Exhibit 10.11
December 29, 2000

Daniel J. Kelly
106 Lamarack Way
Cary, NC 27511

Dear Dan,

In consideration of your contribution to the Company, the Company is willing to
provide you with certain assurances under certain circumstances, as described
herein.

Assuming that you continue to devote your entire business time and efforts to
the Company in an executive management position (which is at least equivalent to
the Company's current executive vice president level) and you continue to
perform satisfactorily, the Company agrees as follows:

         1.       Effective as of the date hereof, the Company agrees to employ
                  you through the close of business on December 31, 2002 (such
                  period is referred to herein as the "Term"). As of January 1,
                  2002 and each successive anniversary thereof (each, the
                  "Automatic Extension Date"), the Term shall automatically be
                  extended for one year unless either party shall give written
                  notice to the other prior to any Automatic Extension Date that
                  such one year extension shall not occur, in which event the
                  Term shall expire as of the close of business on the next
                  December 31st. From and after any such expiration date you
                  shall continue to be employed by the Company as an "at will
                  employee" until such time as either you or the Company end the
                  employment relationship.

         2.       Your base salary shall continue at its current rate of
                  $200,000 per year, subject to increase from time to time,
                  along with the potential for annual bonuses, with both salary
                  increases and bonuses based upon your individual performance
                  (and potentially as a part of a Company-wide bonus plan
                  promulgated in advance of the award of such bonus) as
                  determined by the Company's board of directors (the "Board")
                  or the Board's compensation committee.

         3.       A. Effective as of December 1, 2000 you shall be granted
                  $200,000 worth of restricted shares of Company stock vesting
                  over the next 3 years at the rate of 33 1/3% per year. Such
                  shares shall be valued as of the date of the close of business
                  on November 30, 2000 and shall be granted using that same form
                  of Restricted Stock Agreement which you executed on November
                  15, 1999 (hereinafter "Form Agreement"). Said Form Agreement
                  shall in this instance be modified as necessary to conform to
                  the provisions of this paragraph 3.A. and shall provide for
                  100% vesting upon Change of Control (as defined under "Defined
                  Terms" below). In addition, you shall receive a sum equal to
                  the dividend equivalents you would have received as to such
                  shares as to the dividend paid for the fourth quarter of 2000.

                  B. In addition, you shall be granted as of June 1, 2000 (the
                  effective date of your promotion to Company CFO) $50,000 worth
                  of restricted shares of Company stock, valued as of the close
                  of business on May 31, 2000, which shall be documented using
                  the Form Agreement, modified as necessary to indicate
                  immediate vesting. In addition, you shall receive a sum equal
                  to the dividend equivalents you would have received as to such
                  shares as to the dividends paid for the third and fourth
                  quarters of 2000.

<PAGE>
Daniel J. Kelly
December 29, 2000
Page 2


         4.       If at any time within the twelve-month period commencing
                  immediately after the consummation of a Change of Control (as
                  defined below) (the "Severance Protection Period") your
                  employment is terminated by the Company (or its successor)
                  without "Cause" or by you for "Good Reason" (each as defined
                  under "Defined Terms" below), you will be entitled to
                  forgiveness of that promissory note currently held by the
                  Company dated October 31, 2000 and to receive a sum equal to:
                  a. your then-current base salary and then-current benefits for
                  24 months, b. twice the last bonus awarded to you during the
                  Term and c. the amount of 12 months of the then-current
                  employee contribution toward COBRA continuation coverage (
                  collectively, the "Severance Payments), provided that, unless
                  otherwise provided by action of the Board, the Severance
                  Payments will only be payable hereunder in the event (i) a
                  Change of Control is consummated during the Term or (ii) a
                  definitive agreement is signed prior to the expiration of the
                  Term to consummate a transaction that would constitute a
                  Change of Control and such Change of Control transaction is
                  ultimately consummated pursuant to such agreement. The sum for
                  salary will be 12 months after the first two years.

                  You will not be entitled to any Severance Payments in the
                  event of (i) your termination of employment for any reason
                  prior to or after the Severance Protection Period or (ii) your
                  termination of employment during the Severance Protection
                  Period due to your voluntary resignation of employment without
                  Good Reason, termination of employment by the Company for
                  Cause or your death or "Disability" (as defined under "Defined
                  Terms" below).

         5.       Defined Terms:

                  For purposes of this letter agreement the following
                  definitions shall apply:

                  "Cause" means (i) your continued failure to adequately perform
                  your duties to the Company or any of its affiliates (after
                  receipt of notice and an opportunity to cure each such
                  failure), (ii) your substandard performance as determined by
                  the Board based upon the performance objectives it previously
                  communicated to you as to your then-current position, (iii)
                  fraud with respect to the Company or any of its affiliates or
                  dishonesty in the performance of your duties to the Company or
                  any of its affiliates, (iv) an act or acts on your part
                  relating directly to your employment with the Company and
                  adversely impacting the Company constituting (x) a felony
                  under the laws of the United States or any state thereof or
                  (y) a misdemeanor involving moral turpitude, (v) your willful
                  malfeasance, gross negligence, disloyalty or willful
                  misconduct in connection with your duties to the Company or
                  any of its affiliates or any act or omission which is
                  injurious to the financial condition or business reputation of
                  the Company or any of its affiliates, or (vi) your material
                  breach of any written policies or practices of the Company or
                  any of its affiliates (after receipt of notice and an
                  opportunity to cure such material breach).

                  "Change of Control" means any sale, merger, consolidation, or
                  any other business combination or reorganization, in one or a
                  series of related transactions, as a result of which any
                  "person" or "group" (as such terms are defined in Section
                  13(d) and 14(d) of the Securities Exchange Act of 1934, as
                  amended (the "Act")), other than the Company or any of its
                  affiliates (including any employee benefit plan thereof) and
                  LF Strategic Realty Investors II L.P. and its affiliates) (i)
                  becomes the "beneficial owner", directly or indirectly of more
                  than 50% of (x) the outstanding shares of all series of common
                  stock of the Company (on a fully diluted basis, including all
                  options, warrants or other convertible securities held by
<PAGE>
Daniel J. Kelly
December 29, 2000
Page 3

                  management and other investors) or (y) the combined voting
                  power of all classes of equity securities of the Company
                  entitled to vote in the election of directors generally (on a
                  fully diluted basis, including all options, warrants or other
                  convertible securities held by management and other investors)
                  or (ii) acquires, directly or indirectly, assets representing
                  all or substantially all of the total assets of the Company
                  and its subsidiaries on a consolidated basis (measured by
                  either book value in accordance with generally accepted
                  accounting principles consistently applied or fair market
                  value determined in the reasonable, good faith judgment of the
                  Company's board of directors).

                  "Disability" shall mean and shall be deemed to have occurred
                  after 120 days in the aggregate during any consecutive 12
                  month period or after 90 consecutive days during which period,
                  as the case may be, you, by reason of physical or mental
                  disability or illness, shall have been unable to discharge
                  your duties under this letter agreement. The date of
                  Disability shall be such 120th or 90th day as the case may be.
                  In the event either the Company or you, after receipt of
                  notice of your permanent disability from the other, dispute
                  that your permanent disability shall have occurred, you shall
                  promptly submit to a physical examination by the chief of
                  medicine in any major hospital in the Raleigh, North Carolina
                  area, and unless such physician shall issue a written
                  statement to the fact that in his opinion based on his
                  diagnosis, that you are capable of resuming your employment
                  and devoting your full time and energy to discharging your
                  duties within 30 days after the date of such statement, such
                  Disability shall be deemed to have occurred.

                  "Good Reason" means the Company has required you to relocate
                  to a place of employment which is more than 50 miles outside
                  of the town limits of Cary, NC.

Please indicate your acceptance of the terms of this letter agreement by
executing this letter in the space shown below and returning it to me for the
Company's files. A copy is enclosed for your records.

Feel free to contact me in the event you have any questions.

Sincerely,



John W. Gildea
Chairman, Compensation Committee
Konover Property Trust, Inc. Board of Directors


Agreed to this _____ day of January 2001 by Daniel J. Kelly.


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                                                         Daniel J. Kelly