EXHIBIT 99.1
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (the "Agreement") is made and entered into as
of the date on the signature page (the "Date of this Agreement") by and between
Summit Properties, Inc. and Summit Management Company, both Maryland
corporations (collectively referred to herein as the "Company") and Xxxxxxx X.
Xxxxx ("Employee").
STATEMENT OF PURPOSE
The Company and Employee have mutually agreed to terminate their
employment relationship. This Agreement sets forth the parties' understandings
and agreements with respect to such employment termination and related matters.
NOW, THEREFORE, in consideration of the aforesaid Statement of Purpose,
the promises and mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Termination of Employment. Employee hereby resigns from his
employment with the Company and from all offices, committees and positions he
holds with the Company, Summit Properties Partnership, L.P., and any affiliated
and associated companies and entities (the "Affiliates"), said resignation to be
effective on May 23, 2003 (the "Termination Date"). Employee agrees not to
reapply for employment with the Company in the future.
2. Compensation by Company. Employee acknowledges that the Company has
paid, or shall pay to him in the ordinary course of business, all compensation
(including wages, commissions, deferred and incentive compensation, bonuses and
stock awards) and other benefits of any kind to which he was entitled through
the Date of this Agreement, including pay for his final pay period and his
unused, accrued vacation. Employee expressly acknowledges and agrees that he is
not entitled to receive, and will not receive, any additional compensation or
benefits of any kind from the Company, except as expressly set forth in this
Agreement.
3. Payments by the Company. In consideration of the covenants and
agreements set forth herein, the Company agrees to pay or provide Employee with
the following:
(a) The Company will pay Employee $7,500.00 upon the Effective
Date of this Agreement.
(b) Employee shall be entitled to elect to continue his medical
insurance coverage under the COBRA provision of federal law.
The Company shall pay or reimburse Employee for difference
between the cost of such coverage and the amount of his
co-payment when employed, for the period from the Termination
Date through December 31, 2003, so long as employee does not
become eligible for group medical insurance coverage under a
subsequent employer's plan.
(c) Employee may have vested interests in a Company-sponsored
401-k plan. Employee's interests in said 401-k plan shall be
paid when and as provided in, and otherwise subject to, the
terms, provisions and conditions of said 401-k plan, and
nothing in this Agreement shall modify or override those
terms, provisions or conditions. Employee's right to make
contributions to the 401-k plan shall terminate on the
Termination Date.
(d) Employee may have vested interests in the Summit Properties,
Inc. Compensation Exchange Plan and the Summit Properties,
Inc. 1994 Stock Option and Incentive Plan, as Amended and
Restated. Except as provided hereafter in Paragraph 4(b),
Employee's interests in said plans shall be paid when and as
provided in, and otherwise subject to, the terms, provisions
and conditions of said plans, and nothing in this Agreement
shall modify or override those terms, provisions or
conditions.
(e) The Company will pay or reimburse Employee for reasonable
business-related expenses accrued as of the Termination Date
in accordance with its policies and practices as applicable to
Employee immediately prior to the Termination Date. Except as
otherwise provided in the Consulting Agreement, the Company
will not otherwise reimburse expenses accrued after the
Termination Date.
The above payment(s) shall be subject to applicable withholdings.
4. Special Benefits. In consideration of the covenants and agreements
set forth herein, the Company agrees to provide Employee with the following
special benefits:
(a) Promissory Notes and Security Agreements. The Company will not
forgive any loans made to the Employee by the Company or it's
affiliates, including Employee's Promissory Notes and Security
Agreements. Any such loans will be governed pursuant to the
terms of its respective note.
(b) Vesting and Exercise of Awards under the 1994 Stock Option and
Incentive Plan, as Amended and Restated. Employee has the
following awards of restricted stock grants awarded pursuant
to certain letter agreements between Employee and the Company
which will vest on or prior to December 31, 2003 and awards of
stock options awarded pursuant to certain Incentive Stock
Option Agreements, (collectively the "Award Agreements")
between the Employee and the Company which have vested or will
vest on or prior to December 31, 2003 and which , if not
previously exercised or forfeited, will be subject to exercise
as set forth below:
Options
Grant Date Award Vesting Date Exercisable Exercise Price
10/10/00 84 restricted grants 10/10/03
10/10/00 84 restricted grants 10/10/03
10/10/00 84 restricted grants 10/10/03
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01/13/99 2400 options 02/01/99 0 $16.50
01/13/99 2400 options 02/01/00 0 $16.50
01/13/99 2400 options 02/01/01 0 $16.50
01/05/01 2400 options 02/01/02 2400 $16.50
01/05/01 2400 options 02/01/03 2400 $16.50
01/09/01 17541 options 01/09/01 17541 $24.5625
01/09/01 17,541 options 01/09/02 17541 $24.5625
01/09/01 17,541 options 01/09/03 17541 $24.5625
01/09/01 2459 options 01/09/01 2459 $24.5625
01/09/01 2459 options 01/09/02 2459 $24.5625
01/09/01 2459 options 01/09/03 2459 $24.5625
02/06/02 12000 options 03/01/03 12000 $22.00
For the sole purposes of determining vesting of the above
stock grants and option grants and, in the case of option
grants, the three (3) month post-termination exercise period
provided for in the Award Agreements, Employee will be treated
as being employed through December 31, 2003, in lieu of
requiring Employee to forfeit the unvested awards on the
Termination Date pursuant to the Award Agreements. Employee
may exercise all vested options through March 31, 2004 (i.e.,
a period of three (3) months from December 31, 2003). Other
than as previously set forth in this paragraph, all Employee's
restricted stock grants, performance stock grants and option
grants shall continue to be governed by the terms of the
agreements evidencing such grants and the terms of the
Company's 1994 Stock Option and Incentive Plan.
Employee acknowledges and agrees that the designation of
Employee as an employee of the Company solely for the purposes
of determining vesting of the above stock grants and option
grants constitutes a special benefit to which he was not
otherwise entitled, and is being provided to him in
consideration of the covenants and agreements set forth
herein.
(c) The Company shall provide Employee with, and with remote
access to, a voice mail box (connected to the same telephone
exchange or extension currently assigned to Employee) and
e-mail account (at the same address currently assigned to
Employee) through June 23, 2003.
5. Consulting Services. Employee agrees that during the Separation
Period, he will provide consulting services to the Company under the terms of
the Consulting Agreement, which is attached as Exhibit A. Employee shall not be
entitled to additional consideration beyond that provided in the Consulting
Agreement for such consulting services.
6. Confidential Information and Company Property. In consideration of
the payments and other special benefits outlined above, Employee agrees and
covenants that he shall not directly or indirectly disclose, reveal, use or
remove from the Company's premises any Confidential Information (as hereinafter
defined), other than as may be required or permitted under the Consulting
Agreement or as may be required by law. Employee agrees to promptly return to
the Company any property in his possession or under his control which belongs to
the Company (other than the laptop computer and palm pilot issued to him by the
Company, assuming proprietary information and licensed software programs have
been deleted) as well as
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any records containing Confidential Information (including without limitation
any and all customer files), whether in written or electronic form. As used
herein, "Confidential Information" means any information which
(i) is, or is designed to be, used in the business of the Company or
any customer of the Company, and
(ii) is private or confidential and derives independent actual or
potential commercial value from not being generally known or available
to the public, and
(iii) gives the Company or a customer of the Company an opportunity to
obtain an advantage over competitors who do not know or use such
information,
and includes, without limitation, the Company's customer database; any
confidential or private technical, financial, marketing and business information
relating to the Company, its Affiliates and their respective officers,
directors, employees, stockholders, partners or the Company's customers; any
formula, patent, device, plan, process or compilation of information, names or
employment data relating to the Company, its Affiliates, or the Company's
customers; intra-company memoranda and similar documentation; and any notes
which reflect such Confidential Information. Confidential Information expressly
includes, but is not limited to, information relating to the Company's business
plans, practices, finances, products, pricing, customers and contracts.
Notwithstanding the foregoing, this confidentiality obligation shall not apply
to any information which becomes generally available to the public other than
pursuant to a breach of this Section 6 by Executive.
7. Acknowledgment of Proprietary Information. Employee hereby
acknowledges the importance and value to the Company of the Confidential
Information and the Company's need to protect same. Employee further
acknowledges that the restrictions contained in Paragraph 6 hereof are, in view
of the nature of the business of the Company, reasonably necessary to protect
the legitimate interests of the Company and that any violation of such
restrictions is a material breach of this Agreement and will result in
irreparable injury to the Company.
8. Anti-Pirating of Employees. In consideration of the payments and
benefits provided in Paragraphs 3 and 4 above, Employee acknowledges and
reaffirms his obligations in Paragraph 5(b) of the Employment Agreement between
Employee whereby Employee agreed that for a two (2) year period immediately
following the Termination Date, he would not hire, directly or indirectly, or
entice or participate in any efforts to entice to leave the Company's employ,
any person who was or is a "key employee" of the Company, as defined in the
Employment Agreement, at any time during the twelve (12) month period
immediately preceding the Termination Date.
9. Anti-Pirating of Company Business. In consideration of the payments
and benefits provided in Paragraphs 3 and 4 above, Employee acknowledges and
reaffirms his obligations in Paragraph to Paragraph 5(c) of the Employment
Agreement, whereby Employee agreed that for a period of one (1) year immediately
following the Termination Date, Employee agrees not to engage in any manner,
whether as an officer, employee, owner, partner,
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stockholder, director, consultant or otherwise - directly or indirectly - in any
business which engages or attempts to engage, directly or indirectly, in the
acquisition, development, construction, operation, management or leasing of any
multifamily residential-use development that the Company or its Affiliates owns,
operates or manages as of the Termination Date or that the Company or its
Affiliates, has in any manner taken steps to acquire, develop, construct,
operate, manage or lease (including without limitation making market surveys of
a site, talking to the owner or his agent concerning the purchase or joint
venture of a site, optioning or contracting to buy a site or discussions with
the owner or his agent regarding managing or leasing a property) during the
twelve (12) month period immediately preceding the Termination Date. The
provisions of this Paragraph 9 may be altered or waived upon a request by
Employee which is approved in writing by the Company in its sole discretion.
10. Mutual Release. Employee, on behalf of himself and his heirs,
personal representatives, successors and assigns (the "Employee Parties"),
hereby releases and forever discharges the Company and its Affiliates, and each
and every one of their respective present and former officers, directors,
agents, employees, shareholders, owners, predecessors, successors and assigns
(the "Company Parties"), of and from any and all claims, demands, actions and
causes of action of any kind ("Claims") that he has or may have by reason of
anything done or omitted to be done up to the Date of this Agreement. The Claims
released hereby include but are not limited to (i) any and all Claims related to
Employee's employment with the Company and the termination of same, including
any Claims under the Employment Agreement (ii) any and all Claims by Employee
for additional compensation or benefits other than the compensation and benefits
set forth in this Agreement, including but not limited to wages, commissions,
deferred and incentive compensation, bonuses, or other benefits of any kind,
(iii) any and all Claims relating to employment practices or policies of the
Company or any of its Affiliates, and (iv) any and all Claims arising under any
state or federal legislation (including, but not limited to, Claims under the
Employee Retirement Income Security Act, the Family Medical Leave Act, and
Claims of employment discrimination under Title VII of the 1964 Civil Rights
Act, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, or any act relating to military service). This mutual release shall not
apply to acts defined as violations of federal, state, or local criminal
statutes or ordinances.
(a) The Company, on behalf of itself and each other Company Party,
hereby releases and forever discharges each and every one of the Employee
Parties of and from any and all Claims that it or any other Company Party has or
may have by reason of anything done or omitted to be done up to the Date of this
Agreement, with the exception of claims resulting from acts involving Employee's
willful misconduct, gross negligence, and any acts defined as violations of
federal, state or local criminal statutes or ordinance. It is understood and
agreed that this release does not apply to any Claims under or arising out of
this Agreement or the Consulting Agreement or Claims by Employee for
indemnification which Employee may be entitled to from the Company or its
Affiliates, whether pursuant to that certain Indemnification Agreement between
the Company and Executive dated as of December 17, 2001 or otherwise.
11. Confidentiality of this Agreement. The parties hereto shall not at
any time, directly or indirectly, discuss with or disclose to anyone (other than
by Employee to members of his immediate family, or by the parties to their
respective attorneys, tax advisors and appropriate taxing authorities) the
financial terms of this Agreement, except as otherwise provided or
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required by law. The parties hereto agree to advise the above persons of the
requirement of confidentiality and obtain their agreement to this requirement
before making any disclosure.
12. Non-disparagement; Employment Reference. Employee agrees that he
will refrain from making negative or derogatory comments about the Company, its
Affiliates and their respective officers, employees and agents and the Company
and its Affiliates agree to refrain from making negative or derogatory comments
about Employee.
13. Provisions Relating to ADEA Release. Employee represents to the
Company that he is aware, understands and agrees that:
(a) he is voluntarily entering into and signing this Agreement;
(b) the claims waived, released and discharged in Paragraph 10 of this
Agreement include any and all claims Employee has or may have arising out of or
related to his employment with the Company or his termination, including any and
all claims under the Age Discrimination in Employment Act (the "ADEA");
(c) those claims waived, released and discharged in that Paragraph 10
do not include, and Employee is not waiving, releasing or discharging, any
claims that may arise after the Date of this Agreement;
(d) The payments and benefits described pursuant to Paragraphs 3 and 4
above include consideration that Employee was not entitled to receive before
signing this Agreement;
(e) Employee was given twenty-one (21) days within which to consider
this Agreement;
(f) Employee had and has the right to consult with an attorney
regarding this Agreement before signing it;
(g) Employee may revoke this Agreement at any time within seven (7)
days after the day he signs this Agreement, and this document will not become
effective or enforceable until the eighth day after the Date of this Agreement
(the "Effective Date of this Agreement"), on which day this Agreement will
automatically become effective and enforceable unless previously revoked within
that seven-day period; and
(h) EMPLOYEE HAS CAREFULLY READ THIS DOCUMENT, AND FULLY UNDERSTANDS
EACH AND EVERY TERM.
14. [Intentionally Omitted.]
15. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns. In the event of
a merger or other combination transaction involving the Company, the provisions
of this Agreement shall be binding upon and inure to the benefit of the Company,
if it is the surviving entity, or the entity
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that is the successor to the Company. This Agreement shall be binding upon and
inure to the benefit of Employee, his heirs, executors and administrators.
(b) Choice of Law. This Agreement shall be construed under and
controlled by the laws of the State of North Carolina.
(c) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes and cancels all prior or contemporaneous oral or written agreements
and understandings between them with respect to the subject matter hereof. The
parties acknowledge that the Indemnity Agreement is not affected or superceded
by this Agreement and remains in full force and effect.
(d) Severability. If any provision of this Agreement is
declared invalid or unenforceable as a matter of law, such invalidity or
unenforceability shall not affect or impair the validity or enforceability of
any other provision of this Agreement or the remainder of this Agreement as a
whole.
(e) Paragraph Headings; Interpretation. 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. No provision of this
Agreement is to be interpreted for or against any party because that party or
its legal representative drafted such provision.
(f) No Waiver. No waiver by any party of any breach by any
other party of any provision hereof shall be deemed to be a waiver of any other
breach hereof or a waiver of any such or other provision of this Agreement.
(g) Amendment. This Agreement shall not be modified or amended
except by a writing executed by the parties hereto, duly authorized as
applicable.
(h) Counterparts. This Agreement may be executed in
counterparts, each of which shall be considered an original and all of which,
together, shall constitute but one and the same agreement.
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IN WITNESS WHEREOF, Employee has hereunto set his hand and seal, and
the Company has caused this Agreement to be executed by its duly authorized
officer, all as of June 19, 2003.
Employee:
/S/ Xxxxxxx X. Xxxxx [SEAL]
-----------------------------
Name: Xxxxxxx X. Xxxxx
Company:
Summit Properties Inc
By: /S/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
Summit Management Company
By: /S/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
