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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as
of
February 23, 2005, but effective as of January 1, 2005, by and
between SUN
COMMUNITIES, INC., a Maryland corporation (the "Company"), and
BRIAN W. FANNON
(the "Executive").
WITNESSETH:
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
Executive Vice President and 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 Company's Chief Executive Officer or
the Board of
Directors of the Company (the "Board"), which duties shall be
consistent with
the Executive's positions 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.
(a) Subject to the provisions for termination provided below,
the
term of the Executive's employment under this Agreement shall
commence on
January 1, 2005 and shall continue thereafter for a period of
five (5) years
ending on December 31, 2009; provided, however, that the term of
this Agreement
shall be automatically extended for successive terms of one (1)
year each
thereafter, 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.
(b) Executive acknowledges and agrees that Executive is an
"at-will" employee and that Executive's employment may be
terminated, with or
without cause, at the option of Executive or the Company.
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
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.
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(b) Base Compensation. As compensation for the services to
be
performed hereunder, the Company shall pay to the Executive,
during his
employment hereunder, an annual base salary (the "Base Salary")
of Four Hundred
Three Thousand Seven Hundred Dollars ($403,700.00) per year,
payable in
accordance with the Company's usual pay practices (including tax
withholding),
but in no event less frequently than monthly.
(c) COLA Adjustment. At the beginning of each calendar year
of
this Agreement, commencing with January 1, 2006, and on such
date each year
thereafter (the "Adjustment Date"), the Base Salary shall be
increased in
accordance with the increase, if any, in the cost of living
during the preceding
one year as determined by the percentage increase in the
Consumers Price
Index-All Urban Consumers (U.S. City Average/all items)
published by the Bureau
of Labor Statistics of the U.S. Department of Labor (the
"Index"). The average
Index for calendar years 2003 and 2004 shall be considered the
"Base." The Base
Salary for the calendar year following each Adjustment Date
shall be the Base
Salary specified in Paragraph 4(b) increased by the percentage
increase, if any,
in the Index for the calendar year immediately preceding the
Adjustment Date
over the Base. In the event the Index shall cease to be
published or the formula
underlying the Index shall change materially from the formula
used for the Index
as of the date hereof, then there shall be substituted for the
Index such other
index of similar nature as is then generally recognized and
accepted. In no
event shall the Base Salary during each adjusted calendar year
be less than that
charged during the preceding year of this Agreement.
(d) Incentive Compensation. The Company shall pay to the
Executive
incentive compensation ("Incentive Compensation") in an amount
up to 100% of the
Base Salary for each calendar year that the Executive is
employed under this
Agreement ("Bonus Year"), which Incentive Compensation shall be
determined and
calculated with respect to each Bonus Year as follows: (i) if,
in the sole
discretion of the Compensation Committee of the Board, the
Executive fulfills
his individual goals and objectives for such Bonus Year as
approved by the
Compensation Committee, the Executive shall receive Incentive
Compensation in
the amount of 25% of the then current Base Salary; (ii) if, in
the sole
discretion of the Compensation Committee, the Company achieves
the FFO and
financial budget objectives approved by the Company's Board of
Directors at the
beginning of such Bonus Year, the Executive shall receive
Incentive Compensation
in the amount of 50% of the then current Base Salary; and (iii)
the remaining
25% of the Incentive Compensation may be awarded to the
Executive in the sole
discretion of the Compensation Committee for extraordinary
performance during
such Bonus Year. The determination of the Incentive Compensation
shall be made
by the Company no later than March 1 for the preceding Bonus
Year by reference
to the Company's audited financial statements. Unless otherwise
specified by the
Company's Chief Executive Officer, one-twelfth of such Incentive
Compensation
shall be paid monthly during the year following such Bonus Year;
provided,
however, in the event that the Executive voluntarily terminates
his employment
under this Agreement pursuant to paragraph 7(a)(i) hereof or the
Executive's
employment under this Agreement is terminated with "cause"
pursuant to paragraph
7(a)(ii) hereof, the Executive shall not be entitled to any
unpaid Incentive
Compensation.
(e) Phantom Stock. In the event that the Executive is employed
by
the Company on such dates, on each date that the Company pays a
dividend on its
common stock through May 10, 2007, the Company shall pay the
Executive a cash
bonus in an amount equal to the amount of the dividend
multiplied by the Time
Units (as defined below). In the event that the Executive is
employed by the
Company on May 10, 2007, the Company shall promptly thereafter
pay to Executive
a cash bonus in an amount equal to the product of the Time Units
and the Fair
Market Value (as such term is defined in the Company's Second
Amended and
Restated 1993 Stock Option Plan) on May 10, 2007. In the event
that the
Executive is employed by the
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Company through the initial term of this Agreement (i.e., until
at least
December 31, 2009), the Company shall pay to Executive, no later
than March 10,
2010, a cash bonus in an amount equal to the product of the
Performance Units
(as defined below) and the Fair Market Value on March 1, 2010.
For purposes
hereof, (i) "Time Units" means 6,250 (as such number may be
appropriately
adjusted in the discretion of the Company to take into account
any stock
dividend, stock split, combination or exchange of shares, or
other similar event
affecting the capital structure of the Company); and (ii)
"Performance Units"
means a "specified percentage" of 18,750 (as such number may be
appropriately
adjusted in the discretion of the Company to take into account
any stock
dividend, stock split, combination or exchange of shares, or
other similar event
affecting the capital structure of the Company) determined on
the basis of the
compound annual growth rate of the Company's funds from
operations per weighted
average number of outstanding shares of the Company's common
stock on a fully
diluted basis (as determined by reference to the Company's
audited financial
statements) (the "Per Share FFO") for the period commencing
January 1, 2005 and
ending December 31, 2009 ("CAGR"), determined by comparing the
Per Share FFO for
the year ending December 31, 2009 to the Per Share FFO for the
year ending
December 31, 2005, as follows:
<TABLE>
<CAPTION>
At least 5% At least 7% At least 8%
Less but less than At least 6% but but less but less than
CAGR than 5% 6% less than 7% than 8% 9% At least 9%
-------------------- ------- ------------- ---------------
----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
<C>
Specified Percentage 0 46.67% 73.33% 86.67% 93.33% 100%
</TABLE>
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 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. Nothing contained in this Agreement shall be
construed to
create any obligation on the part of the Company to establish
any such plan or
to maintain the effectiveness of any such plan which may be in
effect from time
to time.
(c) Annual Vacation. The Executive shall be entitled to five
(5)
weeks vacation time each year, without loss of compensation. The
Executive shall
not take more than fourteen (14) consecutive calendar days of
vacation without
the prior approval of the Company's Chief Executive Officer. 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) business 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
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in effect on the date of such termination. For purposes of this
Agreement,
one-twelfth (1/12) of the applicable annual vacation time shall
accrue on the
last day of each calendar month that the Executive is employed
under this
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,
entertainment
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 sixty
(60) 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: (i) a
material
breach of any provision of this Agreement by Executive (if the
breach is
curable, it will constitute cause only if it continues uncured
for a period of
twenty (20) days after Executive's receipt of written notice of
such breach from
the Company); (ii) Executive's failure or refusal, in any
material manner, to
perform all lawful services required of him pursuant to this
Agreement, which
failure or refusal continues for more than twenty (20) days
after Executive's
receipt of written notice of such deficiency; (iii) Executive's
commission of
fraud, embezzlement or theft, or a crime constituting moral
turpitude, in any
case, whether or not involving Company, that in the reasonable
good faith
judgment of the Company, renders Executive's continued
employment harmful to the
Company; (iv) Executive's misappropriation of Company assets or
property,
including, without limitation, obtaining reimbursement through
fraudulent
vouchers or expense reports; or (v) Executive's conviction or
the entry of a
plea of guilty or no contest by Executive with respect to any
felony or other
crime that, in the reasonable good faith judgment of the
Company, adversely
affects the Company or its reputation or business.
8. Compensation Upon Termination or Disability.
(a) In the event that the Company terminates the Executive's
employment under this Agreement without "cause" pursuant to
paragraph 7(a)(i),
(i) the Executive shall be entitled to any accrued and unpaid
Base Salary,
Incentive Compensation and benefits through the effective date
of such
termination, prorated for the number of days actually employed
in the then
current calendar year, which shall be paid by the Company to the
Executive
within thirty (30) days of the effective date of such
termination, and (ii)
subject to the Executive's execution of a general release of
claims in a form
satisfactory to the Company, the Company shall pay the Executive
monthly an
amount equal to one-twelfth (1/12) of the Base Salary (at the
rate that would
otherwise have been payable under this Agreement) 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
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Executive's termination of employment and the Severance Payment
shall not be due
Executive if Executive is entitled to Change in Control Benefits
(as defined in
paragraph 10 below).
(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
accrued and unpaid
Base Salary and benefits through the effective date of such
termination,
prorated for the number of days actually employed in the then
current calendar
year.
(c) 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
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