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EXHIBIT 10.1
April 10, 1997
Xx. Xxxxxxx X. Xxxx
0000 X. Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Xxxxxxx:
This letter will confirm our Agreement of April 2, 1997 concerning your
resignation and separation from Horizon Group, Inc. ("HGI"), Horizon Xxxx
Outlet Centers Limited Partnership ("Horizon LP") (HGI and Horizon LP being
collectively referred to herein as the "Company") and from all other Horizon
companies and entities, and the termination of your Amended and Restated
Employment Agreement dated as of April 10, 1996 ("Employment Agreement").
1. You have confirmed your previous resignation effective as of February
8, 1997 as Chairman of the Board of Directors, President and Chief Executive
Officer, and your resignation effective as of April 2, 1997 as a Director of
HGI and as an officer and director of HGI Perryville, Inc., MG Third Party
Services Corp., First HGI, Inc., Second HGI, Inc., HGI Management Corp. and
from any other positions honorary or otherwise you hold with HGI, Horizon LP
and any other Horizon company or entity. You have also confirmed that there
are no Agreements for you to be appointed to any position with any Horizon
company or entity.
2. At Closing (which shall be April 28, 1997), you will assign and
transfer to Xxxxxx X. Xxxxxxxx or designee all of the shares you hold in HGI
Perryville, Inc., MG Third Party Services Corp., First HGI, Inc., Second HGI,
Inc. and HGI Management Corp. by delivering the certificates for such shares
(or affidavits of loss for any lost certificates) endorsed (or accompanied by
executed stock powers) to Xxxxxx X. Xxxxxxxx or designee.
3. You have asserted claims against the Company related to
your Employment Agreement, termination of the Employment Agreement and the
circumstances of your resignation. The Company has denied your claims and
asserted claims against you related to your Employment Agreement and certain of
your acts thereunder, and the Company has also asserted claims against you
related to amounts advanced and expended and to fees for services by the
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Company. You and the Company have agreed to resolve all these monetary claims
by your withdrawing and waiving your above-described claims and the Company's
withdrawing and waiving its above described claims, except that you have agreed
to pay the Company the sum of $240,000 at Closing.
4. Upon the Company's discharging of its obligations to you created by
this Agreement, you release the Company from any financial obligation to you
whatsoever, save those obligations created by this Agreement. In giving this
release you represent:
That you have no knowledge of any claim that you can
make against the Company for any reason whatsoever
arising out of your status as an employee or as a
director and/or a shareholder or unit holder of the
Company, save for breach of this Agreement.
Upon your discharging of your obligations to the Company created by this
Agreement, the Company releases you from the following:
Any obligation of any nature whatsoever for future
services under the Employment Agreement; and you, to
induce the Company to give this limited release,
represent that you have no actual knowledge of any
illegal or fraudulent act by the Company.
5. You agree to fully cooperate and assist HGI in any assertion it makes
concerning any of its rights as to the $3,000,000 Xxxxxxx Aquastar note.
6. That certain Amended and Restated Agreement dated as of March 13,
1995 among you, HGI, Horizon LP, XxXxxxxx/Xxxx Realty Corp. and McG Outlet
Centers Limited Partnership (the "Outlot Agreement") is hereby terminated. At
Closing you will deliver to the Company a list of all Outlots (as defined in
the Outlot Agreement) that you or any Affiliate (as defined in the Outlot
Agreement) owns or has an interest in or contract or option to acquire as of
the date of this Agreement. The following is agreed regarding Outlots:
(a) At the Closing, you will sell or cause your Affiliates to sell,
and the Company will purchase, at the out of pocket cost incurred by you
and/or your Affiliates, the interest of you and/or
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your Affiliates in that certain Outlot parcel known as the
Parlberg Parcel (sometimes referred to as Parcel C), constituting
approximately 18 acres adjacent to the Company's Birch Run Shopping
Center which an Affiliate of yours has entered into a contract to
purchase.
(b) You agree that all land owned or under contract or option by you
and/or your Affiliates located south of Birch Run Road (also known as
Main Street), west of I-75 and north of Xxxx Road in Birch Run, Michigan,
including Parcel C, the Xxxxxxxx Parcels, the Xxxxxx Parcels, the Shifter
Parcel and the MDOT parcels, will not, during the period ending February
7, 2007, be developed as a manufacturer's outlet center.
(c) The Company agrees that on or about February 7, 2002, it will
reexamine the restriction contained in subparagraph (b) as to the
necessity of its continuance with respect to the business of the Company;
provided, it shall be within the Company's sole discretion as to whether
to retain or eliminate said restriction.
(d) You will enter into and/or cause your Affiliates having interests
in the lands and parcels referred to in subparagraph (b) to enter into
recordable Agreements embodying the limitations on development described
in subparagraph (b) for each such parcel (in the usual form to be
prepared by our respective attorneys) which will be binding on successors
and assigns.
(e) You further agree that the Company has and shall have no
obligation to you or your Affiliates for any commissions or fees
regarding any of the parcels mentioned in this paragraph 6.
7. At Closing, the Company will transfer to you or your designee the
Company's rights to the MDOT I-75 Parcel subject to the letter-Agreement signed
by HGI on May 20, 1996 and by MDOT on February 21, 1997 concerning the MDOT
I-75 Parcel. HGI will also transfer to you or your designee all its rights
under the MDOT letter-Agreement, and you will assume and discharge all of the
Company's obligations under the MDOT letter Agreement and indemnify the Company
from any liability under that Agreement.
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8. At Closing, the Company will transfer, to you or your designee, without
representation or warranty, all of its right, title and interest to the
registered trademark "every kid deserves a shot."
9. You and the Company have acknowledged that the Woodbury airplane lease
expired as of March 31, 1997.
10. At Closing, HGI will extend the time in which you can exercise the
stock options of HGI you presently own to and including February 7, 1999.
11. You will continue to have any and all rights to any amounts vested
under any HGI employee benefit or pension plan pursuant to the terms of said
plans. Any amounts under any such plan payable to you by the Company upon your
termination of employment will be transferred to you by the Company at Closing
in accordance with the terms of the plan. In addition, the Company will
request any Trustee under any plan holding any amounts or benefits for you to
transfer the same to you at the earliest possible date.
12. The Company acknowledges that you have certain personal property on the
premises of the Company including various artwork and office equipment in the
Company's offices in Norton Shores, Michigan. The parties shall prepare a list
of such property owned by you promptly after the date hereof, and you will
remove such property at your cost and expense within 30 days of the date hereof.
13. HGI and you entered into a Letter Agreement dated July 14, 1995 (the
"Lock-Up Letter") with respect to periods during which you would not effect any
offer, sale, contract to sell or other disposal of any Shares and/or Units (as
those terms are defined in the Lock-Out Letter). At Closing, the Lock-Up
Letter will be amended to provide that during the year 1997 an aggregate of
50,000 Shares are free from the restrictions of the Lock-Up Letter, less the
aggregate number of Shares sold after the date hereof; during 1998, 150,000
Shares are free from the restrictions of the Lock-Up Letter, less the aggregate
number of Shares sold after the date hereof; and in 1999 and thereafter 300,000
Shares are free from the restrictions of the Lock-Up Letter, less the aggregate
number of Shares sold after the date hereof. Except as aforesaid, the Lock-Up
Letter shall remain in full force and effect.
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14. (a) In consideration of the Agreements of the Company herein, you
hereby agree that during the Noncompete Period (as defined in this paragraph
14), without the prior written approval of the Company, you will not, directly
or indirectly,
(i) enter into or in any manner take part in the manufacturer
outlet center business (as defined in this paragraph 14), either
individually or as an officer, director, employee, agent,
consultant, partner, investor (excluding ownership interests in
the Company and passive investments aggregating not more than five
percent (5%) of any such entity's total outstanding voting
securities), principal or otherwise, in the United States
(including Alaska and Hawaii) or Canada;
(ii) solicit, divert, take away or enter into any leases or the
like with, or attempt to solicit, divert, take away or enter into
any leases or the like with, any entity or its Affiliates (as
defined in this paragraph) which during the term of your
employment with the Company leased space at a manufacturer outlet
center owned by the Company or Affiliate of the Company, wherever
located in the United States (including Alaska and Hawaii);
provided, nothing herein shall prohibit you from soliciting,
attempting to solicit, assisting in the solicitation of or
entering into any leases or the like with any entity which was a
tenant in any of the manufacturer outlet centers developed, owned
or operated by the Company in connection with any other activity
(including real estate activity) that is not included in the
definition of the manufacturer outlet center business; or
(iii) solicit, attempt to solicit, advise, hire for employment or
engage, any person who is an employee of the Company or an
Affiliate of the Company as of the date hereof and who works in
the accounting department or the leasing department or who is an
on-site property manager.
As used herein, a "manufacturer outlet center" means a
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shopping center or centers primarily tenanted by manufacturers operating
outlet merchandise stores. As used herein, the "manufacturer outlet center
business" means the development, ownership, operation and/or management of a
"manufacturer outlet center," but does not include the development, operation
or management of any business ancillary to a manufacturer outlet center,
including, but not limited to, a golf course, entertainment facility, a hotel,
hockey rink, theater, gas station, convenience store, or other similar amenity
or ancillary use, including, but not limited to, any retail store or pro shop,
whether or not operated by a tenant of a manufacturer outlet center, included
within any such amenity or ancillary use. As used herein, "Affiliate" means,
when used with respect to an entity or the Company, (i) any Person (as
hereinafter defined) which directly or indirectly controls, is controlled by or
under common control with such entity or the Company, (ii) any Person who
directly or indirectly owns, controls or holds the power to vote ten percent
(10%) or more of the outstanding securities of such entity or the Company. As
used herein, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. As used herein, "Person" means any individual, partnership,
corporation, trust or other entity. As used herein, "Noncompete Period" means
the period commencing on February 8, 1997 and ending on February 8, 1999;
provided, however, with respect to Paragraph 14(a)(iii), the Noncompete Period
shall end on February 8, 1998.
(b) You acknowledge that, as a key executive employee, you have been
involved on a high level in the development, implementation and management of
the Company's national business strategies and plans, including those which
involve the Company's finances, research, marketing, planning, operations,
industrial relations and property acquisitions. By virtue of your unique and
sensitive position and special background, employment of you by a competitor of
the Company would represent a serious competitive danger to the Company, and
the use of your talent and knowledge and information about the Company's
business and strategies can and would constitute a valuable competitive
advantage over the Company; provided, however, that nothing herein shall
prohibit you from using your special background and talent in connection with
any other activity (including real estate activity) that is not included in the
definition of the manufacturer outlet center business.
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(c) You acknowledge that enforcement of the covenants set forth in this
Paragraph 14 and in Paragraph 15 hereof will not prevent you from earning a
living in the real estate industry.
(d) You acknowledge that you have carefully read and considered all of the
terms of this Agreement with the advice of counsel, including particularly the
terms of this Paragraph 14 and of Paragraph 15 hereof, that the Company has
made a substantial investment in the Company's business deserving of protection
and that the restrictions provided in this Paragraph 14 and the following
Paragraph 15 hereof are reasonable and necessary for the Company's protection.
You further acknowledge that damages at law will not be a measurable or
adequate remedy for breach of the covenants contained in this Paragraph 14 or
in Paragraph 15 hereof and, accordingly you consent to the entry by any court
of competent jurisdiction of any order enjoining you from violating any such
covenants without bond. The parties hereto further agree that if, in any
judicial proceeding, a court should refuse to enforce any covenants set forth
in this Paragraph 14 or in Paragraph 15 hereof because of their term or
geographical scope, then such covenants shall be deemed to be modified to
permit their enforcement to the maximum extent permitted by law.
15. (a) You acknowledge and agree that the Company competes in a highly
competitive industry and in competitive markets and that as a senior executive
officer you have had access to proprietary and confidential information and
trade secrets of the Company and its Affiliates and their respective
predecessors. You agree that you will not, without the written consent of the
Company, disclose or knowingly permit any entity under your control to disclose
to anyone not properly entitled to the information, or use for your own benefit
or the benefit of anyone else other than the Company or any Affiliate of the
Company, any such trade secrets or proprietary or confidential information
relating to the Company and its Affiliates.
(b) The Company agrees that it will not, without your written consent,
disclose or knowingly permit any entity under its control to disclose to anyone
not properly entitled to the information or use for its own benefit or the
benefit of anyone else other than you or any of your Affiliates, any such trade
secrets or proprietary or confidential information relating to you and your
Affiliates in possession of the Company. You
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acknowledge and agree that the Company is required to make certain disclosures
as a public company including the filing of this Agreement with the United
States Securities and Exchange Commission, and you consent to such disclosures
and filing.
16. Upon reasonable notice, you will be given reasonable access to the
records of the Company to the extent such records pertain to any property,
partnership or other matter with respect to which you have a personal interest.
The Company will furnish to you copies of such records in reasonable amounts
upon your request.
17. You will transfer to the Company at once all files, records, and
documents concerning the Company's business, properties, plans, etc. and not
keep any copies except as reasonably related to you or your Affiliates.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Michigan without regard to the principles of conflicts
of laws thereof.
19. This Agreement may not be varied, altered, modified, changed, or in
any way amended except by an instrument in writing, executed by the parties
hereto or their legal representatives.
20. This Agreement may be signed and delivered by facsimile machine. The
parties agree that an agreement so transmitted shall have the same force and
effect as if an original executed document had been delivered.
If this letter reflects your understanding of our Agreement, please sign
and return one copy and I will have our lawyers prepare the additional
necessary documents forthwith.
Sincerely,
Horizon Group, Inc.
By: / S / Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx,
President
Agreed:
/ S / Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Dated: April 11 , 1997
