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NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into as of January 13, 1994 by
and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive"), SUMMIT PROPERTIES INC., a Maryland
corporation, and SUMMIT MANAGEMENT COMPANY, a Maryland corporation.
WHEREAS, on the date hereof, the Company (as defined below) is entering
into a series of related transactions pursuant to which it will acquire, among
other things, substantially all of the interests of Executive and certain others
in a portfolio of multi-family rental properties located in the eastern United
States; and
WHEREAS, as a condition to the consummation of the transactions
described above, the parties hereto desire to enter into certain agreements
restricting the activities of Executive in an effort to eliminate potential
conflicts of interest that may arise in the future, to protect the Company's
legitimate business interests, i.e., the value of its business and its good
will, and for other business purpose;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein shall have the meanings
set forth below:
"Affiliate" means (i) any entity directly or indirectly cont rolling
(including without limitation an entity for which Executive serves as an
officer, director, employee, consultant or other agent), controlled by, or under
common control with Executive, and (ii) each other entity in which Executive,
directly or indirectly, owns any controlling interest or of which Executive
serves as a general partner.
"Agreement" means this Noncompetition Agreement, any amendments hereto
made in accordance with paragraph 8(d) hereof.
"Company" means (i) Summit Management Company, (ii) Summit Properties
Inc., (iii) any corporation, partnership or other business entity that is,
directly or indirectly, controlled by or under common control with Summit
Properties Inc. and (iv) their respective successors.
"Company Project" means any Multifamily Property that the Company owns,
operates or manages as of the date of Executive's termination of employment with
the Company or that the Company 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 Executive's
termination of employment with the Company.
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"Effective Date" means the date of the closing of the initial public
offering of common stock of Summit Properties Inc.
"Multifamily Property" means any real property on which multifamily
residential-use development has been constructed or is now or hereafter proposed
to be constructed (for example, and not by way of limitation, a property of the
type managed by the Company).
2. Executive's Obligations While Employed by the Company.
(a) Sole Employment. Subject to the provisions of paragraph
2(b) below, Executive agrees to devote his full time during the customary
business hours of the Company and give his best efforts to the business of the
Company and, during the period of his employment by the Company, Executive shall
not engage in any manner, whether as an officer, employee, owner, partner,
stockholder, director, consultant or otherwise -- directly or indirectly -- in
any business other than on behalf of the Company without the prior written
approval of the Board of Directors of Summit Properties Inc., and Executive
shall not accept any other employment whatsoever from any other person, firm,
corporation or entity.
(b) Exceptions. Notwithstanding the provisions of paragraph
2(a) above to the contrary, Executive may during the term of his employment by
the Company and at any time thereafter (i) acquire an interest in any
corporation, partnership, venture or other business entity so long as (A) any
such interest is a passive investment of Executive not exceeding ten percent
(10%) of the total ownership interest in such entity, (B) such interest does not
afford Executive the power to influence in any material fashion the decision
making processes of the entity in which such interest is held and (C) Executive
is not the sponsor, promoter or similar initiator of such entity and (ii)
continue (A) to serve as a general or limited partner of each of the limited
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partnerships identified on Schedule A, attached hereto and incorporated by this
reference, and as an officer, director and shareholder of each of the
corporations identified on said Schedule A, and (B) to discharge Executive's
fiduciary and contractual duties and obligations with respect thereto, even
though such limited partnerships and corporations (or any partnership of which
any such limited partnership or corporation is a general or limited partner) may
directly compete with the Company.
3. Executive's Obligations Following Termination of Employment with the
Company.
(a) Anti-Pirating of Employees. For a two (2) year period
immediately following the termination of Executive's employment with the
Company, Executive agrees not to 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" (as hereinafter defined) of the Company at any
time during the twelve (12) month period immediately preceding the termination
date of Executive's employment with the Company. For purposes of this Agreement,
"key employee" means an employee who has an annualized rate of base salary
equaling or exceeding fifty thousand dollars ($50,000).
(b) Anti-Pirating of Company Projects. For a period of one (1)
year immediately following the termination of Executive's employment with the
Company, Executive agrees not to engage in any manner, whether as an officer,
employee, owner, partner, 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 Company Project.
(c) Trade Secrets and Confidential Information. Executive
hereby agrees that he will hold in a fiduciary capacity for the benefit of the
Company, and shall not directly or indirectly use or disclose any Trade Secret,
as defined hereinafter, that Executive may have acquired during the term of his
employment by the Company for so long as such information remains a Trade
Secret. The term "Trade Secret" as used in this Agreement shall mean information
including, but not limited to, technical or nontechnical data, a formula, a
pattern, a compilation, a program, a device, a method, a technique, a drawing, a
process, financial data, financial plans, product plans, or a list of actual or
potential customers or suppliers which:
derives economic value, actual or potential from not being
generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value
from its disclosure or use; and is the subject of reasonable
efforts by the Company to maintain its secrecy.
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In addition to the foregoing and not in limitation thereof, Executive
agrees that during the period of his employment by the Company and the Covenant
Period, he will hold in a fiduciary capacity for the benefit of the Company and
shall not directly or indirectly use or disclose, any Confidential or
Proprietary Information, as defined hereinafter, that Executive may have
acquired (whether or not developed or compiled by Executive and whether or not
Executive was authorized to have access to such Information) during the term of,
in the course of or as a result of his employment by the Company. The term
"Confidential or Proprietary Information" as used in this Agreement means any
secret, confidential or proprietary information of the Company not otherwise
included in the definition of "Trade Secret" above. The term "Confidential and
Proprietary Information" does not include information that has become generally
available to the public by the act of one who has the right to disclose such
information without violating any right of the Company.
(e) Exceptions. Notwithstanding any provision of paragraphs
3(b) or 3(c) to the contrary, Executive shall not be restricted at any time
after his termination of employment with the Company from engaging in any
activities for which Executive would not be restricted from performing during
the term of his employment with the Company as set forth in paragraph 2(b)
above.
4. Reasonable and Necessary Restrictions. Executive acknowledges that
the restrictions, prohibitions and other provisions hereof, including without
limitation the various periods of restrictions set forth in paragraphs 3(a),
3(b) and 3(c), are reasonable, fair and equitable in scope, terms and duration,
are necessary to protect the legitimate business interests of the Company, and
are a material inducement to the Company to enter into the transactions
contemplated in the recitals hereto. Executive covenants that he will not
challenge the enforceability of this Agreement nor will he raise any equitable
defense to its enforcement.
5. Restrictions In Addition to Employment Agreement. Executive
acknowledges that the restrictions, prohibitions and other provisions hereof
shall be in addition to and not in substitution of the restrictions,
prohibitions and other provisions of the Employment Agreement, as such agreement
shall be amended and supplemented from time to time.
6. Specific Performance. Executive acknowledges that the obligations
undertaken by him pursuant to this Agreement are unique and that the Company
likely will have no adequate remedy at law if Executive shall fail to perform
any of his obligations hereunder, and Executive therefore confirms that the
Company's right to specific performance of the terms of this Agreement is
essential to protect the rights and interests of the Company. Accordingly, in
addition to any other remedies that the Company may have at law or in equity,
the Company shall have the right to have all obligations, covenants, agreements
and other provisions of this Agreement specifically performed by Executive, and
the Company shall have the right to obtain preliminary and permanent injunctive
relief to secure specific performance and to prevent a breach or contemplated
breach of this Agreement by Executive, and Executive submits to the jurisdiction
of the courts of the State of North Carolina for this purpose.
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7. Operations of Affiliates. Executive agrees that he will refrain from
(i) authorizing any Affiliate to perform or (ii) assisting in any manner any
Affiliate in performing any activities that would be prohibited by the terms of
this Agreement if they were performed by Executive. Notwithstanding anything to
the contrary contained in this paragraph 7 (or in any other paragraph of this
Agreement), Executive shall not be required by the terms of this Agreement to
violate any fiduciary or contractual duty he owes as a director or officer of a
corporation, as a partner of a partnership or as a trustee of a trust, which
position he holds not in violation of this Agreement or the Employment
Agreement.
8. Miscellaneous Provisions.
(a) Binding Effect. Subject to any provisions hereof
restricting assignment, all covenants and agreements in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors, assigns, heirs, and personal representatives. None of the
parties hereto may assign any of its rights under this Agreement or attempt to
have any other person or entity assume any of its obligations hereunder.
(b) Severability. If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend the limit
of validity prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provision contained
in this Agreement operates or would operate to invalidate this Agreement, in
whole or in part, then such clause or provision only shall be held ineffective,
as though not herein contained, and the remain-der of this Agreement shall
remain operative and in full force and effect.
(c) Governing Law. This Agreement, the rights and obligations
of the parties hereto, and any claims or disputes relating thereto shall be
governed by and construed in accordance with the laws of the State of North
Carolina, not including the choice-of-law rules thereof.
(d) 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 any 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 such waiver or
consent shall not be construed as a waiver of any other provision or as a
consent with respect to any similar instance or circumstance.
(e) Headings. Paragraph and subparagraph headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
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(f) Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.
(g) Arbitration. Any dispute or controversy arising out of or
relating to this Agreement shall be settled finally and exclusively by
arbitration in Charlotte, North Carolina in accordance with the rules of the
American Arbitration Association then in effect. Such arbitration shall be
conducted by an arbitrators appointed by the American Arbitration Association in
accordance with its rules and any finding by such arbitrators shall be final and
binding upon the parties. Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction thereof, and the parties consent
to the jurisdiction of the courts of the State of North Carolina for this
purpose. Nothing contained in this paragraph 8(g) shall be construed to preclude
the Company from obtaining injunctive or other equitable relief to secure
specific performance or to otherwise prevent a breach or contemplated breach of
this Agreement by Executive as provided in paragraph 6 hereof.
(h) Execution in Counterparts. This Agreement may be executed
in two or more counterparts, none of which need contain the signatures of all
parties hereto and each of which shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.
SUMMIT PROPERTIES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SUMMIT MANAGEMENT COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [SEAL]
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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SCHEDULE A
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Sabal Walk/Summit L.P. and Wekiva/Summit L.P.
Summit/▇▇▇▇▇▇▇ Partners
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