EXHIBIT 10.2
EMPLOYMENT AGREEMENT
BETWEEN MID-AMERICA APARTMENT COMMUNITIES, INC.
AND GEORGE E. CATES
AGREEMENT effective February 4, 1994, by and between
Mid-America Apartment Communities, Inc., a Tennessee
corporation (the "Company"), and George E. Cates (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company is a self-administered and self-
managed equity real estate investment trust which has been
formed to make investments in multifamily residential
properties (the "Properties") and to otherwise carry on the
management, marketing, acquisition and development
activities formerly carried on by The Cates Company; and
WHEREAS, the Company desires to employ the Executive to
devote full time to the business of the Company (including,
without limitation, executive management of the Company and
its Properties) and to serve as the President and Chief
Executive Officer (the "CEO") of the Company; and
WHEREAS, the Executive desires to be so employed on the
terms and subject to the conditions hereinafter stated.
NOW, THEREFORE, in consideration of the premises and
mutual obligations hereinafter set forth the parties agree
as follows:
A. Employment. The Company shall employ the
Executive, and the Executive agrees to be so employed, in
the capacity of the President and CEO of the Company to
serve for the Term hereof, subject to earlier termination as
hereinafter provided.
B. Term. The term of the Executive's employment
hereunder (the "Term") shall be for a period of five years,
commencing on February 4, 1994, and continuing until
February 3, 1999, unless terminated earlier as provided
herein.
C. Services. The Executive shall devote
substantially all of his time and attention and best efforts
during normal business hours to the Company's affairs.
Specifically, the Executive shall have complete senior
management authority and responsibility with respect to the
day to day operations and long term management of the
Company and its Properties, as well as implementation of the
long range growth strategy of the Company, consistent with
directions from the Board of Directors. He shall have full
authority and responsibility, subject to the general
direction, approval and control of the Company's Board of
Directors, for formulating policies and administering the
Company and its Properties in all respects. He shall have
the authority to hire and fire Company personnel, to retain
consultants when he deems necessary to implement the Company
policies, to execute contracts on behalf of the Company in
the ordinary course of business and to negotiate for and
cause the Company to acquire new Properties at the direction
of the Board of Directors.
D. Compensation. During the Term, the Company
shall pay the Executive for his services an annual base
salary of Two Hundred and Twenty-Five Thousand Dollars
($225,000.00), to be paid in semi-monthly payments of Nine
Thousand Three Hundred Seventy-Five Dollars ($9,375.00),
such base salary subject to any increases in base
compensation as approved by the Compensation Committee of
the Company's Board of Directors (the "Compensation
Committee").
In addition, the Company may from time to time pay the
Executive other incentive compensation, including but not
limited to stock options or restricted stock, in accordance
with rules and criteria established by the Compensation
Committee. Such criteria may include, but not be limited
to, the growth in Funds from Operations per Unit and share
of Common Stock and/or performance goals.
E. Benefits. The Company agrees to provide the
Executive with the following benefits:
(1) Insurance. The Company shall provide the
Executive with and pay the cost of Group Life and Health
Insurance in amounts established by the Compensation
Committee.
(2) Vacation. The Executive shall be entitled
each year to a vacation, during which time his compensation
shall be paid in full. The time allotted for such vacation
shall be four (4) weeks.
(3) Employee Benefits. This Agreement shall
not be in lieu of any rights, benefits and privileges to
which the Executive may be entitled as a management level
employee of the Company, including but not limited to any
retirement, pension, profit-sharing, insurance, hospital or
other plans which may now be in effect or which may
hereafter be adopted. The Executive shall have the same
rights and privileges to participate in such plans and
benefits as any other management level employee during the
Term.
F. Expenses. The Company recognizes that the
Executive will have to incur certain out-of-pocket expenses,
including but not limited to travel expenses, related to his
services and the Company's business and the Company agrees
to reimburse the Executive for all reasonable expenses
necessarily incurred by him in the performance of his duties
upon presentation of a voucher or documentation indicating
the amount and business purposes of any such expenses.
G. Termination in Case of Death or Disability.
In case of the Executive's death or permanent disability
(defined hereby as complete physical or mental inability,
confirmed by a licensed physician, to perform the services
described in Section 3 above that continues for a period of
one hundred twenty (120) consecutive days), the Company may
elect to terminate the Executive pursuant to the terms of
Section 10.
H. Definitions. For purposes of this Agreement,
the following terms shall have the following definitions:
(1) "Voluntary Termination" means the
Executive's voluntary termination of his employment
hereunder, which may be affected by the Executive's giving
the Board 90 days written notice of the Executive's desire
to terminate his employment or the Executive's failure to
provide substantially all the services described in Section
3 hereof for a period greater than two (2) consecutive weeks
by reason of the Executive's voluntary refusal to perform
such services. Notwithstanding the foregoing, if the
Executive gives notice of Voluntary Termination and, prior
to the expiration of the 90-day notice period, the Executive
voluntarily refuses or fails to provide substantially all
the services described in Section 3 hereof for a period
greater than two consecutive weeks, the Voluntary
Termination shall be deemed to be effective as of the date
on which the Executive so ceases to carry out his duties.
For purposes of this Section 8, voluntary refusal to perform
services shall not include taking vacation otherwise
permitted in accordance with Section 5(b) hereof, the
Executive's failure to perform services on account of his
illness or the illness of a member of his immediate family,
provided such illness is adequately substantiated at the
reasonable request of the Company or any other absence from
service with the written consent of the Board.
(2) "Termination Without Cause" means the
termination of the Executive's employment by the Company for
any reason other than Voluntary Termination or Termination
With Cause.
(3) "Termination With Cause" means the
termination of the Executive's employment by act of the
Board for any of the following reasons:
(i) the Executive's conviction of a
crime involving some act of dishonesty
or moral turpitude (specifically
excepting simple misdemeanors not
involving acts of dishonesty and all
traffic violations);
(ii) the Executive's theft,
embezzlement, misappropriation of or
intentional and malicious infliction of
damage to the Company property or
business opportunity;
(iii) the Executive's intentional
and material breach of the
noncompetition covenant in Section 11
hereof;
(iv) the Executive's continuous neglect
of his duties hereunder or his
continuous failure or refusal to follow
any reasonable, unambiguous duly adopted
written direction of the Board or any
duly constituted committee thereof that
is not inconsistent with the description
of the Executive's duties set forth in
Section 3 above; and
(v) the Executive's abuse of alcohol,
drugs or other substances, or his
engaging in other deviant personal
activities in a manner that, in the
reasonable judgment of the Board,
adversely affects the reputation,
goodwill or business position of the
Company.
(4) "Involuntary Termination" means conduct on
the part of the Company that constitutes continuous and
material interference by the Company with the Executive's
performance of his duties as set forth in Section 3 hereof
or the intentional or material breach by the Company of this
Agreement.
I. Voluntary Termination; Termination With
Cause. If the Executive shall cease being an employee of
the Company on account of a Voluntary Termination or shall
suffer a Termination With Cause, then the Executive shall
not be entitled to any compensation after the effective date
of such Voluntary Termination or Termination With Cause
(except compensation accrued but unpaid on the date of such
event). In the event of such Voluntary Termination or
Termination With Cause, the Executive shall continue to be
subject to the noncompetition covenant contained in Section
11 hereof for the remainder of the five-year period from the
date of execution of the Agreement.
J. Death or Disability; Termination Without
Cause; or Involuntary Termination. If the Executive shall
suffer a death, disability, Involuntary Termination or a
Termination Without Cause, then the Company shall pay the
Executive cash compensation in a lump sum equal to the
lesser of one year's base salary or the amount which may be
deducted by the Company pursuant to Section 280G of the
Internal Revenue Code.
K. Noncompetition. For five years from the
execution of the Agreement, the Executive shall not, other
than in his capacity as officer and director of the Company,
directly or indirectly, for his own account or for the
account of others, either as an officer, director,
stockholder, owner, partner, promoter, employee, consultant,
advisor, agent, manager or in any other capacity, engage in
the acquisition, development, operation, management, leasing
or landscaping of any multifamily community. Such
prohibition extends to all multifamily communities, wherever
located, during the Term of the Executive's employment and
to multifamily properties within thirty (30) miles of any
one of the Properties after termination of the Agreement.
In the event of Termination for Cause or Voluntary
Termination, the Executive shall continue to be restricted
by this Section 11 for the remainder of the five-year
period.
The Executive agrees that damages at law for violation
of the restrictive covenant contained herein would not be an
adequate or proper remedy to the Company, and that should
the Executive violate or threaten to violate any of the
provisions of such covenant, the Company, its successors or
assigns, shall be entitled to obtain a temporary or
permanent injunction against Executive in any court having
jurisdiction over the person and the subject matter,
prohibiting any further violation of any such covenants.
The injunctive relief provided herein shall be in addition
to any award of damages, compensatory, exemplary or
otherwise, payable by reason of such violation.
Furthermore, the Executive acknowledges that this
Agreement has been negotiated at arms length by the parties,
neither being under any compulsion to enter into this
Agreement, and that the foregoing restrictive covenant does
not in any respect inhibit his ability to earn a livelihood
in his chosen profession without violating the restrictive
covenant contained herein. The Company by these presents
has attempted to limit the Executive's right to compete only
to the extent necessary to protect the Company from unfair
competition. The Company recognizes, however, that
reasonable people may differ in making such a determination.
Consequently, the Company agrees that if the scope or
enforceability of the restrictive covenant contained herein
is in any way disputed at any time, a court or other trier
of fact may modify and enforce the covenant to the extent
that it believes to be reasonable under the circumstances
existing at the time.
L. Notices. All notices or deliveries
authorized or required pursuant to this Agreement shall be
deemed to have been given when in writing and personally
delivered or when deposited in the U.S. mail, certified,
return receipt requested, postage prepaid, addressed to the
parties at the following addresses or to such other
addresses as either may designate in writing to the other
party:
To the Company: Mid-America Apartment
Communities, Inc.
6584 Poplar Avenue, Suite 340
Memphis, Tennessee 38138
To the Executive: George E. Cates
6584 Poplar Avenue, Suite 340
Memphis, Tennessee 38138
M. Entire Agreement. This Agreement contains
the entire understanding between the parties hereto with
respect to the subject matter hereof and shall not be
modified in any manner except by instrument in writing
signed, by or on behalf of, the parties hereto; provided,
however, that any amendment or termination of the covenant
of noncompetition in Section 11 must be approved by a
majority of the Independent Directors of the Company (as
defined in the Company's Amended and Restated Charter).
This Agreement shall be binding upon and inure to the
benefit of the heirs, successors and assigns of the parties
hereto.
N. Arbitration. Any claim or controversy
arising out of, or relating to, this Agreement or its
breach, shall be settled by arbitration in accordance with
the governing rules of the American Arbitration Association.
Judgment upon the award rendered may be entered in any court
of competent jurisdiction.
O. Applicable Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of Tennessee.
P. Assignment. The Executive acknowledges that
his services are unique and personal. Accordingly, the
Executive may not assign his rights or delegate his duties
or obligations under this Agreement. The Executive's rights
and obligations under this Agreement shall inure to the
benefit of and shall be binding upon the Executive's
successors and assigns.
Q. Headings. Headings in this Agreement are for
convenience only and shall not be used to interpret or
construe its provisions.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the 4th day of February, 1994.
Mid-America Apartment
Communities, Inc.
By: _______________________________
____/S/ George E. Cates
George E. Cates