|
|
Maryland
|
56-1857807
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
|
|
309 E. Morehead Street
|
|
Suite 200
|
|
Charlotte, North Carolina
|
28202
|
(Address of principal executive offices)
|
(Zip code)
|
|
|
|
||
|
||
|
|
Page
|
|
||
|
|
|
|
|
|
PART I
|
Financial Information
|
|
|
|
|
Item 1
|
Financial Statements
|
|
|
Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003 (Unaudited)
|
3
|
|
Consolidated Statements of Earnings for the three and six months ended June 30, 2004
and 2003 (Unaudited)
|
4
|
|
Consolidated Statement of Stockholders Equity for the six months ended June 30,
2004 (Unaudited)
|
5
|
|
Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and
2003 (As Revised)(Unaudited)
|
6
|
|
Notes to Unaudited Consolidated Financial Statements
|
7
|
Item 2
|
Managements Discussion and Analysis of Financial Condition and Results of Operations
|
17
|
Item 3
|
Quantitative and Qualitative Disclosures about Market Risk
|
32
|
Item 4
|
Controls and Procedures
|
32
|
|
|
|
PART II
|
Other Information
|
|
|
|
|
Item 1
|
Legal Proceedings
|
33
|
Item 2
|
Changes in Securities
|
34
|
Item 3
|
Defaults Upon Senior Securities
|
34
|
Item 4
|
Submission of Matters to a Vote of Security Holders
|
34
|
Item 5
|
Other Information
|
34
|
Item 6
|
Exhibits and Reports on Form 8-K
|
34
|
|
Signatures
|
36
|
|
|
|
2 | ||
|
||
|
June 30,
|
December 31,
|
|||||
|
2004
|
2003
|
|||||
|
|
||||||
ASSETS
|
|
|
|||||
Real estate assets:
|
|
|
|||||
Land and land improvements
|
$
|
218,343
|
$
|
191,665
|
|||
Buildings and improvements
|
962,777
|
886,264
|
|||||
Furniture, fixtures and equipment
|
78,080
|
69,258
|
|||||
|
|
||||||
Total operating real estate assets
|
1,259,200
|
1,147,187
|
|||||
Less: Accumulated depreciation
|
(149,874
|
)
|
(131,301
|
)
|
|||
|
|
||||||
Net operating real estate assets
|
1,109,326
|
1,015,886
|
|||||
Net real estate assets - assets held for sale
|
79,738
|
92,971
|
|||||
Construction in progress
|
215,726
|
210,313
|
|||||
|
|
||||||
Net real estate assets
|
1,404,790
|
1,319,170
|
|||||
Cash and cash equivalents
|
2,380
|
2,687
|
|||||
Restricted cash
|
1,458
|
1,249
|
|||||
Investments in real estate joint ventures
|
2,923
|
3,096
|
|||||
Deferred financing costs, net of accumulated amortization
|
|
|
|||||
of $7,385 in 2004 and $7,108 in 2003
|
8,156
|
7,694
|
|||||
Other assets
|
14,584
|
14,179
|
|||||
Other assets - assets held for sale
|
174
|
159
|
|||||
|
|
||||||
Total assets
|
$
|
1,434,465
|
$
|
1,348,234
|
|||
|
|
||||||
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|||||
Liabilities:
|
|
|
|||||
Notes payable
|
$
|
804,986
|
$
|
715,807
|
|||
Accrued interest payable
|
4,911
|
4,558
|
|||||
Accounts payable and accrued expenses
|
31,314
|
29,218
|
|||||
Dividends and distributions payable
|
11,748
|
11,724
|
|||||
Security deposits and prepaid rents
|
3,356
|
2,838
|
|||||
Notes payable and other liabilities - assets held for sale
|
10,431
|
10,698
|
|||||
|
|
||||||
Total liabilities
|
866,746
|
774,843
|
|||||
|
|
||||||
|
|
|
|||||
Commitments and contingencies
|
|
|
|||||
Minority interest of common unitholders in Operating Partnership
|
55,783
|
57,324
|
|||||
Minority interest of preferred unitholders in Operating Partnership
|
53,544
|
53,544
|
|||||
|
|
|
|||||
Stockholders' equity:
|
|
|
|||||
Preferred stock, $0.01 par value - 25,000,000 shares authorized,
|
|
|
|||||
no shares issued and outstanding
|
-
|
-
|
|||||
Common stock, $0.01 par value - 100,000,000 shares authorized,
|
|
|
|||||
31,461,058 shares issued and outstanding in 2004 and
|
|
|
|||||
31,335,140 shares issued and outstanding in 2003
|
315
|
313
|
|||||
Additional paid-in capital
|
516,961
|
514,578
|
|||||
Accumulated deficit
|
(41,648
|
)
|
(34,886
|
)
|
|||
Unamortized restricted stock compensation
|
(528
|
)
|
(129
|
)
|
|||
Employee notes receivable
|
(16,708
|
)
|
(17,353
|
)
|
|||
Total stockholders' equity
|
458,392
|
462,523
|
|||||
|
|
||||||
|
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
1,434,465
|
$
|
1,348,234
|
|||
|
|
3 | ||
|
||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|||||||||
Rental
|
$
|
33,010
|
$
|
27,052
|
$
|
65,007
|
$
|
52,880
|
|||||
Other property revenue
|
2,852
|
2,089
|
5,359
|
3,817
|
|||||||||
Interest income
|
263
|
549
|
498
|
1,079
|
|||||||||
Management fees - third party communities
|
146
|
156
|
293
|
326
|
|||||||||
Other income
|
148
|
148
|
282
|
620
|
|||||||||
Gain and interest income on compensation plans
|
138
|
50
|
418
|
238
|
|||||||||
|
|
|
|
||||||||||
Total revenues
|
36,557
|
30,044
|
71,857
|
58,960
|
|||||||||
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|||||||||
Property operating and maintenance (exclusive of items listed below)
|
7,306
|
6,228
|
14,568
|
11,957
|
|||||||||
Real estate taxes and insurance
|
4,980
|
3,836
|
10,051
|
7,321
|
|||||||||
Depreciation and amortization
|
10,763
|
8,036
|
20,992
|
15,340
|
|||||||||
Interest
|
7,578
|
6,450
|
14,496
|
12,821
|
|||||||||
Deferred financing cost amortization
|
338
|
333
|
662
|
713
|
|||||||||
General and administrative
|
2,112
|
1,765
|
4,002
|
3,322
|
|||||||||
Property management - owned communities
|
1,337
|
1,504
|
2,831
|
2,824
|
|||||||||
Property management - third party communities
|
162
|
182
|
343
|
342
|
|||||||||
Liability adjustment and expense on compensation plans
|
138
|
50
|
418
|
238
|
|||||||||
|
|
|
|
||||||||||
Total expenses
|
34,714
|
28,384
|
68,363
|
54,878
|
|||||||||
|
|
|
|
||||||||||
Income from continuing operations before loss on unconsolidated
|
|
|
|
|
|||||||||
real estate joint ventures, minority interest of common
|
|
|
|
|
|||||||||
unitholders in Operating Partnership and dividends to preferred
|
|
|
|
|
|||||||||
unitholders in Operating Partnership
|
1,843
|
1,660
|
3,494
|
4,082
|
|||||||||
Loss on unconsolidated real estate joint ventures
|
(80
|
)
|
(75
|
)
|
(173
|
)
|
(164
|
)
|
|||||
Minority interest of common unitholders in Operating Partnership
|
(54
|
)
|
176
|
(88
|
)
|
265
|
|||||||
Dividends to preferred unitholders in Operating Partnership
|
(1,203
|
)
|
(3,105
|
)
|
(2,406
|
)
|
(6,210
|
)
|
|||||
|
|
|
|
||||||||||
Income (loss) from continuing operations
|
506
|
(1,344
|
)
|
827
|
(2,027
|
)
|
|||||||
|
|
|
|
|
|||||||||
Income from discontinued operations
|
2,914
|
3,193
|
5,060
|
6,694
|
|||||||||
Gain on disposition of discontinued operations
|
9,993
|
3,122
|
10,040
|
6,258
|
|||||||||
Loss from early extinguishment of debt
|
-
|
(1,508
|
)
|
-
|
(1,508
|
)
|
|||||||
Minority interest of common unitholders in Operating Partnership
|
(1,241
|
)
|
(558
|
)
|
(1,456
|
)
|
(1,323
|
)
|
|||||
|
|
|
|
||||||||||
Income from discontinued operations, net of minority interest
|
11,666
|
4,249
|
13,644
|
10,121
|
|||||||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Net income
|
$
|
12,172
|
$
|
2,905
|
$
|
14,471
|
$
|
8,094
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Per share data basic:
|
|
|
|
|
|||||||||
Income (loss) from continuing operations
|
$
|
0.02
|
$
|
(0.05
|
)
|
$
|
0.03
|
$
|
(0.07
|
)
|
|||
Income from discontinued operations
|
0.37
|
0.16
|
0.43
|
0.37
|
|||||||||
|
|
|
|
||||||||||
Net income
|
$
|
0.39
|
$
|
0.11
|
$
|
0.46
|
$
|
0.30
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Per share data - diluted:
|
|
|
|
|
|||||||||
Income (loss) from continuing operations
|
$
|
0.02
|
$
|
(0.05
|
)
|
$
|
0.03
|
$
|
(0.07
|
)
|
|||
Income from discontinued operations
|
0.37
|
0.16
|
0.43
|
0.37
|
|||||||||
|
|
|
|
||||||||||
Net income
|
$
|
0.38
|
$
|
0.11
|
$
|
0.46
|
$
|
0.30
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Dividends declared
|
$
|
0.34
|
$
|
0.34
|
$
|
0.68
|
$
|
0.68
|
|||||
|
|
|
|
||||||||||
Weighted average shares - basic
|
31,459,095
|
26,892,289
|
31,425,268
|
27,050,846
|
|||||||||
|
|
|
|
||||||||||
Weighted average shares - diluted
|
31,681,617
|
26,892,289
|
31,649,300
|
27,050,846
|
|||||||||
|
|
|
|
4 | ||
|
||
|
|
|
|
Unamortized
|
|
|
|||||||||||||
|
|
Additional
|
|
Restricted
|
Employee
|
|
|||||||||||||
|
Common
|
Paid-in
|
Accumulated
|
Stock
|
Notes
|
|
|||||||||||||
|
Stock
|
Capital
|
Deficit
|
Compensation
|
Receivable
|
Total
|
|||||||||||||
|
|
|
|
|
|
||||||||||||||
Balance, December 31, 2003
|
$
|
313
|
$
|
514,578
|
$
|
(34,886
|
)
|
$
|
(129
|
)
|
$
|
(17,353
|
)
|
$
|
462,523
|
||||
Dividends
|
-
|
-
|
(21,233
|
)
|
-
|
-
|
(21,233
|
)
|
|||||||||||
Proceeds from dividend reinvestment and
|
|
|
|
|
|
|
|||||||||||||
stock purchase plans
|
-
|
90
|
-
|
-
|
-
|
90
|
|||||||||||||
Conversion of common units to shares
|
1
|
823
|
-
|
-
|
-
|
824
|
|||||||||||||
Exercise of stock options
|
-
|
384
|
-
|
-
|
-
|
384
|
|||||||||||||
Issuance of stock grants
|
1
|
1,784
|
-
|
(605
|
)
|
-
|
1,180
|
||||||||||||
Netdown of stock grants and stock options
|
-
|
(622
|
)
|
-
|
-
|
-
|
(622
|
)
|
|||||||||||
Amortization of restricted stock grants
|
-
|
-
|
-
|
206
|
-
|
206
|
|||||||||||||
Adjustment for minority interest of common
|
|
|
|
|
|
|
|||||||||||||
unitholders in Operating Partnership
|
-
|
(76
|
)
|
-
|
-
|
-
|
(76
|
)
|
|||||||||||
Interest earned on employee notes receivable
|
-
|
-
|
-
|
-
|
(519
|
)
|
(519
|
)
|
|||||||||||
Repayment of employee notes receivable
|
-
|
-
|
-
|
-
|
1,164
|
1,164
|
|||||||||||||
Net income
|
-
|
-
|
14,471
|
-
|
-
|
14,471
|
|||||||||||||
|
|
|
|
|
|
||||||||||||||
Balance, June 30, 2004
|
$
|
315
|
$
|
516,961
|
$
|
(41,648
|
)
|
$
|
(528
|
)
|
$
|
(16,708
|
)
|
$
|
458,392
|
||||
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
5 | ||
|
||
|
Six Months Ended June 30,
|
||||||
|
|||||||
|
2004
|
2003
|
|||||
|
|
||||||
(as revised, see |
|||||||
|
|
|
Note 14) |
||||
Cash flows from operating activities:
|
|
|
|||||
Net income
|
$
|
14,471
|
$
|
8,094
|
|||
Adjustments to reconcile net income to net cash
|
|
|
|||||
provided by operating activities:
|
|
|
|||||
Minority interest of common unitholders in Operating Partnership
|
1,544
|
1,058
|
|||||
Loss on real estate joint ventures
|
173
|
164
|
|||||
Gain on sale of real estate assets - discontinued operations
|
(10,040
|
)
|
(6,258
|
)
|
|||
Loss on early extinguishment of debt
|
-
|
1,508
|
|||||
Depreciation and amortization
|
23,537
|
20,957
|
|||||
Amortization of deferred settlement on interest rate swap
|
-
|
(503
|
)
|
||||
Issuance of unrestricted stock grants
|
1,150
|
660
|
|||||
(Increase) decrease in restricted cash
|
(225
|
)
|
759
|
||||
Increase in other assets
|
(745
|
)
|
(252)
|
||||
Increase (decrease) in accrued interest payable
|
353
|
(44
|
)
|
||||
Increase in accounts payable and accrued expenses
|
7,182
|
2,447
|
|
||||
Increase in security deposits and prepaid rents
|
471
|
118
|
|||||
|
|
||||||
Net cash provided by operating activities
|
37,871
|
28,708
|
|||||
|
|
||||||
|
|
|
|||||
Cash flows from investing activities:
|
|
|
|||||
Construction of real estate assets and land acquisitions
|
(54,770
|
)
|
(42,207
|
)
|
|||
Acquisition of communities
|
(43,253
|
)
|
(59,427
|
)
|
|||
Proceeds from sale of real estate assets, net
|
22,190
|
85,827
|
|||||
Capitalized interest
|
(5,045
|
)
|
(5,433
|
)
|
|||
Investment in real estate joint venture
|
-
|
(10,403
|
)
|
||||
Contribution from historic tax credit venture partner
|
-
|
6,657
|
|||||
Recurring capital expenditures
|
(3,091
|
)
|
(2,557
|
)
|
|||
Non-recurring capital expenditures
|
(1,101
|
)
|
(1,141
|
)
|
|||
Corporate and other asset additions and office tenant improvements
|
(664
|
)
|
(191
|
)
|
|||
Decrease in notes receivable
|
-
|
2,169
|
|||||
|
|
||||||
Net cash used in investing activities
|
(85,734
|
)
|
(26,705
|
)
|
|||
|
|
||||||
|
|
|
|||||
Cash flows from financing activities:
|
|
|
|||||
Net borrowings on (repayments of) line of credit
|
62,000
|
(34,000
|
)
|
||||
Proceeds from issuance of mortgage debt
|
44,140
|
70,940
|
|||||
Proceeds from construction loan
|
1,956
|
-
|
|||||
Repayment of construction loan
|
(35,300
|
)
|
-
|
||||
Repayments of mortgage debt
|
(764
|
)
|
(1,852
|
)
|
|||
Repayments of tax-exempt bonds
|
(220
|
)
|
(220
|
)
|
|||
Payment of deferred financing costs
|
(1,238
|
)
|
(1,214
|
)
|
|||
Payment for early extinguishment of debt
|
-
|
(1,508
|
)
|
||||
Net proceeds from dividend reinvestment and stock purchase plans
|
377
|
957
|
|||||
Dividends and distributions to unitholders
|
(23,547
|
)
|
(20,752
|
)
|
|||
Repurchase of common stock
|
-
|
(15,193
|
)
|
||||
Netdown of restricted and unrestricted stock grants
|
(493
|
)
|
(460
|
)
|
|||
Repayments of employee notes receivable
|
645
|
1,909
|
|||||
|
|
||||||
Net cash provided by (used in) financing activities
|
47,556
|
(1,393
|
)
|
||||
|
|
||||||
|
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(307
|
)
|
610
|
||||
Cash and cash equivalents, beginning of year
|
2,687
|
2,584
|
|||||
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
2,380
|
$
|
3,194
|
|||
|
|
||||||
|
|
|
|||||
Supplemental disclosure of cash flow information:
|
|
|
|||||
Cash paid for interest, net of capitalized interest
|
$
|
14,266
|
$
|
15,468
|
|||
|
|
6 | ||
|
||
7 | ||
|
||
8 | ||
|
||
|
Balance Sheets
|
||||||
|
|||||||
|
June 30,
|
December 31,
|
|||||
|
2004
|
2003
|
|||||
|
|
||||||
Real estate assets, net
|
$
|
68,578
|
$
|
69,795
|
|||
Cash and cash equivalents
|
1,187
|
690
|
|||||
Other assets
|
335
|
312
|
|||||
|
|
||||||
Total assets
|
$
|
70,100
|
$
|
70,797
|
|||
|
|
||||||
|
|
|
|||||
Mortgages payable
|
$
|
57,417
|
$
|
57,870
|
|||
Other liabilities
|
994
|
544
|
|||||
Partners' capital
|
11,689
|
12,383
|
|||||
|
|
||||||
Total liabilities and partners' capital
|
$
|
70,100
|
$
|
70,797
|
|||
|
|
|
Statements of Operations
|
||||||||||||
|
|||||||||||||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Revenues
|
$
|
2,326
|
$
|
2,392
|
$
|
4,624
|
$
|
4,761
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Expenses:
|
|
|
|
|
|||||||||
Property Operating
|
914
|
961
|
1,853
|
1,914
|
|||||||||
Depreciation and amortization
|
770
|
770
|
1,535
|
1,535
|
|||||||||
Interest
|
963
|
978
|
1,930
|
1,959
|
|||||||||
Total expenses
|
2,647
|
2,709
|
5,318
|
5,408
|
|||||||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Net loss
|
$
|
(321
|
)
|
$
|
(317
|
)
|
$
|
(694
|
)
|
$
|
(647
|
)
|
|
|
|
|
|
9 | ||
|
||
10 | ||
|
||
|
2004
|
2003
|
|||||
|
|
||||||
Minority interest of common unitholders in Operating Partnership
|
$
|
48,772
|
$
|
50,255
|
|||
Minority interest in four operating communities (1)
|
7,011
|
7,069
|
|||||
|
|
||||||
|
$
|
55,783
|
$
|
57,324
|
|||
|
|
11 | ||
|
||
Community
|
Location
|
Summit Belmont
|
Fredericksburg, Virginia
|
Summit Crossing
|
Charlotte, North Carolina
|
Summit Fair Oaks
|
Fairfax, Virginia
|
Summit Glen
|
Atlanta, Georgia
|
Summit Highland
|
Raleigh, North Carolina
|
Summit Norcroft
|
Charlotte, North Carolina
|
Summit Reston
|
Reston, Virginia
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||
|
|
||||||||||||
2004
|
2003
|
2004
|
2003
|
||||||||||
|
|
|
|
||||||||||
Property revenues: | |||||||||||||
Rental revenues
|
$
|
4,470
|
$
|
10,163
|
$
|
9,280
|
$
|
21,261
|
|||||
Other property revenue
|
345
|
701
|
661
|
1,466
|
|||||||||
|
|
|
|
||||||||||
Total property revenues
|
4,815
|
10,864
|
9,941
|
22,727
|
|||||||||
Property operating expenses
|
1,506
|
3,927
|
3,251
|
8,382
|
|||||||||
Depreciation
|
330
|
2,515
|
1,502
|
5,044
|
|||||||||
Interest and amortization
|
65
|
1,229
|
128
|
2,607
|
|||||||||
|
|
|
|
||||||||||
Income from discontinued operations before gain on disposition of
|
|
|
|
|
|||||||||
discontinued operations, loss on early extinguishment of debt
|
|
|
|
|
|||||||||
and minority interest of discontinued operations
|
2,914
|
3,193
|
5,060
|
6,694
|
|||||||||
Gain on disposition of discontinued operations
|
9,993
|
3,122
|
10,040
|
6,258
|
|||||||||
Loss on early extinguishment of debt
|
-
|
(1,508
|
)
|
-
|
(1,508
|
)
|
|||||||
|
|
|
|
||||||||||
Income from discontinued operations before minority interest
|
12,907
|
4,807
|
15,100
|
11,444
|
|||||||||
Minority interest of discontinued operations
|
(1,241
|
)
|
(558
|
)
|
(1,456
|
)
|
(1,323
|
)
|
|||||
|
|
|
|
||||||||||
Income from discontinued operations, net of minority interest
|
$
|
11,666
|
$
|
4,249
|
$
|
13,644
|
$
|
10,121
|
|||||
|
|
|
|
12 | ||
|
||
13 | ||
|
||
14 | ||
|
||
A.
|
We accrued dividends and distributions payable of $11.8 million as of June 30, 2004 and $11.7 million as of December 31, 2003.
|
B.
|
We granted 40,063 shares of unrestricted stock valued at $881,000 during the six months ended June 30, 2004. There were 14,760 shares of stock valued at $325,000 surrendered to satisfy the income tax liability of grantees during the same period.
|
C.
|
We granted 33,342 shares of unrestricted stock valued at $660,000 during the six months ended June 30, 2003. There were 25,361 shares of stock valued at $460,000 surrendered to satisfy the income tax liability of grantees during the same period.
|
15 | ||
|
||
D.
|
On January 2, 2004, we issued 27,982 shares of restricted stock valued at $658,000 pursuant to our 2001 Performance Stock Award Plan. One-half of these shares, valued at $329,000, vested on January 2, 2004. The remaining shares will vest in two equal annual installments on January 2, 2005 and January 2, 2006.
|
E.
|
We issued 56,456 shares of common stock in exchange for 56,456 common units during the six months ended June 30, 2004. The value of these shares of common stock was $823,000.
|
F.
|
On May 27, 2004, we acquired Summit Stonecrest by paying $9.6 million in cash and assuming a $19.7 million mortgage (which had a fair market value of $18.4 million on the date of purchase).
|
|
|
|||
Net cash provided by operating activities, as previously reported
|
$
|
22,666
|
||
Revisions related to certain real estate cash outflows
|
5,703
|
|||
|
||||
Net cash provided by operating activities, after revisions related to certain real estate cash outflows
|
28,369
|
|||
Consolidation of the Management Company
|
339
|
|||
|
||||
Net cash provided by operating activities, as revised
|
$
|
28,708
|
||
|
||||
|
|
|||
Net cash used in investing activities, as previously reported
|
$
|
(20,966
|
)
|
|
Revisions related to certain real estate cash outflows
|
(5,703
|
)
|
||
|
||||
Net cash used in investing activities, after revisions related to certain real estate cash outflows
|
(26,669
|
)
|
||
Consolidation of the Management Company
|
(36
|
)
|
||
|
||||
Net cash used in investing activities, as revised
|
$
|
(26,705
|
)
|
|
|
16 | ||
|
||
17 | ||
|
||
18 | ||
|
||
|
|
2004
|
|
2003
|
|
|
|||
Apartment homes at January 1 of the year
|
|
14,554
|
|
15,428
|
Developments which began rental operations during the period
|
|
743
|
|
502
|
Apartment homes acquired during the period
|
|
605
|
|
405
|
Sale of apartment homes
|
|
(362)
|
|
(490)
|
|
|
|||
Apartment homes at June 30 of the year
|
|
15,540
|
|
15,845
|
|
|
19 | ||
|
||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||
|
|
||||||||||||||||||
|
2004
|
2003
|
% Change
|
2004
|
2003
|
% Change
|
|||||||||||||
|
|
|
|
|
|
||||||||||||||
Property revenue:
|
|
|
|
|
|
|
|||||||||||||
Same-property communities
|
$
|
28,900
|
$
|
28,510
|
1.4
|
%
|
$
|
57,490
|
$
|
57,067
|
0.7
|
%
|
|||||||
Acquisition communities
|
4,341
|
894
|
385.6
|
%
|
8,113
|
894
|
807.5
|
%
|
|||||||||||
Stabilized development communities
|
6,235
|
4,259
|
46.4
|
%
|
12,434
|
7,737
|
60.7
|
%
|
|||||||||||
Lease-up communities
|
893
|
-
|
100.0
|
%
|
1,328
|
-
|
100.0
|
%
|
|||||||||||
Disposition communities
|
308
|
6,342
|
-95.1
|
%
|
942
|
13,728
|
-93.1
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
Total property revenue (1)
|
40,677
|
40,005
|
1.7
|
%
|
80,307
|
79,426
|
1.1
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Property operating and maintenance expense:
|
|
|
|
|
|
|
|||||||||||||
Same-property communities
|
9,020
|
9,251
|
-2.5
|
%
|
18,635
|
18,584
|
0.3
|
%
|
|||||||||||
Acquisition communities
|
1,632
|
391
|
317.4
|
%
|
3,021
|
392
|
670.7
|
%
|
|||||||||||
Stabilized development communities
|
2,397
|
1,796
|
33.5
|
%
|
4,959
|
3,143
|
57.8
|
%
|
|||||||||||
Lease-up communities
|
596
|
12
|
4866.7
|
%
|
857
|
14
|
6021.4
|
%
|
|||||||||||
Disposition communities
|
147
|
2,541
|
-94.2
|
%
|
398
|
5,529
|
-92.8
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
Total property operating and maintenance
expense (1)
|
13,792
|
13,991
|
-1.4
|
%
|
27,870
|
27,662
|
0.8
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Property operating income:
|
|
|
|
|
|
|
|||||||||||||
Same-property communities
|
19,880
|
19,259
|
3.2
|
%
|
38,855
|
38,483
|
1.0
|
%
|
|||||||||||
Acquisition communities
|
2,709
|
503
|
438.6
|
%
|
5,092
|
502
|
914.3
|
%
|
|||||||||||
Stabilized development communities
|
3,838
|
2,463
|
55.8
|
%
|
7,475
|
4,594
|
62.7
|
%
|
|||||||||||
Lease-up communities
|
297
|
(12
|
)
|
2575.0
|
%
|
471
|
(14
|
)
|
3464.3
|
%
|
|||||||||
Disposition communities
|
161
|
3,801
|
-95.8
|
%
|
544
|
8,199
|
-93.4
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
Property operating income
|
26,885
|
26,014
|
3.3
|
%
|
52,437
|
51,764
|
1.3
|
%
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||||
Interest and other income
|
411
|
697
|
-41.0
|
%
|
780
|
1,699
|
-54.1
|
%
|
|||||||||||
Management fees - third party communities
|
146
|
156
|
-6.4
|
%
|
293
|
326
|
-10.1
|
%
|
|||||||||||
Depreciation and amortization expense (continuing
|
|
|
|
|
|
|
|||||||||||||
and discontinued operations)
|
(11,092
|
)
|
(10,551
|
)
|
5.1
|
%
|
(22,492
|
)
|
(20,384
|
)
|
10.3
|
%
|
|||||||
Interest and amortization of deferred financing costs
|
|
|
|
|
|
|
|||||||||||||
(continuing and discontinued operations)
|
(7,982
|
)
|
(8,012
|
)
|
-0.4
|
%
|
(15,288
|
)
|
(16,141
|
)
|
-5.3
|
%
|
|||||||
General and administrative expense
|
(2,112
|
)
|
(1,765
|
)
|
19.7
|
%
|
(4,002
|
)
|
(3,322
|
)
|
20.5
|
%
|
|||||||
Property management - owned communities
|
(1,337
|
)
|
(1,504
|
)
|
-11.1
|
%
|
(2,831
|
)
|
(2,824
|
)
|
0.2
|
%
|
|||||||
Property management - third party communities
|
(162
|
)
|
(182
|
)
|
-11.0
|
%
|
(343
|
)
|
(342
|
)
|
0.3
|
%
|
|||||||
Loss on unconsolidated real estate joint ventures
|
(80
|
)
|
(75
|
)
|
6.7
|
%
|
(173
|
)
|
(164
|
)
|
5.5
|
%
|
|||||||
Gain on sale of real estate assets (continuing and
|
|
|
|
|
|
|
|||||||||||||
discontinued operations)
|
9,993
|
3,122
|
220.1
|
%
|
10,040
|
6,258
|
60.4
|
%
|
|||||||||||
Minority interest of common unitholders
|
|
|
|
|
|
|
|||||||||||||
in Operating Partnership
|
(1,295
|
)
|
(382
|
)
|
239.0
|
%
|
(1,544
|
)
|
(1,058
|
)
|
45.9
|
%
|
|||||||
Dividends to preferred unitholders in
|
|
|
|
|
|
|
|||||||||||||
Operating Partnership
|
(1,203
|
)
|
(3,105
|
)
|
-61.3
|
%
|
(2,406
|
)
|
(6,210
|
)
|
-61.3
|
%
|
|||||||
Loss on early extinguishment of debt
|
-
|
(1,508
|
)
|
-100.0
|
%
|
-
|
(1,508
|
)
|
-100.0
|
%
|
|||||||||
|
|
|
|
|
|
||||||||||||||
Net income
|
$
|
12,172
|
$
|
2,905
|
319.0
|
%
|
$
|
14,471
|
$
|
8,094
|
78.8
|
%
|
|||||||
|
|
|
|
|
|
20 | ||
|
||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||
|
|
||||||||||||||||||
|
2004
|
2003
|
% Change
|
2004
|
2003
|
% Change
|
|||||||||||||
|
|
|
|
|
|
||||||||||||||
Property revenues:
|
|
|
|
|
|
|
|||||||||||||
Rental
|
$
|
26,649
|
$
|
26,530
|
0.4
|
%
|
$
|
53,186
|
$
|
53,330
|
-0.3
|
%
|
|||||||
Other
|
2,251
|
1,980
|
13.7
|
%
|
4,304
|
3,737
|
15.2
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
Total property revenues
|
28,900
|
28,510
|
1.4
|
%
|
57,490
|
57,067
|
0.7
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Property operating expenses:
|
|
|
|
|
|
|
|||||||||||||
Personnel
|
2,299
|
2,289
|
0.4
|
%
|
4,814
|
4,596
|
4.7
|
%
|
|||||||||||
Advertising and promotion
|
374
|
337
|
11.0
|
%
|
762
|
681
|
11.9
|
%
|
|||||||||||
Utilities
|
1,390
|
1,317
|
5.5
|
%
|
2,885
|
2,808
|
2.7
|
%
|
|||||||||||
Building repairs and maintenance
|
1,047
|
1,341
|
-21.9
|
%
|
2,068
|
2,602
|
-20.5
|
%
|
|||||||||||
Real estate taxes and insurance
|
3,510
|
3,551
|
-1.2
|
%
|
7,312
|
7,071
|
3.4
|
%
|
|||||||||||
Other operating expense
|
400
|
416
|
-3.8
|
%
|
794
|
826
|
-3.9
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
Total property operating expense
|
9,020
|
9,251
|
-2.5
|
%
|
18,635
|
18,584
|
0.3
|
%
|
|||||||||||
|
|
|
|
|
|
||||||||||||||
Property operating income
|
$
|
19,880
|
$
|
19,259
|
3.2
|
%
|
$
|
38,855
|
$
|
38,483
|
1.0
|
%
|
|||||||
|
|
|
|
|
|
||||||||||||||
Average physical occupancy
|
94.2
|
%
|
93.8
|
%
|
0.4
|
%
|
94.3
|
%
|
94.2
|
%
|
0.1
|
%
|
|||||||
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Average rent per occupied
apartment home
|
$
|
884
|
$
|
893
|
-1.0
|
%
|
$
|
882
|
$
|
895
|
-1.5
|
%
|
|||||||
|
|
|
|
|
|
21 | ||
|
||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
Property revenues:
|
|
|
|
|
|||||||||
Rental
|
$
|
4,100
|
$
|
842
|
$
|
7,681
|
$
|
842
|
|||||
Other
|
241
|
52
|
432
|
52
|
|||||||||
|
|
|
|
||||||||||
Total property revenues
|
4,341
|
894
|
8,113
|
894
|
|||||||||
Property operating expenses
|
1,632
|
391
|
3,021
|
392
|
|||||||||
|
|
|
|
||||||||||
Property operating income
|
$
|
2,709
|
$
|
503
|
$
|
5,092
|
$
|
502
|
|||||
|
|
|
|
||||||||||
Average physical occupancy
|
94.6
|
%
|
78.0
|
%
|
93.7
|
%
|
67.1
|
%
|
|||||
|
|
|
|
||||||||||
Average rent per occupied apartment home
|
$
|
1,200
|
$
|
1,208
|
$
|
1,197
|
$
|
1,208
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Number of apartment homes
|
1,700
|
405
|
1,700
|
405
|
|||||||||
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
Property revenues:
|
|
|
|
|
|||||||||
Rental
|
$
|
5,694
|
$
|
3,907
|
$
|
11,409
|
$
|
7,163
|
|||||
Other
|
541
|
352
|
1,025
|
574
|
|||||||||
|
|
|
|
||||||||||
Total property revenues
|
6,235
|
4,259
|
12,434
|
7,737
|
|||||||||
Property operating expenses
|
2,397
|
1,796
|
4,959
|
3,143
|
|||||||||
|
|
|
|
||||||||||
Property operating income
|
$
|
3,838
|
$
|
2,463
|
$
|
7,475
|
$
|
4,594
|
|||||
|
|
|
|
||||||||||
Average physical occupancy
|
92.4
|
%
|
68.3
|
%
|
92.5
|
%
|
63.3
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
Physical
|
|
|
|
|
|
Total
|
Actual/
|
|
Occupancy
|
% Leased
|
|
|
|
Number of
|
Actual/
|
Anticipated
|
Actual/
|
Three Months
|
as of
|
|
|
|
Apartment
|
Anticipated
|
Construction
|
Anticipated
|
Ended June
|
June 30,
|
|
Community
|
|
Homes
|
Cost
|
Completion
|
Stabilization
|
30, 2004
|
2004
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
Summit Silo Creek - Washington, D.C.
|
|
284
|
$ 39,040
|
Q1 2004
|
Q4 2004
|
56.9%
|
81.3%
|
|
Summit Reunion Park II - Raleigh, NC
|
|
172
|
10,274
|
Q2 2004
|
Q4 2004
|
32.2%
|
55.2%
|
|
Summit Brickell View - Miami, FL (1)
|
323
|
74,000
|
Q4 2004
|
Q2 2005
|
5.2%
|
29.4%
|
||
Summit Las Olas - Ft. Lauderdale, FL (1)
|
|
420
|
73,700
|
Q4 2004
|
Q3 2005
|
2.9%
|
18.3%
|
|
|
|
|||||||
|
|
1,199
|
$ 197,014
|
|
|
|
|
|
|
|
(1)
|
Stabilization, occupancy and percent leased information in the table above represents data for apartment homes only. Summit Brickell Views approximately 17,500 square feet of office/retail space was 0.0% leased as of June 30, 2004. The approximately 4,000 square feet of office/retail space at Summit Las Olas was 100.0% leased as of June 30, 2004.
|
22 | ||
|
||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
Property revenues:
|
|
|
|
|
|||||||||
Rental
|
$
|
764
|
$
|
-
|
$
|
1,147
|
$
|
-
|
|||||
Other
|
129
|
-
|
181
|
-
|
|||||||||
|
|
|
|
||||||||||
Total property revenues
|
893
|
-
|
1,328
|
-
|
|||||||||
Property operating expenses
|
596
|
12
|
857
|
14
|
|||||||||
|
|
|
|
||||||||||
Property operating income
|
$
|
297
|
$
|
(12
|
)
|
$
|
471
|
$
|
(14
|
)
|
|||
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
Property revenues:
|
|
|
|
|
|||||||||
Rental
|
$
|
273
|
$
|
5,935
|
$
|
864
|
$
|
12,807
|
|||||
Other
|
35
|
407
|
78
|
921
|
|||||||||
|
|
|
|
||||||||||
Total property revenues
|
308
|
6,342
|
942
|
13,728
|
|||||||||
Property operating expenses
|
147
|
2,541
|
398
|
5,529
|
|||||||||
|
|
|
|
||||||||||
Property operating income
|
$
|
161
|
$
|
3,801
|
$
|
544
|
$
|
8,199
|
|||||
|
|
|
|
||||||||||
Number of apartment homes
|
362
|
3,289
|
362
|
3,289
|
|||||||||
|
|
|
|
23 | ||
|
||
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
Property revenues: | |||||||||||||
Rental
|
$
|
4,470
|
$
|
10,163
|
$
|
9,280
|
$
|
21,261
|
|||||
Other
|
345
|
701
|
661
|
1,466
|
|||||||||
|
|
|
|
||||||||||
Total property revenues
|
4,815
|
10,864
|
9,941
|
22,727
|
|||||||||
Property operating expenses
|
1,506
|
3,927
|
3,251
|
8,382
|
|||||||||
Depreciation
|
330
|
2,515
|
1,502
|
5,044
|
|||||||||
Interest and amortization
|
65
|
1,229
|
128
|
2,607
|
|||||||||
|
|
|
|
||||||||||
Income from discontinued operations before gain on discontinued
|
|
|
|
|
|||||||||
operations, loss on early extinguishment of debt and minority
|
|
|
|
|
|||||||||
interest of discontinued operations
|
2,914
|
3,193
|
5,060
|
6,694
|
|||||||||
Gain on disposition of discontinued operations
|
9,993
|
3,122
|
10,040
|
6,258
|
|||||||||
Loss on early extinguishment of debt
|
-
|
(1,508
|
)
|
-
|
(1,508
|
)
|
|||||||
|
|
|
|
||||||||||
Income from discontinued operations before minority interest
|
12,907
|
4,807
|
15,100
|
11,444
|
|||||||||
Minority interest of discontinued operations
|
(1,241
|
)
|
(558
|
)
|
(1,456
|
)
|
(1,323
|
)
|
|||||
|
|
|
|
||||||||||
Income from discontinued operations, net of minority interest
|
$
|
11,666
|
$
|
4,249
|
$
|
13,644
|
$
|
10,121
|
|||||
|
|
|
|
|
Number of
|
Total
|
|
Estimated
|
Anticipated
|
|||||||||||
|
Apartment
|
Estimated
|
Cost to
|
Cost to
|
Construction
|
|||||||||||
Community
|
Homes
|
Costs
|
Date
|
Complete
|
Completion
|
|||||||||||
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|||||||||||
Summit Brickell View - Miami, FL
|
323
|
$
|
74,000
|
$
|
69,096
|
$
|
4,904
|
Q4 2004
|
||||||||
Summit Las Olas - Ft. Lauderdale, FL
|
420
|
73,700
|
68,239
|
5,461
|
Q4 2004
|
|||||||||||
Summit Fairfax Corner - Washington, D.C.
|
488
|
74,500
|
27,045
|
47,455
|
Q4 2006
|
|||||||||||
Summit Manor Park Raleigh, NC
|
484
|
46,300
|
9,316
|
36,984
|
Q4 2006
|
|||||||||||
|
|
|
|
|||||||||||||
Total - communities under construction
|
1,715
|
268,500
|
173,696
|
$
|
94,804
|
|
||||||||||
|
||||||||||||||||
Other development and construction costs (1)
|
-
|
-
|
42,030
|
|
|
|||||||||||
|
|
|
||||||||||||||
|
1,715
|
$
|
268,500
|
$
|
215,726
|
|
|
|||||||||
|
|
|
24 | ||
|
||
25 | ||
|
||
Net cash provided by operating activities increased to $37.9 million for the six months ended June 30, 2004 from $28.7 million for the six months ended June 30, 2003. This increase is primarily due to an improvement in net income excluding certain non-cash items (depreciation and amortization, gain on sale of real estate assets discontinued operations and loss on early extinguishment of debt) of $3.7 million and an increase of $4.7 million in accounts payable and accrued expenses.
26 | ||
|
||
27 | ||
|
||
28 | ||
|
||
|
Payments Due by Period
|
|||||||||||||||
|
||||||||||||||||
|
2004
|
2005-2006
|
2007-2008
|
Thereafter
|
Total
|
|||||||||||
|
|
|
|
|
||||||||||||
Long-term debt principal payments and maturities
|
$
|
50,940
|
$
|
71,017
|
$
|
380,381
|
$
|
311,333
|
$
|
813,671
|
||||||
Standby letters of credit (1)
|
6,253
|
1,567
|
-
|
-
|
7,820
|
|||||||||||
Development expenditures (2)
|
37,137
|
57,667
|
-
|
-
|
94,804
|
|||||||||||
Operating lease commitments (3)
|
100
|
314
|
295
|
212
|
921
|
|||||||||||
Employment agreement payments (4)
|
285
|
1,140
|
1,140
|
1,200
|
3,765
|
|||||||||||
|
|
|
|
|
||||||||||||
Total
|
$
|
94,715
|
$
|
131,705
|
$
|
381,816
|
$
|
312,745
|
$
|
920,981
|
||||||
|
|
|
|
|
(1) (1)
|
|
As collateral for performance on contracts and as credit guarantees to banks and insurers, we were contingently liable under standby letters of credit in the aggregate amount of $7.8 million as of June 30, 2004.
|
(2) (2)
|
|
The estimated cost to complete the four development projects currently under construction was $94.8 million as of June 30, 2004. Anticipated construction completion dates of the projects range from the fourth quarter of 2004 to the fourth quarter of 2006.
|
(3)
|
|
Includes operating leases related to rental of office space.
|
(4)
|
|
We have employment agreements with two of our former executive officers, both of whom resigned from such executive positions, but who remain as employees and have agreed to provide various services to us from time to time through December 31, 2011. Each employment agreement requires that we pay to the former officers a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011 (beginning with calendar year 2002, up to $200,000 on an annual basis). Each employment agreement also requires that we provide participation in our life insurance plan as well as office space, information systems support and administrative support for the remainder of each employees life, and participation in our health and dental insurance plans until the last to die of the employee or such employees spouse. Either party can terminate the employment agreements effective 20 business days after written notice is given. The full base salary amount due shall be payable through 2011 whether or not the agreements are terminated earlier in accordance with their terms. We have amended the employment agreements, effective July 1, 2004. The amendments provide for annual payments by us to the former executives in lieu of providing such office space, information systems support and administrative support. The annual payments are $100,000 for one of the former executive officers and $70,000 to the other former executive officer and each are subject to a yearly increase based on the Consumer Price Index. These amounts represent what we have determined to be the fair market value of such services. In the table above, we have assumed annual payments of $170,000 per executive for years 2004 through 2008. Amounts for these annual payments are not included under "Thereafter" and "Total" because the amount of payments depends on the lifespan of the executive and is therefore indeterminable at this time.
|
29 | ||
|
||
30 | ||
|
||
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
||||||||||||
|
2004
|
2003
|
2004
|
2003
|
|||||||||
|
|
|
|
||||||||||
Net income
|
$
|
12,172
|
$
|
2,905
|
$
|
14,471
|
$
|
8,094
|
|||||
Minority interest of Unitholders
|
1,295
|
382
|
1,544
|
1,058
|
|||||||||
Gain on sale of real estate assets
|
(9,993
|
)
|
(3,122
|
)
|
(10,040
|
)
|
(6,258
|
)
|
|||||
Loss on early extinguishment of debt
|
-
|
1,508
|
-
|
1,508
|
|||||||||
Depreciation:
|
|
|
|
|
|||||||||
Real estate assets
|
10,878
|
10,269
|
22,058
|
19,844
|
|||||||||
Real estate joint venture
|
190
|
190
|
379
|
379
|
|||||||||
|
|
|
|
||||||||||
Funds from Operations
|
$
|
14,542
|
$
|
12,132
|
$
|
28,412
|
$
|
24,625
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Net income per share - diluted
|
$
|
0.38
|
$
|
0.11
|
$
|
0.46
|
$
|
0.30
|
|||||
|
|
|
|
||||||||||
Funds from operations per share - diluted
|
$
|
0.42
|
$
|
0.40
|
$
|
0.81
|
$
|
0.80
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Recurring capital expenditures (1)
|
$
|
1,762
|
$
|
1,781
|
$
|
3,091
|
$
|
2,557
|
|||||
|
|
|
|
||||||||||
Non-recurring capital expenditures (2)
|
$
|
779
|
$
|
932
|
$
|
1,247
|
$
|
1,141
|
|||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
Weighted average shares outstanding - basic
|
31,459,095
|
26,892,289
|
31,425,268
|
27,050,846
|
|||||||||
|
|
|
|
||||||||||
Weighted average shares outstanding diluted
|
31,681,617
|
26,892,289
|
31,649,300
|
27,050,846
|
|||||||||
|
|
|
|
||||||||||
Weighted average shares and units outstanding - basic
|
34,809,293
|
30,436,755
|
34,800,676
|
30,595,312
|
|||||||||
|
|
|
|
||||||||||
Weighted average shares and units outstanding - diluted
|
35,031,815
|
30,531,635
|
35,024,708
|
30,656,175
|
|||||||||
|
|
|
|
31 | ||
|
||
32 | ||
|
||
33 | ||
|
||
|
For
|
Withheld
|
|
|
|
Henry H. Fishkind
|
25,933,696
|
1,148,707
|
James H. Hance, Jr.
|
25,915,071
|
1,167,332
|
Wendy P. Riches
|
25,932,955
|
1,149,448
|
(a)
|
Exhibits
|
|
|
10.1
|
First Amendment to Credit Agreement and Joinder to Loan Documents (incorporated by reference to Exhibit 10.1 to the Operating Partnerships quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, File No. 0-22411).
|
*10.8.1
|
Employment Agreement dated February 15, 1999, by and among William F. Paulsen, Summit and Summit Management Company, as restated on April 3, 2001 and June 25, 2004.
|
*10.8.2
|
Employment Agreement dated February 15, 1999, by and among William B. McGuire, Jr., Summit and Summit Management Company, as restated on August 24, 2001 and June 10, 2004.
|
*10.8.3
|
Retention Bonus Agreement dated May 26, 2004, between Summit and Michael L. Schwarz.
|
*10.8.4
|
Retention Bonus Agreement dated May 26, 2004, between Summit and Gregg D. Adzema.
|
*10.8.5
|
Retention Bonus Agreement dated May 26, 2004, between Summit and Steven R. LeBlanc.
|
* 12.1
|
Statement regarding calculation of Ratio of Earnings to Fixed Charges for the six months ended June 30, 2004.
|
* 31.1
|
Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
* 31.2
|
Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
**32.1
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
34 | ||
|
||
**32.2
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith. This certification shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act.
|
|
|
(b)
|
Reports on Form 8-K
|
|
|
|
On May 7, 2004, we filed a Current Report on Form 8-K in connection with providing additional information regarding the tax fees that we paid to our independent auditors, Deloitte & Touche, LLP.
|
35 | ||
|
||
|
SUMMIT PROPERTIES INC.
|
|
|
August 9, 2004
|
/S/ STEVEN R. L
E
BLANC
|
|
|
|
Steven R. LeBlanc
|
|
President and Chief Executive Officer
|
|
|
August 9, 2004
|
/S/ GREGG D. ADZEMA
|
|
|
|
Gregg D. Adzema
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
||
36 |
SUMMIT PROPERTIES INC.
|
|
|
|
By:
/s/ Steven R. LeBlanc
________________
|
|
|
Name: Steven R. LeBlanc
|
|
Title: President and CEO
|
|
|
SUMMIT MANAGEMENT COMPANY
|
|
By:
/s/ Steven R. LeBlanc
________________
|
|
|
Name: Steven R. LeBlanc
|
|
Title: President and CEO
|
|
|
Collectively, the "Company"
|
|
|
|
/s/ William F. Paulsen____________[
SEAL]
|
|
William F. Paulsen
|
|
|
|
"Executive"
|
SUMMIT PROPERTIES INC.
|
|
|
|
By:
/s/ Steven R. LeBlanc
________________
|
|
|
Name: Steven R. LeBlanc
|
|
Title: President and CEO
|
|
|
SUMMIT MANAGEMENT COMPANY
|
|
By:
/s/ Steven R. LeBlanc
________________
|
|
|
Name: Steven R. LeBlanc
|
|
Title: President and CEO
|
|
|
Collectively, the "Company"
|
|
|
|
/s/
William B. McGuire, Jr.____________[
SEAL]
|
|
William B. McGuire
|
|
|
|
"Executive"
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Summit Properties Inc.;
|
|
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4.
|
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
[Omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];
|
|
|
|
|
(c)
|
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
(d)
|
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
|
|
||
|
|
|
5.
|
|
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
|
|
|
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
|
|
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
|
Date: August 9, 2004
|
|
|
/S/ Steven R. LeBlanc
|
|
|
|
Name: Steven R. LeBlanc
|
|
Title: President and Chief Executive Officer
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Summit Properties Inc.;
|
|
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4.
|
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
|
|
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
(b)
|
[Omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];
|
|
|
|
|
(c)
|
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
(d)
|
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
|
|
||
5.
|
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
|
|
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
|
Date: August 9, 2004
|
/S/ Gregg D. Adzema
|
|
|
|
Name: Gregg D. Adzema
|
|
Title: Executive Vice President and Chief Financial Officer
|
Date: August 9, 2004
|
/S/ Steven R. LeBlanc
|
|
|
|
Steven R. LeBlanc
|
|
President and Chief Executive Officer
|
|
|
Date: August 9, 2004
|
/S/ Gregg D. Adzema
|
|
|
|
Gregg D. Adzema
|
|
Executive Vice President and Chief Financial Officer
|
Exhibit 12.1
|
|
|
|
|
|
|
|
Summit Properties Inc.
|
|
|
|
Calculation of Ratio of Earnings to Fixed Charges
|
|
|
|
Six Months Ended June 30, 2004
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interest of unitholders in Operating Partnership
|
|
$ 18,421
|
|
Interest:
|
|
|
|
|
Expense incurred
|
|
14,619
|
|
Amortization of deferred financing costs
|
|
668
|
|
Rental fixed charges
|
|
46
|
|
|||
|
Total
|
|
$ 33,754
|
|
|
|
|
Fixed charges:
|
|
|
|
|
Interest expense
|
|
$ 14,619
|
|
Interest capitalized
|
|
5,045
|
|
Dividends to preferred unitholders in operating parthership
|
|
2,406
|
|
Rental fixed charges
|
|
46
|
|
Amortization of deferred financing costs
|
|
668
|
|
|||
|
Total
|
|
$ 22,784
|
|
|
|
|
Ratio of earnings to fixed charges
|
|
1.5
|
|
|
AGREEMENT made as of this 26th day of May 2004 by and between Summit Properties Inc., a Maryland corporation with its principal place of business in Charlotte, North Carolina (the "Company"), and Michael L. Schwarz of Charlotte, NC (the "Executive").
|
|||
1.
|
Purpose
. The Company considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. The Board of Directors of the Company (the "Board") recognizes, however, that, as is the case with many publicly held corporations, the possibility of a Change in Control (as defined in Section 2 hereof) exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. Therefore, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Companys management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control. Nothing in this Agreement shall be construed as creating an express or implied contract of employment or any right to be retained in the employ of the Company. The Company and the Executive have entered into an Employment Agreement dated February 16, 1994 (as such agreement may be in effect from time to time, and including any amended or replacement employment agreement, the "Employment Agreement") and an Executive Severance Agreement dated April 2, 1997 (as such agreement may be in effect from time to time, and including any amended or replacement severance agreement, the "Severance Agreement") that provide for compensation to the Executive under certain circumstances in the event that the Executives employment is terminated. This Agreement is intended to supplement the Employment Agreement and the Severance Agreement.
|
||
2.
|
Change in Control
.
|
||
|
(a)
|
A "Change in Control" shall be deemed to have occurred in any one of the following events:
|
|
|
|
(i)
|
any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Act") (other than the Company, Summit Properties Partnership, L.P. (together with any other subsidiaries of the Company, the "Subsidiaries"), or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 40% or more of either (A) the combined voting power of the Companys then outstanding securities having the right to vote in an election of the Board ("Voting Securities") or (B) the then outstanding shares of stock of the Company ("Stock"), in either such case other than as a result of an acquisition of securities directly from the Company; or
|
|
||
|
||
|
|
(ii)
|
persons who, as of the date hereof, constitute the Board (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the date hereof whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Agreement, be considered an Incumbent Director; or
|
|
|
(iii)
|
the consummation of a consolidation or merger of the Company or any subsidiary where the shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 50% of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; or
|
|
|
(iv)
|
the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company.
|
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Voting Securities beneficially owned by any person to 40% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns 40% or more of the combined voting power of all then outstanding Voting Securities, then a "Change in Control" shall be deemed to have occurred for purposes of the foregoing clause (i).
|
|||
|
(b)
|
For purposes of determining whether a Change in Control has occurred, all outstanding options, warrants and other convertible securities that are then exchangeable or convertible into Voting Securities of the Company, including, without limitation, all partnership units of any Subsidiary that are convertible into, or under certain circumstances redeemable for, Voting Securities of the Company at the option of the holder or the Company, shall be deemed to have been converted into the applicable number of shares of Voting Securities of the Company immediately prior to making such determination.
|
|
3.
|
Terminating Event
. A "Terminating Event" shall mean any of the following events:
|
||
|
(a)
|
termination by the Company of the employment of the Executive with the Company for any reason other than:
|
|
||
2 | ||
|
||
|
|
(i)
|
the death of the Executive (which shall be referred to as a "Death Termination"), the total disability of the Executive (total disability meaning the inability of the 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 the Executives 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 the retirement of the Executive;
|
|
|
(ii)
|
if the 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 and its subsidiaries on a consolidated basis, as determined by the Board in good faith in its sole discretion;
|
|
|
(iii)
|
if the Executive engaged in a fraudulent act to the material damage or material prejudice of the Company and its subsidiaries on a consolidated basis or in conduct or activities materially damaging to the property, business or reputation of the Company and its subsidiaries on a consolidated basis, all as determined by the Board in good faith in its sole discretion;
|
|
|
(iv)
|
in the event of any material act or omission by the Executive involving malfeasance or negligence in the performance of the Executives duties to the Company to the material detriment of the Company and its subsidiaries on a consolidated basis, as determined by the Board in good faith in its sole discretion, which has not been corrected by the Executive within 30 days after written notice from the Company of any such act or omission;
|
|
|
(v)
|
failure by the Executive to comply in any material respect with the terms of the Employment 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 the Executive within 30 days after written notice from the Company of such failure; or
|
|
|
(vi)
|
a material breach by the Executive of the non-competition provisions of the Employment Agreement, as determined by the Board in good faith in its sole discretion.
|
Each of the events described in the foregoing clauses (ii) through (vi) shall be referred to individually and collectively as a "For Cause Termination." Notwithstanding any other provision of this Section 3(a), a Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely as a result of the Executive being an employee of any direct or indirect successor to the business or assets of the Company, rather that continuing as an employee of the Company following a Change in Control. For purposes of clause (i) of this Section 3(a), "retirement" shall mean termination of the Executives employment in accordance with the Companys normal retirement policy, generally applicable to its salaried employees, as in effect immediately prior to the change in Control, or in accordance with any retirement arrangement established with respect to the Executive with the Executives express written consent; or
|
|
||
3 | ||
|
||
|
(b)
|
termination by the Executive of the Executives employment with the Company for Good Reason. "Good Reason" shall mean the occurrence of any of the following, provided that in either case the Board has not corrected such material reduction described below within 30 days after written notice by the Executive of such material reduction: (i) there is a material reduction in the Executives duties, rights or responsibilities under the Employment Agreement without his consent, or (ii) there is a material reduction in the aggregate value of the Executives compensation and benefits package from the Company under the Employment Agreement without his consent, other than a reduction in the Executives base salary that is permitted under the Employment Agreement and other than a reduction in compensation and/or benefits affecting a broad group of employees of the Company as determined by the Board in good faith in its sole discretion; (iii) there is a relocation of the Companys offices at which the Executive is principally employed as of the date of this Agreement to a location more than 50 miles from such offices, or the requirement by the Company for the Executive to be based anywhere other than the Companys offices at such location, except for required travel on the Companys business to an extent substantially consistent with the Executives business travel obligations immediately prior to the date hereof.
|
|
4.
|
Retention Bonus Payment
. Provided the Executive is employed by the Company on the Retention Payment Date (as defined below), the Company shall pay to the Executive an amount equal to One Million Nine Hundred Fifty Thousand Dollars ($1,950,000). Said amount shall be paid in one lump sum payment no later than 31 days following the Retention Payment Date. The Company shall also pay to the Executive all reasonable legal and arbitration fees and expenses incurred by the Executive in obtaining or enforcing any right or benefit provided by this Agreement, except in cases involving frivolous or bad faith litigation initiated by the Executive. "Retention Payment Date" shall mean the date that is 11 months following a Change in Control. Notwithstanding anything herein to the contrary, for purposes of this Plan, the Executive shall be deemed to be employed on the Retention Payment Date and therefore entitled to receive the bonus payment provided by this Section 4 in the event the Executive experiences a Terminating Event after a Change in Control or within six months before a Change in Control.
|
||
5.
|
Additional Benefits
.
|
||
|
(a)
|
Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Severance Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, ("the Code"), or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Severance Payments, any Federal, state and local income tax, employment tax and Excise Tax upon the payment provided by this subsection, and any interest and/or penalties assessed with respect to such Excise Tax, shall be equal to the Severance Payments.
|
4 | ||
|
||
|
(b)
|
Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by the Companys independent certified public accounting firm (the "Accounting Firm"), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of the Executives residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. The initial Gross-Up Payment, if any, as determined pursuant to this Section 5(b), shall be paid to the Executive within five days of the receipt of the Accounting Firms determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Company shall furnish the Executive with an opinion of counsel that failure to report the Excise Tax on the Executives applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an "Underpayment"). In the event that the Company exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred, consistent with the calculations required to be made hereunder, and the Company shall make an additional payment to or for the benefit of the Executive such that the net amount retained by the Executive, after deduction of any Federal, state and local income tax, employment tax and Excise Tax upon the payment provided by this subsection, and any interest and/or penalties assessed with respect to such Underpayment or in connection with the proceedings described in Section 5(c).
|
|
|
(c)
|
The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
|
|
|
|
(i)
|
give the Company any information reasonably requested by the Company relating to such claim,
|
|
||
5 | ||
|
||
|
|
(ii)
|
take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company,
|
|
|
|
(iii)
|
cooperate with the Company in good faith in order effectively to contest such claim, and
|
|
|
|
(iv)
|
permit the Company to participate in any proceedings relating to such claim; provided, however that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such contest and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension by the Company of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due shall be limited solely to such contested amount. Furthermore, the Companys control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority.
|
|
|
(d)
|
If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Companys complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
|
6 | ||
|
||
6.
|
Term
. This Agreement shall take effect on the date first set forth above and shall terminate upon the earlier of (a) immediately prior to a For Cause Termination by the Company of the employment of the Executive, (b) the resignation of the Executive other than for Good Reason, (c) immediately prior to the resignation of the Executive if any event that would constitute grounds for a For Cause Termination of the Executives employment has occurred and is continuing, or (d) the payment of all amounts owed hereunder to the Executive following the first Change in Control after the date hereof.
|
|||
7.
|
Withholding
. All payments made by the Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.
|
|||
8.
|
Notice and Date of Termination; Disputes; Etc
.
|
|||
|
(a)
|
Notice of Termination
. During the term of this Agreement, any purported termination of the Executives employment (other than by reason of a Death Termination) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 8. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and the Date of Termination.
|
||
|
(b)
|
Date of Termination
. "Date of Termination", with respect to any purported termination of the Executives employment during the term of this Agreement, shall mean (i) if there is a Disability Termination, 30 days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executives duties during such 30-day period) and (ii) if the Executives employment is terminated for any other reason, the date specified in the Notice of Termination. In the case of a termination by the Company other than a For Cause Termination (which may be effective immediately), the Date of Termination shall not be less than 30 days after the Notice of Termination is given. In the case of a termination by the Executive, the Date of Termination shall not be less than 15 days from the date such Notice of Termination is given. Notwithstanding Section 3(a) of this Agreement, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a Terminating Event for purposes of Section 3(a) of this Agreement.
|
||
|
(c)
|
No Mitigation
. The Company agrees that, if the Executives employment by the Company is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 4 hereof. Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer.
|
||
|
(d)
|
Settlement and Arbitration of Disputes
. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled exclusively by arbitration in accordance with the laws of the State of North Carolina by three arbitrators, one of whom shall be appointed by the Company, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Charlotte, North Carolina. Such arbitration shall be conducted in the City of Charlotte, North Carolina in accordance with the rules of the American Arbitration Association for commercial arbitrations, except with respect to the selection of arbitrators which shall be as provided in this Section 8(d). Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
|
7 | ||
|
||
9.
|
Assignment
. Neither the Company nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party, and without such consent any attempted transfer shall be null and void and of no effect. This Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns. In the event of the Executives death after the Retention Payment Date but prior to the completion by the Company of all payments due him under Section 4 of this Agreement, the Company shall continue such payments to the Executives beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation).
|
|||
10.
|
Enforceability
. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
|
|||
11.
|
Waiver
. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.
|
|||
12.
|
Notices
. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, to the Executive at the last address the Executive has filed in writing with the Company, or to the Company at its main office, attention of the Board.
|
|||
13.
|
Effect on Other Plans
. Nothing in this Agreement shall be construed to limit the rights of the Executive under the Companys benefit plans, programs or policies except as otherwise provided in Section 5 hereof.
|
|||
14.
|
Amendment
. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.
|
|||
15.
|
Governing Law
. This Agreement shall be construed under and be governed in all respects by the laws of the State of North Carolina.
|
|||
8 | ||
|
||
16.
|
Obligations of Successors
. In addition to any obligations imposed by law upon any successor to the Company, the Company will use its reasonable best efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company 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 if no such succession had taken place.
|
|||
17.
|
Confidential Information
. The Executive shall never use, publish or disclose in a manner adverse to the Companys interests, any proprietary or confidential information relating to (a) the business, operations or properties of the Company or any Subsidiary or other affiliate of the Company, or (b) any materials, processes, business practices, technology, know-how, research, programs or other information used in the business of the Company or any Subsidiary or other affiliate of the Company, provided, however, that no breach or alleged breach of this Section 17 shall entitle the Company to fail to comply fully and in a timely manner with any other provision hereof. Nothing in this Agreement shall preclude the Company from seeking money damages, or equitable relief by injunction or otherwise without the necessity of proving actual damage to the Company, for any breach by the Executive hereunder.
|
|||
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company by its duly authorized officer, and by the Executive, as of the date first above written.
|
||||
|
COMPANY:
SUMMIT PROPERTIES INC.
By:
/s/ Steven R. LeBlanc
|
|||
|
||||
|
Name: Steven R. LeBlanc
Title: Chief Executive Officer and President
EXECUTIVE:
/s/ Michael L. Schwarz
|
|||
|
|
||
9 |
AGREEMENT made as of this 26th day of May 2004 by and between Summit Properties Inc., a Maryland corporation with its principal place of business in Charlotte, North Carolina (the "Company"), and Gregg D. Adzema of Charlotte, NC (the "Executive").
|
|||
1.
|
Purpose
. The Company considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. The Board of Directors of the Company (the "Board") recognizes, however, that, as is the case with many publicly held corporations, the possibility of a Change in Control (as defined in Section 2 hereof) exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. Therefore, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Companys management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control. Nothing in this Agreement shall be construed as creating an express or implied contract of employment or any right to be retained in the employ of the Company. The Company and the Executive have entered into an Employment Agreement dated December 17, 2001 (as such agreement may be in effect from time to time, and including any amended or replacement employment agreement, the "Employment Agreement") and an Executive Severance Agreement dated December 17, 2001 (as such agreement may be in effect from time to time, and including any amended or replacement severance agreement, the "Severance Agreement") that provide for compensation to the Executive under certain circumstances in the event that the Executives employment is terminated. This Agreement is intended to supplement the Employment Agreement and the Severance Agreement.
|
||
2.
|
Change in Control
.
|
||
|
(a)
|
A "Change in Control" shall be deemed to have occurred in any one of the following events:
|
|
|
|
(i)
|
any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Act") (other than the Company, Summit Properties Partnership, L.P. (together with any other subsidiaries of the Company, the "Subsidiaries"), or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 40% or more of either (A) the combined voting power of the Companys then outstanding securities having the right to vote in an election of the Board ("Voting Securities") or (B) the then outstanding shares of stock of the Company ("Stock"), in either such case other than as a result of an acquisition of securities directly from the Company; or
|
|
||
|
||
|
|
(ii)
|
persons who, as of the date hereof, constitute the Board (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the date hereof whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Agreement, be considered an Incumbent Director; or
|
||
|
|
(iii)
|
the consummation of a consolidation or merger of the Company or any subsidiary where the shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 50% of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; or
|
||
|
|
(iv)
|
the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company.
|
||
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Voting Securities beneficially owned by any person to 40% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns 40% or more of the combined voting power of all then outstanding Voting Securities, then a "Change in Control" shall be deemed to have occurred for purposes of the foregoing clause (i).
|
|||||
|
(b)
|
For purposes of determining whether a Change in Control has occurred, all outstanding options, warrants and other convertible securities that are then exchangeable or convertible into Voting Securities of the Company, including, without limitation, all partnership units of any Subsidiary that are convertible into, or under certain circumstances redeemable for, Voting Securities of the Company at the option of the holder or the Company, shall be deemed to have been converted into the applicable number of shares of Voting Securities of the Company immediately prior to making such determination.
|
|||
3.
|
Terminating Event
. A "Terminating Event" shall mean any of the following events:
|
||||
|
(a)
|
termination by the Company of the employment of the Executive with the Company for any reason other than:
|
2 | ||
|
||
|
|
(i)
|
the death of the Executive (which shall be referred to as a "Death Termination"), the total disability of the Executive (total disability meaning the inability of the 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 the Executives 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 the retirement of the Executive;
|
||
|
|
(ii)
|
if the 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 and its subsidiaries on a consolidated basis, as determined by the Board in good faith in its sole discretion;
|
||
|
|
(iii)
|
if the Executive engaged in a fraudulent act to the material damage or material prejudice of the Company and its subsidiaries on a consolidated basis or in conduct or activities materially damaging to the property, business or reputation of the Company and its subsidiaries on a consolidated basis, all as determined by the Board in good faith in its sole discretion;
|
||
|
|
(iv)
|
in the event of any material act or omission by the Executive involving malfeasance or negligence in the performance of the Executives duties to the Company to the material detriment of the Company and its subsidiaries on a consolidated basis, as determined by the Board in good faith in its sole discretion, which has not been corrected by the Executive within 30 days after written notice from the Company of any such act or omission;
|
||
|
|
(v)
|
failure by the Executive to comply in any material respect with the terms of the Employment 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 the Executive within 30 days after written notice from the Company of such failure; or
|
||
|
|
(vi)
|
a material breach by the Executive of the non-competition provisions of the Employment Agreement, as determined by the Board in good faith in its sole discretion.
|
||
Each of the events described in the foregoing clauses (ii) through (vi) shall be referred to individually and collectively as a "For Cause Termination." Notwithstanding any other provision of this Section 3(a), a Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely as a result of the Executive being an employee of any direct or indirect successor to the business or assets of the Company, rather that continuing as an employee of the Company following a Change in Control. For purposes of clause (i) of this Section 3(a), "retirement" shall mean termination of the Executives employment in accordance with the Companys normal retirement policy, generally applicable to its salaried employees, as in effect immediately prior to the change in Control, or in accordance with any retirement arrangement established with respect to the Executive with the Executives express written consent; or
|
|
||
3 | ||
|
||
|
(b)
|
termination by the Executive of the Executives employment with the Company for Good Reason. "Good Reason" shall mean the occurrence of any of the following, provided that in either case the Board has not corrected such material reduction described below within 30 days after written notice by the Executive of such material reduction: (i) there is a material reduction in the Executives duties, rights or responsibilities under the Employment Agreement without his consent, or (ii) there is a material reduction in the aggregate value of the Executives compensation and benefits package from the Company under the Employment Agreement without his consent, other than a reduction in the Executives base salary that is permitted under the Employment Agreement and other than a reduction in compensation and/or benefits affecting a broad group of employees of the Company as determined by the Board in good faith in its sole discretion; (iii) there is a relocation of the Companys offices at which the Executive is principally employed as of the date of this Agreement to a location more than 50 miles from such offices, or the requirement by the Company for the Executive to be based anywhere other than the Companys offices at such location, except for required travel on the Companys business to an extent substantially consistent with the Executives business travel obligations immediately prior to the date hereof.
|
|
4.
|
Retention Bonus Payment
. Provided the Executive is employed by the Company on the Retention Payment Date (as defined below), the Company shall pay to the Executive an amount equal to One Million Dollars ($1,000,000). Said amount shall be paid in one lump sum payment no later than 31 days following the Retention Payment Date. The Company shall also pay to the Executive all reasonable legal and arbitration fees and expenses incurred by the Executive in obtaining or enforcing any right or benefit provided by this Agreement, except in cases involving frivolous or bad faith litigation initiated by the Executive. "Retention Payment Date" shall mean the date that is 11 months following a Change in Control. Notwithstanding anything herein to the contrary, for purposes of this Plan, the Executive shall be deemed to be employed on the Retention Payment Date and therefore entitled to receive the bonus payment provided by this Section 4 in the event the Executive experiences a Terminating Event after a Change in Control or within six months before a Change in Control.
|
||
5.
|
Additional Benefits
.
|
||
|
(a)
|
Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Severance Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, ("the Code"), or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Severance Payments, any Federal, state and local income tax, employment tax and Excise Tax upon the payment provided by this subsection, and any interest and/or penalties assessed with respect to such Excise Tax, shall be equal to the Severance Payments.
|
4 | ||
|
||
|
(b)
|
Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by the Companys independent certified public accounting firm (the "Accounting Firm"), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of the Executives residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. The initial Gross-Up Payment, if any, as determined pursuant to this Section 5(b), shall be paid to the Executive within five days of the receipt of the Accounting Firms determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Company shall furnish the Executive with an opinion of counsel that failure to report the Excise Tax on the Executives applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an "Underpayment"). In the event that the Company exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred, consistent with the calculations required to be made hereunder, and the Company shall make an additional payment to or for the benefit of the Executive such that the net amount retained by the Executive, after deduction of any Federal, state and local income tax, employment tax and Excise Tax upon the payment provided by this subsection, and any interest and/or penalties assessed with respect to such Underpayment or in connection with the proceedings described in Section 5(c).
|
|
|
(c)
|
The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
|
|
|
|
(i)
|
give the Company any information reasonably requested by the Company relating to such claim,
|
|
||
5 | ||
|
||
|
|
(ii)
|
take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company,
|
|
|
(iii)
|
cooperate with the Company in good faith in order effectively to contest such claim, and
|
|
|
(iv)
|
permit the Company to participate in any proceedings relating to such claim; provided, however that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such contest and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension by the Company of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due shall be limited solely to such contested amount. Furthermore, the Companys control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority.
|
|
(d)
|
If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Companys complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
|
6 | ||
|
||
6.
|
Term
. This Agreement shall take effect on the date first set forth above and shall terminate upon the earlier of (a) immediately prior to a For Cause Termination by the Company of the employment of the Executive, (b) the resignation of the Executive other than for Good Reason, (c) immediately prior to the resignation of the Executive if any event that would constitute grounds for a For Cause Termination of the Executives employment has occurred and is continuing, or (d) the payment of all amounts owed hereunder to the Executive following the first Change in Control after the date hereof.
|
||
7.
|
Withholding
. All payments made by the Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.
|
||
8.
|
Notice and Date of Termination; Disputes; Etc
.
|
||
|
(a)
|
Notice of Termination
. During the term of this Agreement, any purported termination of the Executives employment (other than by reason of a Death Termination) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 8. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and the Date of Termination.
|
|
|
(b)
|
Date of Termination
. "Date of Termination", with respect to any purported termination of the Executives employment during the term of this Agreement, shall mean (i) if there is a Disability Termination, 30 days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executives duties during such 30-day period) and (ii) if the Executives employment is terminated for any other reason, the date specified in the Notice of Termination. In the case of a termination by the Company other than a For Cause Termination (which may be effective immediately), the Date of Termination shall not be less than 30 days after the Notice of Termination is given. In the case of a termination by the Executive, the Date of Termination shall not be less than 15 days from the date such Notice of Termination is given. Notwithstanding Section 3(a) of this Agreement, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a Terminating Event for purposes of Section 3(a) of this Agreement.
|
|
|
(c)
|
No Mitigation
. The Company agrees that, if the Executives employment by the Company is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 4 hereof. Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer.
|
|
|
||
7 | ||
|
||
|
(d)
|
Settlement and Arbitration of Disputes
. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled exclusively by arbitration in accordance with the laws of the State of North Carolina by three arbitrators, one of whom shall be appointed by the Company, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Charlotte, North Carolina. Such arbitration shall be conducted in the City of Charlotte, North Carolina in accordance with the rules of the American Arbitration Association for commercial arbitrations, except with respect to the selection of arbitrators which shall be as provided in this Section 8(d). Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
|
|
9.
|
Assignment
. Neither the Company nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party, and without such consent any attempted transfer shall be null and void and of no effect. This Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns. In the event of the Executives death after the Retention Payment Date but prior to the completion by the Company of all payments due him under Section 4 of this Agreement, the Company shall continue such payments to the Executives beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation).
|
||
10.
|
Enforceability
. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
|
||
11.
|
Waiver
. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.
|
||
12.
|
Notices
. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, to the Executive at the last address the Executive has filed in writing with the Company, or to the Company at its main office, attention of the Board.
|
||
13.
|
Effect on Other Plans
. Nothing in this Agreement shall be construed to limit the rights of the Executive under the Companys benefit plans, programs or policies except as otherwise provided in Section 5 hereof.
|
||
14.
|
Amendment
. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.
|
8 | ||
|
||
15.
|
Governing Law
. This Agreement shall be construed under and be governed in all respects by the laws of the State of North Carolina.
|
||
16.
|
Obligations of Successors
. In addition to any obligations imposed by law upon any successor to the Company, the Company will use its reasonable best efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company 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 if no such succession had taken place.
|
||
17.
|
Confidential Information
. The Executive shall never use, publish or disclose in a manner adverse to the Companys interests, any proprietary or confidential information relating to (a) the business, operations or properties of the Company or any Subsidiary or other affiliate of the Company, or (b) any materials, processes, business practices, technology, know-how, research, programs or other information used in the business of the Company or any Subsidiary or other affiliate of the Company, provided, however, that no breach or alleged breach of this Section 17 shall entitle the Company to fail to comply fully and in a timely manner with any other provision hereof. Nothing in this Agreement shall preclude the Company from seeking money damages, or equitable relief by injunction or otherwise without the necessity of proving actual damage to the Company, for any breach by the Executive hereunder.
|
||
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company by its duly authorized officer, and by the Executive, as of the date first above written.
|
|||
|
COMPANY:
SUMMIT PROPERTIES INC.
|
||
|
By:
/s/ Steven R. LeBlanc
|
||
|
|||
|
Name: Steven R. LeBlanc
Title: Chief Executive Officer and President
EXECUTIVE:
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/s/ Gregg D. Adzema
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9 |
AGREEMENT made as of this 26th day of May 2004 by and between Summit Properties Inc., a Maryland corporation with its principal place of business in Charlotte, North Carolina (the "Company"), and Steven R. LeBlanc of Charlotte, NC (the "Executive").
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1.
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Purpose
. The Company considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. The Board of Directors of the Company (the "Board") recognizes, however, that, as is the case with many publicly held corporations, the possibility of a Change in Control (as defined in Section 2 hereof) exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. Therefore, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Companys management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control. Nothing in this Agreement shall be construed as creating an express or implied contract of employment or any right to be retained in the employ of the Company. The Company and the Executive have entered into an Employment Agreement dated December 11, 2000 (as such agreement may be in effect from time to time, and including any amended or replacement employment agreement, the "Employment Agreement") and an Executive Severance Agreement dated July 1, 1998 (as such agreement may be in effect from time to time, and including any amended or replacement severance agreement, the "Severance Agreement") that provide for compensation to the Executive under certain circumstances in the event that the Executives employment is terminated. This Agreement is intended to supplement the Employment Agreement and the Severance Agreement.
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2.
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Change in Control
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(a)
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A "Change in Control" shall be deemed to have occurred in any one of the following events:
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(i)
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any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Act") (other than the Company, Summit Properties Partnership, L.P. (together with any other subsidiaries of the Company, the "Subsidiaries"), or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 40% or more of either (A) the combined voting power of the Companys then outstanding securities having the right to vote in an election of the Board ("Voting Securities") or (B) the then outstanding shares of stock of the Company ("Stock"), in either such case other than as a result of an acquisition of securities directly from the Company; or
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(ii)
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persons who, as of the date hereof, constitute the Board (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the date hereof whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Agreement, be considered an Incumbent Director; or
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(iii)
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the consummation of a consolidation or merger of the Company or any subsidiary where the shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 50% of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; or
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(iv)
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the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company.
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Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Voting Securities beneficially owned by any person to 40% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns 40% or more of the combined voting power of all then outstanding Voting Securities, then a "Change in Control" shall be deemed to have occurred for purposes of the foregoing clause (i).
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(b)
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For purposes of determining whether a Change in Control has occurred, all outstanding options, warrants and other convertible securities that are then exchangeable or convertible into Voting Securities of the Company, including, without limitation, all partnership units of any Subsidiary that are convertible into, or under certain circumstances redeemable for, Voting Securities of the Company at the option of the holder or the Company, shall be deemed to have been converted into the applicable number of shares of Voting Securities of the Company immediately prior to making such determination.
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3.
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Terminating Event
. A "Terminating Event" shall mean any of the following events:
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(a)
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termination by the Company of the employment of the Executive with the Company for any reason other than:
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(i)
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the death of the Executive (which shall be referred to as a "Death Termination"), the total disability of the Executive (total disability meaning the inability of the 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 the Executives 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 the retirement of the Executive;
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(ii)
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if the 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 and its subsidiaries on a consolidated basis, as determined by the Board in good faith in its sole discretion;
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(iii)
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if the Executive engaged in a fraudulent act to the material damage or material prejudice of the Company and its subsidiaries on a consolidated basis or in conduct or activities materially damaging to the property, business or reputation of the Company and its subsidiaries on a consolidated basis, all as determined by the Board in good faith in its sole discretion;
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(iv)
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in the event of any material act or omission by the Executive involving malfeasance or negligence in the performance of the Executives duties to the Company to the material detriment of the Company and its subsidiaries on a consolidated basis, as determined by the Board in good faith in its sole discretion, which has not been corrected by the Executive within 30 days after written notice from the Company of any such act or omission;
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(v)
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failure by the Executive to comply in any material respect with the terms of the Employment 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 the Executive within 30 days after written notice from the Company of such failure; or
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(vi)
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a material breach by the Executive of the non-competition provisions of the Employment Agreement, as determined by the Board in good faith in its sole discretion.
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Each of the events described in the foregoing clauses (ii) through (vi) shall be referred to individually and collectively as a "For Cause Termination." Notwithstanding any other provision of this Section 3(a), a Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely as a result of the Executive being an employee of any direct or indirect successor to the business or assets of the Company, rather that continuing as an employee of the Company following a Change in Control. For purposes of clause (i) of this Section 3(a), "retirement" shall mean termination of the Executives employment in accordance with the Companys normal retirement policy, generally applicable to its salaried employees, as in effect immediately prior to the change in Control, or in accordance with any retirement arrangement established with respect to the Executive with the Executives express written consent; or
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(b)
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termination by the Executive of the Executives employment with the Company for Good Reason. "Good Reason" shall mean the occurrence of any of the following, provided that in either case the Board has not corrected such material reduction described below within 30 days after written notice by the Executive of such material reduction: (i) there is a material reduction in the Executives duties, rights or responsibilities under the Employment Agreement without his consent, or (ii) there is a material reduction in the aggregate value of the Executives compensation and benefits package from the Company under the Employment Agreement without his consent, other than a reduction in the Executives base salary that is permitted under the Employment Agreement and other than a reduction in compensation and/or benefits affecting a broad group of employees of the Company as determined by the Board in good faith in its sole discretion; (iii) there is a relocation of the Companys offices at which the Executive is principally employed as of the date of this Agreement to a location more than 50 miles from such offices, or the requirement by the Company for the Executive to be based anywhere other than the Companys offices at such location, except for required travel on the Companys business to an extent substantially consistent with the Executives business travel obligations immediately prior to the date hereof.
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4.
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Retention Bonus Payment
. Provided the Executive is employed by the Company on the Retention Payment Date (as defined below), the Company shall pay to the Executive an amount equal to Three Million Eight Hundred Thousand Dollars ($3,800,000). Said amount shall be paid in one lump sum payment no later than 31 days following the Retention Payment Date. The Company shall also pay to the Executive all reasonable legal and arbitration fees and expenses incurred by the Executive in obtaining or enforcing any right or benefit provided by this Agreement, except in cases involving frivolous or bad faith litigation initiated by the Executive. "Retention Payment Date" shall mean the date that is 11 months following a Change in Control. Notwithstanding anything herein to the contrary, for purposes of this Plan, the Executive shall be deemed to be employed on the Retention Payment Date and therefore entitled to receive the bonus payment provided by this Section 4 in the event the Executive experiences a Terminating Event after a Change in Control or within six months before a Change in Control.
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5.
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Additional Benefits
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(a)
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Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Severance Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, ("the Code"), or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Severance Payments, any Federal, state and local income tax, employment tax and Excise Tax upon the payment provided by this subsection, and any interest and/or penalties assessed with respect to such Excise Tax, shall be equal to the Severance Payments.
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(b)
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Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by the Companys independent certified public accounting firm (the "Accounting Firm"), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of the Executives residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. The initial Gross-Up Payment, if any, as determined pursuant to this Section 5(b), shall be paid to the Executive within five days of the receipt of the Accounting Firms determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Company shall furnish the Executive with an opinion of counsel that failure to report the Excise Tax on the Executives applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an "Underpayment"). In the event that the Company exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred, consistent with the calculations required to be made hereunder, and the Company shall make an additional payment to or for the benefit of the Executive such that the net amount retained by the Executive, after deduction of any Federal, state and local income tax, employment tax and Excise Tax upon the payment provided by this subsection, and any interest and/or penalties assessed with respect to such Underpayment or in connection with the proceedings described in Section 5(c).
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(c)
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The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
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(i)
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give the Company any information reasonably requested by the Company relating to such claim,
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(ii)
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take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company,
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(iii)
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cooperate with the Company in good faith in order effectively to contest such claim, and
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(iv)
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permit the Company to participate in any proceedings relating to such claim; provided, however that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such contest and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension by the Company of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due shall be limited solely to such contested amount. Furthermore, the Companys control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority.
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(d)
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If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Companys complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
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6.
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Term
. This Agreement shall take effect on the date first set forth above and shall terminate upon the earlier of (a) immediately prior to a For Cause Termination by the Company of the employment of the Executive, (b) the resignation of the Executive other than for Good Reason, (c) immediately prior to the resignation of the Executive if any event that would constitute grounds for a For Cause Termination of the Executives employment has occurred and is continuing, or (d) the payment of all amounts owed hereunder to the Executive following the first Change in Control after the date hereof.
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7.
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Withholding
. All payments made by the Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.
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8.
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Notice and Date of Termination; Disputes; Etc
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(a)
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Notice of Termination
. During the term of this Agreement, any purported termination of the Executives employment (other than by reason of a Death Termination) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 8. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and the Date of Termination.
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(b)
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Date of Termination
. "Date of Termination", with respect to any purported termination of the Executives employment during the term of this Agreement, shall mean (i) if there is a Disability Termination, 30 days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executives duties during such 30-day period) and (ii) if the Executives employment is terminated for any other reason, the date specified in the Notice of Termination. In the case of a termination by the Company other than a For Cause Termination (which may be effective immediately), the Date of Termination shall not be less than 30 days after the Notice of Termination is given. In the case of a termination by the Executive, the Date of Termination shall not be less than 15 days from the date such Notice of Termination is given. Notwithstanding Section 3(a) of this Agreement, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a Terminating Event for purposes of Section 3(a) of this Agreement.
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(c)
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No Mitigation
. The Company agrees that, if the Executives employment by the Company is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 4 hereof. Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer.
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(d)
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Settlement and Arbitration of Disputes
. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled exclusively by arbitration in accordance with the laws of the State of North Carolina by three arbitrators, one of whom shall be appointed by the Company, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Charlotte, North Carolina. Such arbitration shall be conducted in the City of Charlotte, North Carolina in accordance with the rules of the American Arbitration Association for commercial arbitrations, except with respect to the selection of arbitrators which shall be as provided in this Section 8(d). Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
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9.
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Assignment
. Neither the Company nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party, and without such consent any attempted transfer shall be null and void and of no effect. This Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns. In the event of the Executives death after the Retention Payment Date but prior to the completion by the Company of all payments due him under Section 4 of this Agreement, the Company shall continue such payments to the Executives beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation).
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10.
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Enforceability
. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
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11.
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Waiver
. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.
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12.
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Notices
. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, to the Executive at the last address the Executive has filed in writing with the Company, or to the Company at its main office, attention of the Board.
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13.
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Effect on Other Plans
. Nothing in this Agreement shall be construed to limit the rights of the Executive under the Companys benefit plans, programs or policies except as otherwise provided in Section 5 hereof.
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14.
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Amendment
. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.
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15.
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Governing Law
. This Agreement shall be construed under and be governed in all respects by the laws of the State of North Carolina.
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16.
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Obligations of Successors
. In addition to any obligations imposed by law upon any successor to the Company, the Company will use its reasonable best efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company 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 if no such succession had taken place.
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17.
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Confidential Information
. The Executive shall never use, publish or disclose in a manner adverse to the Companys interests, any proprietary or confidential information relating to (a) the business, operations or properties of the Company or any Subsidiary or other affiliate of the Company, or (b) any materials, processes, business practices, technology, know-how, research, programs or other information used in the business of the Company or any Subsidiary or other affiliate of the Company, provided, however, that no breach or alleged breach of this Section 17 shall entitle the Company to fail to comply fully and in a timely manner with any other provision hereof. Nothing in this Agreement shall preclude the Company from seeking money damages, or equitable relief by injunction or otherwise without the necessity of proving actual damage to the Company, for any breach by the Executive hereunder.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company by its duly authorized officer, and by the Executive, as of the date first above written.
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COMPANY:
SUMMIT PROPERTIES INC.
By:
/s/ Michael G. Malone
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Name: Steven R. LeBlanc
Title: President & Chief Executive Officer
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EXECUTIVE:
/s/ Steven R. LeBlanc
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