SEPARATION AGREEMENT AND MUTUAL RELEASE
THIS SEPARATION AGREEMENT AND MUTUAL RELEASE (the "Agreement") is made and
entered into as of the 9th day of April, 1996, by and between KENETECH
CORPORATION (the "Company'), a Delaware corporation with its principal place of
business at 500 Sansome Street, Suite 300, San Francisco, California 94111, and
GERALD R. ALDERSON (the "Employee"), who was previously employed by the Company.
RECITALS
A. The Employee was employed by the Company, and his employment was
subject to the provisions of a written Employment Agreement between
the Company and the Employee entered into as of March 1, 1995 as
amended by letter dated December 13, 1995 (the "Employment
Agreement").
B. The Employee and the Company wish to terminate the Employment
Agreement, and the Employee wishes to resign from this employment with
the Company.
C. The Employee and the Company therefore deem it to be in their mutual
interest that Employee terminate his positions with the Company.
D. The Employee acknowledges that he has received full current salary,
vacation pay and benefits payments from the Company up to March 31,
1996, in accordance with the Company's regular payroll practices.
E. The Employee and the Company desire to compromise, settle and release
fully and finally all outstanding matters between them, including all
matters relating to the Employee's separation from the Company and the
termination of the Employment Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, and for other good and valuable consideration, the Company and
the Employee agree as follows:
1. Separation Date. The Company and the Employee agree that the Employee's
employment by the Company was terminated effective as of March 31, 1996 (the
"Separation Date"). The Employee understands and agrees that, effective as of
the Separation Date, he was no longer authorized to incur any expenses,
obligations or liabilities on behalf of the Company and he agrees, on or before
April 19, 1996, to submit for reimbursement, with appropriate supporting
documentation, all outstanding expenses incurred by him prior to such date. The
Company shall reimburse the Employee for such prior expenses in accordance with
Company policy to the extent that such expenses were reasonably and necessarily
incurred by the Employee in connection with the performance of his duties on
behalf of the Company.
2. Resignation. The execution of this Agreement shall confirm the
Employee's resignation as an officer and employee of the Company effective as of
the Separation Date.
3. Terms of Separation. In consideration of the agreements by the Employee
provided herein, including without limitation the releases by the Employee in
Paragraph 4 below, the Company agrees as follows:
(a) The Company shall deliver to the Employee, in full satisfaction of any
claims by him under the Employment Agreement, including but not
limited to any claims for compensation, bonus payments, fringe
benefits, disability benefits, ownership rights, severance benefits,
change in control benefits and options, the following two promissory
notes:
(i) The first promissory note ("Note A") shall be in the amount of
$215,000 and shall be payable in regular semimonthly installments
through the Company's regular payroll system during the period ending
October 1, 1996. Each installment under Note A shall be equal to the
amount payable to the Employee as base salary under the Employment
Agreement prior to the Separation Date, provided that the Company
shall treat each payment under Note A as employment compensation to
the Employee for all purposes and shall deduct and withhold from each
such payment any and all Federal, state and local taxes, deductions
and withholdings related to employment, taxes or compensation required
to be withheld or deducted by the Company under applicable law.
Payments under Note A shall be accelerated to the extent that Note B
(described below) is prepaid in full due to one or more Asset Sales
(described below) and there are Asset Sale Proceeds remaining after
prepayment in full of Note B with which to prepay Note A. Note A shall
not bear interest except that any amounts due and payable thereunder
that are not paid by the Company on or before October 1, 1996 shall
bear interest at the maximum rate permitted by applicable law.
(ii) The second promissory note ("Note B") shall be in the amount of
$750,000 and shall be provided to the Employee on account of the pain
and suffering sustained by the Employee in connection with the
termination of his employment by the Company. Note B shall be due and
payable in full on October 1, 1996 except that payments shall be
accelerated to the extent of any Asset Sale Proceeds (described
below). Note B shall not bear interest except that any amounts due and
payable that are not paid by the Company on or before October 1, 1996
shall bear interest at the maximum rate permitted by applicable law.
(iii)In the event that the Company sells or finances any asset or business
of the Company (such as, for example, KENETECH Resource Recovery, CNF
Constructors, KENETECH Independent Power, or the Company's general
partnership interest in the Energy Investors Fund) on or before the
date that both Note A and Note B are paid in full and the Company
receives proceeds therefrom of more than $500,000 in a single sale or
financing ("Asset Sale"), the Company shall prepay Note B and, once
Note B has been prepaid in full, Note A as provided above, in an
amount equal to two percent (2%) of the gross proceeds of such sale or
financing received by the Company ("Asset Sale Proceeds").
(b) The Employee shall cease participation in all employee benefit plans
of the Company effective as of the Separation Date, and the Company
thereafter shall not be liable for any payments to or on behalf of the
Employee in respect of any Fringe Benefits as set forth in the
Employment Agreement, except as follows: For the period ending April
1, 1998, the Employee and his eligible dependents will continue to be
eligible to participate in the Company's group life insurance plan,
group medical and/or dental insurance plan, accidental death and
dismembership plan, and short-term disability plan on the same terms
as apply to other regular employees of the Company so long as each
such plan remains in effect.
(c) The Employment Agreement will be deemed terminated effective on the
Separation Date, except as otherwise specifically provided in this
Agreement.
(d) Notwithstanding Section 15 of the Employment Agreement, the Company
acknowledges that from the date hereof the Employee may engage in any
act which is directly competitive with the Company's activities,
including its wind generated electricity activities.
4. Mutual Releases.
(a) Release by the Employee. Except as to any claims arising out of rights
provided under this Agreement, and if all payments hereunder are made
when due, in consideration for the agreements contained herein, the
Employee hereby irrevocably and unconditionally releases, acquits and
forever discharges for himself and his heirs, executors,
administrators, agents, successors and assigns, the Company or any
related entity and their stockholders, predecessors, successors,
assigns, agents, directors, officers, employees, representatives,
attorneys, divisions, and subsidiaries, and all persons acting by,
through, under or in concert with any of them (collectively, the
"Company Releasees"), or any of them, from any and all charges,
complaints, claims, assertions of claims, liabilities, obligations,
promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses
(including attorneys' fees and costs actually incurred) of any nature
whatsoever, known or unknown, suspected or unsuspected, arising
directly or indirectly out of the Employee's employment by the
Company, his separation from employment with the Company, or the
termination of the Employment Agreement, which the Employee now has,
or ever claimed to have, or could claim against each or any of the
Company Releasees, including, without limitation, any of the
following: claims under the Employment Agreement, claims for workers'
compensation, claims in equity or law for wrongful discharge, and
personal injury claims, claims under federal, state or local laws
prohibiting discrimination on account of age, national origin, race,
sex, disability, religion and other protected classifications, or
claims under the Civil Rights Acts of 1866 and 1871, as amended, Title
VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act of 1967, as amended,
the Employee Retirement Income Security Act of 1974, as amended, the
Americans with Disabilities Act of 1990, the Family Medical and Leave
Act, or the California Fair Employment and Housing Act (collectively,
the "Claims"). The Employee hereby agrees to forego any right to file
any charges or complaints with any governmental agencies or any legal
action against the Company Releasees under any of the laws referenced
in this paragraph or with respect to any of the Claims.
Notwithstanding the foregoing, the release by the Employee in this
paragraph shall not limit the right of the Employee to seek to enforce
the provisions of this Agreement, including without limitation the
provisions of Paragraph 8 below.
(b) Release by the Company. Except as to any claims arising out of rights
provided under this Agreement, in consideration for the agreements
contained herein, the Company Releasees hereby irrevocably and
unconditionally release, acquit and forever discharge for themselves
and each of their stockholders, predecessors, successors, assigns,
divisions and subsidiaries, the Employee and his heirs, executors,
administrators, agents, successors and assigns, and all persons acting
by, through, under or in concert with any of them (collectively, the
"Employee Releasees"), or any of them, from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses (including attorney's fees
and costs actually incurred) of any nature whatsoever, known or
unknown, suspected or unsuspected, arising directly or indirectly out
of the Employee's employment by the Company, his separation from
employment with the Company, or the termination of the Employment
Agreement, which the Company now has, or ever claimed to have or could
claim against each or any of the Employee Releasees. The Company
hereby agrees to forego any right to file any legal action against the
Employee Releasees with respect to any matters covered by the release
in this paragraph. Notwithstanding the foregoing, the release by the
Company in this paragraph shall not limit the right of the Company to
seek to enforce the provisions of this Agreement, including without
limitation the provisions of Paragraph 8 below.
(c) Indemnification and Insurance. To the extent permitted by applicable
law, the Company agrees that all rights, if any, to indemnification
from the Company existing under the law and under the Company's
certificate of incorporation and by-laws as of the Separation Date, in
favor of the Employee as a director, officer, employee, or agent of
the Company shall survive this Agreement and shall continue in full
force and effect with respect to any liability for any acts or
omissions by the Employee during the period of his employment by the
Company. The Company further agrees that, for so long as it maintains
directors' and officers' liability insurance that covers former
employees whose employment terminated in April 1996 or earlier, it
shall include the Employee among the insured former employees;
provided, however, that this Agreement shall not be construed or
implied as an obligation to continue to maintain directors' and
officers' liability insurance for active or former employees for any
period of time. The Employee shall hold the Company harmless from any
liability arising out of his tax situation and any taxes, penalties,
or other assessments that may hereafter be asserted on account of any
payments under the Notes.
5. Waiver of Unknown Claims. The Company and the Employee acknowledge that
they are aware that they may hereafter discover claims or facts different from
or in addition to those they now know or believe to be true with respect to the
matters herein released, and except as to any claims arising out of the rights
provided under this Agreement, they agree that the mutual releases set forth
above shall be and remain in effect in all respects a complete general release
as to the matters released and all claims relative thereto which may exist or
may heretofore have existed, notwithstanding any such different or additional
facts. The Company and the Employee acknowledge that they have considered the
possibility that they may not fully know the number or magnitude of all of the
claims which they have or may have against each other and the Releasees of the
other party and, except as set forth in this Agreement and Paragraph 8 below,
intend to assume the risk that they are releasing unknown claims. The Company
and the Employee acknowledge that they have been informed of Section 1542 of the
Civil Code of the State of California and, except as set forth in this Agreement
and Paragraph 8 below, they do hereby expressly waive and relinquish all rights
and benefits which they have or may have under such Section, which reads as
follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
The Company and the Employee understand and acknowledge the significance
and consequences of such specific waiver of Section 1542 and, except as set
forth in this Agreement and Paragraph 8 below, hereby assume full
responsibility for any injuries, damages or losses that they may incur as
the result of such waiver.
6. Confidentiality and Non-disclosure Agreements.
(a) The Employee acknowledges that any confidentiality, proprietary or
ownership rights or nondisclosure agreement(s) in favor of the Company
or the Company Releasees, including but not limited to Paragraphs 11
and 12 of the Employment Agreement and any agreements which he may
have entered into in connection with his employment (the
"Nondisclosure Agreement(s)") by the Company, are understood to
survive, and do survive, the termination of his employment and the
termination of the Employment Agreement, and accordingly nothing in
this Agreement shall be construed as terminating, limiting or
otherwise affecting any such Nondisclosure Agreement(s) (including
Paragraphs 11 and 12 of the Employment Agreement) or Employee's
obligations thereunder.
(b) The Employee agrees that, except to the extent compelled by law or
legal process or except to the extent he is required to disclose to
governmental taxing authorities in connection with any inquiry, audit
or assessment relating to the taxation of any payments provided for
herein or except in any litigation or arbitration proceeding between
the Company and the Employee as provided herein (in which case the
Employee will use his best efforts to ensure that such information is
maintained as confidential by the persons to whom he is compelled or
required to disclose such information), the Employee will not: (i)
disclose or communicate confidential information of the Company to any
third party (including governmental agencies and employees and former
employees of the Company); (ii) make use of confidential information
of the Company for his own behalf, or on behalf of any third party;
and (iii) facilitate, assist, persuade or attempt to facilitate,
assist or persuade any third party to commence or prosecute any legal
proceedings against the Company or any Company Releasees. In the event
the Employee receives, is notified of, or is served with a subpoena,
summons, complaint, order, notice, notice of deposition or any other
legal process or request for information (collectively, "Legal
Process") in connection with any legal or quasi-legal proceeding,
including but not limited to any action at law or equity, arbitration,
administrative proceeding or governmental, self-regulating
organization or stock exchange investigation (collectively,
"Litigation"), relating to the performance of his services as an
employee, officer or as a director of the Company, or which, if
complied with by the Employee, might compel or lead to the disclosure
by the Employee of confidential information of the Company, the
Employee shall promptly, but in no event later than 3 business days
after receipt (unless 3 business days is not reasonable under the
circumstances), provided the Company with a copy of the same, and
shall in no event and under no circumstances disclose any such
information prior to the last date specified in the Legal Process for
making such disclosure. The Company shall, not later than 2 business
days prior to the date specified in such Legal Process for compliance,
either: (i) notify the Employee in writing that the Company wishes the
Employee to contest such Legal Process and agree to pay the Employee
the reasonable costs, expenses and attorneys' fees incurred by the
Employee in connection with contesting the Legal Process; or (ii)
notify the Employee that the Company agrees to pay the Employee the
reasonable costs, expenses and attorneys' fees incurred by the
Employee in responding to such Legal Process. The Employee agrees to
take such lawful action in connection with contesting any such Legal
Process as the Company reasonably shall request from time to time. The
Employee agrees promptly to notify the Company of any action taken or
proposed to be taken from time to time in connection with any Legal
Process or Litigation which might lead to the disclosure of the
confidential information of the Company, and to make available to the
Company any Legal Process or documents related thereto. The Employee
further agrees to respond in a timely manner to the Company's
reasonable requests for information involving any pending or future
Litigation, and to provide complete and truthful testimony in any such
Litigation.
7. Company Property and Information. The Company and the Employee agree
that the Employee, as of the date of the execution of this Agreement, has
returned to the Company all Company Information (defined below) and related
reports, customer lists, trade secrets, notes, maps, files, blueprints,
drawings, memoranda, manuals, and records; credit cards; cardkey passes; door
and file keys; automobiles; computer access codes, computer discs, magnetic
media or business information in any form; software; other business information
of the Company Releasees; and all other physical or personal property which the
Employee received or prepared or helped prepare in connection with his
employment The Employee represents and warrants that he has not retained and
will not retain any copies, duplicated, reproductions or excepts thereof in any
form. The term "Company Information" as used in this Agreement includes, without
limitation, information received from third parties, other confidential business
or financial information of the Company and other materials and information
described in this Paragraph. The Employee further represents and warrants that
he has not, except in the ordinary course of business and in accordance with
Company policies and procedures, destroyed or discarded any documents or
information.
8. Confidentiality of This Agreement.
(a) The Employee and the Company mutually represent and agree that, except
to the extent required by law, they will keep the terms, and the fact,
of this Agreement completely confidential and they will not hereafter
disclose any information concerning this Agreement to any person;
provided, however, that the Employee may disclose the terms, and the
fact, of this Agreement to his immediate family and his legal and tax
advisors, if such persons agree to keep such information confidential
and not disclose it to others, except as provided in Paragraph 6(b)
above; provided, however, that the Company may issue a press release
announcing the Employee's resignation, and will file with the
Securities and Exchange Commission a report on Form 10-K or 8-K
regarding his resignation.
(b) The provisions set forth in subparagraph (a) above are material terms
of this Agreement, and a breach of any of those provisions shall
constitute a material breach of this Agreement.
9. Consideration. The Company and the Employee mutually acknowledge that
neither is required to enter into this Agreement, and the Employee acknowledges
that the consideration to be received by him under this Agreement is adequate
and that the promises and agreements made by the Company in this Agreement are
in consideration of the Employee's agreement to provide the releases set forth
in Paragraph 4 above.
10. Receipt of This Agreement. The Employee acknowledges that he has had
twenty-one (21) days to consider the terms of this Agreement.
11. Revocability. This Agreement is revocable by the Employee for seven
(7) days after it is signed by him. This Agreement shall not be effective or
enforceable until the period for revocation has expired and the Employee has
delivered to the Company an original executed version of the Waiver of
Revocation in the form attached hereto as Exhibit A.
12. Arbitration. In the event there shall arise any questions or dispute
between the Company and the Employee with respect to the provisions of this
Agreement or its interpretation, such dispute shall be settled exclusively by
arbitration in Reno, Nevada, in accordance with the commercial rules then in
effect of the American Arbitration Association. Judgment upon an award rendered
by the arbitrators may be entered in any court of competent jurisdiction,
including courts in the States of California and Nevada. Any award so rendered
shall be final and binding upon the Company and the Employee. All costs and
expenses of the arbitrator(s) and any court proceedings, and all costs and
expenses of experts, attorneys, witnesses and other persons retained by the
prevailing parties shall be borne by the party that does not prevail in such
arbitration(s) and court proceedings to the extent that such expenses relate to
claims as to which the prevailing party was successful. In the event that
injunctive relief shall become necessary under this Agreement, both the Company
and the Employee shall have the right to seek provisional remedies prior to an
ultimate resolution by arbitration.
13. Voluntary Agreement. The Employee represents and agrees that he has
been advised by the Company of his right to discuss all aspects of this
Agreement with his attorneys, that he has availed himself of this right, that he
has carefully read and fully understands all of the provisions of this
Agreement, and that he is voluntarily entering into this Agreement.
14. Notices. Any notice given to either party to this Agreement shall be
in writing and shall be deemed to have been given when delivered personally or
sent by certified or registered mail, postage prepaid, return receipt requested,
duly addressed to the party concerned at the address indicated below or to such
changed address as such party may subsequently give such notice of.
If to the Company: KENETECH Corporation
500 Sansome Street, Suite 300
San Francisco, CA 94111
Attn: General Counsel
If to the Employee: Gerald R. Alderson
745 California Avenue
Reno, Nevada 89509
15. General Provisions.
(a) The Employee represents and acknowledges that in executing this
Agreement, he does not rely and has not relied upon any
representation, inducement agreement or statement not set forth herein
made by any of the Company Releasees or by any of the Company
Releasees' agents, representatives or attorneys with regard to the
subject matter of this Agreement or otherwise.
(b) The provisions of this Agreement are severable, and if any part of it
is found to be unenforceable, the other provisions shall remain fully
valid and enforceable. This Agreement shall survive the termination of
any arrangements contained herein.
(c) The Company and the Employee mutually agree that neither may assign
this Agreement, or any rights or obligations under this Agreement, to
any person or entity without the express prior written approval of the
other, except that the Employee may assign Note B or his payment
rights under Note B without the Company's consent.
(d) This Agreement sets forth the entire agreement between the Company and
the Employee and supersedes any and all prior agreements or
understandings between the Company and the Employee pertaining to the
subject matter hereof, including the Employment Agreement. This
Agreement shall inure to the benefit of and be binding upon the
successors in interest and assigns of each party except as otherwise
provided herein.
(e) The effect, intent and construction of this Agreement shall be
governed by the laws of the State of California, without giving effect
to the conflict of laws rules thereof.
(f) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original.
IN WITNESS WHEREOF, the Company and the Employee have duly executed this
Agreement as of the date first set forth above.
KENETECH CORPORATION
By_________________________ ___________________________
Name: Mark D. Lerdal GERALD R. ALDERSON
Title: President and Chief Executive Officer
EXHIBIT A
April , 1996
The Board of Directors
KENETECH Corporation
500 Sansome Street, Suite 300
San Francisco, CA 94111
Attention: Mark D. Lerdal
Gentlemen:
On April 9, 1996, I executed a Separation Agreement and Mutual Release
(the "Agreement") between KENETECH Corporation ("KENETECH") and me, effective as
of March 31, 1996. I acknowledge that I was advised by KENETECH that I had the
right to consult with an attorney, and I have availed myself of that right. I
also acknowledge that I was advised by KENETECH and my attorney that I had the
right to revoke the Agreement at any time during the seven-day period following
the date of my execution of the Agreement, which revocation period expired on
April , 1996.
By providing this letter, I represent and warrant to KENETECH that I have
not revoked the Agreement within the seven-day revocation period that expired on
April , 1996 , and that I will not attempt to revoke the Agreement at any time
in the future. I acknowledge that I am providing this letter to induce KENETECH
to deliver two promissory notes to me in accordance with the provisions of
Paragraph 3(a) of the Agreement. I also acknowledge that I have no basis upon
which to claim that the Agreement is invalid for any reason.
Very truly yours,