EXHIBIT 10
X. XXXXXXX XXXXXX
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release (the "Agreement") is made
as of the 6th day of March 2001 (the "Effective Date"), by and between X.
Xxxxxxx Xxxxxx (the "Employee") and Konover Property Trust, Inc. (the "Company")
concerning the Employee's resignation from the employ of the Company.
WHEREAS, the Company and the Employee entered into that certain
Employment Agreement dated as of March 1, 1997 (the "Employment Agreement"); and
WHEREAS, the Company and the Employee intend that this Agreement shall
be in complete settlement of all rights of the Employee under the Employment
Agreement or otherwise relating to his employment by the Company and its
affiliates; and
WHEREAS, the terms of this Agreement have been approved by the Board of
Directors and the Compensation Committee of the Company;
NOW THEREFORE, in consideration of the mutual promises and agreements
set forth below, the Company and the Employee agree as follows:
1. The Employee hereby resigns from the employ of the Company as
of the close of business on the Effective Date.
2. The Employee hereby resigns as a Director and officer of the
Company and from all other positions with the Company and all
of its subsidiaries and related entities as of the close of
business on the Effective Date. Employee represents that his
resignation as a Director of the Company is not over a
disagreement with the Company on any matters relating to the
Company's operations, policies or practices.
3. The Employee shall receive a severance payment in the gross
amount of Two Million Five Hundred Thousand Dollars
($2,500,000). The severance payment is conditioned upon the
execution of this Agreement and will be made by wire transfer
on the first business day following the date on which this
Agreement becomes final and binding pursuant to paragraph 16
below. All wire transfers under this Agreement shall be
pursuant to the instructions that are currently in effect for
Employee's normal compensation unless directed otherwise by
the Employee in writing addressed to the Company's general
counsel.
4. The Employee shall receive all vacation pay accrued and
unused, if any, as of the Effective Date to the extent
provided in accordance with the Company's standard policies.
Such payment shall be paid at the time of the first regularly
scheduled payroll date that follows the date on which the
Agreement becomes final and binding pursuant to paragraph 16
below.
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5. The Employee's rights with respect to equity awards shall be
as follows:
(a) Pursuant to an Individual Exchange Agreement
pertaining to the FAC Realty Inc. 1996 Restricted
Stock Plan dated as of November 11, 1997 (the
"Exchange Agreement"), employee has received certain
options ("Repurchase Rights") to acquire Company
Stock. Exhibit A hereto sets forth all such
Repurchase Rights issued with respect to the exchange
of restricted stock.
(i) Column IV of Exhibit A sets forth 225,851 of
such Repurchase Rights which vested prior to
the Effective Date and which, subject to the
terms of the Exchange Agreement (other than
Section 5.P thereof which shall be
considered null and void) and the following
sentence, shall remain outstanding and be
entitled to dividend equivalents in
accordance with their terms until April 1,
2002 (the "Expiration Date"), at which time
if they have not been exercised they will
automatically be cancelled. Notwithstanding
the preceding sentence, if the Company
proposes to terminate the "KEYSOP"
arrangement generally on a reasonable basis
prior to the Expiration Date, it shall treat
the Employee in the same manner as the then
officers of the Company with respect to such
termination and the Employee agrees to a
cancellation of the Repurchase Rights on the
same reasonable basis as applied to such
officers.
(ii) Column V of Exhibit A sets forth 391,299 of
such Repurchase Rights which are hereby
cancelled. In exchange therefor, the Company
agrees to pay the Employee Four Hundred
Thousand Dollars ($400,000) by wire transfer
on or before the first business day after
the date on which this Agreement becomes
final and binding in accordance with
paragraph 16 below and an additional Five
Hundred Thousand Dollars ($500,000) by wire
transfer on or before January 4, 2002.
(iii) The Employee previously exchanged 300,000
stock options awarded on July 16, 1997 for
300,000 Repurchase Rights with an exercise
price of $5.625 per share. The Employee
shall be and hereby is vested in such
300,000 Repurchase Rights, and, subject to
the terms of the Exchange Agreement (other
than Section 5.P thereof which shall be
considered null and void), they shall remain
outstanding and be entitled to dividend
equivalents in accordance with their terms
until the Expiration Date, as defined in
clause (i) above. To the extent not
exercised prior to the Expiration Date, such
300,000 Repurchase Rights shall be
automatically cancelled and the Employee
shall have no rights or interests therein.
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(b) The Employee hereby forfeits any and all interest and
rights with respect to options to purchase 350,000
shares of the Company's common stock awarded to the
Employee as of November 11, 1998, and Repurchase
Rights issued in connection with 140,000 of such
options. In exchange therefor, the Company will pay
the Employee Thirty Five Thousand Dollars ($35,000)
by wire transfer on or before the first business day
following the date on which this Agreement becomes
final and binding in accordance with paragraph 16
below.
The Employee acknowledges that no other awards made to the
Employee are outstanding on the date hereof and that he is
entitled to no other equity awards.
6. The Company shall pay the cost of Employee's COBRA costs with
respect to medical and hospitalization insurance for the
eighteen-month period following the Effective Date.
7. The Employee agrees that no additional payments are due from
the Company on any basis whatsoever other than reimbursements
in accordance with the Company's policies for ordinary and
reasonable expenses incurred on or before the Effective Date.
The preceding sentence shall not limit any payments which the
Employee is entitled to as a shareholder of the Company.
8. Employee agrees to cooperate with the Company and its
affiliates in the defense of any claims that may be made
against the Company and its affiliates relating to the period
in which he was employed by the Company (the "Employment
Period"), and will cooperate with the Company and its
affiliates in the prosecution of any such claims that may be
made by the Company or any affiliate. The Employee expressly
agrees to cooperate with the Company in the pursuit or defense
of any claims against or by any other employees, or former
employees, of the Company regarding their employment or
termination of employment with the Company during the
Employment Period. Employee agrees, unless precluded by law,
to promptly inform the Company if he is asked to participate
(or otherwise become involved) in any claims that may be filed
against the Company or any affiliate relating to the
Employment Period. Employee also agrees, unless precluded by
law, to promptly inform the Company if he is asked to assist
in any investigation (whether governmental or private) of the
Company or any affiliate (or their actions) relating to the
Employment Period, regardless of whether a lawsuit has then
been filed against the Company or any affiliate with respect
to such investigation. The Company agrees to reimburse the
Employee for all reasonable out-of-pocket expenses associated
with such cooperation, including travel expenses. The Company
further agrees to attempt in good faith to accommodate the
Employee's schedule with respect to such cooperation. This
paragraph 8 shall not apply to any action in which the
Employee has an interest which is adverse to the Company, and
shall not preclude the Employee from responding to an inquiry
in an honest manner.
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9. The Employee agrees that on and after the date of this
Agreement, he will not make any statement that disparages the
Company or its subsidiaries or affiliates or its shareholders
or their affiliates or any of their officers, directors or
employees and the Company agrees not to make any statement
which disparages the Employee; provided that the provisions of
this paragraph 9 shall not apply to testimony as a witness,
any disclosure required to be made by the Company, compliance
with other legal obligations, the assertion of or defense
against any claim of breach of this Agreement or the
Employee's statements or disclosures to officers or directors
of the Company, and shall not require either party to make
false statements or disclosures.
10. The Employee agrees that, except as may be required by the
lawful order of a court or agency of competent jurisdiction,
the Employee will keep the terms of this Agreement secret and
confidential until such time as the Company discloses the
Agreement pursuant to the requirements of applicable law.
Notwithstanding the foregoing provisions of this paragraph,
the Employee may disclose the contents of this Agreement to
his attorneys, accountants and financial advisors, and his
immediate family provided that the Employee takes steps that
are reasonably calculated to assure that such persons do not
further disclose the terms of this Agreement.
11. The Employee agrees to assign or cause to be assigned all
interests held by the Employee or any person or entity
affiliated with the Employee in Sunset KPT Investment, Inc.
and xxxxxxxxx.xxx, Inc. to one or more employees of the
Company as designated by the Company's Board of Directors in
consideration for Ten Thousand Dollars ($10,000), and Five
Thousand Dollars ($5,000) respectively and to execute such
documents as the Company may reasonably require in connection
therewith, provided that the Employee receives such
consideration on or before March 31, 2001. The Company agrees
to transfer to the Employee one of its corporate memberships
at MacGregor Downs Country Club for no additional
consideration on or before the date on which this Agreement
becomes final and binding pursuant to paragraph 16 below.
12. The Company hereby releases the Employee from the restrictions
set forth in subparagraph 6(a)(i) of the Employment Agreement
(relating to noncompetition). Subject to the preceding
sentence, the Employee expressly acknowledges and agrees that
the Employee will continue to remain subject to the Covenants
and Confidential Information provisions in paragraph 6 of the
Employment Agreement, and further agrees that obligations
under such provisions are not limited in any way by this
Agreement or separation from employment with the Company. The
Employee agrees to promptly, but in no event later than the
date on which this Agreement becomes final and binding in
accordance with paragraph 16, return all records, manuals,
correspondence, notes, financial statements, computer
printouts and other documents and recorded material of every
nature (including copies thereof) that may be in the
Employee's possession or control dealing with Confidential
Information, as defined in the Employment Agreement, and all
other property of the Company in accordance with reasonable
procedures
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to be agreed to between the Employee and the Company's general
counsel. The Employee further agrees that until September 1,
2001, he will not, without the consent of the chief executive
officer of the Company, which shall not be unreasonably
withheld, employ or solicit or attempt to solicit for
employment with or on behalf of any entity any employee of the
Company or any person who is employed by the Company on the
date hereof unless such person is involuntarily terminated
from employment by the Company.
13. Any payments under this Agreement shall be subject to
applicable tax withholding and payroll deductions. The
Employee shall be responsible for all income tax and the
Employee's share of employment taxes with respect to
Repurchase Rights and the shares of stock to which they relate
and, subject to the Employee's right to elect a reduction in
the number of shares transferable upon exercise of Repurchase
Rights to fulfill withholding obligation in connection
therewith, shall make a cash payment to the Company in an
amount sufficient to satisfy all tax withholding obligations
of the Company.
14. The Employee knowingly and voluntarily releases and forever
discharges the Company, its representatives, successors,
assigns, subsidiaries, parents, and shareholders and all of
their affiliates, directors, officers, employees, venture
capital investors, agents, and all trustees, administrators
and fiduciaries under any Company benefit plan, of and from
any and all claims, known and unknown, which the Employee, the
Employee's family, heirs, executors, administrators,
successors, and assigns ever had, now have or may have as of
the date of execution of this Agreement, for, upon, or by
reason of any matter, cause or thing whatsoever including, but
not limited to, any alleged violation of:(a) the Age
Discrimination in Employment Act of 1967, as amended; (b)
Title VII of the Civil Rights Act of 1964, as amended; (c) The
Civil Rights Act of 1991; (d) Section 1981 through 1988 of
Title 42 of the United States Code, as amended; (e) the
Employee Retirement Income Security Act of 1974, as amended;
(f) The Immigration Reform Control Act, as amended; (g) The
Americans with Disabilities Act of 1990, as amended; (h) The
National Labor Relations Act, as amended; (i) The Fair Labor
Standards Act, as amended; (j) The Occupational Safety and
Health Act, as amended; (k) The Family and Medical Leave Act
of 1993; (l) any state anti-discrimination law; (m) any state
wage and hour law; (n) any other local, state or federal law,
regulation or ordinance; (o) any public policy, contract,
tort, or common law; (p) the Employment Agreement; or (q) any
allegation for costs, fees, or other expenses including
attorneys' fees incurred in these matters. Notwithstanding,
the foregoing, the Employee shall continue to be entitled to
indemnification in accordance with the Company's Articles of
Incorporation and By-Laws. The Company releases the Employee
from any and all claims which it has or may have as of the
date of execution of this Agreement for, upon or by reason of
any matter, cause or thing whatsoever including, without
limitation, any claim arising out of his employment, other
than any claim relating to or arising out of the Employee's
fraud or criminal activity. Nothing herein shall release
either party from claims arising from a breach of this
Agreement, including any breach of the Employee's Repurchase
Rights as modified herein.
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Notwithstanding anything herein to the contrary, the parties
acknowledge that the Employee believes in good faith that he
is entitled, upon his termination of employment, to monies and
other consideration substantially in excess of the monies and
consideration agreed upon in this Agreement and that the
latter represents a settlement of claims which the Employee is
only willing to make on the express condition that the
payments set forth in Sections 3 and 5 are fully and timely
made. In view of the preceding sentence, the parties agree
that (i) if the Company fails to timely pay the amounts due on
the first business day on which this Agreement becomes final
and binding under Sections 3, 5(a)(ii) and 5(b) and such
failure continues for five (5) business days after delivery of
written notices (the "Default Notices") from Employee to the
Company's chief executive officer and its general counsel
(which notices shall be delivered to the Company's principal
place of business in Raleigh, North Carolina), then the amount
described in Section 3 shall be increased from Two Million
Five Hundred Thousand Dollars ($2,500,000) to Three Million
Five Hundred Thousand Dollars ($3,500,000) together with
interest from the thirtieth day after the default at the rate
of 12% per annum, and (ii) if the Company fails to timely pay
the Five Hundred Thousand Dollars ($500,000) due by January 4,
2002 under Section 5(a)(ii) or the dividend equivalents under
Sections 5(a)(i) or 5(a)(iii), and any such failure continues
for five (5) business days after delivery of the Default
Notices, then the Five Hundred Thousand Dollars ($500,000)
amount described in Section 5(a)(ii) shall be increased to One
Million Dollars ($1,000,000) together with interest from the
thirtieth day after the default at the rate of 12% per annum.
It is agreed that such increases represent a settlement more
favorable to the Employee of his legitimate claims and shall
not be construed as a penalty. WITH RESPECT TO ALL OF THE
AMOUNTS DESCRIBED IN THIS SECTION TO BE PAID BY THE COMPANY TO
THE EMPLOYEE, THE COMPANY AGREES THAT SUCH PAYMENTS SHALL NOT
BE SUBJECT TO ANY OFFSET OR DEFENSES ARISING OUT OF ANY
OBLIGATIONS OF THE EMPLOYEE TO THE COMPANY OR OUT OF ANY
CLAIMS BY THE COMPANY AGAINST THE EMPLOYEE AND THAT THE
COMPANY SHALL NOT INVOKE ANY DEFENSES IN THE EVENT OF
LITIGATION BY THE EMPLOYEE TO ENFORCE THE OBLIGATION TO MAKE
SUCH PAYMENTS IN FULL AND SHALL NOT BRING ANY DECLARATORY OR
OTHER ACTION WITH RESPECT TO SUCH PAYMENTS.
15. The Employee acknowledges that he was given twenty-one (21)
days to consider this Agreement, to consult with an attorney
and to decide whether or not to sign the Agreement.
16. For a period of up to and including seven (7) days after the
date the Employee signs this Agreement the Employee may revoke
it entirely. No rights or obligations contained in this
Agreement shall become enforceable before the end of the 7-day
revocation period, at which time the Agreement shall become
final and binding.
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17. In the event of any dispute with respect to a breach or
asserted breach of this Agreement, the prevailing party shall
be entitled to recover such party's reasonable attorneys fees
and expenses from the other party.
18. This Agreement shall be binding upon each of the parties and
upon their respective heirs, administrators, representatives,
executors, successors and assigns, and shall inure to the
benefit of each party and to their heirs, administrators,
representatives, executors, successors, and assigns.
19. THE EMPLOYEE HAS BEEN ADVISED TO CONSIDER THIS AGREEMENT AND
HAS BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR
TO EXECUTION OF THIS AGREEMENT. HAVING ELECTED TO EXECUTE THIS
AGREEMENT, AND TO RECEIVE THEREBY THE SUMS AND BENEFITS SET
FORTH ABOVE, THE EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE
CONSIDERATION, DOES VOLUNTARILY ENTER INTO THIS AGREEMENT
INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS THE EMPLOYEE
MAY HAVE AGAINST THE COMPANY.
20. This Agreement shall be construed in accordance with the laws
of the State of North Carolina, without regard to the conflict
of law provisions of any state.
21. This Agreement reflects the entire agreement between the
Employee and the Company and, except as specifically provided
herein, supersedes all prior agreements and understandings,
written or oral relating to the subject matter hereof, it
being acknowledged, however, that the Employee shall continue
to have rights under the Exchange Agreement as modified
hereby.
* * * * * * *
IN WITNESS WHEREOF, this Separation Agreement and General Release has
been duly executed as of the Effective Date.
/s/ X. Xxxxxxx Xxxxxx Date: March 6, 2001
------------------------- -----------------------
X. Xxxxxxx Xxxxxx
Xxxxxxx Property Trust, Inc.
/s/ J. Xxxxxxx Xxxxxxx Date: March 6, 2001
------------------------- -----------------------
By:
Title: President
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SEPARATION AGREEMENT AND GENERAL RELEASE
EXHIBIT A
Repurchase Rights Granted with Respect to Restricted Stock:
I II III IV V
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
Restricted Stock
Grant Date Number of Shares Exercise Price Vested Cancelled
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
1. 3/1/97 135,000 shares $0.7500 45,000 90,000
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
2. 3/1/97 30,000 shares $0.7500 30,000
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
3. 3/1/97 6,000 shares $0.7500 6,000
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
4. 3/1/97 18,000 shares $0.7500 18,000
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
5. 11/11/97 15,000 shares $0.7500 5,001 9,999
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
6. 11/11/97 3,300 shares $0.7500 3,300
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
7. 11/11/97 2,000 shares $0.7500 2,000
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
8. 11/11/97 700 shares $0.7500 700
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
6. 1/1/98 28,700 shares $0.7750 28,700
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
7. 1/1/98 48,500 shares $0.7750 48,500
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
8. 3/1/98 12,550 shares $0.7750 12,550
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
9. 2/22/99 86,600 shares $0.5625 86,600
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
10. 3/1/99 38,650 shares $0.5750 38,650
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
11. 3/1/99 21,800 shares $0.5750 21,800
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
12. 3/1/2000 43,400 shares $0.5125 43,400
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
13. 3/1/2000 30,250 shares $0.5125 30,250
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
14. 3/1/2000 96,700 shares $0.5125 96,700
--------- ------------------- --------------------- --------------------- ------------------- ---------------------
TOTALS: 617,150 shares 225,851 391,299
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