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 quarter ended April 29, 1995
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 CORPORATION
(formerly Collins & Aikman Holdings Corporation)
A Delaware Corporation (IRS Employer Identification
No. 13-3489233)
701 McCullough Drive
Charlotte, North Carolina 28262
Telephone (704) 547-8500
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 6, 1995, the number of outstanding shares of
the Registrant's common stock, $.01 par value, was
70,520,900 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Quarter Ended
April 29, April 30,
1995 1994
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 392,129 $ 390,446
Cost of goods sold . . . . . . . . . . . . . . . . . . 298,431 289,492
Selling, general and administrative expenses . . . . . 46,909 55,392
345,340 344,884
Operating income . . . . . . . . . . . . . . . . . . . 46,789 45,562
Interest expense, net . . . . . . . . . . . . . . . . . 11,541 29,061
Loss on sale of receivables . . . . . . . . . . . . . . 2,694 -
Dividends on preferred stock of subsidiary . . . . . . - 1,129
Income from continuing operations before income taxes . 32,554 15,372
Income taxes . . . . . . . . . . . . . . . . . . . . . 3,653 2,618
Net income . . . . . . . . . . . . . . . . . . . . . . $ 28,901 $ 12,754
Dividends and accretion on preferred stock . . . . . . - 7,086
Income applicable to common shareholders . . . . . . . $ 28,901 $ 5,668
Net income per primary and fully diluted common share . $ .40 $ .19
Average common shares outstanding . . . . . . . . . . . 71,748 29,809
</TABLE>
See accompanying notes.
I-1
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
April 29, January 28,
1995 1995
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . $ 13,719 $ 3,317
Accounts and notes receivable, net . . . . . . 78,910 92,082
Inventories . . . . . . . . . . . . . . . . . . 199,705 196,096
Other . . . . . . . . . . . . . . . . . . . . . 26,477 38,184
Total current assets . . . . . . . . . . . . 318,811 329,679
Property, plant and equipment, at cost less
accumulated depreciation and amortization of
$282,595 and $269,808 . . . . . . . . . . . . . 295,645 287,559
Other assets . . . . . . . . . . . . . . . . . . . 63,183 63,833
$ 677,639 $ 681,071
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable . . . . . . . . . . . . . . . . . $ 1,950 $ 1,723
Current maturities of long-term debt . . . . . 24,752 18,114
Accounts payable . . . . . . . . . . . . . . . 76,052 97,726
Accrued expenses . . . . . . . . . . . . . . . 123,046 144,566
Total current liabilities . . . . . . . . . 225,800 262,129
Long-term debt . . . . . . . . . . . . . . . . . . 555,325 547,963
Deferred income taxes . . . . . . . . . . . . . . . 1,459 1,377
Other, including postretirement benefit obligation 283,306 282,224
Commitments and contingencies . . . . . . . . . . .
Common stock (150,000 authorized, 70,521 shares
issued and outstanding) . . . . . . . . . . . . 705 705
Other paid-in capital . . . . . . . . . . . . . . . 585,972 586,281
Accumulated deficit . . . . . . . . . . . . . . . . (947,648) (976,549)
Foreign currency translation adjustments . . . . . (17,876) (13,655)
Pension equity adjustment . . . . . . . . . . . . . (9,404) (9,404)
Total common stockholders' deficit . . . . . (388,251) (412,622)
$ 677,639 $ 681,071
</TABLE>
See accompanying notes.
I-2
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Quarter Ended
April 29, April 30,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,901 $ 12,754
Adjustments to derive cash flow from
continuing operating activities:
Depreciation and leasehold amortization . . . . . . . . 11,718 11,127
Amortization of other assets & liabilities . . . . . . . 2,931 2,334
Decrease (increase) in accounts and notes receivable . . 18,172 (12,340)
Increase in inventories . . . . . . . . . . . . . . . . (3,609) (13,647)
Decrease in accounts payable . . . . . . . . . . . . . . (21,674) (7,403)
Increase in interest and dividends payable . . . . . . . 730 13,787
Other, net . . . . . . . . . . . . . . . . . . . . . . . (5,713) 11,371
Net cash provided by continuing operating activities . 31,456 17,983
Cash used in discontinued operations . . . . . . . . . . . . (6,831) (8,540)
INVESTING ACTIVITIES
Additions to property, plant and equipment . . . . . . . . . (21,462) (15,286)
Sales of property, plant and equipment . . . . . . . . . . . 274 11
Net proceeds from disposition of discontinued operations . . - 71,445
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . (2,250) 2,680
Net cash provided by (used in) investing activities . (23,438) 58,850
FINANCING ACTIVITIES
Issuance of long-term debt . . . . . . . . . . . . . . . . . 717 1,037
Repayment of long-term debt . . . . . . . . . . . . . . . . . (1,863) (5,335)
Reduction of participating interests in accounts receivable . (5,000) -
Net borrowings (repayments) on revolving
credit facilities . . . . . . . . . . . . . . . . . . . . 15,000 (5,000)
Net borrowings (repayments) on notes payable . . . . . . . . 227 (821)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 134 (265)
Net cash provided by (used in) financing activities . 9,215 (10,384)
Net increase in cash and cash equivalents . . . . . . . . . . 10,402 57,909
Cash and cash equivalents at beginning of period . . . . . . 3,317 81,373
Cash and cash equivalents at end of period . . . . . . . . . $ 13,719 $ 139,282
</TABLE>
See accompanying notes.
I-3
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT
(Unaudited)
A. Organization:
Collins & Aikman Corporation (the "Company") (formerly
Collins & Aikman Holdings Corporation) is a Delaware
corporation. Prior to July 13, 1994, the Company was a wholly-
owned subsidiary of Collins & Aikman Holdings II Corporation
("Holdings II"). In connection with an initial public
offering of common stock ("Common Stock") and a
recapitalization (the "Recapitalization"), Holdings II was
merged into the Company. Concurrently, Collins & Aikman
Group, Inc., a wholly-owned subsidiary of the Company
("Group"), was merged into its wholly-owned subsidiary,
Collins & Aikman Corporation, which changed its name to Collins
& Aikman Products Co. ("C&A Products"). On July 7, 1994, the
Company changed its name from Collins & Aikman Holdings
Corporation to Collins & Aikman Corporation.
Prior to the Recapitalization, the Company was jointly
owned by Blackstone Capital Partners L.P. ("Blackstone
Partners") and Wasserstein Perella Partners, L.P. ("WP
Partners") and their respective affiliates. As a result of
the Recapitalization, Blackstone Partners and WP Partners and
their respective affiliates collectively own approximately 76%
of the Common Stock.
The Company conducts all of its operating activities
through its wholly-owned C&A Products subsidiary.
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 the statement of operations
for the quarter ended April 30, 1994 and the statement of cash
flows for the quarter ended April 30, 1994 to conform to the
fiscal 1995 presentation.
For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Collins & Aikman Corporation Annual Report on Form 10-K for the
fiscal year ended January 28, 1995.
C. Interest Rate Protection Program:
During September 1994, the Company entered into a program
designed to reduce its exposure to changes in the cost of its
variable rate borrowings by the use of interest rate cap and
corridor agreements. The strike price of these agreements
exceeded the current market levels at the time they were
entered into and their cost is included in interest expense
ratably during the life of the agreements. Payments to be
received, if any, as a result of the agreements are accrued
as a reduction of interest expense. Unamortized costs of these
arrangements are included in other assets. Under these
agreements, the Company has limited its exposure on notional
principal amounts as follows (in thousands):
Protection Period Notional Principal Amount Average LIBOR Strike Price
October 1994 thru
October 1995 $ 300,000 6.92%
October 1995 thru
October 1996 $ 250,000 7.50%
I-4
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
Amortization of these agreements amounted to $.1 million during
the quarter ended April 29, 1995.
D. Receivables Facility:
On March 31, 1995, C&A Products repaid and terminated
the receivables financing arrangement it entered into in
connection with the Recapitalization (the "Bridge Receivables
Facility") and entered, through a trust (the "Trust") formed by
Carcorp, Inc., a wholly-owned, bankruptcy remote subsidiary of
C&A Products ("Carcorp"), into a new receivables facility (the
"Receivables Facility") comprised of (i) term certificates,
which were issued on March 31, 1995, in an aggregate face amount
of $110 million and have a term of five years and (ii) variable
funding certificates, which represent revolving commitments of
up to an aggregate of $75 million and have a term of five years.
Carcorp purchases on a revolving basis and transfers to the Trust
virtually all trade receivables generated by C&A Products and
certain of its subsidiaries (the "Sellers").
Availability under the variable funding certificates at any
time depends primarily on the amount of receivables generated by
the Sellers from sales to the auto industry, the rate of
collection on those receivables and other characteristics of
those receivables which affect their eligibility (such as
bankruptcy or downgrading below investment grade of the obligor,
delinquency and excessive concentration). Based on these
criteria, at April 29, 1995 approximately $31.5 million was
available under the variable funding certificates, of which
approximately $30.0 million was utilized.
The term certificates bear interest at an average rate equal
to one-month LIBOR plus .34% per annum. The variable funding
certificates bear interest, at Carcorp's option, at LIBOR plus
.40% per annum or a prime rate.
As of April 29, 1995, the Trust's receivables pool was
$209.9 million net of allowances for doubtful accounts. As of
April 29, 1995, the holders of term certificates and variable
funding certificates collectively possessed a $140 million
undivided senior interest (net of settlements in transit) in the
Trust's receivables pool and, accordingly, such receivables were
not reflected in the Company's accounts receivable balance as
of that date. As of April 29, 1995, Carcorp owned a subordinated
interest in the receivables pool.
E. Inventories:
Inventory balances are summarized as follows (in thousands):
April 29, January 28,
1995 1995
Raw materials . . . . . . . . . . . . . . . .$ 79,869 $ 81,669
Work in process . . . . . . . . . . . . . . . 25,983 24,149
Finished goods . . . . . . . . . . . . . . . 93,853 90,278
$ 199,705 $ 196,096
F. Interest Expense, Net:
Interest expense for the quarters ended April 29, 1995 and
April 30, 1994 is net of interest income of $.8 million and $2.4
million, respectively.
I-5
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
G. Related Party Transactions:
Pursuant to the Stockholders' Agreement among the
Company, Group, Blackstone Partners and WP Partners dated
December 1988, the Company paid Blackstone Partners and WP
Partners, or their respective affiliates, operating,
management and advisory fees aggregating $5.0 million annually
until the agreement's amendment in July 1994.
Under the Amended and Restated Stockholders' Agreement
among the Company, C&A Products, Blackstone Partners and WP
Partners, the Company pays Blackstone Partners and WP Partners, or
their respective affiliates, each an annual monitoring fee of
$1.0 million, which is payable quarterly and which commenced in
the quarter ended October 29, 1994.
During the first quarter of 1994, the Company incurred
expenses of $2.5 million for services performed by affiliates of
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 Company also incurred during the first quarter
of 1994 expenses of $2.75 million for services performed by
affiliates of WP Partners and $3.25 million for services performed
by affiliates of Blackstone Partners in connection with the
Company's review of refinancing and strategic alternatives as
well as other advisory services; these fees are included in
"selling, general and administrative expenses" for the first
quarter of 1994.
In connection with the Company's discontinued operations,
the Company incurred fees of $.1 million during the first quarter
of 1994 to an affiliate of Blackstone Partners for advisory
services in connection with the sale of inventory, real estate
and other assets of Builders Emporium, a former division of
Group.
H. Information About Segments of the Company's Operations:
Information about the Company's segments for the first
quarter of fiscal 1995 and of fiscal 1994 follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Net Gross Operating Capital
April 29, 1995 Sales Margin Income Expenditures
<S> <C> <C> <C> <C>
Automotive Products . . . $ 243,694 $ 45,728 $ 31,080 $ 15,312
Interior Furnishings . . 91,196 27,855 11,196 4,625
Wallcoverings . . . . . . 57,239 20,115 4,513 1,207
392,129 93,698 46,789 21,144
Corporate items . . . . . - - - 318
$ 392,129 $ 93,698 $ 46,789 $ 21,462
Quarter Ended Net Gross Operating Capital
April 30, 1994 Sales Margin Income (Loss) Expenditures
Automotive Products . . . $ 222,991 $ 48,149 $ 35,390 $ 11,234
Interior Furnishings . . 107,129 31,880 13,674 2,573
Wallcoverings . . . . . . 60,326 20,925 5,137 1,286
390,446 100,954 54,201 15,093
Corporate items . . . . . - - (8,639) (a) 193
$ 390,446 $ 100,954 $ 45,562 $ 15,286
</TABLE>
I-6
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
a) Corporate items for the quarter ended April 30, 1994 include
$6.0 million related to services performed by affiliates
of WP Partners and of Blackstone Partners in connection
with the Company's review of refinancing and strategic
alternatives as well as certain other advisory services.
I. 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 results of operations.
See also "PART I - FINANCIAL INFORMATION, Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations."
C&A Products (or its predecessor, Group) has assigned
leases related to divested businesses. Although C&A Products
has obtained releases from the lessors of certain of these
properties, C&A Products remains contingently liable under most
of the leases. C&A Products' 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 results of operations.
J. Common Stockholders' Deficit:
Activity in common stockholders' deficit is as follows (in
thousands):
<TABLE>
<CAPTION> Foreign
Other Currency Pension
Common Paid-in Accumulated Translation Equity
Stock Capital Deficit Adjustments Adjustment Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 28,
1995 . . . . . . . . . . . . . . . . . $ 705 $586,281 $(976,549) $ (13,655) $ (9,404) $(412,622)
Compensation expense
adjustment . . . . . . . . . . . . . . - (309) - - - (309)
Net income . . . . . . . . . . . . . . . - - 28,901 - - 28,901
Foreign currency
translation adjustments . . . . . . . - - - (4,221) - (4,221)
Balance at April 29, 1995 . . . . . . . . $ 705 $585,972 $(947,648) $ (17,876) $ (9,404) $(388,251)
</TABLE>
K. Earnings Per Share:
Earnings per common share are based on the weighted
average number of shares of Common Stock outstanding during each
period and the assumed exercise of employee stock options less
the number of treasury shares assumed to be purchased from the
proceeds, including applicable compensation expense. In
connection with the merger of Holdings II into the Company, the
35,035,000 shares of Common Stock of the Company outstanding
prior to the Recapitalization were canceled and approximately
28,164,000 shares of Common Stock were issued in exchange for
the common stock of Holdings II. All historical amounts and
earnings per share computations have been adjusted to reflect the
merger. For the quarter ended April 30, 1994, net income has been
adjusted by dividends and accretion requirements on preferred
stock to compute the income applicable to common shareholders.
I-7
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RECENT DEVELOPMENTS
On May 31, 1995, the Company announced a stock
repurchase program whereby the Company may spend up to $12.0
million during fiscal 1995 for the repurchase of shares of
Common Stock. The repurchased shares will provide available
shares for the Company's employee and director stock option
plans. It is the Company's intent that any such repurchased
shares will be retained by the Company in its treasury until
their reissuance upon the exercise of options.
INITIAL PUBLIC OFFERING AND RECAPITALIZATION
During July 1994, the Company completed an initial
public offering and a Recapitalization which was designed to
reduce the Company's indebtedness, significantly lower interest
expense, improve operating and financial flexibility and provide
liquidity for operations and other general corporate
purposes. In connection with the Recapitalization, Holdings
II, formerly the sole common stockholder of the Company, was
merged into the Company and the Company changed its name to
Collins & Aikman Corporation. Concurrently, Group was merged
into its wholly-owned subsidiary, Collins & Aikman
Corporation, which changed its name to Collins & Aikman Products
Co.
GENERAL
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 and commercial
floorcoverings for sale in the United States and for export; and
Wallcoverings, which produces residential and commercial
wallpaper for sale in North America. The Company's net sales in
the first quarter of fiscal 1995 were $392.1 million, with
approximately $243.7 million (62.1%) in Automotive Products,
$91.2 million (23.3%) in Interior Furnishings, and $57.2
million (14.6%) in Wallcoverings. 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.
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.
I-8
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
RESULTS OF OPERATIONS
Discussion of results of each of the Company's operating segments
follows:
Automotive Products
<TABLE>
<CAPTION>
Quarter Ended
April 29, 1995 April 30, 1994
Amount Percent Amount Percent
(amounts in thousands)
<S> <C> <C> <C> <C>
Net sales $243,694 100.0% $ 222,991 100.0%
Cost of goods sold 197,966 81.2 174,842 78.4
Gross margin 45,728 18.8 48,149 21.6
Selling, general & administrative
expenses 14,648 6.0 12,759 5.7
Operating income $ 31,080 12.8% $ 35,390 15.9%
</TABLE>
Net Sales: Automotive Products' net sales increased 9.3% to
approximately $243.7 million in the first quarter of 1995, up
$20.7 million over the comparable 1994 quarter. The overall
increase is attributable to increased sales volume of four of
the segment's five high volume products, primarily automotive
bodycloth, which experienced an increase of 20.6%, and molded
carpet, which experienced a 15.4% increase. These were partially
offset by a 33.7% decrease in convertible top systems. The
overall increase in the segment's sales compares with a 1%
increase in the North American vehicle build over the comparable
quarter of the prior year. For the remainder of the year, the
Company currently does not expect any increase in the North
American vehicle build from last year.
The bodycloth increase was due primarily to the Company's
jacquard velvets product line currently utilized in such high
volume models as the General Motors C/K Truck Line. Additional
product placements, which contributed to the overall increase
in bodycloth volume, were the Chevrolet Cavalier, Lumina and
Suburban, the Ford Contour/Mystique, the Chrysler Cirrus/Stratus
and the GEO Prism.
The molded floor carpet increase was due to a 16% increase in
unit shipments principally related to increased production of
high volume models, including the Chevrolet Lumina and Monte
Carlo, the Buick Regal, the Chrysler Cirrus/Stratus, and the Ford
Explorer.
The convertible top systems decrease resulted from reduced
production of the Ford Mustang convertible.
The above factors resulted in the Company's average sales
content per vehicle built in North America of approximately $55
for the first quarter of 1995 compared to an average of
approximately $53 for the fiscal 1994 year and $55 for the
preceding fiscal quarter.
I-9
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Gross Margin: For the first quarter of 1995, gross margin was
18.8%, down from 21.6% in the comparable period in 1994. The
decline is attributable primarily to reduced margins in automotive
seat fabric, which resulted primarily from manufacturing
inefficiencies and from commission weaving costs incurred due to
capacity constraints for certain fabrics, and reduced convertible
top system sales, which carry a higher margin than the segment's
average. The Company has terminated commission weaving in
the middle of the second quarter of 1995. During the current
quarter, the segment experienced increases in certain raw material
prices which were offset by the Company's reengineering efforts.
The Company expects to continue to incur raw material price
increases during the remainder of fiscal 1995.
Selling, General and Administrative Expenses: Automotive
Products' selling, general and administrative expenses increased
14.8% in the first quarter of 1995 over the comparable 1994
period. The increase is primarily due to the allocation of
previously unallocated corporate expenses and costs incurred in
divisional reorganizations.
Interior Furnishings
<TABLE>
<CAPTION>
Quarter Ended
April 29, 1995 April 30, 1994
Amount Percent Amount Percent
(amounts in thousands)
<S> <C> <C> <C> <C>
Net sales $ 91,196 100.0% $ 107,129 100.0%
Cost of goods sold 63,341 69.5 75,249 70.2
Gross margin 27,855 30.5 31,880 29.8
Selling, general & administrative
expenses 16,659 18.2 18,206 17.0
Operating income $ 11,196 12.3% $ 13,674 12.8%
</TABLE>
Net Sales: Interior Furnishings' net sales decreased 14.9% to
$91.2 million in the first quarter of 1994, down $15.9 million
compared to the first quarter of 1994. The Decorative Fabrics
group experienced a net sales decline of 19.8% and the
Floorcoverings group experienced a net sales increase of 3.2%
during the first quarter of fiscal 1995 as compared to the
first quarter of the prior year. Decorative Fabrics' sales
decline was principally in the group's Mastercraft division, which
makes flatwoven upholstery fabrics. In addition, 1994 results
included the Warner and Greeff product lines, which were sold in
the fourth quarter of 1994. The Company believes that lower
sales at Mastercraft may reflect both competition from lower
priced goods and a shift in consumer tastes from traditional
jacquard fabrics to leather and textured fabrics. The Company
expects these factors, together with softness in the
furniture business, to continue to impact Mastercraft sales.
Velvet sales were also down due to the Company's redeployment
of manufacturing capacity to make automotive seat fabric. The
increase in Floorcoverings' sales reflects an increase in the
volume of shipments to the healthcare industry and to the export
markets.
I-10
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Gross Margin: For the first quarter of 1995, gross margin was
30.5%, up from 29.8% in the comparable period. The increase
reflects improvements in manufacturing efficiencies in the
Decorative Fabrics group resulting from the Mastercraft loom
modernization and cost improvement programs.
Selling, General and Administrative Expenses: Interior
Furnishings' selling, general and administrative expenses
decreased $1.5 million or 8.5% in the first quarter of 1995 from
the first quarter of 1994. Of the decrease in selling,
general and administrative expenses, $2.2 million relates
primarily to the Warner and Greeff product lines which were sold
in the fourth quarter of 1994, partially offset by the
allocation to Interior Furnishings of previously unallocated
corporate expenses.
Wallcoverings
<TABLE>
<CAPTION>
Quarter Ended
April 29, 1995 April 30, 1994
Amount Percent Amount Percent
(amounts in thousands)
<S> <C> <C> <C> <C>
Net sales $ 57,239 100.0% $ 60,326 100.0%
Cost of goods sold 37,124 64.9 39,401 65.3
Gross margin 20,115 35.1 20,925 34.7
Selling, general & administrative
expenses 15,602 27.2 15,788 26.2
Operating income $ 4,513 7.9% $ 5,137 8.5%
</TABLE>
Net Sales: Wallcoverings' net sales for the first quarter of 1995
decreased 5.1% from the comparable prior year period. The
decrease reflects lower shipments to converter businesses and
planned reductions in sales to independent distributors,
partially offset by increased sales to independent retailers
("dealers").
Gross Margin: For the first quarter of 1995, gross margin of
35.1% was up from 34.7% in the comparable prior year period.
The improvement in gross margin as a percent of net sales
resulted from a shift to dealer sales from lower margin
converter and independent distributor sales.
Selling, General and Administrative Expenses: Wallcoverings'
selling, general and administrative expenses decreased 1.2% to
$15.6 million in the first quarter of 1995, down $.2 million over
the first quarter of 1994. The decrease in selling, general
and administrative expenses is attributable primarily to a
reduction in the number of sample books, which resulted in lower
selling costs, partially offset by increased allocations to
Wallcoverings of previously unallocated corporate expenses. The
reduction in sample books over the comparable prior year period
reflects a relatively high number of sample books in the prior
year as the segment was reestablishing its shelf space with the
dealers.
I-11
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Company As A Whole
Net Sales: Net sales increased .4% to $392.1 million in the first
quarter of 1995, up $1.7 million over the first quarter of 1994.
The overall net sales increases reflect continued sales increases
in the Company's Automotive Products segment offset by sales
decreases in the Interior Furnishings and Wallcoverings segments
as discussed above.
Gross Margin: Gross margin decreased to $93.7 million or 23.9%
of sales in the first quarter of 1995, down from $101.0 million
or 25.9% of sales in the first quarter of 1994. The first
quarter decrease in gross margin as a percent of sales results
primarily from manufacturing inefficiencies in automotive
fabrics, commission weaving costs incurred due to capacity
constraints for certain automotive fabrics and reduced
convertible top system sales in the Automotive Products segment,
partially offset by efficiencies in the Interior Furnishings
segment and a somewhat improved sales mix in the Wallcoverings
segment. To a lesser extent, the decline in gross margin is
attributable to raw material price increases. The Company
expects the impact of raw material price increases to grow in the
remainder of fiscal 1995, although the Company believes that the
impact can be somewhat reduced by price increases to customers,
reengineering efforts and continued reductions in the cost of
non-conformance.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses decreased in the first quarter of 1995 to
$46.9 million and were $8.5 million lower than the comparable
period in 1994. The improvement is primarily attributable to a
reduction of advisory fees, which were paid in the first quarter
of 1994, and to the sale of the Warner and Greeff product lines
in the fourth quarter of 1994.
Interest Expense: Interest expense, net of interest income,
decreased $17.6 million to $11.5 million in the first quarter
of 1995 from $29.1 million in the first quarter of 1994. The
overall decrease in interest expense was due to the
Recapitalization which reduced the Company's overall outstanding
indebtedness and its borrowing rates.
Loss on the Sale of Receivables: Since the Recapitalization, the
Company has sold on a continuous basis, through its Carcorp
subsidiary, interests in a pool of accounts receivable. In
connection with the receivables sales, a loss of $2.7 million was
incurred in the first quarter of 1995. No sales of receivables
occurred in the comparable period of 1994. See Note D to Condensed
Consolidated Financial Report.
Income Taxes: In the quarter ended April 29, 1995, the provision
for income taxes was $3.7 million compared with $2.6 million for
the comparable 1994 period. In the first quarter of 1995 income
tax expense consisted of foreign, state, franchise and federal
alternative minimum taxes. In the comparable 1994 period the
Company did not incur any federal alternative minimum taxes.
Net Income: The combined effect of the foregoing resulted in net
income of $28.9 million in the first quarter of 1995 compared to
net income of $12.8 million for the comparable period of 1994.
Pro Forma Results: As previously discussed, in July 1994,
the Company completed a Recapitalization designed to reduce its
total indebtedness, significantly lower interest expense,
improve operating and financial flexibility and provide liquidity
for operations and
I-12
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
other general corporate purposes. Had the Recapitalization
occurred at the beginning of fiscal 1994, the pro forma income
and earnings per common share from continuing operations for the
first quarter of fiscal 1994 would have been $32.9 million and
$.46, respectively (assuming 72.2 million fully diluted shares).
The pro forma results do not purport to represent what the
Company's results of operations would actually have been if the
Recapitalization had occurred as of the beginning of fiscal
1994, or to project the Company's results of operations at any
future date or for any future period.
LIQUIDITY AND CAPITAL RESOURCES
The Company and its subsidiaries had cash and cash
equivalents totalling $13.7 million and $3.3 million at April
29, 1995 and January 28, 1995, respectively. The increase in
the Company's cash balance is primarily due to the Receivables
Facility, which the Company entered into on March 31, 1995,
whereby collections of receivables are temporarily held until
the determination of availability. The Receivables Facility is
further discussed below.
As part of the Recapitalization, in July 1994 the Company's
C&A Products subsidiary entered into new credit facilities.
The new credit facilities consist of (i) the Term Loan
Facilities, comprised of term loans in an aggregate principal
amount of $475 million (including a $45 million Canadian loan) and
having a term of eight years, which were drawn in full on the
closing date, (ii) the Revolving Facility, having an aggregate
principal amount of up to $150 million and a term of seven years
and (iii) the Bridge Receivables Facility, which was terminated
and replaced with the Receivables Facility (the Term Loan
Facilities and Revolving Facility, together, the "Facilities").
The Facilities contain restrictive covenants including
maintenance of EBITDA (i.e. earnings before interest, taxes,
depreciation and amortization including the non cash write-off
of goodwill) and interest coverage ratios, leverage and
liquidity tests and various other restrictive covenants which
are typical for such facilities. In addition, C&A Products is
prohibited from paying dividends or making other distributions
to the Company except to the extent necessary to allow the
Company to pay taxes, ordinary expenses, permitted dividends on
the common stock and the price for permitted repurchases of
shares or options and to make permitted investments
in finance, foreign or acquired subsidiaries. The Company does
not believe such prohibition will have a material adverse
impact on the Company because all the Company's operations are
conducted, and all the Company's debt obligations are issued, by
C&A Products and its subsidiaries.
On March 31, 1995, C&A Products repaid and terminated
the Bridge Receivables Facility and entered, through the Trust
formed by its wholly-owned, bankruptcy remote subsidiary,
Carcorp, the Receivables Facility comprised of (i) term
certificates, which were issued on March 31, 1995, in an
aggregate face amount of $110 million and having a term of five
years and (ii) variable funding certificates, which represent
revolving commitments, of up to an aggregate of $75 million
and having a term of five years. Carcorp purchases on a
revolving basis and transfers to the Trust virtually all trade
receivables generated by C&A Products and the Sellers. The
certificates represent the right to receive payments generated by
the receivables held by the Trust.
I-13
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Availability under the variable funding certificates at any
time depends primarily on the amount of receivables generated by
the Sellers from sales to the auto industry, the rate of
collection on those receivables and other characteristics of
those receivables which affect their eligibility (such as
bankruptcy or downgrading below investment grade of the obligor,
delinquency and excessive concentration). Based on these
criteria, at April 29, 1995 approximately $31.5 million was
available under the variable funding certificates, of which
approximately $30.0 million was utilized.
The proceeds received by Carcorp from collections on
receivables, after the payment of expenses and amounts due on the
certificates, are used to purchase new receivables from the
Sellers. Collections on receivables are required to remain in
the Trust if at any time the Trust does not contain sufficient
eligible receivables to support the outstanding certificates. The
Receivables Facility contains certain other restrictions on
Carcorp (including maintenance of $25 million net worth) and on
the Sellers (including limitations on liens on receivables, on
modifications of the terms of receivables, and on changes in
credit and collection practices) customary for facilities of this
type. The commitments under the Receivables Facility will
terminate prior to their term upon the occurrence of certain
events, including payment defaults, breach of covenants,
bankruptcy, insufficient eligible receivables to support the
outstanding certificates, default by C&A Products in servicing
the receivables and, in the case of the variable funding
certificates, failure of the receivables to satisfy certain
performance criteria.
The Company has a master equipment lease agreement for a
maximum of $50 million of machinery and equipment. At April 29,
1995, the Company had $27.4 million of potential availability
under this master lease for future machinery and equipment
requirements of the Company subject to the lessor's approval.
The Company's principal sources of funds are cash
generated from continuing operating activities, borrowings
under the Revolving Facility and the sale of receivables under
the Receivables Facility. Net cash provided by the operating
activities of the Company's continuing operations was $31.5
million for the quarter ended April 29, 1995. The Company had
a total of $47.9 million of borrowing availability under its
credit arrangements as of April 29, 1995. The total was
comprised of $39.4 million under the Revolving Facility, $1.5
million under the Receivables Facility and approximately $7.0
million under a bank demand line of credit in Canada.
In connection with the Company's announced stock repurchase
program the Company and its lenders entered into an amendment to
the Facilities effective May 30, 1995 which permits the
Company currently to spend up to $12 million annually to
repurchase its shares. The Company believes it has
sufficient liquidity under its existing credit arrangements to
effect the repurchase program.
The Company's principal uses of funds for the next several
years will be to fund interest and principal payments on its
indebtedness, net working capital increases and capital
expenditures. At April 29, 1995, the Company had total
outstanding indebtedness of $582.0 million (excluding
approximately $25.6 million of outstanding letters of credit) at
an average interest rate of 7.9% per annum. Of the total
outstanding indebtedness, $560 million relates to the Term Loan
Facilities and the Revolving Facility.
I-14
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
Indebtedness under the Facilities bears interest at a per
annum rate equal to the Company's choice of (i) Chemical Bank's
Alternate Base Rate (which is the highest of Chemical's
announced prime rate, the Federal Funds Rate plus .5% and
Chemical's base certificate of deposit rate plus 1%) ("ABR")
plus the ABR Margin per annum or (ii) the offered rates for
Eurodollar deposits ("LIBOR") of one, two, three, six, nine or
twelve months, as selected by the Company, plus the LIBOR Margin.
Pursuant to the terms of the Facilities, the "ABR Margin" is
currently .50% and the "LIBOR Margin" is currently 1.50%. The
weighted average rate of interest on the Facilities at April 29,
1995 was 7.9%. The weighted average interest rate on the sold
interests under the Receivables Facility at April 29, 1995 was
6.6%. Under the Receivables Facility, the term certificates
bear interest at an average rate equal to one-month LIBOR plus
.34% per annum and the variable funding certificates bear
interest, at Carcorp's option, at LIBOR plus .40% per annum or a
prime rate. Cash interest paid during the quarters ended April
29, 1995 and April 30, 1994 was $11.0 million and $8.5 million,
respectively.
Due to the variable interest rates under the
Facilities and the Receivables Facility, the Company is
sensitive to increases in interest rates. Accordingly, during
September 1994, the Company entered into a program to reduce its
exposure to increases in interest rates through the use of
interest rate cap and corridor agreements. Under these
agreements, the Company has limited its exposure through October
17, 1995 on $300 million of notional principal amount at an
average LIBOR strike price of 6.92% and on $250 million of
notional principal amount from October 17, 1995 through October
17, 1996 at an average LIBOR strike price of 7.50%. Based upon
amounts outstanding at April 29, 1995, a .5% increase in LIBOR
(6.1% at April 29, 1995) would impact interest costs by
approximately $2.8 million annually on the Facilities and $.7
million annually on the Receivables Facility.
The current maturities of long-term debt primarily consist
of the current portion of the Term Loan Facilities, vendor
financing, industrial revenue bonds and other miscellaneous
debt. Repayments of indebtedness under the Term Loan Facilities
commence in the third fiscal quarter of 1995. The maturities of
long-term debt of the Company during the remainder of fiscal 1995
and for 1996, 1997, 1998 and 1999 are $17.0 million, $41.5
million, $61.5 million, $77.2 million and $83.7 million,
respectively. In addition, the Term Loan Facilities provide for
mandatory prepayments with certain excess cash flow of the
Company, net cash proceeds of certain asset sales or other
dispositions by the Company, net cash proceeds of certain
sale-leaseback transactions and net cash proceeds of certain
issuances of debt obligations.
The Company makes capital expenditures on a recurring
basis for replacements and improvements. As of April 29,
1995, the Company had approximately $46.0 million in
outstanding capital expenditure commitments. The Company
currently anticipates that its capital expenditures in 1995 will
aggregate approximately $75 million. The Company may make
additional capital expenditures in 1995 of approximately $35
million (and enter into related sale-leaseback arrangements) or
it may obtain the equipment through existing and new operating
leases. In 1994, the Company's gross capital expenditures
were $84.4 million. The Company in 1994 entered into
related sale leaseback arrangements for proceeds to the Company
of $30.4 million. The Company's capital expenditures in future
years will depend upon demand for the Company's products and
changes in technology.
I-15
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
The Company is sensitive to price movements in its raw
material supply base. During the first quarter of 1995, price
trends for many materials continued to increase. The Company
anticipates that announced price increases in its primary raw
materials could increase the cost of purchased materials by
approximately $20 to $25 million on an annualized basis.
While the Company may not be able to pass on future raw material
price increases to its customers, it believes that a significant
portion of the increased cost can be offset by continued
results of its reengineering efforts and by continued
reductions in the cost of nonconformance.
During 1994, the Company began construction of two
facilities in Mexico to supply automotive products to Mexican
subsidiaries of U.S. based automobile manufacturers, one of which
is currently operational. The Company believes that, based on
the nature of its Mexican operations, fluctuations in the
Mexican peso will not have a material impact on the Company's
operations.
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 will be
approximately $30.0 million in 1995. The increase from the
Company's previous estimate is primarily due to the
anticipated settlement of the Preferred Stock Redemption
Litigation discussed in "Part II - Other Information, Item 1 -
Legal Proceedings". 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 1995 and into 1996 by net
cash provided by operating activities from continuing operations
and by borrowings under existing bank credit facilities.
Tax Matters
At January 28, 1995, the Company had outstanding NOLs
(net operating loss carryforwards) of approximately $391 million
for Federal income tax purposes. These NOLs expire over the
period from 1996 to 2009. The Company also has unused Federal tax
credits of approximately $17.8 million, $10.7 million of which
expire during 1995 to 2003. The Company estimates that it will
generate tax deductions of approximately $65.0 million in
connection with the ultimate disposition of assets and
liabilities of its discontinued businesses during the period
1995 to 1997, which were previously accrued for financial
reporting purposes. The Company anticipates that utilization of
these NOLs, tax credits and deductions will result in minimal
Federal income taxes until these NOLs and tax credits are
exhausted.
The Company's Federal income tax returns for fiscal 1988
through 1991 are currently under examination by the IRS. The
IRS has outstanding challenges to approximately $136 million of
the Company's NOLs and other deductions. The Company disputes
the proposed adjustments. If the IRS were to maintain its
position and such position were to be upheld
I-16
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Continued)
in litigation, the Company would lose a material amount of the
NOLs and other deductions otherwise available to the Company in
future years.
Approximately $134.0 million of the Company's NOLs and
$10.7 million of the Company's unused Federal tax credits may
be used only against the income and apportioned tax liability of
the specific corporate entity that generated such losses or
credits or its successors. Because of the merger of Group and
C&A Products, such NOLs and credits may be used against the
income and apportioned tax liability of C&A Products, which the
Company believes will have sufficient taxable income and
apportioned tax liability to fully use such NOLs and to use a
substantial portion of such tax credits. The Recapitalization did
not constitute a "change in control" that would result in annual
limitations on the Company's use of its NOLs and unused tax
credits. However, future sales of Common Stock by the Company or
the principal shareholders, or changes in the composition of the
principal shareholders, could constitute such a "change in
control". Management cannot predict whether such a "change in
control" will occur. If such a "change of control" were to occur,
the resulting annual limitations on the use of NOLs and tax
credits would depend on the value of the equity of the Company
and the amount of "built-in gain" or "built-in loss" in the
Company's assets at the time of the "change in control", which
cannot be known at this time.
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 otherwise
related to on-site and off-site soil and groundwater
contamination. The Company's management believes that 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. 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
I-17
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. (Concluded)
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. As of
April 29, 1995, 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 13
sites where the Company is participating in the investigation or
remediation of the site, either directly or through
financial contribution, and 12 additional sites where the
Company is alleged to be responsible for costs of investigation or
remediation. As of April 29, 1995, the Company's estimate of its
liability for these 25 sites is approximately $29.7 million.
As of April 29, 1995, the Company has established reserves
of approximately $31.3 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.
For additional information regarding the foregoing,
see "Part II - Other Information, Item 1 - Legal Proceedings"
elsewhere herein.
I-18
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments in legal
proceedings involving the Company or its subsidiaries since those
reported in the Company's Annual Report on Form 10-K for the
fiscal year ended January 28, 1995, except as described below.
Preferred Stock Redemption Litigation. On May 1, 1995
plaintiffs and C&A Products agreed to the principal terms of a
settlement whereby plaintiffs would release all claims relating
to the litigation against Group and the individual
Group-related defendants in exchange for payment by C&A Products
of $4.25 million. The settlement is subject to approval of
the court. On May 12, 1995, C&A Products paid $4.25 million
into an escrow account with the court pursuant to the terms of
the settlement. The settlement is covered by established
accruals.
Item 5. Other Information
On April 6, 1995, J. Michael Stepp was appointed Executive
Vice President and Chief Financial Officer of the Company. On
June 2, 1995, Bruce Wasserstein resigned from the Board of
Directors of the Company and George L. Majoros, Jr., who is
affiliated with WP Partners, and Warren B. Rudman, the former
U.S. Senator from New Hampshire, joined the Board of Directors.
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
July 7, 1994 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 Collins &
Aikman Holdings Corporation, Collins & Aikman Group, Inc. or
Wickes Companies, Inc., if such documents and filings were
made prior to July 7, 1994.
Exhibit
Number Description
4.1 - Restated Certificate of Incorporation of Collins &
Aikman Corporation is hereby incorporated by
reference to Exhibit 4.1 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal
quarter ended July 30, 1994.
4.2 - By-laws of Collins & Aikman Corporation, as amended,
are hereby incorporated by reference to Exhibit 4.2
of Collins & Aikman Corporation's Report on Form 10-Q
for the fiscal quarter ended July 30, 1994.
4.3 - Specimen Stock Certificate for the Common Stock is
hereby incorporated by reference to Exhibit 4.3 of
Amendment No. 3 to Collins & Aikman Holdings
Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed June 21, 1994.
I-19
<PAGE>
Exhibit
Number Description
4.4 - Credit Agreement dated as of June 22, 1994 between
Collins & Aikman Products Co. (formerly Collins &
Aikman Corporation) as Borrower, WCA Canada Inc. as
Canadian Borrower, the Company as Guarantor, the
lenders named therein, Continental Bank, N.A., and
NationsBank, N.A. as Managing Agents, and Chemical
Bank as Administrative Agent is hereby incorporated
by reference to Exhibit 4.5 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal
quarter ended July 30, 1994.
4.5 - First Amendment dated as of January 30, 1995 to the
Credit Agreement dated as of June 22, 1994 among
Collins & Aikman Products Co., WCA Canada Inc.,
Collins & Aikman Corporation, the financial
institutions party thereto and Chemical Bank, as
administrative agent is hereby incorporated by
reference to Exhibit 4.4 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year
ended January 28, 1995.
4.6 - Second Amendment dated as of May 22, 1995 to the
Credit Agreement dated as of June 22, 1994, as
amended, among Collins & Aikman Products Co., WCA
Canada Inc., Collins & Aikman Corporation, the
financial institutions party thereto and Chemical
Bank, as Administrative Agent.
Collins & Aikman 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 Corporation or
any of its subsidiaries, which debt does not exceed
10% of the total assets of Collins & Aikman
Corporation and its subsidiaries on a consolidated
basis.
10.1 - Amended and Restated Stockholders Agreement dated as
of June 29, 1994 among the Company, Collins &
Aikman Group, Inc., Blackstone Capital Partners L.P.
and Wasserstein Perella Partners, L.P. is hereby
incorporated by reference to Exhibit 10.1 of
Collins & Aikman Corporation's Report on Form 10-K
for the fiscal year ended January 28, 1995.
10.2 - 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.
10.3 - 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.
10.4 - 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.
10.5 - Letter Agreement dated as of May 16, 1991 between
Collins & Aikman Corporation and an executive officer
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.
I-20
<PAGE>
Exhibit
Number Description
10.6 - Employment Agreement dated as of March 23, 1992
between Collins & Aikman Group, Inc. and a former
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.
10.7 - First Amendment dated as of April 4, 1994 to
Agreement dated as of March 23, 1992 between Collins
& Aikman Group, Inc. and a former 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.
10.8 - Lease, executed as of the 1st day of June 1987,
between Dura Corporation and Dura Acquisition Corp. is
hereby incorporated by reference to Exhibit 10.24 of
Amendment No.5 to Collins & Aikman Holdings
Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed July 6, 1994.
10.9 - Agreement dated as of October 17, 1994 among Collins &
Aikman Products Co. and a former executive officer
is hereby incorporated by reference to Exhibit
10.29 of Collins & Aikman Corporation's Report on
Form 10-Q for the fiscal quarter ended October 29,
1994.
10.10 - 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.
10.11 - Collins & Aikman Corporation 1994 Executive
Incentive Compensation Plan is hereby incorporated
by reference to Exhibit 10.22 of Amendment No. 4
to Collins & Aikman Holdings Corporation's
Registration Statement on Form S-2 (Registration No.
33-53179) filed June 27, 1994.
10.12 - Collins & Aikman Corporation Supplemental Retirement
Income Plan is hereby incorporated by reference to
Exhibit 10.23 of Amendment No. 5 to Collins &
Aikman Holdings Corporation's Registration Statement
on Form S-2 (Registration No. 33-53179) filed July 6,
1994.
10.13 - 1993 Employee Stock Option Plan as amended.
10.14 - 1994 Employee Stock Option Plan as amended.
10.15 - 1994 Directors Stock Option Plan is hereby
incorporated by reference to Exhibit 10.15 of
Collins & Aikman Corporation's Report on Form 10-K
for the fiscal year ended January 28, 1995.
10.16 - 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.
10.17 - Warrant Agreement dated as of January 28, 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.
I-21
<PAGE>
Exhibit
Number Description
10.18 - Amended and Restated Receivables Sale Agreement
dated as of March 30, 1995 among Collins & Aikman
Products Co., Ack-Ti-Lining, Inc., WCA Canada Inc.,
Imperial Wallcoverings, Inc., The Akro Corporation,
Dura Convertible Systems, Inc., each of the other
subsidiaries of Collins & Aikman Products Co. from
time to time parties thereto and Carcorp, Inc. is
hereby incorporated by reference to Exhibit 10.18 of
Collins & Aikman Corporation's Report on Form 10-K
for the fiscal year ended January 28, 1995.
10.19 - Servicing Agreement, dated as of March 30, 1995,
among Carcorp, Inc., Collins & Aikman Products Co., as
Master Servicer, each of the subsidiaries of Collins &
Aikman Products Co. from time to time parties thereto
and Chemical Bank, asTrustee is hereby incorporated
by reference to Exhibit 10.19 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year
ended January 28, 1995.
10.20 - Pooling Agreement, dated as of March 30, 1995, among
Carcorp, Inc., Collins & Aikman Products Co., as
Master Servicer and Chemical Bank, as Trustee is
hereby incorporated by reference to Exhibit 10.20
of Collins & Aikman Corporation's Report on Form
10-K for the fiscal year ended January 28, 1995.
10.21 - Series 1995-1 Supplement, dated as of March 30,
1995, among Carcorp, Inc.,Collins & Aikman
Products Co., as Master Servicer and Chemical
Bank, as Trustee is hereby incorporated by reference
to Exhibit 10.21 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended January
28, 1995.
10.22 - Series 1995-2 Supplement, dated as of March 30,
1995, among Carcorp, Inc., Collins & Aikman
Products Co., as Master Servicer, the Initial
Purchasers parties thereto, Societe Generale, as
Agent for the Purchasers, and Chemical Bank, as
Trustee is hereby incorporated by reference to
Exhibit 10.22 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended January
28, 1995.
10.23 - Master Equipment Lease Agreement dated as of
September 30, 1994, between NationsBanc Leasing
Corporation of North Carolina and Collins &
Aikman Products Co. is hereby incorporated by
reference to Exhibit 10.27 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal
quarter ended October 29, 1994.
10.24 - Employment Agreement dated as of April 6, 1995
between Collins & Aikman Products Co. and an
executive officer is hereby incorporated by reference
toExhibit 10.24 of Collins & Aikman Corporation's
Report on Form 10-K for the fiscal year ended January
28, 1995.
10.25 - Excess Benefit Plan of Collins & Aikman Corporation
is hereby incorporated by reference to Exhibit 10.25
of Collins & Aikman Corporation's Report on Form
10-K for the fiscal year ended January 28, 1995.
11. - Computation of Earnings Per Share.
27. - Financial Data Schedule.
99. - Voting Agreement between Blackstone Capital Partners
L.P. and Wasserstein Perella Partners, L.P. is
hereby incorporated by reference to Exhibit 99 of
Amendment No. 4 to Collins & Aikman Holdings
Corporation's RegistrationStatement on Form S-2
(Registration No. 33-53179) filed June 27, 1994.
(b) Reports on Form 8-K.
No current reports on Form 8-K were filed during the
quarter for which this report on Form 10-Q is filed.
I-22
<PAGE>
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 CORPORATION
(Registrant)
Dated: June 13, 1995 By: /s/ J. MICHAEL STEPP
J. Michael Stepp
Chief Financial Officer and
Executive Vice President
(On behalf of the Registrant and as
Principal Financial Officer)
By: /s/ ANTHONY HARDWICK
Anthony Hardwick
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
SECOND AMENDMENT dated as of May 22, 1995 (this
"Amendment") to the CREDIT AGREEMENT dated as of June 22, 1994
and as amended and in effect immediately prior to the date hereof
(the "Credit Agreement") among COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation (the "Borrower"), WCA CANADA INC., a
Canadian corporation (the "Canadian Borrower"), COLLINS & AIKMAN
CORPORATION, a Delaware corporation ("Holdings"), the financial
institutions party thereto (the "Lenders"), and CHEMICAL BANK, as
administrative agent (the "Administrative Agent").
A. The Borrower, the Canadian Borrower, Holdings, the
Lenders and the Administrative Agent desire to amend the Credit
Agreement in certain respects as hereinafter set forth.
B. Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Credit Agreement.
Accordingly, the Borrower, the Canadian Borrower,
Holdings, the Lenders and the Administrative Agent hereby agree
as follows:
SECTION 1. Amendment of Credit Agreement. The Credit
Agreement is hereby amended, effective as of the Effective Date
(as hereinafter defined), as follows:
(a) Paragraphs (c) and (d) of Section 6.02 are amended
to read in their entirety as follows:
(c) if at the time thereof and after giving effect
thereto no Default or Event of Default shall have occurred
and be continuing, Holdings may pay dividends in cash on its
common stock or preferred stock or may redeem, purchase,
retire or otherwise acquire for value its common stock or
preferred stock provided that the sum of such dividends and
consideration paid for such redemptions, purchases,
retirements and other acquisitions in any fiscal year shall
not exceed $12,000,000;
(d) if at the time thereof and after giving effect
thereto no Default or Event of Default shall have occurred
and be continuing and the Dividend Condition shall have been
met, Holdings may pay dividends in cash on its common stock
or any preferred stock and may redeem, purchase, retire or
otherwise acquire for value its common stock or any
preferred stock in any fiscal year in an amount not to
exceed in the aggregate for all such transactions 25% of Net
Income for the prior fiscal year less the amount of
dividends and consideration (for redemptions, purchases,
retirements and other acquisitions) paid in such current
fiscal year pursuant to clause (c) above;
(b) Paragraph (f) of Section 6.02 is amended by
deleting clause (ii) thereof and substituting therefor the
following:
<PAGE>
2
(ii) the dividends, other consideration (for redemptions,
purchases, retirements and other acquisitions of common
stock and preferred stock) and other amounts contemplated by
clauses (c) and (d) above; provided that dividends paid to
Holdings pursuant to this clause (ii) in order to permit
Holdings to pay dividends are used by Holdings for such
purpose within 20 days of the receipt of such dividends by
Holdings,
SECTION 2. Effectiveness. This Amendment will become
effective on the date (the "Effective Date") on which the
following conditions have been satisfied: (a) the Administrative
Agent shall have received counterparts of this Amendment which,
when taken together, bear the signatures of the Borrower, the
Canadian Borrower, Holdings, the Administrative Agent and the
Required Lenders, (b) on and as of the Effective Date and after
giving effect to this Amendment, no Default or Event of Default
shall have occurred and be continuing, (c) the representations
and warranties made by Holdings, the Borrower and the Canadian
Borrower in the Credit Agreement shall be true and correct in all
material respects on and as of the Effective Date as if made on
such date, except where such representations and warranties
expressly relate to an earlier date in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date, and (d) the
Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower, dated the Effective Date,
certifying the matters referred to in clauses (b) and (c) above.
SECTION 3. Applicable Law. This Amendment shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 4. Counterparts. This Amendment may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which when taken together
shall constitute but one instrument.
SECTION 5. Agreement. Except as expressly amended
hereby, the Credit Agreement shall continue in full force and
effect in accordance with the provisions thereof on the date
hereof.
SECTION 6. Expenses. The Borrower shall pay all
reasonable out-of-pocket expenses incurred by the Administrative
Agent in connection with the preparation of this Amendment,
including, but not limited to, the reasonable fees and
disbursements of counsel for the Administrative Agent.
SECTION 7. Headings. The headings of this Amendment
are for the purposes of reference only and shall not limit or
otherwise affect the meanings hereof.
<PAGE>
3
IN WITNESS WHEREOF, the Borrower, the Canadian
Borrower, Holdings, the Lenders signatory hereto and the
Administrative Agent have caused this Amendment to be duly
executed by their duly authorized officers, all as of the dates
first above written.
COLLINS & AIKMAN PRODUCTS CO.
By: Anthony Hardwick
Name: Anthony Hardwick
Title: Vice President &
Controller
COLLINS & AIKMAN CORPORATION
By: Anthony Hardwick
Name: Anthony Hardwick
Title: Vice President &
Controller
WCA CANADA INC.
By: Ronald T. Lindsay
Name: Ronald T. Lindsay
Title: Vice President
CHEMICAL BANK, as a Lender and
as Administrative Agent
By:___________________________
Name:
Title:
BANK OF AMERICA ILLINOIS
By: Linda A. Carper
Name: Linda A. Carper
Title: Managing Director
NATIONSBANK, N.A.
By: J. T. Martin
Name: J. T. Martin
Title: Sr. Vice President
<PAGE>
4
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By: Linda A. Carper
Name: Linda A. Carper
Title: Managing Director
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By: Robert Ivosevich
Name: Robert Ivosevich
Title: Authorized Signature
THE INDUSTRIAL BANK OF JAPAN, LTD.
By: Junri Oda
Name: Junri Oda
Title: Sr. Vice President & Sr.
Manager
THE LONG-TERM CREDIT BANK OF JAPAN
LTD.
By: Jay Shankar
Name: Jay Shankar
Title: Vice President
THE TORONTO-DOMINION BANK
By: Neva Nesbitt
Name: Neva Nesbitt
Title: Manager Credit Admin.
THE FIRST NATIONAL BANK OF BOSTON
By: William C. Purington
Name: William C. Purington
Title: Vice President
BANK OF SCOTLAND
By: Elizabeth Wilson
Name: Elizabeth Wilson
Title: Vice President & Branch
Manager
<PAGE>
5
THE BANK OF TOKYO TRUST COMPANY
By: Joseph P. Devoe
Name: Joseph P. Devoe
Title: Vice President
BANQUE PARIBAS
By: David C. Buseck/Eric Green
Name: David C. Buseck/Eric Green
Title: Vice President/Vice President
BRANCH BANKING AND TRUST COMPANY
By: Thatcher L. Townsend III
Name: Thatcher L. Townsend III
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE
By:Charles J. Klenk
Name: Charles J. Klenk
Title: Agent
CAMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENE
By: Sean Mounier/Marcus Edward
Name: Sean Mounier/Marcus Edward
Title: First Vice President
Title: Vice President
THE NIPPON CREDIT BANK, LTD.
By: Clifford Abramsky
Name: Clifford Abramsky
Title: Vice President & Manager
SOCIETE GENERALE
By: Ralph Saheb
Name: Ralph Saheb
Title: Vice President
<PAGE>
6
SOCIETY NATIONAL BANK
By: Lawrence A. Mack
Name: Lawrence A. Mack
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
By: Craig H. Farnsworth
Name: Craig H. Farnsworth
Title: 2nd Vice President
THE TRAVELERS INDEMNITY COMPANY
By: Craig H. Farnsworth
Name: Craig H. Farnsworth
Title: 2nd Vice President
WACHOVIA BANK OF NORTH CAROLINA,
N.A.
By: Joanne M. Starnes
Name: Joanne M. Starnes
Title: Senior Vice President
WELLS FARGO BANK
By: Kathleen Harrison
Name: Kathleen Harrison
Title: Vice President
VAN KAMPEN MERRITT PRIME RATE
INCOME TRUST
By: Jeffrey W. Maillet
Name: Jeffrey W. Maillet
Title: Vice President & Portfolio
Manager
ARAB BANKING CORPORATION
By: Grant E. McDonald
Name: Grant E. McDonald
Title: Vice President
<PAGE>
7
BANK OF IRELAND
By: John Cusak
Name: John Cusak
Title: Assistant Treasurer
THE BANK OF NEW YORK
By: Alan F. Lyster, Jr.
Name: Alan F. Lyster, Jr.
Title: Vice President
CREDITANSTALT CORPORATE FINANCE,
INC.
By: Robert M. Biringer
Name: Robert M. Biringer
Title: Sr. Vice President
By: Daniel D. Lensgraf
Name: Daniel D. Lensgraf
Title: Senior Associate
CRESTAR BANK
By: T. Patrick Collins
Name: T. Patrick Collins
Title: Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: Bert M. Corum
Name: Bert M. Corum
Title: Vice President
FUJI BANK
By:_____________________________
Name:
Title:
GIROCREDIT BANK
By:______________________________
Name:
Title:
<PAGE>
8
MIDLAND BANK
By: Gina Sidorsky
Name: Gina Sidorsky
Title: Director
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: Masataka Ushio
Name: Masataka Ushio
Title: Sr. Vice President
NATIONAL CITY BANK
By: Sharon F. Weinstein
Name: Sharon F. Weinstein
Title: Vice President
NBD BANK, N.A.
By: Larry E. Schuster
Name: Larry E. Schuster
Title:
THE SUMITOMO TRUST & BANKING CO.,
LTD.
By: Suraj P. Bhatia
Name: Suraj P. Bhatia
Title: Sr. Vice President
Mgr. Corporate Finance
Dept.
UNITED STATES NATIONAL BANK OF
OREGON
By: Stephen Mitchell
Name: Stephen Mitchell
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD.
By: Neil Chau
Name: Neil Chau
Title: First Vice President
<PAGE>
9
CRESCENT/MACH 1 PARTNERS, L.P.
By its General Partner
CRESCENT MACH 1 G.P. CORPORATION
By its attorney-in-fact
CRESCENT CAPITAL CORPORATION
By: Mark L. Gold
Name: Mark L. Gold
Title: Managing Director
ALEXANDER HAMILTON LIFE INSURANCE CO.
By: William Lang
Name: William Lang
Title: Vice President - Credit
Management
KEYPORT LIFE INSURANCE CO.
By: Chancellor Senior Secured Management,
Inc. as Portfolio Advisor
Christopher E. Jansen
Name: Christopher E. Jansen
Title: Managing Director
SAKURA BANK
By: Tetsuhide Kokedo
Name: Tetsuhide Kokedo
Title: General Manager
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V.
By: Chancellor Senior Secured Management,
Inc. as Portfolio Advisor
Christopher E. Jansen
Name: Christopher E. Jansen
Title: Managing Director
<PAGE>
________________________________________________________________
COLLINS & AIKMAN HOLDINGS CORPORATION
1993 EMPLOYEE STOCK OPTION PLAN
________________________________________________________________
January 28, 1994
<PAGE>
Table of Contents
Page
I. Purposes of the Plan . . . . . . . . . . . . . . . . . . 1
II. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
III. Effective Date . . . . . . . . . . . . . . . . . . . . . 4
IV. Administration . . . . . . . . . . . . . . . . . . . . . 4
A. Duties of the Committee . . . . . . . . . . . . . . 4
B. Advisors . . . . . . . . . . . . . . . . . . . . . 5
C. Indemnification . . . . . . . . . . . . . . . . . . 5
D. Meetings of the Committee . . . . . . . . . . . . . 5
E. Determinations . . . . . . . . . . . . . . . . . . 5
V. Shares; Adjustment Upon Certain Events . . . . . . . . . 6
A. Shares to be Delivered; Fractional Shares . . . . . 6
B. Number of Shares . . . . . . . . . . . . . . . . . 6
C. Adjustments; Recapitalization, etc. . . . . . . . . 6
VI. Awards and Terms of Options . . . . . . . . . . . . . . 7
A. Grant . . . . . . . . . . . . . . . . . . . . . . . 7
B. Exercise Price . . . . . . . . . . . . . . . . . . 7
C. Number of Shares . . . . . . . . . . . . . . . . . 7
D. Exercisability . . . . . . . . . . . . . . . . . . 7
E. Acceleration of Exercisability . . . . . . . . . . 8
F. Exercise of Options . . . . . . . . . . . . . . . . 9
G. Black-Out Periods . . . . . . . . . . . . . . . . . 9
H. Non-Competition and Other Provisions . . . . . . . 9
I. Restrictions on Exercise. . . . . . . . . . . . . . 10
VII. Effect of Termination of Employment . . . . . . . . . . 10
A. Death, Disability, Retirement, etc. . . . . . . . . 10
B. Cause . . . . . . . . . . . . . . . . . . . . . . . 11
C. Other Termination . . . . . . . . . . . . . . . . . 11
D. Cancellation of Options . . . . . . . . . . . . . . 11
VIII. Nontransferability of Options . . . . . . . . . . . 11
IX. Rights as a Stockholder . . . . . . . . . . . . . . . . 12
X. Termination, Amendment and Modification . . . . . . . . 12
A. General Amendments . . . . . . . . . . . . . . . . 12
B. Other Termination . . . . . . . . . . . . . . . . . 12
XI. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 13
XII. General Provisions . . . . . . . . . . . . . . . . . . . 13
A. Right to Terminate Employment . . . . . . . . . . . 13
B. Purchase for Investment . . . . . . . . . . . . . . 13
i
<PAGE>
Page
C. Trusts, etc. . . . . . . . . . . . . . . . . . . . 13
D. Notices . . . . . . . . . . . . . . . . . . . . . . 14
E. Severability of Provisions . . . . . . . . . . . . 14
F. Payment to Minors, Etc. . . . . . . . . . . . . . . 14
G. Headings and Captions . . . . . . . . . . . . . . . 14
H. Controlling Law . . . . . . . . . . . . . . . . . . 14
I. Section 162(m) Deduction Limitation . . . . . . . . 15
J. Section 16(b) of the Act . . . . . . . . . . . . . 15
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses . . . . . . . . . . . . . . 15
A. Stock Certificates . . . . . . . . . . . . . . . . 15
B. Legends . . . . . . . . . . . . . . . . . . . . . . 15
C. Payment of Expenses . . . . . . . . . . . . . . . . 15
XIV. Listing of Shares and Related Matters . . . . . . . . . 15
XV. Withholding Taxes . . . . . . . . . . . . . . . . . . . 16
ii
<PAGE>
Collins & Aikman Holdings Corporation
1993 Employee Stock Option Plan
(As Amended)
I. Purposes of the Plan
In 1988, Collins & Aikman Group, Inc. ("Group")
implemented the Wickes Equity Share Plan (the "1988 Plan") for
the purposes of attracting, retaining and motivating key
employees of Group and its subsidiaries. In October 1993, the
1988 Plan was terminated in accordance with its terms.
Concurrently, Group announced its intention to implement a new
stock option plan. Accordingly, Collins & Aikman Holdings
Corporation (the "Company") has created a special purpose 1993
Employee Stock Option Plan (the "Plan") to provide for the one-
time award of options to purchase Common Stock, principally to
active key employees who were participants in the 1988 Plan in
recognition of their prior service and to certain other key
employees with substantial prior service. This document shall
supersede all other material describing this Plan, including, but
not limited to, prior drafts hereof and any documents
incorporating the terms and provisions of any such prior drafts.
II. Definitions
In addition to the terms defined elsewhere herein, for
purposes of this Plan, the following terms will have the
following meanings when used herein with initial capital letters:
A. "Act" means the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
B. "Board" means the Board of Directors of the
Company.
C. "Cause" means that the Committee shall have
determined that any of the following events has occurred: (1) an
act of fraud, embezzlement, misappropriation of business or theft
committed by a Participant in the course of his or her
employment, or any intentional or gross negligent misconduct of a
Participant which injures the business or reputation of the
Company or Related Persons; (2) intentional or gross negligent
damage committed by a Participant to the property of the Company
or Related Persons; (3) a Participant's willful failure or
refusal to perform the customary duties and responsibilities of
his or her position with the Company or Related Persons; (4) a
Participant's breach of fiduciary duty, or the making of a false
representation, to the Company or Related Persons; (5) a
Participant's material breach of any covenant, condition or
obligation required to be performed by him or her pursuant to
this Plan, the Option Agreement or any other agreement between
him or her and the Company or Related Persons or a
1
<PAGE>
Participant's intentional or gross negligent violation of any
material written policy of the Company or Related Persons; (6) a
Key Employee's willful failure or refusal to act in accordance
with any specific lawful instructions of a majority of the Board
of Directors of the Company; or (7) commission by a Participant
of a felony or a crime involving moral turpitude. Cause shall be
deemed to exist as of the date any of the above events occur even if
the Committee's determination is later and whether or not such
determination is made before or after Termination of Employment.
D. "Code" means the Internal Revenue Code of 1986, as
amended (or any successor statute).
E. "Committee" means such committee, if any,
appointed by the Board to administer the Plan, consisting of two
or more directors as may be appointed from time to time by the
Board each of whom, unless otherwise determined by the Board,
shall be disinterested persons as defined in Rule 16b-3
promulgated under Section 16(b) of the Act. If the Board does
not appoint a committee for this purpose, "Committee" means the
Board.
F. "Common Stock" means the common stock of the
Company, par value $.01 per share, any Common Stock into which
the Common Stock may be converted and any Common Stock resulting
from any reclassification of the Common Stock.
G. "Company" means Collins & Aikman Holdings
Corporation, a Delaware corporation.
H. "Competitive Activity" means (a) being employed
by, consulting to or being a director of any business, or
engaging directly or indirectly in any business activity, that is
competitive with any material business of any of the Company, a
Related Person or of the division that the Participant is or was
employed by or (b) soliciting for employment or consulting,
employing or retaining, or assisting another Person to employ or
retain, directly or indirectly, any employees of the Company or
Related Persons or any Person who was an employee of the Company
or Related Persons in the prior six months, provided, however,
that employing or retaining, or assisting another Person to
employ or retain, any Person whose employment or consultancy with
the Company or a Related Person has been terminated without Cause
or any Person that is non-exempt under the Federal Fair Labor
Standards Act, 29 USC (section) 213(a)(1), shall not be
considered Competitive Activity.
I. "Disability" means a permanent and total
disability, as determined by the Committee in its sole
discretion. A Disability shall only be deemed to occur at the
time of the determination by the Committee of the Disability.
J. "Fair Market Value" shall mean, for purposes of
this Plan, unless otherwise required by any applicable provision
of the Code or any regulations issued thereunder, as of any date,
the last
2
<PAGE>
sales prices reported for the Common Stock on the
applicable date, (i) as reported by the principal national
securities exchange in the United States on which it is then
traded, or (ii) if not traded on any such national securities
exchange, as quoted on an automated quotation system sponsored by
the National Association of Securities Dealers, or if the sale of
the Common Stock shall not have been reported or quoted on such
date, on the first day prior thereto on which the Common Stock
was reported or quoted. If the Common Stock is not readily
tradeable on a national securities exchange or any system
sponsored by the National Association of Securities Dealers, its
Fair Market Value shall be set by the Committee based upon its
assessment of the cash price that would be paid between a fully
informed buyer and seller under no compulsion to buy or sell
(without giving effect to any discount for a minority interest or
any restrictions on transferability or any lack of liquidity of
the stock).
K. "Key Employee" means any person who is an
executive officer or other valuable employee of the Company or a
Related Person, as determined by the Committee, provided,
however, that no managing director, general partner, limited
partner, director, officer or employee of Wasserstein Perella &
Co., Inc. or The Blackstone Group L.P. that is a director of the
Company will be eligible to participate in the Plan. A Key
Employee may, but need not, be an officer or director of the
Company or a Related Person.
L. "Option" means the right to purchase one Share at
a prescribed purchase price on the terms specified in the Plan.
M. "Outside Director" means any director of the
Company or a Related Person that is not an employee of the
Company or a Related Person.
N. "Participant" means a Key Employee, who is granted
Options under the Plan which Options have not expired.
O. "Person" means any individual or entity, and the
heirs, executors, administrators, legal representatives,
successors and assigns of such Person as the context may require.
P. "Public Offering" means the closing of an offering
under a registration statement registering the common equity
shares of the registering entity under the Securities Act (other
than a registration on a Form S-8, S-4 or any successor or
similar special purpose form).
Q. "Related Person or Related Persons" means (a) any
corporation that is defined as a subsidiary corporation in
Section 424(f) of the Code or (b) any corporation that is defined
as a parent corporation in Section 424(e) of the Code. An entity
shall be deemed a Related Person only for such periods as the
requisite ownership relationship is maintained.
3
<PAGE>
R. "Securities Act" means the Securities Act of 1933,
as amended, and all rules and regulations promulgated thereunder.
S. "Share" means a share of Common Stock.
T. "Termination of Employment" with respect to an
individual means that individual is no longer actively employed
by the Company or a Related Person on a full-time basis,
irrespective of whether or not such employee is receiving salary
continuance pay, is continuing to participate in other employee
benefit programs or is otherwise receiving severance type
payments. In the event an entity shall cease to be a Related
Person, there shall be deemed a Termination of Employment of any
individual who is not otherwise an employee of the Company or
another Related Person at the time the entity ceases to be a
Related Person. A Termination of Employment shall not include a
leave of absence approved for purposes of the Plan by the
Committee.
III. Effective Date
The Plan shall become effective on January 28, 1994
(the "Effective Date"), subject to its approval by the majority
of the Common Stock (at the time of approval) within one year
after the Plan is adopted by the Board of Directors of the
Company. Grants of Options by the Committee under the Plan may
be made on or after the Effective Date of the Plan, including
retroactively, provided that, if the Plan is not approved by the
majority of the Common Stock (at the time of approval), all
Options which have been granted by the Committee shall be null
and void. No Options may be exercised prior to the approval of
the Plan by the majority of the Common Stock (at the time of
approval).
IV. Administration
A. Duties of the Committee. The Plan shall be
administered by the Committee. The Committee shall have full
authority to interpret the Plan and to decide any questions and
settle all controversies and disputes that may arise in
connection with the Plan; to establish, amend and rescind rules
for carrying out the Plan; to administer the Plan, subject to its
provisions; to select Participants in, and grant Options under,
the Plan; to determine the terms, exercise price and form of
exercise payment for each Option granted under the Plan; to
determine the consideration to be received by the Company in
exchange for the grant of the Options; to prescribe the form or
forms of instruments evidencing Options and any other instruments
required under the Plan (which need not be uniform) and to change
such forms from time to time; and to make all other
determinations and to take all such steps in connection with the
Plan and the Options as the Committee, in its sole discretion,
deems necessary or desirable. The Committee shall not be bound
to any standards of uniformity or
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similarity of action, interpretation or conduct in the discharge
of its duties hereunder, regardless of the apparent similarity of
the matters coming before it. Any determination, action or
conclusion of the Committee shall be final, conclusive and binding
on all parties.
B. Advisors. The Committee may employ such legal
counsel, consultants and agents as it may deem desirable for the
administration of the Plan, and may rely upon any advice or
opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses
incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company.
C. Indemnification. To the maximum extent permitted
by applicable law, no officer of the Company or member or former
member of the Committee or of the Board shall be liable for any
action or determination made in good faith with respect to the
Plan or any Option granted under it. To the maximum extent
permitted by applicable law or the Certificate of Incorporation
or By-Laws of the Company, each officer and member or former
member of the Committee or of the Board shall be indemnified and
held harmless by the Company against any cost or expense
(including reasonable fees of counsel reasonably acceptable to
the Company) or liability (including any sum paid in settlement
of a claim with the approval of the Company), and advanced
amounts necessary to pay the foregoing at the earliest time and
to the fullest extent permitted, arising out of any act or
omission to act in connection with the Plan, except to the extent
arising out of such officer's, member's or former member's own
fraud or bad faith. Such indemnification shall be in addition to
any rights of indemnification the officers, members or former
members may have as directors under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or Related
Person.
D. Meetings of the Committee. The Committee shall
adopt such rules and regulations as it shall deem appropriate
concerning the holding of its meetings and the transaction of its
business. Any member of the Committee may be removed from the
Committee at any time either with or without cause by resolution
adopted by the Board, and any vacancy on the Committee may at any
time be filled by resolution adopted by the Board. All
determinations by the Committee shall be made by the affirmative
vote of a majority of its members. Any such determination may be
made at a meeting duly called and held at which a majority of the
members of the Committee are in attendance in person or through
telephonic communication. Any determination set forth in writing
and signed by all the members of the Committee shall be as fully
effective as if it had been made by a majority vote of the
members at a meeting duly called and held.
E. Determinations. Each determination,
interpretation or other action made or taken pursuant to the
provisions of this
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Plan by the Committee shall be final, conclusive and binding for
all purposes and upon all persons, including, without limitation,
the Participants, the Company and Related Persons, directors,
officers and other employees of the Company and Related Persons,
and the respective heirs, executors, administrators, personal
representatives and other successors in interest of each of the
foregoing.
V. Shares; Adjustment Upon Certain Events
A. Shares to be Delivered; Fractional Shares. Shares
to be issued under the Plan shall be made available, at the sole
discretion of the Board, either from authorized but unissued
Shares or from issued Shares reacquired by Company and held in
treasury. No fractional Shares will be issued or transferred
upon the exercise of any Option. In lieu thereof, the Company
shall pay a cash adjustment equal to the same fraction of the
Fair Market Value of one Share on the date of exercise.
B. Number of Shares. Subject to adjustment as
provided in this Article V, the maximum aggregate number of
Shares that may be issued under the Plan shall be 3,119,466. Any
Shares covered by Options that are for any reason canceled, or
expire or terminate unexercised, shall not again be available for
the grant of Options.
C. Adjustments; Recapitalization, etc. The existence
of the Plan and the Options granted hereunder shall not affect in
any way the right or power of the Board or the stockholders of
the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of
the Company, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or Related Persons, any
sale or transfer of all or part of its assets or business or any
other corporate act or proceeding. The Committee may make or
provide for such adjustments in the maximum number of Shares
specified in Article V(B), in the number of Shares covered by
outstanding Options granted hereunder, and/or in the Purchase
Price (as hereinafter defined) applicable to such Options or such
other adjustments in the number and kind of securities received
upon the exercise of Options, as the Committee in its sole
discretion may determine is equitably required to prevent
dilution or enlargement of the rights of Participants or to
otherwise recognize the effect that otherwise would result from
any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the
Company, merger, consolidation, spin-off, reorganization, partial
or complete liquidation, issuance of rights or warrants to
purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing. In the event
of a merger or consolidation in which Company is not the
surviving entity or in the event of any transaction that results
in the acquisition of
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substantially all of Company's outstanding Common Stock by a single
person or entity or by a group of persons and/or entities acting
in concert, or in the event of the sale or transfer of all of the
Company's assets (the foregoing being referred to as "Acquisition
Events"), then the Committee may in its sole discretion
terminate all outstanding Options effective as of the
consummation of the Acquisition Event by delivering notice of
termination to each Participant at least 20 days prior to the date
of consummation of the Acquisition Event; provided that, during
the period from the date on which such notice of termination is
delivered to the consummation of the Acquisition Event, each
Participant shall have the right to exercise in full all the
Options that are then outstanding (without regard to limitations
on exercise otherwise contained in the Options) but contingent
on occurrence of the Acquisition Event, and, provided that, if
the Acquisition Event does not take place within a specified period
after giving such notice for any reason whatsoever, the notice
and exercise shall be null and void. Except as hereinbefore
expressly provided, the issuance by the Company of shares of
stock of any class, or securities convertible into shares of
stock of any class, for cash, property, labor or services,
upon direct sale, upon the exercise of rights or warrants to
subscribe therefor or upon conversion of shares or other securities,
and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to,
the number and class of shares and/or other securities or property
subject to Options theretofore granted or the Purchase Price
(as hereinafter defined).
VI. Awards and Terms of Options
A. Grant. The Committee may grant Options to Key
Employees provided, that the maximum number of Shares with
respect to which Options may be granted to any Key Employee
during any calendar year may not exceed 1,000,000. Each Option
shall be evidenced by an Option agreement (the "Option
Agreement") in such form as the Committee shall approve from time
to time.
B. Exercise Price. The purchase price per Share (the
"Purchase Price") deliverable upon the exercise of an Option
shall be determined by the Committee and set forth in a
Participant's Option Agreement, provided that the Purchase Price
shall not be less than the par value of a Share.
C. Number of Shares. The Option Agreement shall
specify the number of Options granted to the Participant, as
determined by the Committee in its sole discretion.
D. Exercisability. At the time of grant, the
Committee shall specify when and on what terms the Options
granted shall be exercisable. In the case of Options not
immediately exercisable in full, the Committee may at any time
accelerate the time at which all or any part of the Options may
be exercised and may waive any
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other conditions to exercise. No Option shall be exercisable after
the expiration of ten years from the date of grant. Each Option
shall be subject to earlier termination as provided in Article
VII below.
E. Acceleration of Exercisability.
All Options granted and not previously exercisable
shall become fully exercisable immediately upon a Change of
Control (as defined herein). For this purpose, a "Change of
Control" shall be deemed to have occurred upon:
(a) an acquisition by any individual, entity
or group (within the meaning of Section 13d-3 or 14d-1
of the Act) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Act) of more than
80% of the combined voting power of the then
outstanding voting securities of Company entitled to
vote generally in the election of directors including,
but not limited to, by merger, consolidation or similar
corporate transaction or by purchase; excluding,
however, the following: (x) any acquisition by the
Company, Related Persons, Wasserstein Perella Partners,
L.P., Blackstone Capital Partners L.P. or an affiliate
of any of the foregoing, or (y) any acquisition by an
employee benefit plan (or related trust) sponsored or
maintained by the Company or Related Persons; or
(b) the approval of the stockholders of the
Company of (i) a complete liquidation or dissolution of
the Company or (ii) the sale or other disposition of
more than 80% of the gross assets of the Company and
Related Persons on a consolidated basis (determined
under generally accepted accounting principles as
determined in good faith by the Committee); excluding,
however, such a sale or other disposition to a
corporation with respect to which, following such sale
or other disposition, (x) more than 20% of the combined
voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the
election of directors will be then beneficially owned,
directly or indirectly, by the individuals and entities
who were the beneficial owners of the outstanding
Shares immediately prior to such sale or other
disposition, (y) no Person (other than the Company,
Related Persons, and any employee benefit plan (or
related trust) of the Company or Related Persons or
such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the outstanding
Shares) will beneficially own, directly or indirectly,
20% or more of the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of directors
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<PAGE>
and (z) individuals who were members of the Incumbent
Board will constitute at least a majority of the
members of the board of directors of such corporation.
F. Exercise of Options.
1. A Participant may elect to exercise one or
more Options by giving written notice to the Committee of
such election and of the number of Options such Participant
has elected to exercise, accompanied by payment in full of
the aggregate Purchase Price for the number of Shares for
which the Options are being exercised; provided, however,
that, in the case of a notice of exercise delivered to the
Committee by facsimile, such payment may be made by delivery
of payment to the Committee on the business day next
following the date on which such notice of exercise is
delivered (such delivery being deemed to have been duly made
if the Participant giving such facsimile notice shall have
dispatched such payment by a nationally recognized overnight
courier service guaranteeing delivery on such next business
day, provided such payment is actually received by the
Company).
2. Shares purchased pursuant to the exercise of
Options shall be paid for at the time of exercise as
follows:
(a) in cash or by check, bank draft or money
order payable to the order of Company;
(b) if the Shares are traded on a national
securities exchange, through the delivery of
irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the
aggregate Purchase Price; or
(c) on such other terms and conditions as
may be acceptable to the Committee (which may include
payment in full or in part by the transfer of Shares
which have been owned by the Participant for at least 6
months or the surrender of Options owned by the
Participant) and in accordance with applicable law.
3. Upon receipt of payment, the Company shall
deliver to the Participant as soon as practicable a
certificate or certificates for the Shares then purchased.
G. Black-Out Periods. The direct or indirect sale,
transfer or other disposition of Common Stock received by a
Participant upon the exercise of Options shall be prohibited for
two years following the initial Public Offering of the Company,
unless a shorter period of time is specified by the Committee in
its sole discretion at any time.
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<PAGE>
H. Non-Competition and Other Provisions. In
consideration of the grant of Options, by accepting the grant of
Options the Participant agrees during employment and, in the
event any Options vest, for a period ending one year following
the date of the Participant's Termination of Employment, not to
engage in any Competitive Activity, except to the extent
consented to by the Committee in writing. Each Participant by
accepting a grant of Options hereunder acknowledges that the
Company or a Related Person will suffer irreparable harm in the
event such Participant engages in any Competitive Activity during
this period, and agrees that in addition to its remedies at law,
the Company and a Related Person shall be entitled to injunctive
relief as a consequence of a violation or threatened violation of
this covenant. Notwithstanding the foregoing, nothing in this
Plan shall prohibit or penalize ownership by a Participant of the
shares of a business that is registered under Section 12 of the
Act and constitutes, together with all such shares owned by any
immediate family member or affiliate of, or person acting in
concert with, such Participant, less than 2% of the outstanding
registered shares of such business. The Committee will have the
discretion to impose in a Participant's Option Agreement such
other conditions, limitations and restrictions as it determines
are appropriate in its sole discretion, including any waivers of
rights which a Participant may have.
I. Restrictions on Exercise. Notwithstanding
anything else contained herein to the contrary other than Article
VI(E), no Options may be exercised prior to the earlier of the
closing of a Public Offering of Shares or the expiration of two
years from the Effective Date of the Plan, except to the extent
consented to by the Committee in its sole and absolute
discretion.
VII. Effect of Termination of Employment
A. Death, Disability, Retirement, etc. Except as
otherwise provided in the Participant's Option Agreement, upon
Termination of Employment, all outstanding Options then
exercisable and not exercised by the Participant prior to such
Termination of Employment (and any Options not previously
exercisable but made exercisable by the Committee at or after the
Termination of Employment) shall remain exercisable by the
Participant to the extent not exercised for the following time
periods, or, if earlier, the prior expiration of the Option in
accordance with the terms of the Plan and grant:
1. In the event of the Participant's death or
Disability, such Options shall remain exercisable by the
Participant (or by the Participant's estate or by the person
given authority to exercise such Options by the
Participant's will or by operation of law) for a period of
one year from the date of the Participant's death or
Disability, provided that
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the Committee, in its sole discretion, may at any time extend
such time period.
2. In the event the Participant retires from
employment at or after age 65 (or, with the consent of the
Committee or under an early retirement policy of the Company
or a Related Person, before age 65), or if the Participant's
employment is terminated by the Company or a Related Person
without Cause, such Options shall remain exercisable for 90
days from the date of the Participant's Termination of
Employment, provided that the Committee, in its sole
discretion, may at any time extend such time period.
B. Cause. Upon the Termination of Employment of a
Participant for Cause, or if the Company or a Related Person
obtains or discovers information after Termination of Employment
that such Participant had engaged in conduct that would have
justified a Termination of Employment for Cause during
employment, all outstanding Options of such Participant shall
immediately be canceled.
C. Other Termination. In the event of Termination of
Employment for any reason other than as provided in Article
VII(A) or VII(B), all outstanding Options not exercised by the
Participant prior to such Termination of Employment shall remain
exercisable (to the extent exercisable by such Participant
immediately before such termination) for a period of 30 days
after such termination, provided that the Committee, in its sole
discretion, may at any time extend such time period.
D. Cancellation of Options. Except as otherwise
provided in Article VI(E), no Options that were not exercisable
during the period of employment, shall thereafter become
exercisable upon a Termination of Employment for any reason or no
reason whatsoever, and such options shall terminate and become
null and void upon a Termination of Employment unless the
Committee determines in its sole discretion that such Options
shall be exercisable.
VIII. Nontransferability of Options
No Option shall be transferable by the Participant
otherwise than by will or under applicable laws of descent and
distribution, and during the lifetime of the Participant may be
exercised only by the Participant or his or her guardian or legal
representative. In addition, no Option shall be assigned,
negotiated, pledged or hypothecated in any way (whether by
operation of law or otherwise), and no Option shall be subject to
execution, attachment or similar process. Upon any attempt to
transfer, assign, negotiate, pledge or hypothecate any Option, or
in the event of any levy upon any Option by reason of any
execution, attachment or similar process contrary to the
provisions
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hereof, such Option shall immediately terminate and
become null and void.
IX. Rights as a Stockholder
A Participant (or a permitted transferee of an Option)
shall have no rights as a stockholder with respect to any Shares
covered by such Participant's Option until such Participant (or
permitted transferee) shall have become the holder of record of
such Shares, and no adjustments shall be made for dividends in
cash or other property or distributions or other rights in
respect to any such Shares, except as otherwise specifically
provided in this Plan.
X. Termination, Amendment and Modification
A. General Amendments. The Plan shall terminate at
the close of business on December 31, 1995 (the "Termination
Date"), unless terminated sooner as hereinafter provided, and no
Option shall be granted under the Plan on or after that date.
The termination of the Plan shall not terminate any outstanding
Options that by their terms continue beyond the Termination Date.
At any time prior to the Termination Date, the Committee may
amend or terminate the Plan or suspend the Plan in whole or in
part.
The Committee may at any time, and from time to time,
amend, in whole or in part, any or all of the provisions of the
Plan (including any amendment deemed necessary to ensure that the
Company may comply with any regulatory requirement referred to in
Article XII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required
by law or specifically provided herein, the rights of a
Participant with respect to Options granted prior to such
amendment, suspension or termination, may not, other than as
provided in Article X(B), be materially impaired without the
consent of such Participant and, provided further, without the
approval of the stockholders of the Company entitled to vote, no
amendment may be made which would (i) materially increase the
aggregate number of shares of Common Stock that may be issued
under this Plan (except by operation of Article V); (ii) decrease
the minimum Purchase Price of any Option or (iii) extend the
maximum option period.
The Committee may amend the terms of any Option
granted, prospectively or retroactively, but, subject to Article
VI above or as otherwise provided herein, no such amendment or
other action by the Committee shall materially impair the rights
of any Participant without the Participant's consent.
Notwithstanding the foregoing, however, no such amendment may,
without the approval of the stockholders of the Company, effect
any change that would require stockholder approval under
applicable law.
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B. Other Termination. Notwithstanding any other
provision of the Plan, in the event that a Public Offering does
not occur with respect to the Company by January 28, 1995, the
Committee shall have the absolute right and discretion to amend
or terminate the Plan and a Participant's rights with respect to
any Options granted prior to such amendment or termination.
XI. Use of Proceeds
The proceeds of the sale of Shares subject to Options
under the Plan are to be added to the general funds of Company
and used for its general corporate purposes as the Board shall
determine.
XII. General Provisions
A. Right to Terminate Employment. Neither the
adoption of the Plan nor the grant of Options shall impose any
obligation on the Company or Related Persons to continue the
employment of any Participant, nor shall it impose any obligation
on the part of any Participant to remain in the employ of the
Company or Related Persons.
B. Purchase for Investment. If the Board or the
Committee determines that the law so requires, the holder of an
Option granted hereunder shall, upon any exercise or conversion
thereof, execute and deliver to the Company a written statement,
in form satisfactory to the Company, representing and warranting
that such Participant is purchasing or accepting the Shares then
acquired for such Participant's own account and not with a view
to the resale or distribution thereof, that any subsequent offer
for sale or sale of any such Shares shall be made either pursuant
to (i) a Registration Statement on an appropriate form under the
Securities Act, which Registration Statement shall have become
effective and shall be current with respect to the Shares being
offered and sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, and that in
claiming such exemption the holder will, prior to any offer for
sale or sale of such Shares, obtain a favorable written opinion,
satisfactory in form and substance to the Company, from counsel
acceptable to the Company as to the availability of such
exception.
C. Trusts, etc. Nothing contained in the Plan and no
action taken pursuant to the Plan (including, without limitation,
the grant of any Option thereunder) shall create or be construed
to create a trust of any kind, or a fiduciary relationship,
between Company and any Participant or the executor,
administrator or other personal representative or designated
beneficiary of such Participant, or any other persons. Any
reserves that may be established by Company in connection with
the Plan shall continue to be part of the general funds of
Company, and no individual or entity other than Company shall
have any interest in such funds until paid to a
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Participant. If and to the extent that any Participant or such
Participant's executor, administrator or other personal
representative, as the case may be, acquires a right to receive
any payment from Company pursuant to the Plan, such right shall be
no greater than the right of an unsecured general creditor of Company.
D. Notices. Any notice to the Company required by or
in respect of this Plan will be addressed to the Company at 701
McCullough Drive, Charlotte, North Carolina 28262, Attention:
Vice President, Human Resources, or such other place of business
as shall become the Company's principal executive offices from
time to time, or sent to the Company by facsimile to (704) 548-
2081, Attention: Vice President, Human Resources, or to such
other facsimile number as the Company shall notify each
Participant. Each Participant shall be responsible for
furnishing the Committee with the current and proper address for
the mailing to such Participant of notices and the delivery to
such Participant of agreements, Shares and payments. Any such
notice to the Participant will, if the Company has received
notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has
previously informed the Company of his status and address (and
has provided such reasonable substantiating information as the
Company may request) by written notice under this Section. Any
notice required by or in respect of this Plan will be deemed to
have been duly given when delivered in person or when dispatched
by telegram or, in the case of notice to the Company, by
facsimile as described above, or one business day after having
been dispatched by a nationally recognized overnight courier
service or three business days after having been mailed by United
States registered or certified mail, return receipt requested,
postage prepaid. The Company assumes no responsibility or
obligation to deliver any item mailed to such address that is
returned as undeliverable to the addressee and any further
mailings will be suspended until the Participant furnishes the
proper address.
E. Severability of Provisions. If any provisions of
the Plan shall be held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provisions of the
Plan, and the Plan shall be construed and enforced as if such
provisions had not been included.
F. Payment to Minors, Etc. Any benefit payable to or
for the benefit of a minor, an incompetent person or other person
incapable of receipt thereof shall be deemed paid when paid to
such person's guardian or to the party providing or reasonably
appearing to provide for the care of such person, and such
payment shall fully discharge the Committee, the Company and
their employees, agents and representatives with respect thereto.
G. Headings and Captions. The headings and captions
herein are provided for reference and convenience only. They
shall
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not be considered part of the Plan and shall not be
employed in the construction of the Plan.
H. Controlling Law. The Plan shall be construed and
enforced according to the laws of the State of Delaware.
I. Section 162(m) Deduction Limitation. The
Committee at any time may in its sole discretion limit the number
of Options that can be exercised in any taxable year of the
Company, to the extent necessary to prevent the application of
Section 162(m) of the Code (or any similar or successor
provision), provided that the Committee may not postpone the
earliest date on which Options can be exercised beyond the last
day of the stated term of such Options.
J. Section 16(b) of the Act. All elections and
transactions under the Plan by persons subject to Section 16 of
the Exchange Act involving shares of Common Stock are intended to
comply with all exemptive conditions under Rule 16b-3. The
Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b)
of the Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of
business thereunder.
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses
A. Stock Certificates. Upon any exercise of an
Option and payment of the exercise price as provided in such
Option, a certificate or certificates for the Shares as to which
such Option has been exercised shall be issued by Company in the
name of the person or persons exercising such Option and shall be
delivered to or upon the order of such person or persons.
B. Legends. Certificates for Shares issued upon
exercise of an Option shall bear such legend or legends as the
Committee, in its sole discretion, determines to be necessary or
appropriate to prevent a violation of, or to perfect an exemption
from, the registration requirements of the Securities Act or to
implement the provisions of any agreements between Company and
the Participant with respect to such Shares.
C. Payment of Expenses. The Company shall pay all
issue or transfer taxes with respect to the issuance or transfer
of Shares, as well as all fees and expenses necessarily incurred
by the Company in connection with such issuance or transfer and
with the administration of the Plan.
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XIV. Listing of Shares and Related Matters
If at any time the Board or the Committee shall
determine in its sole discretion that the listing, registration
or qualification of the Shares covered by the Plan upon any
national securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection
with, the grant of Options or the award or sale of Shares under
the Plan, no Option grants shall be effective and no Shares will
be delivered, as the case may be, unless and until such listing,
registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Board.
XV. Withholding Taxes
The Company shall have the right to require prior to
the issuance or delivery of any shares of Common Stock payment by
the Participant of any Federal, state or local taxes required by
law to be withheld.
The Committee may permit any such withholding
obligation to be satisfied by reducing the number of shares of
Common Stock otherwise deliverable. A person required to file
reports under Section 16(a) of the Exchange Act with respect to
securities of the Company may elect to have a sufficient number
of shares of Common Stock withheld to fulfill such tax
obligations (hereinafter a "Withholding Election") only if the
election complies with such conditions as are necessary to
prevent the withholding of such shares from being subject to
Section 16(b) of the Exchange Act. To the extent necessary under
then current law, such conditions shall include the following:
(x) the Withholding Election shall be subject to the approval of
the Committee and (y) the Withholding Election is made (i) during
the period beginning on the third business day following the date
of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the
twelfth business day following such date or is made in advance
but takes effect during such period, (ii) six (6) months before
the stock award becomes taxable, or (iii) during any other period
in which a Withholding Election may be made under the provisions
of Rule 16b-3 promulgated pursuant to the Act. Any fraction of a
share of Common Stock required to satisfy such tax obligations
shall be disregarded and the amount due shall be paid instead in
cash by the Participant.
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_________________________________________________________________
COLLINS & AIKMAN HOLDINGS CORPORATION
1994 EMPLOYEE STOCK OPTION PLAN
_________________________________________________________________
April 15, 1994
<PAGE>
Table of Contents
Page
I. Purposes of the Plan . . . . . . . . . . . . . . . . . . 1
II. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
III. Effective Date . . . . . . . . . . . . . . . . . . . . . 5
IV. Administration . . . . . . . . . . . . . . . . . . . . . 5
A. Duties of the Committee . . . . . . . . . . . . . . 5
B. Advisors . . . . . . . . . . . . . . . . . . . . . 5
C. Indemnification . . . . . . . . . . . . . . . . . . 6
D. Meetings of the Committee . . . . . . . . . . . . . 6
E. Determinations . . . . . . . . . . . . . . . . . . 6
V. Shares; Adjustment Upon Certain Events . . . . . . . . . 7
A. Shares to be Delivered; Fractional Shares . . . . . 7
B. Number of Shares . . . . . . . . . . . . . . . . . 7
C. Adjustments; Recapitalization, etc. . . . . . . . . 7
VI. Awards and Terms of Options . . . . . . . . . . . . . . 8
A. Grant . . . . . . . . . . . . . . . . . . . . . . . 8
B. Exercise Price . . . . . . . . . . . . . . . . . . 8
C. Number of Shares . . . . . . . . . . . . . . . . . 9
D. Exercisability . . . . . . . . . . . . . . . . . . 9
E. Acceleration of Exercisability . . . . . . . . . . 9
F. Exercise of Options. . . . . . . . . . . . . . . 10
G. Black-Out Periods. . . . . . . . . . . . . . . . 11
H. Non-Competition and Other Provisions. . . . . . . 11
I. Restrictions on Exercise. . . . . . . . . . . . . 11
J. Incentive Stock Option Limitations. . . . . . . . 11
VII. Effect of Termination of Relationship . . . . . . . . . 13
A. Death, Disability, Retirement, etc. . . . . . . . . 13
B. Cause . . . . . . . . . . . . . . . . . . . . . . . 13
C. Other Termination . . . . . . . . . . . . . . . . . 13
D. Cancellation of Options . . . . . . . . . . . . . . 13
VIII. Nontransferability of Options . . . . . . . . . . . 14
IX. Rights as a Stockholder . . . . . . . . . . . . . . . . 14
X. Termination, Amendment and Modification . . . . . . . . 14
A. General Amendments . . . . . . . . . . . . . . . . 14
B. Other Termination . . . . . . . . . . . . . . . . . 15
XI. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 15
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Page
XII. General Provisions . . . . . . . . . . . . . . . . . . . . 15
A. Right to Terminate Employment. . . . . . . . . . . . . 15
B. Purchase for Investment . . . . . . . . . . . . . . . 15
C. Trusts, etc. . . . . . . . . . . . . . . . . . . . . 16
D. Notices . . . . . . . . . . . . . . . . . . . . . . . 17
E. Severability of Provisions . . . . . . . . . . . . . 17
F. Payment to Minors, Etc. . . . . . . . . . . . . . . . 17
G. Headings and Captions . . . . . . . . . . . . . . . . 17
H. Controlling Law . . . . . . . . . . . . . . . . . . . 17
I. Section 162(m) Deduction Limitation . . . . . . . . . 17
J. Section 16(b) of the Act . . . . . . . . . . . . . . 17
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses . . . . . . . . . . . 17
A. Stock Certificates . . . . . . . . . . . . . . . . . 17
B. Legends . . . . . . . . . . . . . . . . . . . . . . . 18
C. Payment of Expenses . . . . . . . . . . . . . . . . . 18
XIV. Listing of Shares and Related Matters . . . . . . . . . . 18
XV. Withholding Taxes . . . . . . . . . . . . . . . . . . . . 18
ii
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Collins & Aikman Holdings Corporation
1994 Employee Stock Option Plan
(As Amended)
I. Purposes of the Plan
The purposes of this 1994 Employee Stock Option Plan
(the "Plan") are to enable Collins & Aikman Holdings Corporation
(the "Company") and Related Persons (as defined herein) to
attract, retain and motivate the employees and consultants who
are important to the success and growth of the business of the
Company and Related Persons and to create a long-term mutuality
of interest between the Key Employees and Executive Consultants
(as defined herein) and the stockholders of the Company by
granting the Key Employees and Executive Consultants options to
purchase Common Stock (as defined herein). This document shall
supersede all other material describing this Plan, including, but
not limited to, prior drafts hereof and any documents
incorporating the terms and provisions of any such prior drafts.
II. Definitions
In addition to the terms defined elsewhere herein, for
purposes of this Plan, the following terms will have the
following meanings when used herein with initial capital letters:
A. "Act" means the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
B. "Board" means the Board of Directors of the
Company.
C. "Cause" means that the Committee shall have
determined that any of the following events has occurred: (1) an
act of fraud, embezzlement, misappropriation of business or theft
committed by a Participant in the course of his or her employment
or consultancy or any intentional or gross negligent misconduct
of a Participant which injures the business or reputation of the
Company or Related Persons; (2) intentional or gross negligent
damage committed by a Participant to the property of the Company
or Related Persons; (3) a Participant's willful failure or
refusal to perform the customary duties and responsibilities of
his or her position or consultancy with the Company or Related
Persons; (4) a Participant's breach of fiduciary duty, or the
making of a false representation, to the Company or Related
Persons; (5) a Participant's material breach of any covenant,
condition or obligation required to be performed by him or her
pursuant to this Plan, the Option Agreement or any other
agreement between him or her and the Company or Related Persons
or a Participant's
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intentional or gross negligent violation of any material written
policy of the Company or Related Persons; (6) a Key Employee's
willful failure or refusal to act in accordance with any
specific lawful instructions of a majority of the Board of
Directors of the Company; or (7) commission by a Participant of
a felony or a crime involving moral turpitude. Cause shall be
deemed to exist as of the date any of the above events occur even
if the Committee's determination is later and whether or not such
determination is made before or after Termination of Employment
or Termination of Consultancy.
D. "Code" means the Internal Revenue Code of 1986, as
amended (or any successor statute).
E. "Committee" means such committee, if any,
appointed by the Board to administer the Plan, consisting of two
or more directors as may be appointed from time to time by the
Board each of whom, unless otherwise determined by the Board,
shall be disinterested persons as defined in Rule 16b-3
promulgated under Section 16(b) of the Act. If the Board does
not appoint a committee for this purpose, "Committee" means the
Board.
F. "Common Stock" means the common stock of the
Company, par value $.01 per share, any Common Stock into which
the Common Stock may be converted and any Common Stock resulting
from any reclassification of the Common Stock.
G. "Company" means Collins & Aikman Holdings
Corporation, a Delaware corporation.
H. "Competitive Activity" means (a) being employed
by, consulting to or being a director of any business, or
engaging directly or indirectly in any business activity, that is
competitive with any material business of any of the Company, a
Related Person or of the division that the Participant is or was
employed by or (b) soliciting for employment or consulting,
employing or retaining, or assisting another Person to employ or
retain, directly or indirectly, any employees of the Company or
Related Persons or any Person who was an employee of the Company
or Related Persons in the prior six months, provided, however,
that employing or retaining, or assisting another Person to
employ or retain, any Person whose employment or consultancy with
the Company or a Related Person has been terminated without Cause
or any Person that is non-exempt under the Federal Fair Labor
Standards Act, 29 USC (section) 213(a)(1), shall not be considered
Competitive Activity.
I. "Disability" means a permanent and total
disability, as determined by the Committee in its sole
discretion. A Disability shall only be deemed to occur at the
time of the determination by the Committee of the Disability.
J. "Executive Consultants" shall mean executive-level
consultants of the Company or Related Persons, as determined by
the
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Committee, provided, however, that no managing director,
general partner, limited partner, director, officer or employee
of Wasserstein Perella & Co., Inc. or The Blackstone Group L.P.
that is a director of the Company will be eligible to participate
in the Plan.
K. "Fair Market Value" shall mean, for purposes of
this Plan, unless otherwise required by any applicable provision
of the Code or any regulations issued thereunder, as of any date,
the last sales prices reported for the Common Stock on the
applicable date, (i) as reported by the principal national
securities exchange in the United States on which it is then
traded, or (ii) if not traded on any such national securities
exchange, as quoted on an automated quotation system sponsored by
the National Association of Securities Dealers, or if the sale of
the Common Stock shall not have been reported or quoted on such
date, on the first day prior thereto on which the Common Stock
was reported or quoted. If the Common Stock is not readily
tradeable on a national securities exchange or any system
sponsored by the National Association of Securities Dealers, its
Fair Market Value shall be set by the Committee based upon its
assessment of the cash price that would be paid between a fully
informed buyer and seller under no compulsion to buy or sell
(without giving effect to any discount for a minority interest or
any restrictions on transferability or any lack of liquidity of
the stock).
L. "Incentive Stock Option" shall mean any Option
awarded under this Plan intended to be and designated as an
"Incentive Stock Option" within the meaning of Section 422 of the
Code.
M. "Key Employee" means any person who is an
executive officer or other valuable employee of the Company or a
Related Person, as determined by the Committee, provided,
however, that no managing director, general partner, limited
partner, director, officer or employee of Wasserstein Perella &
Co., Inc. or The Blackstone Group L.P. that is a director of the
Company will be eligible to participate in the Plan. A Key
Employee may, but need not, be an officer or director of the
Company or a Related Person.
N. "Non-Qualified Stock Option" shall mean any Option
awarded under this Plan that is not an Incentive Stock Option.
O. "Option" means the right to purchase one Share at
a prescribed purchase price on the terms specified in the Plan.
P. "Participant" means a Key Employee or Executive
Consultant who is granted Options under the Plan which Options
have not expired; provided, however, that any Executive
Consultant shall be a Participant for purposes of the Plan solely
with respect to grants of Non-Qualified Stock Options and shall
be ineligible for Incentive Stock Options.
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Q. "Person" means any individual or entity, and the
heirs, executors, administrators, legal representatives,
successors and assigns of such Person as the context may require.
R. "Public Offering" means the closing of an offering
under a registration statement registering the common equity
shares of the registering entity under the Securities Act (other
than a registration on a Form S-8, S-4 or any successor or
similar special purpose form).
S. "Related Person or Related Persons" means (a) any
corporation that is defined as a subsidiary corporation in
Section 424(f) of the Code or (b) any corporation that is defined
as a parent corporation in Section 424(e) of the Code. An entity
shall be deemed a Related Person only for such periods as the
requisite ownership relationship is maintained.
T. "Securities Act" means the Securities Act of 1933,
as amended, and all rules and regulations promulgated thereunder.
U. "Share" means a share of Common Stock.
V. "Ten Percent Shareholder" shall mean a person
owning Common Stock of the Company possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of the Company as defined in Section 422 of the Code.
W. "Termination of Consultancy" with respect to an
individual means that individual is no longer acting as an
Executive Consultant to the Company or a Related Person. In the
event an entity shall cease to be a Related Person, there shall
be deemed a Termination of Consultancy of any individual who is
not otherwise an Executive Consultant of the Company or another
Related Person at the time the entity ceases to be a Related
Person.
X. "Termination of Employment" with respect to an
individual means that individual is no longer actively employed
by the Company or a Related Person on a full-time basis,
irrespective of whether or not such employee is receiving salary
continuance pay, is continuing to participate in other employee
benefit programs or is otherwise receiving severance type
payments. In the event an entity shall cease to be a Related
Person, there shall be deemed a Termination of Employment of any
individual who is not otherwise an employee of the Company or
another Related Person at the time the entity ceases to be a
Related Person. A Termination of Employment shall not include a
leave of absence approved for purposes of the Plan by the
Committee.
Y. "Termination of Relationship" means a Termination
of Consultancy or a Termination of Employment where the
individual is no longer a consultant to, or employee of, the
Company.
4
<PAGE>
III. Effective Date
The Plan shall become effective on April 15, 1994 (the
"Effective Date"), subject to its approval by the majority of the
Common Stock (at the time of approval) within one year after the
Plan is adopted by the Board of Directors of the Company. Grants
of Options by the Committee under the Plan may be made on or
after the Effective Date of the Plan, including retroactively,
provided that, if the Plan is not approved by the majority of the
Common Stock (at the time of approval), all Options which have
been granted by the Committee shall be null and void. No Options
may be exercised prior to the approval of the Plan by the
majority of the Common Stock (at the time of approval).
IV. Administration
A. Duties of the Committee. The Plan shall be
administered by the Committee. The Committee shall have full
authority to interpret the Plan and to decide any questions and
settle all controversies and disputes that may arise in
connection with the Plan; to establish, amend and rescind rules
for carrying out the Plan; to administer the Plan, subject to its
provisions; to select Participants in, and grant Options under,
the Plan; to determine the terms, exercise price and form of
exercise payment for each Option granted under the Plan; to
determine the consideration to be received by the Company in
exchange for the grant of the Options; to determine whether and
to what extent Incentive Stock Options and Non-Qualified Stock
Options, or any combination thereof, are to be granted hereunder
to one or more Key Employees and to determine whether and to what
extent Non-Qualified Stock Options are to be granted hereunder to
one or more Executive Consultants; to prescribe the form or forms
of instruments evidencing Options and any other instruments
required under the Plan (which need not be uniform) and to change
such forms from time to time; and to make all other
determinations and to take all such steps in connection with the
Plan and the Options as the Committee, in its sole discretion,
deems necessary or desirable. The Committee shall not be bound
to any standards of uniformity or similarity of action,
interpretation or conduct in the discharge of its duties
hereunder, regardless of the apparent similarity of the matters
coming before it. Any determination, action or conclusion of the
Committee shall be final, conclusive and binding on all parties.
Anything in the Plan to the contrary notwithstanding, no term of
this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to
disqualify the Plan under Section 422 of the Code, or, without
the consent of the Participants affected, to disqualify any
Incentive Stock Option under such Section 422.
B. Advisors. The Committee may employ such legal
counsel, consultants and agents as it may deem desirable for the
5
<PAGE>
administration of the Plan, and may rely upon any advice or
opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses
incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company.
C. Indemnification. To the maximum extent permitted
by applicable law, no officer of the Company or member or former
member of the Committee or of the Board shall be liable for any
action or determination made in good faith with respect to the
Plan or any Option granted under it. To the maximum extent
permitted by applicable law or the Certificate of Incorporation
or By-Laws of the Company, each officer and member or former
member of the Committee or of the Board shall be indemnified and
held harmless by the Company against any cost or expense
(including reasonable fees of counsel reasonably acceptable to
the Company) or liability (including any sum paid in settlement
of a claim with the approval of the Company), and advanced
amounts necessary to pay the foregoing at the earliest time and
to the fullest extent permitted, arising out of any act or
omission to act in connection with the Plan, except to the extent
arising out of such officer's, member's or former member's own
fraud or bad faith. Such indemnification shall be in addition to
any rights of indemnification the officers, members or former
members may have as directors under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or Related
Person.
D. Meetings of the Committee. The Committee shall
adopt such rules and regulations as it shall deem appropriate
concerning the holding of its meetings and the transaction of its
business. Any member of the Committee may be removed from the
Committee at any time either with or without cause by resolution
adopted by the Board, and any vacancy on the Committee may at any
time be filled by resolution adopted by the Board. All
determinations by the Committee shall be made by the affirmative
vote of a majority of its members. Any such determination may be
made at a meeting duly called and held at which a majority of the
members of the Committee are in attendance in person or through
telephonic communication. Any determination set forth in writing
and signed by all the members of the Committee shall be as fully
effective as if it had been made by a majority vote of the
members at a meeting duly called and held.
E. Determinations. Each determination,
interpretation or other action made or taken pursuant to the
provisions of this Plan by the Committee shall be final,
conclusive and binding for all purposes and upon all persons,
including, without limitation, the Participants, the Company and
Related Persons, directors, officers and other employees of the
Company and Related Persons, and the respective heirs, executors,
administrators, personal representatives and other successors in
interest of each of the foregoing.
6
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V. Shares; Adjustment Upon Certain Events
A. Shares to be Delivered; Fractional Shares. Shares
to be issued under the Plan shall be made available, at the sole
discretion of the Board, either from authorized but unissued
Shares or from issued Shares reacquired by Company and held in
treasury. No fractional Shares will be issued or transferred
upon the exercise of any Option. In lieu thereof, the Company
shall pay a cash adjustment equal to the same fraction of the
Fair Market Value of one Share on the date of exercise.
B. Number of Shares. Subject to adjustment as
provided in this Article V, the maximum aggregate number of
Shares that may be issued under the Plan shall be 2,980,534. If
Options are for any reason canceled, or expire or terminate
unexercised, the Shares covered by such Options shall again be
available for the grant of Options, subject to the foregoing
limit.
C. Adjustments; Recapitalization, etc. The existence
of the Plan and the Options granted hereunder shall not affect in
any way the right or power of the Board or the stockholders of
the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of
the Company, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or Related Persons, any
sale or transfer of all or part of its assets or business or any
other corporate act or proceeding. The Committee may make or
provide for such adjustments in the maximum number of Shares
specified in Article V(B), in the number of Shares covered by
outstanding Options granted hereunder, and/or in the Purchase
Price (as hereinafter defined) applicable to such Options or such
other adjustments in the number and kind of securities received
upon the exercise of Options, as the Committee in its sole
discretion may determine is equitably required to prevent
dilution or enlargement of the rights of Participants or to
otherwise recognize the effect that otherwise would result from
any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the
Company, merger, consolidation, spin-off, reorganization, partial
or complete liquidation, issuance of rights or warrants to
purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing. In the event
of a merger or consolidation in which Company is not the
surviving entity or in the event of any transaction that results
in the acquisition of substantially all of Company's outstanding
Common Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the
sale or transfer of all of the Company's assets (the foregoing
being referred to as "Acquisition Events"), then the Committee
may in its sole discretion terminate all outstanding Options
effective as of the consummation of the Acquisition Event by
delivering notice of termination to each Participant at least 20
days prior to the date of consummation of
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<PAGE>
the Acquisition Event; provided that, during the period from the
date on which such notice of termination is delivered to the
consummation of the Acquisition Event, each Participant shall have
the right to exercise in full all the Options that are then
outstanding (without regard to limitations on exercise otherwise
contained in the Options) but contingent on occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event
does not take place within a specified period after giving such
notice for any reason whatsoever, the notice and exercise shall be
null and void. Except as hereinbefore expressly provided, the
issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash,
property, labor or services, upon direct sale, upon the exercise
of rights or warrants to subscribe therefor or upon conversion of
shares or other securities, and in any case whether or not for
fair value, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number and class of shares
and/or other securities or property subject to Options
theretofore granted or the Purchase Price (as hereinafter
defined).
VI. Awards and Terms of Options
A. Grant. The Committee may grant Non-Qualified
Stock Options or Incentive Stock Options, or any combination
thereof to Key Employees and may grant Non-Qualified Stock
Options to Executive Consultants, provided, that the maximum
number of Shares with respect to which Options may be granted to
any Key Employee or Executive Consultant during any calendar year
may not exceed 1,000,000, except that in the year of the first
grant of Options to a Key Employee or Executive Consultant, the
maximum number of Shares with respect to which Options may be
granted may not exceed 1,000,000. To the extent that the maximum
number of authorized Shares with respect to which Options may be
granted are not granted in a particular calendar year to a
Participant (beginning with the year in which the Participant
receives his or her first grant of Options hereunder), such
ungranted Options for any year shall increase the maximum number
of Shares with respect to which Options may be granted to such
Participant in subsequent calendar years during the term of the
Plan until used. To the extent that any Option does not qualify
as an Incentive Stock Option (whether because of its provisions
or the time or manner of its exercise or otherwise), such Option
or the portion thereof which does not qualify, shall constitute a
separate Non-Qualified Stock Option. Each Option shall be
evidenced by an Option agreement (the "Option Agreement") in such
form as the Committee shall approve from time to time.
B. Exercise Price. The purchase price per Share (the
"Purchase Price") deliverable upon the exercise of a Non-
Qualified Stock Option granted on or prior to the initial Public
Offering of the Company shall be determined by the Committee and
set forth in a Participant's Option Agreement, provided that the
Purchase Price
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<PAGE>
shall not be less than the par value of a Share, and, provided,
further, that the Purchase Price deliverable upon the exercise
of a Non-Qualified Stock Option granted after the initial Public
Offering of the Company shall be determined by the Committee and
set forth in a Participant's Option Agreement but shall not be
less than 100% of the Fair Market Value of a Share at the time
of grant. The Purchase Price deliverable upon the exercise of
an Incentive Stock Option shall be determined by the Committee
and set forth in a Participant's Option Agreement but shall be
not less than 100% of the Fair Market Value of a Share at the
time of grant; provided, however, if an Incentive Stock Option
is granted to a Ten Percent Shareholder, the Purchase Price
shall be no less than 110% of the Fair Market Value of a
Share.
C. Number of Shares. The Option Agreement shall
specify the number of Options granted to the Participant, as
determined by the Committee in its sole discretion.
D. Exercisability. At the time of grant, the
Committee shall specify when and on what terms the Options
granted shall be exercisable. In the case of Options not
immediately exercisable in full, the Committee may at any time
accelerate the time at which all or any part of the Options may
be exercised and may waive any other conditions to exercise. No
Option shall be exercisable after the expiration of ten years
from the date of grant; provided, however, the term of an
Incentive Stock Option granted to a Ten Percent Shareholder may
not exceed five years. Each Option shall be subject to earlier
termination as provided in Article VII below.
E. Acceleration of Exercisability.
All Options granted and not previously exercisable
shall become fully exercisable immediately upon a Change of
Control (as defined herein). For this purpose, a "Change of
Control" shall be deemed to have occurred upon:
(a) an acquisition by any individual, entity
or group (within the meaning of Section 13d-3 or 14d-1
of the Act) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Act) of more than
80% of the combined voting power of the then
outstanding voting securities of Company entitled to
vote generally in the election of directors, including,
but not limited to, by merger, consolidation or similar
corporate transaction or by purchase; excluding,
however, the following: (x) any acquisition by the
Company, Related Persons, Wasserstein Perella Partners,
L.P., Blackstone Capital Partners L.P. or an affiliate
of any of the foregoing, or (y) any acquisition by an
employee benefit plan (or related trust) sponsored or
maintained by the Company or Related Persons; or
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(b) the approval of the stockholders of the
Company of (i) a complete liquidation or dissolution of
the Company or (ii) the sale or other disposition of
more than 80% of the gross assets of the Company and
Related Persons on a consolidated basis (determined
under generally accepted accounting principles as
determined in good faith by the Committee); excluding,
however, such a sale or other disposition to a
corporation with respect to which, following such sale
or other disposition, (x) more than 20% of the combined
voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the
election of directors will be then beneficially owned,
directly or indirectly, by the individuals and entities
who were the beneficial owners of the outstanding
Shares immediately prior to such sale or other
disposition, (y) no Person (other than the Company,
Related Persons, and any employee benefit plan (or
related trust) of the Company or Related Persons or
such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the outstanding
Shares) will beneficially own, directly or indirectly,
20% or more of the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of directors
and (z) individuals who were members of the Incumbent
Board will constitute at least a majority of the
members of the board of directors of such corporation.
F. Exercise of Options.
1. A Participant may elect to exercise one or
more Options by giving written notice to the Committee of
such election and of the number of Options such Participant
has elected to exercise, accompanied by payment in full of
the aggregate Purchase Price for the number of Shares for
which the Options are being exercised; provided, however,
that, in the case of a notice of exercise delivered to the
Committee by facsimile, such payment may be made by delivery
of payment to the Committee on the business day next
following the date on which such notice of exercise is
delivered (such delivery being deemed to have been duly made
if the Participant giving such facsimile notice shall have
dispatched such payment by a nationally recognized overnight
courier service guaranteeing delivery on such next business
day, provided such payment is actually received by the
Company).
2. Shares purchased pursuant to the exercise of
Options shall be paid for as follows:
(a) in cash or by check, bank draft or money
order payable to the order of Company;
10
<PAGE>
(b) if the Shares are traded on a national
securities exchange, through the delivery of
irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the
aggregate Purchase Price; or
(c) on such other terms and conditions as
may be acceptable to the Committee (which may include
payment in full or in part by the transfer of Shares
which have been owned by the Participant for at least 6
months or the surrender of Options owned by the
Participant) and in accordance with applicable law.
3. Upon receipt of payment, the Company shall
deliver to the Participant as soon as practicable a
certificate or certificates for the Shares then purchased.
G. Black-Out Periods. The direct or indirect sale,
transfer or other disposition of Common Stock received by a
Participant upon the exercise of Options shall be prohibited for
two years following the initial Public Offering of the Company,
unless a shorter period of time is specified by the Committee in
its sole discretion at any time.
H. Non-Competition and Other Provisions. In
consideration of the grant of Options, by accepting the grant of
Options the Participant agrees during employment and, in the
event any Options vest, for a period ending one year following
the date of the Participant's Termination of Employment, not to
engage in any Competitive Activity, except to the extent
consented to by the Committee in writing. Each Participant by
accepting a grant of Options hereunder acknowledges that the
Company or a Related Person will suffer irreparable harm in the
event such Participant engages in any Competitive Activity during
this period, and agrees that in addition to its remedies at law,
the Company and a Related Person shall be entitled to injunctive
relief as a consequence of a violation or threatened violation of
this covenant. Notwithstanding the foregoing, nothing in this
Plan shall prohibit or penalize ownership by a Participant of the
shares of a business that is registered under Section 12 of the
Act and constitutes, together with all such shares owned by any
immediate family member or affiliate of, or person acting in
concert with, such Participant, less than 2% of the outstanding
registered shares of such business. The Committee will have the
discretion to impose in a Participant's Option Agreement such
other conditions, limitations and restrictions as it determines
are appropriate in its sole discretion, including any waivers of
rights which a Participant may have.
I. Restrictions on Exercise. Notwithstanding
anything else contained herein to the contrary other than Article
VI(E), no Options may be exercised prior to the earlier of the
closing of a Public Offering of Shares or the expiration of five
years from the
11
<PAGE>
Effective Date of the Plan, except to the extent consented to by
the Committee in its sole and absolute discretion.
J. Incentive Stock Option Limitations. To the extent
that the aggregate Fair Market Value (determined as of the time
of grant) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by the
Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any subsidiary or
parent corporation (within the meaning of Section 424 of the
Code) exceeds $100,000, such Options shall be treated as Options
which are not Incentive Stock Options.
To the extent permitted under Section 422 of the Code,
or the applicable regulations thereunder or any applicable
Internal Revenue Service pronouncement, if (i) a Participant's
employment with the Company or Related Person is terminated by
reason of death, Disability, retirement or termination without
Cause, and (ii) the portion of any Incentive Stock Option that
would be exercisable during the post-termination period specified
under Article VII but for the $100,000 limitation currently
contained in Section 422(d) of the Code, is greater than the
portion of such Stock Option that is immediately exercisable as
an `incentive stock option' during such post-termination period
under Section 422, such excess shall be treated as a Non-
Qualified Stock Option. If the exercise of an Incentive Stock
Option is accelerated for any reason, any portion of such Option
that is not exercisable as an Incentive Stock Option by reason of
the $100,000 limitation contained in Section 422(d) of the Code
shall be treated as a Non-Qualified Stock Option.
Should any of the foregoing provisions not be necessary
in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the
Committee may amend the Plan accordingly, without the necessity
of obtaining the approval of the shareholders of the Company,
except as otherwise required by law.
12
<PAGE>
VII. Effect of Termination of Relationship
A. Death, Disability, Retirement, etc. Except as
otherwise provided in the Participant's Option Agreement, upon
Termination of Relationship, all outstanding Options then
exercisable and not exercised by the Participant prior to such
Termination of Relationship (and any Options not previously
exercisable but made exercisable by the Committee at or after the
Termination of Relationship) shall remain exercisable by the
Participant to the extent not exercised for the following time
periods, or, if earlier, the prior expiration of the Option in
accordance with the terms of the Plan and grant:
1. In the event of the Participant's death or
Disability, such Options shall remain exercisable by the
Participant (or by the Participant's estate or by the person
given authority to exercise such Options by the
Participant's will or by operation of law) for a period of
one year from the date of the Participant's death or
Disability, provided that the Committee, in its sole
discretion, may at any time extend such time period.
2. In the event the Participant retires from
employment at or after age 65 (or, with the consent of the
Committee or under an early retirement policy of the Company
or a Related Person, before age 65), or if the Participant's
employment is terminated by the Company or a Related Person
without Cause, such Options shall remain exercisable for 90
days from the date of the Participant's Termination of
Employment, provided that the Committee, in its sole
discretion, may at any time extend such time period.
B. Cause. Upon the Termination of Relationship of a
Participant for Cause, or if the Company or a Related Person
obtains or discovers information after Termination of
Relationship that such Participant had engaged in conduct that
would have justified a Termination of Relationship for Cause
during employment or consultancy, all outstanding Options of such
Participant shall immediately be canceled.
C. Other Termination. In the event of Termination of
Relationship for any reason other than as provided in Article
VII(A) or VII(B), all outstanding Options not exercised by the
Participant prior to such Termination of Relationship shall
remain exercisable (to the extent exercisable by such Participant
immediately before such termination) for a period of 30 days
after such termination, provided that the Committee, in its sole
discretion, may at any time extend such time period.
D. Cancellation of Options. Except as otherwise
provided in Article VI(E), no Options that were not exercisable
during the period of employment or consultancy shall thereafter
become exercisable upon a Termination of Relationship for any
13
<PAGE>
reason or no reason whatsoever, and such options shall terminate
and become null and void upon a Termination of Relationship,
unless the Committee determines in its sole discretion that such
Options shall be exercisable.
VIII. Nontransferability of Options
No Option shall be transferable by the Participant
otherwise than by will or under applicable laws of descent and
distribution, and during the lifetime of the Participant may be
exercised only by the Participant or his or her guardian or legal
representative. In addition, no Option shall be assigned,
negotiated, pledged or hypothecated in any way (whether by
operation of law or otherwise), and no Option shall be subject to
execution, attachment or similar process. Upon any attempt to
transfer, assign, negotiate, pledge or hypothecate any Option, or
in the event of any levy upon any Option by reason of any
execution, attachment or similar process contrary to the
provisions hereof, such Option shall immediately terminate and
become null and void.
IX. Rights as a Stockholder
A Participant (or a permitted transferee of an Option)
shall have no rights as a stockholder with respect to any Shares
covered by such Participant's Option until such Participant (or
permitted transferee) shall have become the holder of record of
such Shares, and no adjustments shall be made for dividends in
cash or other property or distributions or other rights in
respect to any such Shares, except as otherwise specifically
provided in this Plan.
X. Termination, Amendment and Modification
A. General Amendments. The Plan shall terminate at
the close of business on the tenth anniversary of the Effective
Date (the "Termination Date"), unless terminated sooner as
hereinafter provided, and no Option shall be granted under the
Plan on or after that date. The termination of the Plan shall
not terminate any outstanding Options that by their terms
continue beyond the Termination Date. At any time prior to the
Termination Date, the Committee may amend or terminate the Plan
or suspend the Plan in whole or in part.
The Committee may at any time, and from time to time,
amend, in whole or in part, any or all of the provisions of the
Plan (including any amendment deemed necessary to ensure that the
Company may comply with any regulatory requirement referred to in
Article XII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required
by
14
<PAGE>
law or specifically provided herein, the rights of a
Participant with respect to Options granted prior to such
amendment, suspension or termination, may not, other than as
provided in Article X(B), be materially impaired without the
consent of such Participant and, provided further, without the
approval of the stockholders of the Company entitled to vote, no
amendment may be made which would (i) materially increase the
aggregate number of shares of Common Stock that may be issued
under this Plan (except by operation of Article V); (ii) decrease
the minimum Purchase Price of any Option or (iii) extend the
maximum option period.
The Committee may amend the terms of any Option
granted, prospectively or retroactively, but, subject to Article
VI above or as otherwise provided herein, no such amendment or
other action by the Committee shall materially impair the rights
of any Participant without the Participant's consent. No
modification of an Option shall adversely affect the status of an
Incentive Stock Option as an incentive stock option under Section
422 of the Code. Notwithstanding the foregoing, however, no such
amendment may, without the approval of the stockholders of the
Company, effect any change that would require stockholder
approval under applicable law.
B. Other Termination. Notwithstanding any other
provision of the Plan, in the event that a Public Offering does
not occur with respect to the Company by January 28, 1995, the
Committee shall have the absolute right and discretion to amend
or terminate the Plan and a Participant's rights with respect to
any Options granted prior to such amendment or termination.
XI. Use of Proceeds
The proceeds of the sale of Shares subject to Options
under the Plan are to be added to the general funds of Company
and used for its general corporate purposes as the Board shall
determine.
XII. General Provisions
A. Right to Terminate Employment. Neither the
adoption of the Plan nor the grant of Options shall impose any
obligation on the Company or Related Persons to continue the
employment of any Participant, nor shall it impose any obligation
on the part of any Participant to remain in the employ of the
Company or Related Persons.
B. Purchase for Investment. If the Board or the
Committee determines that the law so requires, the holder of an
Option granted hereunder shall, upon any exercise or conversion
thereof, execute and deliver to the Company a written statement,
in form satisfactory to the Company, representing and warranting
that
15
<PAGE>
such Participant is purchasing or accepting the Shares then
acquired for such Participant's own account and not with a view
to the resale or distribution thereof, that any subsequent offer
for sale or sale of any such Shares shall be made either pursuant
to (i) a Registration Statement on an appropriate form under the
Securities Act, which Registration Statement shall have become
effective and shall be current with respect to the Shares being
offered and sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, and that in
claiming such exemption the holder will, prior to any offer for
sale or sale of such Shares, obtain a favorable written opinion,
satisfactory in form and substance to the Company, from counsel
acceptable to the Company as to the availability of such
exception.
C. Trusts, etc. Nothing contained in the Plan and no
action taken pursuant to the Plan (including, without limitation,
the grant of any Option thereunder) shall create or be construed
to create a trust of any kind, or a fiduciary relationship,
between Company and any Participant or the executor,
administrator or other personal representative or designated
beneficiary of such Participant, or any other persons. Any
reserves that may be established by Company in connection with
the Plan shall continue to be part of the general funds of
Company, and no individual or entity other than Company shall
have any interest in such funds until paid to a Participant. If
and to the extent that any Participant or such Participant's
executor, administrator or other personal representative, as the
case may be, acquires a right to receive any payment from Company
pursuant to the Plan, such right shall be no greater than the
right of an unsecured general creditor of Company.
D. Notices. Any notice to the Company required by or
in respect of this Plan will be addressed to the Company at 701
McCullough Drive, Charlotte, North Carolina 28262, Attention:
Vice President, Human Resources, or such other place of business
as shall become the Company's principal executive offices from
time to time, or sent to the Company by facsimile to (704) 548-
2081, Attention: Vice President, Human Resources, or to such
other facsimile number as the Company shall notify each
Participant. Each Participant shall be responsible for
furnishing the Committee with the current and proper address for
the mailing to such Participant of notices and the delivery to
such Participant of agreements, Shares and payments. Any such
notice to the Participant will, if the Company has received
notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has
previously informed the Company of his status and address (and
has provided such reasonable substantiating information as the
Company may request) by written notice under this Section. Any
notice required by or in respect of this Plan will be deemed to
have been duly given when delivered in person or when dispatched
by telegram or, in the case of notice to the Company, by
facsimile as described above, or one business day after having
been dispatched by a nationally recognized overnight courier
service or three business
16
<PAGE>
days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid.
The Company assumes no responsibility or obligation to deliver
any item mailed to such address that is returned as undeliverable
to the addressee and any further mailings will be suspended
until the Participant furnishes the proper address.
E. Severability of Provisions. If any provisions of
the Plan shall be held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provisions of the
Plan, and the Plan shall be construed and enforced as if such
provisions had not been included.
F. Payment to Minors, Etc. Any benefit payable to or
for the benefit of a minor, an incompetent person or other person
incapable of receipt thereof shall be deemed paid when paid to
such person's guardian or to the party providing or reasonably
appearing to provide for the care of such person, and such
payment shall fully discharge the Committee, the Company and
their employees, agents and representatives with respect thereto.
G. Headings and Captions. The headings and captions
herein are provided for reference and convenience only. They
shall not be considered part of the Plan and shall not be
employed in the construction of the Plan.
H. Controlling Law. The Plan shall be construed and
enforced according to the laws of the State of Delaware.
I. Section 162(m) Deduction Limitation. The
Committee at any time may in its sole discretion limit the number
of Options that can be exercised in any taxable year of the
Company, to the extent necessary to prevent the application of
Section 162(m) of the Code (or any similar or successor
provision), provided that the Committee may not postpone the
earliest date on which Options can be exercised beyond the last
day of the stated term of such Options.
J. Section 16(b) of the Act. All elections and
transactions under the Plan by persons subject to Section 16 of
the Exchange Act involving shares of Common Stock are intended to
comply with all exemptive conditions under Rule 16b-3. The
Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b)
of the Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of
business thereunder.
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses
A. Stock Certificates. Upon any exercise of an
Option and payment of the exercise price as provided in such
Option, a
17
<PAGE>
certificate or certificates for the Shares as to which such
Option has been exercised shall be issued by Company in the
name of the person or persons exercising such Option and shall be
delivered to or upon the order of such person or persons.
B. Legends. Certificates for Shares issued upon
exercise of an Option shall bear such legend or legends as the
Committee, in its sole discretion, determines to be necessary or
appropriate to prevent a violation of, or to perfect an exemption
from, the registration requirements of the Securities Act or to
implement the provisions of any agreements between Company and
the Participant with respect to such Shares.
C. Payment of Expenses. The Company shall pay all
issue or transfer taxes with respect to the issuance or transfer
of Shares, as well as all fees and expenses necessarily incurred
by the Company in connection with such issuance or transfer and
with the administration of the Plan.
XIV. Listing of Shares and Related Matters
If at any time the Board or the Committee shall
determine in its sole discretion that the listing, registration
or qualification of the Shares covered by the Plan upon any
national securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection
with, the grant of Options or the award or sale of Shares under
the Plan, no Option grant shall be effective and no Shares will
be delivered, as the case may be, unless and until such listing,
registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Board.
XV. Withholding Taxes
The Company shall have the right to require prior to
the issuance or delivery of any shares of Common Stock payment by
the Participant of any Federal, state or local taxes required by
law to be withheld.
The Committee may permit any such withholding
obligation to be satisfied by reducing the number of shares of
Common Stock otherwise deliverable. A person required to file
reports under Section 16(a) of the Exchange Act with respect to
securities of the Company may elect to have a sufficient number
of shares of Common Stock withheld to fulfill such tax
obligations (hereinafter a "Withholding Election") only if the
election complies with such conditions as are necessary to
prevent the withholding of such shares from being subject to
Section 16(b) of the Exchange Act. To the extent necessary under
then current law, such conditions shall
18
<PAGE>
include the following: (x) the Withholding Election shall be
subject to the approval of the Committee and (y) the Withholding
Election is made (i) during the period beginning on the third
business day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of
the Company and ending on the twelfth business day following such
date or is made in advance but takes effect during such period,
(ii) six (6) months before the stock award becomes taxable, or
(iii) during any other period in which a Withholding Election may
be made under the provisions of Rule 16b-3 promulgated pursuant to
the Act. Any fraction of a share of Common Stock required to
satisfy such tax obligations shall be disregarded and the amount
due shall be paid instead in cash by the Participant.
19
<PAGE>
Exhibit 11
Collins & Aikman Corporation
Computation of Earnings Per Share
In thousands, except per share data
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
April 29, April 30,
1995 1994
<S> <C> <C>
Average shares outstanding during the period . . . . . . . 70,521 28,164
Incremental shares under stock options computed under the
treasury stock method using the average market price of
issuer's stock during the period . . . . . . . . . . . . 1,227 1,645
Total shares for EPS . . . . . . . . . . . . . . . . . 71,748 29,809
Income applicable to common shareholders . . . . . . . . . $ 28,901 $ 5,668
Income per common share from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . $ .40 $ .19
</TABLE>
Notes:
(1) Income from continuing operations for the fiscal quarter ended
April 30, 1994 has been adjusted for dividends and accretion
requirements on redeemable preferred stock of $7,086.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains Summary Financial Information extracted from the
Company's Consolidated Balance Sheet and Consolidated Statement of
Operations for the Three Months Ended April 29, 1995 and such is qualified
in its entirety by reference to such Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-END> APR-29-1995
<CASH> 13,719
<SECURITIES> 0
<RECEIVABLES> 84,548
<ALLOWANCES> 5,638
<INVENTORY> 199,705
<CURRENT-ASSETS> 318,811
<PP&E> 578,240
<DEPRECIATION> 282,595
<TOTAL-ASSETS> 677,639
<CURRENT-LIABILITIES> 225,800
<BONDS> 555,325
<COMMON> 705
0
0
<OTHER-SE> (388,251)
<TOTAL-LIABILITY-AND-EQUITY> 677,639
<SALES> 392,129
<TOTAL-REVENUES> 392,129
<CGS> 298,431
<TOTAL-COSTS> 298,431
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (421)
<INTEREST-EXPENSE> 11,541
<INCOME-PRETAX> 32,554
<INCOME-TAX> 3,653
<INCOME-CONTINUING> 28,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,901
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
