Exhibit 10.48
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 1st day of April, 2001, is entered into by
and between Pillowtex Corporation, a Texas corporation (the "Company"), and
Xxxxxxx X. Xxxxxxxxxx ("Employee").
WHEREAS, the Company wishes to employ Employee, and Employee wishes to
accept employment with the Company, on the terms and conditions set forth below;
and
WHEREAS, the Company is a debtor in a bankruptcy case 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 will implement 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").
NOW THEREFORE, in consideration of the mutual covenants contained herein
and for good and valuable consideration, including participation in the KERP,
the receipt of which is hereby acknowledged, it is agreed as follows:
ARTICLE 1
DEFINITIONS
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The following terms will have the respective meanings set forth below,
unless the context clearly otherwise requires:
1.1 "Affiliate" means, with respect to the Company, any person or entity
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that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company.
1.2 "Cause" means the occurrence of any of the following: (a) Employee's
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engaging 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 the Company or its Affiliates;
(b) Employee's engaging in any act involving willful dishonesty, disloyalty, or
infidelity against the Company or its Affiliates; and (c) Employee's willful and
continued breach of or failure substantially to perform under any of the
material terms and covenants of this Agreement. For purposes of this Section
1.2, no act, or failure to act, on Employee's part will 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
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 Error! Reference source not found.,
setting out with specificity the conduct asserted to constitute Cause and, if
the conduct asserted to constitute Cause is described in clause (c) of the first
sentence of this Section Error! Reference source not found., providing Employee
with a reasonable opportunity of not less than 15 days to cure or cease and
desist such conduct.
1.3 "Change in Control" means the occurrence of any of the following
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events:
(a) the Company 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 is held in the aggregate by the holders
of Voting Stock of the Company immediately prior to such transaction;
(b) the Company 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 the Company 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 the Company;
(d) during any period of 24 consecutive months, individuals who at the
beginning of any such period constitute the directors of the Company cease
for any reason to constitute at least a majority thereof; provided,
however, that for purposes of this paragraph (d) each director who is first
elected, or first nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the directors of the Company (or a
committee thereof) then still in office who were directors of the Company
at the beginning of any such period will be deemed to have been a director
of the Company at the beginning of such period; or
(e) the Company's Chapter 11 case is converted into a case under
Chapter 7 of the Bankruptcy Code.
For purposes of this Section 1.3, the term "Excluded Person" means the
Company; any entity in which the Company directly or indirectly owns 50% or more
of the outstanding Voting Stock (a "Subsidiary"); or any employee benefit plan
sponsored by the Company or any Subsidiary.
Notwithstanding the foregoing provisions of this Section 1.3, (i) a change
in Control described in Section 1.3(c) will not occur solely by reason of the
confirmation by the Bankruptcy Court of a plan of reorganization with respect to
the Company pursuant to which the Company emerges from bankruptcy; and (ii) a
merger, consolidation or reorganization of the Company effected in connection
with the confirmation of such plan of reorganization will not be a Change
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in Control described in Section 1.3(a) or Section 1.3(b) if such merger,
consolidation or reorganization does not involve a sale of all or substantially
all of the assets of the Company to an unrelated third party, including, for
example, and not by way of limitation, a reincorporation of the Company in
another jurisdiction.
1.4 "Effective Date" means the date of this Agreement.
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1.5 "Good Reason" means the termination of Employee's employment by
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Employee after a Change in Control 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 the Company as existing
immediately prior to a Change in Control; a substantial alteration in the
nature or status of Employee's position or responsibilities from those in
effect immediately prior to a Change in Control; the failure to provide
Employee with substantially the same perquisites which Employee had
immediately prior to a Change in Control, 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, or any
removal of Employee from or failure to re-elect Employee to any such
positions;
(b) a reduction by the Company in Employee's base salary in effect
immediately prior to a Change in Control;
(c) the requirement by the Company that Employee be based anywhere
other than the metropolitan area in which Employee's office is located
immediately prior to a Change in Control, 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; or
(d) the taking of any action by the Company which would (i) 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 or
(ii) 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.
1.6 "KERP" means the Key Employee Retention Program and Severance Plan, as
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approved by the Order, which consists of (i) a retention incentive plan, (ii) an
emergence bonus plan and (iii) a severance plan.
1.7 "Trade Secrets" means proprietary and confidential information of the
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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.
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ARTICLE 2
EMPLOYMENT, COMPENSATION AND DUTIES
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2.1 Employment. Subject to the terms of this Agreement, the Company
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agrees to employ Employee as its Senior Vice President - Bed and Bath Marketing.
Employee will report to the Executive Vice President - Sales & Marketing of the
Company. Employee's principal place of work will be at the Company's offices in
Kannapolis, North Carolina, subject to such travel as is consistent with the
office of Senior Vice President - Bed and Bath Marketing. Employee and the
Company agree that Employee is an at-will employee, and nothing contained in
this Agreement will prevent Employee from terminating employment with the
Company for any reason or for no reason or will prevent the Company from
terminating Employee's employment with the Company for any reason or for no
reason, subject to satisfaction of any applicable severance pay obligations
under Section 3.1.
2.2 Compensation. Employee's annual base salary will be $286,000,
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payable in accordance with the Company's customary payroll practices and subject
to increases in accordance with Company policy.
2.3 Duties. Employee will perform the customary duties of his position
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as Senior Vice President - Bed and Bath Marketing plus such other duties as may
reasonably be assigned to him from time to time by the Executive Vice President
- Sales & Marketing of the Company.
ARTICLE 3
BENEFITS
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3.1 KERP Benefits. Employee will be eligible to participate in the KERP,
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in accordance with its terms, with respect to the retention incentive plan and
severance plan. In addition, in the event Employee's employment by the Company
is involuntarily terminated for reasons other than death, disability, retirement
at or after the earliest retirement age under any Company-sponsored pension plan
in which Employee participates or Cause, or in the event Employee terminates
employment for Good Reason no later than six months after the occurrence of an
event constituting Good Reason, the Company will pay to Employee a severance
benefit calculated and payable as described below. Employee's severance benefit
will be an amount (the "Severance Amount") equal to Employee's base salary then
in effect for a period of 24 months, less (i) any amount received by Employee
under the retention plan provided for in the KERP and (ii) the amount of any
severance benefit payable to Employee under the KERP. The Severance Amount shall
be paid to Employee as follows: (i) the portion of the Severance Amount equal to
Employee's annual base salary then in effect, shall be paid in a single lump sum
no later than five days after the termination of Employee's employment; and (ii)
the remainder of the Severance Amount (the "Remaining Amount") shall be paid in
equal monthly installments beginning on the anniversary date of the termination
of Employee's employment (the "Termination Anniversary"); provided, however,
that (A) the Employee will not be entitled to the Remaining Amount if Employee
obtains other full-time employment (including reemployment by the Company) prior
to the Termination Anniversary and (B) the Company's obligation to pay the
Remaining Amount shall immediately cease if Employee obtains other full-time
employment (including reemployment by the Company) during the period the
Remaining Amount is being paid. If the Company's obligation to pay the Remaining
Amount is terminated
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other than at the end of the month, payment of the Remaining Amount for that
month shall be prorated to include the portion of the month in which Employee
remained unemployed. In the event of any inconsistency between the provisions of
this Section 3.1 and the KERP, the provisions of this Section 3.1 will control.
3.2 Other Employee Benefits. Employee and Employee's eligible dependents,
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as applicable, will be eligible for participation in and will receive all
benefits to which they are entitled under the terms of the Company's other
employee benefit plans, as in effect from time to time.
3.3 Stock Options. Employee will be eligible to participate in any stock
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option plan adopted by the Company and made available generally to its senior
executives.
3.4 Vacation. Employee will be entitled to paid vacation in accordance
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with Company policy in effect from time to time.
3.5 Automobile Allowance. The Company will provide Employee with an
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automobile allowance of $750.00 per month. The Company will also reimburse
Employee for mileage in accordance with Company policy.
3.6 Certain Tax Payments. The Company will make tax gross-up payments to
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Employee in an amount that will be sufficient to cover the federal and state
income taxes incurred by Employee as a result of the payments made under Section
3.5 (including federal and state income taxes incurred as a result of such
gross-up payments).
3.7 Legal Fees. The Company will reimburse Employee for all legal fees
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and expenses he incurs in seeking to enforce or in defending his rights under
this Agreement, including, but not limited to, fees and expenses identified in
Section 5.3, without regard to whether Employee prevails in whole or in part,
provided that Employee has not acted in bad faith or with no colorable claim of
success.
3.8 Insurance. If Employee's employment is terminated so that Employee is
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entitled to the severance benefit provided for in Section 3.1, Employee shall be
entitled to participate, during the period in which severance is being paid to
Employee pursuant to Section 3.1, in all employee benefit plans providing
health, dental, life and disability 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 and provided further that
Employee continues to make contributions, if any, in the same amounts as
required immediately prior to the termination of Employee's employment. If
Employee's participation in any such plan is not permitted for any reason, the
Company shall arrange to provide Employee, at the Company's sole cost and
expense, with benefits substantially similar to those which Employee is entitled
to receive under such plans. Employee's COBRA rights shall not begin to run
until after the end of the severance period. Furthermore, at the end of the
severance period, Employee will be entitled to take advantage of any conversion
privileges applicable to the benefits available under any such plans.
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ARTICLE 4
CERTAIN OBLIGATIONS OF EMPLOYEE
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4.1 Trade Secrets. During the term of Employee's employment, the Company
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will provide Employee access to, and Employee will have access to and become
familiar with, various Trade Secrets. Employee acknowledges and agrees that the
Trade Secrets (a) are secret and not known in the Company's industry; (b) are
entrusted to Employee after being informed of their confidential and secret
status by the Company or its Affiliates and because of the fiduciary position
occupied by Employee with the Company; (c) have been developed by the Company
and its Affiliates for and on behalf of the Company and its Affiliates through
substantial expenditures of time, effort and money and are used in their
businesses; (d) give the Company 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 the Company and its Affiliates, the disclosure of which
could cause substantial injury and loss of profits and goodwill to the Company
and its Affiliates. 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. 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 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 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 timely notify and promptly
hand deliver a copy of the subpoena, process or other request to the President
of the Company.
4.2 Return of Property. Employee agrees that, upon termination of
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Employee's employment with the Company and its Affiliates for any reason,
Employee will return to the Company, in good condition, 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.
4.3 Noncompetition. Employee acknowledges and agrees that the training
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Employee will receive, the experience Employee will gain and the information
Employee will acquire regarding Trade Secrets while employed hereunder will
enable Employee to injure the Company and its Affiliates if Employee should
compete with the Company in a business that is competitive with the business
conducted or to be conducted by the Company and its Affiliates.
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For these reasons, Employee hereby agrees that Employee will not, during the
period of employment with the Company, 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 the Company or its Affiliates, (b) accept employment
with or render services to a competitor of the Company 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 the Company or its Affiliates, (d) contact, solicit or attempt to solicit or
accept business from any customers of the Company or its Affiliates or any
person or entity whose business the Company 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 the Company or its Affiliates within the United States, Canada and Mexico.
4.4 Nonsolicitation. During the period of employment with the Company and
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for a period of 12 months thereafter, Employee will 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 the Company or its Affiliates to leave the employment of the
Company or its Affiliates, nor will Employee use or 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 Damages. Notwithstanding anything in this Agreement to the contrary,
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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. In addition, Employee acknowledges that any such breach 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 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
Section 4.5.
ARTICLE 5
MISCELLANEOUS
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5.1 Assignment. This Agreement is personal in nature and neither of the
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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 Section 5.2. Without limiting the
generality or effect of the foregoing, Employee's right to
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receive payments provided for in this Agreement will not be assignable,
transferable or delegable, 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 5.1 the Company will have no liability to pay to any
purported assignee any amount Employee attempts to assign, transfer or delegate.
5.2 Successors and Binding Agreement.
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(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,
successors, heirs, distributees and legatees.
5.3 Governing Law; Arbitration. This Agreement and all questions arising
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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, the cost of which will be borne by the party against
whom an arbitration award is entered, specifically subject, however, to the
provisions of Section 3.7. Notwithstanding anything herein to the contrary, the
Company may, at its option, seek injunctive relief as contemplated in Error!
Reference source not found. either in lieu of or in addition to the arbitration
remedies provided for in this Section Error! Reference source not found..
5.4 Severability. If any portion of this Agreement is held to be invalid
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or unenforceable, such holding will not affect any other portion of this
Agreement.
5.5 Entire Agreement. This Agreement comprises the entire agreement
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between the parties hereto and, as of the Effective Date, supersedes any prior
written or oral agreements between the parties, including, without limitation,
the Employment Agreement in effect between Employee and Fieldcrest Xxxxxx, Inc.
dated as of December 15, 1999. This Agreement may not be modified, renewed or
extended except by a written instrument referring to this Agreement and executed
by the parties hereto.
5.6 Notices. Any notice or consent required or permitted to be given under
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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.
5.7 Withholding Taxes. The Company may withhold from any amounts payable
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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.
5.8 Court Approval. On March 6, 2001, the Bankruptcy Court entered an
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order authorizing the Company to implement the KERP (the "KERP Order"). The
Company warrants that its execution of and performance under this Agreement does
not violate or contradict the KERP Order, 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
PILLOWTEX CORPORATION
By:______________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Operating Officer
EMPLOYEE
_________________________________________________
Xxxxxxx X. Xxxxxxxxxx
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