EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of November 9, 1998, is by and between Pillowtex
Management Services Company, a Delaware business trust ("Employer"), and Xxxxxx
X. Xxxxxx ("Employee").
WITNESSETH:
WHEREAS, Employee desires to enter into the employment of Employer and
Employer desires to employ Employee in the capacity and on the terms set forth
below.
NOW, THEREFORE, in consideration of the foregoing recital and of the mutual
agreements contained herein, and for other valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT AND SCOPE.
(a) Commencing as of November 9, 1998 (the "Commencement Date") and
continuing throughout the Term of this Agreement, Employer agrees to employ
Employee and Employee agrees to serve as the employee of Employer with the title
and capacity of Senior Vice President and Chief Financial Officer. As such,
Employee's duties shall include responsibility for all financial operations of
Pillowtex Corporation, Fieldcrest Xxxxxx, Inc., The Xxxxxxx Corporation and
their respective subsidiaries, as well as such other responsibilities as may be
assigned from time to time by the President and Chief Operating Officer of
Employer. Employee shall report to the President and Chief Operating Officer of
Employer.
(b) Employee's performance of services under this Agreement shall
occur primarily at Employer's executive offices at 0000 Xxxx Xxx, Xxxxxx, Xxxxx
00000, subject to such travel as is consistent with the office of Senior Vice
President and Chief Financial Officer.
(c) During the Term of Employee's employment, Employee shall devote
Employee's full business time (at least 40 hours per week) exclusively to the
performance of Employee's duties as stated in this Agreement and to the
furtherance of Employer's business.
2. TERM.
(a) The term of this Agreement (the "Term") shall begin on the
Commencement Date and shall continue through the third anniversary thereof,
subject to automatic extension as provided below and unless terminated earlier
in accordance with Section 4.
(b) Beginning with the second anniversary date of the Commencement
Date and continuing with each anniversary date thereafter, the Term of this
Agreement shall automatically be extended in additional, successive one-year
increments, with the result that the Term will have a remaining duration of two
years upon each and every anniversary. Notwithstanding the foregoing sentence,
the Term shall not be extended if either party has previously given the other
party written notice of its intent not to extend the Agreement at least 15
months prior to the anniversary upon which the extension would otherwise occur.
3. COMPENSATION. During the Term of this Agreement, Employer shall
compensate Employee as set forth below:
(a) Employer shall pay to Employee a base salary of $_____________,
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payable in accordance with Employer's payroll policies in effect from time to
time for executive officers generally, subject to all appropriate withholdings.
(b) Employee shall be eligible to participate in Employer's incentive
bonus plans as they may be amended from time to time to the same extent as
executive officers generally.
(c) Employee shall be entitled to the greater of three-weeks of paid
vacation annually and that amount of vacation to which Employee would be
entitled under Employer's vacation policy as it may be amended from time to
time.
(d) Employee shall be entitled to participate in Employer's health,
benefit and welfare plans offered by Employer as they may be amended from time
to time to the same extent as executive officers of Employer generally.
(e) Employer shall provide Employee with a $_____________ term life
insurance policy.
(f) Employee shall be eligible to participate in any supplemental
executive retirement plan that Employer may adopt.
(g) Employer will acquire a club membership at a country club of
Employee's choice for the exclusive use of Employee during the Term at an
initiation fee of up to $_______. The membership shall remain the property of
Employer subject to Employee's right to acquire it upon termination of
Employee's employment as set forth below. Employer will pay Employee's
membership dues and will reimburse Employee for all expenses and charges
incurred at the club for business purposes. Upon termination of Employee's
employment, Employee's privileges with respect to the membership shall cease and
Employee shall transfer and assign all rights in the membership to Employer,
provided, however, that if Employee is terminated for any reason other than for
Cause (as defined in Section 4(g)(i)), Employee shall be entitled to acquire the
membership from Employer for an amount equal to the lesser of the original
initiation fee or the then-prevailing market price of a comparable membership
and Employee's assumption of all future monthly dues and other costs and
expenses related to the membership.
(h) Employer will pay Employee a car allowance of $_______ per month
plus an additional amount equal to all federal and state income taxes arising
with respect to any portion of the allowance taxable as income to Employee.
4. TERMINATION DURING TERM. Notwithstanding anything to the contrary in
Section 2 of this Agreement, Employee's employment under this Agreement may be
terminated during the Term as set forth below:
(a) Employer may terminate Employee's employment for Cause, in which
case the parties' rights and obligations shall be as set forth in Section 5(a)
below.
(b) Employer may terminate Employee's employment in the absence of
Cause and other than upon Employee's Retirement or Permanent Disability, in
which case the parties' rights and obligations shall be as set forth in either
Section 5(b) or (e) below, as applicable.
(c) Employee's employment shall be terminated upon Employee's
Permanent Disability, in which case the parties' rights and obligations shall be
as set forth in Section 5(c) below.
(d) Employee's employment shall be terminated upon Employee's
Retirement, in which case the parties' rights and obligations shall be as set
forth in Section 5(d) below.
(e) In the event of a Change in Control of Employer, Employee may
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terminate Employee's employment (i) for any reason, for up to six months after
the Change in Control of Employer, or (ii) for Good Reason, in which case the
parties' rights and obligations shall be as set forth in Section 5(e) below.
(f) Employee may terminate Employee's employment at any time for any
reason not heretofore enumerated, in which case the parties' rights and
obligations shall be as set forth in Section 5(f) below.
(g) The following definitions shall apply for purposes of the early
termination of the Term of this Agreement:
(i) "Cause" shall mean the occurrence of any of the following:
(A) Employee's engagement in any personal misconduct involving willful
dishonesty, illegality, or moral turpitude that is demonstrably and materially
detrimental or injurious to the business interests, reputation or goodwill of
Employer or its affiliates; (B) Employee's engagement in any act involving
willful dishonesty, disloyalty, or infidelity against Employer or its
affiliates; (C) Employee's willful and continued breach of or failure
substantially to perform under any of the material terms and covenants of this
Agreement; and (D) Employee's willful and continued breach of or failure
substantially to perform under any material policy established by the Company
with respect to the operation of the Company's business and affairs, or the
conduct of the Company's employees. For purposes of this Section 4(g)(i), no
act, or failure to act, on Employee's part shall be considered "willful" unless
done, or omitted to be done, by Employee in bad faith and without reasonable
belief that Employee's action or omission was in the best interest of Employer.
Prior to asserting any action or failure to act as Cause for Employee's
termination as set forth above, Employer shall provide Employee a written notice
referencing this Section 4(g)(i), setting out with specificity the conduct
asserted to constitute Cause. Any disputes arising as to whether Cause existed
for Employee's termination shall be resolved through binding arbitration in
accordance with Section 9 of this Agreement.
(ii) "Change in Control of Employer" means the occurrence during
the Term of any of the following events:
(A) Pillowtex Corporation, a Texas corporation
("Pillowtex"), is merged, consolidated or reorganized into or with another
corporation or other legal person, and as a result of such merger, consolidation
or reorganization less than a majority of the combined voting power of the then-
outstanding securities entitled to vote generally in the election of directors
("Voting Stock") of such corporation or person immediately after such
transaction are held in the aggregate by the holders of Voting Stock of
Pillowtex immediately prior to such transaction;
(B) Pillowtex sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal person,
and as a result of such sale or transfer less than a majority of the combined
voting power of the then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Stock of Pillowtex immediately prior to such sale or transfer;
(C) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) other than an "Excluded Person" as defined
below has become the beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of securities representing 35% or more of the combined voting
power of the then-outstanding Voting Stock of Pillowtex; or
(D) If, during any period of 24 consecutive months,
individuals who at the beginning of any such period constitute the Directors of
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Pillowtex cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause (D) each Director who is
first elected, or first nominated for election by Pillowtex's stockholders, by a
vote of at least two-thirds of the Directors of Pillowtex (or a committee
thereof) then still in office who were Directors of Pillowtex at the beginning
of any such period will be deemed to have been a Director of Pillowtex at the
beginning of such period.
(iii) "Excluded Person" shall mean any of (A) Xxxxxxx X. Xxxxxx,
Xx., Xxxx X. Xxxxxxxxxxxx or the Xxxx X. Xxxxxxxxxxxx Estate or any person for
which any of Xxxxxxx X. Xxxxxx, Xx., Xxxx X. Xxxxxxxxxxxx or the Xxxx X.
Xxxxxxxxxxxx Estate are deemed to hold beneficial ownership of securities of
Pillowtex registered in the name of such person; (B) Pillowtex; (C) any entity
in which Pillowtex directly or indirectly owns 50% or more of the outstanding
Voting Stock (a "Subsidiary"); or (D) any employee benefit plan sponsored by
Pillowtex or any Subsidiary.
(iv) "Good Reason" shall mean termination of Employee's
employment by Employee after a Change in Control of Pillowtex upon the
occurrence of any of the following:
(A) the assignment to Employee of any duties inconsistent
with Employee's position, duties and status with Employer as existing
immediately prior to a Change in Control of Employer; a substantial alteration
in the nature or status of Employee's responsibilities from those in effect
immediately prior to a Change in Control of Employer; the failure to provide
Employee with substantially the same perquisites which Employee had immediately
prior to a Change in Control of Employer, including but not limited to an office
and appropriate support services; or a change in Employee's titles or offices as
in effect immediately prior to a Change in Control of Employer, or any removal
of Employee from or failure to re-elect Employee to any such positions;
(B) a reduction by Employer in Employee's base salary in
effect immediately prior to a Change in Control of Employer;
(C) the requirement by Employer that Employee be based
anywhere other than the metropolitan area in which Employee's office is located
immediately prior to a Change in Control of Employer, except for required travel
on Employee's business to an extent substantially consistent with Employee's
business travel obligations immediately prior to a Change in Control of
Employer; or
(D) the taking of any action by Employer which would (1)
materially and adversely affect Employee's participation in or materially reduce
Employee's benefits under any employee benefit or compensation plan in which
Employee participates immediately prior to a Change in Control of Employer, or
(2) deprive Employee of any material fringe benefit enjoyed by Employee, or to
which Employee is entitled, as existing immediately prior to a Change in Control
of Employer
(v) "Permanent Disability" shall mean any physical or mental
impairment rendering Employee unable to perform the essential functions of
Employee's job (as determined by Employer), with or without reasonable
accommodation that does not constitute undue hardship to Employer, and such
impairment is permanent or is likely to continue for a period exceeding six
consecutive months. If Employee fails to notify Employer of Employee's need for
accommodation, Employer is not required to accommodate Employee and may hold
Employee to the same standards as persons without a disability. The
determination of whether Employee has a Permanent Disability shall be made as
set forth below. During any period in which the existence of a Permanent
Disability is being determined, Employee shall continue to receive Employee's
full base salary at the rate then in effect and all compensation and benefits
paid during such period until a Permanent Disability is conclusively determined
and this Agreement is terminated in accordance with Section 8 hereof, provided
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Employee (and Employee's personal and legal representatives) act in good faith
and with reasonable diligence in pursuing a determination. This definition is
not intended to either expand or limit any rights and protections granted to
Employee by law. Employer may require Employee to be examined by a physician,
at Employee's own expense, in order to determine whether Employee has a
Permanent Disability. If Employer disagrees with the written opinion of this
physician ("First Physician"), it may engage, at its own expense, another
physician ("Second Physician") to examine Employee. If the First and Second
Physicians agree in writing that Employee has not suffered a Permanent
Disability, their written opinion shall, except as otherwise set forth in this
Section 4(g)(v), be conclusive on the issue of Permanent Disability. If the
First and Second Physicians disagree on whether Employee has suffered a
Permanent Disability, they shall choose a third consulting physician (whose
expense shall be shared equally by Employer and Employee) and the written
opinion of a majority of these three physicians shall be conclusive as to the
issue of Permanent Disability. In connection with a Permanent Disability
determination, Employee hereby consents to any required medical examination and
agrees to furnish any medical information requested by any examining physician
and to waive any applicable physician-patient privilege that may arise because
of such examination. All physicians must be board-certified in the specialty
most closely related to the nature of the Permanent Disability alleged to exist.
(vi) "Retirement" shall mean termination by Employer or
Employee in accordance with Employer's retirement policy (including early
retirement, if included in such policy and elected by Employee in writing)
generally applicable to its senior executive employees, or in accordance with
any other retirement agreement entered into by and between Employee and
Employer.
5. COMPENSATION UPON TERMINATION. If Employee's employment is terminated
during the Term of this Agreement, Employee shall be entitled to compensation as
set forth below:
(a) If Employer terminates Employee's employment for Cause, Employer
shall pay Employee's undiscounted base salary through the date of Employee's
termination at the rate then in effect and all amounts to which Employee is
entitled upon termination of employment under Employer's employee benefit plans.
(b) If Employer terminates Employee's employment without Cause, then
Employer shall pay Employee, not later than the fifth day following the date of
termination, a lump sum severance payment equal to the sum of (i) Employee's
undiscounted base salary through the date of Employee's termination at the rate
then in effect and all amounts to which Employee is entitled upon termination of
employment under Employer's employee benefit plans; (ii) Employee's undiscounted
base salary through the remaining duration of the Term or, if greater, for a
period of 24 months, at the highest rate in effect during the 12 months
immediately preceding the date of Employee's termination; and (iii) the product
obtained by multiplying the greater of (A) (1) the highest annual amount paid to
Employee (or awarded to Employee, if such amount has not yet been paid) as bonus
compensation during or in respect of any of the three calendar years preceding
the year in which the termination occurs and (2) Employee's Bonus Opportunity
Level under the Pillowtex Corporation Management Incentive Plan (or functionally
similar target award level under any successor plan or program) as of the date
of Employee's termination by (B) a proration factor (the "Bonus Proration
Factor") equal to the quotient obtained by dividing the number of months (but in
no event less than 24 months) in the period from the beginning of the most
recent plan year for which a bonus has not been paid (but is anticipated to be
paid as of the date of the Employee's termination) to the expiration of the
Term, by 12. Notwithstanding the foregoing, the provisions of this Section 5(b)
shall not apply if Employer terminates Employee's employment without Cause
subsequent to a Change in Control of Employer.
(c) If Employee's employment is terminated upon Employee's Permanent
Disability, Employer shall pay Employee's undiscounted base salary through the
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date of Employee's termination at the rate then in effect and all amounts to
which Employee is entitled upon termination of employment under Employer's
employee benefit plans. Employee's additional compensation and benefits, if
any, shall be determined in accordance with Employer's employee benefit plans or
other insurance programs then in effect.
(d) If Employee's employment is terminated upon Employee's
Retirement, Employer shall pay Employee's undiscounted base salary through the
date of Employee's termination at the rate then in effect and all amounts to
which Employee is entitled upon termination of employment under Employer's
employee benefit plans. Employee's additional compensation and benefits shall
be determined in accordance with Employer's retirement policy applicable to its
senior executive employees or in accordance with any other retirement agreement
entered into by and between Employee and Employer.
(e) If, at any time within two (2) years after the effective date of
a Change in Control of Employer, Employee's employment (x) is terminated by
Employee for any reason during a period of six months beginning on the date of
the Change in Control of Employer, or if less, during the remaining duration of
the Term; (y) is terminated by Employee for Good Reason; or (z) is terminated by
Employer without Cause (and not by reason of Employee's Permanent Disability
Retirement, or death), Employee shall be entitled to the compensation and
benefits provided below:
(i) Employer shall pay Employee's undiscounted base salary
through the date of Employee's termination at the rate then in effect;
(ii) Employer shall pay all amounts to which Employee is
entitled upon termination of employment under Employer's employee benefit plans;
(iii) Employer shall pay as severance pay to Employee, not
later than the fifth day following Employee's termination, a lump sum severance
payment (together with the payments described in Sections 5(e)(iv) and (v), the
"Severance Payments") equal to the sum of (A) the product obtained by
multiplying Employee's undiscounted annual base salary at the highest rate in
effect during the 12 months immediately preceding Employee's termination by the
number of years or fractions thereof (but in no event less than two years)
remaining in the Term and (B) the product obtained by multiplying the greater
of (1) the highest annual amount paid to Employee (or awarded to Employee, if
such amount has not yet been paid) as bonus compensation during or in respect
of any of the three calendar years preceding the year in which the termination
occurs and (2) Employee's Bonus Opportunity Level under the Pillowtex
Corporation Management Incentive Plan (or functionally similar target aware
level under any successor plan or program) based upon Employee's annual salary
at the highest rate in effect during the 12 months immediately preceding
Employee's termination, by the Bonus Proration Factor (as defined in Section
5(b) above);
(iv) in lieu of shares of common stock, $0.01 par value, of
Pillowtex (the "Shares") issuable upon the exercise of options ("Options"), if
any, granted to Employee under any stock option plan of Pillowtex (which Options
shall be canceled upon the making of the payment referred to below), Employer
shall pay Employee in one sum in cash, not later than the fifth day following
the date of Employee's termination, an aggregate amount equal to the product of
(A) the difference (to the extent that such differences are a positive number)
obtained by subtracting the per Share exercise price of each Option held by
Employee, whether or not then fully exercisable, from the higher of (1) the
closing price of the Shares, as reported on the New York Stock Exchange on the
Date of Termination (or the last trading date prior thereto) or (2) the highest
price per Share actually paid in connection with any Change in Control of
Employer, and (B) the number of shares covered by each such Option;
(v) Employer shall pay Employee the retirement benefits to
which Employee is entitled under Employee's retirement policy or other
retirement agreement;
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(vi) Employer shall reimburse Employee for all legal fees and
expenses incurred by Employee as a result of such termination (including all
such fees and expenses, if any, incurred in successfully contesting or
disputing any such termination or seeking to obtain or enforce any right or
benefit provided by this Agreement); and
(vii) if Severance Payments become subject to the excise tax
(the "Excise Tax") imposed under section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), Employer shall pay to Employee an additional
amount (the "Gross-Up Payment") such that the net amount retained by Employee,
after deduction of any Excise Tax on the Severance Payments (and any federal,
state and local income tax and Excise Tax upon the payment provided for in this
Section 5(e)(vii)), shall be equal to the Severance Payments. For purposes of
determining whether any of the Severance Payments will be subject to the Excise
tax and the amount of such Excise Tax, (A) any other payment or benefit received
or to be received by Employee in connection with a Change in Control of Employer
and Employee's subsequent termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with
Employer, any person whose actions resulted in the Change in Control of
Employer or any person affiliated with Employer or such person) shall be treated
as a "parachute payment" 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 shall be treated as subject to the Excise Tax, unless in the opinion of
tax counsel selected by Employer's independent auditors and reasonably
acceptable to Employee such other payments or benefits (in whole or in part) do
not constitute parachute payments, (B) the amount of the Severance Payments
which shall be treated as subject to the Excise Tax shall be equal to the lesser
of (1) the total amount of the Severance Payments and (2) the amount of excess
parachute payments within the meaning of section 280(G)(b)(1) of the Code (after
applying clause (A) above), and (C) the value of any non-cash benefit, deferred
payment or other benefit shall be determined by Employer's independent auditors
in accordance with the principles of sections 280(G)(d)(3) and (4) of the Code
and the applicable Treasury Regulations. For purposes of determining the amount
of the Gross-Up Payment, Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of Employee's
residence on the date of Employee's termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state
and local taxes. If the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time of Employee's termination
of employment, Employee shall repay to Employer, 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 Excise Tax and federal, state and local income tax
imposed on the Gross-Up Payment being repaid by Employee to the extent that
such repayment results in a reduction in Excise Tax and/or a federal, state or
local income tax deduction) 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 into account hereunder at the time of the
termination of Employee's employment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), Employer shall 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. Employee and Employer shall 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
Severance Payments.
(f) If Employee terminates Employee's employment under circumstances
in which Section 5(e) does not apply, or if Employee's employment is terminated
by reason of his death, Employer shall pay Employee's full base salary through
the date of Employee's termination at the rate then in effect and all amounts
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to which Employee is entitled upon termination of employment under Employer's
employee benefit plans.
6. Insurance. If Employee's employment is terminated under the
provisions of Section 4(e) of this Agreement, Employee shall participate, for a
period of two years from the date of Employee's termination, in all employee
benefit plans providing health and dental benefits in which Employee
participated or was entitled to participate immediately prior to Employee's
termination, provided that such participation is permitted under the general
terms and provisions of such plans and under applicable law. If Employee's
participation in any such plan is not permitted for any reason, Employer shall
arrange to provide Employee, at Employer's sole cost and expense, with benefits
substantially similar to those which Employee is entitled to receive under such
plans. At the end of such two-year period, Employee will be entitled to take
advantage of any conversion privileges applicable to the benefits available
under any such plans.
7. FUTURE EMPLOYMENT. Employee shall not be required to mitigate the
amount of any payment provided for in Section 5 hereof by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
Section 5 hereof be reduced by any compensation earned by Employee as a result
of employment by another employer after the date of Employee's termination, or
otherwise.
8. NOTICE OF TERMINATION.
(a) Any purported termination by Employer or by Employee shall be
communicated by a written "Notice of Termination" to the other party. A Notice
of Termination shall mean a notice indicating the specific termination
provision in this Agreement relied upon and setting forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.
(b) The "date of Employee's termination" shall be: (i) if
Employee's employment is terminated by reason of Employee's Permanent
Disability, the date that is 30 days after the determination of Permanent
Disability pursuant to Section 4(g)(v) of this Agreement, (ii) if Employee's
employment is terminated for Cause, the date specified in the Notice of
Termination, or (iii) if Employee's employment is terminated for any other
reason, the date specified in the Notice of Termination, provided such date is
not more than 60 days from the date such Notice of Termination is given.
9. ARBITRATION. All disputes or claims arising under this Agreement or
in connection with Employee's employment with Employer (including any claims
under any federal, state, or local law or ordinance), except for any dispute or
claim arising under Sections 10, 11, 12, 13, and 16 of this Agreement, shall be
subject to binding arbitration pursuant to the Commercial Arbitration Rules of
the American Arbitration Association, the cost of which shall be borne by the
party against whom an arbitration award is entered.
10. NONDISCLOSURE AGREEMENT. Employer, during the term of Employee's
employment under this Agreement, shall provide Employee access to, and Employee
shall have access to and become familiar with, various trade secrets and
proprietary and confidential information 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 (collectively referred to herein as the "Trade Secrets"), which are
owned by Employer and its affiliates and are regularly used in the operation of
their businesses, but in connection with which Employer and its affiliates take
precautions to prevent dissemination to persons other than certain directors,
officers and employees. Employee acknowledges and agrees that the Trade
Secrets (a) are secret and not known in Employer's industry; (b) are entrusted
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to Employee after being informed of their confidential and secret status by
Employer or its affiliates and because of the fiduciary position occupied by
Employee with Employer; (c) have been developed by Employer and its affiliates
for and on behalf of Employer and its affiliates through substantial
expenditures of time, effort and money and are used in their businesses;
(d) give Employer and its affiliates an advantage over competitors who do not
know or use the Trade Secrets; (e) are of such value and nature as to make it
reasonable and necessary to protect and preserve the confidentiality and
secrecy of the Trade Secrets; and (f) are valuable, special and unique assets
of Employer and its affiliates, the disclosure of which could cause substantial
injury and loss of profits and goodwill to Employer and its affiliates.
Employee shall not use in any way or disclose any of the Trade Secrets,
directly or indirectly, either during the Term of this Agreement or at any time
thereafter, except as required in the course of Employee's employment under
this Agreement. All files, records, documents, information, data and similar
items relating to the business of Employer and its affiliates, whether prepared
by Employee or otherwise coming into Employee's possession, shall remain the
exclusive property of Employer and its affiliates and shall not be removed from
the premises of Employer and its affiliates under any circumstances without the
prior written consent of the Board of Directors of Employer (except in the
ordinary course of business during Employee's period of active employment under
this Agreement), and in any event shall be promptly delivered to Employer upon
termination of this Agreement. 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 shall timely notify and promptly hand deliver a copy of the subpoena,
process or other request to the Chief Executive Officer of Pillowtex. For this
purpose, Employee irrevocably nominates and appoints Employer (including any
attorney retained by Employer), as Employee's true and lawful attorney-in-fact,
to act in Employee's name, place and stead to perform any act that Employee
might perform to defend and protect against any disclosure of any Trade Secrets.
As used in this Agreement, "affiliates" shall mean persons or entities that
directly, or indirectly through one or more intermediaries, control or are
controlled by, or are under common control with, Employer.
11. NON-COMPETITION AGREEMENT. Employee acknowledges and agrees that
the training Employee will receive, the experience Employee will gain and the
information Employee will acquire regarding the Trade Secrets while employed
hereunder will enable Employee to injure Employer if Employee should compete
with Employer in a business that is competitive with the business conducted or
to be conducted by Employer and its affiliates. For these reasons, Employee
hereby agrees that, without the prior written consent of Employer, Employee
shall not, during the period of employment with Employer and for a period of
two years thereafter, 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) in any business that is competitive
with that of Employer or its affiliates, (b) accept employment with or render
services to a competitor of Employer or any of its affiliates as a director,
officer, manager or executive, (c) engage, for Employee's self or any other
person or entity in the sales, marketing, design or manufacture of products
competitive with any product sold, marketed, designed or manufactured by
Employer or its affiliates, (d) contact, solicit or attempt to solicit or
accept business from any customers of Employer or its affiliates or any person
or entity whose business Employer or its affiliates is soliciting, or
(e) take any action inconsistent with the fiduciary relationship of an
employee to Employee's employer. For purposes of this Agreement, a
"competitor" specifically includes persons, firms, sole proprietorships,
partnerships, companies, corporations, or other entities that market products
and/or perform services in direct or indirect competition with those marketed
and/or performed by Employer or its affiliates within the United States,
Canada and Mexico.
12. NONEMPLOYMENT AGREEMENT. During the period of employment with
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Employer and for a period of two years thereafter, Employee shall not, on
Employee's own behalf or on behalf of any other person, partnership,
association, corporation or other entity, hire or solicit or in any manner
attempt to influence or induce any employee of Employer or its affiliates to
leave the employment of Employer or its affiliates, nor shall Employee use or
disclose to any person, partnership, association, corporation or other entity
any information obtained while an employee of Employer concerning the names and
addresses of the employees of Employer or its affiliates.
13. NONDISPARAGEMENT AGREEMENT. Employee shall not, either during the
Term of this Agreement or at any time thereafter, make statements, whether
orally or in writing, concerning Employer, any of its directors, officers,
employees or affiliates or any of its business strategies, policies or
practices, that shall be in any way disparaging, derogatory or critical, or in
any way harmful to the reputation of Employer, any such persons or entities or
business strategies, policies or practices.
14. SUCCESSORS; BINDING AGREEMENT.
(a) Employer will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of Employer, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession had taken place. Failure of
Employer to obtain such agreement prior to the effectiveness of any succession
shall be a breach of this Agreement and shall entitle Employee to compensation
from Employer in the same amount and on the same terms as Employee would be
entitled hereunder if Employee terminated Employee's employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
Employee's termination. As used in this Agreement, "Employer" shall mean
Employer as hereinbefore defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 14 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. In the event of
Employee's death, any amounts owed to Employer under this Agreement shall be
paid to Employee's surviving spouse, if any, and if none, to Employee's estate.
15. SEVERABILITY. The parties hereto intend all provisions of Sections
10, 11, 12, 13 and 16 hereof to be enforced to the fullest extent permitted by
law. Accordingly, should a court of competent jurisdiction determine that the
scope of any provision of Sections 10, 11, 12, 13 and 16 hereof is too broad to
be enforced as written, the parties intend that the court reform the provision
to such narrower scope as it determines to be reasonable and enforceable. In
addition, however, Employee agrees that the provisions of each of the foregoing
sections constitute separate agreements independently supported by good and
adequate consideration and shall be severable from the other provisions of, and
shall survive, this Agreement. The existence of any claim or cause of action
of Employee against Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Employer of
the covenants and agreements of Employee contained in the non-competition,
nondisclosure, nonemployment or nondisparagement agreements. If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term hereof, such provision
shall be fully severable and this Agreement shall be construed and enforced
as if such illegal, invalid or unenforceable provision never comprised a part
of this Agreement; and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or
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by its severance therefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement, a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
16. INVENTIONS. Employee shall promptly disclose, grant and assign to
Employer for its sole use and benefit any and all inventions, improvements,
technical information and suggestions relating in any way to the products of
Employer or any of its affiliates or capable of beneficial use by Employer or
any of its affiliates, which Employee has in the past conceived, developed or
acquired, or may conceive, develop or acquire during the term hereof (whether
or not during usual working hours), together with all patent applications,
letters patent, copyrights and reissues thereof that may at any time be granted
upon any such invention, improvement or technical information. In connection
therewith, Employee shall promptly at all times during and after the term
hereof:
(a) execute and deliver such applications, assignments, descriptions
and other instruments as may be necessary or proper in the opinion of Employer
to vest title to such inventions, improvements, technical information, patent
applications and patents or reissues thereof in Employer and to enable it to
obtain and maintain the entire right and title thereto throughout the world; and
(b) render to Employer, at its expense, all such assistance as it
may require in the prosecution of applications for said patents or reissues
thereof, in the prosecution or defense of interferences which may be declared
involving any said application or patents and in any litigation in which
Employer or its affiliates may be involved relating to any such patents,
inventions, improvements or technical information.
17. AFFILIATES. Employee will use Employee's best efforts to ensure
that no relative of his or corporation of which Employee is an officer,
director or shareholder, or other affiliate of his, shall take any action that
Employee could not take without violating any provision of this Agreement.
18. REMEDIES. Employee recognizes and acknowledges that the
ascertainment of damages in the event of his breach of any provision of this
Agreement would be difficult, and Employee agrees that Employer, in addition to
all other remedies it may have, shall have the right to injunctive relief if
there is such a breach.
19. NOTICES. Any notices, consents, demands, requests, approvals and
other communications to be given under this Agreement by either party to the
other shall be in writing and shall be either (i) delivered in person, (ii)
mailed by registered or certified mail, return receipt requested, postage
prepaid, (iii) delivered by overnight express delivery service or same-day
local courier service or (iv) delivered by facsimile transmission, to the
addresses set forth below.
If to Employer: Pillowtex Management Services Company
0000 Xxxx Xxx
Xxxxxx, Xxxxx 00000
Attention: President and Chief Operating Officer
Facsimile No. (000) 000-0000
Xxxxxx X. Xxxxxx
000 Xxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Notices delivered personally, by overnight express delivery, local courier or
facsimile shall be deemed communicated as of actual receipt; mailed notices
shall be deemed communicated as of three days after mailing.
20. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or written, between the parties hereto with respect to
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the subject matter hereof and contains all of the covenants and agreements
between the parties with respect thereto.
21. MODIFICATION. No change or modification of this Agreement shall be
valid or binding upon the parties hereto, nor shall any waiver of any term or
condition in the future be so binding, unless such change or modification or
waiver shall be in writing and signed by the parties hereto.
22. GOVERNING LAW AND VENUE. THE PARTIES ACKNOWLEDGE AND AGREE THAT
THIS AGREEMENT AND THE OBLIGATIONS AND UNDERTAKINGS OF THE PARTIES HEREUNDER
WILL BE PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IF ANY ACTION IS BROUGHT TO ENFORCE OR INTERPRET THIS AGREEMENT, VENUE FOR SUCH
ACTION SHALL BE IN DALLAS COUNTY, TEXAS. EACH OF THE PARTIES HERETO HEREBY
AGREES IRREVOCABLY AND UNCONDITIONALLY TO CONSENT TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF
AMERICA LOCATED IN DALLAS, TEXAS FOR ANY ACTIONS, SUITS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND FURTHER AGREES THAT SERVICE OF
PROCESS, SUMMONS OR NOTICE BY U.S. REGISTERED MAIL TO THE APPLICABLE ADDRESSES
SET FORTH IN SECTION 19 HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS OF ANY
ACTION, SUIT OR PROCEEDING BROUGHT AGAINST SUCH PARTY IN ANY SUCH COURT.
23. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which shall constitute one
document.
24. COSTS. If any action or law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which Employee or it may be entitled.
25. ASSIGNMENT. Employer shall have the right to assign this Agreement
to its successors or assigns. The terms "successors" and "assigns" shall
include any person, corporation, partnership or other entity that buys all or
substantially all of Employer's assets or all of its stock, or with which
Employer merges or consolidates. The rights, duties and benefits to Employee
hereunder are personal to Employee, and no such right or benefit may be
assigned by Employee.
26. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
27. NO WAIVER. The failure by Employer to enforce at any time any of
the provisions of this Agreement or to require at any time performance by
Employee of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect the validity of this Agreement, or any
part hereof, or the right of Employer thereafter to enforce each and every such
provision in accordance with the terms of this Agreement.
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* * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PILLOWTEX MANAGEMENT SERVICES COMPANY
By:Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Operating Officer
EMPLOYEE
By:Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
GUARANTEE
Pillowtex Corporation unconditionally guarantees all obligations of
Pillowtex Management Services Company to Employee as set forth in the foregoing
Employment Agreement.
PILLOWTEX CORPORATION
By:Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Operating Officer
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