EXHIBIT 10.52
SEPARATION AGREEMENT
This Separation Agreement is made as of the 26th day of October, 2000, by
and between Pillowtex Corporation, a Texas corporation (the "Company"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (the "Executive").
R E C I T A L S
WHEREAS, the Executive is currently employed by the Company as its Chairman
of the Board and Chief Executive Officer pursuant to the terms of an Employment
Agreement dated as of January 1, 1993, and subsequently amended on July 26,
1993, and January 20, 1998 (the "Employment Agreement"); and
WHEREAS, with the Company's consent, the Executive has decided to resign as
Chairman and Chief Executive Officer of the Company, and as a director of the
Company, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained in this Agreement, the parties agree as follows:
1. Resignation. The Executive hereby resigns (i) as Chairman and Chief
Executive Officer of the Company, (ii) from all other offices with, and as a
director of, the Company, its subsidiaries and other affiliates (the Company and
its subsidiaries and affiliates collectively referred to in this Agreement as
"Pillowtex"), and (iii) from all committees of and fiduciary positions with
respect to Pillowtex, all such resignations to be effective as of 3 p.m. Central
Time, October 26, 2000 (the "Effective Date"). From and after the Effective
Date, the Executive will cease to be an employee of Pillowtex. The Executive
agrees that he will not seek to be reelected to the Board of Directors of the
Company after the Effective Date unless he is nominated for election by the
Board.
2. Separation Payments and Benefits.
(a) Upon execution of this Agreement by the Executive, the Company
will pay to the Executive, in a single lump sum payment, the sum of $4.85
million in full satisfaction of all amounts owed to the Executive under the
Employment Agreement for the period from November 1, 2000, through June 20,
2005, and for the extended noncompetition agreements described in Section 5(e).
The Executive will continue to be paid his base salary through October 31, 2000,
in accordance with the Company's normal payroll practices.
(b) Health care expenses incurred by the Executive and/or his spouse
from and after the Effective Date will be reimbursed in accordance with the
following provisions. Health care expenses incurred through the date on which
the Executive and/or his spouse attains age 65, will be reimbursed subject to
substantially similar terms, conditions and limitations that are applied to
employees of the Company generally under the Company's basic health care plan as
in effect from time to time, provided the Executive or his spouse continues to
pay the health care plan premium then charged to active employees of the Company
for such coverage. Thereafter, health care expenses incurred by the Executive
and his spouse will continue to be reimbursed for their lives, subject to
substantially similar terms, conditions and limitations that
are applied to employees of the Company generally under the Company's basic
health care plan as in effect from time to time provided the Executive or his
spouse, if she survives him, pays the health care plan premium charged for COBRA
continuation coverage as in effect from time to time. In addition, the Executive
and his spouse will be entitled to reimbursement under the Company's senior
executive medical plan as in effect on the Effective Date for health care
expenses incurred after the Effective Date and on or before the date the
Executive and/or his spouse attains age 65, provided, however, that the Company
will not be obligated to reimburse any such expenses to the extent such expenses
for each of the Executive and his spouse exceed $10,000 in any calendar year.
(c) Nothing contained in Section 2(b) will limit the Company's right
to amend or modify any provision of its health care plans or to change the terms
and conditions of its health care benefits, provided that any such amendment,
modification or other change made by the Company applies to its senior
executives and employees generally and not just to the Executive or his spouse.
Subject to the foregoing, the Company may provide health care benefits for the
Executive and his spouse by continuing the participation of the Executive and/or
his spouse in the Company's health care plans or under a substitute but
comparable arrangement.
(d) The spouse entitled to benefits under this Agreement is the spouse
to whom the Executive is married on the Effective Date and not any other
individual to whom the Executive may be married after the Effective Date.
(e) The amounts payable to the Executive and his spouse under the
foregoing provisions of this Section 2 will be paid from the general assets of
the Company, and nothing contained in this Agreement will require the Company to
set aside or hold in trust any funds for the benefit of the Executive or his
surviving spouse, who will have the status of general unsecured creditors with
respect to the obligation of the Company to make payments under this Agreement.
Any funds of the Company available to pay benefits under this Agreement will be
subject to the claims of general creditors of the Company and may be used for
any purpose by the Company. ( f) The Executive will be entitled to
indemnification for a period of at least three years after the Effective Date
with respect to his services as an officer and director of Pillowtex on the same
basis and subject to the same terms as other officers and directors of
Pillowtex. The Company will continue its present directors and officers
liability insurance coverage for a period of not less than three years after the
Effective Date and will include the Executive as a covered person under such
insurance coverage.
(g) The Company will make available to the Executive at no cost the
services of his current secretary for a period of 90 days following the
Effective Date.
(h) The Executive and his spouse may each purchase Company product for
their personal use at "SIC value" until their deaths.
3. Return of Property. The Executive understands and agrees that all
books, handbooks, manuals, files, papers, memoranda, letters, facsimile or other
communications that he has in his possession and that were written, authorized,
signed, received or transmitted in his
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capacity as an employee of Pillowtex are and remain the property of the Company.
In addition, the Executive acknowledges that he has returned to the Company all
confidential information of the Company in his possession and all property of
the Company other than the following items which the Executive may retain: (i)
all office and home computers, (ii) the Executive's office furniture, (iii) the
Company-leased automobile currently made available to the Executive and (iv)
country club memberships purchased by the Company and held in the Executive's
name. The Executive will be responsible for and will fully discharge all
expenses that are incurred with respect to such country club memberships from
and after the Effective Date. The Company will take all action necessary to
transfer title of such property to the Executive, provided that title to the
Company-leased automobile will be transferred to the Executive no later than the
end of the lease period, and the Executive will take all action necessary to
transfer title to the Company of all property to be returned to the Company.
Prior to the transfer of title to the Company-leased automobile, the Company
will continue to pay all related lease payments, and the Executive and his
spouse will have the exclusive use of the automobile. The Executive acknowledges
that he will not be entitled to the use of Company airplanes, apartments,
condominiums, boats or other Company property after the Effective Date except as
expressly provided in this Section 3.
4. Assistance and Cooperation. At all times following the Effective
Date the Executive will cooperate with Pillowtex in the defense of any
threatened or pending litigation or in the investigation or proceeding by any
governmental agency that relates to events that occurred while he was an
employee of Pillowtex. The Executive will not receive any additional
compensation for such assistance and cooperation but will be entitled to
reimbursement by the Company for all reasonable out-of-pocket expenses incurred
in providing such assistance and cooperation, including any reasonably necessary
legal fees.
5. Termination of Prior Agreements. The provisions of this Agreement
supersede the provisions of that certain Retention and Supplemental Retirement
Agreement dated as of June 28, 2000, between the Executive and the Company and
the provisions of the Employment Agreement, and the Executive and the Company
acknowledge and agree that such agreements will terminate as of the Effective
Date, except that:
(a) The Executive will be entitled to payment for base salary (but
not for any bonus or other incentive pay) accrued through the Effective Date and
for any unused vacation earned as of the Effective Date in accordance with the
Company's vacation policy.
(b) The Executive will be entitled to reimbursement for expenses
incurred through the Effective Date in accordance with the Company's expense
reimbursement policy applicable to other executive officers of the Company, as
approved by the Company's Management Committee, which approval will not be
unreasonably withheld.
(c) The Executive will be entitled to the tax-offset payment
described in Section 6(f) of the Employment Agreement with respect to any
amounts described in that Section that have accrued as of the Effective Date,
such tax-offset payment to be paid concurrently with the reimbursement of
expenses as provided in Section 5(b).
(d) The provisions of Section 8 ("Nondisclosure Agreement"),
Section 11 ("Severability"), Section 13 ("Remedies"), Section 14
("Acknowledgements") and Section 15
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("Assignment of Inventions") of the Employment Agreement will survive the
termination of the Employment Agreement and will continue to be enforc eable in
accordance with their terms.
(e) The provisions of Section 9 ("Noncompetition Agreement") and
Section 10 ("Nonemployment") of the Employment Agreement will survive the
termination of the Employment Agreement and will continue to be enforceable for
a period of three years after the Effective Date and otherwise in accordance
with their terms.
6. Split Dollar Life Insurance. The Executive and the Company have
entered into a Split Dollar Life Insurance Agreement dated July 26, 1993 (the
"Split Dollar Agreement") with respect to a whole life insurance policy (the
"Policy") in the face amount of $3 million insuring the life of the Executive.
Pursuant to the terms of the Split Dollar Agreement, the Executive will have a
period of 90 days after the Effective Date in which to repay to the Company the
principal and accrued interest under the promissory note described in the Split
Dollar Agreement and have the Company release its interest in the Policy. If the
Executive does not elect to repay the principal and interest on the promissory
note during such 90-day period, the Company will surrender the Policy to the
insurer, and the proceeds received by the Company as a result of such surrender
will be distributed to the Company and to the Executive as provided in Section 8
of the Split Dollar Agreement.
7. Nondisparagement. Pillowtex as an entity and each of its directors
and executive officers while directors and executive officers of Pillowtex will
not publicly disparage the Executive in any formal public statement or encourage
or induce others to publicly disparage the Executive. The Executive agrees that
he will not publicly disparage or encourage or induce others to publicly
disparage Pillowtex or any of its past and present officers, directors,
shareholders agents and employees. For purposes of this Agreement, the term
"disparage" includes without limitation comments or statements to the press,
Pillowtex employees or any individual or entity with whom Pillowtex has a
business relationship that could be reasonably expected to adversely affect in
any manner (i) the conduct of the business of Pillowtex (including without
limitation any business plans or prospects), (ii) the business reputation of
Pillowtex or any of its officers or directors or (iii) the Executive's personal
or business reputation.
8. Mutual General Release.
(a) In consideration of the payments to be made to and the benefits
to be conferred on the Executive under this Agreement, the Executive, for
himself, his heirs, executors, administrators, and assigns, releases the
Company, its current, former and successor subsidiaries, parent corporations,
affiliates and partners, and each of their officers, directors, employees,
agents, representatives, insurance carriers, benefit plans, fiduciaries and
attorneys, or any other related parties, from, and agrees not to ▇▇▇ any of the
foregoing with respect to, any claims, known or unknown, that he has, or that
anyone claiming for him might have or claim to have, with respect to, concerning
or arising out of his employment with Pillowtex, his resignation as an officer
of the Company and his termination of employment with Pillowtex or any other
event occurring before the d ate of execution of this Agreement. These claims
include, but are not limited to, claims arising under any employment agreement,
retirement agreement, employment law or regulation, including Title VII of the
Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act
of 1967, as amended; the Employee Retirement
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Income Security Act of 1974, as amended; or any other federal, state or local
civil rights, employee benefit, labor contract, tort, or common law. The Company
acknowledges that the Executive is waiving only those claims that he has or
believes he might have as of the Effective Date and not any claims that might
arise in the future.
(b) In consideration of the Executive's agreements hereunder,
Pillowtex and its successors and assigns releases the Executive, his spouse,
their heirs, executors, administrators, and assigns, from, and agrees not to ▇▇▇
any of the foregoing with respect to, any claims, known or unknown, that it has,
or that anyone claiming for or through Pillowtex might have or claim to have,
with respect to or arising out of the employment of the Executive at any time by
Pillowtex or with respect to the Executive's service as an officer, director,
employee or shareholder of Pillowtex or any other event occurring before the
Effective Date. The Executive acknowledges that Pillowtex is waiving only those
claims that it has or believes it might have as of the Effective Date and not
any claims that might arise in the future.
(c) Notwithstanding the foregoing, (i) the release contained in
Section 8(a) will not apply to (A) any right the Executive has to
indemnification under the Company's Certificate of Incorporation, By-laws,
directors and officers liability insurance or otherwise with regard to the
Executive's service as an officer or director of Pillowtex, (B) any rights the
Executive has accrued under any employee benefit plan maintained by Pillowtex
and (C) any rights of the Executive under this Agreement; and (ii) the release
contained in Section 8(b) will not apply to any rights of the Company under this
Agreement.
(d) The Executive acknowledges that he has been advised to consult
with an attorney prior to signing this Agreement. The Executive further
acknowledges that he has been given at least 21 days to consider signing this
Agreement and that he may voluntarily choose to sign the Agreement before the
end of the 21-day period. The Executive understands that he will have seven days
after he signs this Agreement during which he may revoke for any reason the
portion of the release contained in Section 8(a) that relates to claims arising
under the Age Discrimination in Employment Act of 1967, as amended, by
delivering a notice of revocation to the Company, to the attention of the
General Counsel, at the Company's executive offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇. Any such revocation will have no effect on the remaining portions
of such release or on any other provision of this Agreement, which will remain
enforceable by the Company.
9. Miscellaneous.
(a) This Agreement supersedes any and all other agreements, either
oral or written, between the parties with respect to the Executive's resignation
as an officer of, and his termination of employment by, the Company and contains
all of the agreements between the parties with respect to such resignation and
termination. Any modification or amendment to this Agreement will be valid only
if it is in writing and is executed by the Executive and the Company.
(b) In the event of a material breach of this Agreement by the
Executive, the Company will not be obligated to make any further payments or
provide any additional benefits to the Executive or his spouse.
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(c) In the event that any part of the Company's obligations to the
Executive under this Agreement are abrogated or set aside for any reason
whatsoever, the Company agrees that the Executive will be deemed to have a fully
liquidated claim against the Company in the full amount of any such abrogation
or set-aside.
(d) All amounts paid to the Executive pursuant to this Agreement
will be subject to withholding for taxes as required by applicable law.
(e) This Agreement may be executed in counterparts, each of which
will constitute an original, but all of which will constitute one document.
(f) This Agreement will be binding upon and inure to the benefit of
and be enforceable against the parties, and their respective successors,
executors, administrators, personal representatives, heirs and assigns.
(g) The parties acknowledge and agree that this Agreement is to be
performed in Dallas, Dallas County, Texas. This Agreement will be governed by,
and construed in accordance with, the laws of the State of Texas, without regard
to conflicts of laws principles. Each of the parties waives any right such party
may have to a trial by jury. If any action is brought to enforce or interpret
this Agreement, venue for such action will be in Dallas County, Texas. Each of
the parties agrees irrevocably and unconditionally to consent to submit to the
exclusive jurisdiction of the courts of the State of Texas and of the United
States of America located in Dallas, Texas for any actions, suits or proceedings
arising out of or relating to this Agreement.
(h) The Company agrees that, in connection with any press release
or filing with the Securities and Exchange Commission relating to this
Agreement, it will describe the Executive's departure from Pillowtex as his
resignation as Chairman and Chief Executive Officer and as a director of the
Company without further characterization.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
PILLOWTEX CORPORATION
By
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
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EXECUTIVE
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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