Exhibit 10.1

 

SEPARATION AGREEMENT AND RELEASE

 

This Separation Agreement and Release (“Agreement”) is made and entered into by
and between Michael D. Baumann (“Baumann”), in his individual capacity and on
behalf of all entities that he controls (the “Baumann Entities”) and Trade
Street Residential, Inc., a Maryland corporation, including its affiliates,
parent entities and subsidiaries (“Company”). For purposes hereof, Baumann and
the Company shall be collectively referred to herein as the “Parties,” and
individually, as a “Party.”

 

WHEREAS, Company has employed Baumann as its Chief Executive Officer in
accordance with that certain Employment Agreement dated September 26, 2013, by
and between the Company and Baumann (“Employment Agreement”);

 

WHEREAS, Baumann currently serves as a member of the Board of Directors of the
Company (the “Board”); and

 

WHEREAS, Baumann and the Company have reached the agreement set forth herein
regarding the terms of Baumann’s departure from his employment with the Company,
his resignation as a member of the Board and the termination of his Employment
Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Baumann and Company, hereby intending to be legally bound,
agree as follows:

 

1.          Recitals. The recitals set forth above are true and correct and are
incorporated herein by reference.

 

2.          Termination of Employment. Baumann’s separation from Company shall
be effective at 5:00 p.m. Eastern Standard Time on February 23, 2014 (the
“Separation Date”). Effective on the Separation Date, Baumann will be deemed to
have (i) resigned as a member of the Board, (ii) resigned his position as Chief
Executive Officer of the Company and (iii) terminated all other employee,
agency, lessor, sublessor, licensor, sublicensor and other vendor relationships
with the Company. Baumann warrants and represents that he has returned, or will
promptly hereafter return, to Company all property of Company in his possession,
custody, or control, including, but not limited to, files (paper and electronic)
and other documents, client records, working papers, reports, computers and
other hardware or software, access cards, office keys, and all other Company
property (tangible or intangible) of any nature. For the avoidance of doubt, the
Company shall continue to occupy the Company’s headquarters in Aventura,
Florida, insofar as a lease extension has been executed and delivered by the
Company in its name subject only to execution by the landlord, and the Company
shall be deemed to own free and clear of any liens, security interests, claims
or encumbrances whatsoever all furniture, furnishings, leasehold improvements,
fixtures and equipment currently used by the Company. Notwithstanding the
foregoing, Baumann shall be entitled to retain and remove all equipment
currently in his office in the Company’s headquarters, including his desktop
computer, iPad and telephone, which property shall be deemed to be owned by
Baumann free and clear of any liens, security interests, claims or encumbrances.
Baumann shall take reasonable steps as soon as possible to transfer any
telephone and data plans to his personal name and, if such is not done by
February 28, 2014, the Company shall be free to cancel such plans.

 

3.         Payments & Benefits to Baumann. In consideration of Baumann’s
obligations and undertakings under this Agreement, the Company agrees as
follows:

 

(a)Cash Payments. On the Separation Date, the Company shall pay to Baumann (i) a
lump sum cash settlement payment of $2,250,000.00, minus all applicable
withholding taxes in accordance with normal payroll withholding practices, and
minus a sum not to exceed $161,568.45 subject to verification of the Audit
Committee of the Board (regarding certain personal expenses); (ii) a lump sum
payment of $8,582.57 representing the payment for health insurance required by
Section 7.4 of the Employment Agreement; and (iii) for a period of 12 months
ending on the first anniversary of this Agreement, a monthly amount equal to the
monthly rent on 2,500 square feet of office space at market rental rates, which
payments will commence at such time as Baumann shall have presented to the
Company an executed lease agreement evidencing such rental amount and a prompt
and reasonable determination by the Company that such rental rate is a market
rate. It shall be presumed that any “all-in” rental rate (including rent, tenant
improvement charges, expense pass-through amounts and other costs) of $40.00 per
square foot or less is a market rate. The Company shall also pay to Barbara
Montero on the Separation Date a lump sum severance payment of $85,000.00, minus
all applicable withholding taxes.

 

 

 

 

(b)Vesting of Restricted Stock. Effective at the Separation Date, 54,338 shares
of restricted common stock, par value $0.01 per share, of Company (“Common
Stock”) awarded to and in the name of Michael D. Baumann upon completion of
Company’s initial public offering (the “Restricted Shares”) shall vest in full;
provided, however, that this number of shares of Common Stock otherwise to be
issued and delivered to Mr. Baumann shall be reduced, in accordance with Section
14.04 of the Company’s 2013 Equity Incentive Plan (the “Plan”), to cover any tax
withholding obligations applicable to the vesting of the Restricted Shares.
Company shall, upon request of Baumann, issue and deliver one or more
certificates evidencing the 54,338 shares of Company common stock, without any
restrictive legend thereon referencing any vesting of such shares.

(c)Amendment of Partnership Agreement. At the Separation Date, the Company and
Baumann (including Baumann’s affiliates who are parties thereto) shall execute
and deliver Amendment No. 1 to the Second Amended and Restated Agreement of
Limited Partnership of Trade Street Operating Partnership, LP (the “Partnership
Agreement”) in the form attached as Exhibit A hereto.

(d)Indemnification. That certain Indemnification Agreement between the Company
and Baumann dated as of June 28, 2012 shall remain in full force and effect for
acts and conduct by Baumann up to and including the Separation Date.

 

4.          Release.

 

(a)           In consideration of the payments and other benefits to be provided
by the Company to Baumann after the Separation Date, Baumann, for himself and
his heirs, executors, administrators, personal representatives, affiliates and
assigns, hereby irrevocably and unconditionally forever releases and discharges
Company, its past and present shareholders, officers, directors, partners,
managers, members, attorneys, consultants, agents, employees, subsidiaries,
parent corporations, affiliated or related entities and its or their past and
present shareholders, officers, directors, agents, employees and all of the
successors, assigns, and legal representatives of the foregoing (collectively,
“Releasees”) of and from, any matter or thing occurring in whole or in part
through the date hereof, any and all rights, claims, grievances, arbitrations,
liabilities or causes of action (“Claims”) which Baumann has asserted, could
assert or which could be asserted on his behalf (1) arising from Baumann’s
relationship to, employment with or service as an employee, officer, director,
or manager of the Company or its subsidiaries and affiliates prior to the date
of execution and delivery of this Agreement, including his separation from such
employment; provided, however, that Baumann does not release or discharge any
claim that Baumann may have for or in respect of indemnification or advancement
of expenses pursuant to any indemnification agreement between Baumann and the
Company or pursuant to the Company’s organizational documents or applicable
state law or (2) arising under the Age Discrimination in Employment Act of 1967,
as amended (the “ADEA”), the Family and Medical Leave Act of 1993, the Employee
Retirement Income Security Act of 1974, Title VII of the Civil Rights Act of
1964, the Rehabilitation Act of 1973, the Equal Pay Act, the Lilly Ledbetter
Fair Pay Act of 2009, the Civil Rights Act of 1866, the Civil Rights Act of
1991, the Americans with Disabilities Act of 1990, the ADA Amendments Act of
2008, the Genetic Information Nondiscrimination Act, the Florida Human Rights
Act of 1977, the Florida Civil Rights Act of 1992, Section 760.50 of the Florida
Statutes, the Miami-Dade County Code, and the wage and discrimination laws of
the United States or any State of the United States or any other country and
their subdivisions, including any state or local law, ordinance, regulation or
rule, all of the foregoing as heretofore or hereafter amended, or any court
decree, heretofore or hereafter promulgated. To the extent permitted by law,
Baumann also waives any and all rights under the laws of any jurisdiction in the
United States that would limit the foregoing release and waiver of which he had
knowledge as of the date hereof. Baumann recognizes that, among other things, he
is releasing Releasees of and from any and all claims he might have against
Releasees for retaliation of any kind, pain and suffering, emotional distress,
defamation, libel, slander and for discrimination based on age, gender, national
origin, race, religion, disability, sexual orientation, or veteran status.
Notwithstanding any other provision of this Agreement to the contrary, this
Agreement does not encompass, and Baumann does not release, waive or discharge,
the obligations of the Company, or the rights of Baumann, under (i) any
indemnification or similar agreement with Baumann or (ii) under this Agreement.

 

 

 

 

(b)        In consideration of the payments and other benefits to be provided by
Baumann to the Company under this Agreement, the Company, on behalf of itself
and its affiliates and each of their respective officers, directors, partners,
shareholders, employees, and agents, hereby irrevocably and unconditionally
forever releases and discharges Baumann and the Baumann Entities, their past and
present shareholders, officers, directors, partners, managers, members,
attorneys, consultants, agents, employees, subsidiaries, parent corporations,
affiliated or related entities and their past and present shareholders,
officers, directors, agents, employees and all of the successors, assigns, and
legal representatives of the foregoing (which, together with Bauman collectively
are referred to as the “Baumann Releasees”) of and from, any matter or thing
occurring in whole or in part through the date hereof, any and all Claims which
the Company has asserted, could assert or which could be asserted on his behalf
(1) arising from Baumann’s relationship to, employment with or service as an
employee, officer, director, or manager of the Company or its subsidiaries and
affiliates prior to the date of execution and delivery of this Agreement,
including Bauman’s employment and separation therefrom; provided, however, that
the Company does not release any claim that the Company may have for
indemnification pursuant to any indemnification agreement between Baumann and
the Company or otherwise existing pursuant to the Company’s organizational
documents or applicable state law, except insofar as such claim is released by
this Agreement, including its release and discharge of Baumann from any and all
claims whatsoever up to the date hereof that it had, may have had, now have or
may have for or by reason of any claim arising out of or attributable to
Baumann’s relationship to, employment with or service as an employee, officer,
director, manager, agent, lessor, sublessor, licensor, sublicensor or vendor of
the Company or its subsidiaries and affiliates, or pursuant to any, United
States federal, state, or local law or regulation. Company agrees to indemnify
and hold Baumann harmless from and against any Claim, grievance, loss, damage,
liability, cost or expense, including without limitation, reasonable attorneys’
fees, by reason of Company’s breach of this Agreement, including the
representations, warranties, and covenants made under this Agreement.

 

(c)          Baumann warrants and represents that he has not heretofore assigned
or transferred to any person or entity any of the Claims released hereunder, nor
has he filed any grievance, charge or complaints against Company with any
governmental or administrative agency or court. Baumann agrees to indemnify and
hold the Releasees harmless from and against any Claims, including without
limitation, reasonable attorneys’ fees by reason of Baumann's breach of this
Agreement, including representations, warranties, and covenants made under this
Agreement.

 

(d)          The Parties acknowledge that this Agreement is an important legal
document and that each of them has been requested to sign this document in
connection with Bauman’s separation from Company. The Parties acknowledge that
each of them: (i) has read this Agreement in its entirety, (ii) is competent to
execute this Agreement, (iii) Baumann has executed this Agreement knowingly and
voluntarily and without reliance upon any statement or representation of any
Releasee or its representatives, (iv) has been advised to, and has had ample
opportunity if so desired, to discuss this Agreement with his own attorney for
assistance and advice concerning this Agreement, (v) the terms of this Agreement
have been negotiated, (vi) understands the terms of this Agreement and their
legal effects, and (vii) understands that the terms of this Agreement are
enforceable. Baumann further covenants, warrants, and represents that he or it,
as applicable, has entered into this Agreement freely and voluntarily.

 

(e)          The Parties further agree without any reservation whatsoever that
neither of them (i) shall sue the other Party or become a party to a lawsuit on
the basis of any and all claims of any type lawfully and validly released herein
or (ii) become a party to a lawsuit on the basis of any and all claims of any
type lawfully and validly released herein.

 

(f)          Baumann hereby waives any right to monetary recovery or individual
relief should any federal, state, or local agency (including the Equal
Employment Opportunity Commission) pursue any claim on Baumann’s behalf arising
out of or related to Baumann’s employment with and/or separation from employment
with the Company.

 

 

 

 

5.          No Admission. The Parties agree that this Agreement does not
constitute an admission by the Company or Baumann of any: (a) violation of any
statute, law, regulation, order or other applicable authority; (b) breach of
contract, actual or implied; or (c) commission of any tort.

 

6.           Non-Solicitation; Non-Disparagement. Baumann hereby covenants and
agrees that for a period of one (1) year following the Separation Date, he shall
not directly or indirectly induce or encourage any employee of the Company or
affiliated entities to leave the employ of the Company or affiliated entities.
Each of the Parties hereto agrees not to disparage the other or the other’s
officers, directors, employees, attorneys, agents, consultants or
representatives (or, in the case of the Company, any of its products or
services); provided, that the foregoing shall not prohibit Baumann or the
Company from making any general competitive statements or communications about
the other or their respective businesses in the ordinary course of competition.
Further, Baumann agrees and understands that any violation of this provision
will void this Agreement and Baumann will be required to return or repay to the
Company any and all consideration received under this Agreement.

 

7.          Standstill. For a period of four (4) years from and after the
Separation Date, Baumann shall not:

 

(i) make any shareholder proposal, or “solicit” any “proxy” (as such terms are
defined under Regulation 14A under the Exchange Act, disregarding clause (iv) of
Rule 14a-1(1)(2), or in any way participate in, any such “solicitation” of
“proxies” to vote, or seek to advise or influence any person or entity with
respect to the election of any director of the Company;

 

(ii) make any unsolicited offer, submit any unsolicited letter to the Company or
the Board or any member or committee thereof or any officer of the Company, or
otherwise make or participate in the making of any proposal, in each case to
acquire, whether by merger, share exchange or otherwise, substantially all of
the stock or assets of the Company;

 

(iii) seek representation on the Board or a change in the composition of the
Board or otherwise submit any nominee to serve on the Board; and

 

(iv) bring, or participate in the bringing, of any action by or in the right of
the Company against any then-sitting current or former director of the Company,
or bring, or participate in the bringing, of any action or otherwise act to
contest the validity of this Section 7;

 

8.          Confidentiality. The Parties hereto agree to keep the existence and
terms of this Agreement and the circumstances of Baumann’s separation from the
Company confidential, except as required to be disclosed by the regulations of
the Securities and Exchange Commission or the listing rules of the NASDAQ Global
Market. Baumann specifically agrees not to discuss the existence or terms of
this Agreement with any third party except for his spouse, legal counsel and
financial and legal advisors. The Company and Baumann agree that the press
release attached as Exhibit B hereto shall be released prior to the opening of
the market on February 24, 2014. Baumann acknowledges that during the course of
Baumann’s employment and/or service on the Board he has had access to and/or the
Company has disclosed to him information relating to the nature and operation of
the Company’s business, the Company’s manner of operation, its financial
condition, its business operations, it business and marketing plans and pricing
methods (hereinafter “Confidential Information”). Baumann agrees that, for a
period of one year from the date this Agreement is executed, Baumann will retain
in confidence such Confidential Information and that Baumann will not, either
directly or indirectly, use, reveal, disclose, publish, communicate or divulge
any such Confidential Information to any other person or entity for any purpose
whatsoever except as required by law. Baumann expressly agrees that he shall
keep secret and confidential all such Confidential Information, except: (i) as
authorized by the Company in writing or as required by law; (ii) as required to
comply with a court order, subpoena, or demand of a governmental entity; (iii)
to the extent that such information has become available to the public through
no fault of Baumann nor by any breach by Baumann of the provisions of this
Agreement.

 

9.          Cooperation. After the Separation Date, Baumann agrees to make
himself available, upon reasonable request, to the Company, its external and
internal auditors, and representatives to a reasonable extent for the purpose of
providing information and cooperating with respect to pending or future
investigations, audits, and inquiries on matters in which Baumann was involved
during his tenure as Chief Executive Officer of the Company and/or about which
Baumann has knowledge.

 

 

 

 

10.         Access to Office; Conduct. Up to and including February 28, 2014,
Baumann shall be allowed access to the Company’s offices between the hours of
10:00 a.m. and 2:00 p.m. Eastern Standard Time. During any period that Baumann
shall be present in the Company’s offices, he shall conduct himself in a
professional manner and with a demeanor that fosters a collegial work
environment. For the avoidance of doubt and without limiting the generality of
the foregoing sentence, during any period that Baumann is present in the
Company’s offices, Baumann shall not discuss any business with any Company
employee, engage in any verbal communication with any Company employee except
friendly pleasantries or physically touch, physically or mentally intimidate or
otherwise threaten any Company employee. If Baumann shall violate this
provision, the Company shall have the right to expel him from the Company’s
office, and he shall not be readmitted at any time for any reason without the
consent of the Company’s chairman.

 

11.         Other Agreements. Notwithstanding the provisions of any stock award
agreement with respect to shares of restricted common stock of the Company owned
by Barbara Montero, such shares of restricted common stock shall vest in full as
of the Separation Date; provided, however, that the number of shares to be
delivered to Barbara Montero shall be reduced, in accordance with Section 14.04
of the Plan, to cover tax withholding obligations applicable to the vesting of
such restricted shares.

 

12.          Binding Effect. All terms and provisions of this Agreement, whether
so expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the Parties and their respective administrators, executors, other
legal representatives, heirs, successors and permitted assigns.

 

13.          Enforcement Costs. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provisions of this
Agreement, the successful or prevailing Party or Parties shall be entitled to
recover reasonable attorneys' fees and expenses, court costs and all expenses
even if not taxable as court costs (including, but not limited to, all
attorneys' fees and expenses incident to any appeals), incurred in that action
or proceeding, in addition to any other relief to which such Party or Parties
may be entitled.

 

14.          Entire Agreement. This Agreement (together with the agreements and
documents expressly referenced herein) represents the entire understanding and
agreement between the Parties with respect to the subject matter discussed in
this Agreement, and supersedes all other negotiations, understandings and
representations (if any) made by and between such Parties with respect to such
subject matter. In the event that any provision in this Agreement is determined
to be legally invalid or unenforceable by any court of competent jurisdiction
and cannot be modified to be enforceable, the affected provision shall be
stricken from the Agreement, and the remaining terms of the Agreement and its
enforceability shall remain unaffected thereby.

 

15.          Counterparts. This Agreement may be executed in one or more
counterparts, and counterparts may be exchanged by electronic transmission
(including by email), each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

 

16.          Opportunity for Independent Representation. Baumann hereby
acknowledges and agrees that he has been given the opportunity, if so desired,
to seek independent counsel for review and advice in connection with his rights,
remedies and obligations under this Agreement.

 

17.          Governing Venue and Submission to Jurisdiction. This Agreement
shall be governed by the laws of the State of Maryland. Any suit, action or
other legal proceeding arising out of, or relating to, this Agreement shall be
brought in a court of competent jurisdiction located in Baltimore, Maryland
having subject matter jurisdiction thereof and both Parties agree to submit to
the jurisdiction of such forum.

  

18.          Notices. All notices, demands, requests and replies required or
permitted by this Agreement shall be in writing and shall be deemed given when
delivered in person or on the third (3rd) business day following the date of
mailing if sent by first-class mail, postage prepaid, return receipt requested,
addressed as follows:

 

 

 

 

  (a) if to the Company: Trade Street Residential, Inc.       Attention: Chief
Executive Officer       19950 W. Country Club Drive       Suite 800      
Aventura, FL 33180

 

  (b) if to Baumann: Michael D. Baumann      

915 North Southlake Drive

Hollywood, Florida 33019

 

PLEASE READ CAREFULLY. THIS DOCUMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.

 

[Signature Page Follows] 

 

 

 

 

The undersigned, Michael Baumann, hereby represents that he has executed this
Agreement for the purposes and the consideration expressed herein, and that he
has carefully read this Agreement, has had adequate time and opportunity to
consider and understand its meaning and effect, and, if he so desired, discussed
it with any person of his choice, including his attorney, and that he has
voluntarily executed it as such.

 

The undersigned Parties, intending to be legally bound, have executed this
Agreement as of the day and year first above written.

 

EMPLOYEE   TRADE STREET RESIDENTIAL, INC.       By:  /s/ Michael D. Baumann  
By: /s/ Richard Ross    Michael D. Baumann    

 

    Print Name:  Richard Ross             Title: Chief Financial Officer       
  Date:  February 23, 2014   Date:  February 23, 2014          

 

[Signature Page to Separation Agreement and Release]