SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release (the "Agreement") is
entered into as of March 20, 2002, by and between WestPoint Stevens Inc., a
Delaware corporation (the "Company"), and Lanny Bledsoe, an individual resident
of Alabama (the "Executive").
I. STATEMENT OF BACKGROUND INFORMATION
A. Executive has been employed as Senior Vice President of
Manufacturing of the Company.
B. Executive has resigned his position as Senior Vice President
of Manufacturing effective as of March 21, 2002 (the "Effective Date"), and has
accepted a position as Special Assistant to the President for the balance of
calendar year 2002 (the "Interim Period"), at the conclusion of which period
Executive shall retire from the Company.
C. Executive and the Company desire to enter into this Agreement
to establish the terms and conditions of Executive's employment during the
Interim Period, to establish certain post-employment nondisclosure and
noncompetition arrangements with Executive, and to settle fully and finally any
differences between the parties that might arise from Executive's employment
and termination of employment with the Company.
II. STATEMENT OF AGREEMENT
In consideration of the mutual covenants and obligations hereinafter
set forth, the receipt and adequacy of which are expressly acknowledged, the
parties hereto, intending to be legally bound, do hereby agree as follows:
1. Termination of Employment. On the Effective Date, Executive's
new position with the Company shall be Special Assistant to the President.
Executive's employment with the Company shall terminate effective on the 1st
day of January, 2003 (the "Termination Date").
2. Compensation to Executive. In consideration for the general
release and for the covenants contained herein, the Company agrees to pay to
Executive the following amounts, subject to the terms hereof. Except as set
forth in this Agreement, Executive acknowledges that there is no other
compensation, wages, salary, or other amounts due and owing to him from the
Company:
A. Interim Period Compensation. For the Interim Period, the
Company shall pay Executive the following amounts and provide the following
benefits:
i. base salary at a rate equal to Executive's base
salary in effect as of the Effective Date, payable in accordance with the
Company's usual and customary payroll practices;
ii. bonus pay under the Company's Management Incentive
Plan in respect of the Company's 2002 fiscal year if and to the extent that
performance objectives under such plan are attained, such payment, if any, to
occur in February 2003; and
iii. continued participation in each pension, welfare
benefit, and executive compensation program (other than equity-based
compensation programs), in which Executive participated immediately before the
Effective Date on such terms as are available to Company Senior Vice Presidents
generally; and
Choose Alternative A or B:
[X][ALTERNATIVE A] iv. subject to approval by the Compensation Committee of
the Board, an award of 50,000 Deferred Shares to Executive under the Company's
Omnibus Stock Incentive Plan, with the Shares to be delivered on December 31,
2004, subject to the conditions that Executive shall not have voluntarily
terminated employment with the Company prior to the Termination Date and shall
have complied fully with the terms of this Agreement (including the
nondisclosure and noncompetition provisions of Section 6 hereof), and further
subject to such other terms and conditions as the Compensation Committee of the
Company's Board of Directors may specify in a separate Deferred Share Award
Agreement; or
[ ][ALTERNATIVE B] iv. subject to approval by the Compensation Committee of
the Board, an award of 50,000 Restricted Shares to Executive under the
Company's Omnibus Stock Incentive Plan, to be issued within ten (10) business
days following the date that this Agreement becomes effective (as provided in
Section 12 hereof), subject to the conditions that the entirety of such Award
shall be forfeited if Executive shall voluntarily terminate employment with the
Company prior to the Termination Date or shall have failed to comply fully with
the terms of this Agreement (including the nondisclosure and noncompetition
provisions of Section 6 hereof), and further subject to such other terms and
conditions as the Compensation Committee of the Company's Board of Directors
may specify in a separate Restricted Share Award Agreement.
[NOTE: GRANT UNDER IV. MUST BE APPROVED BY COMPENSATION COMMITTEE OF BOARD.]
B. Termination and Post-Termination Compensation. For the period
commencing with the Termination Date, the Company shall pay Executive the
following amounts and provide the following benefits:
-2-
i. upon the Termination Date, Executive shall become
fully vested in all outstanding Company stock options previously awarded to
Executive and shall become fully vested in all previously earned awards under
the Company Key Employee Stock Bonus Plan, and Executive's right to all
unearned shares awarded under such Plan shall expire on the Termination Date;
ii. health plan continuation coverage for Executive's
current spouse consisting of: first, standard coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), with Executive paying the
monthly premium cost applicable to active employees under the Company's group
health plan and the Company paying or imputing taxable income to Executive (or,
in the event of Executive's death, the Executive's spouse) for the difference
between (x) the cost of such coverage charged to COBRA participants under the
Company's group health plan and (y) the cost of such coverage charged to active
employees participating in such plan; and thereafter, standard coverage for a
spouse under the Company's retiree group health plan, for so long as the
Company maintains the retiree group health plan, with Executive paying the
monthly premium cost applicable to active employees under the Company's group
health plan and the Company paying or imputing taxable income to Executive (or,
in the event of Executive's death, the Executive's spouse) for the difference
between (x) the cost of coverage charged to retirees participating in the
Company's retiree group health plan and (y) the cost of coverage charged to
active employees under the Company's group health plan, until the spouse
attains age 65;
iii. subject to Executive's full compliance with the
provisions of Section 6 of this Agreement, annual cash compensation of $100,718
for calendar years 2003 and 2004, payable to Executive (or, in the event of
Executive's death, to his estate) in accordance with the Company's usual and
customary payroll practices; and
iv. benefits under any Company-sponsored pension plans
in which Executive participates in accordance with the terms of such plans.
3. Deductions and Withholding; Expenses. Executive agrees that
the Company may withhold from any and all compensation paid to and required to
be paid to Executive pursuant to this Agreement, all federal, state, local
and/or other taxes which the Company determines are required to be withheld in
accordance with applicable statutes and/or regulations then in effect. For
purposes of this Agreement and calculations hereunder, all such deductions and
withholdings shall be deemed to have been paid to and received by Executive.
4. Release of Company. Except for the obligations of Company
under this Agreement, Executive, for himself, his successors, assigns,
attorneys, and all those entitled to assert his rights, now and forever hereby
releases and discharges Company and its respective officers, directors,
stockholders, trustees, employees, agents, parent corporations, subsidiaries,
affiliates, estates, successors, assigns and attorneys, (the "Released
Parties") from any and all claims, actions, causes of action, sums of money
-3-
due, suits, debts, liens, covenants, contracts, obligations, costs, expenses,
damages, judgments, agreements, promises, demands, claims for attorney's fees
and costs, or liabilities whatsoever, in law or in equity ("Claims"), which
Executive ever had or now has against the Released Parties, including any
Claims arising by reason of or in any way connected with any employment
relationship or Employment Agreement which existed between Company, or any of
its parents, subsidiaries, affiliates, or predecessors, and Executive. It is
understood and agreed that this Agreement is intended to cover all Claims which
may be traced either directly or indirectly to the aforesaid employment
relationship, or the termination of that relationship, that Executive has, had,
or purports to have, from the beginning of time to the present, whether known
or unknown, that now exists, no matter how remotely they may be related to the
aforesaid employment relationship, including, but not limited to, Claims for
employment discrimination under federal or state law; Claims arising under
Title VII of the Civil Rights Act, 42 U.S.C. ss. 2000(e), et seq., the
Americans With Disabilities Act, 42 U.S.C. ss. 12101 et seq. or the Age
Discrimination in Employment Act, 29 U.S.C. ss. 621, et seq.; Claims for
statutory or common law wrongful discharge; Claims for attorney's fees,
expenses and costs; Claims for defamation; Claims for intentional infliction of
emotional distress; Claims for wages or vacation pay; Claims for benefits,
including any Claims arising under the Employee Retirement Income Security Act,
29 U.S.C. ss. 1001, et seq.
Without limiting the generality of the foregoing, Executive agrees
that by executing this Agreement, he has released and waived any and all Claims
he has or may have as of the date of this Agreement under the Age
Discrimination in Employment Act, 29 U.S.C. ss. 621, et seq. It is understood
that Executive is advised to consult with an attorney prior to executing this
Agreement; that he may, before executing this Agreement, consider this
Agreement for a period of twenty-one (21) calendar days; and that he is
receiving consideration for this Agreement to which he was previously not
entitled. It is further understood that this Agreement is not effective until
seven (7) calendar days after the execution of this Agreement and that
Executive may revoke this Agreement within seven (7) calendar days from the
date of execution of this Agreement.
In the event Executive shall breach or attempt to rescind this
Agreement or shall institute an action that would otherwise be subject to this
release after the Effective Date, Executive agrees that he will first return to
the Company all consideration received hereunder and the Company shall be
entitled to all attorneys' fees and costs incurred in defending any Claim that
Executive purports to release in this Agreement.
5. Return of Company Property. As soon as practicable, but in no
event later than five (5) days after the Termination Date, Executive will
return to the Company all property of the Company then in his possession,
including, but not limited to, any automobiles, cellular phones, computers,
printers, Palm Pilots, files, records, customer information, Confidential
Information, Trade Secrets, and any written or electronic information that
might constitute non-public insider information under the Securities and
Exchange Act of 1934. Upon return of all property, Executive shall represent to
the Company that he has no other Company property in his possession.
-4-
6. Restrictions on Conduct of the Executive.
A. General. The Executive and the Company understand
and agree that the purpose of the provisions of this Section 6 is to protect
the legitimate business interests of the Company, including the protection of
Confidential Information and Trade Secrets, and is not intended to impair or
infringe upon the Executive's right to work, earn a living, or acquire and
possess property from the fruits of his labor. The Executive hereby
acknowledges that the post-employment restrictions set forth in this Section 6
are reasonable and that they do not, and will not, unduly impair his ability to
earn a living. Therefore, subject to the limitations of reasonableness imposed
by law, the Executive shall be subject to the restrictions set forth in this
Section 6.
B. Restrictive Covenants.
i. Restriction on Disclosure and Use of
Confidential Information and Trade Secrets. Executive hereby agrees that the
Executive shall not, directly or indirectly, reveal, divulge, or disclose to
any entity any Confidential Information, and the Executive shall not, directly
or indirectly, at any time for a period of two (2) years from the Termination
Date use or make use of any Confidential Information in connection with any
business activity. The Executive shall not directly or indirectly transmit or
disclose any Trade Secret of the Company to any Person, and shall not make use
of any such Trade Secret, directly or indirectly, for himself or for others.
This Agreement is not intended to, and does not alter either the Company's
rights or the Executive's obligations under any state or federal statutory or
common law regarding trade secrets and unfair trade practices.
For purposes of this Agreement, "Confidential Information"
means all information regarding the Company, its activities, business or
clients that is the subject of reasonable efforts by the Company to maintain
its confidentiality and that is not generally disclosed by practice or
authority to persons not employed by the Company, but that does not rise to the
level of a Trade Secret. Confidential Information shall include, but is not
limited to, financial plans and data concerning the Company; management
planning information; business plans; operational methods; market studies;
marketing plans or strategies; product development techniques or plans;
customer lists; details of customer contracts; current and anticipated customer
requirements; past, current and planned research and development; business
acquisition plans; and new personnel acquisition plans. Confidential
Information shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right or privilege of the Company. This definition shall
not limit any definition of "confidential information" or any equivalent term
under state or federal law.
"Trade Secrets" means all information, with regard to form,
including, but not limited to, technical or nontechnical data, a formula, a
pattern, a compilation, a program, a device, a method, a technique, a drawing,
a process, financial data, financial plans, product plans, distribution lists
or a list of actual or potential customers, advertisers or suppliers which is
not commonly known by or available to the public and which
-5-
information: (A) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use; and (B)
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. Without limiting the foregoing, Trade Secret means any
item of Confidential Information that constitutes a "trade secret(s)" under the
common law or statutory law of the State of Georgia.
ii. Noncompetition with the Company. In consideration of
the compensation and benefits being paid and to be paid by the Company to the
Executive hereunder, and in consideration of Executive's former employment with
the Company, Executive hereby agrees that, for a period of two (2) years from
the Termination Date, the Executive will not, without prior written consent of
the Company, directly or indirectly seek or obtain a Competitive Position in
the Restricted Territory with a Competitor. "Competitive Position" means any
employment with a Competitor in which the Executive will use or is likely to
use any Confidential Information or Trade Secrets, or in which the Executive
has duties for such Competitor that are the same or similar to those services
performed by Executive for the Company. "Restricted Territory" means the United
States of America. "Competitor" means any corporation, partnership, joint
venture, limited liability company, association or other entity or enterprise
engaged in the direct sale and marketing to retailers of textile home fashion
products within the same distribution channels and market as the Company.
C. Enforcement of Restrictive Covenants.
i. Rights and Remedies Upon Breach. In the
event the Executive breaches, or threatens to commit a breach of, any of the
provisions of the Restrictive Covenants, the Company shall have (a) the right
and remedy to enjoin the Executive from violating or threatening to violate the
Restrictive Covenants it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company; and (b)
the right and the remedy to cease payment of any continuing compensation that
would otherwise be due to Executive under this Agreement and require repayment
of all cash compensation paid to Executive pursuant to Section 2(B)(iii) of
this Agreement.
ii. Severability of Covenants. The Executive
acknowledges and agrees that the restrictive covenants herein are reasonable
and valid in time and scope and in all other respects. The covenants set forth
in this Agreement shall be considered and construed as separate and independent
covenants. Should any part or provision of any covenant be held invalid, void
or unenforceable in any court of competent jurisdiction, such invalidity,
voidness or unenforceability shall not render invalid, void or unenforceable
any other part or provision of this Agreement. If any portion of the foregoing
provisions is found to be invalid or unenforceable by a court of competent
jurisdiction because its duration, the territory, the definition of activities
or the definition of information covered is considered to be invalid or
unreasonable in scope, the invalid or unreasonable term shall be redefined, or
a new enforceable term provided, such that the
-6-
intent of the Company and the Executive in agreeing to the provisions of this
Agreement will not be impaired and the provision in question shall be
enforceable to the fullest extent of the applicable laws.
7. Confidentiality and Non-Disparagement. Executive and the
Company covenant and warrant that they have not and will not disclose or
publish, verbally, in writing or otherwise, to any person or entity the amount
of consideration passing pursuant to this Agreement, or any other term or
consideration passing pursuant to this Agreement. The parties specifically
except from this limitation the following: as to Executive, his tax advisor(s),
his immediate family, and the Internal Revenue Service; as to the Company, its
attorneys, accountants, directors, and only those employees determined to have
a bona fide need to know the information, in the Company's good faith
determination, as well as any disclosures required by state or Federal law,
including, but not limited to the Securities and Exchange Act of 1934.
Executive and the Company further covenant and warrant that neither will make
any statements or comments of a defamatory or disparaging nature to third
parties, including the Company's customers or potential employers of Executive,
regarding Executive, the Company or its directors, officers, personnel, or
products. Executive further agrees that, should he breach the obligations set
forth in this Paragraph 7, the Company will be entitled to cease payment of all
continuing consideration for the remainder of the term of this Agreement.
Executive further agrees that any breach of this paragraph shall cause
irreparable harm to the Company, and nothing herein shall prohibit the Company
from seeking equitable relief, including an injunction, in the case of a breach
of the terms of this paragraph.
8. Entire Agreement. This Agreement embodies the entire
agreement of the parties and supercedes any prior written or oral Agreement,
including, without limitation, the Employment Agreement between the parties.
This Agreement may not be changed or terminated orally but only by an agreement
in writing signed by the parties hereto.
9. Waiver. The waiver by the Company of a breach of any
provision of this Agreement by the Executive shall not operate or be construed
as a waiver of any subsequent breach by him. The waiver by the Executive of a
breach of any provision of this Agreement by the Company shall not operate or
be construed as a waiver of any subsequent breach by the Company.
10. Governing Law. This Agreement shall be subject to, and
governed by, the internal laws of the State of Georgia, without regard to
choice of law principles.
11. Assignability; Successors. The obligations of Executive may
not be delegated and, Executive may not, without the Company's written consent
thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise
dispose of this Agreement or any interest herein. Any such attempted delegation
or disposition shall be null and void and without effect.
12. Effective Date. This Agreement shall take effect seven (7)
days after it is fully executed by the parties, and Executive shall have the
right to revoke the Agreement
-7-
during that period (the "Revocation Period"); provided, however, that Executive
shall be bound by all restrictive covenants dating from the Termination Date
during the Revocation Period, and any breach of this Agreement by Executive
during that Revocation Period shall be construed as a revocation of this
Agreement.
13. Paragraph Headings. The paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WESTPOINT STEVENS INC.
Dated: 3/21/02 By: /s/ M. L. Fontenot
--------------------- --------------------------------
M.L. Fontenot
President
Dated: March 20, 2002 /s/ Lanny L. Bledsoe
--------------------- -----------------------------------
Lanny Bledsoe
-8-