Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 24/th/ day of May, 2002 (but effective
as of the date set forth in Section 1.11), is entered into by and between
Pillowtex Corporation, a Delaware corporation (the "Company"), and Xxxxxxx X.
Xxxxxx ("Employee").
WHEREAS, the Company and Employee have previously entered into that
certain Employment Agreement, dated as of March 19, 2001 (the "Prior
Agreement"); and
WHEREAS, the Company is a debtor in a bankruptcy case (the "Bankruptcy
Proceedings") under Chapter 11 of the United States Bankruptcy Code, Case Number
00-4211(SLR), pending in the United States Bankruptcy Court for the District of
Delaware (the "Court"); and
WHEREAS, the Company has previously implemented the KERP (as defined
below) pursuant to an order Authorizing Debtors and Debtors in Possession to
Implement Key Employee Retention Program and Severance Plan issued by the Court
on March 6, 2001 (the "Order"); and
WHEREAS, the Company and Employee desire to provide for certain rights
and responsibilities of each party in connection with the future employment of
the Employee including certain rights of the parties in the event of a possible
change in control of the Company; and, the parties desire that this Agreement
will supercede the Prior Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:
ARTICLE 1
DEFINITIONS
The following terms will have the respective meanings set forth below,
unless the context clearly otherwise requires:
1.1 "Affiliate" shall mean, with respect to the Company, any person or
entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Company.
1.2 "Bankruptcy Proceeding" shall have the meaning ascribed to such
term in the second premise of this Agreement.
1.3 "Board" shall mean the Board of Directors of the Company.
1.4 "Cause" shall mean the occurrence of any of the following: (a)
Employee engaging in any personal misconduct involving willful dishonesty,
illegality, or moral turpitude that is detrimental or injurious to the business
interests, reputation or goodwill of the Company or its Affiliates; (b) Employee
engaging in any act involving willful dishonesty, disloyalty, or
infidelity against the Company or its Affiliates; (c) an act of fraud,
embezzlement or theft in connection with the Employee's duties or in the course
of his employment with the Company; (d) Employee's breach of or failure
substantially to perform under any of the material terms and covenants of this
Agreement; or (e) the death, disability or retirement of Employee. For purposes
of this Section 1.4, no act, or failure to act, on Employee's part will be
considered "willful" unless done, or omitted to be done, by Employee without
reasonable belief that Employee's action or omission was in the best interest of
the Company. Prior to asserting any action or failure to act as Cause for
Employee's termination as set forth above, the Company will provide Employee a
written notice referencing this Section 1.4, setting out with specificity the
conduct asserted to constitute Cause and, if the conduct asserted to constitute
Cause is described in clause (d) of the first sentence of this Section 1.4,
providing Employee with a reasonable opportunity of not less than ten (10) days
to cure or cease and desist such conduct; provided, however, Employee will not
be provided any opportunity to cure such conduct more than twice while this
Agreement is in effect.
1.5 "Change in Control" shall mean (a) the acquisition by an
individual, entity or person (as the term "person" is used in Section 13(d)(3)
or any successor rule or regulation promulgated under the Exchange Act) of
beneficial ownership (as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of a
majority of the outstanding Voting Stock; or (b) the sale of substantially all
of the Company's assets or a merger or sale of stock wherein the holders of the
Company's Voting Stock immediately prior to such sale do not hold at least a
majority of the outstanding Voting Stock of the Company or its successor
immediately following such sale; or (c) the Company files a report or proxy
statement with the Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K, Schedule 14A or Schedule 14C (or any
successor schedule, form or report or item therein) that a change in control of
the Company has occurred.
Notwithstanding the foregoing provisions of Section 1.5 hereof, a
"Change in Control" shall not be deemed to have occurred for purposes of this
Agreement solely because the Company, a corporation or other legal entity in
which the Company directly or indirectly beneficially owns 100% of the voting
securities of such entity, or any employee stock ownership plan or any other
employee benefit plan of the Company or any wholly-owned subsidiary of the
Company, either files or becomes obligated to file a report or a proxy statement
under or in response to Schedule 13D, Schedule 14D-1, Form 8-K, Schedule 14A or
Schedule 14C (or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares of Voting
Stock, because the Company reports that a change in control of the Company has
occurred by reason of such beneficial ownership or because the Company, a
corporation or other legal entity in which the Company directly or indirectly
beneficially owns 100% of the voting securities of such entity, or any employee
stock ownership plan or any other employee benefit plan of the Company or any
wholly-owned subsidiary of the Company becomes (subsequent to the Effective
Date) the beneficial owner, directly or indirectly, of a majority of the Voting
Stock.
Notwithstanding the foregoing provisions of this Section 1.5, (i) a
Change in Control described in this Section 1.5 will not occur by reason of the
consummation of the transactions contemplated by the confirmation by the
Bankruptcy Court of a plan of reorganization with
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respect to the Company pursuant to which the Company emerges from bankruptcy;
and (ii) a merger (including, for example, and not by way of limitation, a
reincorporation of the Company in another jurisdiction), consolidation or
reorganization of the Company effected in connection with the confirmation of
such plan of reorganization will not be a Change in Control described in Section
1.5.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.7 "Company" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
1.8 "Confidential Information" shall mean any and all technical and
non-technical information disclosed by the Company pursuant to or in
contemplation of this Agreement, including Trade Secrets and proprietary
information, techniques, sketches, drawings, models, inventions, know-how,
processes, apparatus, equipment, algorithms, software programs, software source
documents and formulae related to the current, future and proposed products and
services of the Company and/or the Company's parents, subsidiaries, customers
and/or vendors, whether delivered in written (or other tangible) form, and
includes, without limitation, information concerning design details and
specifications, financial data, procurement requirements, customer lists,
business forecasts and purchasing, manufacturing, sales, merchandising,
development, engineering and marketing plans. Without limiting the generality of
the foregoing, the term "Confidential Information" will also be deemed to
include all analyses, compilations, forecasts, studies or other documents
prepared by Employee in connection with the performance by Employee of
Employee's duties pursuant to this Agreement.
1.9 "Court" shall have the meaning ascribed to such term in the second
premise of this Agreement.
1.10 "Disability" shall mean a physical or mental disability which
renders the Employee substantially incapable of performing his duties under this
Agreement, as determined by an independent physician selected by the Company and
agreed to by the Employee, and which disability has existed for (a) at least 13
consecutive weeks, or (b) 120 days in any twelve- month period.
1.11 "Effective Date" shall have the meaning ascribed to such term in
the Second Amended Joint Plan of Reorganization of Pillowtex Corporation, a
Texas corporation, and its Debtor Subsidiaries.
1.12 "Employee" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
1.13 "Employee Benefits" shall mean all employee retirement income and
welfare benefit policies, plans, programs or arrangements in which senior
executives of the Company participate generally, including, without limitation,
any stock option, restricted stock, stock purchase, stock appreciation, savings,
pension, supplemental executive retirement or other retirement income or welfare
benefit, deferred compensation, incentive compensation, group and/or executive
life, accident, health, dental, medical/hospital or other insurance (whether
funded by actual insurance or self-funded by the Company), disability, salary
continuation,
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expense reimbursement and other employee benefit policies, plans, programs or
arrangements that may exist immediately prior to the termination of Employee's
employment or any equivalent successor policies, plans, programs or arrangements
that may be adopted thereafter by the Company.
1.14 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor to thereto.
1.15 "Good Reason" means the termination of Employee's employment by
Employee upon the occurrence of any of the following, without the Employee's
prior written consent:
(a) a significant reduction or diminution in the nature or scope
of the authorities, title, powers, functions, responsibilities or duties
attached to the position(s) with the Company which the Employee holds as of the
date hereof;
(b) the failure to elect or reelect the Employee to the office(s)
of the Company which the Employee holds as of the date hereof;
(c) any reduction by the Company in Employee's Base Salary as in
effect on the date hereof or as may be increased from time to time, or the
termination or reduction of Employee's rights to any Employee Benefits required
under this Agreement or in effect for all senior executives, as in effect on the
date hereof or as such may be increased from time to time (other than a
termination of Employee Benefits which affects all senior executive officers of
the Company in the same manner); or
(d) a decision, action or requirement by the Company to relocate
the Employee more than 50 miles from the Company's offices in Kannapolis, North
Carolina.
1.16 "KERP" shall mean that certain Key Employee Retention Program and
Severance Plan, as approved by the Order and attached hereto as Exhibit 1.16,
which consists of (a) a retention incentive plan, (b) an emergence bonus plan
and (c) a severance plan.
1.17 "Order" shall have the meaning ascribed to such term in the third
premise of this Agreement.
1.18 "Noncompetition Period" shall mean the period of Employee's
employment and a period of (a) with respect to Westpoint Xxxxxxx, Inc., Springs
Industries, Inc. and/or Xxx River Inc. or their respective Affiliates, two and
one-half (2.5) years following termination of Employee's employment with the
Company or (b) with respect to all other companies, one (1) year following
termination of Employee's employment with the Company.
1.19 "Post-Employment Payment" shall have the meaning ascribed to such
term in Section 3.1.
1.20 "Prior Agreement" shall have the meaning ascribed to such term in
the first premise of this Agreement.
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1.21 "Protected Area" shall mean (a) the United States, (b) Canada, (c)
Mexico, (d) the states of the United States and adjoining or east of the
Mississippi River, and (c) North Carolina.
1.22 Omitted.
1.23 "Trade Secrets" shall mean proprietary and confidential
information of the Company or any Affiliate consisting of, but not limited to,
financial statements, processes, computer programs, compilations of information,
records, sales procedures, customer requirements, pricing techniques, customer
lists, methods of doing business and other confidential information used in the
operation of their businesses, that (a) the Company and its Affiliates have
taken steps to keep secret and (b) is not generally known to others and (c)
gives the Company a competitive business advantage. If any Trade Secret is found
by an arbitrator or a court of competent jurisdiction to not be a Trade Secret
for the purposes of this Agreement, such information will in any event be
considered Confidential Information for purposes of this Agreement.
1.24 "Termination Date" shall have the meaning ascribed to such term in
Section 3.1(a).
1.25 "Voting Stock" shall mean any outstanding securities entitled to
vote generally in the election of directors of the Company.
ARTICLE 2
EMPLOYMENT, COMPENSATION AND DUTIES
2.1 Employment. Subject to the terms of this Agreement, the Company
agrees to employ Employee as its Executive Vice President and Chief Financial
Officer with duties as set forth in Section 2.3. The initial term (the "Term")
of this Agreement shall be two (2) years and, unless the Company provides
Employee with written notice of its intention to renew this Agreement at least
180 days prior to the expiration of the Term, this Agreement shall expire at the
end of such period. If the Company provides Employee with written notice of its
intention to renew this Agreement and the Employee has not furnished notice of
termination to the Company at least 180 days prior to the expiration of the
Term, the Term shall be extended for an additional two (2) year period on the
same terms set forth herein. Any decision to not renew this Agreement shall not
constitute termination without Cause or termination for Good Reason. Employee
will report to the Chief Executive Officer of the Company or, in the absence or
disability of the Chief Executive Officer, to the Chief Operating Officer or to
the Board. Employee's principal place of work will be at the Company's offices
in Kannapolis, North Carolina.
2.2 Compensation. Employee's annual base salary (the "Base Salary")
will be $350,000 payable in accordance with the Company's customary payroll
practices and subject to such increases as may be determined from time to time
thereafter by the Board or the Compensation Committee thereof in its sole
discretion. During each year of this Agreement, Employee shall be eligible for
an annual performance bonus to be determined by the Compensation Committee of
the Board.
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2.3 Duties. Employee will perform the customary duties of his position as
Executive Vice President and Chief Financial Officer, including, without
limitation, the duties described in Exhibit A attached hereto and incorporated
herein by reference, plus such other duties, consistent with his position, as
may reasonably be assigned to him from time to time by the Board or the Chief
Executive Officer.
ARTICLE 3
BENEFITS
3.1 Post-Employment Benefits.
(a) If, during the Term, Employee is terminated by the Company without
Cause or the Employee terminates his employment with the Company for Good Reason
(within four (4) months following the occurrence of the event constituting Good
Reason), the Company shall pay to the Employee the amount specified below in
Section 3.1(a)(i) within fifteen (15) business days after the date the
Employee's employment is terminated (the "Termination Date"):
(i) In lieu of any further payments to the Employee for periods
subsequent to the Termination Date, but without affecting the rights of the
Employee referred to in Section 3.1(b) hereof, a lump sum payment (the
"Post-Employment Payment"), less any withholdings required by applicable
law, in an amount equal to the sum of (i) all earned and accrued but unpaid
Base Salary, bonus payments and vacation pay, and (ii) two and one-half
(2.5) times the Employee's Base Salary and bonuses paid during the
preceding twelve months.
(ii) Upon written notice given by the Employee to the Company
prior to the receipt of any payment pursuant to Section 3.1(a)(i) hereof,
the Employee, at Employee's sole option, may elect to have all or any of
the Post-Employment Payment paid to the Employee on a quarterly or monthly
basis during the time period specified in such written notice.
(b) In addition to all other compensation due to the Employee, if,
during the Term, Employee is terminated by the Company without Cause or the
Employee terminates his employment with the Company for Good Reason (within four
(4) months following the occurrence of the event constituting Good Reason):
(i) Any Company stock options held by the Employee that have not
previously terminated or been exercised shall be deemed vested and
exercisable, regardless of whether or not the vesting/performance
conditions set forth in the relevant agreements shall have been satisfied;
(ii) All restrictions on any restricted securities granted by the
Company to the Employee that have not previously been forfeited shall be
removed and the securities shall be fully vested and freely transferable
without restrictions (unless otherwise restricted pursuant to applicable
securities laws), regardless of whether the vesting/performance conditions
set forth in the relevant agreements shall have been satisfied;
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(iii) For a period of two (2) years following the Termination
Date, the Company shall arrange to provide the Employee with the car
allowance as set forth in Section 3.4, club dues as set forth in Section
3.6, and Employee Benefits (other than any stock option, stock purchase,
stock appreciation, savings, pension, supplemental retirement or other
retirement plan of the Company, or any other equity incentive policy, plan,
program or arrangement of the Company), substantially similar to those
which the Employee was receiving or entitled to receive immediately prior
to the Termination Date (and if and to the extent that such benefits shall
not or cannot be paid or provided under any policy, plan, program or
arrangement of the Company solely due to the fact that the Employee is no
longer an officer or employee of the Company, then the Company shall itself
pay to the Employee and/or the Employee's dependents and beneficiaries, the
full cost of such Employee Benefits). Any Employee Benefits payable to the
Employee pursuant to this Section 3.1(b)(iii) by reason of any "welfare
benefit plan" of the Company (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended) shall be reduced to the
extent comparable welfare benefits are available to the Employee from
another employer during such two (2) year period.
(c) The Company and Employee acknowledge and agree that the termination
of Employee's employment with the Company might, but for the provisions of this
Section 3.1(c), be deemed to vest rights to payments and/or benefits pursuant to
the terms of both this Agreement and the KERP. Employee further acknowledges and
agrees that it is not the intent of the parties that termination of Employee's
employment with the Company will entitle Employee to payments and/or benefits
pursuant to both this Agreement and the severance provisions of the KERP (as
described on pages 10-12 of the KERP, the "KERP Severance Provisions").
Accordingly, in the event Employee's employment with the Company is terminated
and such termination would, but for this Section 3.1(c), entitle Employee to
payments and/or benefits pursuant to both this Agreement and the KERP Severance
Provisions, Employee must elect (in writing within five (5) days of the
termination of Employee's employment) whether to receive payments and benefits
pursuant to this Agreement or pursuant to the KERP Severance Provisions;
provided, however, under no circumstances shall the termination of Employee's
employment with the Company prevent Employee from receiving his retention
bonuses and/or his emergence performance bonuses as such are described in the
KERP and earned by the Employee. Under no circumstances will the termination of
Employee's employment with the Company entitle Employee to receive
post-employment payments pursuant to both this Agreement and pursuant to the
KERP. In the event of any inconsistency between the provisions of this Section
3.1(c) and the KERP, the provisions of this Section 3.1(c) will control.
(d) Death or Disability. If the Employee's employment is terminated by
reason of his Disability, the Employee shall continue to receive his then
current annual Base Salary and all Employee Benefits for six (6) months after
his termination for such Disability, and such payments will be in addition to
any insurance payments the Employee is entitled to receive. If the Employee's
employment is terminated by reason of the Employee's death, the Company agrees
to pay to the legal representative of his estate, (i) for a period of six (6)
months after the date of death an amount equal to and payable at the same rate
as his then current annual Base Salary, and (ii) any payment the Employee's
beneficiaries may be entitled to receive pursuant to any Employee Benefits then
maintained by the Company. In the event of death or Disability, the
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estate or the Employee, as the case may be, will have the right to receive all
earned and accrued but unpaid Base Salary, bonus and vacation payments.
(e) Excise Tax.
(i) If Employee becomes entitled to one or more payments (with a
"payment" including, without limitation, the vesting of an option, removal
of restrictions on restricted stock or any other non-cash benefit or
property), whether pursuant to the terms of this Agreement or any other
plan, arrangement, or agreement with the Company or its Affiliates (the
"Total Payments"), which are or become subject to the tax imposed by
Section 4999 of the Code (the "Excise Tax"), the Company will pay to
Employee, at the time specified below, an additional amount (the "Gross-Up
Payment") equal to the lesser of: (i) $300,000 or (ii) the sum of the
Excise Tax attributable to the Total Payments and the Gross-Up Tax Burden.
For purposes of this Agreement, "Gross-Up Tax Burden" means an amount equal
to the Excise Tax attributable to the Total Payments multiplied by the sum
of (w) the highest marginal rate of United States federal income taxation
applicable to an individual in the calendar year in which the Gross-Up
Payment is to be made, as adjusted downward to reflect the reduction in
such federal income tax rate obtained from the deduction of state and local
income taxes as determined in (y) below, (x) the medicare tax rate
applicable to Employee in the calendar year in which the Gross-Up Payment
is to be made, (y) the highest marginal rate of state and local income
taxation in the state and locality of Employee's residence on the date the
Excise Tax is determined, and (z) the Excise Tax rate in the calendar year
in which the Gross-Up Payment is to be made. For purposes of determining
whether any of the Total Payments will be subject to the Excise Tax and the
amount of such Excise Tax: (A) the Total Payments will be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code will be treated as subject to the Excise Tax,
unless, and except to the extent that, in the written opinion of
independent compensation consultant or auditors of nationally recognized
standing ("Independent Advisors") selected by the Company and reasonably
acceptable to Employee, the Total Payments (in whole or in part) do not
constitute parachute payments, excess parachute payments or are otherwise
not subject to the Excise Tax; (B) the amount of the Total Payments which
will be treated as subject to the Excise Tax will be equal to the lesser of
(i) the total amount of the Total Payments, or (ii) the total amount of
excess parachute payments with the meaning of Section 280G(b)(1) of the
Code (after applying clause (A) above); and (C) the value of any non-cash
benefits or any deferred payment or benefit will be determined by the
Independent Advisors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code and the applicable Treasury Regulations. If
the Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time the Gross-Up Payment is made, Employee
will repay to the Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Gross Up Tax Burden imposed on the Gross-Up Payment
being repaid by Employee to the extent that such repayment results in a
reduction in the Gross UpTax Burden) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. If the
Excise Tax is determined to exceed the amount taken
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into account hereunder at the time the Gross-Up Payment is made (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company will make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or additions
payable by Employee with respect to such excess) at the time that the amount of
such excess is finally determined, provided, however, such additional Gross-Up
Payment (plus interest, penalties or additions payable by Employee with respect
to such excess) shall not exceed an amount equal to $300,000 less the amount of
the original Gross-Up Payment. Employee and the Company will each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments. The Gross-up Payment provided for above will be
paid on the 30th day (or such earlier date as the Excise Tax becomes due and
payable to the taxing authorities) after it has been determined that the Total
Payments (or any portion thereof ) are subject to the Excise Tax, but in no
event later than 60 days following termination of employment of Employee.
(ii) In the event Employee would be entitled to Total Payments
which would be subject to the Excise Tax, Employee May, at his option,
elect to reduce the Total Payments he would receive to such an amount as
would not be subject to the Excise Tax. To exercise this option, Employee
must provide written notice (the "Cap Notice") to the Company of such
election within ten (10) business days of the Termination Date and such Cap
Notice must specify the manner and amount in which Employee elects to
reduce the Total Payments. Upon receipt of the Cap Notice by the Company,
Employee's election will be considered irrevocable and the Company shall
have no liability whatsoever for complying with Employee's instructions
contained in the Cap Notice.
3.2 Stock Options and Restricted Stock. Employee will be eligible to
participate in any stock option plan and restricted stock plan adopted by the
Company and made available generally to its senior executives. Employee shall
receive at a minimum those shares allocated to Employee on page 56 of that
certain Second Amended Joint Plan of Reorganization of Pillowtex Corporation, a
Texas corporation, and its Debtor Subsidiaries.
3.3 Vacation. Employee will be entitled to paid vacation in accordance with
Company policy in effect from time to time for senior executive officers of the
Company, or if greater, four weeks' vacation.
3.4 Auto Expense. The Company will pay the Employee $1,000 per month as his
automobile allowance, plus an additional amount equal to any taxes incurred by
Employee for such automobile allowance.
3.5 Term Life Insurance. The Company will provide Employee with a $500,000
term life insurance policy.
3.6 Club Membership. Unless such an initiation fee has previously been paid
by the Company on behalf of Employee, the Company will reimburse Employee for
the initiation fee of one country club membership within 50 miles of his home or
Company office, as mutually
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agreed, in an amount not to exceed $25,000, and the Company will reimburse
Employee for club dues and other charges incidental to membership. All country
club expenses incurred by Employee that are related to Company business will be
reimbursed in accordance with the Company's customary expense reimbursement
policy.
ARTICLE 4
CERTAIN OBLIGATIONS OF EMPLOYEE
4.1 Trade Secrets. During the term of Employee's employment, the Company
will provide Employee access to, and Employee will have access to and become
familiar with, various Trade Secrets. Employee will not use in any way or
disclose any of the Trade Secrets, directly or indirectly, either during the
term of Employee's employment or at any time thereafter, except as required in
the course of Employee's employment with the Company. Employee agrees that upon
Employee's receipt of any subpoena, process or other request to produce or
divulge, directly or indirectly, any Trade Secrets to any entity, agency,
tribunal or person, Employee will, prior to any such disclosure, notify and
deliver a copy of the subpoena, process or other request to the Company. The
obligations of non-disclosure of Trade Secrets will not apply to any Trade
Secret which Employee can demonstrate any of the following: (i) is or becomes
available to the public through no breach of this Agreement; (ii) was previously
learned by Employee from a source other than the Company or an agent of the
Company without any obligation to hold it in confidence; (iii) is received from
a third party free to disclose such information without restriction; (iv) is
independently developed by Employee without the use of or reference to the Trade
Secret; or (v) is approved for release by written authorization of the Company,
but only to the extent of such authorization. Disclosure of Trade Secrets in
response to a valid order of a court or other governmental body will not be
deemed to be a breach of this Agreement.
4.2 No Removal of Records and Return of Property. All files, records,
documents, information, data and similar items relating to the business of the
Company and its Affiliates, whether prepared by Employee or otherwise coming
into Employee's possession, will remain the exclusive property of the Company
and its Affiliates and will not be removed from the premises of the Company and
its Affiliates under any circumstances without the prior written consent of the
Chief Executive Officer or President of the Company (except in the ordinary
course of business during Employee's period of employment), and in any event
will be promptly delivered to the Company upon termination of Employee's
employment with the Company and its Affiliates. Employee agrees that, upon
termination of Employee's employment with the Company and its Affiliates for any
reason, Employee will return to the Company, in good condition (reasonable wear
and tear excepted), all property of the Company, including without limitation,
the originals and all copies of all management, training, marketing and selling
manuals; promotional materials; other training and instructional materials;
financial information; vendor, owner, manager and product information; customer
lists; other customer information; and all other selling, service and trade
information and equipment. If such items are not returned, the Company will have
the right to charge Employee for all reasonable damages, costs, attorneys' fees
and other expenses incurred in searching for, taking, removing and/or recovering
such property, and Employee hereby authorizes Company to deduct any such amounts
from any sum due from Company to Employee under this Agreement, consistent with
applicable law. In the event of a dispute between Employee and the Company
regarding the amount of any such deductions, the parties agree to submit such
dispute to arbitration in accordance with Section 5.4.
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4.3 Noncompetition. Employee acknowledges and agrees that by virtue of
Employee's position with the Company, Employee will be exposed to the Company's
valuable Trade Secrets and Confidential Information and will have access to the
Company's customers and suppliers at the highest level and that, if used in
competition with the Company, such contacts and information would enable
Employee to irreparably injure the Company and its Affiliates if Employee should
compete with the Company in a business that is competitive with the business
conducted by the Company and its Affiliates during the continuation of
Employee's employment with the Company or which the Company proposes to conduct
as of the termination of the employment of the Employee (and of which the
Employee has knowledge). For these reasons, Employee hereby agrees that Employee
will not, during the Noncompetition Period and within the Protected Area,
directly or indirectly, either as an individual, a partner or a joint venturer,
or in any other capacity, (a) invest (other than investments in publicly-owned
companies which constitute not more than 1% of the voting securities of any such
company and investments made through Equity Capital Partners, provided Employee
does not own, directly or indirectly, more than 5% of the profits or capital
interest of Equity Capital Partners) in any business that is directly
competitive with that of the Company or its Affiliates, (b) accept employment
with or render services to a direct competitor of the Company as a director,
officer, manager, consultant, executive or other employee, (c) engage, for
Employee's self or any other person or entity in the sales, marketing, design,
offer or manufacture of products or services directly competitive with any
product and/or services sold, marketed, designed, offered or manufactured by the
Company or its Affiliates, or (d) solicit or accept business with respect to
products or services that are directly competitive with the products and/or
services sold, marketed, designed, offered or manufactured by the Company or its
Affiliates from any customers of the Company or its Affiliates or any person or
entity whose business the Company or its Affiliates is soliciting or solicited
during Employee's employment. For purposes of this Agreement, a "competitor" or
a business that is competitive with the Company means only those persons, firms,
sole proprietorships, partnerships, companies, corporations, or other entities
that manufacture and/or market textile related bed, bath, pillow and pad
products and/or perform services in direct competition with those marketed
and/or performed by the Company or its Affiliates within the Protected Area;
provided, however, the term "competitor" (i) expressly excludes any entity where
the foregoing definition would apply to 10% or less of such entity's annual
sales, and (ii) expressly includes Westpoint Xxxxxxx, Inc., Springs Industries,
Inc. and Xxx River, Inc.
4.4 Nonsolicitation. During the period of employment with the Company and
the Noncompetition Period, Employee will not, on Employee's own behalf or on
behalf of any other person, partnership, association, corporation or other
entity, directly or indirectly, hire or solicit or in any manner attempt to
influence or induce any employee of the Company or its Affiliates to leave the
employment of the Company or its Affiliates, nor will Employee, directly or
indirectly, disclose to any person, partnership, association, corporation or
other entity any information obtained while an employee of the Company
concerning the names and addresses of the employees of the Company or its
Affiliates.
4.5 Acknowledgement. The parties acknowledge and agree that all benefits to
be received pursuant to this Agreement, or available to be received by Employee,
are consideration for all covenants and obligations of Employee hereunder,
including, without limitation, those contained in Section 4.3 and Section 4.4.
The parties will use commercially reasonable efforts to
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agree, within ten (10) business days of the Termination Date, to the dollar
value attributable to the covenants contained in Section 4.3 and the amount of
any Post-Employment Payment attributable to such covenants.
4.6 Confidential Information. During the course of this Agreement, Employee
may receive or have access to Confidential Information. Employee acknowledges
the economic value to the Company of the Confidential Information. Employee
agrees that Employee:
(i) shall use the Confidential Information only in connection
with Employee's performance of his obligations under this Agreement;
(ii) shall not disclose such Confidential Information to any
other person or entity without the prior written consent of the Company;
and
(iii) shall copy the Confidential Information only as necessary
for the performance of Employee's obligation under this Agreement, and
ensure that all confidentiality notices are reproduced in full on such
copies.
The obligations of confidentiality shall not apply to any Confidential
Information which Employee can demonstrate:
(i) is or becomes available to the public through no breach of
this Agreement;
(ii) was previously learned by Employee from a source other than
the Company without any obligation to hold it in confidence;
(iii) is received from a third party free to disclose such
information without restriction;
(iv) is independently developed by Employee without the use of or
reference to the Confidential Information; or
(v) is approved for release by written authorization of the
Company, but only to the extent of such authorization.
(vi) Disclosure of Confidential Information in response to a
valid order of a court or other governmental body will not be deemed to be
a breach of this Agreement.
Confidential Information, including permitted copies, shall be deemed the
property of the Company. Employee shall, within thirty (30) days of a written
request by the Company, return all Confidential Information (or any designated
portion thereof) recorded in a tangible form, including all copies thereof, to
the Company, or if so directed by the Company, destroy such Confidential
Information and all other Confidential Information that is within the control of
Employee.
4.7 Damages.
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(a) Notwithstanding anything in this Agreement to the contrary, if
Employee breaches the covenants contained in this ARTICLE 4, the Company will
have no further obligations to Employee pursuant to this Agreement and may
recover from Employee all such damages to which it may be entitled at law or in
equity. Employee acknowledges any breach of this Agreement may result in
immediate and irreparable harm to the Company for which money damages are likely
to be inadequate. Accordingly, the Company may seek whatever relief it
determines to be appropriate to protect the Company's rights under this
Agreement, including, without limitation, an injunction (without the requirement
of posting a bond or other security) to prevent Employee from disclosing any
Trade Secrets or Confidential Information concerning the Company to any person
or entity, to prevent any person or entity from receiving from Employee or using
any such Trade Secrets or Confidential Information, and/or to prevent any person
or entity from retaining or seeking to retain any other employees of the
Company. Employee acknowledges good and sufficient consideration for the
noncompetition and nonsolicitation covenants of this ARTICLE 4.
(b) The parties acknowledge and agree that if Employee's employment is
terminated by the Company without Cause or Employee terminates his employment
for Good Reason, (i) the amount of damages that would be suffered by Employee
would be speculative and difficult to determine, (ii) the Post-Employment
Payment is a good faith reasonable estimate of the amount of damages which
Employee will suffer, and (iii) the Post-Employment Payment constitutes
liquidated damages (and not a penalty). In the event Employee's employment is
terminated by the Company without Cause or Employee terminates his employment
for Good Reason, the post-employment benefits described in Section 3.1 shall be
Employee's exclusive remedy and the Company's sole obligation.
ARTICLE 5
MISCELLANEOUS
5.1 Release. Except as expressly contemplated by this Agreement and/or the
KERP, Employee hereby forever releases, waives and discharges all claims,
obligations, suits, judgements, damages, demands, debts, rights, causes of
action and liabilities, whether liquidated or unliquidated, fixed or contingent,
material or immaterial, known or unknown, foreseen or unforeseen, arising in
law, equity or otherwise, that are based in whole or in part on any act,
omission, transaction or other occurrence taking place on or prior to the date
hereof in any way relating to the Company or its Affiliates, and their
respective past and present directors, partners, officers, employees, agents,
consultants, advisors, legal counsel, accountants and financial advisors acting
in such capacity (individually, a "Releasee" and collectively, "Releasees"),
which Employee now has or may have had against the respective Releasees.
Employee hereby covenants to refrain from directly or indirectly asserting any
claim or demand, or commencing, instituting or causing to be commenced, any
proceeding of any kind against any Releasee, based upon any matter purported to
be released hereby. Employee warrants that he has not assigned or otherwise
transferred any claim that, but for such assignment or transfer, would be
released by this Agreement.
5.2 Assignment. This Agreement is personal in nature and neither of the
parties hereto will, without the written consent of the other, assign, transfer
or delegate this Agreement or any rights or obligations contained in this
Agreement except as expressly provided in this
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Section 5.2. Without limiting the generality or effect of the foregoing,
Employee's rights and obligations provided for in this Agreement may not be
assigned, transferred or delegated, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Employee's will or by the
laws of descent and distribution, and if Employee attempts any assignment or
transfer contrary to this Section 5.2, such assignment or transfer will be void
and the Company will have no liability to any purported assignee or delegatee.
5.3 Successors and Binding Agreement.
(a) The Company will require any successor to all or substantially all
of the businesses or assets of the Company (whether direct or indirect, by
purchase, merger, consolidation, reorganization, confirmed reorganization plan
or otherwise) expressly to assume and agree to perform this Agreement in the
same manner and to the same extent the Company would be required to perform if
no such succession had taken place. This Agreement will be binding upon and
inure to the benefit of the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the businesses or assets of the Company whether by
purchase, merger, consolidation, reorganization, confirmed reorganization plan
or otherwise (and such successor will thereafter be deemed "the Company" for the
purposes of this Agreement).
(b) This Agreement will inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators, heirs,
distributees and legatees.
5.4 Governing Law; Arbitration. This Agreement and all questions arising in
connection with it will be governed by and construed in accordance with the laws
of the State of North Carolina. Subject to the following sentence, all disputes
arising out of, or in connection with this Agreement, which are not promptly
settled by mutual agreement of the parties hereto, will be finally settled by
arbitration in accordance with the Commercial Rules of the American Arbitration
Association. Notwithstanding anything herein to the contrary, the Company may,
at its option, seek injunctive relief as contemplated in ARTICLE 4 either in
lieu of or in addition to the arbitration remedies provided for in this Section
5.4.
5.5 Severability. If any portion of this Agreement is held to be invalid or
unenforceable, such holding will not affect any other portion of this Agreement.
5.6 Entire Agreement. This Agreement comprises the entire agreement between
the parties hereto with respect to the subject matter hereof and, as of the
Effective Date, supersedes any prior written or oral agreements between the
parties with respect to the subject matter hereof, excluding the KERP but
specifically including, without limitation, the Prior Agreement and any other
severance or employment agreement. This Agreement may not be modified, renewed
or extended except by a written instrument referring to this Agreement and
executed by the parties hereto.
5.7 Notices. Any notice or consent required or permitted to be given under
this Agreement will be in writing and will be effective (a) when given by
personal delivery, (b) one business day after being sent by overnight delivery
service or (c) five business days after being
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sent by certified or registered mail, return receipt requested, to the Secretary
of the Company at the Company's principal place of business or to Employee at
the last known address of Employee as shown on the records of the Company and
each notice which must be sent to the Employee shall also be copied to: Xxxxxx
Xxxxxx, Esq., Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
5.8 Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement all federal, state, provincial, city or other taxes or
other amounts as will be required pursuant to any law or governmental regulation
or ruling.
5.9 Court Approval. The Company warrants that (i) on March 2, 2001, it
filed a motion with the Bankruptcy Court for authority to enter into an
employment agreement with Employee; (ii) the period for objecting to such motion
has expired without any objections having been filed; (iii) on March 16, 2001,
the Company filed with the Bankruptcy Court a certificate of no objections with
respect to such motion; and (iv) the Company's execution of and performance
under this Agreement does not violate or contradict the order submitted to the
Bankruptcy Court in connection with such motion, any provision of Title 11 of
the United States Bankruptcy Code, any other applicable statutes, or any orders
previously entered by the Bankruptcy Court in the Company's bankruptcy case.
5.10 Legal Fees. The Company shall promptly reimburse Employee for all
legal fees and expenses he incurs in seeking to enforce or in defending his
rights under this Agreement without regard to whether Employee prevails in whole
or in part, provided that Employee has not acted in bad faith or with no
reasonable claim of success.
5.11 Other Fees. The Company agrees to reimburse Employee for those fees
(including legal fees) incurred by the Employee in the negotiation and execution
of this Agreement; provided, however, the Company will not reimburse Employee
and Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxxx and A. Xxxxx Xxxxxx (taken together) greater
than $65,000 in the aggregate for negotiation of this Agreement and the
employment agreements for such other executives.
5.12 Prior Agreement. On the Effective Date, the Prior Agreement will
automatically terminate without any further action required by the parties
hereto and this Agreement shall become effective.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date and year first above written.
PILLOWTEX CORPORATION
By:___________________________________
Name:____________________________
Title:___________________________
EMPLOYEE
______________________________________
Printed Name: Xxxxxxx X. Xxxxxx
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EXHIBIT A
Job Description
Exhibit 1.16
[attach KERP agreement]
