Exhibit 10.12
XXXXXXX X. XXXXXXXX
SEPARATION AND SETTLEMENT AGREEMENT
AND GENERAL RELEASE
This Separation and Settlement Agreement and General Release (the
"Agreement") is made as of the 30th day of March 2001, by and between Xxxxxxx X.
Xxxxxxxx (the "Employee") and Konover Property Trust, Inc. (the "Company")
concerning the Employee's termination of employment with 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 Employee's employment with the Company terminated,
effective as of March 6, 2001 (the "Effective Date"); 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, under any other written agreement between the Employee and the
Company, 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's employment with the Company terminated as of
the close of business on the Effective Date; provided,
however, that his salary and benefits shall be continued
through April 15, 2001.
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 effective as of the
close of business on the Effective Date.
3. The Employee shall be entitled to a severance benefit
consisting of One Million Five Hundred Thousand Dollars
($1,500,000) (the "Cash Severance Benefit") plus forgiveness
(the "Loan Forgiveness") of the outstanding balance, including
accrued interest, on the Employee's promissory note to the
Company, dated June 12, 1998, in the original principal amount
of One Hundred and Twenty-Five Thousand Dollars ($125,000).
The Cash Severance Benefit shall be reduced by the tax
withholding applicable to the Loan Forgiveness. Provided that
this Agreement has become final and binding in accordance with
paragraph 18 below, payment of the Cash Severance Benefit
after reduction in accordance with the preceding sentence (the
"Net Severance Amount") will be made by wire transfer in five
equal monthly installments, as of the last business day of
each month commencing on April 30, 2001, and ending on August
31, 2001. Each such installment payment of the Net Severance
Amount shall be subject to applicable
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tax withholding. All installments shall accelerate and be
immediately due and payable in the event of a sale of 50% or
more of the Company's voting securities or a liquidation or
winding-up of the Company (an "Acceleration Event"). All wire
transfers under this Agreement shall be pursuant to the
instructions that are attached hereto unless directed
otherwise by the Employee in writing addressed to the
Company's general counsel.
4. The payment of Employee's salary and benefits through April
15, 2001 shall be inclusive of all accrued vacation and
Employee shall be entitled to no additional vacation pay.
5. The Company shall issue and deliver to the Employee Two
Hundred and Fifty-Nine Thousand Five Hundred and Forty-Five
(259,545) shares of common stock on or before April 1, 2002
or, if earlier, an Acceleration Event, or the date on which
the Employee makes a cash payment to the Company in an amount
equal to the Company's tax withholding obligations on the
shares. Unless the Employee makes a cash payment to the
Company to cover the applicable tax withholding on such
shares, the Company may reduce the number of shares to be
delivered to cover its tax withholding obligations. The
Employee shall be entitled to dividend equivalent payments
with respect to such shares for any dividend record date which
occurs after the date hereof and prior to issuance and
delivery of the shares to Employee. Such shares shall be in
full satisfaction of all rights of the Employee under all
outstanding restricted stock awards and repurchase rights
issued with respect thereto. All other rights, including
dividend equivalent rights, which the Employee may otherwise
have with respect to restricted stock, stock options and
repurchase rights are hereby forfeited as of the Effective
Date.
6. The Company shall pay the Employee's COBRA premium with
respect to medical and hospitalization insurance from the date
hereof through the end of COBRA coverage; provided, however,
that if the Company changes to a self-insured arrangement for
medical benefits during the COBRA period, in lieu of paying
the Employee's remaining COBRA premium, it will make a lump
sum payment to the Employee in an amount equal to the
aggregate COBRA premium anticipated for the remainder of the
COBRA period.
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
and submitted to the Company prior to the date hereof. The
preceding sentence shall not limit any payments which the
Employee is entitled to as a shareholder of the Company.
8. The 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
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employees, of the Company regarding their employment or
termination of employment with the Company during the
Employment Period. The 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. The 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. Promptly upon
the receipt of the Employee's written request, 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.
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. to
one or more employees of the Company as designated by the
Company's Board of Directors in consideration for Seven
Thousand Five Hundred Dollars ($7,500) and to execute such
documents as the Company may reasonably require in connection
therewith, provided that the Employee receives such
consideration on or before April 30, 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 18 below.
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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 of paragraph 6 of the
Employment Agreement, and further agrees that obligations
under such provisions are not limited in any way by this
Agreement or termination 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 18, 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 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, or other amounts under this
Agreement which are required to be treated as compensation,
shall be subject to applicable tax withholding and payroll
deductions at the lowest applicable statutory rates.
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 (the "Company
Parties"), of and from any and all claims, known and unknown,
which the Employee, the Employee's family, heirs, executors,
administrators, successors, and assigns (the "Employee
Parties") 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) Sections 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
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foregoing, the Employee shall continue to be entitled to
indemnification in accordance with the Company's Articles of
Incorporation and By-Laws. Nothing herein shall limit the
payments to which the Employee is entitled as a shareholder of
the Company. 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 this Agreement are fully and timely
made. In view of the preceding sentence, the parties agree
that if the Company fails to timely pay the amounts due under
the terms of this Agreement as of the date on which they
become due 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 pursuant to
paragraph 23 below), each such payment shall be increased with
interest from the fifteenth day after the default at the rate
of 12% per annum, and all other payments to which the Employee
is entitled under this Agreement shall be immediately due and
payable.
15. The Company hereby releases the Employee Parties from any and
all claims known or unknown which the Company ever had, now
have or may have as of the date of execution of this Agreement
(a) for, upon or by reason of any stock option, restricted
stock repurchase right or dividend equivalents awarded to the
Employee or (b), other than any claim relating to or arising
out of the Employee's actions which are determined pursuant to
a final judicial determination to constitute fraud or criminal
activity, for, upon or by reason of any other matter, cause or
thing whatsoever including, without limitation, any claim
arising out of his employment with the Company or its
subsidiaries. The Company agrees that the payments to which
the Employee is entitled under this Agreement 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.
16. The Employee agrees to cooperate in good faith with the
general counsel of the Company for the purpose of determining
whether there is any material agreement between the Company
and any third party relating to any financing, sale,
acquisition, or transfer of the capital stock of or assets of
the Company, or any other agreement imposing material
liability on the Company, of which the general counsel is not
otherwise aware and as to which the Employee represented or
purported to represent the Company in negotiating the terms of
the agreement or was otherwise aware of the existence of such
agreement.
17. 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.
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18. 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.
19. 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.
20. 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
AND EMPLOYEE PARTIES MAY HAVE AGAINST THE COMPANY AS PROVIDED
IN SECTION 14.
21. 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.
22. 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.
23. Any notice pertaining to this Agreement shall be in writing
and shall be deemed to have been effectively given on the
earliest of (a) when received, (b) upon personal delivery to
the party notified, (c) one business day after delivery via
facsimile with electronic confirmation of successful
transmission, (d) one business day after delivery via an
overnight courier service or (e) three days after deposit with
the United Postal Service, and addressed as follows
to the Employee at:
000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
With a copy to:
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Xxxxxxx X. Xxxxxx, Esq.
McGuireWoods LLP
0 X. 00xx Xxxxxx - Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
to the Company at:
Chief Executive Officer
Konover Property Trust
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
General Counsel
Konover Property Trust
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
24. This Agreement may not be modified or amended except by a
writing signed by the parties to this Agreement.
25. This Agreement may be signed in multiple counterparts, each of
which shall be deemed an original. Any executed counterpart
returned by facsimile shall be deemed an original executed
counterpart.
* * * * * **
IN WITNESS WHEREOF, this Separation Agreement and General Release has
been duly executed as of the Effective Date.
__________________________ Date: March ___, 2001
Xxxxxxx X. Xxxxxxxx
Xxxxxxx Property Trust, Inc.
______________________________ Date: March ___, 2001
By:
Title:
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