<PAGE>   1


                                                                   Exhibit 10.16


INTER
OFFICE
MEMO


                                      DATE: November 10, 1997




TO:                        Mr. Bob Nelson

FROM:                      Sharon L. Rodgers


         I am pleased to inform you that you have been approved to participate
in the management incentive plan for fiscal 1998. You will participate in the
plan based on an individual percentage award of 40%.

         For fiscal 1998, the amount of your actual incentive award will be
based on achievement of Financial Goals, as set forth below.

                                Financial Goals

         The Financial Goals for your fiscal 1998 award are as follows:

<TABLE>
<CAPTION>
                                                             Corporate
                             Avondale Yarns             Operating Earnings
Performance                  Division Income            (Thousands of Dollars)
   Level                     (Thousands of Dollars)           (EBDLIT)
-----------                  ----------------------     ----------------------
<S>                         <C>                         <C>

      50%                   18,000                              124,000
      75%                   21,000                              130,000
     100%                   24,000                              136,000
     125%                   27,000                              142,000
</TABLE>


         100% of your actual incentive award will be based on achievement of
Financial Goals, with 75% based on Avondale Yarns Division Income and 25% based
on Corporate Operating Earnings (EBDLIT). Your actual incentive award will be
determined by multiplying your total base salary paid in fiscal 1998 times your
individual percentage award times the sum of 75% of the Performance Level
achieved for Avondale Yarns Division Income and 25% of the Performance Level
achieved for Corporate Operating Earnings (EBDLIT) as set forth above and will
be calculated by the Company. The Performance Levels will be prorated when final
financial results fall between the 50% and 125% levels. No incentive award based
on Financial Goals will be paid if the applicable Performance Level is below
50%, and no additional incentive award will be paid for any financial results
which exceed the 125% Performance Level.

         The general guidelines of the plan for fiscal 1998 are as follows:



<PAGE>   2



1.       Operating earnings (EBDLIT) will be defined as reported in the
         Company's financial statements.

2.       Your actual incentive award will be paid on an annual basis, with
         payment to be made as soon as practical after the fiscal year audit is
         completed.

3.       No incentive award will be paid if you are not in the employ of the
         Company on the last day of the fiscal year (effective date of
         severance must be after fiscal year end).

4.       In the event you are reassigned or given a new position and
         responsibilities during the fiscal year (promotion or demotion),
         payment of the incentive award will be determined on a case-by-case
         basis. The Company reserves the right to deny payment or to reduce the
         incentive award in the case of demotions.

         Please indicate your understanding of the plan, the performance goals
and your potential incentive award by signing and returning this letter to me. A
copy is provided for your personal files.



                                              /s/ Sharon Rodgers   
                                              ---------------------
SLR/jwp



Acknowledged: /s/ Bob Nelson
              --------------

Date:         November 11, 1997
              -----------------