FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 2, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- ------------
Commission File Number 1-6922
GUILFORD MILLS, INC.
---------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-1995928
------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) number)
4925 West Market Street, Greensboro, N.C. 27407
------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code - (336) 316-4000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes (X)
No ( )
Number of shares of common stock outstanding
at January 2, 2000 - 19,194,295
<PAGE>
GUILFORD MILLS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JANUARY 2, 2000
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Condensed Consolidated Financial Statements
The condensed consolidated financial statements included herein have been
prepared by Guilford Mills, Inc. (the "Company" or "Guilford"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The Condensed Consolidated Balance Sheet as of October 3, 1999 has been taken
from the audited financial statements as of that date. Certain information and
note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's latest annual report on Form 10-K for the year ended
October 3, 1999.
The condensed consolidated financial statements included herein reflect all
adjustments (none of which are other than normal recurring accruals) which are,
in the opinion of management, necessary for a fair presentation of the
information included. For comparative purposes, certain amounts have been
reclassified to conform with fiscal 2000 presentation. The following condensed
consolidated financial statements are included:
Consolidated Statements of Income for the thirteen weeks ended January
2, 2000 and the fourteen weeks ended January 3, 1999
Condensed Consolidated Balance Sheets as of January 2, 2000 and
October 3, 1999
Condensed Consolidated Statements of Cash Flows for the thirteen weeks
ended January 2, 2000 and the fourteen weeks ended January 3, 1999
Condensed Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Guilford Mills, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the Thirteen Weeks Ended January 2, 2000
and the Fourteen Weeks Ended January 3, 1999
(In thousands except per share data)
(Unaudited)
------------------------------------------------------------------------
January 2, January 3,
2000 1999
(13 Weeks) (14 Weeks)
------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 206,502 $ 214,913
------------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of goods sold 175,563 179,715
Selling and administrative 25,808 27,002
------------------------------------------------------------------------
201,371 206,717
------------------------------------------------------------------------
OPERATING INCOME 5,131 8,196
INTEREST EXPENSE 4,471 4,127
OTHER (INCOME) EXPENSE, NET (4,084) 519
------------------------------------------------------------------------
INCOME BEFORE INCOME TAX PROVISION 4,744 3,550
INCOME TAX PROVISION 1,717 1,187
------------------------------------------------------------------------
NET INCOME $ 3,027 $ 2,363
========================================================================
NET INCOME PER SHARE:
Basic $ 0.16 $ 0.10
Diluted 0.16 0.10
------------------------------------------------------------------------
DIVIDENDS PER SHARE $ 0.11 $ 0.11
------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Guilford Mills, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
January 2, 2000 and October 3, 1999
(In thousands)
------------------------------------------------------------------------
January 2, October 3,
2000 1999
(Unaudited)
------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 18,497 $ 22,554
Short-term investments 1,585 --
Accounts receivable, net 155,863 160,071
Inventories 144,418 136,772
Other current assets 24,310 19,344
------------------------------------------------------------------------
Total current assets 344,673 338,741
------------------------------------------------------------------------
Property, net 312,309 312,415
Other assets 100,153 102,275
------------------------------------------------------------------------
Total assets $757,135 $ 753,431
========================================================================
LIABILITIES
Short-term borrowings $137,057 $ 112,009
Current maturities of long-term debt 528 532
Other current liabilities 77,116 98,540
------------------------------------------------------------------------
Total current liabilities 214,701 211,081
------------------------------------------------------------------------
Long-term debt 145,899 146,137
Other liabilities 56,164 55,268
------------------------------------------------------------------------
Total long-term liabilities 202,063 201,405
------------------------------------------------------------------------
STOCKHOLDERS' INVESTMENT
Common stock 655 655
Capital in excess of par 120,532 120,532
Retained earnings 364,728 363,812
Accumulated other comprehensive loss (14,030) (12,279)
Other stockholders' investment (131,514) (131,775)
------------------------------------------------------------------------
Total stockholders' investment 340,371 340,945
------------------------------------------------------------------------
Total liabilities and stockholders'
investment $757,135 $ 753,431
========================================================================
See accompanying condensed notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Guilford Mills, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Thirteen Weeks Ended January 2, 2000
and the Fourteen Weeks Ended January 3, 1999
(In thousands)
(Unaudited)
------------------------------------------------------------------------
January 2, January 3,
2000 1999
(13 Weeks) (14 Weeks)
------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 3,027 $ 2,363
Depreciation and amortization 16,857 17,100
Other adjustments to net income, net (3,196) (101)
Net changes in operating assets and liabilities (30,164) (11,965)
------------------------------------------------------------------------
Net cash (used in) provided by operating
activities (13,476) 7,397
------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property (14,868) (15,702)
Other investing activities, net 1,671 1,792
------------------------------------------------------------------------
Net cash used in investing activities (13,197) (13,910)
------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net 24,978 23,278
Payments of long-term debt (219) (162,308)
Proceeds from issuance of long-term debt,
net of deferred financing costs paid -- 140,233
Purchases of treasury shares -- (2,600)
Other financing activities, net (2,111) (2,700)
------------------------------------------------------------------------
Net cash provided by (used in)
financing activities 22,648 (4,097)
------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (32) (76)
------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,057) (10,686)
EQUIVALENTS
BEGINNING CASH AND CASH EQUIVALENTS 22,554 30,447
------------------------------------------------------------------------
ENDING CASH AND CASH EQUIVALENTS $ 18,497 $ 19,761
------------------------------------------------------------------------
See accompanying condensed notes to consolidated financial statements.
</TABLE>
<PAGE>
GUILFORD MILLS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 2, 2000
(In thousands except share data)
(Unaudited)
1. Reclassifications -- For comparative purposes, certain amounts for fiscal
1999 have been reclassified to conform to the fiscal 2000 presentation.
2. Seasonal Fluctuations -- Results for any portion of a year are not
necessarily indicative of the results to be expected for a full year, due to
seasonal aspects of the textile industry.
3. Foreign Currency Translation -- The Company has a majority-owned foreign
subsidiary that operates in Mexico. During the Company's first quarter in fiscal
1999, the economy in Mexico was considered highly inflationary and the financial
results for the Company's Mexican subsidiary were remeasured. Remeasurement
adjustments are included in the results of operations along with transaction
gains and losses for the period. Effective with the Company's second quarter in
fiscal 1999, Mexico's economy was no longer considered highly inflationary and
the financial results for the Company's Mexican subsidiary have been translated.
Translation gains or losses are reflected in the stockholders' investment
section of the balance sheet in accumulated other comprehensive loss.
4. Per Share Information -- Basic earnings per share information has been
computed by dividing net income by the weighted average number of shares of
common stock, par value $.02 per share, outstanding during the periods
presented. The weighted average shares used in computing basic net income for
the thirteen weeks ended January 2, 2000 and the fourteen weeks ended January 3,
1999 were 18,899,000 and 22,831,000, respectively.
Diluted earnings per share information also considers the dilutive effect of
stock options and restricted stock grants. The weighted average shares used in
computing diluted net income per share for the thirteen weeks ended January 2,
2000 and the fourteen weeks ended January 3, 1999 were 18,911,000 and
22,852,000, respectively.
The difference between the number of weighted average shares used to calculate
basic and diluted earnings per share was due entirely to the number of
outstanding stock options and restricted stock. During the periods ended January
2, 2000 and January 3, 1999, outstanding stock options and shares of restricted
stock of 2,019,000 and 1,604,000, respectively, were antidilutive and not
included in the calculation of diluted net income per share.
The Company has authorized 1,000,000 shares of $1 par preferred stock. As of
January 2, 2000 and October 3, 1999, no such shares were issued.
5. Inventories -- Inventories are carried at the lower of cost or market. Cost
is determined by using the LIFO (last-in, first-out) method for the majority of
inventories. Cost for all other inventories has been determined principally by
the FIFO (first-in, first-out) method.
Inventories at January 2, 2000 and October 3, 1999 consisted of the following:
<TABLE>
<CAPTION>
January 2, October 3,
2000 1999
------------------ -----------------
<S> <C> <C>
Finished Goods $ 39,806 $ 45,143
Raw Materials and work in process 108,759 96,527
Manufacturing supplies 8,076 8,056
------------------ -----------------
Total inventories valued at FIFO cost 156,641 149,726
Less - Adjustments to reduce FIFO cost
to LIFO cost, net (12,223) (12,954)
------------------ -----------------
Total inventories $ 144,418 $ 136,772
================== =================
</TABLE>
6. Accumulated Depreciation -- Accumulated depreciation at January 2, 2000 and
October 3, 1999 was $512,132 and $497,871, respectively.
7. Comprehensive Income -- For the thirteen weeks ended January 2, 2000 and the
fourteen weeks ended January 3, 1999, total comprehensive income was $1,276 and
$1,307, respectively. Included in total comprehensive income for the first
quarter was net income of $3,027 and $2,363, respectively, and foreign currency
translation losses of $1,751 and $1,056, respectively.
8. Financial Instruments -- During fiscal 2000, the Company adopted a policy to
manage the exposure related to sales denominated in the Euro through the use of
forward exchange contracts. The duration of these contracts is less than 12
months and attempts to match the anticipated receivable collections. For the
period ended January 2, 2000 realized gains totaled $292. At January 2, 2000 the
nominal amount of the remaining contracts was $39,794 and unrealized
mark-to-market gains, recorded in other current assets in the balance sheet,
were $1,826. These transactions do not qualify as hedges and, as a result,
changes in the fair value of the contracts are recorded as other income in the
statement of income.
9. Segment Information -- Segment information as of January 2, 2000 and January
3, 1999 was as follows:
<TABLE>
<CAPTION>
HOME
AS OF JANUARY 2, 2000 APPAREL AUTOMOTIVE FASHIONS OTHER TOTAL
--------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
External sales $74,743 $95,512 $25,548 $10,699 $206,502
Intersegment sales 28,657 28,657
Operating profit (2,201) 7,586 (1,357) 1,103 5,131
Interest expense 4,471
Other income, net (4,084)
Income before
income taxes 4,744
========== ============ ============ ========= ========
AS OF JANUARY 3, 1999
External sales $81,222 $88,832 $33,196 $11,663 $214,913
Intersegment sales 32,126 32,126
Operating profit 964 7,507 1,345 (1,620) 8,196
Interest expense 4,127
Other expense, net 519
Income before
income taxes 3,550
========== ============ ============ ========= ========
</TABLE>
10. Other income -- Other income for the first quarter of fiscal 2000 included
the hedging gain of $2,118 comprised of $1,826 of mark-to-market gain and $292
of realized gain and a $3,048 gain from stock received from two of the Company's
insurance carriers that demutualized.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
- ---------------------
The first quarter of fiscal 2000 consisted of thirteen weeks. The first quarter
of fiscal 1999 had fourteen weeks.
Net sales for the first quarter of fiscal 2000 were $206.5 million, a decrease
of $8.4 million, or 3.9% from net sales of $214.9 million for the comparable
period of the prior year.
Sales in the Automotive segment increased 7.5% in the first quarter of fiscal
2000 to $95.5 million as compared to $88.8 million for the same quarter in the
prior year. The Company continued to experience strong U.S. automotive fabric
sales increases partially as a result of the increased North American automobile
production. U. S. bodycloth sales dramatically improved as the Company supplied
bodycloth for several popular models and continued to grow market share. In
addition, the return of a major customer program in Mexico increased year over
year sales. Partially offsetting the sales growth were certain foreign currency
exposures and unfavorable product mix changes within the U.K. operations.
Apparel segment sales for the first quarter ended January 2, 2000 declined 8.0%
to $74.7 million from $81.2 million in the comparable quarter of the prior year.
Sales of elastics/intimate apparel, including lace products, continued to grow
during the quarter as a result of the Company's relationship with the major
branded manufacturers who have done well at the retail level. Ready-to-wear
fabric sales also increased due to sales emphasis on warp knitted suedes and
circular knits. These increases were more than offset by a decline in swimwear
sales as a result of financial difficulties and inventory adjustments by certain
of our customers. Mature commodity fabric (linings, sleepwear and robewear)
sales declined due primarily to lower sales to a major customer who filed
bankruptcy late in fiscal 1999.
Home Fashions segment sales for the quarter decreased 22.9% to $25.5 million
from $33.2 million in the first quarter of the prior year. This sales decrease
was primarily due to sales of the cotton jersey knit sheets in fiscal 1999,
which the Company exited in the first quarter of fiscal 1999 because of below
cost imports. There was also lower demand for window curtains due to low cost
imports.
First quarter sales in the Other segment, which includes specialty fabrics and
fibers, declined 8.5% to $10.7 million as compared to $11.7 million in the first
quarter of the previous year. This decline was primarily attributable to a
decrease in the sales volume of hook and loop closure fabrics in the European
market due to continued resourcing to a local supplier. Additionally, sales
declined due to fiscal 1999 inventory sales of nylon fiber, which the Company
ceased to produce during the first quarter of fiscal 1999.
Gross margin for the first quarter of fiscal 2000, decreased to $30.9 million or
15.0% of net sales, from $35.2 million or 16.4% of net sales, for the same
quarter a year ago. The decrease was predominately the result of the sales
volume declines in the Apparel, Home Fashions and Other segments, which also
caused under-utilization of capacity in certain facilities. Conversely, the
growth of the U.S. Automotive business has created operating inefficiencies
associated with continuous seven day production and capacity constraints. In
addition, the strength of the British sterling disadvantaged the Company's U.K.
operations in the European marketplace and negatively impacted sales and margin.
However the forward exchange contracts that the Company entered into to hedge
this exposure, generated income during the first quarter of fiscal 2000. This
income was included in other income. Raw material price increases have been
minimal. The first quarter of fiscal 1999 included non-recurring operating
inefficiencies related to the closing of a yarn production facility in Georgia.
Selling and administrative expenses were $25.8 million or 12.5% of net sales,
compared to $27.0 million or 12.6% of net sales, for the same quarter a year
ago. The decrease from prior year was due primarily to cost reductions and fewer
markdown allowances in the Home Fashions segment. Partially offsetting these
savings were severance costs of $1.2 million associated with a recent downsizing
in our apparel segment.
Interest expense for the first quarter was $4.5 million compared to $4.1 million
for the first quarter last year. The increase in interest expense was
attributable to an overall increase in the level of debt and a full quarter's
effect of interest on private placement debt, which replaced lower rate
borrowings during the first quarter of fiscal 1999.
For the quarter ended January 2, 2000, other income, net was $4.1 million
compared to other expense, net, of $0.5 million for the prior year's comparable
period. Included in other income for the current year were foreign currency
hedging gains of $2.1 million and insurance demutualization gains of $3.0
million. Subsequent to January 2, 2000, a gain of $2.2 million has been realized
as a result of additional stock received in demutualizations.
The income tax provision for the first quarter of fiscal 2000 was $1.7 million,
or 36.2% of income before income taxes, compared to $1.2 million, or 33.4% of
income before income taxes for the same period a year ago. The estimated
effective tax rate for fiscal 2000 increased as a result of a reduction in tax
credits and foreign sales commission as compared to fiscal 1999.
For the quarter ended January 2, 2000, net income was $3.0 million, or $.16 per
diluted share, compared to net income of $2.4 million, or $.10 per diluted
share, for the same quarter a year ago.
Liquidity and Capital Requirements
- ----------------------------------
At January 2, 2000, working capital was $130.0 million compared to $127.7
million at October 3, 1999. The increase in working capital was primarily the
result of higher inventory, due to the increased Automotive volume and a build
in Apparel for orders or forecasts which were not shipped. Working capital also
increased as a result of an increase in other current assets for prepaid taxes
and the unrealized portion of the hedging gain, and a decrease in other current
liabilities due to payments of certain compensation accruals. Partially
offsetting these changes was a decrease in accounts receivable.
The Company intends to maintain the annual capital expenditures near the
depreciation expense. However, during the Company's second quarter of fiscal
2000 and for the next fiscal year, capital expenditures are expected to be
slightly above depreciation expense due to the Company's expansion into Mexico.
The Company maintains flexibility with respect to its seasonal working capital
needs through a committed revolving credit facility of $150 million and its
continued access to other traditional sources of funds, including uncommitted
lines of credit aggregating $120 million, and the ability to receive advances
against its factored accounts receivable. At January 2, 2000, borrowing
availability against the Company's revolving credit facility was $100 million
and availability under its uncommitted bank lines of credit was $41.9 million.
The Company plans to renew the revolving credit facility, which expires at the
end of fiscal 2000. The textile industry is experiencing a tightening in lending
due principally to lower reported earnings. The Company expects the new
revolving credit facility to have higher effective interest rates than under the
Company's current facility. This new revolving credit facility is expected to be
in place in the third quarter of fiscal 2000. Management believes that the
Company's financial position and operating performance will continue to provide
the Company with the ability to obtain necessary capital from the appropriate
financial markets.
Contingencies and Future Operations
- -----------------------------------
Since January 1992, the Company has been involved in discussions with the United
States Environmental Protection Agency ("EPA") regarding remedial actions at its
Gold Mills, Inc. ("Gold") facility in Pine Grove, Pennsylvania which was
acquired in October 1986. Between 1988 and 1990, the Company implemented a
number of corrective measures at the facility in conjunction with the
Pennsylvania Department of Environmental Resources. Subsequently, through
negotiations with the EPA, Gold entered into a Final Administrative Consent
Order, effective October 14, 1992. Pursuant to such order, Gold has performed
(i) certain measures designed to prevent any potential threats to the
environment at the facility and (ii) an investigation to fully determine the
nature of any release of hazardous substances at the facility. In addition, upon
instruction by the EPA, Gold will conduct a study to evaluate alternatives for
any corrective action which may be necessary at the facility. The failure of
Gold to comply with the terms of the Consent Order may result in the imposition
of monetary penalties against Gold.
During fiscal 1992, the Company received a Notice of Violation from the North
Carolina Division of Environmental Management concerning ground water
contamination on or near one of its facilities. The Company voluntarily agreed
to allow the installation of monitoring wells at the site, but denies that such
contaminants originated from the Company's operations or property. The Company
has removed all underground storage tanks at all its U.S. facilities.
At January 2, 2000, environmental accruals amounted to $4.0 million of which
$3.0 million was non-current and was included in other non-current liabilities
in the accompanying balance sheet.
Several purported class action lawsuits have been filed on behalf of purchasers
of the Company's common stock against the Company and certain of its officers
and directors. These lawsuits were consolidated by order of the Court on January
8, 1999. A Consolidated and Amended Class Action Complaint (the "Consolidated
Complaint") was filed on February 8, 1999. The Consolidated Complaint purports
to allege claims under Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder, in connection with the Company's
public disclosure of accounting irregularities at the Hofmann Laces unit in
fiscal year 1998. Specifically, the Consolidated Complaint alleges that, during
the alleged class period (January 20, 1998 through October 26, 1998), defendants
materially misrepresented the Company's financial condition and overstated the
Company's reported earnings. No specific amount of damages is sought in the
Consolidated Complaint.
On April 9, 1999, defendants filed a motion to dismiss the Consolidated
Complaint. On July 21, 1999, the Court entered an order dismissing all claims
against one of the Company's officers but denied the motion to dismiss of the
Company and the remaining individual defendant (Bruno Hofmann).
Plaintiffs filed their Second Amended Complaint on September 7, 1999, and
defendants answered the Second Amended Complaint on September 24, 1999.
On November 1, 1999, plaintiffs filed a motion seeking to certify a plaintiff
class consisting of all persons or entities who purchased the common shares of
the Company from January 20, 1998 through October 26, 1998 inclusive. The
Company intends to vigorously defend the lawsuits.
The Securities and Exchange Commission (the "Commission") has issued a formal
Order Directing Private Investigation and Designating Officers To Take Testimony
(the "Formal Order") with respect to accounting irregularities at the Hofmann
Laces Unit which the Company had previously disclosed in press releases in
October and November 1998. Prior to the issuance of the Formal Order, the
Company had voluntarily provided certain information to the Commission
concerning the accounting irregularities at the Hofmann Laces Unit. The Company
has delivered documents to, and intends to continue cooperating fully with, the
Commission.
The Company is also involved in various litigation arising in the ordinary
course of business. Although the final outcome of these legal and environmental
matters cannot be determined, based on the facts presently known, it is
management's opinion that the final resolution of these matters will not have a
material adverse effect on the Company's financial position or future results of
operations.
Year 2000
- ---------
The Company previously had reported concerns resulting from the possible
inability of internal and external computer systems and applications to
recognize and process data pertaining to years after 1999. At this time, the
Company has neither experienced, nor expects to experience, any material Year
2000 problems impacting the production or delivery of Guilford's products or
internal or external business interruptions. In preparing for Year 2000
readiness, the Company spent $1.4 million and does not foresee any material
additional expenditures. The Company will continue to monitor for potential Year
2000 problems.
Safe Harbor-Forward-Looking Statements
- --------------------------------------
From time to time, the Company may publish forward-looking statements relative
to such matters as anticipated financial performance, business prospects,
technological developments, new products, research and development activities
and similar matters. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.
All statements other than statements of historical fact included in this
document, including, without limitation the statements under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are,
or may be deemed to be, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Important factors that could cause actual results to differ materially
from those discussed in such forward-looking statements include:
1. general economic factors including, but not limited to, changes in
interest rates, foreign currency translation rates, consumer
confidence, housing starts, trends in disposable income, changes in
consumer demand for goods produced, and cyclical or other downturns
2. the overall level of automotive production and the production of
specific car models
3. fashion trends
4. information and technological advances including Year 2000 issues
5. cost and availability of raw materials, labor and natural and other
resources
6. domestic and foreign competition
7. domestic and foreign governmental regulations and trade policies
8. reliance on major customers
9. success of marketing, advertising and promotional campaigns or
10. inability to achieve cost reductions through consolidation and
restructuring of acquired companies
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk for changes in interest rates and foreign
currency exchange rates and has limited exposure to commodity price risk. The
Company does not hold or issue any financial instruments for trading purposes.
During the period ended January 2, 2000, the Company did not experience any
material changes with respect to its sensitivity or management of interest rate
or commodity price risk. However, the Company is subject to foreign currency
risk primarily related to sales and expenditures and other transactions
denominated in foreign currencies and investments in foreign subsidiaries. The
Company manages the exposure related to this risk through forward exchange
contracts with durations generally less than 12 months. The changes in the
market value of such contracts have a high correlation to the price changes in
the currency of the related hedged or anticipated transactions to which they
relate. On January 2, 2000, the Company had the following outstanding foreign
currency forward contracts:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Forward
Currency Nominal Average Gain
Contracts Amount Rate Fair Value (Loss)
(Hedge of Firm Commitments) (In thousands)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receive U.S. Dollar/Pay British Pound
14,819 1.6240 14,870 51
-------------------------------------------------------------------------------
Receive German Deutsche Marks/ Pay U.S. Dollar
113 1.8607 109 (4)
-------------------------------------------------------------------------------
Receive Euro/Pay Mexican Peso
480 12.3695 420 (60)
-------------------------------------------------------------------------------
(Hedge of Anticipatory Commitments) (In thousands)
-------------------------------------------------------------------------------
Receive British Pound/Pay Euro
39,794 0.6578 41,620 1,826
-------------------------------------------------------------------------------
<FN>
(1) Contracts generally mature within 12 months
(2) Nominal contract amount as reflected in the underlying contract
(3) Weighted average contract rates represent the rates of exchange as
reflected in the underlying contract
(4) Fair value equals the contract amount presented in U.S. dollar
equivalents based upon the January 2, 2000 exchange rates obtained from
brokers or referenced from publicly available market information
(5) Gain/(loss) on firm commitments represents the net unrecognized gain/
(loss) based upon the January 2, 2000 exchange rate. Gain on
anticipatory commitments represents the unrealized gain in other
income based upon the January 2, 2000 exchange rate.
</FN>
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings. Reference is made to Item 3 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 3, 1999, which item is
incorporated herein by reference, as modified by this report on Form 10-Q.
Items 2 - 3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. The Company's
fiscal 1999 Annual Meeting of Stockholders was held on February 3, 2000. At such
meeting, the stockholders elected Tomokazu Adachi, John A. Emrich, Bruno
Hofmann, Sherry R. Jacobs and Stig A. Kry to serve as directors for a three-year
term expiring at the first annual meeting of stockholders held after the
Company's 2002 fiscal year. At the same meeting the stockholders also ratified
the selection of Arthur Andersen LLP as independent auditors for the fiscal year
ending October 1, 2000. The number of votes cast for, against or withheld, as
well as the number of abstentions, as the case may be, with respect to each
matter voted upon at the fiscal 1999 Annual Stockholders' Meeting is set forth
below:
(1) Election of Directors
<TABLE>
<CAPTION>
Director Votes For Votes Withheld
-------- --------- --------------
<S> <C> <C>
Tomokazu Adachi 15,571,105 582,589
John A. Emrich 15,893,681 260,013
Bruno Hofmann 15,825,476 328,218
Sherry R. Jacobs 15,878,098 275,596
Stig A. Kry 15,799,647 354,047
</TABLE>
(2) Ratification of Selection of Auditors
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions
--------- ------------- -----------
<S> <C> <C>
16,102,266 19,202 32,225
</TABLE>
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(3) By-laws of the Company, as amended through January 1, 2000
(10)* Amendments to the Guilford Mills, Inc. 1991 Stock Option Plan
*Represents a compensatory plan or arrangement
(b) Reports on Form 8-K. Not Applicable
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUILFORD MILLS, INC.
(Registrant)
Date: February 15, 2000 By: /s/ Terrence E. Geremski
-----------------------------
Terrence E. Geremski
Executive Vice President/
Chief Financial Officer
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUILFORD MILLS, INC.
(Registrant)
Date: February 15, 2000 By:
-----------------------
Terrence E. Geremski
Executive Vice President/
Chief Financial Officer
Exhibit 3
BY-LAWS
OF
GUILFORD MILLS, INC.
(as amended effective as of January 1, 2000)
ARTICLE I
OFFICES
The principal office of the Corporation within the State of Delaware
shall be located at the address stated in the Certificate of Incorporation or in
any certificate of appointment or change of agent or of change of principal
office which shall be filed with the Secretary of State on behalf of the
Corporation. The Corporation may have such other offices, either within or
without the State of Delaware, as the Board of Directors may designate or as the
business of the Corporation may require from time to time.
ARTICLE II
STOCKHOLDERS
The Annual Meeting of the stockholders for the purpose of electing
Directors and for the transaction of such other business as may come before the
meeting shall in 1993 be held on such day during the months of October or
November as may be fixed by the Board of Directors. The next Annual Meeting of
the stockholders for the purpose of electing Directors and for the transaction
of such other business as may come before the meeting shall be held on such day
during the months of February or March in 1995 as may be fixed by the Board of
Directors. Thereafter, the Annual Meeting of the stockholders for the purpose of
electing Directors and for the transaction of such other business as may come
before the meeting shall be on such day during the months of February or March
in each year as may be fixed by the Board of Directors. If the election of
Directors shall not be held on the day designated herein for any annual meeting
of the stockholders, or at any adjournment thereof, the annual election of
Directors may be held at a special meeting of the stockholders as soon
thereafter as may be convenient.
SECTION 2. Place of Meeting. Annual meetings and special meetings of
the stockholders shall be held at such place, within or without the State of
Delaware and at such hour as may be fixed from time to time by the Board of
Directors. At least ten days' (but not more than 50 days') notice shall be given
to the stockholders of the place so fixed.
SECTION 3. Special Meetings. Special meetings of stockholders
of the Corporation may be called only by the Board of Directors pursuant to a
resolution approved by a majority of the whole Board of Directors.
SECTION 4. Notice of Meeting. Written or printed notice stating the
time and place of the meeting shall be delivered not less than ten (10) days
before the date of the meeting, either personally or by mail, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States Mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid. Such notice need not
state the purposes of the meeting unless required by law. Whenever the
provisions of law or of the Certificate of Incorporation or By-laws of the
Corporation require that a meeting of the stockholders shall be duly called for
the purpose, or that a certain notice of the time, place and purposes of any
such meeting shall be given, in order that certain action may be taken at such
meeting, a written waiver of notice of the time, place and purposes of such
meeting, whether regular or special, signed by every stockholder entitled to
notice not present in person or duly represented by proxy at such meeting, or by
his attorney or legal representative thereunto duly authorized, either before or
after the time fixed for holding said meeting, shall be deemed equivalent to
such call and notice, and such action if taken at any such meeting shall be as
valid as if call and notice had been duly given. Notice of any adjourned meeting
of the stockholders shall not be required to be given.
SECTION 5. Closing of Transfer Books for Fixing of Record Date. The
Board of Directors may close the stock transfer books of the Corporation for a
period not exceeding fifty (50) days preceding the date of any meeting of
stockholders or the date for payment of any dividend or the date for the
allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or for a period of not exceeding fifty (50)
days in connection with obtaining the consent of stockholders for any purpose.
In lieu of closing the stock transfer books as aforesaid, the Board of Directors
may fix in advance a date, not exceeding fifty (50) days preceding the date of
any meeting of stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment or rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as the
case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid. In the event that the
Board of Directors shall not have closed the transfer books of the Corporation
or fixed a date for the determination of its stockholders entitled to vote, as
aforesaid, no share of stock shall be voted on at any election for Directors
which has been transferred on the books of the Corporation within twenty (20)
days next preceding such election of Directors.
SECTION 6. Quorum. The holders of a majority of the outstanding shares
of the Corporation entitled to vote, present in person or represented by proxy,
shall constitute a quorum at any meeting of the stockholders. In the absence of
a quorum at any meeting, or any adjournment thereof, a majority in interest of
the stockholders present in person or represented by proxy may adjourn the
meeting from time to time without further notice. At such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally held.
SECTION 7. Proxies. At all meetings of stockholders, the vote of any
stockholder may be cast in person or by his proxy or proxies (who need not be
stockholders) appointed by an instrument in writing subscribed by such
stockholder or by his duly authorized attorney-in-fact and delivered to the
Secretary of the meeting. No appointment of proxy shall be valid after one year
from the date thereof, unless the proxy provides for a longer period.
SECTION 8. Voting Shares. Each stockholder shall be entitled
at each meeting of the stockholders to one vote in person or by proxy for each
share of capital stock having voting rights held by him.
SECTION 9. Voting Lists. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order and showing the address of each
stockholder of record and the number of shares registered in the name of each
stockholder of record. Such list shall be open during the usual hours for
business at the place where said election is to be held for ten (10) days next
preceding the date of said election, to the examination of any stockholder, and
shall be produced and kept at the time and place of the meeting during the whole
time thereof, and subject to the inspection of any stockholder who may be
present.
SECTION 10. Notification of Nomination of Directors. Nominations for
election to the Board of Directors of the Corporation at a meeting of
stockholders may be made by the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of Directors at such meeting who
complies with the notice procedures set forth in this Section 10. Such
nominations, other than those made by, or on behalf of the Board of Directors,
may be made only if notice in writing is personally delivered to, or mailed by
first class United States mail, postage prepaid, and received by, the Secretary
of the Corporation not less than sixty (60) days nor more than ninety (90) days
prior to such meeting; provided, however, that if less than seventy (70) days'
notice or prior public disclosure of the date of the meeting is given to
stockholders, such nomination shall have been mailed by first class United
States mail, postage prepaid, and received by, or personally delivered to, the
Secretary of the Corporation not later than the close of business on the tenth
(10th) day following the day on which notice of the date of the meeting was
mailed or such public disclosure was made, whichever occurs first. Such notice
shall set forth (a) as to each proposed nominee (i) the name, age, business
address and, if known, residence address of each such nominee, (ii) the
principal occupation or employment of each such nominee, (iii) the number of
shares, if any, of stock of the Corporation that are beneficially owned by each
such nominee and (iv) any other information concerning the nominee that must be
disclosed in proxy solicitations pursuant to the proxy rules of the Securities
and Exchange Commission if such person had been nominated, or intended to be
nominated, by the Board of Directors (including such person's written consent to
be named as a nominee and to serve as a Director if elected); and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the
Corporation's books, of such stockholder (ii) a representation that such
stockholder is a holder of record of shares of stock of the Corporation entitled
to vote at the meeting and the class and number of shares of the Corporation
which are beneficially owned by such stockholder, (iii) a representation that
such stockholder intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice and (iv) a description of
all arrangements or understandings between such stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by such stockholder. The
Corporation also may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a Director of the Corporation.
The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 11. Notice of Business at Annual Meetings. At an annual meeting
of the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, if such business relates to the election of Directors of the
Corporation, the procedures in Article II, Section 10 must be complied with. If
such business relates to any other matter, the stockholder must have given
timely notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be personally delivered to, or mailed by
first class United States mail, postage prepaid, and received by, the Secretary
of the Corporation not less than sixty (60) days nor more than ninety (90) days
prior to such meeting; provided, however, that if less than seventy (70) days'
notice or prior public disclosure of the date of the meeting is given to
stockholders, such notice, to be timely, must have been mailed by first class
United States mail, postage prepaid, and received by, or personally delivered
to, the Secretary of the Corporation not later than the close of business on the
tenth (10th) day following the day on which notice of the date of the meeting
was mailed or such public disclosure was made, whichever occurs first. A
stockholder's notice to the Secretary of the Corporation shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (iii) a representation that the stockholder
is a holder of record of shares of stock of the Corporation entitled to vote at
the meeting and the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (iv) any material interest of the
stockholder in such business. Notwithstanding anything in these By-laws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 11 and except that any
stockholder proposal which complies with Rule 14a-8 of the proxy rules (or any
successor provision) promulgated under the Securities Exchange Act of 1934, as
amended, and is to be included in the Corporation's proxy statement for an
annual meeting of stockholders shall be deemed to comply with the requirements
of this Section 11.
The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 11, and if he should so
determine, he shall so declare to the meeting and the business not properly
brought before the meeting shall be disregarded.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by its Board of Directors.
SECTION 2. Number, tenure and qualifications. The number of
Directors shall be such as from time to time shall be fixed by the Board of
Directors, but in no case shall the number be more than fourteen (14) or less
than three (3). Each Director shall hold office until the next election of the
class for which such Directors shall have been chosen, and until a successor
shall be duly elected and qualified, or until his death, resignation or removal.
No Director need be a stockholder of the Corporation. No Director shall serve as
such beyond attaining the age of 70, except that Directors serving as such on
September 5, 1998 may serve until the later of (i) the expiration of the term of
office to which he or she previously has been elected or (ii) age 72.
Notwithstanding the foregoing, each of Maurice A. Fishman, George Greenberg and
Charles A. Hayes shall be eligible to be designated as a Director Emeritus. Any
such appointment shall be for a one year term expiring with the next Annual
Meeting of Stockholders after such appointment. The one year term shall be
subject to renewal, at the meeting of Directors immediately following the Annual
Meeting of Stockholders, for successive one year periods not beyond the 80th
birthday of the Director Emeritus. A Director Emeritus shall not be considered a
member of the Board of Directors, but shall be a consultant to the Board.
Compensation for a Director Emeritus shall be as determined by the entire Board
of Directors, but shall not in any event exceed the cash compensation paid to
Directors for serving as such. Compensation for a Director Emeritus shall not
include stock option grants or any other stock-based compensation. Directors
Emeritus shall have none of the rights, obligations or duties of a Director
including, without limitation, voting rights. Directors Emeritus shall be
invited to attend and speak at meetings of the Board of Directors but shall not
serve on or attend Committee meetings.
SECTION 3. Regular Meetings. The first meeting of each newly elected
Board of Directors shall be held immediately after, and at the same place as the
annual election of Directors, if a quorum shall be then present, in which case
notice of such meeting need not be given. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of Delaware,
for the holding of regular meetings without other notice than such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or of any two
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Delaware, as the place for holding any special meeting of the Board of Directors
called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at
least two (2) days prior thereto by written notice delivered personally or
mailed to each Director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Each such notice shall state the time and place of the
meeting but need not state the purposes thereof except as otherwise in these
By-laws expressly provided. Unless required by law or these By-laws, such notice
shall not be required to be given to any Director who shall be present at such
meeting, or who shall waive such notice in writing or by telegraph, cable or
radio, whether before or after the meeting, and any meeting of the Board of
Directors shall be a legal meeting without any notice thereof having been given
if all of the Directors shall be present thereat. Whenever the provisions of the
law or of the Certificate of Incorporation of the Corporation or these By-laws
require that a meeting of the Directors shall be duly called for the purpose, or
that a certain notice of the time, place and purposes of any such meeting shall
be given, in order that certain action may be taken at such meeting, a written
waiver of notice of the time, place and purposes of such meeting, whether
regular or special, signed by every Director not present in person, either
before or after the time fixed for holding said meeting, shall be deemed
equivalent to such call and notice, and such action if taken at any such meeting
shall be as valid as if call and notice had been duly given.
SECTION 6. Quorum. A majority of the Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
but if less than such a quorum is present at a meeting, a majority of the
Directors present may adjourn the meeting from time to time without further
notice.
SECTION 7. Manner of Acting. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
SECTION 8. Removal of Directors. Any Director may be removed, but only
with cause, at any time, by the affirmative vote of the holders of a majority of
the outstanding stock entitled to vote for the election of Directors of the
Corporation, at a special meeting of the stockholders called and held for the
purpose.
SECTION 9. Vacancies. Any vacancy or vacancies in the Board of
Directors resulting from death, resignation, removal, and increase in the
authorized number of Directors, or any other cause, may be filled only by a
majority vote of the Directors then in office, though less than a quorum, and
each Director so elected shall hold office until the next election of the class
for which such Director shall have been chosen and until his successor shall be
duly elected and qualified, or until his death, resignation or removal.
SECTION 10. Compensation. By resolution of the Board of Directors,
the Directors may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid such fee for attendance at each
meeting of the Board of Directors or such stated salary as Director as shall be
fixed by the Board of Directors. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV
EXECUTIVE COMMITTEE
SECTION 1. Designation and Vacancies. The Executive Committee, if
any, shall be designated as provided in the Certificate of Incorporation, shall
consist of not less than three members of the Board of Directors, one of whom
shall be designated the Chairman of the Executive Committee. The Chairman of the
Executive Committee shall preside at meetings of the Executive Committee, and
the Secretary of the Corporation, or such other person as the Executive
Committee shall from time to time determine, shall act as Secretary of the
Executive Committee.
The Board of Directors, by action of a majority of the whole Board,
shall fill vacancies in the Executive Committee.
SECTION 2. Powers. During the intervals between the meetings of the
Board of Directors, the Executive Committee, if designated, shall have, and may
exercise, all of the powers of the Board of Directors (other than the power to
remove or elect officers) in the management of the business and affairs of the
Corporation, including the power to authorize the seal of the Corporation to be
affixed to all papers which may require it, in such manner as the Executive
Committee shall deem for the best interests of the Corporation, in all cases in
which specific directions shall not have been given by the Board of Directors.
All action by the Executive Committee shall be reported to the
Board of Directors at its meeting next succeeding such action.
SECTION 3. Procedures, Meetings and Quorum. The Executive Committee
shall meet at such times and at such place or places as may be provided by such
rules of procedures as the Executive Committee may adopt, or by resolution of
the Executive Committee or of the Board of Directors. At every meeting of the
Executive Committee the presence of a majority of all the members shall be
necessary for the adoption by it of any resolution.
SECTION 4. Compensation. By resolution of the Board of Directors,
the members of the Executive Committee may be paid their expenses, if any, of
attendance at each meeting of the Executive Committee, and may be paid such fee
for attendance at each meeting of the Executive Committee as shall be fixed by
the Board of Directors.
ARTICLE 7
AUDIT COMMITTEE
SECTION 1. Audit Committee. The Audit Committee, if any, of the Board
of Directors shall be designated by the Board of Directors and shall consist of
not less than two (2) members of the Board of Directors, none of whom shall be
executive officers of the Corporation. One member of the Audit Committee may be
designated the Chairman of the Audit Committee. The Chairman of the Audit
Committee shall preside at meetings of the Audit Committee, and the Secretary of
the Corporation, or such other person as the Audit Committee shall from time to
time determine, shall act as Secretary of the Audit Committee. The Board of
Directors, by action of a majority of the whole Board, shall fill vacancies in
the Audit Committee.
SECTION 2. Powers. The Audit Committee shall meet with management to
consider the adequacy of the internal controls of the Corporation and the
objectivity of financial reporting. The Audit Committee shall also meet with the
Corporation's independent accountants and with appropriate Corporation financial
personnel with respect to such matters. The Audit Committee shall recommend to
the Board of Directors the appointment of independent accountants. The Audit
Committee shall have such other powers as are granted to it by resolution of the
Board of Directors.
SECTION 3. Procedures, Meetings and Quorum. The Audit Committee shall
meet at such times and at such place or places as may be provided by such rules
of procedures as the Audit Committee may adopt, or by resolution of the Audit
Committee or of the Board of Directors. At every meeting of the Audit Committee
the presence of a majority of all the members shall be necessary for the
adoption of a new resolution.
SECTION 4. Compensation. By resolution of the Board of Directors, the
members of the Audit Committee may be paid their expenses, if any, of attendance
at each meeting of the Audit Committee and may be paid such fee for attendance
at each meeting of the Audit Committee as shall be fixed by the Board of
Directors.
ARTICLE VI
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a Chairman
of the Board, a President, one or more Vice Presidents (the number thereof to be
determined by the Board of Directors), a Secretary and a Treasurer, each of whom
shall be elected by the Board of Directors. Such other officers (including a
Vice Chairman of the Board) and assistant officers as may be deemed necessary
may be elected or appointed by the Board of Directors. Any two offices (but not
more than two), other than the offices of a President and Secretary, may be held
by the same person. The President shall be chosen from among the Directors.
SECTION 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually at the first
meeting of the Board of Directors following the annual election of Directors. If
the election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as may be convenient. Each officer shall hold office
until his successor shall be duly elected and qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
SECTION 3. Removal of Officers. Any officer may be removed, either with
or without cause, by the vote of a majority of the whole Board of Directors at a
special meeting called for the purpose or, except in case of any officer elected
by the Board of Directors, by any superior officer upon whom the power of
removal may be conferred by the Board of Directors or by these By-laws.
SECTION 4. Vacancies. A vacancy in any office resulting from
death, resignation, removal or any other cause, may be filled by the Board of
Directors for the unexpired portion of the term.
SECTION 5. Chairman and Vice Chairman of the Board. The Chairman of the
Board of Directors shall preside at all meetings of the stockholders and of the
Board of Directors at which he is present and shall have and perform such other
duties and may exercise such other powers as from time to time may be assigned
to him by these By-Laws or the Board of Directors. The Vice Chairman of the
Board of Directors shall, in the absence of the Chairman of the Board of
Directors, preside at all meetings of the stockholders and of the Board of
Directors at which he is present, and shall perform such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. President. The President shall be the chief executive
officer of the Corporation and shall have the final executive authority with
respect to the management of the affairs and policies of the Corporation,
including such powers and authority which, by custom and usage, ordinarily are
inherent in and incident to the office of the chief executive officer, except as
the same specifically may be limited by resolution of the Board of Directors.
SECTION 7. The Vice Presidents. Each Vice President shall have such
powers and perform such duties as the Board of Directors may determine or as may
be assigned to him by the President. In the absence of the President or in the
event of his death, or inability or refusal to act, the Vice President (or in
the event there be more than one Vice President, the Vice Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President, and when so acting, shall have all the powers and be subject to
all the restrictions upon the President.
SECTION 8. The Secretary. The Secretary shall (a) keep the minutes of
the meetings of the stockholders, the Board of Directors, the Executive
Committee (if designated), and all other committees, if any, of which a
Secretary shall not have been appointed, in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-laws and as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents, the execution of which on behalf of
the Corporation under its seal, is duly authorized; (d) be in charge of the
stock ledger of the Corporation; (e) in general perform all duties incident to
the office of Secretary and such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
SECTION 9. The Treasurer. The Treasurer shall (a) have charge and
custody of and be responsible for all funds and securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the Corporation from
any source whatsoever; (c) deposit all such moneys in the name of the
Corporation in such banks, trust companies, or other depositories as shall be
selected in accordance with the provisions of Article VI of these By-laws; and
(d) in general perform all duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors. He shall, if required by the Board of Directors, give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the Board of Directors shall determine.
SECTION 10. Assistant Secretaries and Assistant Treasurers. At the
request of the Secretary or in his absence or disability, one or more Assistant
Secretaries designated by the Board of Directors shall have all the powers of
the Secretary. At the request of the Treasurer or in his absence or disability,
one or more Assistant Treasurers designated by the Board of Directors shall have
all the powers of the Treasurer. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties as shall be assigned to them
by the Secretary or the Treasurer, respectively, or by the President or the
Board of Directors.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. Except as otherwise provided by law, these
By-laws or resolutions of the Board of Directors, any contract or other
instrument shall be valid and binding on the Corporation if executed and
delivered in its name and on its behalf by the President or in his absence or
disability by any Vice President. The Board of Directors may, however, authorize
any other officer or officers or other agent or agents to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances.
SECTION 2. Loans. No loan shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers or other
agent or agents of the Corporation and in such manner and as shall from time to
time be determined by resolution of the Board of Directors. Each of such
officers and agents shall give such bond, if any, as the Board of Directors may
require.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select or as may be designated by any officer or officers of the
Corporation.
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of
stock of the Corporation shall be in such form and shall contain such
information as shall be required by law at the time the same are issued. Such
certificates shall be (i) signed by the Chairman or Vice Chairman of the Board
of Directors or by the President or a Vice President and by the Treasurer or an
Assistant Treasurer, or by the Secretary or an Assistant Secretary. If such
certificate is countersigned (i) by a transfer agent other than the Corporation
or its employee or (ii) by a registrar other than the Corporation or its
employee, any of the signatures above authorized may be a facsimile. Such
certificates shall bear the seal of the Corporation which may be a facsimile
thereof. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, the certificate may be issued by the Corporation with the same effect as
if such person were such officer, transfer agent, or registrar at the date of
issue. All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and the date of issue, shall be
entered on the stock transfer books of the Corporation. The person in whose name
any shares shall stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes. All certificates
surrendered to the Corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except as otherwise provided
in the Certificate of Incorporation and except that in case of a lost,
destroyed, or mutilated certificate a new one may be issued therefor upon such
terms and/or indemnity to the Corporation as the Board of Directors may
prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or the Transfer
Agent of the Corporation and on surrender for cancellation of the certificate
for such shares.
ARTICLE IX
FISCAL YEAR
The 1994 fiscal year of the Corporation shall commence on September 27,
1993 and end on October 2, 1994. Thereafter, the fiscal year of the Corporation
shall commence on the first Monday following the Sunday nearest September 30 in
each year and end on the Sunday nearest September 30 in each year.
ARTICLE X
SEAL
The corporate seal of the Corporation shall be in the form of a circle
and shall include the name of the Corporation and reference to the year and
place of its incorporation.
ARTICLE XI
INDEMNIFICATION
SECTION 1. Indemnification Respecting Third Party Claims. The
Corporation, to the full extent permitted, and in the manner required, by the
laws of the State of Delaware as in effect at the time of the adoption of this
Article or as such laws may be amended from time to time, shall indemnify any
person who was or is made a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (including any
appeal thereof), whether civil, criminal, administrative or investigative in
nature (other than an action by or in the right of the Corporation), by reason
of the fact that such person is or was a Director, officer, employee or agent of
the Corporation, or, if at a time when he was a Director, officer, employee or
agent of the Corporation, is or was serving at the request of, or to represent
the interests of, the Corporation as a Director, officer, partner, fiduciary,
employee or agent (a "Subsidiary Officer") of another Corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise (an "Affiliated
Entity"), against expenses (including attorneys' fees and disbursements), costs,
judgments, fines, penalties and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful; provided, however,
that the Corporation shall not be obligated to indemnify against any amount paid
in settlement unless the Corporation has consented to such settlement, which
consent shall not be unreasonably withheld. The termination of any action, suit
or proceeding by judgment, order, settlement or conviction or upon a plea of
nolo contendere or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that such
person had reasonable cause to believe that his or her conduct was unlawful.
Notwithstanding anything to the contrary in the foregoing provisions of this
Section 1, a person shall not be entitled, as a matter of right, to
indemnification pursuant to this Section 1 against costs or expenses incurred in
connection with any action, suit or proceeding commenced by such person against
any person who is or was a Director, officer, fiduciary, employee or agent of
the Corporation or a Subsidiary Officer of any Affiliated Entity, but such
indemnification may be provided by the Corporation in a specific case as
permitted by Section 6 of this Article.
SECTION 2. Indemnification Respecting Derivative Claims. The
Corporation, to the full extent permitted, and in the manner required, by the
laws of the State of Delaware as in effect at the time of the adoption of this
Article or as such laws may be amended from time to time, shall indemnify any
person who was or is made a party to or is threatened to be made a party to any
threatened, pending or completed action or suit (including any appeal thereof)
brought in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a Director, officer, employee or
agent of the Corporation, or, if at a time when he was a Director, officer,
employee or agent of the Corporation, is or was serving at the request of, or to
represent the interests of, the Corporation as a Subsidiary Officer of an
Affiliated Entity against expenses (including attorneys' fees and disbursements)
and costs actually and reasonably incurred by such person in connection with
such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless, and except to the extent that, the Court of
Chancery of the State of Delaware or the court in which such judgment was
rendered shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses and costs as the
Court of Chancery of the State of Delaware or such other court shall deem
proper. Notwithstanding anything to the contrary in the foregoing provisions of
this Section 2, a person shall not be entitled, as a matter of right, to
indemnification pursuant to this Section 2 against costs and expenses incurred
in connection with any action or suit in the right of the Corporation commenced
by such person, but such indemnification may be provided by the Corporation in
any specific case as permitted by Section 6 of this Article.
SECTION 3. Determination of Entitlement to Indemnification. Any
indemnification under Section 1 or 2 of this Article (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification is proper under the circumstances because
such person has met the applicable standard of conduct set forth in Section 1 or
2 of this Article. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of Directors who were not
parties to the action, suit or proceeding in respect of which indemnification is
sought or by majority vote of the members of a committee of the Board of
Directors composed of at least three members each of whom is not a party to such
action, suit or proceeding, or (b) if such a quorum is not obtainable and/or
such a committee is not established or obtainable, or, even if obtainable, if a
quorum of disinterested Directors so directs, by independent legal counsel in a
written opinion or (c) by the stockholders. In the event a request for
indemnification is made by any person referred to in Section 1 or Section 2, the
Corporation shall cause such determination to be made not later than 60 days
after such request is made.
SECTION 4. Right to Indemnification Upon Successful Defense and
For Service as a Witness.
(a) Notwithstanding the other provisions of this Article, to
the extent that a Director, officer, employee or agent of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1 or 2 of this Article, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) and costs actually and reasonably incurred
by such person in connection therewith.
(b) To the extent any person who is or was a Director,
officer, employee or agent of the Corporation has served or prepared to serve as
a witness in any action, suit or proceeding (whether civil, criminal,
administrative or investigative in nature) or in any investigation by the
Corporation or the Board of Directors thereof or a committee thereof or by any
securities exchange on which securities of the Corporation are or were listed by
reason of his services as a Director, officer, employee or agent of the
Corporation or as a Subsidiary Officer of any Affiliated Entity (other than in a
suit commenced by such person), the Corporation shall indemnify such person
against expenses (including attorneys' fees and disbursements) and costs
actually and reasonably incurred by such person in connection therewith within
30 days after receipt by the Corporation from such person of a statement
requesting such indemnification, averring such service and reasonably evidencing
such expenses and costs.
SECTION 5. Advance of Expenses. Expenses and costs incurred by any
person referred to in Section 1 or Section 2 of this Article in defending a
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such person to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized by
this Article.
SECTION 6. Indemnification Not Exclusive. The provision of
indemnification to or the advancement of expenses and costs to any person under
this Article, or the entitlement of any person to indemnification or advancement
of expenses and costs under this Article, shall not limit or restrict in any way
the power of the Corporation to indemnify or advance expenses and costs to such
person in any other way permitted by law or be deemed exclusive of, or
invalidate, any right to which any person seeking indemnification or advancement
of expenses and costs may be entitled under any law, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in such
person's capacity as an officer, Director, employee or agent of the Corporation
and as to action in any other capacity while holding any such position.
SECTION 7. Accrual of Claims; Successors. The indemnification provided
or permitted under this Article shall apply in respect of any expense, cost,
judgment, fine, penalty or amount paid in settlement, whether or not the claim
or cause of action in respect thereof accrued or arose before or after the
effective date of this Article. The right of any person who is or was a
Director, officer, employee or agent of the Corporation to indemnification under
this Article shall continue after he shall have ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
distributees, executors, administrators and other legal representatives of such
person.
SECTION 8. Corporate Obligations; Reliance. This Article shall be
deemed to create a binding obligation on the part of the Corporation to its
current and former officers, Directors, employees and agents and their heirs,
distributees, executors, administrators and other legal representatives, and
such persons in acting in such capacities shall be entitled to rely on the
provisions of this Article, without giving notice thereof to the Corporation.
SECTION 9. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of, or to
represent the interests of, the Corporation as a Subsidiary Officer of any
Affiliated Entity, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article or
applicable law.
SECTION 10. Definitions of Certain Terms.
(a) For purposes of this Article, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its corporate existence had continued, would
have been permitted under applicable law to indemnify its Directors, officers,
employees or agents, so that any person who is or was a Director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request, or to represent the interests of, such constituent corporation as a
Director, officer, employee or agent of any Affiliated Entity shall stand in the
same position under the provisions of this Article with respect to the resulting
or surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.
(b) For purposes of this Article, references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; references to "serving at the request of the Corporation" shall
include any service as a Director, officer, fiduciary, employee or agent of the
Corporation which imposes duties on, or involves services by, such Director,
officer, fiduciary, employee or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interest of the Corporation" as
referred to in this Article.
Exhibit 10
AMENDMENTS TO THE GUILFORD MILLS, INC.
1991 STOCK OPTION PLAN
The Guilford Mills, Inc. 1991 Stock Option Plan (the "Option Plan) is hereby
amended as follows:
1. The first sentence of the first paragraph of Article II of the Option Plan
is amended and restated in its entirety, in order to reflect certain
changes to be made with respect to the number of authorized Shares, to read
as follows:
The total number of shares of common stock of the Company
which may be purchased or acquired pursuant to the exercise of
Options or Rights granted under the Plan shall not exceed, in the
aggregate, Two Million Seven Hundred Eighty Nine Thousand Three
Hundred Seventy Five (2,789,375) shares of the authorized common
stock, $.02 par value per share, of the Company (the "Shares"),
such number to be subject to adjustment as provided in Article
XVIII hereof.
2. Effective on February 8, 2000, the first sentence of the first paragraph of
Article II of the Option Plan is amended and restated in its entirety, in
order to reflect certain changes to be made with respect to the number of
authorized Shares, to read as follows:
The total number of shares of common stock of the Company
which may be purchased or acquired pursuant to the exercise of
Options or Rights granted under the Plan shall not exceed, in the
aggregate, Two Million Seven Hundred Fifty Thousand (2,750,000)
shares of the authorized common stock, $.02 par value per share,
of the Company (the "Shares"), such number to be subject to
adjustment as provided in Article XVIII hereof.
3. The first and second paragraphs of Article III of the Option Plan are
amended and restated in their entirety, in order to reflect the changes in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to read as follows:
The board of directors of the Company (the "Board of
Directors) shall designate from among its members an option
committee (the "Option Committee") to administer the Plan. The
Option Committee shall consist of no fewer than two members of the
Board of Directors, each of whom shall be a "non-employee
director" within the meaning of Rule 16b-3 (or any successor rule
or regulation) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). A majority of the members
of the Option Committee shall constitute a quorum, and the act of
a majority of the members of the Option Committee shall be the act
of the Option Committee. Any member of the Option Committee may be
removed at any time either with or without cause by resolution
adopted by the Board of Directors, and any vacancy on the Option
Committee at any time may be filled by resolution adopted by the
Board or Directors.
Any or all powers and functions of the Option Committee may be
exercised at any time and from time to time by the Board of
Directors or an executive committee of the Board of Directors (the
"Executive Committee"); provided, however, that all of the members
of the Board of Directors need not be "non-employee directors"
within the meaning of Rule 16b-3 (or any successor rule or
regulation) promulgated under the Exchange Act.
4. In order to reflect certain changes in Rule 16b-3 of the Exchange Act, the
last sentence of the fourth paragraph in Article III of the Option Plan
shall be deleted in its entirety.
5. The sixth paragraph of Article VII of the Option Plan is amended and
restated in its entirety, in order to reflect the changes in Rule 16b-3(e)
of the Exchange Act, to read as follows:
Any election by a holder of a Right to receive cash in full or
partial settlement of such Right, and any exercise of such Right
for cash, may be made only by a Request filed with the Corporate
Secretary of the Company. Within thirty (30) days after the
receipt by the Company of a Request to receive cash in full or
partial settlement of a Right or to exercise such Right for cash,
the Board of Directors, the Executive Committee or the Option
Committee, as the case may be, shall, in its sole discretion,
either consent to or disapprove, in whole or in part, such
Request. A Request to receive cash in full or partial settlement
of a Right or to exercise for cash may provide that, if the Board
of Directors, the Executive Committee or the Option Committee, as
the case may be, shall disapprove such Request, such Request shall
be deemed to be an exercise of such Right for Shares.
6. In order to reflect certain changes in Rule 16b-3(e) of the Exchange Act,
the eighth paragraph of Article VII of the Option Plan shall be deleted in
its entirety.
7. The first paragraph of Article VIII of the Option Plan is amended and
restated in its entirety, in order to provide for certain changes with
regard to the vesting period applicable to Options or Rights, and to
provide for certain changes with regard to the post-termination exercise
period applicable to Options or Rights, to read as follows:
Upon termination of employment of any employee with the
Company and all of its subsidiary corporations and parent
corporations of the Company, an Option or Right previously granted
to the employee, shall, to the extent not theretofore exercised
(except as provided below), terminate and become null and void;
provided, however, that:
(a) if the employee shall die while in the employ of such
corporation or during any of the Post-Retirement Vesting
Period (as defined below), the one (1) year period or the
three (3) month period, whichever is applicable, specified in
clauses (b), (c) and (d) below, such Option or Right shall
become immediately exercisable in full and the legal
representative of such employee, or such person who acquired
such Option or Right as a permitted transferee of the employee
hereunder may, not later than one (1) year from the date of
death, exercise such Option or Right, to the extent not
theretofore exercised, in respect of any or all of such number
of Shares covered by the Option or Right; and
(b) if the employment of any employee to whom such Option
or Right shall have been granted shall terminate by reason of
the employee's retirement (at such age or upon such conditions
as shall be specified by the Board of Directors, the Executive
Committee or the Option Committee, as the case may be, in its
sole discretion), such employee shall have the right to
exercise such Option or Right so granted, to the extent not
theretofore exercised, in respect of any or all of such number
of Shares (it being understood that such Option or Right shall
continue to vest at the same rate and in the same manner as
such Option or Right would have vested had no retirement had
taken place), at any time up to and including the earlier of
five (5) years after the date of such termination and the
expiration of such Option or Right (the "Post-Retirement
Vesting Period"),
(c) if the employment of any employee to whom such Option
or Right shall have been granted shall terminate by reason of
the employee's disability (as described in Section 22(e)(3) of
the Code), such employee shall have the right to exercise such
Option or Right so granted, to the extent not theretofore
exercised, in respect of any or all of such number of Shares
(it being understood that such Option or Right shall become
immediately exercisable in full upon termination by
disability), at any time up to and including one (1) year
after the date of such termination, and
(d) if the employment of any employee to whom such Option
or Right shall have been granted shall terminate by reason of
the employee's dismissal by the employer other than for cause
(as defined below), such employee shall have the right to
exercise such Option or Right so granted, to the extent not
theretofore exercised, in respect of any or all of such number
of Shares which such employee would have been entitled to
under such Option or Right as of the date of termination (it
being understood that upon dismissal by the employer other
than for cause all vesting of Options and Rights granted shall
cease), at any time up to and including three (3) months after
the date of such dismissal;
provided, however, that the Board of Directors, the Executive
Committee or the Option Committee, as the case may be, shall have
the authority, in its sole discretion, to extend the applicable
periods referred to in subsections (a), (b), (c) and (d) above
under appropriate circumstances.
8. In order to clarify certain provisions with regard to the termination
provisions of the Option Plan, the third paragraph of Article VIII shall be
deleted in its entirety. The third paragraph of Article VIII reads as
follows:
In no event, however, shall any person be entitled to exercise
any Option or Right after the expiration of the period of
exercisability of such Option or Right as specified therein.
9. Article X of the Option Plan is amended and restated in its entirety, in
order to reflect certain changes to be made with respect to Options for
Director Participants, to read as follows:
Subject to the terms and conditions of Articles X through XIV
hereof, commencing with the Annual Meeting of stockholders of the
Company to be held in February, 2000, each person who is elected
or re-elected at, or otherwise continues his or her service on the
Board immediately after, the Annual Meeting of stockholders of the
Company, shall automatically be granted on the date of such Annual
Meeting of stockholders an Option to purchase 4,000 Shares,
subject to adjustment as provided in Article XVII hereof. The form
of Options granted pursuant to this Article X shall be
Non-Qualified Options. The purchase price of the Shares covered by
the Options shall be the fair market value of the Shares at the
date of grant.
10. In order to reflect certain changes to be made with respect to Options for
Director Participants, the first sentence of the first paragraph of Article
XI shall be amended and restated to read as follows:
Any Option granted under Article X hereof shall be exercisable
for ten years from the date of grant.
11. In order to reflect certain changes to be made with respect to Options for
Director Participants, the first sentence of Article XII shall be amended
and restated in its entirety to read as follows:
If a Director Participant's service as a director of the
Company is terminated by reason of (a) disability, (b) death, (c)
failure of the Company to retain, or nominate for re-election such
Director Participant, who is otherwise eligible to serve in such
capacity, for a reason other than for cause, (d) his or her
ineligibility for re-election pursuant to the Company's By-laws,
or (e) retirement, such termination shall be considered a
"Qualifying Termination" and unexercised Options previously
granted to such Director Participant shall be exercisable during
the period from the date of termination until the earlier of five
(5) years or the natural term of such Option.
12. In order to reflect certain changes in Rule 16b-3 of the Exchange Act, the
text of Article XIV of the Option Plan shall be deleted in its entirety and
the word "Reserved." inserted in lieu thereof.
13. In order to reflect certain changes in Rule 16b-3(e) of the Exchange Act,
the penultimate sentence of Article XXII of the Option Plan shall be
deleted in its entirety.
14. Article XVII of the Option Plan is amended and restated in its entirety, in
order to reflect the changes in Rule 16b-3 of the Exchange Act, to read as
follows:
Each Option or Right granted under the Plan to a participant
shall not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable, during the
participant's lifetime, only by the participant. Notwithstanding
the foregoing, at the discretion of the Board of Directors, the
Executive Committee or the Option Committee, as the case may be,
an award of an Option or Right other than an Incentive Option may
permit the transferability of an Option or Right by a participant
solely to the participant's spouse, siblings, parents, children
and grandchildren or trusts for the benefit of such persons
(and/or the participant) or partnerships, corporations, limited
liability companies or other entities owned solely by such persons
(and/or the participant), including trusts for such persons
(and/or the participant), subject to any restriction included in
the award of the Option or Right.
15. The first sentence of Article XVIII of the Option Plan is amended and
restated in its entirety as follows:
In the event of any change in the outstanding Shares through
merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off, combination
of shares, exchange of shares, or other like change in capital
structure of the Company, appropriate adjustments shall be made by
the Board of Directors, the Executive Committee or the Option
Committee, as the case may be, to the maximum number of Shares
which may be acquired under the Plan pursuant to the exercise of
Options and Rights, to the number of Shares subject to Options to
be granted pursuant to Article X hereof, and to the number of
Shares and price per Share subject to outstanding Options or
Rights as shall be equitable to prevent dilution or enlargement of
rights under such Options or Rights, and the determination of the
Board of Directors, the Executive Committee or the Option
Committee, as the case may be, as to these matters shall be
conclusive.
16. In order to allow for the grant of Options and Rights to certain
consultants, the following paragraphs of the Option Plan shall be amended
and restated in their entirety as follows:
The first paragraph of Article I:
Guilford Mills, Inc. (the "Company") desires to afford (a)
certain of its key employees and consultants and the key employees
of and consultants to any subsidiary corporation or parent
corporation of the Company now existing or hereafter formed or
acquired, including directors who are regularly employed by the
Company and any subsidiary or parent corporation of the Company,
and (b) directors of the Company, who are responsible for the
continued growth of the Company, an opportunity to acquire a
proprietary interest in the Company, and thus to create in such
key employees, consultants and directors an increased interest in
and a greater concern for the welfare of the Company and its
subsidiaries.
The second paragraph of Article I:
The Company, by means of this 1991 Stock Option Plan (the
"Plan"), seeks to retain the services of persons now holding key
positions, consulting arrangements and directorships and to
attract the services of persons capable of filling such positions.
The third paragraph of Article I:
The stock option ("Options") and stock appreciation rights
("Rights") offered pursuant to the Plan are a matter of separate
inducement and are not in lieu of any salary or other compensation
for the services of any key employee, consultant or director.
The third paragraph of Article II:
Except as provided in Articles X through XIV and XXVIII
hereof, the Company may, from time to time during the period
beginning on August 29, 1991 (the "Effective Date") and ending on
August 28, 2001 (the "Termination Date"), grant to certain key
employees, consultants and directors of the Company, or certain
key employees of and consultants to any subsidiary corporation or
parent corporation of the Company now existing or hereafter formed
or acquired, Incentive Options and/or Non-Qualified Options and/or
Rights under the terms hereinafter set forth.
The fourth paragraph of Article II:
Provisions of the Plan that pertain to Options or Rights
granted to an employee or a consultant shall apply to Options,
Rights or any combination thereof.
The third paragraph of Article III:
Subject to the express provisions of the Plan, including
without limitation, Articles X through XIV hereof, the Board of Directors,
the Executive Committee or the Option Committee, as the case may be, shall
have authority, in its sole discretion, to determine the employees and
consultants to whom Options or Rights shall be granted, the date upon which
such Options or Rights shall be granted, the number of Shares which shall
be subject to each Option or Right, the purchase price or exercise price of
each Option or Right, and the other terms and provisions thereof (which
need not be identical). In determining the number of shares for which
Options or Rights are to be granted to each employee or consultant, the
length of such employee's or consultant's service, the amount of the
employee's or consultant's earnings and his responsibilities and duties
shall be given careful consideration by the Board of Directors, the
Executive Committee or the Option Committee, as the case may be.
The fifth paragraph of Article III:
Any terms not specifically provided for herein with regard
to consultants shall be determined by the Board of Directors, the Executive
Committee or the Option Committee, as the case may be, in its sole
discretion, and such terms shall be provided in and governed by the
consulting agreement entered into with such consultant. The determination
of the Board of Directors, the Executive Committee or the Option Committee,
as the case may be, on matters referred to in this Article III shall be
conclusive.
The first paragraph of Article IV:
Incentive Options may be granted only to salaried key
employees of the Company or any subsidiary corporation or parent
corporation of the Company now existing or hereafter formed or
acquired. Non-Qualified Options and Rights may be granted to
salaried key employees of the Company or of any subsidiary
corporation or parent corporation of the Company now existing or
hereafter formed or acquired, except as hereinafter provided, and
Non-Qualified Options shall be granted to directors of the Company
("Director Participants") pursuant to the provisions of Articles X
through XIV hereof. Non-Qualified Options and Rights may be
granted to consultants to the Company or to any subsidiary
corporation or parent corporation of the Company now existing or
hereafter formed or acquired, on such terms and conditions as the
Board of Directors, the Executive Committee or the Option
Committee, as the case may be, shall determine in its sole
discretion.
The second paragraph of Article IV:
The Plan does not create a right in any employee or consultant
to participate in the Plan, nor does it create a right in any
employee or consultant to have any Options or Rights granted to
him or her.
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> OCT-1-2000
<PERIOD-END> JAN-2-2000
<EXCHANGE-RATE> 1.00
<CASH> 18,497
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0
0
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</TABLE>
