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EXHIBIT 10.41
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 31st day of December, 1998, but shall be effective as of January 1,
1999, by and between SUN COMMUNITIES, INC., a Maryland corporation (the
"Company"), and BRIAN W. FANNON (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to continue the employment of the
Executive, and the Executive desires to continue to be employed by the Company,
on the terms and subject to the conditions set forth below.
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 Operating 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, 1999 and shall continue thereafter for a period of three (3) years
ending on December 31, 2001.
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 below) during the term of
this Agreement.
4. Compensation.
(a) 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 One Hundred
Thousand Dollars ($100,000.00) per year, payable in accordance with the
Company's usual pay practices (and in any event no less
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frequently than monthly).
(c) Annual Salary Increase. On January 1 of each year,
commencing January 1, 2000, the Base Salary shall be increased by five percent
(5%) of the Base Salary for the immediately prior year or such greater increase
as may be deemed appropriate by the Board, in its sole and absolute discretion.
(d) Bonus. The Board shall prepare and adopt an executive
bonus plan (the "Bonus Plan") which shall be established for the payment of an
incentive bonus to the Executive based on the Company achieving certain
performance criteria to be established by the Company and the Executive. Such
Bonus Plan shall utilize the same bonus-formula methodology as that used in the
bonus plans for the Company's Chief Executive Officer and Chief Financial
Officer. Upon adoption, a copy of the Bonus Plan shall be attached to this
Agreement and incorporated herein, and the Executive shall be eligible to
receive an award under the Bonus Plan on the terms and conditions set forth in
that document; provided, however, that such bonus shall not exceed fifty percent
(50%) of the Executive's then current Base Salary.
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 four
(4) weeks vacation time each year without loss of compensation which shall be
scheduled with the advance approval of the Company. In the event that the
Executive is unable for any reason to take the total amount of vacation time
authorized herein during any year, he may accrue such unused time and add it to
the vacation time for any following year; provided, however, that no more than
ten (10) days of accrued vacation time may be carried over at any time (the
"Carry-Over Limit"). In the event that the Executive has accrued and unused
vacation time in excess of the Carry-Over Limit (the "Excess Vacation Time"),
the Excess Vacation Time shall be paid to the Executive within ten (10) days of
the end of the year in which the Excess Vacation Time was earned based on the
Base Salary then in effect. Upon any termination of this Agreement for any
reason whatsoever, accrued and unused vacation time (not to exceed twenty (20)
business days) shall be paid to the Executive within ten (10) days of such
termination based on the Base Salary in effect on the date of such termination.
For purposes of this Agreement, one-twelfth (1/12) of the applicable annual
vacation shall accrue on the last day of each month that the Executive is
employed under this Agreement.
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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.
(a) The Executive's employment under this Agreement may be
terminated:
(i) by either the Executive or the Company at any
time for any reason whatsoever or for no reason upon not less than
thirty (30) days written notice;
(ii) by the Company at any time for "cause" as
defined below, without prior notice; and
(iii) upon the Executive's death.
(b) For purposes hereof, for "cause" shall mean the material
breach of any provision of this Agreement by the Executive, or any action of the
Executive (or the Executive's failure to act), which, in the reasonable
determination of the Board, involves malfeasance, fraud, or moral turpitude, or
which, if generally known, would or might have a material adverse effect on the
Company and/or its reputation.
8. Severance Compensation.
(a) In the event that the Company terminates the Executive's
employment under this Agreement without "cause" pursuant to paragraph 7(a)(i)
hereof, the Executive shall be entitled to any unpaid 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 with paragraph 12 of this 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 this Agreement for "cause" or if the Executive voluntarily terminates his
employment hereunder, the Executive shall be entitled to no further compensation
or other benefits under this Agreement, except only as to any unpaid 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 hereof or the Executive's breach of any provision of that
certain Reimbursement Agreement by and between the Executive and Sun
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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 hereof.
9. Affiliates. Upon any termination of the Executive's employment
under this Agreement, (a) 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, including, without limitation, Sun Home Services, Inc. ("Sun
Homes"), and (b) that certain Employment Agreement, of even date herewith,
between Sun Homes and the Executive shall be automatically terminated.
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 below) 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), (ii) upon a Change in Control under paragraph 10(f)(ii), 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 two and 99/100 (2.99) times
the Base Salary in effect on the date of such Change in Control,
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 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 this Agreement is terminated in
accordance with paragraph 7(a)(i) 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
this Agreement is terminated by the Company or its successor in accordance with
paragraph 7(a)(i) 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, Severance Payment, and the exercise or
surrender of stock options as a result of the
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Change in Control.
(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.
(f) For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred:
(i) if any person or group of persons acting together
(other than (a) the Company or any person (I) who on December 1, 1998
was a director or officer of the Company, or (II) whose shares of
Common Stock of the Company are treated as "beneficially owned" by any
such director or officer, or (b) any institutional investor (filing
reports under Section 13(g) rather than 13(d) of the Securities
Exchange Act of 1934, as amended, including any employee benefit plan
or employee benefit trust sponsored by the Company)), becomes a
beneficial owner, directly or indirectly, of securities of the Company
(including convertible securities) representing twenty percent (20%) or
more of either the then-outstanding Common Stock of the Company or the
combined voting power of the Company's then-outstanding voting
securities;
(ii) if the directors or stockholders of the Company
approve an agreement to merge into or consolidate with, or to sell all
or substantially all of the Company's assets to, any person (other than
a wholly-owned subsidiary of the Company formed for the purpose of
changing the Company's corporate domicile); or
(iii) if the new directors appointed to the Board during
any twelve-month period constitute a majority of the members of the
Board, unless (I) the directors who were in office for at least twelve
(12) months prior to such twelve-month period (the "Incumbent
Directors") plus (II) the new directors who were recommended or
appointed by a majority of the Incumbent Directors constitutes a
majority of the members of the Board.
For purposes of this paragraph 10(f), a "person" includes an
individual, a partnership, a corporation, an association, an unincorporated
organization, a trust or any other entity.
11. Stock Options. In the event of termination of the Executive's
employment under this Agreement for "cause", all stock options or other stock
based compensation awarded to the Executive shall lapse and be of no further
force or effect whatsoever in accordance with the Company's Amended and Restated
1993 Stock Option Plan. In the event that the Company terminates the Executive's
employment under this Agreement without "cause" or upon the death of the
Executive, all stock options and other stock based compensation awarded to the
Executive shall become fully vested and immediately exercisable; provided,
however, that such options and other stock based compensation cannot be
exercised until the expiration of the Noncompetition Period (as defined in
paragraph 12 below) and such stock options or other stock based compensation
shall be automatically forfeited upon the Executive's breach of any of the
provisions of paragraph 12 hereof. Any Stock Option Agreements between the
Company and the Executive shall be amended to conform to the provisions of this
paragraph 11. In the event of an inconsistency between the terms of a Stock
Option Agreement and the terms of this Agreement, the terms of this Agreement
shall control.
12. Covenant Not To Compete and Confidentiality.
(a) The Executive acknowledges the Company's reliance and
expectation of
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the Executive's continued commitment to performance of his duties and
responsibilities under this Agreement. In light of such reliance and expectation
on the part of the Company and as an inducement for the Company to enter into
this Agreement, the Executive agrees that:
(i) for a period commencing on the date of this Agreement
and ending upon the expiration of twelve (12) months following the
termination of the Executive's employment under this Agreement for any
reason, including, without limitation, the expiration of the term (the
"Noncompetition Period"), the Executive shall not, directly or
indirectly, engage in, or have an interest in or be associated with
(whether as an officer, director, stockholder, partner, associate,
employee, consultant, owner or otherwise) any corporation, firm or
enterprise which is engaged in (A) the development, ownership, leasing,
management or financing of manufactured housing communities, (B) the
sales of manufactured homes, or (C) any other business which is
competitive with the business then or at any time during the term of
this Agreement conducted or proposed to be conducted by the Company, or
any corporation owned or controlled by the Company or under common
control with the Company (the "Affiliates"), anywhere within the
continental United States or Canada; provided, however, that,
notwithstanding anything to the contrary herein, in the event that the
Executive voluntarily terminates his employment with the Company, the
Noncompetition Period shall extend until the later of the remainder of
the initial 3-year term of this Agreement or the expiration of twelve
(12) months following the termination of Executive's employment under
this Agreement;
(ii) the Executive shall not at any time, for so long as any
Confidential Information (as defined below) shall remain confidential
or otherwise remain wholly or partially protectable, either during the
term of this Agreement or thereafter, use or disclose, directly or
indirectly, to any person outside of the Company or any Affiliate any
Confidential Information;
(iii) promptly upon the termination of this Agreement for any
reason, the Executive (or in the event of the Executive's death, his
personal representative) shall return to the Company any and all copies
(whether prepared by or at the direction of the Company or the
Executive) of all records, drawings, materials, memoranda and other
data constituting or pertaining to Confidential Information;
(iv) for a period commencing on the date of this Agreement
and ending upon the expiration of the Noncompetition Period, the
Executive shall not, directly or indirectly, divert, or by aid to
others, do anything which would tend to divert, from the Company or any
Affiliate any trade or business with any customer or supplier with whom
the Executive had any contact or association during the term of the
Executive's employment with the Company or with any party whose
identity or potential as a customer or supplier was confidential or
learned by the Executive during his employment by the Company; and
(v) for a period commencing on the date of this Agreement
and ending upon the expiration of the Noncompetition Period, the
Executive shall not, either directly or indirectly, induce or attempt
to induce any person with whom the Executive was acquainted while in
the Company's employ to leave the employment of the Company or any of
the Affiliates.
As used in this Agreement, the term "Confidential Information" shall
mean all business information of any nature and in any form which at the time or
times concerned is not generally
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known to those persons engaged in business similar to that conducted or
contemplated by the Company or any Affiliate (other than by the act or acts of
an employee not authorized by the Company to disclose such information) and
which relates to any one or more of the aspects of the present or past business
of the Company or any of the Affiliates or any of their respective predecessors,
including, without limitation, patents and patent applications, inventions and
improvements (whether or not patentable), development projects, policies,
processes, formulas, techniques, know-how, and other facts relating to sales,
advertising, promotions, financial matters, customers, customer lists, customer
purchases or requirements, and other trade secrets.
(b) The Executive agrees and understands that the remedy at
law for any breach by him of this paragraph 12 will be inadequate and that the
damages flowing from such breach are not readily susceptible to being measured
in monetary terms. Accordingly, it is acknowledged that, upon adequate proof of
the Executive's violation of any legally enforceable provision of this paragraph
12, the Company shall be entitled to immediate injunctive relief and may obtain
a temporary order restraining any threatened or further breach. Nothing in this
paragraph 12 shall be deemed to limit the Company's remedies at law or in equity
for any breach by the Executive of any of the provisions of this paragraph 12
which may be pursued or availed of by the Company.
13. Arbitration. Any dispute or controversy arising out of or
relating to this Agreement 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. Nothing contained in
this paragraph 13 shall be construed to preclude the Company from obtaining
injunctive or other equitable relief to secure specific performance or to
otherwise prevent a breach or contemplated breach of this Agreement by the
Executive as provided in paragraph 12 hereof.
14. 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:
Sun Communities, 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
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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.
15. 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.
(d) This Agreement supersedes all agreements and
understandings between the parties and may not be modified or terminated orally.
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.
(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
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instrument.
(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 COMMUNITIES, INC.,
a Maryland corporation
By: /s/ Gary A. Shiffman
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Gary A. Shiffman, President
EXECUTIVE:
/s/ Brian W. Fannon
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BRIAN W. FANNON
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