RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is made and entered into
as of this 4th day of April, 1996 (hereinafter referred to as the "Effective
Date"), by and between FACTORY STORES OF AMERICA, INC., a Delaware corporation
(the "Corporation"), and X. XXXXXXX XXXXXX (the "Participant").
WHEREAS, The Factory Stores of America, Inc. 1996 Restricted Stock Plan
(the "Plan") has been adopted by the Executive Compensation Committee (the
"Committee") of the Board of Directors of the Corporation (the "Board") and the
Board; and
WHEREAS, the Committee has determined that it is desirable and in the best
interest of the Corporation to make an award (the "Award") of certain shares of
common stock, par value $.01 per share of the Corporation ("Common Stock"),
under the Plan, to the Participant, subject to certain restrictions as specified
below; and
WHEREAS, in order to enforce the aforesaid restrictions, Participant is
required under the terms of the Award to immediately deposit the certificate(s)
for the shares of Common Stock subject to the Award, together with stock powers
appropriately endorsed in blank, with the Corporation in accordance with the
requirements of this Agreement.
NOW, THEREFORE, the Corporation and the Participant agree as follows:
1. Date of Award. The date of making the Award under this Agreement is the
4th day of April, 1996 (the "Effective Date").
2. Receipt by Participant. The Participant acknowledges receipt from the
Corporation of 90,000 shares of Common Stock (the "Restricted Stock") and agrees
to the execution of stock powers or such other transfer authorizations as the
Corporation shall request, in blank, covering the Restricted Stock to be held by
the Corporation, prior to the distribution of certificates representing the
Restricted Stock to the Participant as hereinafter provided.
3. Investment Representation and Transfer Restrictions; and Registration
(a) Investment Representation. Participant represents to the Corporation
that the Participant is taking the Restricted Stock for investment and without
any present intention to sell, transfer or otherwise dispose of the Restricted
Stock.
(b) Securities Law Restrictions. The Participant agrees with the
Corporation that the Restricted Stock shall be subject to such stop-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which Common Stock
is then listed and any other applicable federal or state securities laws, rules
or regulations, and the Committee may cause a legend or legends to be placed on
any certificate representing any of the shares of Restricted Stock to make
appropriate reference to such restrictions.
(c) Other Transfer Restrictions. The Participant agrees with the
Corporation that each certificate representing any of the shares of Restricted
Stock may bear a legend, substantially in the form attached as Exhibit A hereto,
to the effect that the shares of Restricted Stock represented thereby are
subject to potential forfeiture and may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance with the
terms of this Agreement, and shall be subject to such stop-transfer orders and
other restrictions as the Committee shall deem advisable to ensure compliance
with the terms of this Agreement.
(d) Registration. Prior to vesting pursuant to Paragraph 5 below, the
Corporation shall cause the Restricted Stock to be registered under the
Securities Act of 1933 and to be listed on the New York Stock Exchange (the
"NYSE").
4. Receipt by the Corporation. The Corporation acknowledges receipt from
the Participant of certificates representing the Restricted Stock, registered in
the name of the Participant, and acknowledges receipt of stock powers executed
in blank by the Participant covering all of the Restricted Stock. Certificates
representing the Restricted Stock shall be held by the Corporation and
distributed or transferred as directed by the Committee in accordance with this
Agreement.
5. Vesting and Delivery of Restricted Stock by the Corporation
(a) Periodic Vesting. Subject to subparagraph 5(b) below, the Restricted
Stock shall vest and become nonforfeitable in five (5) equal installments of
twenty percent (20%) per year provided the Participant continues to be employed
by the Company at the relevant vesting date, commencing (i.e., the first 20%
shall vest) on the later to occur of (i) the average closing price of Common
Stock on the NYSE being $16.00 per share (subject to appropriate adjustment for
stock dividends, stock splits, or similar transactions) or more for any five (5)
consecutive trading days or (ii) December 14, 2000.
(b) Accelerated Vesting.
(i) If the condition set forth in clause (i) of subparagraph 5(a) has
previously during the term of this Agreement been satisfied, then
notwithstanding the requirement of continued employment in subparagraph
5(a) above, all Restricted stock not previously vested and subject to
forfeiture shall vest and the right of the Participant to such shares of
Restricted Stock shall become nonforfeitable upon the occurrence of any of
the following:
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(A) the Participant's death during his employment by the
Corporation;
(B) the Participant's disability (as defined in the Plan) during
his employment by the Corporation;
(C) termination of the Participant's employment by the
Corporation due to the Corporation's election not to extend the Second
Amended and Restated Employment Agreement, dated December 15, 1995, by
and between the Corporation and the Participant (the "Employment
Agreement"), as permitted in Paragraph 2(a) thereof; or
(D) termination of the Participant's employment "without cause"
pursuant to Paragraph 2(c) or Paragraph 5(a)(iii) of the Employment
Agreement.
(ii) If the condition set forth in clause (i) of subparagraph 5(a) has
not previously during the term of this Agreement been satisfied, then
notwithstanding the requirement of continued employment in subparagraph
5(a) above, 74,000 shares of Restricted Stock shall be forfeited and 16,000
shares of Restricted Stock shall vest and the right of the Participant to
such shares of the Restricted Stock shall become nonforfeitable upon the
occurrence of any of the following:
(A) the Participant's death during his employment by the
Corporation;
(B) the Participant's disability (as defined in the Plan) during
his employment by the Corporation;
(C) termination of the Participant's employment by the
Corporation due to the Corporation's election not to extend the
Employment Agreement as permitted in Paragraph 2(a) thereof; or
(D) termination of the Participant's employment "without cause"
pursuant to Paragraph 2(c) (other than pursuant to Paragraph 2(c)(iv))
or Paragraph 5(a)(iii) (other than within three (3) months prior to,
at the time of or within one (1) year following a "change of control"
pursuant to Paragraph 2(e) or, provided that such change is effected,
the execution of a definitive agreement therefor) of the Employment
Agreement.
(iii) If the condition set forth in clause (i) of subparagraph 5(a)
has not previously during the term of this Agreement been satisfied, then
notwithstanding the requirement of continued employment in subparagraph
5(a) above, all Restricted Stock not previously vested and subject to
forfeiture shall vest and the right of the Participant to such shares of
Restricted Stock shall become nonforfeitable as follows upon the
termination by the Participant of his
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employment pursuant to Paragraph 2(c)(iv) of the Employment Agreement:
(A) 16,000 shares on the date of the termination of the
Participant's employment by the Corporation;
(B) 37,000 shares on the first anniversary of the termination of
the Participant's employment; and
(C) 37,000 shares on the second anniversary of the termination of
the Participant's employment.
(iv) If the condition set forth in clause (i) of subparagraph 5(a) has
not previously during the term of this Agreement been satisfied, then
notwithstanding the requirement of continued employment in subparagraph
5(a) above, all Restricted Stock not previously vested and subject to
forfeiture shall vest and the right of the Participant to such shares of
Restricted Stock shall become nonforfeitable upon the termination of the
Participant's employment by the Corporation "without cause" pursuant to
Paragraph 5(a) (iii) of the Employment Agreement if such termination occurs
within three (3) months prior to, at the time of or within one (1) year
following a "change of control" as defined in Section 2(e) of the
Employment Agreement or, provided that such change is effected, the
execution of a definitive agreement therefor.
(c) Delivery of Restricted Stock Certificates to the Participant. Within
thirty (30) days after a date on which shares of Restricted Stock have become
vested as provided in subparagraphs 5(a) or 5(b) above, the Committee shall
instruct the appropriate officer of the Corporation to deliver to the
Participant, the Participant's designee, or such other person as shall have been
designated as Participant's beneficiary in accordance with this Agreement, as
applicable, certificates representing the shares of Restricted Stock which have
become vested and nonforfeitable, free from any restrictions imposed by this
Agreement other than such restrictions and conditions as may be deemed necessary
by the Committee to assure compliance with all applicable securities laws,
rules, regulations and listing requirements as set forth in subparagraph 3(b)
above.
(d) Delivery of Forfeited Restricted Stock. If the Participant's employment
with the Corporation terminates for any reason other than one of those provided
in subparagraph 5(b) above, before all of the shares of Restricted Stock are
vested in accordance with subparagraphs 5(a) and 5(b) above, all such shares
then subject to forfeiture shall be deemed forfeited by the Participant and the
Committee shall instruct the appropriate officer of the Corporation concerning
the disposition of such forfeited shares. Thereafter such forfeited shares shall
cease to be subject to this Agreement.
(e) Limitation on Shares of Restricted Stock. Except as otherwise provided
in Paragraph 6(a) or 9 of this Agreement, the aggregate number of shares of
Restricted Stock which the Participant may be entitled to receive under this
Agreement shall not exceed 90,000.
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6. Voting Rights: Dividends: Other Distributions.
(a) The Participant shall have the full power to vote all of the Restricted
Stock held by the Corporation in the Participant's name from time to time and
shall be entitled to receive all cash dividends declared upon any of the
Restricted Stock held by the Corporation in the Participant's name from time to
time. All shares of Common Stock or other securities, including but not limited
to stock dividends, issued in respect of the Restricted Stock or in substitution
thereof, whether by the Corporation or by another issuer, shall be held by the
Corporation and shall be subject to all terms and conditions of this Agreement
and shall be redelivered to the Participant or delivered as instructed by the
Committee under the same circumstances as the Restricted Stock with respect to,
or in substitution for, which they were issued; provided, however, that if the
Participant should receive rights, warrants or fractional interests in respect
of any of the Restricted Stock held by the Corporation in the Participant's
name, such rights or warrants may be held, exercised, sold or otherwise disposed
of, and such fractional interests may be settled, by the Participant free and
clear of the restrictions herein set forth.
(b) The Participant shall use sixty percent (60%) of the cash dividends
paid on any unvested shares of Restricted Stock to purchase additional shares of
Common Stock within thirty (30) days of payment or as soon thereafter as the
Participant may purchase shares of Common Stock without penalty under the
Federal securities law.
7. Designation of Beneficiary. The Participant may file with the Committee
a written designation of one or more persons as the beneficiary who shall be
entitled to receive the Restricted Stock, if any, distributable to the
Participant upon the Participant's death. The Participant may, from time to
time, revoke or change the Participant's beneficiary designation without the
consent of any prior beneficiary, if any, by filing a new designation with the
Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date prior to
such receipt.
If no such beneficiary designation is in effect at the time of the
Participant's death, or if no designated beneficiary survives the Participant,
or if such designation conflicts with law, the Participant's estate shall be
deemed to have been designated the Participant's beneficiary and shall receive
the Restricted Stock, if any, distributable to the Participant upon the
Participant's death. If the Committee is in doubt as to the right of any person
to receive such distribution, the Committee may direct an appropriate officer of
the Corporation to retain the Restricted Stock, without liability for any
interest in respect thereof, until the rights thereto are determined, or the
Committee may direct the transfer of such Restricted Stock into any court of
appropriate jurisdiction and such transfer shall be deemed a complete discharge
of the obligations of the Corporation hereunder.
8. Effect of Award on Status of Participant. The fact that an Award has
been made to the Participant under this Plan shall not confer on the Participant
any right to continued
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employment with the Corporation; nor shall it limit the right of the Corporation
to terminate the Participant's employment at any time.
9. Adjustment Upon Changes in Capitalization; Dissolution or Liquidation
(a) In the event of a change in the number or type of shares of Common
Stock outstanding (or in the event of an exchange of such shares) by reason of a
reclassification, recapitalization, reorganization, merger, or consolidation, or
other similar capital adjustment, merger or consolidation of the Corporation, or
the sale by the Corporation of all or a substantial portion of its assets, or
the occurrence of any other event which could affect the implementation of the
Plan and the realization of its objectives, the Committee shall make such
adjustments in the terms, conditions, or restrictions of this Agreement as are
equitable and just.
(b) The making of the Award under this Agreement does not affect in any way
the right or power of the Corporation or its stockholders to make or authorize
any adjustment, recapitalization, reorganization, or other change in the
Corporation's capital structure or its business, or any merger or consolidation
of the Corporation, or to issue bonds, debentures, preferred or other preference
stock ahead of or affecting Common Stock or the rights thereof, or the
dissolution or liquidation of the Corporation, or any sale or transfer of all or
any part of the Corporation's assets or business.
10. Nontransferability. The Restricted Stock may not be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of by the Participant
until transferred to the Participant by the Corporation in accordance with the
terms of this Agreement. Nothing herein shall preclude the Participant from
making a gift of any Restricted Stock to a spouse, child, stepchild, grandchild,
parent, sibling, or legal dependent of the Participant, or to a trust of which
the beneficiary or beneficiaries of the trust shall be either a person
designated herein or the Participant, provided, however, that any Restricted
Stock so given shall remain subject to the restrictions, obligations and
conditions set forth in this Agreement. In addition, the Restricted Stock may be
tendered in response to a tender offer for or a request or invitation to tender
of greater than fifty percent (50%) of the common stock of the Corporation and
may be surrendered in a merger, consolidation or share exchange involving the
Corporation; provided, however, in each case, that except as otherwise provided
in Paragraph 6 above, the security or other consideration received in exchange
therefor shall thereafter be subject to the restrictions and conditions set
forth in this Agreement.
11. Taxes. All Restricted Stock distributed pursuant to this Agreement, and
any amounts distributed with respect thereto prior to distribution of such
Restricted Stock by the Corporation, shall be subject to applicable federal,
state and local withholding for taxes. The Participant expressly acknowledges
and agrees to such withholding without regard to whether the Restricted Stock
may then be sold or otherwise transferred by the Participant.
12. Notices. Any notices or other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given if delivered personally or when delivered to a
nationally recognized overnight courier service or deposited in the United
States mail as Certified Mail, return receipt requested, properly addressed
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and postage prepaid, if to the Corporation at its principal office at 000 Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000; and, if to the Participant, at
the Participant's last address appearing on the books of the Corporation. The
Corporation and the Participant may change their address or addresses by giving
written notice of such change as provided herein. Any notice or other
communication hereunder shall be deemed to have been given on the date actually
delivered, as of the first (1st) business day following delivery to a nationally
recognized overnight courier service, or as of the third (3rd) business day
following the date mailed, as the case may be.
13. Construction Controlled by Plan. This Agreement shall be construed so
as to be consistent with the Plan; and except as specifically provided herein
the provisions of the Plan shall be deemed to be controlling in the event that
any provision hereof should appear to be inconsistent therewith. The Participant
hereby acknowledges receipt of a copy of the Plan from the Corporation.
14. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be valid and enforceable under applicable
law, but if any provision of this Agreement is determined to be unenforceable,
invalid or illegal, the validity of any other provision or part thereof, shall
not be affected thereby and this Agreement shall continue to be binding on the
parties hereto as if such unenforceable, invalid or illegal provision or part
thereof had not been included herein.
15. Modification of Agreement; Waiver. This Agreement may be modified,
amended, suspended or terminated, and any terms, representations or conditions
may be waived, but only by a written instrument signed by each of the parties
hereto. No waiver hereunder shall constitute a waiver with respect to any
subsequent occurrence or other transaction hereunder or of any other provision
hereof.
16. Captions and Headings; Gender and Number. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Agreement. As used herein,
the masculine gender shall include the feminine and neuter, the singular number
the plural, and vice versa, whenever such meanings are appropriate.
17. Governing Law: Venue and Jurisdiction. Without regard to the principles
of conflicts of laws, the laws of the State of North Carolina shall govern and
control the validity, interpretation, performance, and enforcement of this
Agreement. The parties hereto agree that any suit or action relating to this
Agreement shall be instituted and prosecuted in the courts of the County of
Xxxxxxxx, State of North Carolina, and each party hereby does waive any right or
defense relating to such jurisdiction and venue.
18. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the Corporation, and its successors and assigns, and shall be
binding upon and inure to the benefit of the Participant, and his heirs,
legatees, personal representatives, executors and administrators.
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19. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties hereto and, except as otherwise
provided hereunder, there are no other agreements or understandings, written or
oral, in effect between the parties hereto relating to the matters addressed
herein.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
executed in its corporate name by a duly authorized officer, and attested by its
Secretary or any of its Assistant Secretaries, and its corporate seal to be
hereto affixed, all by authority of its Board of Directors first duly given; and
the individual party hereto has hereunto set such party's hand and adopted as
such party's seal the typewritten word "SEAL" appearing beside such party's
name, all done this the day and year first above written.
FACTORY STORES OF AMERICA, INC.
By: _______________________________________
J. Xxxxx Xxxxxxx, Xx.
Chairman and Chief Executive Officer
ATTEST:
___________________
___________________ Secretary
[Corporate Seal]
____________________________________(SEAL)
X. XXXXXXX XXXXXX
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EXHIBIT A
Form of Legend
The shares represented by this certificate are subject to restrictions on
transfer and potential forfeiture under the terms of a Restricted Stock
Agreement dated April 4, 1996, a copy of which agreement may be obtained from
the issuer by writing to:
Factory Stores of America, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Corporate Secretary
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