1
EXHIBIT 10.1.45
PILLOWTEX CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective January 1, 1997)
2
PILLOWTEX CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. Purpose. The purpose of the Supplemental Executive Retirement
Plan is to provide certain executive employees of Pillowtex Corporation and its
subsidiaries with a targeted level of retirement income upon retirement or
other termination of employment.
2. Definitions. The following definitions are used throughout
the Plan.
(a) "Annual Conventional Benefits" means the aggregate
projected annual employer-provided retirement benefit to be paid to the
Participant from the Pension Plan, plus the projected annual Primary Social
Security Benefit of the Participant, each payable as a straight life annuity,
on the assumption that the Participant will remain employed by the Company or a
subsidiary of the Company through the last day of the month in which the
Participant attains age 65.
(b) "Annual Supplemental Benefit Target" has the meaning
as defined in Section 5(a).
(c) "Board of Directors" means the Board of Directors of
the Company.
(d) "Change in Control" means the occurrence of one or
more of the following events, unless the Board has adopted a resolution prior
to or promptly following the occurrence of any such event stipulating,
conditionally, temporarily or otherwise, that any such event will not result in
a change in control of the Company:
(i) 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 the
surviving 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;
(ii) 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 the acquiring 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;
(iii) any person (as the term "person" is used in
Section 13(d) or Section 14(d) of the Exchange Act), other
than an Excluded Person (as hereafter defined), is or becomes
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), directly or indirectly,
of securities of the Company representing 35% or more of the
combined voting power of the Company's then outstanding
securities;
(iv) during any period of 24 consecutive months,
at least a majority of the Board ceases to consist of
individuals who have served continuously on the Board since
the beginning of such 24-month period, unless the election of
directors during such period, or nomination for election by
the Company's shareholders, was approved by a vote of at least
two-thirds of the directors then still in office who will at
that time have served continuously on the Board since the
beginning of such 24-month period; or
(v) the Company has entered into one or more
definitive agreements pursuant to which a transaction
described in paragraph (i) or paragraph (ii) above may occur
and the Board determines that all conditions required to
consummate such a transaction have been fulfilled.
3
Notwithstanding the foregoing provisions, a "Change
in Control" will not be deemed to have occurred for purposes
of this Agreement solely because the Company, a Subsidiary or
any employee benefit plan of the Company either files or
becomes obligated to file a report or proxy statement under or
in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of voting securities of the Company,
whether in excess of 25% or otherwise, or because the Company
reports that a change in control of the Company has or may
have occurred or will or may occur in the future by reason of
such beneficial ownership.
For purposes of this definition, the term "Excluded
Person" means any of Charles M. Hansen, Jr., Mary R.
Silverthorne or the John H. Silverthorne Estate or any person
for which any of Charles M. Hansen, Jr., Mary R. Silverthorne
or the John H. Silverthorne Estate are deemed to hold
beneficial ownership of securities of the Company registered
in the mane of such person.
(e) "Code" means the Internal Revenue Code of 1986, as
amended and in effect from time to time.
(f) "Committee" means the Compensation Committee of the
Board of Directors or any successor committee appointed by the Board of
Directors to administer the Plan.
(g) "Common Stock" means the common stock of the Company,
$0.01 par value, or any security into which such Common Stock may be changed by
reason of any transaction described in Section 11.
(h) "Company" means Pillowtex Corporation, a Texas
corporation. The term "subsidiary of the Company" means any corporation of
which at least 50% of the total combined voting power of all outstanding shares
of stock is owned directly or indirectly by the Company.
(i) "Competitive Median" means the median compensation
for an employee holding a comparable position in firms with comparable sales
(including but not limited to firms within the Company's industry), as
determined by Committee.
(j) "Effective Date" means January 1, 1997.
(k) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(l) "Final Average Compensation" means a Participant's
projected aggregate cash compensation for the five consecutive years of
employment ending with the month the Participant attains age 65, divided by
five, based on the assumption that the Participant will remain employed by the
Company or a subsidiary of the Company through the last day of the month in
which the Participant attains age 65 and such other assumptions as may be
adopted from time to time by the Committee. In no event, however, will a
Participant's compensation in excess of the Competitive Median be taken into
account for any purpose under the Plan. The Competitive Median will be applied
separately to each year's cash compensation, based on the Competitive Median in
effect at the time. The Final Average Compensation for each Participant will
be determined by the Committee from time to time, provided that no
Participant's Final Average Compensation will be reduced below that originally
determined by the Committee upon the Participant's first becoming eligible to
participate in the Plan.
(m) "Lifetime Supplemental Benefit Target" has the
meaning as defined in Section 5(a).
(n) "Market Value per Share" means, at any date, the
closing sale price of the Common Stock on that date (or, if there are no sales
on that date, the last preceding date on which there was a sale) in the
principal market in which the Common Stock is traded.
4
(o) "Participant" means an employee who is eligible to
receive benefits under the Plan. The term "Participant" will include the
beneficiary of a deceased Participant, unless the context clearly requires a
different interpretation.
(p) "Pension Plan" means the Pension Plan for Qualified
Employees of Pillowtex Corporation, as amended from time to time, a defined
benefit pension plan that is sponsored by the Company and is intended to
qualify under Section 401(a) of the Code.
(q) "Phantom Share" means, solely for purposes of
determining the value of a Participant's Supplemental Retirement account, a
hypothetical measurement unit equivalent to one share of Common Stock, subject
to the adjustments described in Section 11.
(r) "Plan" means the Pillowtex Corporation Supplemental
Executive Retirement Plan as set forth herein and as amended from time to time.
(s) "Plan Year" means the calendar year.
(t) "Primary Social Security Benefit" means the primary
social security retirement benefit to which the Participant would be entitled
under the provisions of the Social Security Act.
(u) "Scheduled Annual Accrual" has the meaning as defined
in Section 5(a).
(v) "Subsidiary" means any corporation, partnership,
joint venture or other entity in which the Company owns or controls, directly
or indirectly, 50% or more of the total combined voting power or equity
interest represented by all classes of stock or equity issued by such
corporation, partnership, joint venture or other entity.
(w) "Supplemental Retirement Account" means the account
described in Sections 4 and 5.
3. Eligibility. Each key executive employee of the Company or
any Subsidiary who is designated by the Committee as eligible to participate in
the Plan will be a Participant.
4. Supplemental Retirement Benefit. Upon a Participant's
retirement or other termination of employment with the Company and its
Subsidiaries, the Participant will be entitled to receive a supplemental
retirement benefit equal to the vested balance in the Participant's
Supplemental Retirement Account. The balance of a Participant's Supplemental
Retirement Account as of any date will be equal to the value of the Phantom
Shares accrued to the account, as determined by reference to the Market Value
per Share for the Common Stock on such date (subject to the provisions of
Section 5).
5. Contribution Credits/Accounts. (a) The Supplemental
Retirement Account for each Participant will be credited annually with a
contribution equal to the Participant's Scheduled Annual Accrual. Except as
provided in Section 5(c) below, each Scheduled Annual Accrual will be expressed
as a number of Phantom Shares determined by dividing the amount of the
Scheduled Annual Accrual by the Market Value per Share on the date of such
contribution.
(i) The "Scheduled Annual Accrual" for each
Participant means a dollar amount which, when accrued annually
(compounding at the rate of 12% per year) in equal installments
through the last day of the month in which the Participant attains age
65, would produce a lump sum amount equal to the Participant's
Lifetime Supplemental Benefit Target. For any Plan Year after a
Participant attains age 65 and remains employed by the Company or any
Subsidiary, the Scheduled Annual Accrual will be a flat amount equal
to the weighted average of the Scheduled Annual Accruals credited with
respect to the Participant for the five Plan Years immediately prior
to attainment of age 65.
(ii) The "Lifetime Supplemental Benefit Target"
for each Participant means the net present value (discounted at a rate
of 8% per year), as of the last day of the month in which the
Participant attains age 65, of a stream of straight life annuity
payments equal to the Participant's Annual Supplemental Benefit
5
Target paid annually to the Participant throughout the Participant's
lifetime, as determined by reference to the UP-1984 Unisex Mortality
Table.
(iii) The "Annual Supplemental Benefit Target" for
each Participant means (A) the difference between (1) 50% of the
Participant's Final Average Compensation, and (2) the Participant's
Annual Conventional Benefits, multiplied by (B) a fraction (not to
exceed one), the numerator of which is the number of years of vesting
service that the Participant will have earned under the Pension Plan
if the Participant remains continuously employed by the Company or a
subsidiary of the Company until reaching age 65 (disregarding any
period of service with Beacon Manufacturing Corp., whether or not
taken into account under the Pension Plan) and the denominator of
which is 30.
(b) Except as provided in Section 5(c) below or in
Section 8, each Participant's account will be deemed to be invested solely in
Phantom Shares, and the balance of a Participant's account as of any date will
be determined by multiplying the number of Phantom Shares credited to such
Participant's account at the time of determination by the Market Value per
Share on such date. In the event the Company pays any dividends (other than in
Common Stock) with respect to Common Stock, each Participant's account will be
credited with a number of additional Phantom Shares determined by calculating
the amount of an equivalent dividend on the number of Phantom Shares credited
to the Participant immediately prior to such dividend, and dividing such
hypothetical dividend by the Market Value per Share on the date the dividend
was paid.
(c) In the event of a Change in Control, the balance of
each Participant's account as of the date of the Change in Control will be
determined (based on the number of Phantom Shares credited to such
Participant's account as of such date), and each Participant's account will
thereupon be converted into a hypothetical fixed-income investment earning 12%
per annum (subject to reduction to 8% per annum upon commencement of
installment payments under Section 8), and will no longer be deemed to be
invested in Phantom Shares. In addition, in the event of a Change in Control,
a Participant's Scheduled Annual Accrual will be stated as a dollar amount, and
will no longer be expressed as a number of Phantom Shares.
(d) Scheduled Annual Accruals will be made to the
Participant's account as of a date selected by the Company (but not later than
90 days after the end of the Plan Year for which the contribution is to be
credited) beginning with the Plan Year in which the Participant first becomes
eligible to participate in the Plan and ending with the Plan Year in which the
Participant retires or otherwise terminates employment, whichever occurs first.
For purposes of the foregoing sentence, a Participant who becomes eligible for
benefits under any long term disability plan maintained by the Company or any
subsidiary of the Company will be regarded as having terminated employment nine
months after the onset of the disability that entitles the Participant to
benefits. If a Participant first becomes eligible to participate on a date
other than the first day of the Plan Year or attains age 65, retires or
otherwise terminates employment on a date other than the last day of the Plan
Year, contributions to be credited for such Plan Year will be prorated in the
manner specified by the Committee.
6. Vesting. Subject to the rights of general creditors as set
forth in Section 10 and the right of the Company to discontinue the Plan as
provided in Section 13, a Participant will be vested in his Supplemental
Retirement Account to the same extent that he has a vested interest in his
employer-provided benefit under the Pension Plan. If required under the terms
of a Participant's employment contract with the Company or any subsidiary of
the Company, the Participant will be given credit for additional years of
service for purposes of vesting under this Plan (but not for purposes of
calculating the amount of a Participant's supplemental retirement benefit under
the Plan). Notwithstanding the foregoing, a Participant will become fully
vested in his Supplemental Retirement Account upon a Change in Control. In
addition, a Participant will be fully vested if he becomes eligible for
benefits under any long term disability plan maintained by the Company or any
subsidiary of the Company.
6
7. Commencement of Benefits. Payment of a Participant's vested
interest in his Supplemental Retirement Account will be made or will begin on
the first day of the month following the month in which the Participant retires
or otherwise terminates employment.
8. Form of Benefits. A Participant's vested Supplemental
Retirement Account balance will be paid in a single lump sum cash payment,
unless the Participant elects, at least six months prior to the date his
Supplemental Retirement Account is scheduled to be paid, in accordance with
procedures established by the Committee to receive his vested Supplemental
Retirement Account balance in annual, quarterly or monthly cash installments
over a period not greater than fifteen years (or in a combination of a lump sum
and such installments). The amount of each installment payment will be equal
to the quotient obtained by dividing the Participant's account balance as of
the date of such installment payment by the number of installment payments
remaining to be made to or on behalf of such Participant at the time of
calculation. If a Participant has elected an installment form of payment, the
Participant's Supplemental Retirement Account balance will be deemed to be
converted into a hypothetical fixed-income investment earning 8% per annum, and
will no longer be deemed to be invested in Phantom Shares.
9. Death Benefits. (a) Upon the death of a Participant who is
receiving a supplemental retirement benefit, the Participant's Supplemental
Retirement Account balance will continue to be paid in accordance with the form
of payment elected by the Participant under Section 8.
(b) If a Participant who is entitled to receive a
supplemental retirement benefit under the Plan dies before payment of such
benefit begins, the Supplemental Retirement Account balance will be paid as a
death benefit to the beneficiary designated by the Participant (who may or may
not be the Participant's spouse) in accordance with procedures established by
the Committee or, in the event the Participant has not designated any
beneficiary, to the Participant's surviving spouse, if any, and if none, to the
Participant's estate. The death benefit payable pursuant to this subsection
(b) will be paid on the first day of the month following the month in which the
Participant dies. The death benefit will be paid to the beneficiary in a
single lump sum payment unless the beneficiary elects, at least six months
prior to the date the benefit is scheduled to be paid, to receive the death
benefit in any other form permitted under Section 8.
10. Benefits are Unfunded. (a) The Plan will be unfunded. All
benefits payable to a Participant under the Plan will be paid from the general
assets of the Company or any subsidiary of the Company that employed the
Participant, and nothing contained in the Plan will require the Company or any
subsidiary of the Company to set aside or hold in trust any funds for the
benefit of a Participant, who will have the status of a general unsecured
creditor with respect to the obligation of the Company to make payments under
the Plan. Any funds of the Company or any subsidiary of the Company available
to pay benefits under the Plan will be subject to the claims of general
creditors of the Company or such subsidiary and may be used for any purpose by
the Company or such subsidiary.
(b) If the supplemental retirement benefit payable to a
Participant under the Plan is attributable to periods of employment with the
Company and/or one or more subsidiaries of the Company, the Committee may
allocate liability for the payment of the benefit among the Company and one or
more subsidiaries in any manner the Committee, in its sole discretion,
determines to be appropriate.
(c) Notwithstanding the provisions of Section 10(a), the
Company may, at the direction, and in the absolute discretion, of the
Committee, transfer to the trustee of one or more trusts established for the
benefit of one or more Participants assets from which all or a portion of the
benefits provided under the Plan will be satisfied, provided that such assets
held in trust will at all times be subject to the claims of general unsecured
creditors of the Company and the subsidiaries of the Company, and no
Participant will at any time have a prior claim to such assets. To the extent
that supplemental retirement benefits under the Plan are paid from any such
trust, the Company and each subsidiary of the Company will be relieved of all
liability for such benefits.
7
11. Certain Adjustments. The Committee will make or provide for
such adjustments in the number of Phantom Shares credited to accounts under the
Plan, the kind of shares covered by Phantom Shares, and/or in the computations
based on Common Stock, the number of shares thereof, or the Market Value per
Share, as the Committee in its sole discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement of the
rights of Participants that otherwise would result from any stock dividend,
stock split, combination of shares, recapitalization or other change in the
capital structure of the Company, merger, consolidation, issuance of rights or
warrants to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing.
12. Administration of the Plan. (a) The Committee will
administer the Plan and will have the full authority and discretion to
accomplish that purpose, including without limitation, the authority and
discretion to (i) interpret the Plan and correct any defect, supply any
omission or reconcile any inconsistency or ambiguity in the Plan in the manner
and to the extent that the Committee deems desirable to carry the purpose of
the Plan, (ii) resolve all questions relating to the eligibility of employees
to become Participants, (iii) determine the amount of benefits payable to
Participants and authorize and direct the Company with respect to the payment
of benefits under the Plan, (iv) make all other determinations and resolve all
questions of fact necessary or advisable for the administration of the Plan,
and (v) make, amend and rescind such rules as it deems necessary for the proper
administration of the Plan. The Committee will keep a written record of its
action and proceedings regarding the Plan and all dates, records and documents
relating to its administration of the Plan.
(b) In determining the amount of a Participant's
supplemental retirement benefit (including the amount of the Scheduled Annual
Accrual, Lifetime Supplemental Benefit Target, and Annual Supplemental Benefit
Target), the Committee will adopt, with the advice of actuaries or such other
consultants as it may select, such assumptions as in its sole discretion it
determines to be necessary, desirable or appropriate as to interest rates,
mortality, rates of inflation, increases in Participant compensation,
Competitive Median compensation, Primary Social Security Benefits, and any
other matter that the Committee deems relevant in making the calculations
required under the Plan. The Committee may revise any such assumptions from
time to time to the extent that the Committee deems necessary, desirable or
appropriate, and any such revised assumptions will be taken into account in
determining the amount of future Scheduled Annual Accruals required to provide
a Participant's supplement retirement benefit under the Plan.
(c) Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control the Committee may not adopt
or revise any assumption or other factor that would adversely affect the
existing or future benefit of any Participant without such Participant's
written consent (including but not limited to a reduction in the dollar value
of the Scheduled Annual Accrual to be credited with respect to such Participant
on or after the Change in Control, determined by reference to the most recent
Scheduled Annual Accrual credited prior to the Change in Control).
(d) Any action taken or determination made by the
Committee will, except as otherwise provided in Section 13 below, be conclusive
on all parties. No member of the Committee will vote on any matter relating
specifically to such member. In the event that a majority of the members of
the Committee will be specifically affected by any action proposed to be taken
(as opposed to being affected in the same manner as each other Participant in
the Plan), such action will be taken by the Board of Directors.
13. Claims Procedure. (a) If a Participant does not receive the
benefits which he believes he is entitled to receive under the Plan, he may
file a claim for benefits with the Committee. All claims will be made in
writing and will be signed by the claimant. If the claimant does not furnish
sufficient information to determine the validity of the claim, the Committee
will indicate to the claimant any additional information which is required.
(b) Each claim will be approved or disapproved by the
Committee within 90 days following the receipt of the information necessary to
process the claim. In the event the Committee denies a claim for benefits
8
in whole or in part, the Committee will notify the claimant in writing of the
denial of the claim. Such notice by the Committee will also set forth, in a
manner calculated to be understood by the claimant, the specific reason for
such denial, the specific Plan provisions on which the denial is based, a
description of any additional material or information necessary to perfect the
claim with an explanation of why such material or information is necessary, and
an explanation of the Plan's claim review procedure as set forth below. If no
action is taken by the Committee on a claim within 90 days, the claim will be
deemed to be denied for purposes of the review procedure.
(c) A claimant may appeal a denial of his claim by
requesting a review of the decision by the Committee or a person designated by
the Committee, which person will be a named fiduciary under Section 402(a)(2)
of ERISA for purposes of this Section. An appeal must be submitted in writing
within six months after the denial and must (i) request a review of the claim
for benefits under the Plan, (ii) set forth all of the grounds upon which the
claimant's request for review is based and any facts in support thereof, and
(iii) set forth any issues or comments which the claimant deems pertinent to
the appeal. The Committee or the named fiduciary designated by the Committee
will make a full and fair review of each appeal and any written materials
submitted in connection with the appeal. The Committee or the named fiduciary
designated by the Committee will act upon each appeal within 60 days after
receipt thereof unless special circumstances require an extension of the time
for processing, in which case a decision will be rendered as soon as possible
but not later than 120 days after the appeal is received. The claimant will be
given the opportunity to review pertinent documents or materials upon
submission of a written request to the Committee or named fiduciary, provided
the Committee or named fiduciary finds the requested documents or materials are
pertinent to the appeal. On the basis of its review, the Committee or named
fiduciary will make an independent determination of the claimant's eligibility
for benefits under the Plan. The decision of the Committee or named fiduciary
on any claim for benefits will be final and conclusive upon all parties
thereto. In the event the Committee or named fiduciary denies an appeal in
whole or in part, it will give written notice of the decision to the claimant,
which notice will set forth in a manner calculated to be understood by the
claimant the specific reasons for such denial and which will make specific
reference to the pertinent Plan provisions on which the decision was based.
14. Amendment or Termination. (a) Except as provided in
paragraph (b) of this Section, the Plan may be amended at any time by the
Committee. The Plan may also be amended or terminated by the Board of
Directors at any time. Any amendment adopted by the Committee or the Board may
reduce prospectively the earnings factor to be applied to a Participant's
account established under the Plan, or may change the hypothetical investment
of account balances from Phantom Shares to any other hypothetical investment.
However, no action taken by the Committee or by the Board of Directors to amend
or terminate the Plan will have the effect of decreasing a Participant's
account balance as of the date of such action.
(b) Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control the Plan may not be amended
with respect to any Participant in any manner that would adversely affect such
Participant's existing or future benefit under the Plan without such
Participant's written consent, including but not limited to (i) an amendment to
the targeted benefit formula for any period on or after the Change in Control,
or (ii) an amendment that would cause a reduction in the dollar value of the
Scheduled Annual Accrual to be credited with respect to such Participant on or
after the Change in Control, determined by reference to the most recent
Scheduled Annual Accrual credited prior to the Change in Control.
15. Miscellaneous. (a) Nothing in the Plan will confer upon a
Participant the right to continue in the employ of the Company or any
subsidiary of the Company or will limit or restrict the right of the Company or
any subsidiary of the Company to terminate the employment of a Participant at
any time with or without cause.
(b) Notwithstanding any provision of the Plan which is
expressed in terms of targeted benefits, projected annual benefits or actuarial
calculations, each Participant's actual benefit under the Plan as of any date
will consist solely of the vested balance of the Participant's Supplemental
Retirement Account.
9
(c) Except as otherwise provided in the Plan, no right or
benefit under the Plan will be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge such right or benefit will
be void. No such right or benefit will in any manner be liable for or subject
to the debts, liabilities or torts of a Participant.
(d) The Plan is intended to provide benefits for
"management or highly compensated" employees within the meaning of Sections
201, 301 and 401 of ERISA, and therefore to be exempt from the provisions of
Parts 2, 3 and 4 of Title I of ERISA. Accordingly, the Plan will terminate and
no further benefits will accrue hereunder in the event it is determined by a
court of competent jurisdiction or by an opinion of counsel that the Plan
constitutes an employee pension benefit plan within the meaning of Section 3(2)
of ERISA, which is not so exempt. In addition, in the absolute discretion of
the Committee, the benefit of each Participant accrued under such balance of
the Plan on the date of termination will be paid immediately to such
Participant in a single lump sum cash payment.
(e) If any provision in the Plan is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions will nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(f) THE PLAN WILL BE CONSTRUED AND GOVERNED IN ALL
RESPECTS IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND, TO THE EXTENT NOT
PREEMPTED BY SUCH FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
Executed at Dallas, Texas, this ___ day of _________, 1997.
PILLOWTEX CORPORATION
By