SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the thirteen weeks ended April 30, 1994
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 1-10218
COLLINS & AIKMAN HOLDINGS CORPORATION
A Delaware Corporation (IRS Employer Identification
No. 13-3489233)
8320 University Executive Park, Suite 102
Charlotte, North Carolina 28262
Telephone (704) 548-2350
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 .
As of June 13, 1994, the number of outstanding shares of the Registrant's common
stock, $.01 par value, was 35,035,000 shares.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
April 30, May 1,
1994 1993
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 390,446 $ 339,043
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 289,492 260,095
Selling, general and administrative expenses . . . . . . . . . . . . . . 55,392 52,796
344,884 312,891
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,562 26,152
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . 29,061 27,225
Dividends on preferred stock of subsidiary . . . . . . . . . . . . . . . 1,129 1,129
Income (loss) from continuing operations before
income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,372 (2,202)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,618 3,271
Income (loss) from continuing operations . . . . . . . . . . . . . . . . 12,754 (5,473)
Discontinued operations:
Loss from operations, net of income tax expense
of $570 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (1,359)
Loss on disposal, net of income tax expense of $0 - (2,237)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,754 $ (9,069)
</TABLE>
See accompanying notes.
I-1
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
April 30, January 29,
1994 1994
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 139,282 $ 81,373
Accounts and notes receivable, net . . . . . . . . . . . . . . . . . 212,708 200,368
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,709 176,062
Receivable from sale of business . . . . . . . . . . . . . . . . . . - 70,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,832 48,397
Total current assets . . . . . . . . . . . . . . . . . . . . . . 586,531 576,200
Property, plant and equipment, at cost less
accumulated depreciation and amortization of
$251,203 and $240,514 . . . . . . . . . . . . . . . . . . . . . . . . 294,684 292,600
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,833 50,025
$ 934,048 $ 918,825
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,043 $ 3,789
Current maturities of long-term debt . . . . . . . . . . . . . . . . 163,715 25,895
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 78,188 85,591
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 159,778 142,351
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,097 2,671
Total current liabilities . . . . . . . . . . . . . . . . . . . . 408,821 260,297
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758,528 897,659
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 640 640
Other, including postretirement benefit obligation . . . . . . . . . . . 334,440 339,768
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . .
Redeemable preferred stock of subsidiary (aggregate
preference in liquidation $129) . . . . . . . . . . . . . . . . . . . 132 132
Preferred stock of subsidiary (aggregate preference
in liquidation $45,145) . . . . . . . . . . . . . . . . . . . . . . . 181 181
Redeemable preferred stock (aggregate preference in
liquidation $162,861) . . . . . . . . . . . . . . . . . . . . . . . . 129,454 122,368
Common stock (35,035 shares issued and outstanding) . . . . . . . . . . . 350 350
Other paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 160,285 160,249
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . (843,669) (849,337)
Foreign currency translation adjustments . . . . . . . . . . . . . . . . (7,367) (5,735)
Pension equity adjustment . . . . . . . . . . . . . . . . . . . . . . . . (7,747) (7,747)
Total common stockholder's deficit . . . . . . . . . . . . . . . (698,148) (702,220)
$ 934,048 $ 918,825
</TABLE>
See accompanying notes.
I-2
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
April 30, May 1,
1994 1993
OPERATING ACTIVITIES
<S> <C> <C>
Income (loss) continuing operations . . . . . . . . . . . . . . . . . . $ 12,754 $ (5,473)
Adjustments to derive cash flow from continuing
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . 13,461 15,807
Increase in accounts and notes receivable . . . . . . . . . . . (12,340) (24,747)
Decrease (increase) in inventories . . . . . . . . . . . . . . (13,647) 689
Increase (decrease) in accounts payable . . . . . . . . . . . . (7,403) 626
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . 23,794 12,438
Net cash provided by (used in) continuing
operating activities . . . . . . . . . . . . . . . . . 16,619 (660)
Loss from discontinued operations . . . . . . . . . . . . . . . . . . . - (3,596)
Adjustments to derive cash flow from discontinued
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . - 5,249
Net change in receivables, inventory and
accounts payable . . . . . . . . . . . . . . . . . . . . . - (14,854)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . (8,540) (24,569)
Net cash used in discontinued operating
activities . . . . . . . . . . . . . . . . . . . . . . (8,540) (37,770)
INVESTING ACTIVITIES
Additions to property, plant and equipment . . . . . . . . . . . . . . (15,286) (7,267)
Sales of property, plant and equipment . . . . . . . . . . . . . . . . 4,519 815
Proceeds from businesses sold . . . . . . . . . . . . . . . . . . . . . 67,212 49,243
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,769 (2,659)
Net cash provided by investing activities . . . . . . . . . 60,214 40,132
FINANCING ACTIVITIES
Issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . 1,037 36,689
Reduction of long-term debt . . . . . . . . . . . . . . . . . . . . . . (10,335) (23,800)
Net reduction of short-term borrowings . . . . . . . . . . . . . . . . (821) (6,300)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (265) (6,990)
Net cash used in financing activities . . . . . . . . . . . (10,384) (401)
Increase in cash and cash equivalents . . . . . . . . . . . . . . . . . 57,909 1,301
Cash and cash equivalents at beginning of period . . . . . . . . . . . 81,373 83,688
Cash and cash equivalents at end of period . . . . . . . . . . . . . . $ 139,282 $ 84,989
</TABLE>
See accompanying notes.
I-3
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT
(Unaudited)
A. Organization and Acquisition:
Collins & Aikman Holdings Corporation ("Holdings" or the "Company")
(formerly WCI Holdings Corporation) is a Delaware corporation and a wholly owned
subsidiary of Collins & Aikman Holdings II Corporation ("Holdings II") (formerly
WCI Holdings II Corporation), a corporation jointly owned by Blackstone Capital
Partners L.P. ("Blackstone Partners") and Wasserstein Perella Partners, L.P.
("WP Partners") (both of which are Delaware limited partnerships) and their
respective affiliates. The Company was formed on September 21, 1988 to acquire
all the outstanding common stock of Collins & Aikman Group, Inc. ("Group")
(formerly Wickes Companies, Inc.). On April 13, 1989, Group became a wholly
owned subsidiary of the Company.
B. Basis of Presentation:
The condensed consolidated financial statements include the accounts of
the Company and its subsidiaries. In the opinion of management, the
accompanying condensed consolidated financial statements reflect all adjustments
(consisting of only normal recurring adjustments) necessary for a fair
presentation of financial position and results of operations. Results of
operations for interim periods are not necessarily indicative of results for the
full year. Certain reclassifications have been made to conform to the current
presentation of continuing operations.
C. Discontinued Operations:
As of the end of fiscal 1992, Group reclassified its Builders Emporium
home improvement retail chain and the Engineering Group as discontinued
operations. In March 1993, the Engineering Group was sold for approximately $51
million. Builders Emporium's inventory was sold during the third and fourth
quarters of fiscal 1993 and substantially all accounts receivable and accounts
payable balances were settled as of January 29, 1994. Remaining assets and
liabilities of Builders Emporium relate primarily to real estate and workers
compensation self-insurance liabilities, which continue to be liquidated.
The Company's Kayser-Roth Corporation subsidiary ("Kayser-Roth") was
reclassified as a discontinued operation at the end of the fiscal quarter ended
October 30, 1993 and was sold on January 28, 1994 for a total price of $170
million (subject to post-closing purchase price adjustment). A portion of the
proceeds was used to repay $66 million of borrowings under a Kayser-Roth credit
facility. In connection with the sale, Group received a 90-day $70 million
senior unsecured bridge note from the purchaser, which was paid with accrued
interest on April 27, 1994. Kayser-Roth has been reclassified as a discontinued
operation for the quarter ended May 1, 1993.
At the end of the second fiscal quarter ended July 31, 1993, Group
decided to retain the Dura Convertible division of Wickes Manufacturing Company
and accordingly Dura has been reclassified as a continuing operation for the
quarter ended May 1, 1993.
I-4
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
Interest expense has been allocated to discontinued operations based on
the ratio of net book value (including reserves for loss on disposal) of
discontinued operations to Group's consolidated invested capital. Interest
allocated to discontinued operations was $5.0 million for the quarter ended May
1, 1993. No interest was allocated to discontinued operations in the quarter
ended April 30, 1994.
The Company incurred fees during the first quarter of 1994 to Blackstone
Partners of $100,000 for advisory services in connection with the sale of
Builders Emporium's inventory, real estate and other assets. In addition,
during the first quarter of 1994, the Company incurred expenses of $2.5 million
for services performed by Blackstone Partners and WP Partners in connection with
a comprehensive review of the Company's liabilities associated with discontinued
operations, including surplus real estate, postretirement and workers
compensation liabilities.
The majority of Builders Emporium's leased properties have been assigned
to third parties. In addition, Group has assigned leases in connection with the
divestiture of Kayser-Roth, the Engineering Group, Wickes Manufacturing Company
and other divested businesses. Although Group has obtained releases from the
lessors of certain properties, Group remains contingently liable under most of
the leases. Group's future liability for these leases, in management's opinion,
based on the facts presently known to it, will not have a material effect on the
Company's consolidated financial condition or future results of operations.
<TABLE>
D. Inventories:
Inventory balances are summarized as follows (in thousands):
April 30, January 29,
1994 1994
<S> <C> <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . $ 73,592 $ 70,762
Work in process . . . . . . . . . . . . . . . . . . . . . . . 27,038 24,739
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . 89,079 80,561
$ 189,709 $ 176,062
</TABLE>
E. Interest Expense, Net:
Interest expense for the quarters ended April 30, 1994 and May 1, 1993 is
net of interest income of $2.4 million and $1.0 million, respectively.
F. Long-Term Debt:
At April 30, 1994, Blackstone Partners and WP Partners were holders of
approximately $92.4 million and $96.9 million, respectively, of the Company's
Subordinated PIK Bridge Notes. The remaining balance of the Subordinated PIK
Bridge Notes aggregated approximately $9.4 million at April 30, 1994. The
Subordinated PIK Bridge Notes mature December 2, 1996, unless extended by the
holders. The Company anticipates that, at least if certain debt of Group
continues to be outstanding or
I-5
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Concluded)
(Unaudited)
is refinanced with similarly restrictive debt, the Company will not have
sufficient cash to pay the Subordinated PIK Bridge Notes in cash at maturity in
1996 and, unless such maturity is extended by the holders, the Company will
issue replacement notes as permitted by the terms of the Subordinated PIK Bridge
Notes. If issued, each replacement note will mature December 8, 1998, with
sinking fund payments equal to one-third of the outstanding principal amount due
December 1996 and 1997. The Company's ability to satisfy the sinking fund
payments and the final payment at maturity of the replacement notes, if issued,
will depend on the availability of cash at the Company. The Company anticipates
that, at least if certain debt of Group continues to be outstanding or is
refinanced with similarly restrictive debt, the Company will not have
sufficient cash to satisfy the sinking fund payments or the final payment at
maturity of the replacement notes, if issued, unless the sinking fund and final
maturity dates are extended by the holders.
In April 1994, WP Partners and Blackstone Partners agreed, at the option of
the Company exercisable prior to September 15, 1994, to exchange the
Subordinated PIK Bridge Notes held by them for shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), subject to certain
conditions including an initial public equity offering by the Company.
During the first quarter of 1994, the Company incurred expenses of $2.75
million for services performed by WP Partners and $3.25 million for services
performed by Blackstone Partners in connection with the Company's review of
refinancing and strategic alternatives as well as certain other advisory
services. These fees are included in "selling, general and administrative
expenses".
For additional information, including information regarding the proposed
initial public common stock offering and recapitalization of the Company, see
"PART I - FINANCIAL INFORMATION, Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations" elsewhere herein.
G. Commitments and Contingencies:
See "PART II - OTHER INFORMATION, Item 1. Legal Proceedings." The ultimate
outcome of the legal proceedings to which the Company is a party will not, in
the opinion of the Company's management based on the facts presently known to
it, have a material effect on the Company's consolidated financial condition or
future results of operations.
See also "PART I - FINANCIAL INFORMATION, Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations - Environmental
Matters" and Note C to Condensed Consolidated Financial Report elsewhere herein.
I-6
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PROPOSED RECAPITALIZATION
As part of a proposed recapitalization (the "Recapitalization"), the
Company filed a registration statement on Form S-2 covering the sale in a public
offering of 25 million shares of Common Stock. Of the 25 million shares of
Common Stock offered, 20 million shares are being sold by the Company and 5
million shares are being sold by Blackstone Partners and WP Partners (the
"Selling Stockholders"). The Company will not receive any of the proceeds from
the sale of the shares being sold by the Selling Stockholders. The Selling
Stockholders have also granted the underwriters in the public offering an option
for 30 days to purchase up to an additional 3,750,000 shares of Common Stock.
The Recapitalization, if it occurs, would result in the defeasance and
redemption, or repayment, of all outstanding indebtedness and preferred
stock of the Company and its subsidiaries other than $22.6 million of
mortgage and other debt which would remain outstanding. Of the approximately
$202.9 million of Subordinated PIK Bridge Notes to be redeemed, approximately
$9.7 million would be redeemed for cash and approximately $193.2 million
would be exchanged for Common Stock. The sources of capital for the
Recapitalization are proceeds of the public offering, available cash and amounts
to be available under certain proposed new credit facilities (the "New Credit
Facilities").
The New Credit Facilities will consist of (i) a Closing Date Term Loan
Facility in an aggregate principal amount of $450 million with a term of eight
years (including a $45 million Canadian borrowing), (ii) a Delayed Draw Term
Loan Facility in an aggregate principal amount of $25 million with a term of
eight years (which may be drawn in full or in part on or prior to the first
anniversary of the closing date), (iii) a Revolving Facility in an aggregate
principal amount of up to $150 million with a term of seven years and (iv) a
Receivables Facility in an aggregate principal amount of $150 million with a
term of seven years. These facilities will include various restrictive
covenants including maintenance of EBITDA (i.e. earnings before interest, taxes,
depreciation and amortization) and interest coverage ratios, leverage and
liquidity tests and various other restrictive covenants which are typical for
such facilities.
Given the current state of the capital markets, the Company believes that
it is in its best interests to restructure the Company's debt and capitalization
by increasing its equity capital and decreasing its interest expense.
In connection with the Recapitalization, Holdings II, currently the sole
common stockholder of the Company, will be merged into the Company and the
Company will change its name to Collins & Aikman Corporation. Concurrently,
Group will be merged into its wholly-owned subsidiary, Collins & Aikman
Corporation ("C&A Co."), which will change its name to Collins & Aikman Products
Co.
I-7
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
GENERAL
After the acquisition of Group in 1988, the Company implemented a
restructuring plan designed to focus on certain businesses and to eliminate
unnecessary corporate overhead. The Company accordingly divested 27 business
units which in 1988 contributed 73% of net sales. The aggregate proceeds from
these divestitures were $1,643 million, and enabled the Company to reduce total
indebtedness from $2,483 million at December 8, 1988 to $925.3 million at April
30, 1994. In addition, the Company reduced and consolidated corporate staffs.
Throughout this period, the Company made substantial investments to enhance the
competitive position of its three continuing business segments and to strengthen
its position as a low-cost producer.
All references to a year with respect to the Company refer to the fiscal
year of the Company which ends on the last Saturday of January of the following
year.
RESULTS OF OPERATIONS
The Company's continuing business segments consist of Automotive
Products, which supplies interior trim products to the North American automotive
industry; Interior Furnishings, which manufactures residential upholstery in the
United States; and Wallcoverings, which produces residential wallcoverings in
the United States. The Company's net sales in the first quarter of fiscal 1994
were $390.4 million, with approximately $223.0 million (57.1%) in Automotive
Products, $107.1 million (27.4%) in Interior Furnishings, and $60.3 million
(15.5%) in Wallcoverings.
The industries in which the Company competes are cyclical. Automotive
Products is influenced by the level of North American vehicle production.
Interior Furnishings is primarily influenced by the level of residential,
institutional and commercial construction and renovation. Wallcoverings is also
influenced by levels of construction and renovation and by trends in home
remodeling.
FIRST QUARTER OF 1994 COMPARED TO FIRST QUARTER OF 1993
Net Sales and Operating Income
Net sales increased 15.2% to $390.4 million in the first quarter of 1994
from $339.0 million in the corresponding period of 1993. The overall increase
in net sales reflected improvement in Automotive Products and Interior
Furnishings offset by a decrease in net sales at Wallcoverings.
Automotive Products' net sales increased 27.6% in the first quarter of
1994 to $223.0 million as compared to $174.7 million in the first quarter of
1993. The increase in net sales is due to a 12% increase in North American auto
build as compared to the first quarter of 1993 and to new fabric placements
obtained in the third quarter of 1993 as well as increased production of several
of the car lines served by the Company, including the Ford Mustang and the
General Motors Cadillac,
I-8
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
which exceeded the overall increase in the North American auto build. Operating
income of the Automotive Products segment increased 114% to $35.4 million as
compared to $16.5 million in the first quarter of 1993.
Interior Furnishings' net sales increased 4.0% in the first quarter of
1994 to $107.1 million as compared to $103.0 million in the first quarter of
1993 as a result of increases at the segment's Decorative Fabrics and
Floorcoverings groups. Net sales of the Decorative Fabrics group increased by
2.7%, in the first quarter of 1994 to $84.2 million as compared to $82.0 million
in the first quarter of 1993 due to an improvement in product mix on a stable
unit volume. The Floorcoverings group's net sales increased 9.1% to $22.9
million as a result of increased installations. Operating income of the
Interior Furnishings segment increased 38.9% to $13.7 million as compared to
$9.8 million in the first quarter of 1993.
Wallcoverings' net sales decreased 1.7% in the first quarter of 1994 to
$60.3 million as compared to $61.4 million in the first quarter of 1993 due to
sluggish demand by chain stores, which was partially offset by modest growth in
independent retailer ("dealer") business. Management believes that the growth
in dealer business reflects benefits of the Company's initiative begun in late
1993 to increase product offerings. Operating income of the Wallcoverings
segment increased 21.1% to $5.1 million for the first quarter of 1994 as
compared to $4.2 million for the first quarter of 1993.
Gross Margin and Selling, General and Administrative Expenses
Automotive Products' gross margin increased to 21.6% in the first quarter
of 1994 from 17.9% in the first quarter of 1993, and selling, general and
administrative expenses decreased from 8.1% to 5.7% of sales, due to improved
absorption of fixed costs over a greater sales volume and due to continuing
costs reduction initiatives.
Interior Furnishings' gross margin increased to 29.7% from 26.8% as a
result of improved product mix in the Decorative Fabrics and Floorcoverings
groups as well as increased absorption of fixed costs.
Wallcoverings' gross margin increased to 34.7% from 32.6% as a result of
continuing cost reduction initiatives and improved manufacturing efficiencies.
Total Operating Expenses
Total operating expenses were $344.9 million and $312.9 million in the
first quarter of 1994 and the first quarter of 1993, respectively, including
$8.6 million and $4.5 million of unallocated corporate expenses, respectively.
Unallocated corporate expenses in the first quarter of 1994 include $3.2 million
of expenses incurred for the performance of services by Blackstone Partners and
$2.8 million for the performance of services by WP Partners in connection with
the Company's review of refinancing and other strategic alternatives as well as
certain other advisory services. Operating expenses allocated to the Company's
three business segments totaled $336.3 million or 86.1% of sales in the first
quarter of 1994 compared to
I-9
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
$308.4 million or 91.0% of sales in the first quarter of 1993. This 4.9
percentage point improvement is primarily the result of the allocation of fixed
costs over a larger sales volume, improved manufacturing productivity, and
continuing cost reduction initiatives at both the operating and corporate level.
Operating expenses in the first quarter of 1993 included $0.9 million of
goodwill amortization.
Interest Expense
Interest expense allocated to continuing operations, net of interest
income of $2.4 million in the first quarter of 1994 and $1.0 million in the
first quarter of 1993, increased to $29.1 million during the first quarter of
1994 compared to $27.2 million in the first quarter of 1993. Interest expense,
including amounts allocated to discontinued operations in 1993 and excluding
interest income, decreased to $31.4 million during the first quarter of 1994
compared to $34.0 million in the first quarter of 1993. The decrease in
interest expense was due primarily to a decrease in the Company's average
borrowings.
Income Taxes
In the first quarter of 1994 income taxes of $2.6 million consisted of
foreign and state taxes. This amount compared to a foreign and state tax
provision of $3.3 million in the first quarter of 1993.
Discontinued Operations
The Company's loss from discontinued operations, including losses on
disposals of $2.2 million, was $3.6 million for the first quarter of 1993.
Net Income
The combined effect of the foregoing resulted in net income of $12.8
million in the first quarter of 1994 compared to a net loss of $9.1 million in
the first quarter of 1993.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1994, the Company had cash and cash equivalents totaling
$139.3 million compared to $81.4 million at January 29, 1994. Included in cash
and cash equivalents at April 30, 1994 was $135.3 million held by Group. The
increase in the Company's cash balance is principally due to the receipt of the
cash proceeds of $71.2 million from the payment of the Kayser-Roth note referred
to below. The Company's principal sources of funds are cash generated from
continuing operating activities and borrowings under bank credit facilities.
Net cash provided by the operating activities of its continuing operations was
$16.6 million for the quarter ended April 30, 1994. C&A Co. had $59.5 million
of borrowing availability under a credit facility at April 30, 1994. Based on
financial covenants in that credit facility, approximately $42 million could be
paid to Group as a dividend. The Company's Canadian subsidiaries had $8.1
million of borrowing availability under a
I-10
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
bank demand line of credit at April 30, 1994. Restrictions on the payment of
dividends contained in various debt agreements of Group have prevented the
payment of dividends by Group to the Company since January 26, 1991.
During the fourth quarter of 1993, the Company sold Kayser-Roth for
approximately $170 million including a $70 million note. A portion of the
proceeds was used to repay $66 million of borrowings under a Kayser-Roth credit
facility. The Company's Engineering Group, which was discontinued in 1992, was
sold during the first quarter of 1993 for approximately $51 million.
Additionally, the Company has nearly completed the disposition of the real
estate, inventory and other assets of Builders Emporium, which the Company
discontinued at the end of 1992. The Kayser-Roth sale is subject to post-
closing purchase price adjustment. On April 27, 1994, the Kayser-Roth note was
paid with accrued interest. The Company intends to use these cash proceeds of
$71.2 million for general corporate purposes, including possibly the repurchase
of a portion of Group's 15% Subordinated Notes due 1994 or other debt in open
market or privately negotiated transactions.
During the first quarter of 1994, the Company used cash from continuing
operations and new borrowings of $1.0 million to repay $10.3 million of
outstanding indebtedness. During the first quarter of 1993, the Company
incurred new long-term indebtedness of $36.7 million and repaid existing
indebtedness of $23.8 million.
The Company's principal uses of funds for the next several years will be
to fund principal and interest payments on its indebtedness, net working capital
increases and capital expenditures. The Company makes capital expenditures on a
recurring basis for replacement and improvements. As of April 30, 1994, the
Company had approximately $43.0 million in outstanding capital commitments.
Capital expenditures during the first quarter of 1994 aggregated $15.3 million.
During 1994, the Company anticipates capital expenditures will aggregate
approximately $80 million as compared to $44.9 million, $38.2 million
and $38.9 million, during 1993, 1992 and 1991, respectively. This
increase is due primarily to the planned acquisition of additional machinery
and equipment at Decorative Fabrics' Mastercraft division as part of an
$85 million five-year capital investment plan that was initiated this year for
the purpose of expanding production capacity at Mastercraft to accommodate
anticipated growth. Secondarily, this increase is due to the planned
completion of an Automotive Products facility in Mexico for approximately
$6.0 million. The Company's capital expenditures in future years will depend
upon demand for the Company's products and changes in technology. The Company
currently estimates that capital expenditures in 1995 will exceed $60 million.
The Company has significant obligations relating to postretirement,
casualty, environmental, lease and other liabilities of discontinued
operations. In connection with the sale and acquisition of certain businesses,
the Company has indemnified the purchasers and sellers for certain environmental
liabilities, lease obligations and other matters. In addition, the Company is
contingently liable with respect to certain lease and other obligations assumed
by certain purchasers and may be required to honor such obligations if such
purchasers are unable or unwilling to do so. Management anticipates that the
net cash requirements of its discontinued operations
I-11
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
will be approximately $15.0 million for the remainder of 1994. However, because
the requirements of the Company's discontinued operations are largely a function
of contingencies, it is possible that the actual net cash requirements of the
Company's discontinued operations could differ materially from management's
estimates. Management believes that the Company's needs relating to
discontinued operations can be adequately funded in 1994 by net cash provided by
operating activities from continuing operations and by borrowings under bank
credit facilities.
From time to time, the Company evaluates acquisitions. The Company
expects to fund any future acquisitions with net cash provided by operating
activities from continuing operations, borrowings under bank credit facilities
or the issuance of securities.
If the Recapitalization is effected, the Company expects to have
approximately $548 million of outstanding indebtedness and unused borrowing
availability of approximately $95 million under the New Credit Facilities, after
giving effect to the Recapitalization. Management believes that, if the
Recapitalization is effected, cash flow from operations and funds available
under the New Credit Facilities will be sufficient to fund the Company's long-
and short-term liquidity requirements, including working capital, capital
expenditures and debt service requirements. However, even if the
Recapitalization is effected, the Company and its subsidiaries will continue to
have substantial indebtedness outstanding which could (i) adversely affect the
Company's ability to obtain additional financing, (ii) decrease the amount of
cash flow available for working capital, capital expenditures, acquisitions,
general corporate or other purposes, (iii) place the Company at a competitive
disadvantage and (iv) render the Company more vulnerable to increases in
interest rates or economic downturns.
As part of the Recapitalization as proposed, all the outstanding public
debt and preferred stock of the Company and its subsidiaries would be defeased
and redeemed. In addition, the C&A Co. Credit Agreement described below would
be terminated and all borrowings thereunder would be prepaid. Approximately
$193.2 million of the Subordinated PIK Bridge Notes described below would be
exchanged for Common Stock and the remainder would be redeemed for cash.
If the Recapitalization is not successful, management believes that the
Company has sufficient liquidity to meet its cash requirements through 1994 and
into 1995. To meet long-term cash requirements, the Company will require
alternative financing or proceeds from asset sales. There can be no assurance
as to the timing of any such financing or asset sales or the proceeds the
Company could realize therefrom. Restrictions in existing debt agreements of
the Company could limit the ability of the Company to effect future financings
and asset sales.
Group's agreements governing outstanding debt restrict the payment of
dividends on its Common Stock. Since January 26, 1991, no additional dividends
could be paid by Group to Holdings under the most restrictive provisions in the
existing
I-12
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
debt agreements of Group. Under these provisions, which are contained in the
indenture, as amended (the "11-7/8% Indenture"), governing the 11-7/8% Senior
Subordinated Debentures due 2001 (the "11-7/8% Securities"), as of April 30,
1994, Group would have needed to earn an additional $853 million of consolidated
net income (as defined in the 11-7/8% Indenture) in order to eliminate the
deficit in its dividend capacity (assuming no change in the other factors used
to determine Group's dividend capacity). Accordingly, the Company does not
expect Group to be permitted to pay dividends to it during 1994 or in the
foreseeable future beyond 1994, at least so long as the 11-7/8% Securities are
outstanding. Even if the 11-7/8% Securities are refinanced, there can be no
assurance that any new debt would not contain similarly restrictive covenants.
All the consolidated indebtedness of the Company is indebtedness of Group
and its subsidiaries, except for the Subordinated PIK Bridge Notes described
below, which mature December 2, 1996, unless extended by the holders, and bear
interest payable in cash or in additional Subordinated PIK Bridge Notes, at the
option of the Company.
At April 30, 1994, the Company had total outstanding long-term
indebtedness of $922.2 million (including the current portion of $163.7 million,
$137.4 million of which is due on May 1, 1995) at varying interest rates between
5% and 15% per annum. Cash interest expense on that indebtedness for the
remainder of 1994 will be approximately $78.7 million. Cash interest paid
during the first quarter of 1994 and 1993 aggregated $8.5 million and $14.7
million, respectively.
The maturities of long-term debt of the Company during the remainder of
1994 and for 1995 and 1996 are $20.6 million, $170.9 million and $127.2 million,
respectively. Under the terms of the 11-7/8% Indenture, Group is required to
redeem $138 million aggregate principal amount of 11-7/8% Securities on each
June 1 from 1993 through 2000 ("Mandatory Redemptions") and to repay the
remaining outstanding 11-7/8% Securities at maturity on June 1, 2001. Under the
terms of the 11-7/8% Indenture, if Adjusted Net Worth (as such term is defined
in the 11-7/8% Indenture) is equal to or less than $700 million on the last day
of any fiscal quarter (the "Minimum Equity Test"), Group will be required to
begin on the last day of the second fiscal quarter thereafter (unless the
Minimum Equity Test is satisfied at the end of the intervening fiscal quarter)
semi-annual redemptions ("Accelerated Redemptions") of $138 million aggregate
principal amount of 11-7/8% Securities until all the 11-7/8% Securities are
redeemed or until the Minimum Equity Test is again satisfied. Group can reduce
its obligation to make any cash Mandatory Redemption or Accelerated Redemption
payment through the application of previously redeemed or purchased and canceled
11-7/8% Securities as permitted by the 11-7/8% Indenture. Group has previously
delivered for cancellation $1,033 million in aggregate principal amount of 11-
7/8% Securities, which are available for such purpose. Group satisfied the
Minimum Equity Test at April 30, 1994. On that date, Adjusted Net Worth was
$768 million. If Group had not satisfied the Minimum Equity Test at that date
and did not subsequently satisfy such test, the first cash redemption payment
(after giving effect to credits for previously acquired 11-7/8% Securities)
would be required at the end of the fiscal quarter ending April 1997. By
comparison, if Group continues to satisfy the Minimum Equity Test at all times
or cures any failure of such test
I-13
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
prior to any accelerated cash redemption payment becoming due, no cash
redemption payment will be required until June 1, 2000.
Group's C&A Co. subsidiary consummated a $225 million credit agreement
with a syndicate of banks on May 22, 1991 that expires on May 15, 1998 (the "C&A
Co. Credit Agreement"). In the first quarter of 1994, C&A Co. made net
principal repayments under the C&A Co. Credit Agreement of $9.5 million.
Availability under the C&A Co. Credit Agreement is determined monthly based upon
C&A Co.'s receivables balance. The C&A Co. Credit Agreement permits C&A Co. to
pay dividends to Group only if C&A Co. satisfies a minimum liquidity requirement
of $25 million and then limits the amount of total dividends to $175 million
plus 90% (or 100% if certain specified ratios are met) of C&A Co.'s net income
(excluding the impact of Statement of Financial Accounting Standards No. 106
"Employers' Accounting for Postretirement Benefits Other Than Pensions")
subsequent to April 27, 1991. As of April 30, 1994, an additional $59.5 million
was available to C&A Co. under the C&A Co. Credit Agreement. Although, as of
that date, approximately $93 million of additional dividends could be paid to
Group under the dividend restriction in the C&A Co. Credit Agreement, other
financial covenants in the C&A Co. Credit Agreement would limit the amount of
dividends to approximately $42 million. C&A Co. and its subsidiaries are
separate corporate entities and the assets of C&A Co. and its subsidiaries are
available first and foremost to satisfy the claims of the creditors of C&A Co.
and such subsidiaries. At April 30, 1994, receivables and fixed assets pledged
as collateral under the C&A Co. Credit Agreement aggregated approximately $172
million and $98 million, respectively.
Group's Canadian subsidiaries have a bank demand line of credit that made
available to them approximately $13.7 million at April 30, 1994, of which
approximately $5.6 million was outstanding as of that date.
Group's Board of Directors has authorized expenditures for the voluntary
repurchase from time to time of Group's outstanding publicly traded debt
securities. There were no repurchases of publicly traded debt during 1993 or the
first quarter of 1994. Repurchases of publicly traded debt may be made from
time to time through open market or privately negotiated transactions. The
Company expects to fund any such additional repurchases out of the proceeds of
the Kayser-Roth note referred to above, cash from operating activities or
borrowings under existing or new lines of credit. Such repurchases may occur
prior to the consummation of the proposed Recapitalization (which, if effected
as proposed, would result in the defeasance and redemption of such debt) or at
any other time, depending on market conditions, available cash and other factors
that the Board of Directors of Group in its sole discretion deems relevant to
the advisability of repurchasing publicly traded debt.
Additionally, the Board of Directors of the Company has authorized
expenditures for the repurchase from time to time of shares of the Company's
15-1/2% Cumulative Exchangeable Redeemable Preferred Stock (the "Merger
Preferred Stock"). The Company expended $4.7 million for the repurchase of
approximately 320,000 shares of Merger Preferred Stock in 1991. No new
purchases have been made since 1991. The timing of any additional repurchases
will depend on market conditions, available cash
I-14
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
and other factors that the Board of Directors of the Company in its sole
discretion deems relevant. If effected as proposed, the Recapitalization would
result in the defeasance and redemption of the Merger Preferred Stock.
On December 8, 1988, the Company borrowed $142 million from Blackstone
Partners, WP Partners and other lenders through the issuance of the Subordinated
PIK Bridge Notes. At April 30, 1994, $198.7 million of the Subordinated PIK
Bridge Notes was outstanding. The Subordinated PIK Bridge Notes mature December
2, 1996, unless extended by the holders. In the event the maturity date is not
extended by the holders, the Company may, as permitted by the terms of the
Subordinated PIK Notes,discharge its obligation to pay each Subordinated PIK
Bridge Note at its maturity by delivering one or more replacement notes in an
aggregate principal amount equal to the principal of and accrued interest on
such Subordinated PIK Bridge Note through the maturity date. The Company's
ability to pay the Subordinated PIK Bridge Notes at maturity in cash will depend
on the availability of cash at Holdings. As discussed above, since January 26,
1991, no additional cash dividends to Holdings have been permitted under the
most restrictive provisions in the existing debt agreements of Group, and
Holdings does not expect Group to be permitted to pay dividends to Holdings
during 1994 or in the foreseeable future beyond 1994, at least so long as the
11-7/8% Securities are outstanding. Even if the 11-7/8% Securities are
refinanced, there can be no assurance that any new debt would not contain
similarly restrictive covenants. Accordingly, Holdings anticipates that, at
least if the 11-7/8% Securities continue to be outstanding or are refinanced
with similarly restrictive debt, Holdings will not have sufficient cash to pay
the Subordinated PIK Bridge Notes in cash at maturity in 1996 and, unless such
maturity is extended by the holders, Holdings will issue the replacement notes.
The holders of the Subordinated PIK Bridge Notes have three times extended the
maturity date and, in the event Holdings does not have sufficient cash to repay
the Subordinated PIK Bridge Notes at December 2, 1996, it is possible that the
holders would again extend the maturity date, although there can be no assurance
that this would happen. If issued, each replacement note would mature December
8, 1998, with sinking fund payments equal to one-third of the outstanding
principal amount due in each of December 1996 and 1997. Holdings' ability to
satisfy the sinking fund payments and the final payment at maturity of the
replacement notes, if issued, will depend on the availability of cash at
Holdings. Holdings anticipates that, at least if the 11-7/8% Securities
continue to be outstanding or are refinanced with similarly restrictive debt, it
will not have sufficient cash to satisfy the sinking fund payments or the final
payment at maturity of the replacement notes, if issued, unless the sinking fund
and final maturity dates are extended by the holders. Any such principal
payment default would enable the holders of more than 25% of the outstanding
principal amount of all replacement notes to accelerate the replacement notes,
provided that Blackstone Partners and WP Partners concur. In addition, with or
without such concurrence, the holders could pursue any other right or remedy
available under law. Upon any voluntary or involuntary liquidation (including
pursuant to any bankruptcy proceeding), dissolution or winding up of Holdings,
holders of its debt would be entitled to be paid out of the assets of Holdings
in full before any distribution is made to any preferred or common stockholders
of Holdings. As of April 19, 1994, Blackstone
I-15
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Partners and WP Partners, which together at that date held $187.1 million
principal amount of Subordinated PIK Bridge Notes, agreed at the option of the
Company exercisable prior to September 15, 1994, to exchange the Notes for
shares of Common Stock (which will be restricted stock within the meaning of
Rule 144 of the Securities Act of 1933), subject to certain conditions including
an initial public equity offering by the Company.
In connection with the merger in which Group became a wholly owned
subsidiary of the Company, approximately 4,250,000 shares of Merger Preferred
Stock were issued. In addition, approximately 6,500 shares of Merger Preferred
Stock may be issued upon the exchange of outstanding shares of Group's 15-1/2%
Junior Cumulative Exchangeable Redeemable Preferred Stock (the "Intermediate
Preferred Stock"), at the holder's option. Dividends on the Merger Preferred
Stock are payable quarterly and dividends accruing on or prior to February 1,
1995 may be paid, at the option of the Company, in cash (at the rate of $3.875
per year) or in additional shares of Merger Preferred Stock (at the rate of .04
shares for each $1 of dividends not paid in cash). Dividends accruing after
February 1, 1995 may be paid only in cash. To date, all dividends have been
paid in additional shares of Merger Preferred Stock and at April 30, 1994,
approximately 6,514,000 shares were outstanding. Since January 25, 1992, and as
of April 30, 1994, total liabilities of the Company exceeded total assets based
on its balance sheet and therefore, under Delaware law, the payment of dividends
on the Merger Preferred Stock will require a determination by the Board of
Directors, based on a current valuation of the Company's assets and liabilities,
that adequate surplus exists under Delaware law for the purpose of paying
dividends. The Board of Directors made that determination with respect to the
dividends paid through May 2, 1994, but it is not possible to predict whether or
not such a determination will be able to be made with respect to future
dividends. In addition, Holdings' ability to pay cash dividends on the Merger
Preferred Stock will depend on the availability of cash at Holdings. As
discussed above, since January 26, 1991, no additional cash dividends to
Holdings have been permitted under the most restrictive provisions in the
existing debt agreements of Group, and Holdings does not expect Group to be
permitted to pay dividends to Holdings during 1994 or in the foreseeable future
beyond 1994, at least so long as the 11-7/8% Securities are outstanding. Even
if the 11-7/8% Securities are refinanced, there can be no assurance that any new
debt would not contain similarly restrictive covenants. To the extent that
dividends were permitted and there was available cash, if the Recapitalization
is not effected, it is the Company's present expectation that it would direct
Group from time to time to declare and pay cash dividends in such available
amounts, if any, until Holdings had paid in full the principal and interest on
the Subordinated PIK Bridge Notes and, if issued, the replacement notes. In
addition, under certain circumstances, available cash may be used by the Company
to repurchase Merger Preferred Stock or to pay dividends on the Company's Common
Stock.
ENVIRONMENTAL MATTERS
The Company is subject to increasingly stringent Federal, state and local
environmental laws and regulations that (i) affect ongoing operations and may
increase capital costs and operating expenses and (ii) impose liability for the
costs of investigation and remediation and certain other damages related to on-
site and off-site soil and groundwater contamination. The Company's management
believes that
I-16
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
it has obtained, and is in material compliance with, all material environmental
permits and approvals necessary to conduct its various businesses.
Environmental compliance costs for continuing businesses currently are accounted
for as normal operating expenses or capital expenditures of such business
units. In the opinion of management, based on the facts presently known to
it, such environmental compliance costs will not have a material adverse
effect on the Company's consolidated financial condition or results of
operations.
The Company is legally or contractually responsible or alleged to be
responsible for the investigation and remediation of contamination at various
sites. It also has received notices that it is a potentially responsible party
("PRP") in a number of proceedings. The Company may be named as a PRP at other
sites in the future, including with respect to divested and acquired
businesses. It is a normal risk of operating a manufacturing business that
liability may be incurred for investigating and remediating on-site and
off-site contamination. The Company is currently engaged in investigation
or remediation at certain sites. In estimating the total cost of
investigation and remediation, the Company has considered, among other things,
the Company's prior experience in remediating contaminated sites, remediation
efforts by other parties, data released by the Environmental Protection Agency,
the professional judgment of the Company's environmental experts, outside
environmental specialists and other experts, and the likelihood that other
parties which have been named as PRPs will have the financial resources to
fulfill their obligations at sites where they and the Company may be jointly
and severally liable. Under the scheme of joint and several liability, the
Company could be liable for the full costs of investigation and remediation
even if additional parties are found to be responsible under the applicable
laws. It is difficult to estimate the total cost of investigation and
remediation due to various factors including incomplete information regarding
particular sites and other PRP's, uncertainty regarding the extent of
environmental problems and the Company's share, if any, of liability for
such problems, the selection of alternative compliance approaches, the
complexity of environmental laws and regulations and changes in
cleanup standards and techniques. When it has been possible to provide
reasonable estimates of the Company's liability with respect to environmental
sites, provisions have been made in accordance with generally accepted
accounting principles. Excluding sites at which the Company's participation is
anticipated to be de minimis or otherwise insignificant or where the Company is
being indemnified by a third party for the liability, there are 15 sites where
the Company is participating in the investigation or remediation of the site,
either directly or through financial contribution, and nine additional sites
where the Company is alleged to be responsible for costs of investigation or
remediation. The Company's current estimate of its liability for these 24 sites
is approximately $29.5 million. As of April 30, 1994, the Company has
established reserves of approximately $30.3 million for the estimated future
costs related to all its known environmental sites. In the opinion of
management, based on the facts presently known to it, the environmental costs
and contingencies will not have a material adverse effect on the Company's
consolidated financial condition or results of operations. However, there can
be no assurance that the Company has identified or properly assessed all
potential environmental liability arising from the activities or properties of
the Company, its present and former subsidiaries and their corporate
predecessors.
I-17
COLLINS & AIKMAN HOLDINGS CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Concluded)
For additional information regarding the foregoing, see "PART II - OTHER
INFORMATION, Item 1. Legal Proceedings" elsewhere herein.
I-18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments in legal proceedings involving
Holdings or its subsidiaries since those reported in Holdings' Annual Report on
Form 10-K for the fiscal year ended January 29, 1994.
Item 4. Submission of Matters to a Vote of Security Holders.
On April 27, 1994, Holdings II, the owner of all of the outstanding
shares of the Company's Common Stock, executed and delivered a Consent of Sole
Stockholder of Collins & Aikman Holdings Corporation in Lieu of a Meeting
approving an amendment to the Company's Certificate of Incorporation (the
"Amendment"). The Amendment increased the number of authorized shares of Common
Stock from 1,000 to 150,000,000, decreased the par value thereof from $1.00 per
share to $.01 per share, and effected a 35,035 to 1 split of the then
outstanding shares of Common Stock. Also on April 27, 1994, Holdings II
executed and delivered a separate written consent ratifying, approving and
adopting the Company's 1993 Employee Stock Option Plan and its 1994 Employee
Stock Option Plan (the "Ratification"). No class or series of the Company's
stock other than the Common Stock was entitled to vote on either the Amendment
or the Ratification. One thousand shares of Common Stock held by Holdings II,
representing all of the then outstanding shares of Common Stock, consented to
the Amendment and the Ratification. No shares abstained or withheld consent.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Please note that in the following description of exhibits, the title of
any document entered into, or filing made, prior to and in some cases on July
15, 1992 reflects the name of the entity a party thereto or filing, as the case
may be, at such time. Accordingly, documents and filings described below may
refer to WCI Holdings II Corporation, WCI Holdings Corporation or Wickes
Companies, Inc., if such documents and filings were made prior to and in some
cases on July 15, 1992.
Exhibit
Number Description
3.1 - By-Laws of Collins & Aikman Holdings Corporation, as amended.
4.1 - Certificate of the Powers, Designation, Preferences and Relative,
Participating, Optional or Other Rights, and the Qualifications,
Limitations or Restrictions of the 15-1/2% Cumulative
Exchangeable Redeemable Preferred Stock of Collins & Aikman
Holdings Corporation (formerly named WCI Holdings Corporation) is
hereby incorporated by reference to Exhibit 4.4 of WCI Holdings
Corporation's Quarterly Report on Form 10-Q for the quarter ended
April 29, 1989 (SEC File No. 1-10218).
II-1
Exhibit
Number Description
4.2 - Indenture dated as of April 13, 1989, by and between WCI Holdings
Corporation and United States Trust Company of New York, as
Trustee, regarding WCI Holdings Corporation's 15-1/2% Junior
Subordinated Exchange Debentures is hereby incorporated by
reference to Exhibit 4.5 of WCI Holdings Corporation's Quarterly
Report on Form 10-Q for the quarter ended April 29, 1989 (SEC
File No. 1-10218).
4.3 - Subordinated PIK Bridge Note Purchase Agreement dated as of
December 7, 1988, for up to $71,000,000 is hereby incorporated by
reference to Exhibit (b) (5) of the Final Amendment to WCI
Holdings Corporation's Tender Offer Statement on Schedule 14D-1
filed December 12, 1988 (SEC File No. 1-10218).
4.4 - Subordinated PIK Bridge Note Purchase Agreement dated as of
December 7, 1988, for up to $69,187,500 is hereby incorporated by
reference to Exhibit (b) (6) of the Final Amendment to WCI
Holdings Corporation's Tender Offer Statement on Schedule 14D-1
filed December 12, 1988 (SEC File No. 1-10218).
4.5 - Subordinated PIK Bridge Note Purchase Agreement dated as of
December 7, 1988, for up to $5,000,000 is hereby incorporated by
reference to Exhibit (b) (7) of the Final Amendment to WCI
Holdings Corporation's Tender Offer Statement on Schedule 14D-1
filed December 12, 1988 (SEC File No. 1-10218).
4.6 - Subordinated PIK Bridge Note Purchase Agreement dated as of
December 7, 1988, for up to $1,812,500 is hereby incorporated by
reference to Exhibit (b) (8) of the Final Amendment to WCI
Holdings Corporation's Tender Offer Statement on Schedule 14D-1
filed December 12, 1988 (SEC File No. 1-10218).
4.7 - Modification Agreements dated as of December 4, 1990 and June 5,
1990 to the Subordinated PIK Bridge Notes, and the Subordinated
PIK Bridge Notes dated December 8, 1988 are hereby incorporated
by reference to Exhibit 4.10 of WCI Holdings Corporation's
Quarterly Report on Form 10-Q for the quarter ended October 27,
1990.
4.8 - Modification and Waiver Agreements dated as of November 25, 1991
and January 24, 1992, to the Subordinated PIK Bridge Notes dated
December 8, 1988 are hereby incorporated by reference to Exhibit
4.9 of WCI Holdings Corporation's Report on Form 10-K for the
fiscal year ended January 25, 1992.
4.9 - Modification and Waiver Agreement dated as of December 2, 1992 to
the Subordinated PIK Bridge Notes dated December 8, 1988 is
hereby incorporated by reference to Exhibit 4.10 of Collins &
Aikman Holdings Corporation's Quarterly Report on Form 10-Q for
the quarter ended October 24, 1992.
II-2
Exhibit
Number Description
4.10 - Indenture dated as of January 26, 1985, pursuant to which 7
1/2%/10% Debentures due 2005 of Collins & Aikman Group, Inc.
(formerly named Wickes Companies, Inc.) were issued is hereby
incorporated by reference to Exhibit T3-C of Wickes Companies,
Inc.'s Application for Qualification of Indentures under the
Trust Indenture Act of 1939 on Form T-3, as amended, dated
January 2, 1985 (SEC File No. 22-13520).
4.11 - Indenture dated as of May 1, 1985, pursuant to which 11 3/8%
Usable Subordinated Debentures due 1997 of Collins & Aikman
Group, Inc. (formerly named Wickes Companies, Inc.) were issued
is hereby incorporated by reference to Exhibit 4(f) of Wickes
Companies, Inc.'s Current Report on Form 8-K dated May 21, 1985
(SEC File No. 1-6761).
4.12 - Indenture dated as of May 1, 1985, pursuant to which 15%
Subordinated Notes due 1995 of Collins & Aikman Group, Inc.
(formerly named Wickes Companies, Inc.) were issued is hereby
incorporated by reference to Exhibit 4(g) of Wickes Companies,
Inc.'s Current Report on Form 8-K dated May 21, 1985 (SEC File
No. 1-6761).
4.13 - Indenture dated as of June 1, 1986, pursuant to which 11 7/8%
Senior Subordinated Debentures due 2001 of Collins & Aikman
Group, Inc. (formerly named Wickes Companies, Inc.) were issued
is hereby incorporated by reference to Exhibit 4 to Amendment
No.3 to Wickes Companies, Inc.'s Registration Statement on Form
S-3 (Registration No. 33-4401) filed June 5, 1986.
4.14 - First Supplemental Indenture dated as of January 29, 1993, by and
between Collins & Aikman Group, Inc. and Bank One, Columbus, NA
regarding 11 7/8% Senior Subordinated Debentures due 2001 of
Collins & Aikman Group, Inc. (formerly named Wickes Companies,
Inc.) is hereby incorporated by reference to Exhibit 4.17 of
Collins & Aikman Holdings Corporation's Report on Form 10-K for
the fiscal year ended January 30, 1993.
4.15 - Second Supplemental Indenture dated as of January 29, 1993, by
and between Collins & Aikman Group, Inc. and Bank One, Columbus,
NA regarding 11 7/8% Senior Subordinated Debentures due 2001 of
Collins & Aikman Group, Inc. (formerly named Wickes Companies,
Inc.) is hereby incorporated by reference to Exhibit 4.18 of
Collins & Aikman Holdings Corporation 's Report on Form 10-K for
the fiscal year ended January 30, 1993.
4.16 - Second Amendment and Restatement of Credit Agreement dated as of
April 8, 1994 among Collins & Aikman Group, Inc. and Continental
Bank N.A., Individually and as Issuing Bank, is hereby
incorporated by reference to Exhibit 4.17 of Collins & Aikman
Holdings Corporation's Report on Form 10-K for the fiscal year
ended January 29, 1994.
II-3
Exhibit
Number Description
4.17 - Credit Agreement dated as of May 15, 1991, among Collins & Aikman
Corporation, certain subsidiaries of Collins & Aikman
Corporation, the financial institutions party thereto and
Continental Bank N.A., as Agent, is hereby incorporated by
reference to Exhibit 4.19 of WCI Holdings Corporation's Quarterly
Report on Form 10-Q for the quarter ended April 27, 1991.
4.18 - First Amendment to Credit Agreement dated as of March 11, 1992,
among Collins & Aikman Corporation, certain subsidiaries of
Collins & Aikman Corporation, the financial institutions party
thereto and Continental Bank N.A., as Agent, is hereby
incorporated by reference to Exhibit 4.23 of WCI Holdings
Corporation's Report on Form 10-K for the fiscal year ended
January 25, 1992.
Collins & Aikman Holdings Corporation agrees to furnish to the
Commission upon request in accordance with Item 601(b)(4)(iii)(A)
of Regulation S-K copies of instruments defining the rights of
holders of long-term debt of Collins & Aikman Holdings
Corporation or any of its subsidiaries, which debt does not
exceed 10% of the total assets of Collins & Aikman Holdings
Corporation and its subsidiaries on a consolidated basis.
10.1 - Stockholders Agreement dated as of December 6, 1988, among
Blackstone Capital Partners, L.P., Wasserstein Perella Partners,
L.P., WCI Holdings II Corporation, WCI Holdings Corporation and
WCI Acquisition Corporation is hereby incorporated by reference
to Exhibit 10.1 of the Registration Statement on Form S-4 of WCI
Holdings Corporation and Wickes Companies, Inc. (Registration No.
33-27143) filed February 22, 1989.
10.2 - Amendment No.1 to Stockholders Agreement dated as of May 1, 1992
to Stockholders Agreement dated as of December 6, 1988 among
Blackstone Capital Partners L.P., Wasserstein Perella Partners,
L.P., Collins & Aikman Holdings II Corporation, Collins & Aikman
Holdings Corporation, and Collins & Aikman Group, Inc. is hereby
incorporated by reference to Exhibit 10.2 of Collins & Aikman
Holdings Corporation's Quarterly Report on Form 10-Q for the
quarter ended October 24, 1992.
10.3 - Employment Agreements dated as of June 16, 1989 between Wickes
Companies, Inc. and certain executive officers is hereby
incorporated by reference to Exhibit 10.1 of Wickes Companies,
Inc.'s Report on Form 10-K for the fiscal year ended January 27,
1990.
10.4 - First Amendment to Employment Agreements dated as of March 20,
1990 between Wickes Companies, Inc. and certain executive
officers is hereby incorporated by reference to Exhibit 10.2 of
Wickes Companies, Inc.'s Report on Form 10-K for the fiscal year
ended January 27, 1990.
II-4
Exhibit
Number Description
10.5 - Employment Agreement dated as of July 18, 1990 between Wickes
Companies, Inc. and an executive officer is hereby incorporated
by reference to Exhibit 10.3 of Wickes Companies, Inc.'s Report
on Form 10-K for the fiscal year ended January 26, 1991.
10.6 - Agreement dated as of February 25, 1993 and First Amendment dated
as of March 29, 1993 between Collins & Aikman Group, Inc. and a
former executive officer is hereby incorporated by reference to
Exhibit 10.10 of Collins & Aikman Holdings Corporation's Report
on Form 10-K for the fiscal year ended January 30, 1993.
10.7 - Employment Agreement dated as of May 1, 1991 between Kayser-Roth
Corporation and an executive officer is hereby incorporated by
reference to Exhibit 10.8 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year ended
January 30, 1993.
10.8 - First Amendment to Employment Agreement dated as of May 1, 1991
between Kayser-Roth Corporation and an executive officer is
hereby incorporated by reference to Exhibit 10.9 of Collins &
Aikman Holdings Corporation's Report on Form 10-K for the fiscal
year ended January 30, 1993.
10.9 - Letter Agreement dated as of May 16, 1991 and Employment
Agreement dated as of July 22, 1992 between Collins & Aikman
Corporation and an executive officer is hereby incorporated by
reference to Exhibit 10.7 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year ended
January 30, 1993.
10.10 - First Amendment to Employment Agreement dated as of February 24,
1994 between Collins & Aikman Corporation and an executive
officer is hereby incorporated by reference to Exhibit 10.7 of
Collins & Aikman Holdings Corporation's Registration Statement on
Form S-2 (Registration No. 33-53179) filed April 19, 1994.
10.11 - Letter Agreements dated as of May 16, 1991 between Collins &
Aikman Corporation and certain executive officers is hereby
incorporated by reference to Exhibit 10.14 of Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed April 19, 1994.
10.12 - Employment Agreement dated as of February 1, 1992 between Collins
& Aikman Corporation and an executive officer is hereby
incorporated by reference to Exhibit 10.15 of Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed April 19, 1994.
10.13 - Amendment dated as of May 19, 1994 to Agreement dated as of
February 1, 1992 between Collins & Aikman Corporation and an
executive officer.
II-5
Exhibit
Number Description
10.14 - Agreement dated as of March 23, 1992 between Collins & Aikman
Group, Inc. and an executive officer is hereby incorporated by
reference to Exhibit 10.6 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year ended
January 30, 1993.
10.15 - First Amendment to Agreement dated as of April 4, 1994 between
Collins & Aikman Group, Inc. and an executive officer is hereby
incorporated by reference to Exhibit 10.14 of Collins & Aikman
Holdings Corporation's Report on Form 10-K for the fiscal year
ended January 29, 1994.
10.16 - Employment Agreement dated as of April 27, 1992 between Collins &
Aikman Corporation and an executive officer is hereby
incorporated by reference to Exhibit 10.16 of Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed April 19, 1994.
10.17 - Letter Agreement dated as of August 12, 1992 between Collins &
Aikman Group, Inc. and an executive officer is hereby
incorporated by reference to Exhibit 10.9 of Collins & Aikman
Holdings Corporation's Report on Form 10-K for the fiscal year
ended January 30, 1993.
10.18 - Employment Agreement dated as of March 1, 1993 between Imperial
Wallcoverings, Inc. and an executive officer is hereby
incorporated by reference to Exhibit 10.17 of Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No.33-53179) filed April 19, 1994.
10.19 - Employment Agreement dated as of October 1, 1993 between Collins
& Aikman Corporation and an executive officer is hereby
incorporated by reference to Exhibit 10.18 of Collins & Aikman
Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed April 19, 1994.
10.20 - The Wickes Equity Share Plan is hereby incorporated by reference
to Exhibit 10.11 of Collins & Aikman Holdings Corporation's
Report on Form 10-K for the fiscal year ended January 30, 1993.
10.21 - Warrant Agreement dated as of January 8, 1994 by and between
Collins & Aikman Group, Inc. and Legwear Acquisition Corporation
is hereby incorporated by reference to Exhibit 10.20 of Collins &
Aikman Holdings Corporation's Report on Form 10-K for the fiscal
year ended January 29, 1994.
10.22 - 1993 Employee Stock Option Plan is hereby incorporated by
reference to Exhibit 10.12 of the Registration Statement on Form
S-2 of Collins & Aikman Holdings Corporation (File No. 33-53179)
filed April 19, 1994.
II-6
Exhibit
Number Description
10.23 - 1994 Employee Stock Option Plan is hereby incorporated by
reference to Exhibit 10.13 of the Registration Statement on Form
S-2 of Collins & Aikman Holdings Corporation (File No. 33-53179)
filed April 19, 1994.
10.24 - Acquisition Agreement dated as of November 22, 1993 as amended
and restated as of January 28, 1994, among Collins & Aikman
Group, Inc., Kayser-Roth Corporation and Legwear Acquisition
Corporation is hereby incorporated by reference to Exhibit 2.1 of
Collins & Aikman Holdings Corporation's Current Report on Form 8-
K dated February 10, 1994.
10.25 - Letter Agreement dated April 19, 1994 with Blackstone Capital
Partners L.P. and Wasserstein Perella Partners, L.P. regarding
Subordinated PIK Bridge Notes is hereby incorporated by reference
to Exhibit 10.24 of Collins & Aikman Holdings Corporation's
Report on Form 10-K for the fiscal year ended January 29, 1994.
(b) Reports on Form 8-K.
On February 10, 1994, the Company filed a Current Report on Form 8-K
dated January 28, 1994, reporting under Item 2 thereof ("Acquisition or
Disposition of Assets") the sale of all of the outstanding stock of Group's
wholly-owned subsidiary Kayser-Roth Corporation to Legwear Acquisition
Corporation, a corporation organized by Grupo Synkro, S.A. de C.V. of Mexico
City, Mexico. Pro forma financial statements of the Company were filed with the
report.
II-7
SIGNATURE
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.
COLLINS & AIKMAN HOLDINGS CORPORATION
(Registrant)
Dated: June 13, 1994 By: /s/ DAVID J. McKITTRICK
David J. McKittrick
(On behalf of the Registrant
and as Principal Financial
and Accounting Officer)
===============================================================================
BY-LAWS
OF
COLLINS & AIKMAN HOLDINGS CORPORATION
A Delaware Corporation
===============================================================================
BY-LAWS
OF
COLLINS & AIKMAN HOLDINGS CORPORATION
(a Delaware corporation)
(as amended through June 1, 1994)
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office of the
Corporation in the State of Delaware shall be 32 Lockerman Square, Suite L-100,
City of Dover, County of Kent. The name of the registered agent is The
Prentice-Hall Corporation System, Inc.
SECTION 2. Other Offices. The Corporation may also have offices at
other places, either within or without the State of Delaware, as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
Meeting of Stockholders
SECTION 1. Annual Meetings. The annual meeting of the stockholders
for the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held at such place (within or
without the State of Delaware), date and hour as shall be designated in the
notice thereof, except that no annual meeting need be held if all actions,
including the election of directors, required by the General Corporation Law of
the State of Delaware to be taken at a stockholders' annual meeting are taken by
written consent in lieu of a meeting pursuant to Section 9 of this Article II.
SECTION 2. Special Meetings. Special meetings of the stockholders
for any purpose or purposes may be called by the Board, the Executive Committee,
either Co-Chairman of the Board, the President or a stockholder or stockholders
holding of record at least 25% of all shares of the Corporation entitled to vote
thereat to be held at such place (within or without the State of Delaware), date
and hour as shall be designated in the notice thereof.
<END OF PAGE 1>
SECTION 3. Notice of Meetings. Except as otherwise expressly
required by law, notice of each meeting of the stockholders shall be given not
less than 10 or more than 60 calendar days before the date of the meeting to
each stockholder entitled to vote at such meeting by mailing such notice,
postage prepaid, directed to each stockholder at the address of such stockholder
as appears on the records of the Corporation. Every such notice shall state the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Except as provided in the
next immediate sentence or as otherwise expressly required by law, notice of any
adjourned meeting of the stockholders need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken. If the
adjournment is for more than 30 calendar days, or if after the adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given to each stockholder entitled to vote at such adjourned meeting.
A written waiver of notice, signed by a stockholder entitled to
notice, whether signed before or after the time set for a given meeting, shall
be deemed equivalent to notice of such meeting. Attendance of a stockholder in
person or by proxy at a stockholders' meeting shall constitute a waiver of
notice to such stockholder of such meeting, except when such stockholder attends
the meeting for the express purpose of objecting at the beginning of the meeting
to the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 4. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its stock
ledger to prepare and make, at least 10 calendar days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours,
for a period of at least 10 calendar days prior to the meeting either at a
place specified in the notice of the meeting within the city where the meeting
is to be held or, if not so specified, at the place where the meeting is to
be held. Such list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 5. Quorum. At each meeting of the stockholders, except as
otherwise expressly required by law, stockholders holding a majority of the
shares of stock of the
2
Corporation issued, outstanding and entitled to be voted at the meeting
shall be present in person or by proxy in order to constitute a quorum for the
transaction of business. In the absence of a quorum at any such meeting or
any adjournment or adjournments thereof, a majority in voting interest of
those present in person or by proxy and entitled to vote thereat or, in the
absence therefrom of all the stockholders, any officer entitled to preside
at, or to act as secretary of, such meeting may reschedule such meeting from
time to time until stockholders holding the amount of stock requisite for a
quorum shall be present in person or by proxy. At any such rescheduled meeting
at which a quorum may be present, any business may be transacted that might have
been transacted at the meeting as originally called.
SECTION 6. Organization. At each meeting of the stockholders, one of
the following shall act as chairman of the meeting and preside thereat, in the
following order of precedence:
(a) the Co-Chairman of the Board designated by the Board to chair such
meeting;
(b) if there is no Co-Chairman of the Board or if both Co-Chairmen of
the Board shall be absent from such meeting, the President;
(c) if the Co-Chairmen of the Board and the President shall be absent
from such meeting, any other officer or director of the Corporation
designated by the Board or the Executive Committee to act as chairman of
such meeting and to preside thereat; or
(d) a stockholder of record of the Corporation who shall be chosen
chairman of such meeting by a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat.
The Secretary or, if the Secretary shall be presiding over the meeting in
accordance with the provisions of this Section or if he shall be absent from
such meeting, the person (who shall be an Assistant Secretary, if an Assistant
Secretary shall be present thereat) whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
SECTION 7. Order of Business. The order of business at each meeting
of the stockholders shall be determined by the chairman of such meeting, but
such order of business may be changed by a majority in voting interest of those
present in person or by proxy at such meeting and entitled to vote thereat.
3
SECTION 8. Voting. Each holder of voting stock of the Corporation
shall, at each meeting of the stockholders, be entitled to one vote in person or
by proxy for each share of stock of the Corporation held by him and registered
in his name on the books of the Corporation on the date fixed pursuant to the
provisions of Section 4 of Article VIII of these By-laws as the record date for
the determination of stockholders who shall be entitled to receive notice of and
to vote at such meeting.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held by the Corporation, shall neither be entitled to
vote nor be counted for quorum purposes. Any vote of stock of the Corporation
may be given at any meeting of the stockholders by the stockholders entitled to
vote thereon either in person or by proxy appointed by an instrument in writing
delivered to the Secretary or an Assistant Secretary of the Corporation or the
secretary of the meeting. The attendance at any meeting of a stockholder who
may theretofore have given a proxy shall not have the effect of revoking the
same unless he shall in writing so notify the secretary of the meeting prior to
the voting of the proxy. At all meetings of the stockholders, all matters,
except as otherwise provided by law or in these By-laws, shall be decided by the
vote of a majority of the votes cast by stockholders present in person or by
proxy and entitled to vote thereat, a quorum being present. Except as otherwise
expressly required by law, the vote at any meeting of the stockholders on any
question need not be by ballot, unless so directed by the chairman of the
meeting. On a vote by ballot, each ballot shall be signed by the stockholder
voting, or by his proxy, if there be such proxy, and shall state the number of
shares voted.
SECTION 9. Action by Written Consent. Except as otherwise provided
by law or by the Certificate of Incorporation, any action required or permitted
to be taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock of the Corporation having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares of stock of the Corporation entitled to vote thereon
were present and voted.
4
ARTICLE III
Board of Directors
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors.
SECTION 2. Number and Term of Office. The Board of Directors shall
consist of six members, but the number of members constituting the Board of
Directors may be increased or decreased from time to time by resolution adopted
by a majority of the whole Board. Directors need not be stockholders or
citizens or residents of the United States of America. Each of the directors of
the Corporation shall hold office until his term expires and until his successor
is elected and qualified or until his earlier death or until his earlier
resignation or removal in the manner hereinafter provided.
SECTION 3. Election. At each meeting of the stockholders for the
election of directors at which a quorum is present, the person receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors.
SECTION 4. Resignation, Removal and Vacancies. Any director may
resign at any time by giving written notice of his resignation to either Co-
Chairman of the Board, the President or the Secretary of the Corporation. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, when accepted by
action of the Board. Except as aforesaid, the acceptance of such resignation
shall not be necessary to make it effective.
A director may be removed, either with or without cause, at any time
by a vote of a majority in voting interest of the stockholders.
Any vacancy or newly created directorship occurring on the Board for
any reason may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director. The director elected to
fill such vacancy or newly created directorship shall hold office for the
unexpired term in respect of which such vacancy occurred or such newly created
directorship was created.
SECTION 5. Meetings. (a) Annual Meetings. As soon as practicable
after each annual election of directors, the Board shall meet for the purpose of
organization and the transaction of other business.
5
(b) Regular Meetings. Regular meetings of the Board shall be held at
such times and places as the Board shall from time to time determine.
(c) Special Meetings. Special meetings of the Board shall be held
whenever called by either Co-Chairman of the Board or the President or a
majority of the directors at the time in office. Any and all business may be
transacted at a special meeting that may be transacted at a regular meeting of
the Board.
(d) Place of Meeting. The Board may hold its meeting at such place
or places within or without the State of Delaware as the Board may from time to
time by resolution determine or as shall be designated in the respective notices
or waivers of notice thereof.
(e) Notice of Meetings. Notices of regular meetings of the Board or
of any adjourned meeting need not be given.
Notices of special meetings of the Board, or of any meeting of any
committee of the Boards that has not been fixed in advance as to time and place
by such committee, shall be mailed by the Secretary or an Assistant Secretary to
each director or member of such committee, addressed to him at his residence or
usual place of business, so as to be received at least one calendar day before
the day on which such meeting is to be held, or shall be sent to him by
telegraph, cable or other form of recorded communication or be delivered
personally or by telephone not later than one calendar day before the day on
which such meeting is to be held. Such notice shall include the time and place
of such meeting. However, notice of any such meeting need not be given to any
director or member of any committee if such notice is waived by him in writing
or by telegraph, cable or other form of recorded communication, whether before
or after such meeting shall be held, or if he shall be present at such meeting.
(f) Quorum and Manner of Acting. Except as otherwise provided by
law, the Certificate of Incorporation or these By-laws, one-half of the total
number of directors shall be present in person at any meeting of the Board in
order to constitute a quorum for the transaction of business at such meeting.
In each case the vote of a majority of those directors present at any such
meeting at which a quorum is present shall be necessary for the passage of any
resolution or any act of the Board, except as otherwise expressly required by
law or these By-laws. In the absence of a quorum for any such meeting, a
majority of the directors present thereat may adjourn such meeting from time to
time until a quorum shall be present thereat.
6
(g) Action by Communication Equipment. The directors, or the members
of any committee of the Board, may participate in a meeting of the Board, or of
such committee, by mean of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation shall constitute presence in person at such
meeting.
(h) Action by Consent. Any action required or permitted to be taken
at any meeting of the Board, or of any committee thereof, may be taken without a
meeting if all members of the Board or committee, as the case may be, consent
thereto in writing and such writing is filed with the minutes of the proceedings
of the Board or such committee.
(i) Organization. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside thereat, in the following order
of precedence: (a) the Co-Chairman of the Board chosen by a majority of the
directors present thereat; (b) the President; or (c) any director chosen by a
majority of the directors present thereat. The Secretary or, in case of his
absence, any person (who shall be an Assistant Secretary, if an Assistant
Secretary shall be present thereat) whom the chairman shall appoint, shall act
as secretary of such meeting and keep the minutes thereof.
SECTION 6. Compensation. Directors, as such, shall not receive any
stated salary for their services, but by resolution of the Board may receive a
fixed sum and expenses incurred in performing the functions of director and
member of any committee of the Board. Nothing herein contained shall be
construed so as to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE IV
Committees
SECTION 1. (a) Designation and Membership. The Board may, by
resolution passed by a majority of the whole Board, designate one or more
committees consisting of such number of directors, not less than one, as the
Board shall appoint. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Vacancies occurring on any committee for any
reason may be filled by the Board at any time. Any member of any committee
shall be subject to removal, with or without cause, at any time by the Board or
by a majority in voting interest of the
7
stockholders.
(b) Functions and Powers. Any such committee, subject to any
limitations prescribed by the Board, shall possess and may exercise, during the
intervals between meetings of the Board, all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers that may
require it; provided, however, that no such committee shall have such power or
authority in reference to amending the Certificate of Incorporation of the
Corporation (except that a committee may, to the extent authorized in
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors, fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation), adopting an agreement of merger or
consolidation under Section 251 or Section 252 of the General Corporation Law of
the State of Delaware, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, filling vacancies on the Board, changing the
membership or filling vacancies on any committee of the Board or amending these
By-laws. No such committee shall have the power and authority to declare
dividends, to authorize the issuance of stock of the Corporation or to adopt a
certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of the State of Delaware unless such power and authority shall
be expressly delegated to it by a resolution passed by a majority of the whole
Board.
(c) Meetings, Quorum and Manner of Acting. Each committee shall
meet at such times and as often as may be deemed necessary and expedient and at
such places as shall be determined by such committee. A majority of each such
committee shall constitute a quorum, and the vote of a majority of those members
of each such committee present at any meeting thereof at which a quorum is
present shall be necessary for the passage of any resolution or act of such
committee. The Board may designate a chairman for each such committee, who
shall preside at meetings thereof, and a vice chairman, who shall preside at
such meetings in the absence of the chairman.
8
ARTICLE V
Officers
SECTION 1. Election, Appointment and Term of Office. The officers of
the Corporation shall be two Co-Chairmen of the Board, a President, who shall
also be the Chief Executive Officer, such number of Vice Chairmen of the Board
and Vice Presidents (including and Executive, Senior and/or First Vice
Presidents) as the Board may determine from time to time, a Treasurer, one or
more Assistant Treasurers, if any, as the Board may determine, as Secretary and
one or more Assistant Secretaries, if any, as the Board may determine. Any two
or more offices may be held by the same person. Officers need not be
stockholders of the Corporation or citizens or residents of the United States of
America. The Co-Chairmen of the Board, any Vice Chairman of the Board and the
President shall be elected by the Board from among its members at its annual
meeting, and all other officers may be elected by the Board or the Executive
Committee, and each such officer shall hold office until the next annual meeting
of the Board or the Executive Committee, as the case may be, and until his
successor is elected or until his earlier death or until his earlier resignation
or removal in the manner hereinafter provided.
The Board or the Executive Committee may elect or appoint such other
officers as it deems necessary, including a Corporate General Counsel and one or
more Associate or Assistant Corporate General Counsels, Assistant Vice
Presidents, Assistant Treasurers and Assistant Secretaries. Each such officer
shall have such authority and shall perform such duties as may be provided
herein or as the Board or Executive Committee may prescribe.
If additional officers are elected or appointed during the year, each
of them shall hold office until the next annual meeting of the Board or
Executive Committee at which officers are regularly elected or appointed and
until his successor is elected or appointed or until his earlier death or until
his earlier resignation or removal in the manner hereinafter provided.
SECTION 2. Resignation, Removal and Vacancies. Any officer may
resign at any time by giving written notice to the President or the Secretary of
the Corporation, and such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, when accepted by action of the Board or the Executive Committee.
Except as aforesaid, the acceptance of such resignation shall not be necessary
to make it effective.
9
All officers and agents elected or appointed by the Board or the
Executive Committee shall be subject to removal at any time by the Board or the
Executive Committee, as the case may be, with or without cause.
A vacancy in any office may be filled for the unexpired portion of the
term in the same manner as provided for election or appointment to such office.
SECTION 3. Duties and Functions. (a) Co-Chairmen of the Board. The
Co-Chairman of the Board, who shall be a member thereof, selected by the
directors present thereat, shall preside at all meeting of the Board and of the
stockholders at which one of them shall be present and each shall perform such
other duties and exercise such powers as may from time to time be prescribed by
the Board of Directors or the Executive Committee.
(b) Vice Chairmen of the Board. Each Vice Chairman of the Board
shall be a member thereof and shall have such powers and duties as may from time
to time be prescribed by the Board or the Executive Committee.
(c) President. The President shall be a member of the Board, shall
be the Chief Executive Officer of the Corporation and shall perform such duties
and exercise such powers as are incident to the office of chief executive, and
shall perform such other duties and exercise such other powers as may from time
to time be prescribed by the Board or the Executive Committee.
(d) Vice Presidents. Each Vice President shall have such powers and
duties as shall be prescribed by the Board or the Executive Committee.
(e) Treasurer. The Treasurer shall have charge and custody of, and
be responsible for, all funds and securities of the Corporation and shall
deposit all such funds to the credit of the Corporation in such banks, trust
companies or other depositaries as shall be selected in accordance with the
provisions of these By-laws; he shall disburse the funds of the Corporation as
may be ordered by the Board or the Executive Committee, making proper vouchers
for such disbursements; and, in general, he shall perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Board, the Executive Committee or the President.
To such extent as the Board or Executive Committee shall deem proper, the duties
of the Treasurer may be performed by one or more assistants, to be appointed by
the Board or Executive Committee.
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(f) Secretary. The Secretary shall keep the records of all meetings
of the stockholders and of the Board and committees of the Board. He shall
affix the seal of the Corporation to all instruments requiring the corporate
seal when the same shall have been signed on behalf of the Corporation by a duly
authorized officer. The Secretary shall be the custodian of all contracts,
deeds, documents and all other indicia of title to properties owned by the
Corporation and of its other corporate records and in general shall perform all
duties and have all powers incident to the office of Secretary. To such extent
as the Board or the Executive Committee shall deem proper, the duties of
Secretary may be performed by one or more assistants, to be appointed by the
Board or the Executive Committee.
(g) Assistant Secretaries and Assistant Treasurers. Each Assistant
Secretary and each Assistant Treasurer shall perform the duties of and exercise
the powers of the Secretary and the Treasurer, respectively, in the absence of
the Secretary and the Treasurer, respectively.
ARTICLE VI
Contracts, Checks, Drafts,
Bank Accounts, Proxies, etc.
SECTION 1. Execution of Documents. The President, each Vice President
or any other officer, employee or agent of the Corporation designated by the
Board, or designated in accordance with corporate policy as approved by the
Board, shall have power to execute and deliver deeds, leases, contracts,
mortgages, bonds, debentures, checks, drafts and other orders for the payment of
money and other documents for an in the name of the Corporation, and such power
may be delegated (including power to redelegate) by written instrument to other
officers, employees or agents of the Corporation.
SECTION 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
or otherwise in accordance with corporate policy as approved by the Board.
SECTION 3. Proxies in Respect of Stock or Other Securities of Other
Corporations. The President or any other officer of the Corporation designated
by the Board shall have the authority (a) to appoint from time to time an agent
or agents of the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation, (b) to vote or consent in
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respect of such stock or securities and (c) to execute or cause to be executed
in the name and on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, powers of attorney or other instruments as he
may deem necessary or proper in order that the Corporation may exercise such
powers and rights. The President or any such designated officer may instruct
any person or persons appointed as aforesaid as to the manner of exercising such
powers and rights.
ARTICLE VII
Books and Records
The books and records of the Corporation may be kept at such places
within or without the State of Delaware as the Board may from time to time
determine.
ARTICLE VIII
Shares and Their Transfer; Fixing Record Date
SECTION 1. Certificate for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate certifying the number of
shares owned by him in the Corporation and designating the class of stock to
which such shares belong, which shall otherwise be in such form as the Board
shall prescribe. Each such certificate shall be signed by, or in the name of
the Corporation by, a Co-Chairman of the Board, a Vice Chairman of the Board,
the President or a Vice President and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Corporation. In case any officer
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer before such certificate is issued, it may
nevertheless be issued by the Corporation with the same effect as if he were
such officer at the date of issue.
SECTION 2. Record. A record shall be kept of the name of the person,
firm or corporation owning the stock represented by each certificate for stock
of the Corporation issued, the number of shares represented by each such
certificate and the date thereof, and, in the case of cancellation, the date of
cancellation. Except as otherwise expressly required by law, the person in
whose name shares of stock stand on the books of the Corporation shall be deemed
the owner thereof for all purposes as regards the Corporation.
SECTION 3. Lost, Stolen, Destroyed or Mutilated Certificates. The
holder of any stock of the Corporation
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shall immediately notify the Corporation of any loss, theft, destruction
or mutilation of the certificate therefor. The Corporation may issued
a new certificate for stock in the place of any certificate theretofore
issued by it and alleged to have been lost, stolen, destroyed or mutilated, and
the Board or the President or Secretary may, in its or his discretion, require
the owner of the lost, stolen, mutilated or destroyed certificate or his legal
representatives to give the Corporation a bond in such sum, limited or
unlimited, in such form and with such surety or sureties as the Board shall
in its discretion determine, to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss, theft, mutilation
or destruction of any such certificate or the issuance of any such new
certificate.
SECTION 4. Fixing Date for Determination of Stockholders of Record.
(a) In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board may fix a record date, which shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which shall not
be more than 60 or less than 10 calendar days before the date of such meeting.
If no record date is fixed by the Board, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; providing, however, that the Board may
fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board and which date shall
not be more than 10 calendar days after the date upon which the resolution
fixing the record date is adopted by the Board. If no record date has been
fixed by the Board, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board is otherwise required, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the registered office of the
Corporation
13
shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board and prior action by
the Board is required, the record date for determining stockholder entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board adopts the resolution taking such
prior action.
(c) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted, and which
record date shall be not more than 60 calendar days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto.
ARTICLE IX
Seal
The Board shall provide a corporate seal, which shall be in the form
of a circle and shall bear the full name of the Corporation, the words
"Corporate Seal Delaware" and in figures the year of its incorporation.
ARTICLE X
The fiscal year of the Corporation shall end on December 31 each year,
or on such other date as the Board of Directors shall determine.
ARTICLE XI
Indemnification
SECTION 1. Right to Indemnification. The Corporation shall to the
fullest extent permitted by applicable law as then in effect indemnify any
person (the "Indemnitee") who is or was involved in any manner (including,
without limitation, as a party or a witness) or is threatened to be made so
involved in any threatened, pending or completed investigation, claim, action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including,
14
without limitation, any action, suit or proceeding by or in the right of the
Corporation to procure a judgment in its favor) (a "Proceeding") by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including, without limitation, any employee
benefit plan), against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by the
Indemnitee in connection with such Proceeding. Such indemnification shall be a
contract right and shall include the right to receive payment in advance of any
expenses incurred by the Indemnitee in connection with such Proceeding,
consistent with the provisions of applicable law as then in effect.
SECTION 2. Insurance, Contracts and Funding. The Corporation may
purchase and maintain insurance to protect itself and any person entitled to
indemnification under this Article XI against any expenses, judgments, fines and
amounts payable as specified in this Article XI, to the fullest extent permitted
by applicable law as then in effect. The Corporation may enter into contracts
with any person entitled to indemnification under this Article XI in furtherance
of the provisions of this Article XI and may create a trust fund, grant a
security interest or use other means (including, without limitation, a letter of
credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article XI.
SECTION 3. Indemnification Not Exclusive Right. The right of
indemnification provided in this Article XI shall not be exclusive of any other
rights to which those seeking indemnification may otherwise be entitled, and the
provisions of this Article XI shall inure to the benefit of the heirs and legal
representatives of any person entitled to indemnification under this Article XI
and shall be applicable to Proceedings commenced or continuing after the
adoption of this Article XI, whether arising from acts or omissions occurring
before or after such adoption.
SECTION 4. Advancement of Expenses. In furtherance and not in
limitation of the foregoing provision, all reasonable expenses incurred by or on
behalf of the Indemnitee in connection with any Proceeding shall be advanced to
the Indemnitee by the Corporation within 20 calendar days after the receipt by
the Corporation of a statement or statements from the Indemnitee requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the expenses incurred by the Indemnitee and, if
15
required by law at the time of such advance, shall include or be accompanied
by an undertaking by or on behalf of the Indemnitee to repay the amounts
advanced if it shall ultimately be determined that the Indemnitee
is not entitled to be indemnified against such expenses pursuant to this
Article XI.
SECTION 5. Effects of Amendments. Neither the amendment or repeal
of, nor the adoption of a provision inconsistent with, any provision of this
Article XI (including, without limitation, this Section 5) shall adversely
affect the rights of any Indemnitee under this Article XI with respect to any
Proceeding commenced or threatened prior to such amendment, repeal or adoption
of an inconsistent provision.
SECTION 6. Severability. If any provision or provisions of this
Article XI shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Article XI (including, without limitation, all portions of
any paragraph of this Article XI containing any such provision held to be
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby; and (b) to the fullest extent possible, the provisions of this Article
XI (including, without limitation, all portions of any paragraph of this Article
XI containing any such provision held to be invalid, illegal or unenforceable,
that are not themselves invalid, illegal or unenforceable) shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
ARTICLE XII
Amendments
These By-laws may be amended or repealed by the Board at any regular
or special meeting thereof, subject to the power of the holders of a majority of
the outstanding stock of the Corporation entitled to vote in respect thereof, by
their vote at an annual meeting or at any special meeting, to amend or repeal
any By-law.
16
AMENDMENT, dated as of May 19, 1994 to AGREEMENT dated as of February
1, 1992 (the "Agreement") between Collins & Aikman Corporation (the "Company")
and Andrew Major ("Employee").
WHEREAS, the Company and Employee desire to amend the Agreement as
hereinafter provided;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Section 1 of the Agreement is hereby amended to read in its entirety
as follows:
"1. Term of Employment. The Company hereby agrees to employ Employee
and Employee hereby accepts employment for a period commencing February 1,
1992 and ending June 1, 1994 (the "Retirement Date"), subject to the terms
and conditions of this Agreement. The termination of Employee's employment
with the Company on the Retirement Date shall constitute a voluntary
retirement by Employee."
2. The heading of Section 3 of the Agreement is hereby amended to read in
its entirety as follows:
"3. Salary and Bonus Plan".
3. Section 3.2 of the Agreement is hereby amended to replace the words
"fiscal years 1993 and 1994" in the second sentence thereof with the words
"fiscal year 1993" and to delete the words "and 1994" in the third sentence
thereof.
4. Section 3.3 of the Agreement is hereby deleted.
5. Sections 6.1 and 6.2 of the Agreement are hereby deleted, any
references to such Sections are hereby deleted, and Section 6 of the Agreement
is hereby amended to read in its entirety as follows:
"6. Severance Amount. If Employee's employment with the Company ends
on the Retirement Date, the Company shall pay Employee the amount of
$325,000 (the "Severance Amount") on a periodic basis during the year
following his Retirement Date in accordance with normal pay practice.
Payment of the Severance Amount shall be in lieu of any severance or bonus
policy of the Company or any of its affiliates and Employee shall be
entitled to no severance or bonus other than the Severance Amount."
<END OF PAGE 1>
6. Section 7.2(b) of the Agreement is hereby amended to read in its
entirety as follows:
"(b) For good and valuable consideration, Employee agrees that until
September 1, 1994, he shall not engage, or enter into an agreement or
understanding to engage, directly or indirectly, in any business activity
that is competitive with any business of the Company or any of its
subsidiaries. Without limiting the generality of the foregoing, Employee
shall not while he is employed hereunder and until September 1, 1994
compete with the Company in any way whatsoever or directly or indirectly
(whether for compensation or otherwise), alone or as an agent, principal,
partner, officer, employee, trustee, director, shareholder or in any other
capacity, own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or furnish any capital to,
or be connected in any manner with or provide any services as a consultant
for, any business which competes with the business of the Company or its
subsidiaries as it may be conducted from time to time. In addition, prior
to September 1, 1994, Employee shall not, directly or indirectly, publicly
announce or make known any intention to engage in any such activity in the
future."
7. Section 7 of the Agreement is hereby amended to add the following at
the end thereof:
"7.4 Cooperation. During his employment and at any time thereafter,
Employee shall promptly notify the Company of any threatened, pending or
completed investigation, claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative ("Proceeding"), in which he may
be involved, whether as an actual or potential party or witness or
otherwise, or with respect to which he may receive requests for
information, by reason of his future, present or past association with the
Company or any affiliate of the Company. Employee shall cooperate fully
with the Company and any affiliate of the Company in connection with any
Proceeding at no expense to the Company or any affiliate of the Company
other than the reimbursement of Employee's reasonable out-of-pocket
expenses. Employee shall not disclose any confidential or privileged
information in connection with any Proceeding without the written consent
of the Company and shall give prompt notice to the Company of any request
therefor.
7.5 Hiring. For good and valuable consideration and in order to
protect the Company's legitimate business interests (including its
interests in not having its confidential information appropriated),
Employee agrees that until June 1, 1995, Employee shall not, directly or
indirectly (including, without limitation, in his capacity as an agent,
principal, partner, officer, employee, director or shareholder of another
2
person or entity), hire, consult with, contract with or engage the services
of, or attempt to hire, consult with, contract with or engage the services
of, or influence or attempt to influence any other person or entity to
hire, consult with, contract with or engage the services of, or to attempt
to hire, consult with, contract with or engage the services of, (i) any
person who is or was employed by the Company or any of its subsidiaries at
any time during the term of this Agreement or (ii) any designer, sales
representative or consultant used by the Company's Decorative Fabrics group
at any time during the term of this Agreement. Employee represents to the
Company that he has no agreement or understanding, directly or indirectly,
to hire, consult with, contract with or engage the services of, or has not
influenced or attempted to influence any other person to hire, consult
with, contract with or engage the services of, the services of any of the
persons described in clauses (i) or (ii) of the previous sentence.
7.6 Return of Documents. On June 1, 1994, or the earlier request of
the Company, Employee shall return any documents, records, data, books or
materials of the Company or its subsidiaries or affiliates in his
possession or control and any of his workpapers containing confidential
information (including, without limitation, customer lists, pricing data
and trade secrets) of the Company or its subsidiaries or affiliates, and
shall not retain any copies thereof.
7.7 Cancellation of Options. In consideration of the payments to be
made hereunder, Employee agrees that he shall not be granted any options
under the Collins & Aikman Holdings Corporation 1993 Employee Stock Option
Plan (the "1993 Option Plan"), the Collins & Aikman Holdings Corporation
1994 Employee Stock Option Plan (the "1994 Option Plan") or any other
option plan of the Company of any of its affiliates, and any options
granted or deemed granted prior to the date hereof shall be unvested and
null and void.
7.8 Specific Enforcement. Employee acknowledges that
his failure to comply with the provisions of Sections 7.1, 7.2, 7.3, 7.4,
7.5 and 7.6 of this Agreement will result in irreparable and continuing
damage for which there will be no adequate remedy at law and that, in the
event of a failure of Employee so to comply, the Company shall be entitled,
without the necessity of giving notice, proving actual damages or securing
or posting any bond, to injunctive relief in addition to all other remedies
which may otherwise be available to the Company and to such other and
further relief as may be proper and necessary to ensure compliance with the
provisions of said Sections."
3
8. Section 8 of the Agreement is hereby amended to read in its entirety
as follows:
"8. Release. For good and valuable consideration, Employee on behalf
of himself and his heirs unconditionally releases the Company and its
subsidiaries and affiliates and the directors, officers, employees,
stockholders, represen- tatives and agents of the Company and its
subsidiaries and affiliates, and each of their respective successors,
assigns and heirs, and any and all other related entities and individuals,
and each of them in any and all capacities, from any and all claims,
liabilities, demands and obligations of any nature, whether known or
unknown, arising out of his future, present or past association with the
Company or any of its subsidiaries or affiliates, or the termination of any
such association (other than those related to post-retirement benefits
under pension, profit-sharing, savings or retirement plans of the Company
and other than those explicitly provided for by this Agreement) including,
without limitation, any claims, liabilities, demands and obligations
arising out of or related to (i) the 1993 Option Plan or the 1994 Option
Plan, (ii) the Collins & Aikman Group, Inc. (formerly, Wickes Companies,
Inc.) Equity Share Plan (or any other shadow equity plan), (iii) any
severance or bonus plan of the Company, (iv) any alleged legal restrictions
on the Company's rights to terminate its employees, such as any implied
contract of employment or termination contrary to public policy (including,
without limitation, the Age Discrimination in Employment Act) and (v)
contract, tort or property rights (including, without limitation, breach of
contract, breach of the implied covenant of good faith and fair dealing,
tortious interference with contract or current or prospective economic
advantage, fraud, deceit, misrepresentation, defamation, wrongful
termination, infliction of emotional distress, breach of fiduciary duty and
any other common law claim of any kind whatsoever). Employee hereby waives
any and all rights arising under any Federal or state statute, rule or
principle of common law or equity to prosecute or assert in any manner, and
agrees not to prosecute or assert in any manner, any claim, liability,
demand or obligation which is the subject of the foregoing release. From
time to time, upon the request of the Company, Employee shall execute and
deliver all such documents as the Company may deem necessary or desirable
to effectuate the foregoing release, waiver and agreement."
9. All references in the Agreement to this "Agreement" shall mean the
Agreement, as amended hereby. Except as expressly amended hereby, the Agreement
shall continue in full force and effect in accordance with the provisions
thereof.
10. In executing this Amendment, Employee has not relied upon any
statement, representation or promise, whether written or oral,
4
of the Company or any of its subsidiaries or affiliates, or of any
representative or attorney for the Company or any of its subsidiaries or
affiliates, except for statements expressly set forth in this Amendment.
11. Employee acknowledges that he was advised that he had a period of
twenty-one (21) calendar days in which to consider and execute this Amendment.
Employee further acknowledges and understands that he has seven calendar days
from the date on which he executes this Amendment to revoke it. Accordingly,
this Amendment shall not become effective or enforceable until the revocation
period has expired. To the extent that it has not otherwise done so, the
Company hereby advises Employee to consult with an attorney prior to executing
this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
/s/ Andrew Major
ANDREW MAJOR
COLLINS & AIKMAN CORPORATION
by /s/ Ronald T. Lindsay
Name: RONALD T. LINDSAY
Title: Vice President
5
