Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 24th day of May, 2002 (but effective as
of the date set forth in Section 1.11), is entered into by and between Pillowtex
Corporation, a Delaware corporation (the "Company"), and Anthony Williams
("Employee").
WHEREAS, the Company and Employee have previously entered into that
certain Employment Agreement, dated as of April 1, 2001 (the "Prior Agreement");
and
WHEREAS, the Company is a debtor in a bankruptcy case (the "Bankruptcy
Proceedings") under Chapter 11 of the United States Bankruptcy Code, Case Number
00-4211(SLR), pending in the United States Bankruptcy Court for the District of
Delaware (the "Court"); and
WHEREAS, the Company has previously implemented the KERP (as defined
below) pursuant to an order Authorizing Debtors and Debtors in Possession to
Implement Key Employee Retention Program and Severance Plan issued by the Court
on March 6, 2001 (the "Order"); and
WHEREAS, the Company and Employee desire to provide for certain rights
and responsibilities of each party in connection with the future employment of
the Employee including certain rights of the parties in the event of a possible
change in control of the Company; and, the parties desire that this Agreement
will supercede the Prior Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:
ARTICLE 1
DEFINITIONS
The following terms will have the respective meanings set forth below,
unless the context clearly otherwise requires:
1.1 "Affiliate" shall mean, with respect to the Company, any person or
entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Company.
1.2 "Bankruptcy Proceeding" shall have the meaning ascribed to such
term in the second premise of this Agreement.
1.3 "Board" shall mean the Board of Directors of the Company.
1.4 "Cause" shall mean the occurrence of any of the following: (a)
Employee engaging in any personal misconduct involving willful dishonesty,
illegality, or moral turpitude that is detrimental or injurious to the business
interests, reputation or goodwill of the Company or its Affiliates; (b) Employee
engaging in any act involving willful dishonesty, disloyalty, or
infidelity against the Company or its Affiliates; (c) an act of fraud,
embezzlement or theft in connection with the Employee's duties or in the course
of his employment with the Company; (d) Employee's breach of or failure
substantially to perform under any of the material terms and covenants of this
Agreement; or (e) the death, disability or retirement of Employee. For purposes
of this Section 1.4, no act, or failure to act, on Employee's part will be
considered "willful" unless done, or omitted to be done, by Employee without
reasonable belief that Employee's action or omission was in the best interest of
the Company. Prior to asserting any action or failure to act as Cause for
Employee's termination as set forth above, the Company will provide Employee a
written notice referencing this Section 1.4, setting out with specificity the
conduct asserted to constitute Cause and, if the conduct asserted to constitute
Cause is described in clause (d) of the first sentence of this Section 1.4,
providing Employee with a reasonable opportunity of not less than ten (10) days
to cure or cease and desist such conduct; provided, however, Employee will not
be provided any opportunity to cure such conduct more than twice while this
Agreement is in effect.
1.5 "Change in Control" shall mean (a) the acquisition by an
individual, entity or person (as the term "person" is used in Section 13(d)(3)
or any successor rule or regulation promulgated under the Exchange Act) of
beneficial ownership (as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of a
majority of the outstanding Voting Stock; or (b) the sale of substantially all
of the Company's assets or a merger or sale of stock wherein the holders of the
Company's Voting Stock immediately prior to such sale do not hold at least a
majority of the outstanding Voting Stock of the Company or its successor
immediately following such sale; or (c) the Company files a report or proxy
statement with the Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K, Schedule 14A or Schedule 14C (or any
successor schedule, form or report or item therein) that a change in control of
the Company has occurred.
Notwithstanding the foregoing provisions of Section 1.5 hereof, a
"Change in Control" shall not be deemed to have occurred for purposes of this
Agreement solely because the Company, a corporation or other legal entity in
which the Company directly or indirectly beneficially owns 100% of the voting
securities of such entity, or any employee stock ownership plan or any other
employee benefit plan of the Company or any wholly-owned subsidiary of the
Company, either files or becomes obligated to file a report or a proxy statement
under or in response to Schedule 13D, Schedule 14D-1, Form 8-K, Schedule 14A or
Schedule 14C (or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares of Voting
Stock, because the Company reports that a change in control of the Company has
occurred by reason of such beneficial ownership or because the Company, a
corporation or other legal entity in which the Company directly or indirectly
beneficially owns 100% of the voting securities of such entity, or any employee
stock ownership plan or any other employee benefit plan of the Company or any
wholly-owned subsidiary of the Company becomes (subsequent to the Effective
Date) the beneficial owner, directly or indirectly, of a majority of the Voting
Stock.
Notwithstanding the foregoing provisions of this Section 1.5, (i) a
Change in Control described in this Section 1.5 will not occur by reason of the
consummation of the transactions contemplated by the confirmation by the
Bankruptcy Court of a plan of reorganization with
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respect to the Company pursuant to which the Company emerges from bankruptcy;
and (ii) a merger (including, for example, and not by way of limitation, a
reincorporation of the Company in another jurisdiction), consolidation or
reorganization of the Company effected in connection with the confirmation of
such plan of reorganization will not be a Change in Control described in Section
1.5.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.7 "Company" shall have the meaning ascribed to such term in the
first paragraph of this Agreem
1.8 "Confidential Information" shall mean any and all technical and
non-technical information disclosed by the Company pursuant to or in
contemplation of this Agreement, including Trade Secrets and proprietary
information, techniques, sketches, drawings, models, inventions, know-how,
processes, apparatus, equipment, algorithms, software programs, software source
documents and formulae related to the current, future and proposed products and
services of the Company and/or the Company's parents, subsidiaries, customers
and/or vendors, whether delivered in written (or other tangible) form, and
includes, without limitation, information concerning design details and
specifications, financial data, procurement requirements, customer lists,
business forecasts and purchasing, manufacturing, sales, merchandising,
development, engineering and marketing plans. Without limiting the generality of
the foregoing, the term "Confidential Information" will also be deemed to
include all analyses, compilations, forecasts, studies or other documents
prepared by Employee in connection with the performance by Employee of
Employee's duties pursuant to this Agreement.
1.9 "Court" shall have the meaning ascribed to such term in the second
premise of this Agreement.
1.10 "Disability" shall mean a physical or mental disability which
renders the Employee substantially incapable of performing his duties under this
Agreement, as determined by an independent physician selected by the Company and
agreed to by the Employee, and which disability has existed for (a) at least 13
consecutive weeks, or (b) 120 days in any twelve- month period.
1.11 "Effective Date" shall have the meaning ascribed to such term in
the Second Amended Joint Plan of Reorganization of Pillowtex Corporation, a
Texas corporation, and its Debtor Subsidiaries.
1.12 "Employee" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
1.13 "Employee Benefits" shall mean all employee retirement income and
welfare benefit policies, plans, programs or arrangements in which senior
executives of the Company participate generally, including, without limitation,
any stock option, restricted stock, stock purchase, stock appreciation, savings,
pension, supplemental executive retirement or other retirement income or welfare
benefit, deferred compensation, incentive compensation, group and/or executive
life, accident, health, dental, medical/hospital or other insurance (whether
funded by actual insurance or self-funded by the Company), disability, salary
continuation,
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expense reimbursement and other employee benefit policies, plans, programs or
arrangements that may exist immediately prior to the termination of Employee's
employment or any equivalent successor policies, plans, programs or arrangements
that may be adopted thereafter by the Company.
1.14 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor to thereto.
1.15 "Good Reason" means the termination of Employee's employment by
Employee upon the occurrence of any of the following, without the Employee's
prior written consent:
(a) a significant reduction or diminution in the nature or scope
of the authorities, title, powers, functions, responsibilities or duties
attached to the position(s) with the Company which the Employee holds as of the
date hereof (other than in connection with a person other than Employee being
elected or appointed Chief Executive Officer of the Company);
(b) the failure to elect or reelect the Employee to the office(s)
of the Company which the Employee holds as of the date hereof (other than in
connection with a person other than Employee being elected or appointed Chief
Executive Officer of the Company);
(c) any reduction by the Company in Employee's Base Salary as in
effect on the date hereof or as may be increased from time to time, or the
termination or reduction of Employee's rights to any Employee Benefits required
under this Agreement or in effect for all senior executives, as in effect on the
date hereof or as such may be increased from time to time (other than a
termination of Employee Benefits which affects all senior executive officers of
the Company in the same manner);
(d) a decision, action or requirement by the Company to relocate
the Employee more than 50 miles from the Company's offices in Kannapolis, North
Carolina; or
(e) a person other than Employee is elected or appointed Chief
Executive Officer of the Company and Employee continues his employment with the
Company for a period of nine (9) months following such election or appointment;
provided, however, Employee will not be required to fulfill this nine (9) month
requirement if he otherwise has Good Reason to terminate employment (as set
forth in 1.15(a)-(d) above) or is terminated by the Company without Cause.
1.16 "KERP" shall mean that certain Key Employee Retention Program and
Severance Plan, as approved by the Order and attached hereto as Exhibit 1.16,
which consists of (a) a retention incentive plan, (b) an emergence bonus plan
and (c) a severance plan.
1.17 "Order" shall have the meaning ascribed to such term in the third
premise of this Agreement.
1.18 "Noncompetition Period" shall mean the period of Employee's
employment and a period of (a) with respect to Westpoint Stevens, Inc., Springs
Industries, Inc. and/or Dan River Inc. or their respective Affiliates, two and
one-half (2.5) years following termination of
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Employee's employment with the Company or (b) with respect to all other
companies, one (1) year following termination of Employee's employment with the
Company.
1.19 "Post-Employment Payment" shall have the meaning ascribed to such
term in Section 3.1.
1.20 "Prior Agreement" shall have the meaning ascribed to such term in
the first premise of this Agreement.
1.21 "Protected Area" shall mean (a) the United States, (b) Canada, (c)
Mexico, (d) the states of the United States and adjoining or east of the
Mississippi River, and (c) North Carolina.
1.22 Omitted.
1.23 "Trade Secrets" shall mean proprietary and confidential
information of the Company or any Affiliate consisting of, but not limited to,
financial statements, processes, computer programs, compilations of information,
records, sales procedures, customer requirements, pricing techniques, customer
lists, methods of doing business and other confidential information used in the
operation of their businesses, that (a) the Company and its Affiliates have
taken steps to keep secret and (b) is not generally known to others and (c)
gives the Company a competitive business advantage. If any Trade Secret is found
by an arbitrator or a court of competent jurisdiction to not be a Trade Secret
for the purposes of this Agreement, such information will in any event be
considered Confidential Information for purposes of this Agreement.
1.24 "Termination Date" shall have the meaning ascribed to such term in
Section 3.1(a).
1.25 "Voting Stock" shall mean any outstanding securities entitled to
vote generally in the election of directors of the Company.
ARTICLE 2
Employment, Compensation and Duties
2.1 Employment. Subject to the terms of this Agreement, the Company
agrees to employ Employee as its President and Chief Operating Officer with
duties as set forth in Section 2.3. The initial term (the "Term") of this
Agreement shall be two (2) years and, unless the Company provides Employee with
written notice of its intention to renew this Agreement at least 180 days prior
to the expiration of the Term, this Agreement shall expire at the end of such
period. If the Company provides Employee with written notice of its intention to
renew this Agreement and the Employee has not furnished notice of termination to
the Company at least 180 days prior to the expiration of the Term, the Term
shall be extended for an additional two (2) year period on the same terms set
forth herein. Any decision to not renew this Agreement shall not constitute
termination without Cause or termination for Good Reason. Employee will report
to the Chief Executive Officer of the Company or, in the absence or disability
of the Chief Executive Officer, to the Board. Employee's principal place of work
will be at the Company's offices in Kannapolis, North Carolina.
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2.2 Compensation. Employee's annual base salary (the "Base Salary")
will be $400,000 payable in accordance with the Company's customary payroll
practices and subject to such increases as may be determined from time to time
thereafter by the Board or the Compensation Committee thereof in its sole
discretion. During each year of this Agreement, Employee shall be eligible for
an annual performance bonus to be determined by the Compensation Committee of
the Board.
2.3 Duties. Employee will perform the customary duties of his position
as President and Chief Operating Officer, including, without limitation, the
duties described in Exhibit A attached hereto and incorporated herein by
reference, plus such other duties, consistent with his position, as may
reasonably be assigned to him from time to time by the Board or the Chief
Executive Officer.
ARTICLE 3
BENEFITS
3.1 Post-Employment Benefits.
(a) If, during the Term, Employee is terminated by the Company
without Cause or the Employee terminates his employment with the Company for
Good Reason (within four (4) months following the occurrence of the event
constituting Good Reason, other than as described in Section 1.15(e)), the
Company shall pay to the Employee the amount specified below in Section
3.1(a)(i) within fifteen (15) business days after the date the Employee's
employment is terminated (the "Termination Date"):
(i) In lieu of any further payments to the Employee for
periods subsequent to the Termination Date, but without affecting the
rights of the Employee referred to in Section 3.1(b) hereof, a lump sum
payment (the "Post-Employment Payment"), less any withholdings required
by applicable law, in an amount equal to the sum of (i) all earned and
accrued but unpaid Base Salary, bonus payments and vacation pay, and
(ii) two and one-half (2.5) times the Employee's Base Salary and
bonuses paid during the preceding twelve months.
(ii) Upon written notice given by the Employee to the Company
prior to the receipt of any payment pursuant to Section 3.1(a)(i)
hereof, the Employee, at Employee's sole option, may elect to have all
or any of the Post-Employment Payment paid to the Employee on a
quarterly or monthly basis during the time period specified in such
written notice.
(b) In addition to all other compensation due to the Employee, if,
during the Term, Employee is terminated by the Company without Cause or the
Employee terminates his employment with the Company for Good Reason (within four
(4) months following the occurrence of the event constituting Good Reason, other
than as described in Section 1.15(e)):
(i) Any Company stock options held by the Employee that have
not previously terminated or been exercised shall be deemed vested and
exercisable, regardless of whether or not the vesting/performance
conditions set forth in the relevant agreements shall have been
satisfied;
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(ii) All restrictions on any restricted securities granted by
the Company to the Employee that have not previously been forfeited
shall be removed and the securities shall be fully vested and freely
transferable without restrictions (unless otherwise restricted pursuant
to applicable securities laws), regardless of whether the
vesting/performance conditions set forth in the relevant agreements
shall have been satisfied;
(iii) For a period of two (2) years following the Termination
Date, the Company shall arrange to provide the Employee with the car
allowance as set forth in Section 3.4, club dues as set forth in
Section 3.6, and Employee Benefits (other than any stock option, stock
purchase, stock appreciation, savings, pension, supplemental retirement
or other retirement plan of the Company, or any other equity incentive
policy, plan, program or arrangement of the Company), substantially
similar to those which the Employee was receiving or entitled to
receive immediately prior to the Termination Date (and if and to the
extent that such benefits shall not or cannot be paid or provided under
any policy, plan, program or arrangement of the Company solely due to
the fact that the Employee is no longer an officer or employee of the
Company, then the Company shall itself pay to the Employee and/or the
Employee's dependents and beneficiaries, the full cost of such Employee
Benefits). Any Employee Benefits payable to the Employee pursuant to
this Section 3.1(b)(iii) by reason of any "welfare benefit plan" of the
Company (as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended) shall be reduced to the extent
comparable welfare benefits are available to the Employee from another
employer during such two (2) year period.
(c) The Company and Employee acknowledge and agree that the
termination of Employee's employment with the Company might, but for the
provisions of this Section 3.1(c), be deemed to vest rights to payments and/or
benefits pursuant to the terms of both this Agreement and the KERP. Employee
further acknowledges and agrees that it is not the intent of the parties that
termination of Employee's employment with the Company will entitle Employee to
payments and/or benefits pursuant to both this Agreement and the severance
provisions of the KERP (as described on pages 10-12 of the KERP, the "KERP
Severance Provisions"). Accordingly, in the event Employee's employment with the
Company is terminated and such termination would, but for this Section 3.1(c),
entitle Employee to payments and/or benefits pursuant to both this Agreement and
the KERP Severance Provisions, Employee must elect (in writing within five (5)
days of the termination of Employee's employment) whether to receive payments
and benefits pursuant to this Agreement or pursuant to the KERP Severance
Provisions; provided, however, under no circumstances shall the termination of
Employee's employment with the Company prevent Employee from receiving his
retention bonuses and/or his emergence performance bonuses as such are described
in the KERP and earned by the Employee. Under no circumstances will the
termination of Employee's employment with the Company entitle Employee to
receive post-employment payments pursuant to both this Agreement and pursuant to
the KERP. In the event of any inconsistency between the provisions of this
Section 3.1(c) and the KERP, the provisions of this Section 3.1(c) will control.
(d) Death or Disability. If the Employee's employment is terminated
by reason of his Disability, the Employee shall continue to receive his then
current annual Base Salary and all Employee Benefits for six (6) months after
his termination for such Disability, and
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such payments will be in addition to any insurance payments the Employee is
entitled to receive. If the Employee's employment is terminated by reason of the
Employee's death, the Company agrees to pay to the legal representative of his
estate, (i) for a period of six (6) months after the date of death an amount
equal to and payable at the same rate as his then current annual Base Salary,
and (ii) any payment the Employee's beneficiaries may be entitled to receive
pursuant to any Employee Benefits then maintained by the Company. In the event
of death or Disability, the estate or the Employee, as the case may be, will
have the right to receive all earned and accrued but unpaid Base Salary, bonus
and vacation payments.
(e) Excise Tax.
(i) If Employee becomes entitled to one or more payments (with
a "payment" including, without limitation, the vesting of an option,
removal of restrictions on restricted stock or any other non-cash
benefit or property), whether pursuant to the terms of this Agreement
or any other plan, arrangement, or agreement with the Company or its
Affiliates (the "Total Payments"), which are or become subject to the
tax imposed by Section 4999 of the Code (the "Excise Tax"), the Company
will pay to Employee, at the time specified below, an additional amount
(the "Gross-Up Payment") equal to the lesser of: (i) $300,000 or (ii)
the sum of the Excise Tax attributable to the Total Payments and the
Gross-Up Tax Burden. For purposes of this Agreement, "Gross-Up Tax
Burden" means an amount equal to the Excise Tax attributable to the
Total Payments multiplied by the sum of (w) the highest marginal rate
of United States federal income taxation applicable to an individual in
the calendar year in which the Gross-Up Payment is to be made, as
adjusted downward to reflect the reduction in such federal income tax
rate obtained from the deduction of state and local income taxes as
determined in (y) below, (x) the medicare tax rate applicable to
Employee in the calendar year in which the Gross-Up Payment is to be
made, (y) the highest marginal rate of state and local income taxation
in the state and locality of Employee's residence on the date the
Excise Tax is determined, and (z) the Excise Tax rate in the calendar
year in which the Gross-Up Payment is to be made. For purposes of
determining whether any of the Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax: (A) the Total Payments
will be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code will be treated as subject to
the Excise Tax, unless, and except to the extent that, in the written
opinion of independent compensation consultant or auditors of
nationally recognized standing ("Independent Advisors") selected by the
Company and reasonably acceptable to Employee, the Total Payments (in
whole or in part) do not constitute parachute payments, excess
parachute payments or are otherwise not subject to the Excise Tax; (B)
the amount of the Total Payments which will be treated as subject to
the Excise Tax will be equal to the lesser of (i) the total amount of
the Total Payments, or (ii) the total amount of excess parachute
payments with the meaning of Section 280G(b)(1) of the Code (after
applying clause (A) above); and (C) the value of any non-cash benefits
or any deferred payment or benefit will be determined by the
Independent Advisors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code and the applicable Treasury Regulations.
If the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder at the time the Gross-Up Payment is made,
Employee will repay to the Company, at the time that the amount
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of such reduction in Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction (plus that portion
of the Gross-Up Payment attributable to the Gross Up Tax Burden imposed
on the Gross-Up Payment being repaid by Employee to the extent that
such repayment results in a reduction in the Gross UpTax Burden) plus
interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. If the Excise Tax is determined to
exceed the amount taken into account hereunder at the time the Gross-Up
Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company will make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions
payable by Employee with respect to such excess) at the time that the
amount of such excess is finally determined, provided, however, such
additional Gross-Up Payment (plus interest, penalties or additions
payable by Employee with respect to such excess) shall not exceed an
amount equal to $300,000 less the amount of the original Gross-Up
Payment. Employee and the Company will each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments. The Gross-up Payment provided for above
will be paid on the 30th day (or such earlier date as the Excise Tax
becomes due and payable to the taxing authorities) after it has been
determined that the Total Payments (or any portion thereof ) are
subject to the Excise Tax, but in no event later than 60 days following
termination of employment of Employee.
(ii) In the event Employee would be entitled to Total Payments
which would be subject to the Excise Tax, Employee May, at his option,
elect to reduce the Total Payments he would receive to such an amount
as would not be subject to the Excise Tax. To exercise this option,
Employee must provide written notice (the "Cap Notice") to the Company
of such election within ten (10) business days of the Termination Date
and such Cap Notice must specify the manner and amount in which
Employee elects to reduce the Total Payments. Upon receipt of the Cap
Notice by the Company, Employee's election will be considered
irrevocable and the Company shall have no liability whatsoever for
complying with Employee's instructions contained in the Cap Notice.
3.2 Stock Options and Restricted Stock. Employee will be eligible to
participate in any stock option plan and restricted stock plan adopted by the
Company and made available generally to its senior executives. Employee shall
receive at a minimum those shares allocated to Employee on page 56 of that
certain Second Amended Joint Plan of Reorganization of Pillowtex Corporation, a
Texas corporation, and its Debtor Subsidiaries.
3.3 Vacation. Employee will be entitled to paid vacation in accordance
with Company policy in effect from time to time for senior executive officers of
the Company, or if greater, four weeks' vacation.
3.4 Auto Expense. The Company will pay the Employee $1,000 per month as
his automobile allowance, plus an additional amount equal to any taxes incurred
by Employee for such automobile allowance.
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3.5 Term Life Insurance. The Company will provide Employee with a
$500,000 term life insurance policy.
3.6 Club Membership. Unless such an initiation fee has previously been
paid by the Company on behalf of Employee, the Company will reimburse Employee
for the initiation fee of one country club membership within 50 miles of his
home or Company office, as mutually agreed, in an amount not to exceed $25,000,
and the Company will reimburse Employee for club dues and other charges
incidental to membership. All country club expenses incurred by Employee that
are related to Company business will be reimbursed in accordance with the
Company's customary expense reimbursement policy.
ARTICLE 4
CERTAIN OBLIGATIONS OF EMPLOYEE
4.1 Trade Secrets. During the term of Employee's employment, the
Company will provide Employee access to, and Employee will have access to and
become familiar with, various Trade Secrets. Employee will not use in any way or
disclose any of the Trade Secrets, directly or indirectly, either during the
term of Employee's employment or at any time thereafter, except as required in
the course of Employee's employment with the Company. Employee agrees that upon
Employee's receipt of any subpoena, process or other request to produce or
divulge, directly or indirectly, any Trade Secrets to any entity, agency,
tribunal or person, Employee will, prior to any such disclosure, notify and
deliver a copy of the subpoena, process or other request to the Company. The
obligations of non-disclosure of Trade Secrets will not apply to any Trade
Secret which Employee can demonstrate any of the following: (i) is or becomes
available to the public through no breach of this Agreement; (ii) was previously
learned by Employee from a source other than the Company or an agent of the
Company without any obligation to hold it in confidence; (iii) is received from
a third party free to disclose such information without restriction; (iv) is
independently developed by Employee without the use of or reference to the Trade
Secret; or (v) is approved for release by written authorization of the Company,
but only to the extent of such authorization. Disclosure of Trade Secrets in
response to a valid order of a court or other governmental body will not be
deemed to be a breach of this Agreement.
4.2 No Removal of Records and Return of Property. All files, records,
documents, information, data and similar items relating to the business of the
Company and its Affiliates, whether prepared by Employee or otherwise coming
into Employee's possession, will remain the exclusive property of the Company
and its Affiliates and will not be removed from the premises of the Company and
its Affiliates under any circumstances without the prior written consent of the
Chief Executive Officer or President of the Company (except in the ordinary
course of business during Employee's period of employment), and in any event
will be promptly delivered to the Company upon termination of Employee's
employment with the Company and its Affiliates. Employee agrees that, upon
termination of Employee's employment with the Company and its Affiliates for any
reason, Employee will return to the Company, in good condition (reasonable wear
and tear excepted), all property of the Company, including without limitation,
the originals and all copies of all management, training, marketing and selling
manuals; promotional materials; other training and instructional materials;
financial information; vendor, owner, manager and product information; customer
lists; other customer information; and all other selling, service and trade
information and equipment. If such items are not
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returned, the Company will have the right to charge Employee for all reasonable
damages, costs, attorneys' fees and other expenses incurred in searching for,
taking, removing and/or recovering such property, and Employee hereby authorizes
Company to deduct any such amounts from any sum due from Company to Employee
under this Agreement, consistent with applicable law. In the event of a dispute
between Employee and the Company regarding the amount of any such deductions,
the parties agree to submit such dispute to arbitration in accordance with
Section 5.4.
4.3 Noncompetition. Employee acknowledges and agrees that by virtue of
Employee's position with the Company, Employee will be exposed to the Company's
valuable Trade Secrets and Confidential Information and will have access to the
Company's customers and suppliers at the highest level and that, if used in
competition with the Company, such contacts and information would enable
Employee to irreparably injure the Company and its Affiliates if Employee should
compete with the Company in a business that is competitive with the business
conducted by the Company and its Affiliates during the continuation of
Employee's employment with the Company or which the Company proposes to conduct
as of the termination of the employment of the Employee (and of which the
Employee has knowledge). For these reasons, Employee hereby agrees that Employee
will not, during the Noncompetition Period and within the Protected Area,
directly or indirectly, either as an individual, a partner or a joint venturer,
or in any other capacity, (a) invest (other than investments in publicly-owned
companies which constitute not more than 1% of the voting securities of any such
company) in any business that is directly competitive with that of the Company
or its Affiliates, (b) accept employment with or render services to a direct
competitor of the Company as a director, officer, manager, consultant, executive
or other employee, (c) engage, for Employee's self or any other person or entity
in the sales, marketing, design, offer or manufacture of products or services
directly competitive with any product and/or services sold, marketed, designed,
offered or manufactured by the Company or its Affiliates, or (d) solicit or
accept business with respect to products or services that are directly
competitive with the products and/or services sold, marketed, designed, offered
or manufactured by the Company or its Affiliates from any customers of the
Company or its Affiliates or any person or entity whose business the Company or
its Affiliates is soliciting or solicited during Employee's employment. For
purposes of this Agreement, a "competitor" or a business that is competitive
with the Company means only those persons, firms, sole proprietorships,
partnerships, companies, corporations, or other entities that manufacture and/or
market textile related bed, bath, pillow and pad products and/or perform
services in direct competition with those marketed and/or performed by the
Company or its Affiliates within the Protected Area; provided, however, the term
"competitor" (i) expressly excludes any entity where the foregoing definition
would apply to 10% or less of such entity's annual sales, and (ii) expressly
includes Westpoint Stevens, Inc., Springs Industries, Inc. and Dan River, Inc.
4.4 Nonsolicitation. During the period of employment with the Company
and the Noncompetition Period, Employee will not, on Employee's own behalf or on
behalf of any other person, partnership, association, corporation or other
entity, directly or indirectly, hire or solicit or in any manner attempt to
influence or induce any employee of the Company or its Affiliates to leave the
employment of the Company or its Affiliates, nor will Employee, directly or
indirectly, disclose to any person, partnership, association, corporation or
other entity any information obtained while an employee of the Company
concerning the names and addresses of the employees of the Company or its
Affiliates.
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4.5 Acknowledgement. The parties acknowledge and agree that all
benefits to be received, or available to be received by Employee pursuant to
this Agreement are consideration for all covenants and obligations of Employee
hereunder, including, without limitation, those contained in Section 4.3 and
Section 4.4. The parties will use commercially reasonable efforts to agree,
within ten (10) business days of the Termination Date, to the dollar value
attributable to the covenants contained in Section 4.3 and the amount of any
Post-Employment Payment attributable to such covenants.
4.6 Confidential Information. During the course of this Agreement,
Employee may receive or have access to Confidential Information. Employee
acknowledges the economic value to the Company of the Confidential Information.
Employee agrees that Employee:
(i) shall use the Confidential Information only in connection
with Employee's performance of his obligations under this Agreement;
(ii) shall not disclose such Confidential Information to any
other person or entity without the prior written consent of the
Company; and
(iii) shall copy the Confidential Information only as necessary
for the performance of Employee's obligation under this Agreement, and
ensure that all confidentiality notices are reproduced in full on such
copies.
The obligations of confidentiality shall not apply to any Confidential
Information which Employee can demonstrate:
(i) is or becomes available to the public through no breach
of this Agreement;
(ii) was previously learned by Employee from a source other
than the Company without any obligation to hold it in confidence;
(iii) is received from a third party free to disclose such
information without restriction;
(iv) is independently developed by Employee without the use of
or reference to the Confidential Information; or
(v) is approved for release by written authorization of the
Company, but only to the extent of such authorization.
(vi) Disclosure of Confidential Information in response to a
valid order of a court or other governmental body will not be deemed to
be a breach of this Agreement.
Confidential Information, including permitted copies, shall be deemed the
property of the Company. Employee shall, within thirty (30) days of a written
request by the Company, return all Confidential Information (or any designated
portion thereof) recorded in a tangible form, including all copies thereof, to
the Company, or if so directed by the Company, destroy such
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Confidential Information and all other Confidential Information that is within
the control of Employee.
4.7 Damages.
(a) Notwithstanding anything in this Agreement to the contrary, if
Employee breaches the covenants contained in this ARTICLE 4, the Company will
have no further obligations to Employee pursuant to this Agreement and may
recover from Employee all such damages to which it may be entitled at law or in
equity. Employee acknowledges any breach of this Agreement may result in
immediate and irreparable harm to the Company for which money damages are likely
to be inadequate. Accordingly, the Company may seek whatever relief it
determines to be appropriate to protect the Company's rights under this
Agreement, including, without limitation, an injunction (without the requirement
of posting a bond or other security) to prevent Employee from disclosing any
Trade Secrets or Confidential Information concerning the Company to any person
or entity, to prevent any person or entity from receiving from Employee or using
any such Trade Secrets or Confidential Information, and/or to prevent any person
or entity from retaining or seeking to retain any other employees of the
Company. Employee acknowledges good and sufficient consideration for the
noncompetition and nonsolicitation covenants of this ARTICLE 4.
(b) The parties acknowledge and agree that if Employee's employment
is terminated by the Company without Cause or Employee terminates his employment
for Good Reason, (i) the amount of damages that would be suffered by Employee
would be speculative and difficult to determine, (ii) the Post-Employment
Payment is a good faith reasonable estimate of the amount of damages which
Employee will suffer, and (iii) the Post-Employment Payment constitutes
liquidated damages (and not a penalty). In the event Employee's employment is
terminated by the Company without Cause or Employee terminates his employment
for Good Reason, the post-employment benefits described in Section 3.1 shall be
Employee's exclusive remedy and the Company's sole obligation.
ARTICLE 5
MISCELLANEOUS
5.1 Release. Except as expressly contemplated by this Agreement and/or
the KERP, Employee hereby forever releases, waives and discharges all claims,
obligations, suits, judgements, damages, demands, debts, rights, causes of
action and liabilities, whether liquidated or unliquidated, fixed or contingent,
material or immaterial, known or unknown, foreseen or unforeseen, arising in
law, equity or otherwise, that are based in whole or in part on any act,
omission, transaction or other occurrence taking place on or prior to the date
hereof in any way relating to the Company or its Affiliates, and their
respective past and present directors, partners, officers, employees, agents,
consultants, advisors, legal counsel, accountants and financial advisors acting
in such capacity (individually, a "Releasee" and collectively, "Releasees"),
which Employee now has or may have had against the respective Releasees.
Employee hereby covenants to refrain from directly or indirectly asserting any
claim or demand, or commencing, instituting or causing to be commenced, any
proceeding of any kind against any Releasee, based upon any matter purported to
be released hereby. Employee warrants that he has not assigned or
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otherwise transferred any claim that, but for such assignment or transfer, would
be released by this Agreement.
5.2 Assignment. This Agreement is personal in nature and neither of the
parties hereto will, without the written consent of the other, assign, transfer
or delegate this Agreement or any rights or obligations contained in this
Agreement except as expressly provided in this Section 5.2. Without limiting the
generality or effect of the foregoing, Employee's rights and obligations
provided for in this Agreement may not be assigned, transferred or delegated,
whether by pledge, creation of a security interest, or otherwise, other than by
a transfer by Employee's will or by the laws of descent and distribution, and if
Employee attempts any assignment or transfer contrary to this Section 5.2, such
assignment or transfer will be void and the Company will have no liability to
any purported assignee or delegatee.
5.3 Successors and Binding Agreement.
(a) The Company will require any successor to all or substantially
all of the businesses or assets of the Company (whether direct or indirect, by
purchase, merger, consolidation, reorganization, confirmed reorganization plan
or otherwise) expressly to assume and agree to perform this Agreement in the
same manner and to the same extent the Company would be required to perform if
no such succession had taken place. This Agreement will be binding upon and
inure to the benefit of the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the businesses or assets of the Company whether by
purchase, merger, consolidation, reorganization, confirmed reorganization plan
or otherwise (and such successor will thereafter be deemed "the Company" for the
purposes of this Agreement).
(b) This Agreement will inure to the benefit of and be enforceable
by Employee's personal or legal representatives, executors, administrators,
heirs, distributees and legatees.
5.4 Governing Law; Arbitration. This Agreement and all questions
arising in connection with it will be governed by and construed in accordance
with the laws of the State of North Carolina. Subject to the following sentence,
all disputes arising out of, or in connection with this Agreement, which are not
promptly settled by mutual agreement of the parties hereto, will be finally
settled by arbitration in accordance with the Commercial Rules of the American
Arbitration Association. Notwithstanding anything herein to the contrary, the
Company may, at its option, seek injunctive relief as contemplated in ARTICLE 4
either in lieu of or in addition to the arbitration remedies provided for in
this Section 5.4.
5.5 Severability. If any portion of this Agreement is held to be
invalid or unenforceable, such holding will not affect any other portion of this
Agreement.
5.6 Entire Agreement. This Agreement comprises the entire agreement
between the parties hereto with respect to the subject matter hereof and, as of
the Effective Date, supersedes any prior written or oral agreements between the
parties with respect to the subject matter hereof, excluding the KERP but
specifically including, without limitation, the Prior Agreement and any other
severance or employment agreement. This Agreement may not be modified, renewed
or
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extended except by a written instrument referring to this Agreement and executed
by the parties hereto.
5.7 Notices. Any notice or consent required or permitted to be given
under this Agreement will be in writing and will be effective (a) when given by
personal delivery, (b) one business day after being sent by overnight delivery
service or (c) five business days after being sent by certified or registered
mail, return receipt requested, to the Secretary of the Company at the Company's
principal place of business or to Employee at the last known address of Employee
as shown on the records of the Company and each notice which must be sent to the
Employee shall also be copied to: Howard Jacobs, Esq., Katten Muchin Zavis
Rosenman, 575 Madison Avenue, New York, New York 10022.
5.8 Withholding Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, provincial, city or other taxes
or other amounts as will be required pursuant to any law or governmental
regulation or ruling.
5.9 Court Approval. The Company warrants that (i) on March 2, 2001, it
filed a motion with the Bankruptcy Court for authority to enter into an
employment agreement with Employee; (ii) the period for objecting to such motion
has expired without any objections having been filed; (iii) on March 16, 2001,
the Company filed with the Bankruptcy Court a certificate of no objections with
respect to such motion; and (iv) the Company's execution of and performance
under this Agreement does not violate or contradict the order submitted to the
Bankruptcy Court in connection with such motion, any provision of Title 11 of
the United States Bankruptcy Code, any other applicable statutes, or any orders
previously entered by the Bankruptcy Court in the Company's bankruptcy case.
5.10 Legal Fees. The Company shall promptly reimburse Employee for all
legal fees and expenses he incurs in seeking to enforce or in defending his
rights under this Agreement without regard to whether Employee prevails in whole
or in part, provided that Employee has not acted in bad faith or with no
reasonable claim of success.
5.11 Other Fees. The Company agrees to reimburse Employee for those
fees (including legal fees) incurred by the Employee in the negotiation and
execution of this Agreement; provided, however, the Company will not reimburse
Employee and Mike Harmon, Scott Shimizu and A. Allen Oakley (taken together)
greater than $65,000 in the aggregate for negotiation of this Agreement and the
employment agreements for such other executives.
5.12 Prior Agreement. On the Effective Date, the Prior Agreement will
automatically terminate without any further action required by the parties
hereto and this Agreement shall become effective.
5.13 Chief Executive Officer Agreement. In the event Anthony Williams
is appointed Chief Executive Officer of the Company, the parties hereto shall
enter into good faith negotiations for a new employment agreement commensurate
with such title and duties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date and year first above written.
PILLOWTEX CORPORATION
By:____________________________________________
Name:_____________________________________
Title:____________________________________
EMPLOYEE
_______________________________________________
Printed Name: Anthony Williams
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EXHIBIT A
Job Description
Exhibit 1.16
[attach KERP agreement]