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Exhibit 10.7.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered into
on this 11th day of December, 2000 ("Effective Date') by and between XXXXXX X.
XXXXXXX, an individual resident of the state of North Carolina (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 continue the employment of 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 Hoard 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
2.1. Base Salary. Commencing on January 1, 2001, the Company shall pay
Executive during the term of Executive's employment under this Agreement, a base
salary equal to Four Hundred Ten Thousand and 00/1.00 Dollars ($410,000.00) 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 Executives performance during the period covered by
such review; provided, however, that Executive's Base salary shall not be
reduced below Four Hundred Ten Thousand and 00/100 Dollars ($410,000.00) 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 S 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 2001 will
be calculated as a percentage of Executive's Base Salary which corresponds to
the actual per share growth in Funds Flow from Operations ("F90") during the
period from December 31, 2000 to December 31, 2001 as set forth in the following
table:
FFO Growth % 4 5 6 7 8 9 10
Cash Bonus as % of Base salary 30 40 50 60 70 90 110
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.
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
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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, July 1, 2004
(the "First Renewal Term"). Following the First Renewal 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 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 Hoard in good faith in its
sole discretion (which shall be referred to individually and collectively as a
"For Cause Termination,,); or
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(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)) 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 Ease 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.
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) July 1,
2004 or (b) the first anniversary of the date of Termination or (II) if
Termination occurs later than (a) 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,
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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 First Renewal Term. If Executive's employment under this
Agreement is terminated as a result of a Death Termination or Disability
Termination during the First Renewal 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) July 1, 2004 or (b)
the first anniversary of the date of Termination or (I) if the above said
Termination occurs later than (a) 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:
(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
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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
5.1. Finding 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
oz 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 Executives 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.
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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 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
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 dated July 1, 1998, Executive Severance Agreement dated July 1, 1998,
and the Indemnification agreement dated July 20, 1999 constitute the entire
agreement of the parties with respect to the subject matter hereof and upon the
Effective xxxx, 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
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Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
SUMMIT MANAGEMENT COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
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Collectively, the "Company"
/s/ Xxxxxx X. XxXxxxx
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Xxxxxx X. XxXxxxx
"Executive"
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