EXHIBIT 10.59
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 31st day of December, 2002, but shall be effective as of January 1,
2003, by and between SUN HOME SERVICES, INC., a Michigan corporation (the
"Company"), and BRIAN W. FANNON (the "Executive").
PRELIMINARY NOTE
This Agreement is entered into contemporaneously with that certain
Employment Agreement (the "Sun Agreement") by and between the Executive and Sun
Communities, Inc., a Maryland corporation ("Sun Communities"), and, in the event
of any contradiction between the terms of this Agreement and the terms of the
Sun Agreement, the Sun Agreement shall control.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, the parties agree as follows:
1. Employment.
(a) The Company agrees to employ the Executive and the
Executive accepts the employment, on the terms and subject to the conditions set
forth below. During the term of employment hereunder, the Executive shall serve
as the Chief Executive Officer of the Company, and shall do and perform
diligently all such services, acts and things as are customarily done and
performed by such officers of companies in similar business and in size to the
Company, together with such other duties as may reasonably be requested from
time to time by the Board of Directors of the Company (the "Board"), which
duties shall be consistent with the Executive's position as set forth above.
(b) For service as an officer and employee of the Company, the
Executive shall be entitled to the full protection of the applicable
indemnification provisions of the Articles of Incorporation and Bylaws of the
Company, as they may be amended from time to time.
2. Term of Employment.
Subject to the provisions for termination provided below, the
term of the Executive's employment under this Agreement shall commence on
January 1, 2003 and shall continue thereafter for a period of three (3) years
ending on December 31, 2005; provided, however, that the term of this Agreement
shall be automatically extended for successive terms of one (1) year each,
unless either party notifies the other party in writing of its desire to
terminate this Agreement at least thirty (30) days before the end of the term
then in effect.
3. Devotion to the Company's Business.
The Executive shall devote his best efforts, knowledge, skill,
and his entire productive time, ability and attention to the business of the
Company and its Affiliates (as defined in paragraph 12 of the Sun Agreement)
during the term of this Agreement.
4. Compensation.
(a) General Statement. During the term of this Agreement, the
Company shall pay or provide, as the case may be, to the Executive the
compensation and other benefits and rights set forth in paragraphs 4, 5 and 6 of
this Agreement.
(b) Base Compensation. As compensation for the services to be
performed hereafter, the Company shall pay to the Executive, during his
employment hereunder, an annual base salary (the "Base Salary") of Two Hundred
Sixty Seven Thousand Dollars ($267,000.00) per year, payable in accordance with
the Company's usual pay practices (and in any event no less frequently than
monthly).
(c) Bonus. The Executive shall be entitled to an annual bonus
of up to fifty percent (50%) of the Base Salary upon the Company's attainment of
certain performance milestones in accordance with the Company's executive
employee bonus program (as the same may change from time to time in the
discretion of the Board).
5. Benefits.
(a) Insurance. The Company shall provide to the Executive
life, medical and hospitalization insurance for himself, his spouse and eligible
family members as may be determined by the Board to be consistent with the
Company's standard policies.
(b) Benefit Plans. The Executive, at his election, may
participate, during his employment hereunder, in all retirement plans, 401(K)
plans and other benefit plans of the Company generally available from time to
time to other executive employees of the Company and for which the Executive
qualifies under the terms of the plans (and nothing in this Agreement shall or
shall be deemed to in any way affect the Executive's right and benefits under
any such plan except as expressly provided herein). The Executive shall also be
entitled to participate in any equity, stock option or other employee benefit
plan that is generally available to senior executives, as distinguished from
general management, of the Company. The Executive's participation in and
benefits under any such plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan.
(c) Annual Vacation. The Executive shall be entitled to the
vacation time specified in the Sun Agreement. Any vacation time used by the
Executive under the Sun Agreement shall be deemed vacation time under this
Agreement and any vacation time used by the Executive under this Agreement shall
be deemed vacation time under the Sun Agreement.
6. Reimbursement of Business Expenses.
The Company shall reimburse the Executive or provide him with
an expense allowance during the term of this Agreement for travel, car
telephone, and other expenses reasonably and necessarily incurred by the
Executive in connection with the Company's business. The Executive shall furnish
such documentation with respect to reimbursement to be paid hereunder as the
Company shall reasonably request.
7. Termination of Employment.
This Agreement, and the Executive's employment hereunder, shall be
automatically terminated upon termination of the Sun Agreement.
8. Severance Compensation.
(a) In the event that Sun Communities terminates the
Executive's employment under the Sun Agreement without "cause" pursuant to
paragraph 7(a)(i) thereof, the Executive shall be entitled to any unpaid Base
Salary, bonus and benefits accrued and earned by him hereunder up to and
including the effective date of such termination and the Company shall pay the
Executive monthly an amount equal to one-twelfth (1/12) of the Base Salary in
effect on the date of such termination for a period of up to twelve (12) months
if the Executive fully complies
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with paragraph 12 of the Sun Agreement (the "Severance Payment").
Notwithstanding the foregoing, the Company, in its sole discretion, may elect to
make the Severance Payment to the Executive in one lump sum due within thirty
(30) days of the Executive's termination of employment.
(b) In the event of termination of the Executive's employment
under the Sun Agreement for "cause" or if the Executive voluntarily terminates
his employment under this Agreement or the Sun Agreement, the Executive shall be
entitled to no further compensation or other benefits under this Agreement,
except only as to any unpaid Base Salary, bonus and benefits accrued and earned
by him hereunder up to and including the effective date of such termination.
(c) Regardless of the reason for termination of the
Executive's employment hereunder, bonuses and benefits shall be prorated for any
period of employment not covering an entire year of employment.
(d) Notwithstanding anything to the contrary in this paragraph
8, the Company's obligation to pay, and the Executive's right to receive, any
compensation under this paragraph 8, including, without limitation, the
Severance Payment, shall terminate upon the Executive's breach of any provision
of paragraph 12 of the Sun Agreement or the Executive's breach of any provision
of that certain Reimbursement Agreement by and between the Executive and Sun
Communities Operating Limited Partnership. In addition, the Executive shall
promptly forfeit any compensation received from the Company under this paragraph
8, including, without limitation, the Severance Payment, upon the Executive's
breach of any provision of paragraph 12 of the Sun Agreement.
9. Affiliates. Upon any termination of the Executive's employment under
this Agreement, the Executive shall be deemed to have resigned from any and all
offices or directorships held by the Executive in the Company and/or the
Affiliates.
10. Effect of Change of Control.
(a) The Company or its successor shall pay the Executive the
Change in Control Benefits (as defined below) if there has been a Change in
Control (as defined in the Sun Agreement) and any of the following events has
occurred: (i) the Executive's employment under this Agreement is terminated in
accordance with paragraph 7(a)(i) of the Sun Agreement, (ii) upon a Change in
Control under paragraph 10(f)(ii) of the Sun Agreement, the Company or its
successor does not expressly assume all of the terms and conditions of this
Agreement, or (iii) there are less than eighteen (18) months remaining under the
term of this Agreement.
(b) For purposes of this Agreement, the "Change in Control
Benefits" shall mean the following benefits:
(i) A cash payment equal to Seven Hundred Ninety
Eight Thousand Three Hundred Thirty Dollars ($798,330.00), payable
within sixty (60) days of the Change in Control; and
(ii) Continued receipt of all compensation and
benefits set forth in paragraphs 5(a) and 5(b) of this Agreement, until
the earlier of (i) one year following the Change in Control (subject to
the Executive's COBRA rights) or (ii) the commencement of comparable
coverage from another employer. The provision of any one benefit by
another employer shall not preclude the Executive from continuing
participation in Company benefit programs provided under this paragraph
10(b)(ii) that are not provided by the subsequent employer. The
Executive shall promptly notify the Company upon
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receipt of benefits from a new employer comparable to any benefit
provided under this paragraph 10(b)(ii).
(c) Notwithstanding anything to the contrary herein, (i) in
the event that the Executive's employment under the Sun Agreement is terminated
in accordance with paragraph 7(a)(i) thereof within sixty (60) days prior to a
Change in Control, such termination shall be deemed to have been made in
connection with the Change in Control and the Executive shall be entitled to the
Change in Control Benefits; and (ii) in the event that the Executive's
employment under the Sun Agreement is terminated by the Company or its successor
in accordance with paragraph 7(a)(i) thereof after a Change in Control and the
Executive was not already entitled to the Change in Control Benefits under
paragraph 10(a)(iii), the Company or its successor shall pay the Executive an
amount equal to the difference between the Change in Control Benefits and the
amounts actually paid to the Executive under this Agreement after the Change in
Control but prior to his termination.
(d) The Change in Control Benefits are in addition to any and
all other Company benefits to which the Executive may be entitled, including,
without limitation, Base Salary, annual bonus, and the exercise or surrender of
stock options as a result of the Change in Control; provided, however, that the
Change in Control Benefits are in lieu of the Severance Payment.
(e) Notwithstanding anything to the contrary contained herein,
the Change in Control Benefits shall be reduced by all other payments to the
Executive which constitute "excess parachute payments" under Section 280(G) of
the Internal Revenue Code of 1986, as amended.
11. Arbitration. Any dispute or controversy arising out of, relating
to, or in connection with this Agreement or Executive's employment hereunder,
whether in contract, tort, or otherwise (including, without limitation, claims
of wrongful termination of employment, claims under Title VII of the Civil
Rights Act, the Fair Labor Standards Act, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, or comparable state or federal laws,
and any other laws dealing with employees' rights and remedies), or the
interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled finally and exclusively by arbitration in the State of
Michigan in accordance with the expedited procedures of the Commercial
Arbitration Rules of the American Arbitration Association then in effect. Such
arbitration shall be conducted by an arbitrator(s) appointed by the American
Arbitration Association in accordance with its rules and any finding by such
arbitrator(s) shall be final and binding upon the parties. Judgment upon any
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof, and the parties consent to the jurisdiction of the courts
of the State of Michigan for this purpose. The parties hereby acknowledge that
it is their intent to expedite the resolution of any dispute, controversy or
claim hereunder and that the arbitrator shall schedule the timing of discovery
and of the hearing consistent with that intent. Nothing contained in this
paragraph 11 shall be construed to preclude the Company from obtaining
injunctive or other equitable relief to secure specific performance or to
otherwise prevent a breach or contemplated breach of the Sun Agreement by the
Executive as provided in paragraph 12 thereof.
12. Notice. Any notice, request, consent or other communication given
or made hereunder shall be given or made only in writing and (a) delivered
personally to the party to whom it is directed; (b) sent by first class mail or
overnight express mail, postage and charges prepaid, addressed to the party to
whom it is directed; or (c) telecopied to the party to whom it is directed, at
the following addresses or at such other addresses as the parties may hereafter
indicate by written notice as provided herein:
If to the Company:
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Sun Home Services, Inc.
31700 Middlebelt Road, Suite 145
Farmington Hills, Michigan 48334
Fax: (248) 932-3072
Attn: Gary A. Shiffman, President
If to the Executive:
Brian W. Fannon
21555 Chase Drive
Novi, Michigan 48375
Fax: (248) 348-0468
In all events, with a copy to:
Jaffe, Raitt, Heuer & Weiss,
Professional Corporation
One Woodward Avenue, Suite 2400
Detroit, Michigan 48226
Fax: (313) 961-8358
Attn: Arthur A. Weiss
Any such notice, request, consent or other communication given or made:
(i) in the manner indicated in clause (a) of this paragraph shall be deemed to
be given or made on the date on which it was delivered; (ii) in the manner
indicated in clause (b) of this paragraph shall be deemed to be given or made on
the third business day after the day in which it was deposited in a regularly
maintained receptacle for the deposit of the United States mail, or in the case
of overnight express mail, on the business day immediately following the day on
which it was deposited in the regularly maintained receptacle for the deposit of
overnight express mail; and (iii) in the manner indicated in clause (c) of this
paragraph shall be deemed to be given or made when received by the telecopier
owned or operated by the recipient thereof.
13. Miscellaneous.
(a) The provisions of this Agreement are severable and if any
one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision to the extent enforceable in any jurisdiction
nevertheless shall be binding and enforceable.
(b) The rights and obligations of the Company under this
Agreement shall inure to the benefit of, and shall be binding on, the Company
and its successors and assigns, and the rights and obligations (other than
obligations to perform services) of the Executive under this Agreement shall
inure to the benefit of, and shall be binding upon, the Executive and his heirs,
personal representatives and assigns. This Agreement is personal to Executive
and he may not assign his obligations under this Agreement in any manner
whatsoever.
(c) The failure of either party to enforce any provision or
protections of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver of any single remedy shall not constitute a waiver of such party's right
to assert all other legal remedies available to it under the circumstances.
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(d) This Agreement (together with the Sun Agreement)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings or agreements relating
thereto. This Agreement may not be modified except by written instrument
executed by the Company and Executive. No modification, termination or attempted
waiver shall be valid unless in writing and signed by the party against whom the
same is sought to be enforced.
(e) This Agreement shall be governed by and construed
according to the laws of the State of Michigan, without regard to the conflicts
of laws principles of the State of Michigan.
(f) Captions and paragraph headings used herein are for
convenience and are not a part of this Agreement and shall not be used in
construing it.
(g) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Copies (whether
photostatic, facsimile or otherwise) of this Agreement may be made and relied
upon to the same extent as though such copy was an original.
(h) Each party shall pay his or its own fees and expenses
incurred in connection with the transactions contemplated by this Agreement,
including, without limitation, any fees incurred in connection with any
arbitration arising out of the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the date first written above.
COMPANY:
SUN HOME SERVICES, INC.,
a Michigan corporation
By:/s/ Gary A. Shiffman
---------------------------------
Gary A. Shiffman, President
EXECUTIVE:
/s/ Brian W. Fannon
------------------------------------
BRIAN W. FANNON
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