Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 1999
-----------------------------
ATLANTIC GULF COMMUNITIES CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8967 59-0720444
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(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
2601 South Bayshore Drive
Miami, Florida 33133-5461
- --------------------------------------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
(305) 859-4000
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS
On August 30, 1999, Atlantic Gulf Communities Corporation ("Atlantic
Gulf") entered into an employment termination agreement with Mr. J. Larry
Rutherford (Mr. Rutherford's "Termination Agreement," a copy of which is
attached as Exhibit 10.1 hereto), pursuant to which Mr. Rutherford's employment
with the Company and its subsidiaries and affiliates (collectively, the
"Company") terminated, effective as of August 17, 1999. On August 18, 1999,
Atlantic Gulf entered into an employment agreement with Mr. Richard Ackerman
(Mr. Ackerman's "Employment Agreement," a copy of which is attached as Exhibit
10.2 hereto), pursuant to which Mr. Ackerman was appointed to the position of
Chief Executive Officer of Atlantic Gulf, effective as of August 17, 1999. The
principal terms of Mr. Rutherford's Termination Agreement and Mr. Ackerman's
Employment Agreement are summarized below:
MR. RUTHERFORD'S TERMINATION AGREEMENT. Pursuant to Mr. Rutherford's
Termination Agreement:
1. Mr. Rutherford's employment with Atlantic Gulf as its
President and Chief Executive Officer terminated, without cause, effective as of
August 17, 1999 (the "Effective Date").
2. As of the Effective Date, Mr. Rutherford resigned as a
director and officer of all of Atlantic Gulf's subsidiaries and affiliates.
3. Mr. Rutherford has agreed to continue to serve as a director
and non-executive Chairman of the Board of Directors of Atlantic Gulf (the
"Board"). Mr. Rutherford has tendered his unsigned letter of resignation from
the Board to the Company, which will become effective upon the earlier to occur
of (a) the date Mr. Rutherford instructs the Board to sign and date the letter
or (b) the date the Board elects, in its sole and absolute discretion, to accept
and date the letter.
4. Atlantic Gulf has agreed to continue to pay to Mr. Rutherford
his Base Salary, at the rate of $450,000 per annum, through December 31, 2000,
in accordance with Atlantic Gulf's normal payroll practices.
5. All of Mr. Rutherford's stock options to acquire Atlantic Gulf
common stock that were unexercised on the Effective Date terminated as of such
date.
6. On the Effective Date, Atlantic Gulf canceled Mr. Rutherford's
$600,000 nonrecourse promissory note and, in exchange therefor, Mr. Rutherford
returned to Atlantic Gulf the shares of Atlantic Gulf common stock that he
purchased with the proceeds of such note.
7. The Company has agreed to cancel Mr. Rutherford's two $199,000
recourse promissory notes on December 31, 2000, if Mr. Rutherford is not in
breach of his Termination Agreement as of that date and, at the time of such
cancellation, Mr. Rutherford has agreed to return to Atlantic Gulf the shares of
Atlantic Gulf common stock that he purchased with the proceeds of such notes.
<PAGE>
8. Atlantic Gulf has agreed to continue certain of Mr.
Rutherford's employee benefits (i.e., Company health and life insurance and his
Company leased automobile) so long as he remains a director of Atlantic Gulf.
9. Mr. Rutherford has agreed to provide up to 40 hours of
consulting service per month to the Company so long as he continues to receive
the payments referenced in paragraph 4 above.
10. Mr. Rutherford has agreed to certain restrictive covenants,
i.e., (a) an agreement not to compete with Atlantic Gulf within a 100 mile
radius of the Company's Chenoa project located in Aspen/ Glenwood Springs,
Colorado, and a 25 mile radius of the Company's West Bay Club Project, located
in Lee County, Florida, and an agreement not to participate (as an equity or
debt investor) in any of the Company's real estate projects, in both cases
through December 31, 2000) and (b) an agreement not to disclose confidential
information of the Company.
11. The parties provided to each other mutual general releases
(with certain stated exceptions) relating principally to Mr. Rutherford's
service as a director and officer of the Company, his employment agreement and
the termination of his employment with the Company.
12. The Company agreed to provide limited indemnification to Mr.
Rutherford related principally to, among other things, Mr. Rutherford's service
as a director and officer of the Company and his employment agreement.
13. The provisions of Mr. Rutherford's Employment Agreement which,
by their terms, were to survive the termination of his employment with the
Company, will continue in full force and effect, including, for example, his
agreements not to disclose confidential information of the Company and not to
solicit employees of the Company for a stated period of time.
THE FOREGOING IS INTENDED AS A SUMMARY ONLY, AND IS NOT (AND SHOULD NOT
BE CONSIDERED TO BE) A DEFINITIVE DESCRIPTION OF ALL, OF THE TERMS OF MR.
RUTHERFORD'S TERMINATION AGREEMENT. FOR A COMPLETE DESCRIPTION OF THE TERMS OF
MR. RUTHERFORD'S TERMINATION OF EMPLOYMENT WITH THE COMPANY, SEE THE COPY OF MR.
RUTHERFORD'S TERMINATION AGREEMENT ATTACHED AS EXHIBIT 10.1 HERETO.
MR. ACKERMAN'S EMPLOYMENT AGREEMENT. Pursuant to Mr. Ackerman's
Employment Agreement:
1. As of the Effective Date, Atlantic Gulf retained Mr. Ackerman
to serve as Chief Executive Officer of Atlantic Gulf through December 31, 1999.
2. Mr. Ackerman's salary is $35,000 per month, pro rated for
partial months. If the parties are unable to reach an agreement for any reason
on the terms of an extension of Mr. Ackerman's Employment Agreement at least 30
days prior to its scheduled termination date, Mr. Ackerman will be paid an
additional amount retroactive to August 17, 1999, equal to $15,000 per month,
pro rated for partial months, within 10 days following the termination of his
Employment Agreement.
<PAGE>
3. While employed by Atlantic Gulf, Mr. Ackerman will be entitled
to participate in all employee benefit programs to the extent eligible
thereunder.
4. While employed by Atlantic Gulf, Atlantic Gulf has agreed to
maintain director and officer insurance for Mr. Ackerman and otherwise indemnify
him for losses incurred by him as a result of any suit or proceeding relating to
his service with Atlantic Gulf.
5. Mr. Ackerman has agreed to certain restrictive covenants,
i.e., (a) a limited agreement not to solicit Atlantic Gulf employees during his
employment and for one year thereafter and (b) a limited agreement not to
disclose confidential information of Atlantic Gulf.
6. Atlantic Gulf agreed to reimburse Mr. Ackerman for his
attorneys fees and costs incurred in connection with entering into his
Employment Agreement.
THE FOREGOING IS INTENDED AS A SUMMARY ONLY, AND IS NOT (AND SHOULD NOT
BE CONSIDERED TO BE) A DEFINITIVE DESCRIPTION OF ALL, OF THE TERMS OF MR.
ACKERMAN'S EMPLOYMENT AGREEMENT. FOR A COMPLETE DESCRIPTION OF THE TERMS OF MR.
ACKERMAN'S EMPLOYMENT WITH ATLANTIC GULF, SEE THE COPY OF MR. ACKERMAN'S
EMPLOYMENT AGREEMENT ATTACHED AS EXHIBIT 10.2 HERETO.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Letter Agreement, dated as of August 17, 1999, between Mr. J.
Larry Rutherford and the Company.
10.2 Letter Agreement, dated as of August 17, 1999, between Mr.
Richard Ackerman and the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATLANTIC GULF COMMUNITIES CORPORATION
(Registrant)
/s/ JOHN H. FISCHER
------------------------------------
By: John Fischer
Title: Vice President and Treasurer
Date: August 27, 1999
/s/ MATT ALLEN
------------------------------------
By: Matt Allen
Title: Vice President - Finance
Date: August 27, 1999
ATLANTIC GULF COMMUNITIES CORPORATION
2601 SOUTH BAYSHORE DRIVE
SUITE 400
MIAMI, FL 33133-5461
August 17, 1999
Mr. J. Larry Rutherford
c/o Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Fourth Floor
Miami, FL 33133-5461
Re: Letter Agreement Regarding Termination of Employment
----------------------------------------------------
Dear Larry:
This will confirm the terms of our mutual agreement concerning the
termination of your employment with Atlantic Gulf Communities Corporation
("Atlantic Gulf") and its subsidiaries and affiliates (collectively, the
"Company").
Reference is hereby made to:
- your Employment Agreement with Atlantic Gulf, dated as of
November 17, 1997, as amended by those certain letter
agreements, dated as of November 26, 1997, and December 29,
1997 (collectively, your "Employment Agreement");
- your Stock Incentive Plan and Agreement with Atlantic Gulf,
dated as of November 17, 1997, as amended by the November 26,
1997 amendment to your Employment Agreement (collectively,
your "Stock Incentive Agreement");
- the Stock Option Agreements issued to you by Atlantic Gulf
(your "ESOP Stock Option Agreements") under its Employee Stock
Option Plan ("ESOP");
- your promissory note in the principal amount of $199,000,
dated as of December 29, 1997;
- your promissory note in the principal amount of $199,000,
dated as of July 6, 1998;
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 2
- your promissory note in the principal amount of $600,000,
dated as of July 6, 1998;
- your Pledge and Security Agreement with Atlantic Gulf, dated
as of December 29, 1997, as amended by that certain First
Amendment to Pledge and Security Agreement, dated as of July
6, 1998 (collectively, the "Pledge Agreement").
The loans evidenced by your two $199,000 promissory notes (the
"$199,000 Notes") are referred to herein as your "Recourse Loans," the loan
evidenced by your $600,000 promissory note (the "$600,000 Note," which, together
with the two $199,000 Notes, are collectively referred to herein as your
"Notes") is referred to herein as your "$600,000 Loan" and the two Recourse
Loans and the $600,000 Loan are collectively referred to herein as your "Loans."
Your two $199,000 Notes, $600,000 Note and Pledge Agreement are referred to
herein as your "Loan Documents."
Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in your Employment Agreement.
1. You and Atlantic Gulf agree that your employment with the
Company shall be terminated, without "cause" (as defined in Section 5.1 of your
Employment Agreement), pursuant to Section 5.4 of your Employment Agreement,
effective at the close of business on August 17, 1999 (the "Termination Date").
Pursuant to the terms of your Employment Agreement:
a. On or before the fifth business day immediately
following the Termination Date, Atlantic Gulf will pay to you your accrued and
earned but unpaid Base Salary through the Termination Date.
b. For the period commencing on the day immediately
following the Termination Date and ending on December 31, 2000, Atlantic Gulf
will continue to pay you your Base Salary at the annual rate of $450,000,
payable in installments consistent with Atlantic Gulf's normal payroll schedule,
subject to applicable withholding and other taxes. In the event of your death,
payments required to be made under this paragraph 1.b. shall be paid to your
estate in accordance with the terms hereof.
c. Except to the extent expressly provided otherwise
herein, Section 6. of your Employment Agreement (excluding Section 6.1 thereof)
shall remain in full force and effect following the Termination Date.
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 3
2. Notwithstanding anything in your Employment Agreement, Stock
Incentive Agreement, the ESOP and/or your ESOP Stock Option Agreement to the
contrary:
a. You acknowledge and agree you have not earned, and are
not entitled to receive, any Incentive Compensation under your Employment
Agreement.
b. On and as of the Termination Date:
i. all of the Options granted to you under your
Stock Incentive Agreement (your "ISA Options") that are not exercisable as of
the Termination Date shall automatically terminate;
ii. all of your ISA Options that are exercisable,
but have not been exercised, as of the Termination Date shall automatically
terminate;
iii. all of your rights, privileges and benefits
under your Stock Incentive Agreement shall automatically terminate; and
iv. your Stock Incentive Agreement shall terminate.
c. On and as of the Termination Date:
i. all of the Options granted to you under the
ESOP and your ESOP Stock Option Agreements (your "ESOP Options") that are not
exercisable as of the Termination Date shall automatically terminate;
ii. all of your ESOP Options that are exercisable,
but have not been exercised, as of the Termination Date shall automatically
terminate;
iii. all of your rights, privileges and benefits
under the ESOP and your ESOP Stock Option Agreements shall automatically
terminate; and
iv. your ESOP Stock Option Agreements shall
terminate.
d. With respect to your Loans:
i. On and as of the Termination Date:
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 4
A. your $600,000 Loan will be canceled and
you will be released from any further obligations thereunder;
B. if you have them in your possession,
you will deliver to Atlantic Gulf the stock certificates evidencing the shares
of Atlantic Gulf purchased with the proceeds of your $600,000 Loan, which
certificates are identified in Exhibit A hereto (the "Stock Certificates");
C. if Atlantic Gulf has possession of the
Stock Certificates referenced in paragraph d.1.B. above and you have not already
executed stock powers in blank for all of such Stock Certificates, you agree to
do so; and
D. Atlantic Gulf will return to you your
$600,000 Note, marked "canceled."
ii. On December 31, 2000, unless you are in breach
of this Agreement on such date (other than any breach which has been waived by
the Company, which the Company may do or not do, in its sole and absolute
discretion) and the Board of Directors of Atlantic Gulf (the "Board") has
provided you with written notice of such breach before December 31, 2000,
including in reasonable detail the nature of such aforesaid breach:
A. your two Recourse Loans will be
canceled and you will be released from any further obligations thereunder;
B. if you have them in your possession, on
or before December 30, 2000, you will deliver to Atlantic Gulf the stock
certificates evidencing the shares of Atlantic Gulf purchased with the proceeds
of your Recourse Loans, which Stock certificates are identified in Exhibit A
hereto;
C. if Atlantic Gulf has possession of the
Stock Certificates referenced in paragraph d.ii.C. above and you have not
already executed stock powers in blank for all of such Stock Certificates, you
agree to do so on or before December 31, 2000; and
D. upon cancellation of your two $199,000
Notes in accordance herewith, Atlantic Gulf will return both $199,000 Notes to
you, marked "canceled."
Absent a default or breach by you hereunder, Atlantic Gulf agrees not
to enforce any provisions of the two $199,000 Notes before December 31, 2000.
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 5
e. For federal income tax purposes,:
i. you will be deemed to have:
A. sold the shares of stock of Atlantic
Gulf securing the $600,000 Note (i.e., the shares purchased with the proceeds of
the $600,000 Loan) to Atlantic Gulf for the $600,000 principal amount of the
$600,000 Note in full satisfaction of the $600,000 Loan; and
B. if the Recourse Loans are canceled in
accordance with paragraph d.ii. above, sold the shares of stock of Atlantic Gulf
securing the $199,000 Notes (i.e., the shares purchased with the proceeds of the
Recourse Loans) to Atlantic Gulf for their fair market value ("FMV"), based on
the closing price of such shares on the cancellation date, in partial
satisfaction of the Recourse Loans;
and
ii. Atlantic Gulf will be deemed to have:
A. received the shares described in clause
e.i.A. above in full satisfaction of the $600,000 Loan; and
B. if the Recourse Loans are canceled in
accordance with paragraph d.ii above, received the shares described in e.i.B.
above in partial satisfaction of the Recourse Loans and canceled or forgiven the
excess of the principal amount of the Recourse Loans over the FMV of the shares
of stock described in clause e.i.B. above.
f. From and after the Termination Date, you (i) agree to
continue as a director, and non-executive Chairman ("Chairman") of the Board of
Atlantic Gulf, but (ii) to resign as a director and officer of all of the
subsidiaries and affiliates of Atlantic Gulf as to which you are then serving as
a director and/or officer. Furthermore, on the Termination Date, you agree to
deliver to the Board (A) a signed letter of resignation (dated as of the
Termination Date) as a director and officer addressed to the board of directors
of each of the subsidiaries and affiliates of Atlantic Gulf of which you are a
member and/or officer, which resignation letter shall be effective upon
delivery, and (B) a signed, but undated, letter of resignation as a director and
Chairman to the Board, which resignation letter shall be effective upon the
earlier to occur of (Y) the date you instruct the Board to date such letter or
(Z) the date the Board elects, in its sole and absolute discretion, to date such
letter. So long as you continue to serve as a director and/or Chairman of
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 6
the Board, you will receive no compensation for such service other than the
compensation expressly provided for in this letter agreement. You understand and
agree that you will have no legal authority to bind the Company without the
prior written consent of the Board.
g. During the period that you continue to receive Base
Salary pursuant to paragraph 1.b. above, you agree to be available to provide,
at reasonable times and upon reasonable notice, up to 40 hours of consulting
services per month to the Company, the Board and members of senior management
and the Board. If such consulting services require travel or the incurrence by
you of other expenses, Atlantic Gulf will reimburse you for such travel (in the
case of air travel, by coach class only) and other reasonable and necessary
expenses, upon the submission of proper written substantiation therefor (in the
manner and form determined by Atlantic Gulf), based on its employee expense
reimbursement policy in effect at the time you incur such expenses.
h. From and after the Termination Date, you shall cease to
be eligible to participate in any and all Company employee benefit programs;
provided, however, that during the period that you continue to serve as a
director and/or Chairman, you will continue to be eligible to participate in the
Company's medical, dental and life insurance programs ("Insurance Programs") on
the same terms as in effect for you on the Termination date. You hereby
authorize Atlantic Gulf to deduct and withhold directly from the payment(s)
referred to in paragraph 1.b above your share of any premiums with respect to
such insurance coverage until such time as you give Atlantic Gulf written
instructions to terminate your participation in such Insurance Programs. You
acknowledge and agree that Atlantic Gulf shall have no obligation to (i)
maintain such Insurance Programs in place and may discontinue such Insurance
Programs at any time for any reason as to all employees, without liability to
you, or (ii) to pay any premiums with respect to your Insurance Programs if such
premiums exceed the payment(s) referred to in paragraph 1.b above.
i. You shall be entitled to COBRA coverage promptly
following the termination of your Company health insurance coverage under
paragraph 2.h above.
j. During the period that you continue to serve as a
director and/or Chairman, you will be permitted to continue to use your existing
leased Company automobile on the same terms as in effect on the Termination
Date; provided, however, that on the date on which you cease to serve as a
director and Chairman you shall (i) provide Atlantic Gulf with written
confirmation from the leasing company (in form and substance satisfactory to
Atlantic Gulf, in its sole discretion) that you have assumed all of the
remaining liabilities with respect to your leased Company automobile from and
after the Termination Date and that the Company has been released
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 7
from any and all such liabilities or (ii) return your leased Company automobile
to Atlantic Gulf, after which you will have no further liability to the Company
with respect thereto.
k. Except as otherwise specifically provided for herein,
all of your employee benefits in effect on the Termination Date shall cease on
the Termination Date.
l. You agree that, before January 1, 2001, you will not,
without the prior written consent of the Board:
i. (A) acquire an equity interest, directly or
indirectly, in whole or in part, in any real estate project owned, directly or
indirectly, in whole or in part, by the Company on the Termination Date or any
real estate project in which the Company acquires an ownership interest,
directly or indirectly, in whole or in part, on or before December 31, 2000 (all
such real estate projects referenced in this 2.l.i being collectively referred
to herein as the "Projects"), (B) acquire a debt interest, directly or
indirectly, in whole or in part, in any such Project, (C) acquire an equity or
debt interest, directly or indirectly, in any entity that acquires an equity or
debt interest, directly or indirectly, in whole or in part, in any such Project
or (D) accept or assume a position, directly or indirectly, as an employee,
officer, director, agent, consultant, partner, member, security holder, creditor
or otherwise with any person or entity that acquires an equity or debt interest,
directly or indirectly, in whole or in part, in any such Project; and
ii. engage in, directly or indirectly, or have any
interest, directly or indirectly, in any person or entity (including an
interest, directly or indirectly, as a shareholder, lender, partner, member,
employee, officer, director, agent, consultant, security holder, creditor or
otherwise) in any person or entity that engages in, competition with the Company
within (A) a 100 mile radius of the Company's Chenoa Project located in
Aspen/Glenwood Springs, Colorado, so long as the Company continues to own an
equity interest, directly or indirectly, therein, and (B) a 25 mile radius of
the Company's West Bay Club Project, located in Lee County, Florida, so long as
the Company continues to own an equity interest, directly or indirectly,
therein.
m. You acknowledge and confirm that the restrictive
covenants contained in paragraph 2.l above (the "Restrictive Covenants") are
reasonably necessary to protect the legitimate business interests of the Company
and are not overbroad, overlong or unfair and are not the result of
overreaching, duress or coercion of any kind. You further acknowledge and
confirm that your full, uninhibited and faithful observance of each of the
Restrictive Covenants will not cause you any undue hardship, financial or
otherwise, and that enforcement of each of the Restrictive Covenants will not
impair your ability to obtain employment commensurate with your
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 8
skill level and terms otherwise generally acceptable to you. You further
acknowledge and confirm that your special and unique knowledge of the Projects
is such as would cause the Company serious and possibly irreparable injury
and/or loss if you were to use such ability and knowledge to the benefit of a
competitor of the Company and/or person or entity acquiring an interest,
directly or indirectly, in whole or in part, in any of the Projects in violation
of the Restrictive Covenants.
n. You recognize and acknowledge that a breach by you of
the Restrictive Covenants will cause irreparable harm and damage to the Company,
the monetary amount of which may be impossible to ascertain. As a result, you
further recognize and acknowledge that the Company shall be entitled to
injunctive relief enjoining and restraining any violation of the Restrictive
Covenants by you or your affiliates, employer, partners, associates, members or
agents, either directly or indirectly, and that such rights to injunctive relief
shall be cumulative and in addition to whatever other remedies at law or in
equity the Company may possess with respect to such violation(s).
o. You hereby represent and warrant that, as of the
Termination Date, you do not own any equity or debt interest of the type
described in paragraph l.i and/or l.ii. above.
3. On August 16, 1999, Atlantic Gulf provided you with a copy of
this Agreement and explained to you that it constitutes a legal waiver and
release of any rights and claims that you may have under any contract and under
all federal, state and local laws and regulations prohibiting employment
discrimination or otherwise regulating employment or claims related to
employment, including, without limitation, Title VII of the Civil Rights Act of
1964, the Equal Employment Opportunity Act of 1972, the Age Discrimination in
Employment Act of 1967 ("ADEA"), the Americans with Disabilities Act of 1990,
the National Labor Relations Act, the Employee Retirement Income Security Act of
1974, the Civil Rights Act of 1991, the Workers Adjustment and Retraining
Notification Act of 1988, and 42 U.S.C. Section 1981. You acknowledge that you
intend to waive and release any and all such rights and claims you may have
under any contract or agreement and under the statutes, laws and regulations
cited above or any other applicable statute, law or regulation (with the
exception of any claims that may arise under the ADEA after the date that you
sign this Agreement). You understand and acknowledge that this Agreement does
not constitute an admission by the Company (a) of any violation of any statute,
law, regulation, order or other applicable authority, (b) of any breach of any
contract, actual or implied, or (c) of any commission of any tort.
4. In exchange for the consideration described herein, on behalf
of yourself and your executors, administrators, representatives, trustees,
heirs, subrogees, guardians, conservators,
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 9
agents, successors and assigns, you hereby release and discharge Atlantic Gulf,
its subsidiaries, affiliates, divisions and related companies, and each of their
respective successors and assigns, their past and present principals, directors,
officers, representatives, shareholders, employees, agents, partners and their
respective heirs, executors, and administrators, from any and all claims,
complaints, contracts, liabilities, obligations, demands, debts, damages,
losses, costs, expenses, attorneys' fees, rights of action and causes of action,
of any kind or character whatsoever, at law or in equity, whether known or
unknown, suspected or unsuspected (collectively, "Claims"), with respect to, or
arising out of, your employment or the termination of your employment with the
Company; provided however that the Claims released under this paragraph 4. shall
not include, or apply to, (a) any Claims related to the enforcement of any
provision of this Agreement or (b) or Indemnification Claims (as defined below).
Indemnification Claims shall mean all and any of your rights and benefits to
indemnification and similar benefits under Delaware law and the law of the
jurisdictions of organization of any subsidiary or affiliate of the Company,
under the respective charters and bylaws of the Company and its subsidiaries and
affiliates, and under any directors and officers insurance policies maintained
by the Company, in each instance in respect of you being a current or former
director, and/or former officer, of the Company and its affiliates and
subsidiaries.
5. In exchange for the consideration described herein, on behalf
of itself, its subsidiaries, affiliates, divisions and related companies, and
each of its/their respective successors and assigns, its/their past and present
principals, directors, officers, representatives, shareholders, employees,
agents, partners and its/their respective heirs, executors, and administrators,
representatives, trustees, heirs, subrogees, guardians, conservators, agents,
successors and assigns, the Company hereby releases and discharges you and your
executors, administrators, representatives, trustees, heirs, subrogees,
guardians, conservators, agents, successors and assigns, from any and all Claims
with respect to, or arising out of, your employment or the termination of your
employment with the Company or your position as a director or officer of the
Company or any of its subsidiaries or affiliates; provided, however, that the
Claims released under this paragraph 5. shall not include, or apply to, (a) any
Claims with respect to, or arising out of, your own gross negligence or
intentional or willful misconduct, (b) any Claims related to the enforcement of
any provision of this Agreement, and (c) any Claims related to the enforcement
of any provisions of your Employment Agreement that, by their terms, survive the
termination of your Employment Agreement.
6. The Company represents and warrants to you that, at all times
during the five-year period ending on the Termination Date, you have been
covered by (a) the Company's Directors and Officers Insurance policies (subject
to any exceptions contained therein for excluded acts), (b) the indemnification
provisions under Delaware corporate law and the law of the jurisdictions of
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 10
organization of any subsidiary or affiliate of the Company of which you served
as an officer and/or director (subject to any exceptions contained therein for
excluded acts) and (c) the indemnification provisions contained in the
respective charters and bylaws of the Company and its subsidiaries and
affiliates (subject to any exceptions contained therein for excluded acts), in
each instance in respect of your service as a director and/or officer of
Atlantic Gulf and its affiliates and subsidiaries during such five-year period.
The Company further represents and warrants to you that the indemnification
described in the immediately preceding sentence shall remain in place with
respect to your service as a director of Atlantic Gulf following the Termination
Date on the same terms, to the same extent, for the same period and for the same
acts as are applicable to the other directors of Atlantic Gulf following the
Termination Date.
7. Neither you nor the Company will at any time (a) disclose the
terms or existence of this Agreement or any fact concerning its negotiation,
execution or implementation or concerning your employment or termination of
employment with the Company, except as may be required by law, statute or
regulation, or in connection with a valid and effective subpoena or order issued
by a court of competent jurisdiction or by a governmental body, or in connection
with any financing, sale of the Company (through a stock or asset sale), merger
or other restructuring transaction entered into by the Company, but only to the
extent required, or (b) denigrate, disparage, impugn or defame the Company, its
services or business conduct or reputation or that of any of its principals,
directors, officers, employees, partners or agents, on the one hand, or you, on
the other hand.
8. Upon the request by Atlantic Gulf for the return of all
property of the Company then in your possession, you will immediately return
such property, including, without limitation (and to the extent applicable),
leased vehicles (subject to your rights under paragraph 2.j. above), home office
equipment, computers, building keys and passes, memoranda (including e-mail
memoranda addressed to you or on which you were copied or otherwise in your
possession), sales brochures, credit cards, telephone charge cards, manuals,
courtesy parking passes, customer lists and customer contacts, sales
information, diskettes, intangible information stored on diskettes, business or
marketing plans, reports, projections, software programs and data compiled with
the use of those programs, tangible copies of trade secrets and confidential
information, and any and all other property or information held or used by you
in connection with your employment with the Company.
9. You acknowledge that the Company advised you to consult with
an attorney before signing this Agreement and that you had sufficient
opportunity to consult with an attorney after receiving a copy of this Agreement
and before signing it. Furthermore, you acknowledge that the Company advised you
that you are entitled to a period of twenty-one (21) days from the date of
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 11
this Agreement to consider the proposal herein and seven (7) days after the
execution hereof to revoke your agreement to the terms hereof. In signing this
Agreement, you have relied only on the promises contained herein and not on any
other promises made by the Company.
10. By signing this Agreement, you acknowledge that you are
entering into this Agreement voluntarily and with full knowledge of its
significance, meaning and binding effect. You have seven (7) days to revoke this
Agreement after you sign it. This Agreement will not become effective or
enforceable until eight (8) days after the date you sign it.
11. This Agreement (a) represents the entire agreement of the
parties with respect to the subject matter hereof, (b) may not be amended,
modified or rescinded except in writing, signed by both Atlantic Gulf and you,
and (c) is governed by and shall be construed in accordance with the law of the
State of Florida, excluding its laws regarding choice of law. In the event of
any dispute arising out of this Agreement or any action to enforce the terms
hereof, the costs incurred by the prevailing party in connection with such
dispute or action (including reasonable attorneys' fees and out-of-pocket costs)
shall be paid by the party not prevailing in such dispute or action.
12. YOU AND THE COMPANY EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND ANY
OTHER AGREEMENT, DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR
ACTIONS OF ANY PARTY HERETO.
13. The parties hereby agree that, with respect to all litigation
referred to in the immediately preceding paragraph 12, venue shall be
exclusively within Miami-Dade County, Florida.
<PAGE>
J. Larry Rutherford
August 17, 1999
Page 12
If you are in agreement with the terms and conditions of this letter
agreement, please sign and date all three enclosed original signature pages to
this letter agreement, keep one signed signature page for your records and
return the other two signed signature pages to Joel Goldman at Atlantic Gulf.
ATLANTIC GULF COMMUNITIES CORPORATION,
for and on behalf of itself and all of its subsidiaries
and affiliates
By:_____________________________________
Name (Print): James DeFrancia
Title: Authorized Director, for and on behalf of the Board
of Directors of Atlantic Gulf Communities
Corporation
AGREED TO AND ACCEPTED BY:
- -----------------------------------
J. LARRY RUTHERFORD
Date:______________________________
cc: Joel Goldman, Esq.
John Ruppert, Esq.
James DeFrancia
<PAGE>
EXHIBIT A
STOCK CERTIFICATES*
- ----------------------------------------------------------------------------
STOCK CERTIFICATE NO. NO. OF SHARES PURCHASE PRICE AMOUNT ADVANCED
- ----------------------------------------------------------------------------
AG 104202 4,700 $ 3.62620 $ 17,043.14
- ----------------------------------------------------------------------------
AG 104202 9,500 3.97700 37,781.50
- ----------------------------------------------------------------------------
AG 104217 8,000 4.13281 33,062.48
- ----------------------------------------------------------------------------
AG 104217 14,000 4.41520 61,812.80
- ----------------------------------------------------------------------------
AG 104217 4,000 4.25000 17,254.50
- ----------------------------------------------------------------------------
AG 104312 5,000 3.87500 19,692.00
- ----------------------------------------------------------------------------
AG 104312 5,720 2.12500 12,334.47
- ----------------------------------------------------------------------------
AG 104312 29,280 2.12500 63,138.78
- ----------------------------------------------------------------------------
AG 104312 50,000 2.06250 104,692.00
- ----------------------------------------------------------------------------
AG 10,700 2.31250 25,082.63
- ----------------------------------------------------------------------------
AG 104348 5,800 1.00000 5,985.75
- ----------------------------------------------------------------------------
AG 104307 282,352 2.12500 599,998.00
- ----------------------------------------------------------------------------
TOTAL 429,052 $997,878.05
- ----------------------------------------------------------------------------
* The shares evidenced by Certificate No. AG 104307 were purchased with
the proceeds of the $600,000 Loan. All of the other shares were
purchased with the proceeds of the Recourse Loans.
ATLANTIC GULF COMMUNITIES CORPORATION
2601 South Bayshore Drive
Miami, Florida 33133
August 17, 1999
Richard S. Ackerman
433 Plaza Real, Suite 335
Boca Raton, Florida 33432
Re: Terms of Employment
-------------------
Dear Richard:
We are pleased to confirm that Atlantic Gulf Communities
Corporation (the "Company") has offered you the position of Chief Executive
Officer ("CEO"), subject to the terms of this letter (the "Letter Agreement").
Your employment hereunder commences as of the date hereof and will continue
until December 31, 1999 (the "Employment Term"). You will report only to the
Board of Directors of the Company.
The Company will pay you a base salary at the rate of $35,000
per month, pro rated for partial months, in accordance with the usual payroll
practices of the Company; provided that, if you and the Company are unable to
reach an agreement for any reason whatsoever on the terms of an extension of the
Employment Term at least 30 days prior to the end thereof, you will be paid an
additional amount, retroactive to the commencement of the Employment Term, equal
to $15,000 per month, pro rated for partial months, in a lump sum within 10 days
following the expiration of the Employment Term.
While you are employed by the Company, you will devote
substantially all of your business time and efforts to the performance of your
duties hereunder, provided, however, you will be allowed to manage your personal
investments both active and inactive (including real estate transactions) to the
extent that they do not materially interfere with your duties as CEO.
While you are employed by the Company, you will be entitled to
participate, to the extent eligible thereunder, in all medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and life
insurance plans, savings, pension, profit sharing and deferred compensation
plans and any and all
<PAGE>
Richard S. Ackerman
August 17, 1999
Page 2
other employee welfare or benefit plans as are presently and hereinafter offered
by the Company to its executives.
The Company will also maintain at all times during the
Employment Term Officer and Director liability insurance coverage for you, in
the same aggregate amount and under the same terms as are maintained for the
Company's other senior officers and directors, and will otherwise indemnify you
and hold you harmless to the fullest extent permitted by Delaware law for all
losses and expenses incurred by you as a result of any suits or proceedings
relating to your service as an officer, director and employee of the Company.
The Company will also reimburse you for all reasonable and
necessary expenses incurred by you in the course of, and pursuant to, the
business of the Company; provided, however, that any costs of commuting to and
from Boca Raton, Florida, and the Company's offices in Miami, Florida, and any
costs and expenses of lodging in Miami, Florida, will be born by you.
The Company will also reimburse you for all reasonable legal
fees (at your attorney's standard rates) and disbursements incurred by you in
connection with entering into this Letter Agreement, as soon as is practicable
following your presentation to the Company of reasonable documentation thereof.
You agree not to disclose, communicate, use to the detriment
of the Company or for the benefit of any other person(s) or misuse in any way
any Confidential Information of the Company. For purposes of this Agreement,
"Confidential Information of the Company" means information disclosed to you or
known by you as a consequence of or through your employment by the Company prior
to or after the date hereof and not generally known about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict you from disclosing Confidential Information to the extent required by
law.
At all times while you are employed by the Company and for a
period of 12 months after the termination of your employment with the Company
for any reason, you shall not, directly or indirectly, for yourself or for any
other person or entity employ or attempt to employ, or solicit the employment
of, or enter into any contractual arrangement with, any employee or former
employee of the Company, unless such employee or former employee has not been
employed by the Company for a period in excess of six months.
<PAGE>
Richard S. Ackerman
August 17, 1999
Page 3
YOU AND THE COMPANY EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF OR IN CONNECTION WITH THIS LETTER AGREEMENT
AND ANY AGREEMENT, DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR
ACTIONS OF ANY PARTY HERETO.
The parties hereby agree that, with respect to all litigation
referred to in the immediately preceding paragraph, venue shall be exclusively
within Palm Beach County, Florida.
This Letter Agreement will be governed by, and construed under
and in accordance with, the internal laws of the State of Delaware without
reference to rules relating to the conflicts of laws.
This Letter Agreement contains the entire agreement of the
parties relating to the subject matter hereof, and supersedes in its entirety
any and all prior agreements, understandings or representations relating to the
subject matter hereof. No modifications of this Letter Agreement will be valid
unless made in writing and signed by the parties hereto.
Very truly yours,
ATLANTIC GULF COMMUNITIES
CORPORATION
By: ________________________
Name: James DeFrancia
Title: Authorized Director
Agreed:
- ----------------------------
Richard S. Ackerman
