EMPLOYMENT AGREEMENT
BETWEEN
FAC REALTY, IN
AND
XXXX X. XXXXXXXX
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the 13th day of October,
1997 between FAC REALTY, INC., a Delaware corporation (the "Company"), and Xxxx
X. XXXXXXXX (the "Executive") for employment commencing on the Effective Date
(as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. Employment.
(a) The Company hereby employs the Executive as Vice President and Chief
Accounting Officer and the Executive hereby accepts such employment, on the
terms and subject to the conditions hereinafter set forth.
(b) During the term of her employment under this Employment Agreement, the
Executive shall be and have the title of Vice President and shall devote her
entire business time and all reasonable efforts to her employment and perform
diligently such duties as are customarily performed by vice presidents of
companies similar in size to the Company, together with such other duties as may
be reasonably requested from time to time by the Board of Directors of the
Company (the "Board"), which duties shall be consistent with her title and
position as set forth above and as provided in Paragraph 2; provided, however,
that business activities by the Executive with respect to passive investments,
so long as such activities do not, alone or in the aggregate, materially
interfere with the Executive's performance of her duties as described in this
Paragraph l(b), will not be deemed inconsistent with the requirements of this
Paragraph l(b).
2. Term and Positions.
(a) Subject to the provisions for termination hereinafter stated, the term
of this Employment Agreement shall begin on October 13, 1997 (the "Effective
Date") and shall continue through October 1, 1998. In the event of a "change in
control" (as thereinafter defined) the term of this Employment Agreement shall
be extended through October 1, 1999.
(b) The Executive shall be entitled to serve as Vice President of the
Company. For service as an officer and employee of the Company, the Executive
shall be entitled to the full protection of the applicable indemnification
provisions of the Certificate of Incorporation and Bylaws of the Company, as the
same may be amended from time to time, which indemnifications shall remain
effective after termination of this Employment Agreement with respect to
Executive's actions and inactions during the term hereof.
(c) If:
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(i) the Company materially changes the Executive's duties and
responsibilities as set forth in Paragraphs l(b) and 2(b) without her
consent;
(ii) the Executive's place of employment or the principal executive
offices of the Company are located more than fifty (50) miles from the
geographical center of Smithfield, North Carolina; or
(iii) there occurs a material breach by the Company of any of its
obligations under this Employment Agreement, which breach has not been
cured in all material respects within ten (10) days after the Executive
gives notice thereof to the Company;
then in any such event the Executive shall have the right to terminate her
employment with the Company, but such termination shall not be considered a
voluntary resignation or termination of such employment or of this Employment
Agreement by the Executive but rather a discharge of the Executive by the
Company "without cause" (as defined in Paragraph 5 (a) (iii)). The Executive may
exercise such right of termination at any time within three (3) months following
the occurrence of the applicable event described in (i) and (iii) of this
Paragraph 2(c), and within six (6) months following the occurrence of the
applicable event described in (ii) of this Paragraph 2(c).
(d) The Executive shall be deemed not to have consented to any written
proposal calling for a material change in her duties and responsibilities unless
he shall give written notice of her consent thereto to the Executive Management
Committee of the Company within fifteen (15) days after receipt of such written
proposal. If the Executive shall not have given such consent, the Company shall
have the opportunity to withdraw such proposed material change by written notice
to the Executive given within ten (10) days after the end of said fifteen (15)
day period.
(e) The term "change in control" means the first to occur of the following
events:
i) any person or group of commonly controlled persons owns or
controls, directly or indirectly, fifty percent (50%) or more of the voting
control or value of the capital stock of the Company following the
Effective Date;
ii) any person or group of commonly controlled persons owning less
than five percent (5%) of the voting control or value of the capital stock
of the Company within 30 days following the Effective Date owns or
controls, directly or indirectly, more than twenty percent (20%) of the
voting control or value of the capital stock of the Company; or
iii) following the Effective Date, the stockholders of the Company
approve an agreement to merge or consolidate with another corporation or
other entity resulting (whether separately or in connection with a series
of transactions) in a change in ownership of twenty percent (20%) or more
of the voting control or value of the capital stock of the Company, or an
agreement to sell or otherwise dispose of all or substantially all of the
Company's assets (including without limitation, a plan of liquidation or
dissolution), or otherwise approve of a fundamental alteration in the
nature of the Company's business; provided,
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however, a pledge, hypothecation or other similar disposition for the
purpose of providing collateral security made at the time the Company
enters into a bona fide financing transaction with a party which at the
time of such transaction is not an affiliate of the Company would not
constitute a change in control.
Notwithstanding the foregoing provisions of this Paragraph 2, the ownership or
acquisition of capital stock by the Executive, and/or any other person who is or
was an officer of the Company as of the Effective Date and/or their respective
affiliates, shall not be deemed to result in a "change in control" of the
Company.
3. Compensation.
During the term of her employment under this Employment Agreement the
Company shall pay or provide, as the case may be, to the Executive the
compensation and other benefits and rights set forth in this Paragraph 3.
(a) The Company shall pay to the Executive a base salary payable in
accordance with the Company's usual pay practices (and in any event no less
frequently than monthly) of One Hundred Ten Thousand Dollars ($110,000.00)
per annum, to be increased (but not decreased) from time to time (based
upon the performance of the Company and the Executive) as determined by the
Board or the Company's Executive Compensation Committee.
(b) The Company may pay to the Executive bonus compensation on a
calendar year basis pursuant to the terms of the incentive compensation
plan established by the Board from time to time, not later than March 1
following each calendar year. Such bonus compensation may be payable in the
form of cash or Common Stock of the Company. In the event such bonus is
paid in the form of Common Stock, the determination of shares issued may be
based on the cash equivalent divided by the market price of the Common
Stock on or about the date of determination of the bonus compensation by
the Board. Such shares may be increased by fifty percent (50%) and
automatically vest on the third anniversary of the date of issuance (for
example October 1, 2001 for shares issued March 1, 1998) unless the
Executive voluntarily terminates his employment prior to such anniversary
date or his employment is terminated for "cause" (see Paragraph 5(a)(iii)).
(c) The Company shall provide to the Executive such life, medical,
hospitalization and dental insurance for himself, her spouse and eligible
family members, as may be available to other officers of the Company.
(d) The Executive shall participate in all retirement and other
benefit plans of the Company generally available from time to time to
officers of the Company and for which the Executive qualifies under the
terms thereof (and nothing in this Employment Agreement shall or shall be
deemed to in any way affect the Executive's rights and benefits thereunder
except as expressly provided herein).
(e) The Executive shall be entitled to such periods of vacation and
sick leave allowance each year as are determined by the Company's Executive
Compensation Committee for officers generally; provided, however, the
Executive shall be entitled to
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not less than three weeks of vacation per year.
(f) The Executive shall be entitled to participate in any equity or
other employee benefit plan that is generally available to officers, as
distinguished from general management, of the Company. The Executive's
participation in and benefits under any such plan shall be on the terms and
subject to the conditions specified in the governing document of the
particular plan.
(g) The Company shall reimburse the Executive or provide him with an
expense allowance during the term of this Employment Agreement for travel,
entertainment and other expenses reasonably and necessarily incurred by the
Executive in connection with the Company's business. The Executive shall
furnish such documentation with respect to reimbursement to be paid
hereunder as the Company shall reasonably request.
4. Payment in the Event of Death or Permanent Disability.
(a) In the event of the Executive's death or "permanent disability" (as
hereinafter defined) during the term of her employment under this Employment
Agreement, the Company shall pay or cause its insurance company to pay to the
Executive (or her personal representatives, heirs, successors and assigns in the
event of her death) an amount equal to not less than two (2) times the
Executive's then effective annual base salary, as determined under Paragraph
3(a), plus a pro rata portion of the bonus applicable to the calendar year in
which such death or permanent disability occurs, as such bonus is determined
under Paragraph 3(b).
(b) The pro rata portion of the bonus described in Paragraph 4(a) shall be
paid when and as provided in Paragraph 3(b). The remainder of the benefit to be
paid pursuant to Paragraph 4(a) shall be paid within ninety (90) days after the
date of death or permanent disability, as the case may be.
(c) Except as otherwise provided in Paragraphs 2(b), 3(d), 4(a) and 4(b),
in the event of the Executive's death or permanent disability, the Executive's
employment hereunder shall terminate and the Executive shall be entitled to no
further compensation or other benefits under this Employment Agreement, except
as to that portion of any unpaid salary and other benefits accrued and earned by
him hereunder up to and including the date of such death or permanent
disability, as the case may be.
(d) For purposes of this Employment Agreement, the Executive's "permanent
disability" shall be deemed to have occurred after one hundred twenty (120) days
in the aggregate during any consecutive twelve (12) month period, or after
ninety (90) consecutive days, during which one hundred twenty (120) or ninety
(90) days, as the case may be, the Executive, by reason of her physical or
mental disability or illness, shall have been unable to discharge her duties
under this Employment Agreement. The date of permanent disability shall be such
one hundred twentieth (120th) or ninetieth (90th) day, as the case may be. In
the event either the Company or the Executive, after receipt of notice of the
Executive's permanent disability from the other, dispute that the Executive's
permanent disability shall have occurred, the Executive shall promptly submit to
a physical examination by the chief of medicine of any major accredited hospital
in the
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Raleigh, North Carolina, area and, unless such physician shall issue his/her
written statement to the effect that in his/her opinion, based on his/her
diagnosis, the Executive is capable of resuming her employment and devoting her
full time and energy to discharging her duties within thirty (30) days after the
date of such statement, such permanent disability shall be deemed to have
occurred.
5. Termination.
(a) The Employment of the Executive under this Employment Agreement, and
the term hereof, may be terminated by the Company:
(i) on the death or permanent disability (as defined above) of the
Executive;
(ii) for "cause" at any time by action of the Board; or
(iii) "without cause" at any time by action of the Board.
For purposes hereof, the term "cause" shall mean:
(A) The Executive's fraud, commission of a felony, commission of
an act or series of repeated acts of dishonesty which fraud, felony or
dishonesty is materially inimical to the best interests of the
Company, or which results in material injury to the business
reputation of the Company, or the Executive's willful and repeated
failure to perform her duties under this Employment Agreement, which
failure has not been cured within fifteen (15) days after the Company
gives notice thereof to the Executive; or
(B) The Executive's material breach of any material provision of
this Employment Agreement, which breach has not been cured in all
substantial respects within ten (10) days after the Company gives
notice thereof to the Executive.
For purposes hereof, the term "without cause" shall mean any reason other
than those set forth in subparagraphs (a)(i) and (a)(ii) of this Paragraph
5.
The exercise by the Company of its rights of termination under this
Paragraph 5 shall be the Company's sole remedy in the event of the
occurrence of the event as a result of which such right to terminate
arises. Upon any termination of this Employment Agreement, the
Executive shall be deemed to have resigned from all offices and
directorships held by the Executive in the Company.
(b) In the event of a termination claimed by the Company to be for "cause"
pursuant to Paragraph 5(a)(ii), the Executive shall have the right to have the
justification for said termination determined by arbitration in Raleigh, North
Carolina. In order to exercise such right, the Executive shall serve on the
Company within thirty (30) days after termination a written request for
arbitration. The Company immediately shall request the appointment of a single
arbitrator by the American Arbitration Association and thereafter the question
of "cause" shall be determined under the rules of the American Arbitration
Association, and the decision of the arbitrator shall be final and binding on
both parties. The parties shall use all reasonable efforts to
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facilitate and expedite the arbitration and shall act to cause the arbitration
to be completed as promptly as possible. During the pendency of the arbitration,
the Executive shall continue to receive all compensation and benefits to which
he is entitled hereunder, and if at any time during the pendency of such
arbitration the Company fails to pay and provide all compensation and benefits
to the Executive in a timely manner the Company shall be deemed to have
automatically waived whatever rights it then may have had to terminate the
Executive's employment for cause. Expenses of the arbitration shall be borne
equally by the parties.
(c) In the event of termination pursuant to subparagraph (a)(i) or (a)(ii)
of this Paragraph 5, except as otherwise provided in Paragraphs 2(b), 3(d), 4(a)
and 4(b), as applicable, the Executive shall be entitled to no further
compensation or other benefits under this Employment Agreement, except as to
that portion of any unpaid salary and other benefits accrued and earned by him
hereunder up to and including the effective date of such termination.
(d) In the event of termination pursuant to subparagraph (i), (ii) or (iii)
of Paragraph 2 (c) or subparagraph (a)(iii) of this Paragraph 5, the Executive
shall be entitled to (i) severance pay payable within five (5) days of such
termination in a lump sum equal to the greater of (A) the total amount of unpaid
base salary for the then-unexpired portion of the term of this Employment
Agreement, at the theneffective annual rate of salary, as determined under
Paragraph 3(a), and (B) the amount of six months base salary at the then
effective annual rate of salary, (ii) a pro rata portion of the bonus described
in Paragraph 4(a) applicable to the calendar year in which such termination
occurs, as such bonus is determined under Paragraph 3(b), and (iii) other
benefits accrued and earned by him hereunder up to and including the effective
date of such termination.
(e) In no event shall the Executive have or be deemed to have any duty to
seek employment or otherwise mitigate damages with respect to any amounts or
benefits due to him upon termination of this Employment Agreement provided in
this Paragraph 5, nor shall any such amount or benefit be reduced by reason of
any other compensation or benefits which the Executive may earn following
termination of this Employment Agreement.
6. Covenants and Confidential Information.
(a) The Executive acknowledges the Company's reliance and expectation of
the Executive's continued commitment to performance of her duties and
responsibilities during the time when he is employed under this Employment
Agreement. In light of such reliance and expectation on the part of the Company,
during the time when he is employed under this Employment Agreement and if the
Executive's employment is terminated voluntarily by the Executive or by the
Company pursuant to Paragraph 5(a)(ii), for the period after such termination
through the date this Employment Agreement would have otherwise terminated but
for such termination (and, as to clause (ii) of this subparagraph (a), at any
time during and after the term of this Employment Agreement), the Executive
shall not, directly or indirectly, do either of the following:
(i) Own, manage, control or participate in the ownership, management,
or control of, or be employed or engaged by or otherwise affiliated or
associated as a consultant, independent contractor or otherwise with, any
other corporation, partnership, proprietorship, firm, association or other
business entity engaged in the business of, or otherwise engage in the
business of, acquiring, owning, developing
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or managing factory outlet shopping centers; provided, however, that the
ownership of not more than one percent (1%) of any class of publicly traded
securities of any entity shall not be deemed a violation of this covenant;
or (ii) Disclose, divulge, discuss, copy or otherwise use or suffer to be
used in any manner, in competition with, or contrary to the interests of,
the Company, any confidential information relating to the Company's
operations, properties or otherwise to its particular business or other
trade secrets of the Company, it being acknowledged by the Executive that
all such information regarding the business of the Company compiled or
obtained by, or furnished to, the Executive while the Executive shall have
been employed by or associated with the Company is confidential information
and the Company's exclusive property; provided, however, that the foregoing
restrictions shall not apply to the extent that such information (A) is
obtainable in the public domain or known in the industry generally, (B)
becomes obtainable in the public domain or known in the industry generally,
except by reason of the breach by the Executive of the terms hereof, (C)
was not acquired by the Executive in connection with her employment or
affiliation with the Company, (D) was not acquired by the Executive from
the Company or its representatives, or (E) is required to be disclosed by
rule of law or by order of a court or governmental body or agency.
(b) The Executive agrees and understands that the remedy at law for any
breach by him of this Paragraph 6 may be inadequate and that the damages
following such breach are not readily susceptible to being measured in monetary
terms. Accordingly, it is acknowledged that, upon adequate proof of the
Executive's violation of any legally enforceable provision of this Paragraph 6,
the Company may be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach. Nothing in this
Paragraph 6 shall be deemed to limit the Company's remedies at law or in equity
for any breach by the Executive of any of the provisions of this Paragraph 6
which may be pursued or availed of by the Company.
(c) The Executive has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon the Company
under this Paragraph 6, and hereby acknowledges and agrees that the same are
reasonable in time and territory, are designed to eliminate competition which
otherwise would be unfair to the Company, do not stifle the inherent skill and
experience of the Executive, would not operate as a bar to the Executive's sole
means of support, are fully required to protect the legitimate interests of the
Company and do not confer a benefit upon the Company disproportionate to the
detriment to the Executive.
7. Purposely Omitted..
8. Restricted Stock. The Executive shall receive a grant of 3,871 shares
(the "Restricted Shares") of restricted common stock of the Company ("Common
Stock") granted under the Company's 1996 Restricted Stock Plan. Prior to
vesting, the Restricted Shares will be registered under the Securities Act on
Form S-8, will be listed on the NYSE and following vesting thereof will be
freely tradable subject to applicable provisions of Rule 144 promulgated under
the Securities Act. With respect to said grant, the Company and the Executive
shall enter into a Restricted Stock Agreement in a form mutually agreed upon by
the Company and the Executive providing that (i) the Restricted Shares shall
vest in three equal installments of thirty-three and one-third percent (331/3)
per year provided the Executive continues to be employed by the Company,
commencing on the one-year anniversary date of the Effective Date and (ii) upon
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the Executive's death or permanent disability (as defined in Paragraph 4(d))
during her employment by the Company or termination of the Executive's
employment pursuant to (or, in the case of termination at any time following the
expiration of this Employment Agreement, for the reasons set forth in) Paragraph
2(c) or Paragraph 5(a)(iii), all unvested Restricted Shares shall
(notwithstanding the requirement of continued employment in subparagraph (i)
above), upon such termination of employment, immediately vest.
9. Representations and Warranties of the Company.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to enter into, execute and deliver this Employment
Agreement, fulfill its obligations hereunder and consummate the transactions
contemplated hereby.
(b) The execution and delivery of, performance of obligations under, and
consummation of the transactions contemplated by, this Employment Agreement have
been duly authorized and approved by all requisite corporate action by or in
respect of the Company, and this Employment Agreement constitutes the legally
valid and binding obligation of the Company, enforceable by the Executive in
accordance with its terms.
(c) No provision of the Company's governing documents or any agreement to
which it is a party or by which it is bound or of any material law or regulation
of the kind usually applicable and binding upon the Company prohibits or limits
its ability to enter into, execute and deliver this Employment Agreement,
fulfill its respective obligations hereunder and consummate the transactions
contemplated hereby.
10. Miscellaneous.
(a) The Executive represents and warrants that he is not a party to any
agreement, contract or understanding, whether employment or otherwise, which
would restrict or prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Employment Agreement.
(b) The provisions of this Employment Agreement are severable and if any
one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision to the extent enforceable nevertheless shall be binding
and enforceable.
(c) The rights and obligations of the Company under this Employment
Agreement shall inure to the benefit of, and shall be binding on, the Company
and its successors and assigns, and the rights and obligations of the Executive
under this Employment Agreement shall inure to the benefit of, and shall be
binding upon, the Executive (other than obligations to perform services and to
refrain from competition and disclosure of confidential information) and her
heirs, personal representatives and assigns.
(d) Any controversy or claim arising out of or relating to this Employment
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Rules of the American Arbitration Association then pertaining in the
City of Raleigh, North Carolina, and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. The arbitrator or arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided,
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however, that nothing in this Paragraph 9(d) shall be construed so as to deny
the Company the right and power to seek and obtain injunctive relief in a court
of equity for any breach or threatened breach by the Executive of any of her
covenants contained in Paragraph 6 hereof.
(e) Any notice to be given under this Employment Agreement shall be
personally delivered in writing or shall have been deemed duly given when
received after it is posted in the United States mail, postage prepaid,
registered or certified return receipt requested, and if mailed to the Company,
shall be addressed to its principal place of business, attention: Chairman, and
if mailed to the Executive, shall be addressed to him at her home address last
known on the records of the Company, or at such other address or addresses as
either the Company or the Executive may hereafter designate in writing to the
other. All notices provided for hereunder to the parties shall be accompanied by
simultaneous copy of such notice sent to the attorneys for such parties, as
follows:
If to the Executive:
If to the Company:
General Counsel
FAC Realty, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, Xxxx Xxxxx
Xxxx, Xxxxx Xxxxxxxx 00000
Notices sent by Federal Express or similar overnight delivery service or by
facsimile transmissions shall also constitute due notice under this paragraph
9(e), effective upon receipt thereof.
(f) The failure of either party to enforce any provision or provisions of
this Employment Agreement shall not in any way be construed as a waiver of any
such provision or provisions as to any future violations thereof, nor prevent
that party thereafter from enforcing each and every other provision of this
Employment Agreement. The rights granted the parties herein are cumulative and
the waiver of any single remedy shall not constitute a waiver of such party's
right to assert all other legal remedies available to it under the
circumstances.
(g) This Employment Agreement supersedes all prior agreements and
understandings between the parties made prior to the date hereof and may not be
modified or terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing and signed by the party against whom the same
is sought to be enforced.
(h) This Employment Agreement shall be governed by and construed according
to the laws of the State of North Carolina.
(i) Captions and paragraph headings used herein are for convenience and are
not a part of this Employment Agreement and shall not be used in construing it.
(j) Where necessary or appropriate to the mean hereof, the singular and
plural
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shall be deemed to include each other, and the masculine, feminine and neuter
shall be deemed to include each other.
(k) This Employment Agreement may be executed in multiple counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument. This Employment Agreement may be
executed by facsimile signature.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
the day and year first set forth above.
FAC REALTY INC., a Delaware corporation
(SEAL) By: _____________________________________
Xxxx X. Xxxxxxxx X. Xxxxxxx Xxxxxx
President and Chief Executive Officer
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