive's
title as the Board shall specify from time to time) and shall have such duties
typically associated with such title and shall report to the Company's Chief
Executive Officer. Executive also agrees to serve as an officer and/or director
of any subsidiary of the Company without additional compensation. If at any time
during the Term of Employment, Executive is not a Member of the Board of
Directors, the parties acknowledge and agree that Executive shall have the right
to be present at any meetings of the Board at which the other members of the
Company's executive management team are permitted to attend, and shall receive
notification in the same manner and timing as delivered to the Board with
respect to such meetings; provided, however, that Executive shall not be
entitled to be present during the discussion of any agenda item which personally
concerns or otherwise relates to Executive.
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(b) Executive shall devote his full business time, attention,
skill and best efforts to the performance of his duties under this Agreement and
shall not engage in any other business or occupation during the Term of
Employment, including, without limitation, any activity that (x) conflicts with
the interests of the Company; (y) interferes with the proper and efficient
performance of his duties for the Company, or (z) interferes with the exercise
of his judgment in the Company's best interests. Notwithstanding the foregoing,
nothing herein shall preclude Executive from (i) serving, with the prior written
consent of the Company, as a member of the board of directors or advisory boards
(or their equivalents in the case of a non-corporate entity) of non-competing
businesses and charitable organizations, (ii) engaging in charitable activities
and community affairs, and (iii) managing his personal investments and affairs;
provided, however, that the activities set out in clauses (i), (ii) and (iii)
shall be limited by Executive so as not to materially interfere, individually or
in the aggregate, with the performance of his duties and responsibilities
hereunder.
(c) Executive's principal place of employment shall be in
Austin, Texas, although Executive understands and agrees that he may be required
to travel from time to time for business reasons.
Section 4. Compensation. During the Term of Employment,
Executive shall be entitled to the following compensation:
(a) Base Salary. Executive shall be paid an initial Base
Salary (the "Base Salary"), at the annual rate of no less than $175,000, subject
to applicable and authorized deductions and withholdings and payable in
accordance with the regular payroll practices of the Company. Such Base Salary
may be increased by the Board in its discretion, but in no event may be
decreased.
(b) Annual Bonus. Executive shall be eligible for an annual
cash bonus award determined by the Compensation Committee of the Board in
respect of each fiscal year during the Term of Employment (the "Annual Bonus");
provided, however, that in the event the Company adopts an annual bonus plan far
its senior executives, Executive shall participate in such plan on the same
basis as other senior executives of the Company (with appropriate adjustment due
to differences in title and salary). Executive shall receive the Annual Bonus in
respect of any year at the same time as bonuses are paid to other executive
officers of the Company, but in no event later than ninety (90) days after the
end of the fiscal year for which the bonus is payable.
(c) Legal Fees. The Company shall reimburse Executive for
reasonable and necessary attorneys' fees incurred by Executive in the review and
analysis of this Agreement, prior to Executive's execution of this Agreement.
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Section 5. Employee Benefits.
During the Term of Employment, Executive shall be entitled to
participate in health, insurance, retirement and other benefits provided to
other senior executives of the Company. Executive shall also be entitled to at
least the same number of holidays, vacation, sick days and other benefits as are
generally allowed to senior executives of the Company in accordance with the
Company policy in effect from time to time, or as otherwise granted by the
Compensation Committee of the Board.
Section 6. Key-Man Insurance.
At any time during the Term of Employment, the Company shall
have the right to insure the life of Executive for the sole benefit of the
Company, in such amounts, and with such terms, as it may determine. All premiums
payable thereon shall be the obligation of the Company. Executive shall have no
interest in any such policy, but agrees to cooperate with the Company in taking
out such insurance by submitting to physical examinations, supplying all
information required by the insurance company, and executing all necessary
documents, provided that no financial obligation is imposed on Executive by any
such documents.
Section 7. Reimbursement of Business Expenses.
Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all business expenses incurred in
connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy, as in effect from time to
time.
Section 8. Termination of Employment.
(a) General. The Term of Employment shall terminate upon the
earliest to occur of (i) Executive's death, (ii) a termination by reason of a
Disability, (iii) a termination by the Company with or without Cause, or (iv) a
termination by Executive with or without Good Reason. Upon any termination of
Executive's employment for any reason, except as may otherwise be requested by
the Company, Executive shall be deemed to have resigned from any and all
directorships, committee memberships or any other positions Executive holds with
the Company or any of its affiliates.
(b) Termination Due to Death or Disability. Executive's
employment shall terminate automatically upon his death. The Company may
terminate Executive's employment immediately upon the occurrence of a
Disability, such termination to be effective upon Executive's receipt of written
notice of such termination. In the event Executive's employment is terminated
due to his death or Disability, Executive or his estate or his beneficiaries, as
the case may be, shall be entitled to the Accrued Obligations.
(c) Termination by the Company for Cause.
(i) A termination for Cause shall not take
effect unless the provisions of this subsection (i) are complied with. The Board
shall give Executive not less than ten (10) business days written notice of the
Board's intention to terminate Executive for Cause, such notice to state in
detail the particular act or acts or failure or failures to act that constitute
the grounds on which the proposed termination for Cause is based. Executive
shall have ten (10) business days after the date that such written notice has
been received by Executive in which to cure such conduct, to the extent such
cure is possible. If he fails to cure such conduct, the termination shall be
effective on the date immediately following the expiration of the ten (10)
business day notice period.
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(ii) In the event the Company terminates
Executive's employment for Cause, he shall be entitled to the Accrued
Obligations.
(d) Termination By The Company Without Cause. The Company may
terminate Executive's employment at any time without Cause, effective upon
Executive's receipt of written notice of such termination. In the event
Executive's employment is terminated by the Company without Cause (other than
due to death or Disability), Executive shall be entitled to:
(i) The Accrued Obligations;
(ii) An amount equal to one (1) times the
sum of (x) the annual Base Salary as of the date of termination, plus (y) an
average of the Annual Bonus paid or payable to Executive under the terms of this
Agreement in the three (3) fiscal years immediately prior to the fiscal year in
which Executive's termination of employment occurs; provided, however, that if
Executive has been employed under the terms of this Agreement for less than
three (3) fiscal years as of the date of such termination, the bonus (y) to be
included in this amount shall be based on the percentage of Base Salary
represented by the average Annual Bonus as a percent of the corresponding
average annual compensation received by Executive under the terms of this
Agreement; such amount shall be payable in equal monthly installments during the
Restricted Period;
(iii) A pro rata Annual Bonus for the year
in which such termination occurs, equal to the greater of (x) the Annual Bonus
paid or payable in respect of the fiscal year immediately prior the fiscal year
in which Executive's termination of employment occurs, or (y) Executive's target
Annual Bonus for the year in which such termination occurs, multiplied by a
fraction, the numerator of which equals the number of days elapsed from the
commencement of the fiscal year in which such termination occurs through the
date of such termination, and the denominator of which equals 365; such amount
shall be payable in equal monthly installments during the Restricted Period; and
(iv) An amount equal to the difference
between the amount paid by Executive for health insurance coverage under the
Company's health benefit plan immediately prior to such termination and the cost
of continuation coverage under COBRA, payable on a monthly basis for the period
ending on the expiration of the Restricted Period; provided, that if prior to
the expiration of the Restricted Period Executive is eligible to receive health
insurance benefits from a subsequent employer, payments under this subsection
(iv) shall cease as of the date Executive becomes eligible.
(e) Termination By Executive With Good Reason. Executive may
terminate his employment with Good Reason by providing the Company thirty (30)
days' written notice setting forth in reasonable specificity the event that
constitutes Good Reason, within sixty (60) days of the occurrence of such event.
During such thirty (30) day notice period, the Company shall have a cure right
(if curable), and if not cured within such period, Executive's termination will
be effective upon the expiration of such cure period, and Executive shall be
entitled to the same payments and benefits as provided in Section 8(d) above for
a termination without Cause.
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(f) Termination By Executive Without Good Reason. Executive
may terminate his employment without Good Reason by providing the Company thirty
(30) days' written notice of such termination. In the event of a termination of
employment by Executive under this Section 8(f), Executive shall be entitled to
the Accrued Obligations. In the event of termination of Executive's employment
under this subsection (f), the Company may, in its sole and absolute discretion,
at any time after notice of termination has been given by Executive, terminate
Executive's employment (which in no event shall be treated as a termination
without Cause or an event of Good Reason), provided that the Company shall
continue to pay to Executive his then current Base Salary and continue benefits
provided pursuant to Section 5 for the duration of the unexpired notice period.
(g) Mitigation; Offset. In the event of any termination of
employment under this Section 8, Executive shall be under no obligation to
mitigate amounts payable hereunder by seeking other employment or otherwise, and
there shall be no offset against any payments or amounts due to Executive under
the terms of this Agreement on account of any subsequent employment by Executive
or otherwise.
(h) Release. Notwithstanding any provision herein to the
contrary, the Company may require that, prior to payment of any amount or
provision of any benefit pursuant to subsections (d) or (e) of this Section 8,
Executive shall have executed a complete release of the Company and its
affiliates and related parties in such form as is reasonably required by the
Company, and any waiting periods contained in such release shall have expired.
Section 9. Additional Payment.
(a) In the event that payments or benefits made or provided to
Executive under this Agreement and under any other plan, program or agreement of
the Company, or any of their respective affiliates (the "Aggregate Payment") are
or become subject to the Excise Tax, the Company shall pay to Executive an
additional amount (the "Additional Payment") such that the net amount retained
by Executive with respect to the Aggregate Payment, after deduction of any
Excise Tax on the Aggregate Payment and any Federal, state and local income tax
and Excise Tax on the Additional Payment (and any interest and penalties
thereon), but before deduction for any Federal, state or local income or
employment tax withholding on such Aggregate Payment, shall be equal to the
amount of the Aggregate Payment.
(b) The determination of whether the Aggregate Payment will be
subject to the Excise Tax and, if so, the amount to be paid to Executive and the
time of payment pursuant to this Section 9 shall be made by the Auditor. All
fees and expenses of the Auditor shall be borne solely by the Company.
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(c) For purposes of determining the amount of the Additional
Payment, Executive shall be deemed to pay:
(i) Federal income taxes at the highest
applicable marginal rate of Federal income taxation for the calendar year in
which the Additional Payment is to be made, and
(ii) Any applicable state and local income
taxes at the highest applicable marginal rate of taxation for the calendar year
in which the Additional Payment is to be made, net of the maximum reduction in
Federal incomes taxes which could be obtained from the deduction of such state
or local taxes if paid in such year.
(d) In the event that the Excise Tax is subsequently
determined by the Auditor or pursuant to any proceeding or negotiations with the
Internal Revenue Service to be less than the amount taken into account hereunder
in calculating the Additional Payment made, Executive shall repay to the
Company, at the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Additional Payment that would not
have been paid if such Excise Tax had been applied in initially calculating such
Additional Payment.
(e) In the event that the Excise Tax is subsequently
determined by the Auditor or pursuant to any proceeding or negotiations with the
Internal Revenue Service to exceed the amount taken into account hereunder at
the time the Additional Payment is made (including, but not limited to, by
reason of any payment the existence or amount of which cannot be determined at
the time of the Additional Payment), the Company shall make an additional
payment in respect of such excess (plus any interest or penalty payable with
respect to such excess) at the time that the amount of such excess is finally
determined.
Section 10. Noncompete Agreement.
As a condition to his employment pursuant to this Agreement,
Executive shall execute the Noncompete Agreement. Executive hereby represents
and warrants to the Company that he will comply with all obligations under the
Noncompete Agreement and further agrees that the Noncompete Agreement will
survive any termination of this Agreement or Executive's employment, or
subsequent service relationship with the Company; if any. Executive agrees that
any breach of his obligations under the Noncompete Agreement shall likewise and
to the same extent be viewed as a breach hereunder.
Section 11. Representations and Warranties of Executive.
Executive represents that:
(a) Executive is entering into this Agreement voluntarily and
that his employment hereunder and compliance with the terms and conditions
hereof will not conflict with or result in the breach by him of any agreement to
which he is a party or by which he may be bound;
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(b) he has not, and in connection with his employment with the
Company will not, violate any non-solicitation or other similar covenant or
agreement by which he is or may be bound;
(c) in connection with his employment with the Company he will
not use any confidential or proprietary information he may have obtained in
connection with employment with any prior employer; and
(d) during the Term of Employment, Executive will not in any
way attempt to limit the financial risk with respect to unvested options to
purchase shares of the Company or any other stock-based awards granted under the
Company's 2004 Incentive Award Plan or otherwise, by means of any hedging
(including without limitation, selling short) or other techniques.
Section 12. Taxes.
The Company may withhold from any payments made under this
Agreement all applicable taxes, including but not limited to income, employment
and social insurance taxes, as shall be required by law.
Section 13. Successors and Assigns; No Third-Party
Beneficiaries.
(a) The Company. This Agreement shall inure to the benefit of
and be enforceable by, and may be assigned by the Company to, any purchaser of
all or substantially all of the Company's business or assets, any successor to
the Company or any assignee thereof (whether direct or indirect, by purchase,
merger, consolidation or otherwise). The Company will require any such
purchaser, successor or assignee to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would, be
required to perform it if no such purchase, succession or assignment had taken
place.
(b) Executive. Executive's rights and obligations under this
Agreement shall not be transferable by Executive by assignment or otherwise,
without the prior written consent of the Company; provided, however, that if
Executive shall die, all amounts then payable to Executive hereunder shall be
paid in accordance with the terms of this Agreement to Executive's devisee,
legatee or other designee or, if there be no such designee, to Executive's
estate.
Section 14. Waiver and Amendments.
Any waiver, alteration, amendment or modification of any of
the terms of this Agreement shall be valid only if made in writing and signed by
the parties hereto; provided, however, that any such waiver, alteration,
amendment or modification is consented to on the Company's behalf by the Board.
No waiver by either of the parties hereto of their rights hereunder shall be
deemed to constitute a waiver with respect to any subsequent occurrences or
transactions hereunder unless such waiver specifically states that it is to be
construed as a continuing waiver.
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Section 15. Severability and Governing Law.
If any covenants or such other provisions of this Agreement
are found to be invalid or unenforceable by a final determination of a court of
competent jurisdiction: (a) the remaining terms and provisions hereof shall be
unimpaired, and (b) the invalid or unenforceable term or provision hereof shall
be deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision hereof. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PRINCIPLES THEREOF) APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 16. Notices.
(a) Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed to or delivered to the party
for whom it is intended at such address as may from time to time be designated
by it in a notice mailed or delivered to the other party as herein provided,
provided that, unless and until some other address be so designated, all notices
or communications by Executive to the Company shall be mailed or delivered to
the Company at its principal executive office, and all notices or communications
by the Company to Executive may be given to Executive personally or may be
mailed to Executive at Executive's last known address, as reflected in the
Company's records.
(b) Any notice so addressed shall be deemed to be given: (i)
if delivered by hand, on the date of such delivery; (ii) if mailed by courier or
by overnight mail, on the first business day following the date of such mailing;
and (iii) if mailed by registered or certified mail, on the third business day
after the date of such mailing.
Section 17. Dispute Resolution.
Any controversy arising out of or relating to this Agreement
or the breach hereof (other than claims for injunctive relief arising under the
Noncompete Agreement) shall be settled by binding arbitration in accordance with
the Employment Dispute Resolution Rules of the American Arbitration Association
(with the exception that there will be a panel of three arbitrators rather than
a single arbitrator) and judgment upon the award rendered may be entered in any
court having jurisdiction thereof. The costs of any such arbitration proceedings
shall be borne equally by the Company and Executive, and neither party shall be
entitled to recover attorney's fee or costs expended in the course of such
arbitration or enforcement of the awarded rendered thereunder. The location for
the arbitration shall be Austin, Texas. Any award made by such arbitrator shall
be final, binding and conclusive on the parties for all purposes, and judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
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Section 18. Section Headings.
The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof affect the meaning or interpretation of this Agreement or of any term or
provision hereof.
Section 19. Entire Agreement.
This Agreement, together with the Noncompete Agreement,
constitutes the entire understanding and agreement of the parties hereto
regarding the employment of Executive. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements between the parties relating to the subject matter of this Agreement.
Section 20. Survival of Operative Sections.
Upon any termination of Executive's employment, the provisions
of Section 8 through Section 21 of this Agreement shall survive to the extent
necessary to give effect to the provisions thereof.
Section 21. 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. The execution of this Agreement may be
by actual or facsimile signature.
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[Signatures to appear on the following page.]
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
AMERICAN CAMPUS COMMUNITIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
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Xxxxxxx X. Xxxxxxx, Xx.
President and Chief Executive Officer
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
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