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PILLOWTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
(Effective February 9, 1998)
PILLOWTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
* * * *
1. PURPOSE. The purpose of the Executive Deferred Compensation Plan
is to provide key executives of the Company and non-employee members of the
Board of Directors with the opportunity to defer base salary, incentive
compensation payments or other payments in accordance with the provisions of
this Plan.
2. DEFINITIONS. The following definitions are used throughout the
Plan.
(a) "ACCOUNT" means the account described in Section 5.
(b) "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
(c) "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 Securities Exchange Act of 1934), 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 Securities
Exchange Act of 1934), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the Company's
then-outstanding securities;
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(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.
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 Securities Exchange Act of 1934, 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 name of
such person.
(d) "CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time.
(e) "COMMITTEE" means the Compensation Committee of the Board of
Directors or any successor committee appointed by the Board of Directors to
administer the Plan.
(f) "COMPANY" means Pillowtex Corporation, a Texas corporation.
(g) "COMPENSATION" means (i) the annual fixed or base
compensation, payable monthly or otherwise to a Participant, (ii) cash
incentive compensation earned by a Participant pursuant to an incentive
compensation plan now in effect or hereafter established by the Company,
including, without limitation, the Pillowtex Corporation Management Incentive
Plan, (iii) cash compensation earned by a Participant for service on the
Board of Directors, (iv) cash compensation earned by a Participant who is a
non-employee member of the Board of Directors for services rendered as a
consultant to the Company and (v) any other cash bonus or cash incentive
compensation earned by a Participant pursuant to a Company policy, program or
practice.
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(h) "EFFECTIVE DATE" means February 9, 1998.
(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(j) "FINANCIAL HARDSHIP" means an unforeseeable financial
emergency of the Participant, determined by the Committee as provided in
Section 7(b) on the basis of information supplied by the Participant, arising
from an illness, disability, casualty loss, sudden financial reversal or
other such unforeseeable occurrence, but not including foreseeable events
such as the purchase of a house or education expenses for children.
(k) "PARTICIPANT" means an employee of the Company or non-employee
member of the Board of Directors 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.
(l) "PLAN" means the Pillowtex Corporation Executive Deferred
Compensation Plan as set forth herein and as amended from time to time.
(m) "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.
3. ELIGIBILITY. Each key executive of the Company or any Subsidiary,
or non-employee member of the Board of Directors, who is designated by the
Committee as eligible to participate in the Plan will be a Participant.
4. DEFERRAL OF COMPENSATION. (a) A Participant may elect to defer
receipt of all or a portion of his or her Compensation for any calendar year.
Subject to procedures established by the Committee, a Participant's election
may specify a dollar amount or percentage of Compensation for deferral, and
may specify that different percentages or dollar amounts will apply to
different sources of Compensation. A Participant's entitlement to defer will
cease with respect to the calendar year following the calendar year in which
he or she ceases to be a Participant.
(b) A Participant's Compensation in excess of amounts deductible
by the Company with respect to any year under Section 162(m) of the Code will
automatically be deferred under the Plan in accordance with procedures
established by the Committee.
(c) Deferral elections will be made in accordance with procedures
established by the Committee from time to time. Except as provided in this
Section, a deferral election must be made before the first day of the
calendar year in which the Participant would earn the Compensation covered by
such election by the performance of services.
(d) Notwithstanding Section 4(b), a Participant who first becomes
eligible to participate in the Plan during a calendar year may, no later than
30 days after becoming a
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Participant, elect to participate in the Plan for such year and any calendar
year thereafter by filing an election agreement with the Committee, and such
Participant's deferral election will be effective with respect to
Compensation payable after the date of the Participant's election. In
addition, no later than 30 days after the Effective Date of the Plan, a
Participant may elect to participate in the Plan for such year and any
calendar year thereafter by filing an election agreement with the Committee,
and such Participant's deferral agreement will be effective with respect to
Compensation payable after the date of the Participant's election.
5. ACCOUNTS/INTEREST CREDIT. Compensation that a Participant elects
to defer will be treated as if it were set aside in an Account on the date
the Compensation would otherwise have been paid to the Participant. Such
Account will be credited with interest at such rate and in such manner as
determined from time to time by the Committee. Unless otherwise determined
by the Committee, interest hereunder will be credited at the prime rate in
effect according to the Wall Street Journal plus one percent, adjusted as of
the first day of each calendar quarter.
6. VESTING. Except as provided in Section 7(c) and Section 10, a
Participant's Account will be fully vested and nonforfeitable at all times.
7. DISTRIBUTION OF BENEFITS. (a) Except as otherwise provided in
this Section, payment of a Participant's Account balance will be made or
begin on the earlier to occur of the first day of the month following the
month in which the Participant retires or otherwise terminates employment (or
in the case of a non-employee member of the Board of Directors, terminates
service on the Board of Directors), or the date specified by the Participant
in the election agreement.
(b) Upon a finding by the Committee that a Participant has
suffered a Financial Hardship, the Committee may, in its sole discretion,
distribute to the Participant an amount which does not exceed the amount
required to meet the immediate financial needs created by the Financial
Hardship and not reasonably available to the Participant from other sources.
(c) Notwithstanding any other provision of this Section 7, a
Participant may elect to receive a distribution of all or part of his or her
Account if (and only if) the amount distributed with respect to such election
is reduced by 10%. The remaining 10% of the portion of the Participant's
Account subject to such election will be forfeited. Any distribution made
pursuant to such an election will be made as soon as practicable following
the date such election is submitted to the Committee.
8. FORM OF PAYMENT. A Participant's 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 Account is scheduled to be paid, in accordance
with procedures established by the Committee, to receive his 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
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Participant has elected an installment form of payment, the unpaid portion of
the Participant's Account will continue to earn interest in accordance with
Section 4.
9. DEATH BENEFITS. (a) If a Participant who has an Account balance
under the Plan dies before payment of such balance begins, the 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.
(b) Upon the death of a Participant who is receiving installment
payments of his or her Account balance, the Participant's Account balance
will continue to be paid in accordance with the form of payment elected by
the Participant 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 that employed the
Participant, and nothing contained in the Plan will require the Company or
any Subsidiary 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 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 benefit payable to a Participant under the Plan is
attributable to periods of employment with the Company and/or one or more
Subsidiaries, 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.
11. 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 out the purpose of the Plan, (ii)
resolve all questions relating
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to the eligibility of individuals 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) 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 earnings factor, election procedure or other administrative rule
that would adversely affect the existing or future benefit of any Participant
without such Participant's written consent.
(c) Any action taken or determination made by the Committee will,
except as otherwise provided in Section 12 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.
12. CLAIMS PROCEDURE. (a) If a Participant does not receive the
benefits which the Participant believes he or she is entitled to receive
under the Plan, the Participant 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 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
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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.
13. 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. 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.
14. MISCELLANEOUS. (a) Nothing in the Plan will confer upon a
Participant the right to continue in the employ of the Company or any
Subsidiary or will limit or restrict the right of the Company or any
Subsidiary to terminate the employment or other service of a Participant at
any time with or without cause.
(b) 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.
(c) 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
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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.
(d) The Company may withhold or cause to be withheld from any
amounts payable under the Plan all federal, state, local and other taxes as
required by law. Any withholding of taxes or other amounts with respect to
Compensation deferred under the Plan which is required prior to distribution
from the Plan will be withheld from the Participant's non-deferred
Compensation, or will be satisfied by such other arrangement with the
Participant as may be approved by the Committee.
(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 this 26th day of February, 1998, effective as of February 9,
1998.
PILLOWTEX CORPORATION
By: /s/ Jeffrey D. Cordes
------------------------------------
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PILLOWTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
1998 DEFERRAL AGREEMENT
This Deferral Agreement (the "Agreement") has been made as of the date
indicated below between __________________________________ (the "Participant")
and Pillowtex Corporation, a Texas corporation (the "Company").
I hereby elect to participate in the Pillowtex Corporation Executive
Deferred Compensation Plan (the "Plan"), and elect to defer receipt of the
portion of my Compensation specified below. Capitalized terms not defined in
this Agreement have the meanings set forth in the Plan.
1. BASE SALARY. Please defer payment of my base salary as follows:
/ / $____________ or _____% of my base salary.
2. OTHER CASH COMPENSATION. Please defer payment of my other cash
compensation as follows:
/ / $____________ or _____% of any cash incentive compensation
under the Pillowtex Corporation Management Incentive
Plan.
/ / $____________ or _____% of any other cash bonus or
cash incentive compensation earned under a Company policy,
program or practice.
/ / $____________ or _____% of any cash compensation
earned for service on the Board of Directors. (NONEMPLOYEE
DIRECTORS ONLY)
/ / $____________ or _____% of any other cash
compensation earned for services rendered as a consultant to the
Company. (NONEMPLOYEE DIRECTORS ONLY)
3. TIMING OF DISTRIBUTION. Please defer payment or make payment of
the first installment as follows (check one and complete blank if necessary):
/ / Upon retirement or other termination of service.
/ / On _____________________________ (specify date that is at least
3 years after the beginning of the calendar year in which the
Compensation is earned - e.g. for Compensation earned in 1998,
date must be January 1, 2001 or later).
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4. FORM OF PAYMENT. Please make payment of the above specified
Compensation together with all accrued interest reflected in my Account as
follows (check one and complete blank if necessary):
/ / Pay in a lump sum.
/ / Pay $_________________ or _____% of such amount in a lump
sum and the remainder of such amount in ____ annual installments
(not to exceed 15 installments).
/ / Pay $_________________ or _____% of such amount in a lump
sum and the remainder of such amount in ____ quarterly
installments (not to exceed 60 installments).
/ / Pay $_________________ or _____% of such amount in a lump
sum and the remainder of such amount in ____ monthly installments
(not to exceed 180 installments).
I understand that in order to modify or revoke this Agreement with
respect to Compensation otherwise payable in a particular year, the
modification of revocation must be delivered to the Company before the first
day of the calendar year in which I would earn the Compensation by the
performance of services.
I acknowledge that I have reviewed the Plan and understand that my
participation will be subject to the terms and conditions contained in the
Plan. I acknowledge that I have been advised to consult with my own
financial, tax, estate planning and legal advisors before making this
election to defer in order to determine the tax effects and other
implications of my participation in the Plan.
I understand that by electing to participate in the Plan, I will
automatically defer amounts of my Compensation in excess of amounts
deductible by the Company with respect to Section 162(m) of the Code in
accordance with procedures established by the Committee.
Dated this _____ day of _________________, 1998.
_____________________________ _____________________________
(Signature) (Print or type name)
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PILLOWTEX CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATIONS
In accordance with the terms and conditions of the Pillowtex
Corporation Executive Deferred Compensation Plan (the "Plan"), I hereby
designate the person(s) indicated below as my beneficiary(ies) to receive the
amounts payable under said Plan.
Name____________________________ Name____________________________
Address_________________________ Address_________________________
________________________________ ________________________________
________________________________ ________________________________
Social Sec. No. of Social Sec. No. of
Beneficiary____________________ Beneficiary____________________
Relationship____________________ Relationship____________________
Date of Birth___________________ Date of Birth___________________
In the event that the above-named beneficiary(ies) predecease(s) me, I
hereby designate the following person as beneficiary(ies);
Name____________________________ Name____________________________
Address_________________________ Address_________________________
________________________________ ________________________________
________________________________ ________________________________
Social Sec. No. of Social Sec. No. of
Beneficiary____________________ Beneficiary____________________
Relationship____________________ Relationship____________________
Date of Birth___________________ Date of Birth___________________
I hereby expressly revoke all prior designations of beneficiary(ies),
reserve the right to change the beneficiary(ies) herein designated and agree
that the rights of said beneficiary(ies) shall be subject to the terms of the
Plan. In the event that there is no beneficiary living at the time of my death,
I understand that the amounts payable under the Plan will be paid to my estate.
Date (Signature) (Print or type name)
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