<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Collins & Aikman Corporation
................................................................................
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
................................................................................
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
................................................................................
2) Aggregate number of securities to which transaction applies:
................................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
................................................................................
5) Total fee paid:
................................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
................................................................................
2) Form, Schedule or Registration Statement No.:
................................................................................
3) Filing Party:
................................................................................
4) Date Filed:
................................................................................
<PAGE>
[Collins & Aikman Logo]
Collins & Aikman Corporation
5755 New King Court
Troy, Michigan 48098
April 5, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Collins & Aikman Corporation to be held on May 1, 2000 at the New York Palace
Hotel, 455 Madison Avenue at 50th Street, New York, New York 10022, at 11:00
a.m., Eastern Daylight Savings Time.
You are urged to read carefully the formal notice of the meeting and the
Proxy Statement which follow. After reading them, please sign, date and mail
the enclosed proxy card so that your shares will be represented at the meeting.
A prepaid return envelope is provided for this purpose.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Thomas E. Evans
Thomas E. Evans
Chairman of the Board
and Chief Executive Officer
<PAGE>
COLLINS & AIKMAN CORPORATION
5755 New King Court
Troy, Michigan 48098
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 1, 2000
----------------
To the Stockholders of
COLLINS & AIKMAN CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of the
holders of common stock, par value $0.01 per share (the "Common Stock"), of
COLLINS & AIKMAN CORPORATION, a Delaware corporation (the "Company"), will be
held on May 1, 2000 at the New York Palace Hotel, 455 Madison Avenue at 50th
Street, New York, New York 10022, commencing at 11:00 a.m., Eastern Daylight
Savings Time, for the purpose of considering and voting upon the following
matters:
(I) the election of three directors to hold office until the year 2003
Annual Meeting and thereafter until their successors are elected and
qualified;
(II) the approval of the amendment of certain provisions of the Company's
1994 Employee Stock Option Plan;
(III) the approval of the Company's 2000 Employee Stock Option Plan; and
(IV) such other matters as may properly come before the Meeting or any
adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 15, 2000 as
the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting. Therefore, only holders of record of Common Stock
at the close of business on such date will be entitled to notice of and to
vote at the Meeting.
A complete list of stockholders entitled to notice of and to vote at the
Meeting will be available at the offices of Hughes, Hubbard & Reed, One
Battery Park Plaza, 12th Floor, New York, New York 10004, at least ten days
prior to the Meeting. The list will also be available for inspection by
stockholders at the Meeting on the day thereof.
Stockholders are requested to sign and date the enclosed proxy and return it
promptly in the enclosed pre-addressed reply envelope, whether or not they
plan to attend the Meeting, so that their shares may be represented. Any proxy
may be revoked by filing with the Secretary of the Company in care of the
First Union Customer Information Service Center at the address set forth in
the accompanying Proxy Statement either a written notice of revocation bearing
a later date than the proxy or a subsequent proxy relating to the same shares
at any time prior to the time the proxy is voted. Further, any person who has
executed a proxy and is present at the Meeting may vote in person instead of
by proxy, thereby canceling any proxy previously given.
By Order of the Board of Directors,
/s/ Ronald T. Lindsay
Ronald T. Lindsay
Secretary
PLEASE EXECUTE, DATE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU
INTEND TO BE PRESENT AT THE ANNUAL MEETING.
April 5, 2000
<PAGE>
PROXY STATEMENT
----------------
COLLINS & AIKMAN CORPORATION
5755 New King Court
Troy, Michigan 48098
----------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 1, 2000
General Information
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Collins & Aikman Corporation, a Delaware corporation
(the "Company"), of proxies for use at the Annual Meeting of Stockholders of
the Company to be held on May 1, 2000 at the New York Palace Hotel, 455
Madison Avenue, New York, New York 10022, commencing at 11:00 a.m., Eastern
Daylight Savings Time, and at any adjournment or postponement thereof (the
"Meeting").
The presence, in person or by proxy, of stockholders holding a majority of
the shares entitled to vote at the Meeting is necessary to constitute a quorum
at the Meeting.
All shares of the common stock, par value $0.01 per share (the "Common
Stock"), of the Company which are entitled to vote and are represented at the
Meeting by properly executed proxies received prior to or at the Meeting, and
not revoked, will be voted at the Meeting in accordance with the instructions
indicated on such proxies. If no instructions are indicated, such proxies will
be voted to elect the three nominees for director named below (or if any
nominee becomes unavailable, such other person as the Nominating Committee of
the Board of Directors or the Company selects), to approve the amendment of
certain provisions of the Company's 1994 Employee Stock Option Plan as
described below, to approve the Company's 2000 Employee Stock Option Plan and
in accordance with the Board of Directors' recommendations with respect to any
other matter that may properly come before the Meeting.
The Board of Directors has fixed the close of business on March 15, 2000 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Meeting. Therefore, only holders of
record of Common Stock at the close of business on the Record Date will be
entitled to notice of and to vote at the Meeting.
Any proxy may be revoked by the person giving it at any time before it is
voted. A proxy may be revoked by filing, with the Secretary of the Company (in
care of the First Union Customer Information Service Center, Client Service
Group, 1525 West W.T. Harris Boulevard, 3C3, Charlotte, North Carolina, 28288-
1153, Attention: Proxy Department) at any time prior to the time the proxy is
voted, either a written notice of revocation bearing a later date than the
proxy or a subsequent proxy relating to the same shares, or by attending the
Meeting and voting in person (although attendance at the Meeting will not in
and of itself constitute revocation of a proxy).
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies may be solicited by directors,
officers and employees of the Company in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not
be additionally compensated, but may be reimbursed for out-of-pocket expenses
in connection with such solicitation. Arrangements will also be made with
custodians, nominees and fiduciaries for forwarding of proxy solicitation
materials to beneficial owners of shares of Common Stock held of record by
such custodians, nominees and fiduciaries, and the Company may reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith. In addition, the Company has retained Georgeson &
Company Inc. to distribute proxy soliciting materials to brokers, banks and
institutional holders for a fee of approximately $1,000, plus reasonable
expenses.
1
<PAGE>
This Proxy Statement and the accompanying proxy are being mailed to
stockholders commencing on or about April 5, 2000.
Voting Securities and Principal Stockholders
On the Record Date, 61,879,272 shares of Common Stock were outstanding. Only
holders of Common Stock of record on the close of business on the Record Date
are entitled to notice of and to vote at the Meeting. Each stockholder of
record is entitled to one vote for each share of Common Stock held on all
matters to come before the Meeting.
Set forth in the table below is certain information as of March 15, 2000
regarding the beneficial ownership of voting securities of the Company by
persons who are known to the Company to own beneficially more than 5% of the
Company's voting stock.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Name and Address Beneficial of
Title of Class of Beneficial Owner Ownership Class
- -------------- ------------------- ---------- -------
<S> <C> <C> <C>
Common Stock, par value Blackstone Capital Partners 26,131,107(1) 42%
$0.01 per share L.P. 345 Park Avenue
New York, New York 10154
Wasserstein/C&A 27,845,589(2) 45%
Holdings, L.L.C.
31 West 52nd Street
New York, New York 10019
</TABLE>
- --------
(1) Of these shares (i) 20,571,403 shares are held directly by Blackstone
Capital Partners L.P., a Delaware limited partnership ("Blackstone
Partners"), the sole general partner of which is Blackstone Management
Associates L.P. ("Blackstone Associates"), (ii) 1,061,413 shares are held
directly by Blackstone Family Investment Partnership I L.P., a Delaware
limited partnership ("BFIP"), the sole general partner of which is
Blackstone Management Associates I L.L.C. ("BMA"), (iii) 93,291 shares are
held directly by Blackstone Advisory Directors Partnership L.P., a
Delaware limited partnership ("BADP"), the sole general partner of which
is Blackstone Associates, and (iv) 4,405,000 shares are held directly by
Blackstone Capital Company II, L.L.C., a Delaware limited liability
company, all the ownership interest of which is owned directly and
indirectly by Blackstone Partners, BFIP and BADP.
(2) Of these shares (i) 27,629,573 are held directly by Wasserstein/C&A
Holdings, L.L.C. (the "Wasserstein L.L.C."), which is controlled by
Wasserstein Perella Partners, L.P. ("WP Partners"), the sole general
partner of which is Wasserstein Perella Management Partners, Inc. ("WP
Management"), which is an indirect wholly-owned subsidiary of Wasserstein
Perella Group, Inc. ("WP Group"), (ii) 153,625 are held directly by WPPN,
Inc., an indirect subsidiary of WP Group, (iii) 45,000 shares are held
directly 33% by each of three trusts for which Bruce Wasserstein, the
Chairman and Chief Executive Officer of WP Management (who is also a
director and stockholder of WP Group), is the Co-Trustee and (iv) 17,391
are owned directly by Bruce Wasserstein.
2
<PAGE>
Security Ownership of Management
Set forth in the table below is certain information as of March 15, 2000
regarding the beneficial ownership of equity securities of the Company by (i)
directors of the Company, (ii) the executive officers of the Company named in
the Summary Compensation Table set forth in this Proxy Statement (and referred
to herein as the "Named Executive Officers") and (iii) directors and executive
officers of the Company as a group. Unless otherwise indicated, the beneficial
owner has sole voting power and sole investment power over the securities
shown below.
<TABLE>
<CAPTION>
Amount and Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
- -------------- ------------------------ -------------------- ----------------
<S> <C> <C> <C>
Common
Stock,
par
value
$0.01
per
share Bruce R. Barnes 0(1)
Robert C. Clark 60,000(2) *
Thomas E. Evans 548,681(3) *
Dean C. Gaskins 81,000(4) *
Marc S. Goldberg 0
Thomas E. Hannah 981,435(5) 1.6%
Dennis E. Hiller 246,709(6) *
Richard C. Lappin 0
George L. Majoros, Jr. 8,898(1)(7) *
James J. Mossman 0(8)
Elizabeth R. Philipp 96,853(9) *
Warren B. Rudman 50,000(2) *
Neil P. Simpkins 0
J. Michael Stepp 273,402(10) *
D. Michael Weston 152,000(11) *
Executive officers and
directors as a group (16
persons) 1,183,319(12) 1.9%
</TABLE>
- --------
* Less than one percent of shares of Common Stock outstanding.
(1) Dr. Barnes and Mr. Majoros are officers of Wasserstein Perella & Co.,
Inc. ("WP & Co."), which is under common control with WP Management. Mr.
Majoros is also an employee of WP Management. WP Management is the
general partner of WP Partners, which controls the Wasserstein L.L.C. The
Wasserstein L.L.C. holds 27,629,573 shares of Common Stock directly. An
additional 216,016 shares of Common Stock are held by affiliates of the
Wasserstein L.L.C. See "Voting Securities and Principal Stockholders".
However, Dr. Barnes and Mr. Majoros do not hold or share the power to
vote or to dispose of the shares of Common Stock held directly by the
Wasserstein L.L.C. or its affiliates and accordingly are not the
beneficial owners of such shares.
(2) Represents shares underlying options granted under the 1994 Directors
Stock Option Plan (the "Directors Plan") which (i) are vested or (ii)
will vest within 60 days unless the director ceases to be a director
prior to that time.
(3) Of these shares, (i) 145,000 are held directly, (ii) 3,681 shares are
held indirectly in the Company Stock Fund of the Company's 401(k) plan
and (iii) 400,000 represent shares underlying options granted under the
Company's 1994 Employee Stock Option Plan (the "1994 Plan") and
exercisable within 60 days.
(4) Of these shares (i) 80,000 represent shares underlying options granted
under the 1994 Plan which are vested, and (ii) 1,000 shares are held
directly.
(5) These shares represent shares underlying options granted under the
Company's 1993 Employee Stock Option Plan (the "1993 Plan"), which are
vested.
(6) Of these shares (i) 95,566 represent shares underlying options granted
under the 1993 Plan which are vested, (ii) 98,334 represent shares
underlying options granted under the 1994 Plan which are vested, (iii)
26,795 shares are held directly (and Mr. Hiller shares voting power and
investment power over such
3
<PAGE>
shares), (iv) 20,849 and 4,320 shares, respectively, are held indirectly in
the Company Stock Fund of the Company's 401(k) plan and non-qualified
excess benefit plan and (v) 845 shares are held by Mr. Hiller's spouse.
(7) All shares are held directly.
(8) Mr. Mossman, in his capacities as a general partner of Blackstone
Associates and Member of BMA, shares with all general partners of
Blackstone Associates and Members of BMA the power to vote and to dispose
of 26,131,107 shares of Common Stock which are held directly by
partnerships, including Blackstone Partners, of which Blackstone
Associates or BMA is the sole general partner, and a limited liability
company, all the limited liability company interest of which is owned
directly and indirectly by partnerships of which Blackstone Associates or
BMA is the sole general partner. See "Voting Securities and Principal
Stockholders". For purposes of this filing under the Securities Exchange
Act of 1934, as amended, Mr. Mossman may be deemed to be a beneficial
owner of such securities; however, Mr. Mossman expressly disclaims such
beneficial ownership of any equity securities of the Company.
(9) Of these shares (i) 91,853 represent shares underlying options granted
under the 1993 Plan which are vested and (ii) 5,000 shares are held
directly.
(10) Of these shares (i) 200,000 represent shares underlying options granted
under the 1994 Plan which are vested, (ii) 65,000 shares are held directly
(and Mr. Stepp shares voting power and investment power over such shares)
and (iii) 2,791 and 5,611 shares, respectively, are held indirectly in the
Company Stock Fund of the Company's 401(k) plan and non-qualified excess
benefit plan.
(11) Of these shares (i) 150,000 represent shares underlying options granted
under the 1994 Plan which are vested and (ii) 2,000 shares are held
directly.
(12) Excludes shares held by Blackstone Partners and its affiliates and
Wasserstein L.L.C. and its affiliates.
Voting
As of March 15, 2000, Blackstone Partners and its affiliates and the
Wasserstein L.L.C., which is controlled by WP Partners, and its affiliates
(collectively, the "Partners") beneficially own or have the right to vote in
the aggregate approximately 87% of the outstanding Common Stock. See "Voting
Securities and Principal Stockholders" and "Information as to Nominees and
other Directors--Certain Relationships". The Partners have advised the Company
that they intend to vote all such shares in favor of PROPOSAL I, PROPOSAL II
and PROPOSAL III. Accordingly, the presence of a quorum at the Meeting and the
approval and adoption of PROPOSAL I, PROPOSAL II and PROPOSAL III are assured.
PROPOSAL I
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation provides that the Board of
Directors of the Company is divided into three classes serving staggered three-
year terms. Three directors will be elected at the Meeting, each to hold office
until his term expires at the year 2003 Annual Meeting and until his successor
is elected and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. All the nominees are
presently directors of the Company. Proxies will be voted for the election of
the nominees listed below and identified as Nominees for Election at the
Meeting, unless contrary instructions are set forth on the proxy card. If any
nominee shall be unavailable to serve as a director, proxies will be voted for
the election of such other person or persons as the Nominating Committee of the
Board of Directors or the Company may select. The Company is not aware of any
circumstances likely to render any nominee unavailable. According to the bylaws
of the Company, directors shall be elected by a plurality of the votes cast.
Therefore, the three persons receiving the greatest number of votes cast at the
Meeting for the election of directors shall be elected as directors and
abstentions and broker non-votes will not affect the outcome of the election,
but they will be counted for purposes of determining whether a quorum is
present.
4
<PAGE>
Information as to Nominees and Other Directors
Set forth below, as of March 15, 2000, are the name, age and principal
occupation or employment during the last five years of each nominee for
election to the Board of Directors and all other directors whose terms have
not expired. None of the nominees or other directors is related to any
executive officer or other director of the Company by blood, marriage or
adoption. The affiliations between the Company and WP Management, WP Group, WP
& Co., Blackstone and BGH (as such terms are defined herein) are set forth
under "Voting Securities and Principal Stockholders" and "Information as to
Nominees and other Directors--Certain Relationships".
Management recommends that stockholders vote FOR the election of each of
Messrs. Clark, Goldberg and Simpkins.
Nominees for Election at the Meeting--Class III Directors
Robert C. Clark, 56, has been a director of the Company since October 1994.
Mr. Clark is Dean of the Harvard Law School and Royal Professor of Law. Mr.
Clark joined Harvard Law School in 1979 after four years at Yale Law School,
where he was a tenured professor, and became Dean in 1989. Mr. Clark is a
corporate law specialist and author of numerous texts and legal articles.
Prior to his association with academia, he was in private practice with Ropes
& Gray. Mr. Clark is also a director of American Lawyer Media Holdings, Inc.
and American Lawyer Media, Inc. and a trustee of Teachers Insurance Annuity
Association (TIAA).
Marc S. Goldberg, 56, has been a director of the Company since 1999. Mr.
Goldberg has been a Senior Advisor to WP & Co. since 1999. Prior to that, Mr.
Goldberg was Senior Vice President Worldwide Operations and Technology from
1995 to 1998 and Senior Vice President of Corporate Planning from 1990 to 1995
of Philip Morris Companies, Inc., a diversified manufacturing company.
Neil P. Simpkins, 33, has been a director of the Company since 1999. He has
been a Senior Managing Director of The Blackstone Group L.P. ("Blackstone")
since January 2000 and a Managing Director from 1998 until 1999. Prior to that
he was a principal at Bain Capital, Inc., a private equity investment firm,
from 1993 until 1998.
Directors Whose Terms Expire at the 2001 Annual Meeting--Class I Directors
Thomas E. Evans, 48, has been Chairman of the Board and Chief Executive
Officer of the Company since April 1999. Previously, he was President of
Tenneco Automotive, an automotive supplier and a division of Tenneco, Inc.,
from 1995 until April 1999. Prior to that, Mr. Evans served for six years with
Case Corporation, a manufacturer of farm machinery and construction equipment
and a subsidiary of Tenneco, Inc., in
a series of senior management positions the last being Senior Vice President
of Worldwide Operations. Prior to his employment with Case Corporation, he
spent sixteen years in the automotive industry with Rockwell International and
Federal Mogul Corporation. Mr. Evans is also a director of the Wisconsin
Central Transportation Corporation, the Motor & Equipment Manufacturers
Association, the National Association of Manufacturers and the Institute of
Textile Technology.
George L. Majoros, Jr., 38, has been a director of the Company since June
1995. Mr. Majoros is a Managing Director of WP & Co. and the Chief Operating
Officer of its Merchant Banking Group. Mr. Majoros has been an officer of WP &
Co. since February 1993. Prior to that, Mr. Majoros was an attorney in the law
firm of Jones, Day, Reavis & Pogue. Mr. Majoros is also President and Chief
Executive Officer and a director of Yardley of London, Ltd., a manufacturer of
personal products.
Richard C. Lappin, 55, has been a director of the Company and a Senior
Managing Director of Blackstone since 1999. From 1990 to 1998 he was President
and Chief Operating Officer of Fruit of the Loom Apparel Co., an apparel
manufacturer. Mr. Lappin is also a director of American Axel & Manufacturing
Holdings, Inc., Republic Technologies International, Inc., Haynes Holdings,
Inc. and Clark USA, Inc.
5
<PAGE>
Directors Whose Terms Expire at the 2002 Annual Meeting--Class II Directors
Bruce R. Barnes, 38, has been a director of the Company since February 1999
and was Co-Chairman of the Board from February 1999 until April 1999. Dr.
Barnes has been a Managing Director of WP & Co. since February 1997 and has
been a senior member of its Merchant Banking Group since September 1998. He
was Executive Vice President of Ziff Brothers Investments, L.L.C., a private
investment company, from January 1995 to June 1996. Prior to that, at Ziff
Communications Company, a privately-held publishing and media company, Dr.
Barnes was Senior Vice President and Chief Financial Officer from September
1993 to December 1994 and was Vice President and Special Assistant to the
Chairman from November 1992 to September 1993. Dr. Barnes is also a director
of American Lawyer Media Holdings, Inc. and American Lawyer Media, Inc.
James J. Mossman, 41, has been a director of the Company since January 1995.
Mr. Mossman has been a Member of Blackstone Group Holdings L.L.C. ("BGH"),
which is under common control with Blackstone Partners, since March 1996
pursuant to a reorganization of Blackstone Group Holdings L.P. ("Blackstone
Group"), and has been a Senior Managing Director of Blackstone (or served in
this capacity) since 1990. Mr. Mossman was a General Partner of Blackstone
Group from 1990 to February 1996. Mr. Mossman is also a director of Transtar,
Inc.
Warren B. Rudman, 70, has been a director of the Company since June 1995.
Mr. Rudman has been a partner in the law firm of Paul, Weiss, Rifkind, Wharton
& Garrison since January 1993. Mr. Rudman served as a United States Senator
from New Hampshire from 1980 through 1992 and as Attorney General of New
Hampshire from 1970 until 1976. Mr. Rudman is also a director of the Chubb
Corporation, Allied Waste, Boston Scientific, the American Stock Exchange and
the Raytheon Company and an independent trustee of seventeen mutual funds of
the Dreyfus Corporation.
Certain Relationships. Blackstone Partners is a Delaware limited partnership
formed in 1987 for the purpose of, among other things, (i) committing capital
to facilitate corporate restructurings, leveraged buyouts, bridge financings
and other investments and (ii) capitalizing affiliates that will engage in
investment and merchant banking activities. The sole general partner of
Blackstone Partners is Blackstone Associates, a Delaware limited partnership,
whose general partners include Mr. Mossman. At present, the business of
Blackstone Associates consists of performing the function of, and serving as,
the general partner of certain limited partnerships, including Blackstone
Partners. Messrs. Mossman, Lappin and Simpkins are also Members of Blackstone
Management Partners L.L.C., which is the general partner of Blackstone
Management Partners L.P. ("Blackstone Management"), and BMA, which is the
general partner of BFIP.
WP Partners is a Delaware limited partnership, the general partner of which
is WP Management. WP Partners was formed by WP Group for the purpose of
participating in merchant banking activities, including committing capital to
the organization and consummation of leveraged buyout transactions. WP
Management and WP Group are both Delaware corporations. WP Management serves
as general partner of WP Partners and as such is engaged in managing WP
Partners. WP Group is an international private advisory and merchant banking
firm. The principal subsidiary of WP Group is WP & Co., an international
investment banking firm. Dr. Barnes and Mr. Majoros are Managing Directors of
WP & Co. Mr. Majoros is also an employee of WP Management.
As of March 15, 2000, Blackstone Partners and its affiliates and the
Wasserstein L.L.C., which is controlled by WP Partners, and its affiliates
beneficially own or have the right to vote in the aggregate approximately 87%
of the outstanding Common Stock and are in a position to jointly control the
Company.
Certain Agreements. Blackstone Partners, WP Partners and the Company have
entered into an Amended and Restated Stockholders Agreement (the "Stockholders
Agreement") relating to the governance and management of the Company, and WP
Partners and Blackstone Partners have entered into a Voting Agreement (the
"Voting Agreement") relating to voting for nominees affiliated with each
other. Pursuant to the Voting Agreement, each Partner will be obligated to
vote for nominees to the Board of Directors that are affiliated with
6
<PAGE>
the other Partner (and in certain circumstances, a transferee of the other
Partner). Pursuant to the Stockholders Agreement, each of WP Partners,
Blackstone Partners and the Company has a right of first refusal with regard
to sales of Common Stock by each Partner (with certain exceptions). Each
Partner also has the right to sell along with the other (with certain
exceptions). Under certain circumstances, such as resignation of a director,
the Company is required to replace the director with an individual affiliated
with the same Partner as the former director. The affiliates of Blackstone
Partners who hold shares of Common Stock directly and the Wasserstein L.L.C.
are successors under the Stockholders Agreement to Blackstone Partners and WP
Partners, respectively, with respect to the shares of Common Stock such
entities hold directly and as such are bound by the obligations of and
entitled to the rights of their affiliated Partner under the Stockholders
Agreement.
The shares of Common Stock beneficially owned by Blackstone Partners and the
Wasserstein L.L.C. and their affiliates have, in each case, been pledged to
The Chase Manhattan Bank in connection with the financing of the purchase of a
portion of those shares under a credit facility with The Chase Manhattan Bank
and to secure the obligations of the pledgors under such credit facility. The
credit facility with The Chase Manhattan Bank contains events of default
typical for facilities of this type (with customary qualifications and
exceptions), including nonpayment of principal or interest; violation of
covenants; material breaches of representations and warranties; bankruptcy;
material undischarged judgments; invalidity of security documents; Change in
Control (as defined therein); and insufficiency of Collateral Value of the
Stock Collateral (as defined therein).
Meetings and Committees of the Board of Directors.
Meetings and Attendance. In fiscal 1999, the Board of Directors held a total
of three meetings and took action by unanimous written consent on six
occasions. All incumbent directors attended at least 75% of the aggregate of
the total number of meetings held by the Board and the total number of
meetings held by the Committees on which he served during fiscal 1999.
Committees of the Board. The Board of Directors has designated the Audit
Committee, which consists of Mr. Clark and Mr. Rudman, and the Compensation
Committee, which currently consists of Mr. Lappin and Dr. Barnes. In addition,
the Company's Restated Certificate of Incorporation provides for the
Nominating Committee, which consists of Messrs. Barnes, Clark, Goldberg,
Lappin, Majoros, Mossman, Rudman, and Simpkins.
The Audit Committee held two meetings in fiscal 1999. The Audit Committee's
function is to meet with the Company's independent public accountants and with
management to make inquiries regarding the manner in which the
responsibilities of each are being discharged. The Audit Committee reviews the
scope of audit and non-audit assignments and related fees, the Company's
accounting principles, and the adequacy of internal controls.
The Compensation Committee held one formal meeting in fiscal 1999 and took
action by unanimous written consent on eight occasions. The Compensation
Committee's function is to determine compensation for executive officers of
the Company and to decide matters and policies with respect to the
compensation of such executive officers, including the entry into employment
agreements and the grant of awards under, and administration of, the Company's
option plans. The Compensation Committee is not entitled to award or authorize
any compensation to be paid to any executive officer of the Company who is
also a partner or employee of Blackstone Partners, WP Partners or their
affiliates. See "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION".
The Nominating Committee held one meeting in fiscal 1999 and took action by
unanimous written consent on one occasion. The Nominating Committee's function
is to nominate, by a majority vote thereof, persons for election to the Board
of Directors at any annual meeting of stockholders or at any special meeting
of stockholders called for the purpose of electing directors. Stockholders
wishing to recommend director candidates for consideration by the Nominating
Committee may do so by writing to the Secretary of the Company, giving the
recommended candidate's name, biographical data and qualifications, not later
than the date by which
7
<PAGE>
stockholder proposals for action must be submitted. See "STOCKHOLDER
PROPOSALS". Pursuant to the Restated Certificate of Incorporation of the
Company, the Nominating Committee consists of all directors serving on the
Board of Directors, excluding directors that are salaried employees of the
Company.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Committee is responsible
for the design, administration and oversight of all senior management
compensation and benefit policies, plans, programs and agreements.
Executive Officer Compensation
The Company's compensation programs for its executive officers are intended
to attract and retain qualified executives for the Company, to recognize
individual performance in conjunction with overall corporate performance and
to link a significant portion of the compensation paid to executives with the
Company's current and long-term performance. The Compensation Committee
believes that these goals are best implemented by providing a compensation
package consisting of three major components: base salary, short-term
incentive compensation and long-term incentive compensation.
The Compensation Committee is not empowered to award or authorize any
compensation to be paid to any executive officer of the Company who is also a
partner or employee of Blackstone Partners, WP Partners, Blackstone Group, WP
Management or WP & Co. None of the Company's current executive officers is a
partner or employee of Blackstone Partners, WP Partners, The Blackstone Group,
WP Management or WP & Co.
Base Salary
When determining base salaries for the executive officers, the Compensation
Committee considers the Company's retention needs, individual experience,
individual and Company performance and individual responsibilities, the
salaries of other officers and employees within the Company and management's
recommendations. No relative weights are assigned to any factor. In addition,
the Compensation Committee considers previously obtained, survey-based
compensation data for companies of similar size with jobs similar to those of
the Company in magnitude, complexity and scope of responsibility. While some
of the companies identified in the peer group performance graph participate in
these surveys, the Compensation Committee believes its competitors for
executive talent are broader than this group due to the varied businesses in
which its divisions compete for executive talent. As a matter of policy, base
salaries are generally targeted at the 50th percentile of this broader group
of automotive supply and general industry companies.
Salaries of executive officers are reviewed periodically by the Compensation
Committee, generally on a 12 to 18 month cycle. Salary adjustments are
determined by subjectively evaluating the factors described in the previous
paragraph.
In the opinion of the Compensation Committee, competitive base salaries
contribute to the Company's overall performance by attracting and retaining
high quality management.
Short-term Incentive Compensation
The second major component of the executive compensation program is the
Company's Executive Incentive Compensation Plan (the "Bonus Plan") adopted
each year. The objectives of this plan are to:
. Motivate key employees to achieve and exceed the Company's financial
goals;
. Maintain management's focus on the importance of earnings and cash flows;
8
<PAGE>
. Focus on annual business results to lead to improvement in shareholder
value; and
. Attract and retain key employees of the quality required to manage the
Company's businesses successfully.
Under the Bonus Plan, the Company's executive officers and other key
employees who the Committee deems to be in a position to have an impact on the
attainment of the earnings and cash flow goals of the Company and its
operating divisions have the opportunity to earn annual performance bonuses.
While the number of persons participating in the Bonus Plan varies from year
to year, approximately 300 persons participated in fiscal 1999. The bonus pool
for each group of participants is based on Earnings Before Interest and Taxes
(EBIT) and Operating Cash Flow (OCF). At the beginning of the year, EBIT/OCF
goals are established for Threshold (lowest), Target (expected) and Maximum
performance for each operating division; such EBIT/OCF goals correspond with
Threshold, Target and Maximum bonus levels established for each group of
participants. The amount of bonus actually paid under the Bonus Plan to
participants, other than Messrs. Stepp and Hannah and Ms. Philipp, discussed
separately below, is initially calculated based on the extent to which unit
performance meets or exceeds the predetermined goals, thereby linking pay and
unit performance and can range from 50% (for Threshold) to 200% (for Maximum)
of the target award. Department heads, operating unit presidents, human
resources and the Chief Executive Officer may change the allocation of bonus
amounts among individuals, but not the aggregate bonus pool awarded. The
target award for executive officers ranges from 40% to 100% of base salary
depending on the participant's position with a subsidiary of the Company. The
1999 targets required an improvement over 1998 results. The Bonus Plan for
fiscal 2000 has been approved. The applicability of the 2000 Bonus Plan has
been expanded to include approximately 650 employees. Bonus calculations will
be based, for operating unit participants, 70% upon the relevant operating
unit performance and 30% upon general Company performance, and 100% upon
general Company performance for corporate participants, measured by Earnings
Before Taxes and Free Cash Flow targets as defined in the 2000 Bonus Plan.
All of the current executive officers received bonuses for fiscal 1999 under
the Bonus Plan. For four executive officers, the target bonuses equaled 50% of
base salary, for three of such officers 40% of base salary and for the other
such officer 100% of base salary. Bonuses actually awarded were approximately
47%, 77%, 100%, 67%, 50%, 50%, 74% and 143% of annual base salary,
respectively, including additional discretionary bonuses. Such awards were
pursuant to the formula under the Bonus Plan, except as adjusted by the Chief
Executive Officer. In addition, the Committee approved an additional aggregate
of $550,940 in discretionary bonuses for current executive officers for fiscal
1999. This discretionary bonus has been determined after the end of fiscal
1999 and compensates executive officers for individual performance or
achievements during the year as determined in the subjective judgment of the
Committee after receiving management's recommendations. Messrs. Hannah and
Stepp and Ms. Philipp received payments described under "Executive
Compensation - Employment Agreements" rather than bonuses under the 1999 Bonus
Plan. The payments were determined based upon the provisions of their
employment agreements, management's recommendations and the Committee's
subjective judgment of what was appropriate.
Long-Term Incentive Compensation
The third major component of the Company's executive compensation program is
its long-term incentive compensation plans. Through the 1993 Plan, the 1994
Plan, and the proposed 2000 Plan, the Company seeks to align the interests of
key employees, at or above a level selected by the Committee in its subjective
judgment (including all executive officers), more closely with those of the
Company's stockholders, and to motivate and reward actions which lead to long-
term value creation for stockholders. Stock option grants provide a direct
link between any rewards executives may receive and the results achieved for
stockholders. Stock options are intended to serve as compensation over a
period of several years.
Stock option grants with their respective vesting schedules were made to the
Chief Executive Officer and three of the other Named Executive Officers in
fiscal 1999 to attract the new Chief Executive Officer to the
9
<PAGE>
Company, to recognize the increased responsibilities of two Named Executive
Officers and to retain a Named Executive Officer during calendar year 1999.
These 1999 grants vest as shown in "Option Grants in Last Fiscal Year".
Stock option grants are made based on the Committee's subjective evaluation
of the duties and responsibilities of the individual, his or her present and
potential contributions to the long-term growth and success of the Company,
the number of options previously granted to such person, the number of options
granted to persons in similar positions both at the Company and at other
companies deemed comparable to the Company (based on the Committee members'
knowledge of options granted by other companies), the number of options
required to attract and retain qualified management personnel, the number of
options remaining available for grant and management's recommendations. The
Committee's policy is to grant options with a term of ten years to provide a
long-term incentive and to fix the exercise price of the options at the fair
market value of the underlying shares at the date of grant. Such options only
provide compensation if the price of the underlying shares increases. In
addition, the Committee's policy is generally to grant options that vest over
a specific period to provide the executive with an incentive to remain with
the Company. The Committee's policy is also to provide new executives with
options to attract them to the Company based on negotiations with new
executives, management's recommendations and the Committee's subjective
judgment primarily after reviewing the number of options granted to similar
executives of the Company. The number of options granted in fiscal 1999 to
executives was determined based on the above factors and the Committee's
subjective judgment. Stock options granted to the Named Executive Officers
during the last fiscal year and year-end option values of options granted to
the Named Executive Officers are reflected in the tables provided below.
Termination and Other Benefits
The Company generally determines termination benefits of executive officers
based on the executive officer's employment agreement (if applicable), the
Company's general severance policies for "exempt employees" (if applicable) or
an agreement with the departing executive officer at the time of separation.
The Committee's policy generally has been to have employment agreements and
change-in-control agreements with each of the Company's executive officers to
provide them with severance benefits. These benefits are intended to permit
these executives to focus their attention on performing their duties to the
Company, rather than on the security of their employment. The Company has also
adopted a supplement to the Profit Sharing and Personal Savings Plan and an
Excess Benefit Plan relating to the Employee's Pension Account Plan to provide
the benefits the underlying plans would have provided to executives but for
legal limitations under the Employee Retirement Income Security Act of 1974
and Internal Revenue Service regulations.
Chief Executive Officer Compensation
The compensation of the Company's Chief Executive Officer is consistent with
the compensation philosophy of the Company described above. Mr. Evans was
hired with a base salary of $700,000, based primarily on the Committee's
subjective evaluation of the Company's personnel needs and Mr. Evans'
experience and responsibilities, Mr. Hannah's previous salary as Chief
Executive Officer of the Company, management's recommendation and survey-based
compensation data. No particular weight was given to any of these factors. The
terms of Mr. Evans' employment agreement are described under "Employment
Agreements" elsewhere in this Proxy Statement.
In addition to his base salary, Mr. Evans received annual incentive
compensation under the Bonus Plan and a $325,000 signing bonus. Mr. Evans'
target bonus opportunity under the Bonus Plan was 100 percent of current
annual base salary, with a maximum opportunity of 200 percent of current
annual base salary. EBIT/OCF goals have been established by the Compensation
Committee at the beginning of each fiscal year; award calculations are based
on the same factors as are bonuses for all executive officers. In 1999, the
Company's financial performance was above the targets set by the Compensation
Committee. Mr. Evans' annual bonus award for the most recent fiscal year was
$1,000,000, which is equal to approximately 143% of his annual base salary
10
<PAGE>
(excluding the signing bonus payment pursuant to Mr. Evans' employment
agreement), which included a discretionary award of $216,000 determined in the
Committee's subjective judgment of what was appropriate given Mr. Evans'
performance and achievements in 1999 as described below. Mr. Evans' bonus
under the Bonus Plan was not adjusted from the amount computed under the
formula in the Bonus Plan. Mr. Evans signing bonus was determined based on the
Committee's subjective judgment of the amount necessary to attract him to the
Company.
The Compensation Committee, at its sole discretion, determines the amount of
any stock options to be granted to Mr. Evans based on the factors described
above. During the most recent fiscal year, stock options were granted to Mr.
Evans pursuant to his employment agreement, based on the factors described
above under "Long-Term Incentive Compensation", including the Committee's
subjective evaluation of Mr. Evans' duties and responsibilities, his potential
contributions to the long-term growth and success of the Company, the lack of
any options previously granted to him, the number of options granted to
persons in similar positions both at the Company and at other companies deemed
comparable to the Company (based on the Committee members' knowledge of
options granted by other companies), the number of options required to attract
Mr. Evans to the Company, the number of options remaining available for grant
and management's recommendations.
The Compensation Committee believes the total compensation program for Mr.
Evans is competitive with that provided by comparable companies, matches the
responsibilities of his office and reflects his personal contributions to the
Company's performance. Since joining the Company in April 1999, Mr. Evans has
repositioned the focus of the Company as a global supplier of automotive
interior systems, has developed a comprehensive corporate strategy of
leveraging the Company's core competencies in acoustic technologies and design
and styling excellence, has enhanced and accelerated the Company's
restructuring program to reposition the Company and to reduce costs to better
serve the needs of global customers and has relocated the Company headquarters
to Troy, Michigan. Mr. Evans also has initiated a series of changes designed
to expand the number of eligible participants in the 2000 Bonus Plan and 2000
Employee Stock Option Plan, to increase overall asset utilization and to
reduce investment in working capital.
The Committee determined that Mr. Hannah's salary remain at $600,000 a year
in fiscal 1999, based primarily on the Committee's subjective evaluation of
the Company's retention needs, Mr. Hannah's experience, performance and
responsibilities, the salaries of other officers and employees of the Company,
management's recommendation and survey-based compensation data. No particular
weight was given to any of these factors. Mr. Hannah retired effective in June
1999. He received a pro rata bonus of $300,000 under the Bonus Plan pursuant
to a letter agreement entered into in March 1999 between Mr. Hannah and the
Company, and the Committee did not recommend any stock option grant or
discretionary bonus for Mr. Hannah for fiscal 1999 as a result of his
retirement. The Committee approved the terms of the March 1999 letter
agreement based on its subjective judgment of what was appropriate.
Deductibility of Compensation in Excess of $1 Million a Year
In 1993, Congress enacted Section 162(m) of the U.S. Internal Revenue Code
of 1986, effective for tax years beginning in 1994. This legislation precludes
a public corporation from taking a federal income tax deduction for
compensation in excess of $1 million per year for its chief executive officer
and any of its four other highest paid executive officers required to be in
the summary compensation table below (with exceptions for certain performance
based compensation), although "grandfather" provisions may apply to certain
compensation arrangements that were entered into by a corporation before it
was publicly held. In view of the grandfather provisions regarding going
public in an initial public offering, this legislation did not limit the
Company's tax deductions for executive compensation prior to fiscal 1994. Due
to a modification of Mr. Hannah's employment agreement in fiscal 1996 to
increase certain bonus percentages, the grandfather provisions of Section
162(m) did not apply to certain compensation paid for fiscal 1996, 1997 and
1998 pursuant to Mr. Hannah's employment agreement. Consequently, Section
162(m) limited the Company's tax deductions with respect to a portion of Mr.
Hannah's compensation in excess of $1 million for fiscal 1996, 1997 and 1998,
and to Mr. Evans' and Mr. Stepp's compensation in excess of $1 million for
fiscal 1999. In addition, the duration
11
<PAGE>
of the grandfather provisions of Section 162(m) was limited and does not apply
to compensation paid by the Company after its annual meeting held in 1998
(although options granted prior to such meeting are expected to be exempt
under Section 162(m)).
The Company will continue to review its executive compensation practices and
plans on an ongoing basis with respect to Section 162(m). Where it deems
advisable, the Company will take appropriate action to preserve the tax
deductibility of its executive compensation, but it believes the more
important objective is maintaining competitive compensation. To retain highly
skilled managers and remain competitive with other employers, the Compensation
Committee retains the authority to authorize other payments, including salary
and bonuses that would not be deductible for federal income tax purposes,
including payments under the 1999 and 2000 Bonus Plans and the Company's stock
option plans.
Compensation Committee of the Board of Directors of Collins & Aikman
Corporation:
BRUCE R. BARNES
RICHARD C. LAPPIN
12
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following is a list of the names and ages, as of March 15, 2000, of the
executive officers of the Company and a description of all positions and
offices with the Company held by each such person and each such person's
principal occupations and employment during the past five years. All executive
officers hold office at the pleasure of the Company's Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Thomas E. Evans......... 48 Chairman of the Board and Chief Executive Officer
Dean C. Gaskins......... 55 President of Automotive Fabrics
Dennis E. Hiller........ 45 President of North American Automotive Interior Systems
Ronald T. Lindsay....... 49 Senior Vice President, General Counsel and Secretary
Jonathan L. Peisner..... 40 Senior Vice President Communications, Investor Relations and Business
Planning
Rajesh K. Shah.......... 48 Executive Vice President and Chief Financial Officer
D. Michael Weston....... 54 President of European Automotive Interior Systems
Reed A. White........... 52 President of Collins & Aikman Dura Convertible Systems
</TABLE>
Thomas E. Evans has been Chairman of the Board and Chief Executive Officer
of the Company since April 1999. Previously, he was President of Tenneco
Automotive, an automotive supplier and a division of Tenneco, Inc., from 1995
until April 1999. Prior to that, Mr. Evans served for six years with Case
Corporation, a manufacturer of farm machinery and construction equipment and a
subsidiary of Tenneco, Inc., in a series of senior management positions the
last being Senior Vice President of Worldwide Operations. Prior to his
employment with Case Corporation, he spent sixteen years in the automotive
industry with Rockwell International and Federal Mogul Corporation. Mr. Evans
is also a director of the Wisconsin Central Transportation Corporation, the
Motor & Equipment Manufacturers Association, the National Association of
Manufacturers and the Institute of Textile Technology.
Dean C. Gaskins has been President since June 1998 and was Executive Vice
President from February until June 1998, of Automotive Fabrics. He has been an
executive officer of the Company since February 2000. Mr. Gaskins joined
Collins & Aikman Products Co. in 1996 when JPS Automotive L.P. was purchased,
as Executive Vice President of Cramerton Automotive Products. He served as
Chief Operating Officer from 1995 until 1996 and Executive Vice President from
1994 until 1996, of JPS Automotive.
Dennis E. Hiller has been President of the North American Automotive
Interior Systems division since February 1999. Mr. Hiller was President of the
Automotive Carpet and Acoustics Group from December 1996 to February 1999 and
was President of the Automotive Carpet division from November 1994 to December
1996. Mr. Hiller was President of The Akro Corporation (now known as Collins &
Aikman Accessory Mats, Inc.), an indirect subsidiary of the Company, from 1992
until November 1994. Mr. Hiller has been an executive officer of the Company
since April 1996.
Ronald T. Lindsay has been Senior Vice President, General Counsel and
Secretary and an executive officer of the Company since 1999. He has been
Senior Vice President since 1999, Vice President 1988-1999, and since 1988,
General Counsel and Secretary of Collins & Aikman Products Co., a wholly-owned
subsidiary of the Company ("Products").
Jonathan L. Peisner has been Senior Vice President of Communications and
Investor Relations of the Company since 1999 and Senior Vice President of
Communications, Investor Relations and Business Planning since January 2000
and has been executive officer of the Company since February 2000. From 1995
until 1999, he was Director of Investor Relations and Business Planning for
Lear Corporation, an automotive supplier.
Rajesh K. Shah has been Executive Vice President and Chief Financial Officer
and an executive officer of the Company since 1999. Prior to that, he was Vice
President and Chief Financial Officer at United Technologies Automotive, an
automotive supplier and a division of United Technologies Corporation from
1995 until 1999.
13
<PAGE>
Prior to that, from 1981 until 1994, he held senior level positions at Varity
Corporation, an automotive supplier, including Executive Vice President and
Chief Operating Officer at the Dayton Walther division, Vice President--
Finance and Planning at Kelsey Hayes and Director of Finance for Perkins
Engine.
D. Michael Weston has been President of the European Automotive Interior
Systems division since February 1999. Mr. Weston was President of Collins &
Aikman Plastics, Inc., an indirect subsidiary of the Company, from March 1997
to February 1999 and has been an executive officer of the Company since April
1998. Mr. Weston was Executive Vice President of Global Manufacturing, Textron
Automotive Interiors, an automotive supplier, from January 1996 until October
1996, President of Textron Automotive Interiors from January 1995 until
January 1996 and President of Textron Automotive Exteriors from July 1994
until January 1995. Prior to that, Mr. Weston was President of Davidson
Exterior Trim Textron.
Reed A. White has been President of Dura Convertible Systems, Inc. (also
known as Collins & Aikman Dura Convertible Systems) since 1994, has been
employed thereby in various management positions since April 1985 and has been
an executive officer of the Company since February 2000.
See "Executive Compensation Employment Agreements" for a description of
employment agreements with Messrs. Evans, Hiller and Weston pursuant to which
they are required to be elected to the offices they currently hold.
Additionally, Messrs. Lindsay, Peisner and Shah have employment agreements
pursuant to which they are required to be elected to the offices they
currently hold.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation for
services rendered to the Company and its subsidiaries by (i) all individuals
serving as the Company's Chief Executive Officer during fiscal 1999, (ii) the
Company's four most highly compensated executive officers (other than the
Chief Executive Officer) whose total annual salary and bonus exceeded $100,000
and who were serving as executive officers at the end of the fiscal year ended
December 25, 1999 and (iii) up to two of the Company's former executive
officers whose compensation would have been reported herein if they had been
serving as executive officers of the Company at the end of the fiscal year
(the individuals named in clauses (i), (ii), and (iii) being referred to in
this Proxy Statement as the "Named Executive Officers"). All compensation
shown has been paid by Products or by a subsidiary of Products (although any
options shown as awarded are for Common Stock of the Company). The Company
does not separately compensate its executive officers for their duties as
officers of the Company (except for any such options).
14
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------------- ------------
Awards
------------ ---
Other
Annual Securities All Other
Year Salary Bonus Compensation Underlying Compensation
Name and Principal Position (1) ($) ($) ($) Options (#) ($)
- --------------------------- ---- ------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas E. Evans
Chairman of the Board 1999 485,513 1,325,000(4) 28,508(2) 1,200,000 19,950(5)
and Chief Executive 1998 N/A N/A N/A N/A N/A
Officer(3) 1997 N/A N/A N/A N/A N/A
Thomas E. Hannah 1999 300,000 300,000 115(2) 0 439,955(6)
Former Chief Executive 1998 600,000 400,000 2,801(2) 0 29,984
Officer 1997 556,250 582,000 1,326(2) 0 32,215
Dennis E. Hiller
President of North 1999 384,167 200,000 1,944(2) 100,000 314,682(7)
American Automotive 1998 295,000 106,750 (2) 0 17,527
Interior Systems 1997 275,000 192,500 (2) 25,000 14,596
Elizabeth R. Philipp 1999 179,808 0 333(2) 0 509,694(8)
Former Executive Vice 1998 300,200 90,052 (2) 0 12,196
President, General 1997 300,200 116,478 (2) 0 16,346
Counsel and Secretary
J. Michael Stepp 1999 300,000 150,000 73(2) 50,000 729,490(9)
Executive Vice 1998 291,000 97,500 (2) 75,000 16,160
President, Strategic 1997 264,000 128,040 (2) 20,000 14,550
Planning and Business
Development
D. Michael Weston
President of European 1999 323,333 165,000 675(2) 100,000 15,045(10)
Automotive Interior 1998 281,250 72,500 (2) 25,000 15,538
Systems(11) 1997 229,167 110,000 (2) 100,000 1,483
Dean C. Gaskins 1999 258,333 200,000 (2) 0 13,007(13)
President of Automotive 1998 242,925 100,000 (2) 75,000 14,768
Fabrics(12) 1997 193,400 101,535 (2) 50,000 0
</TABLE>
- --------
(1) The information given in this table is for the fiscal years indicated,
not calendar years. 1999 indicates the fiscal year ended December 25,
1999. 1998 indicates the fiscal year ended December 26, 1998. 1997
indicates the fiscal year ended December 27, 1997.
(2) Total perquisites for each executive officer were less than the lesser of
$50,000 or 10% of annual salary and bonus, and accordingly, the dollar
value of such perquisites is not shown. The numbers shown for Messrs.
Evans, Hannah, Hiller, Stepp and Weston and for Ms. Philipp reflect
gross-ups for incremental federal and state income taxes related to such
perquisites or relocation reimbursements. Perquisites for an executive
officer may, but do not necessarily, include reimbursement for any of the
following expenses: car; financial planning; executive fitness; executive
physicals and medical; clubs and entertainment; and personal use of
Company aircraft.
(3) Mr. Evans joined the Company as Chairman of the Board of Directors and
Chief Executive Officer and was named an executive officer of the Company
in April 1999. Prior to April 1999, Mr. Evans held no position with the
Company or its subsidiaries.
(4) Mr. Evans' bonus calculation includes a $325,000 signing bonus payment
made pursuant to his employment agreement.
(5) Amount for fiscal 1999 for Mr. Evans consists of (i) contributions to the
Collins & Aikman Corporation Profit Sharing and Personal Savings Plan, a
defined contribution plan (the "PSP"), in the amount of $9,500, (ii)
contributions to the non-qualified supplement to the PSP (the "SPSP") in
the amount of $6,010
15
<PAGE>
and (iii) premiums in the amount of $3,219 and $1,221 paid for basic term
life insurance and Accidental Death & Dismemberment insurance ("AD&D
insurance"), respectively, under group life insurance policies.
(6) Amount for fiscal 1999 for Mr. Hannah consists of (i) contributions to
the PSP in the amount of $3,200, (ii) contributions to the SPSP in the
amount of $14,550, (iii) premiums in the amount of $1,714 and $785 paid
for basic term life insurance and AD&D insurance, respectively, under
group life policies, (iv) a transition bonus of $250,000, based upon the
extent to which the reorganization plan targets were achieved before his
June 1999 retirement, and (v) payments totaling $169,706 under the
Supplemental Retirement Income Plan.
(7) Amount for fiscal 1999 for Mr. Hiller consists of (i) contributions to
the PSP in the amount of $3,200, (ii) contributions to the SPSP in the
amount of $12,118, (iii) premiums in the amount of $2,300 and $603 paid
for basic term life insurance and AD&D insurance, respectively, under
group life insurance policies and (iv) $296,461 relocation expenses.
(8) Amount for fiscal 1999 for Ms. Philipp consists of (i) contributions to
the PSP in the amount of $3,200, (ii) contributions to the SPSP in the
amount of $5,268, (iii) premiums in the amount of $971 and $255 paid for
basic term life insurance and AD&D insurance, respectively, under group
life insurance policies and (iv) a $500,000 lump sum payment pursuant to
her May 12, 1999 letter agreement with the Company.
(9) Amount for fiscal 1999 for Mr. Stepp consists of (i) contributions to the
PSP in the amount of $3,200, (ii) contributions to the SPSP in the amount
of $9,250, (iii) premiums in the amount of $1,740 and $300 paid for basic
term life insurance and AD&D insurance, respectively, under group life
insurance policies, (iv) a transition bonus of $300,000 and (v) a
severance payment of $415,000.
(10) Amount for fiscal 1999 for Mr. Weston consists of (i) contributions to
the PSP in the amount of $3,200, (ii) contributions to the SPSP in the
amount of $9,517 and (iii) premiums in the amount of $1,932 and $396 paid
for basic term life insurance and AD&D insurance, respectively, under
group life insurance policies.
(11) Mr. Weston joined the Company as President of Collins & Aikman Plastics,
Inc. in March 1997 and was named an executive officer of the Company in
April 1998. He was named President of European Automotive Interior
Systems, a division of the Company, in February 1999. Prior to March
1997, Mr. Weston held no positions with the Company or its subsidiaries.
(12) Mr. Gaskins has been President of Automotive Fabrics since June 1998. He
joined the Company in 1996 and was named an executive officer of the
Company in February 2000.
(13) Amount for fiscal 1999 for Mr. Gaskins consists of (i) contributions to
the PSP in the amount of $3,200, (ii) contributions to the SPSP in the
amount of $8,040 and (iii) premiums in the amount of $1,527 and $240 paid
for basic term life insurance and AD&D insurance, respectively, under
group life insurance policies.
Option Grants In Last Fiscal Year
Shown below is information on grants of stock options made during the fiscal
year ended December 25, 1999, to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
- ---------------------------------------- --------------------------------------------------
Number of
Securities Grant
Underlying % of Total Date
Options Options Granted Exercise Present
Granted to Employees Price Expiration Value
Name (#) in Fiscal 1999 ($/sh)(1) Date ($)(2)
- ---- ---------- --------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Thomas E. Evans......................... 1,200,000(3) 60.0 5.00 04/22/09 5,187,901
Thomas E. Hannah........................ 0 0 N/A N/A N/A
Dennis E. Hiller........................ 100,000(4) 5.0 5.00 01/20/09 429,692
Elizabeth R. Philipp.................... 0 0 N/A N/A N/A
J. Michael Stepp........................ 50,000(5) 2.5 4.375 04/20/09 189,531
D. Michael Weston....................... 100,000(6) 5.0 5.00 01/20/09 429,692
Dean C. Gaskins......................... 0 0 N/A N/A N/A
</TABLE>
- -------
(1) "N/A" appearing in the table denotes not applicable since no options were
granted to the Named Executive Officer.
16
<PAGE>
(2) Option values reflect Black-Scholes model output for options. The
assumptions used in the model were expected volatility of 84%, risk-free
rate of return of 5.85% for Mr. Evans' options, 5.16% for Messrs. Hiller's
and Weston's options and 5.96% for Mr. Stepp's options, dividend yield of
0% and time to exercise of ten years. Additionally, no liquidity discount
or forfeiture discount was applied.
(3) Options were awarded pursuant to the 1994 Plan and vest 33 1/3% on April
22, 2000, 66 2/3% on April 22, 2001 and 100% on April 22, 2002.
(4) Options were awarded pursuant to the 1994 Plan and vest 33 1/3% on January
20, 2000, 66 2/3% on January 20, 2001 and 100% on January 20, 2002.
(5) Options were awarded pursuant to the 1994 Plan and vested 100% on December
31, 1999.
(6) Options were awarded pursuant to the 1994 Plan and vest 50% on January 20,
2000 and 100% on January 20, 2001.
If, upon exercise of any of the options described above, the Company must
pay any amount for income tax withholding, in the Compensation Committee's or
the Board of Directors' sole discretion, either the optionee will pay such
amount to the Company or the number of shares of Common Stock delivered by the
Company to the optionee will be appropriately reduced to reimburse the Company
for such payment. The Compensation Committee or the Board may also permit the
optionee to choose to have such shares withheld or to tender shares of Common
Stock the optionee already owns. The Compensation Committee or the Board may
also make such other arrangements with respect to income tax withholding as it
shall determine.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
Shown below is information with respect to the exercise of stock options
during the last fiscal year and the year-end value of unexercised options to
purchase Common Stock granted to the Named Executive Officers and held by them
as of December 25, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying In-The-Money-
Acquired Unexercised Options at Options at FY-End
On Value FY-End (#) ($)(1)
Exercise Realized ------------------------- ---------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Evans......... 0 0 0 1,200,000 0 750,000
Thomas E. Hannah........ 0 0 981,435 0 1,375,411(2) 0
Dennis E. Hiller........ 0 0 193,900 91,666 156,617(2) 41,666(2)
Elizabeth R. Philipp.... 0 0 91,853 0 136,536(2) 0
J. Michael Stepp........ 0 0 200,000 70,000 62,500(2) 0(2)
D. Michael Weston....... 0 0 150,000 75,000 31,250(2) 31,250(2)
Dean C. Gaskins......... 0 0 80,000 45,000 0(2) 0(2)
</TABLE>
- --------
(1) The value of in-the-money options is based on the difference between the
exercise price of such options and the closing price of the Common Stock
on the New York Stock Exchange on December 23, 1999 (the last trading day
of the fiscal year ended December 25, 1999), which was $5.625.
(2) Some options were not in-the-money at fiscal year end because the exercise
price of such options exceeded the closing price of the Common Stock on
the New York Stock Exchange on December 23, 1999.
Defined Benefit or Actuarial Plan Disclosure
C&A Co. Plan. Provided certain eligibility requirements are met, at the end
of each calendar month, pay credits are applied to a participant's account
under the Collins & Aikman Corporation Employees' Pension Account Plan (the
"C&A Co. Plan") based on the participant's length of credited service and
compensation (as defined) during that month. For participants aged 50 or
older, the monthly pay credit is based on either credited service and
compensation or age and compensation, whichever results in the higher amount.
17
<PAGE>
The following chart sets forth how pay credits are determined under the C&A
Co. Plan:
<TABLE>
<CAPTION>
Percentage of
Compensation Used to
Determine Pay Credits
-----------------------------
Eligibility Requirements
------------------------ Up to 1/3 Over 1/3
Years Of of the S.S. of the S.S.
Credited Service Age Wage Base Wage Base
---------------- or --- ----------- -----------
<S> <C> <C> <C> <C>
less than 10 less than 50 2.5% 4.5%
10 - 14 50 - 54 3.0% 5.5%
15 - 19 55 - 59 4.0% 6.5%
20 - 24 60 - 64 5.0% 8.0%
25 or more 65 or more 6.0% 10.0%
</TABLE>
The dollar amounts that result from these percentages are added together and
the total is the pay credit for the month.
In addition, interest credits are applied each month to the account balance.
Participants make no contributions to the C&A Co. Plan. Employer contributions
are 100% vested after five years of service or at age 65, whichever is
earlier, and may vest under certain other circumstances as set forth in the
C&A Co. Plan. The estimated annual benefits payable upon retirement at normal
retirement age under the C&A Co. Plan for Messrs. Evans, Hannah, Hiller,
Stepp, Weston and Gaskins and Ms. Philipp, assuming they use their account
balances to purchase a single life annuity, are $2,020, $0, $49,421, $6,782,
$4,769, $10,049, and $23,158, respectively. Participants in the C&A Co. Plan
have the option, however, of receiving the value of their vested account in a
lump sum following termination of employment.
C&A Co. Excess Plan. The Excess Benefit Plan of Collins & Aikman Corporation
(the "C&A Co. Excess Plan") works in conjunction with the C&A Co. Plan (which
is described above) and provides to the employee any benefit which the C&A Co.
Plan would have provided but for certain legal limitations under the Employee
Retirement Income Security Act of 1974 and Internal Revenue Service
regulations. The pay credits and interest credits are determined as described
with respect to the C&A Co. Plan as if no legal limitations existed, and then
this plan provides any benefit which is in excess of the benefit provided
under the C&A Co. Plan. The estimated annual benefits payable upon retirement
at normal retirement age under the C&A Co. Excess Plan for Messrs. Evans,
Hannah, Hiller, Stepp, Weston and Gaskins and Ms. Philipp are $3,245, $0,
$38,878, $10,410, $4,850, $3,675 and $28,950, respectively.
C&A Co. SRIP. Participation in the Collins & Aikman Corporation Supplemental
Retirement Income Plan (the "C&A Co. SRIP") is solely at the discretion of the
Board of Directors of Products and is extended to a select group of key
executives. The plan, which may be discontinued at any time, provides a
participating employee with a retirement benefit at or after age 62 or between
ages 55 and 61 on an actuarially reduced basis. A target benefit is first
calculated for each employee based on Total Annual Compensation (final base
salary plus the average of the bonuses paid for the last three fiscal years)
and years of service at retirement. The benefit payable from the C&A Co. SRIP
is determined as the excess of the target benefit over any pension benefits
payable from Social Security and any other retirement plans sponsored by the
Company. An employee does not become vested in a benefit until (i) reaching
age 55 and completing 10 years of service or (ii) reaching age 62.
18
<PAGE>
The following table shows, for specified compensation and years of service
classifications, the hypothetical annual target benefits under the C&A Co.
SRIP for employees retiring at age 65, assuming that the retiring participant
elects a single life annuity.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
Total Annual --------------------------------------------------------------
Compensation 10 15 20 25 30 35 43
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 84,000 $102,000 $120,000 $120,000 $120,000 $120,000 $120,000
225,000 94,500 114,750 135,000 135,000 135,000 135,000 135,000
250,000 105,000 127,500 150,000 150,000 150,000 150,000 150,000
275,000 115,500 140,250 165,000 165,000 165,000 165,000 165,000
300,000 126,000 153,000 180,000 180,000 180,000 180,000 180,000
350,000 147,000 178,500 210,000 210,000 210,000 210,000 210,000
400,000 168,000 204,000 240,000 240,000 240,000 240,000 240,000
450,000 189,000 229,500 270,000 270,000 270,000 270,000 270,000
500,000 210,000 255,000 300,000 300,000 300,000 300,000 300,000
600,000 252,000 306,000 360,000 360,000 360,000 360,000 360,000
700,000 294,000 357,000 420,000 420,000 420,000 420,000 420,000
800,000 336,000 408,000 480,000 480,000 480,000 480,000 480,000
900,000 378,000 459,000 540,000 540,000 540,000 540,000 540,000
1,000,000 420,000 510,000 600,000 600,000 600,000 600,000 600,000
1,100,000 462,000 561,000 660,000 660,000 660,000 660,000 660,000
1,200,000 504,000 612,000 720,000 720,000 720,000 720,000 720,000
1,300,000 546,000 663,000 780,000 780,000 780,000 780,000 780,000
1,400,000 588,000 714,000 840,000 840,000 840,000 840,000 840,000
1,500,000 630,000 765,000 900,000 900,000 900,000 900,000 900,000
</TABLE>
All the Named Executive Officers except Ms. Philipp participate in the C&A
Co. SRIP. Mr. Evans currently has 4 years, 11 months of plan service, and at
age 65, he will have an estimated 21 years, 3 months of plan service. Mr.
Hannah had 10 years, 5 months of plan service at retirement. Mr. Hiller
currently has 24 years, 2 months of plan service and at age 65 will have an
estimated 43 years, 6 months of plan service. Mr. Stepp had 4 years, 8 months
of plan service at the conclusion of his employment with the Company. Mr.
Weston currently has 3 years, 1 month of plan service and at age 65 will have
an estimated 13 years, 4 months of plan service. Mr. Gaskins currently has 3
years, 4 months of plan service, and at age 65, he will have an estimated 13
years, 1 month of plan service.
Employment Agreements
In April 1999, Products entered into an employment agreement with Mr. Evans,
pursuant to which he serves as the Company's Chief Executive Officer and as
Chairman of the Board of Directors. The agreement provides for an initial base
salary of $700,000 and participation in any executive bonus plan with a target
bonus of 100% of base salary then in effect and a maximum of 200% of base
salary. The agreement also provides for participation in benefit plans as
generally in effect for executive officers and such perquisites as the
Compensation Committee deems advisable from time to time, which may include
the use of company aircraft, use of company automobiles (and reimbursement for
gas and maintenance charges), and luncheon club and country club membership
dues. Under the Supplemental Retirement Income Plan, Mr. Evans has received
credit for four years of past service under the executive retirement plan of
his former employer, with additional benefit accruals to occur in accordance
with such plan for years of service to the Company. Mr. Evans is also to
receive an $850,000 signing bonus, $325,000 of which was paid in April 1999
and $175,000 of which is to be paid on each of the first three anniversaries
of the commencement of his employment, subject to the terms and conditions of
the employment agreement. Mr. Evans was granted options under the Company's
1994 Stock Option Plan for 1,200,000 shares, which options vest 33 1/3% on
each of the first three anniversaries of the commencement of his employment.
Under the agreement, Mr. Evans may not sell more than 60,000 shares of Common
Stock in any
19
<PAGE>
three month period or more than 180,000 in any one year period, unless a
change of control of the Company occurs. Upon a change of control of the
Company, as defined in the agreement, all options granted to Mr. Evans would
become fully vested and immediately exercisable, all benefits under the
Supplemental Retirement Income Plan would be fully vested and any unpaid
portion of the signing bonus would be paid immediately. The agreement provides
for employment for a period commencing April 22, 1999 and ending April 22,
2002. Thereafter, the agreement will be automatically renewed for additional
one year periods unless Products or Mr. Evans provides 90 days prior written
notice. In the event of involuntary termination for reasons other than cause
or termination by Mr. Evans for good reason (a demotion for Mr. Evans'
position or a significant reduction in his responsibilities, other than as a
result of a sale or other disposition of assets of the company), the agreement
provides for severance benefits equal to Mr. Evans' base salary then in effect
for a period of two years from the termination date, plus if such termination
occurs during fiscal year 2000, two times the average of the target bonus for
fiscal year 2000 and the greater of $575,000 and the actual bonus for fiscal
year 1999. For fiscal year 2001 and thereafter, the additional amount shall be
two times the average of the target bonus for the then fiscal year and Mr.
Evans' actual bonus for the most recently completed fiscal year. Additionally,
Mr. Evans would receive in the event of involuntary termination for reasons
other than cause, any unpaid portion of the signing bonus, the complete
vesting and right to immediately exercise any options granted under the
employment agreement, a pro rata portion of $575,000 or the target bonus for
the then fiscal year, immediate and full vesting in all benefits under the
Supplemental Retirement Income Plan, and one year after the termination date
the restrictions on Mr. Evans' sale of Common Stock would expire. If Mr.
Evans' employment is terminated due to his death or physical or mental
disability, Products shall pay any unpaid portion of his signing bonus, any
earned but unpaid bonus under the executive bonus plan, any unpaid salary
prior to the termination date, one times his base salary on the termination
date and, a ratable portion of the annual bonus he would have earned based on
actual performance results for the current fiscal year. Additionally, a
ratable portion of options granted to Mr. Evans under the agreement which
would have vested on the next anniversary of the commencement date of his
employment shall become vested and immediately exercisable based upon the
period of service since the immediately preceding anniversary date of the
commencement of his employment, and one year after the termination date, the
restrictions on the sale of Mr. Evans' Common Stock would expire.
In July 1992, Products entered into an employment agreement with Mr. Hannah,
which was amended as of February 1994, October 1996 and August 1997. The
agreement, as amended, provided for an initial base salary of $600,000 and
participation in any executive bonus plan, with a target bonus of 100% of the
base salary then in effect and a maximum of 200% of base salary. The agreement
also provided for participation in benefit plans as generally in effect for
executive officers and such perquisites as the Compensation Committee deems
advisable from time to time, including luncheon club and country club
membership dues. The agreement was automatically renewed each year unless
Products notified Mr. Hannah of its intention to terminate the agreement. In
the event of involuntary termination for reasons other than cause and other
than a change of control, the agreement provided for severance benefits equal
to Mr. Hannah's base salary then in effect for a period of one year from the
termination date plus any unpaid cash bonus for the prior fiscal year and a
pro rata portion of any bonus he would have received had he been employed for
the entire fiscal year.
In March 1999, the Company entered into a letter agreement with Mr. Hannah.
The letter agreement stated that in the event of any termination of his
employment the period for exercise of his options shall be extended to two
years following the date of his termination of employment (or the original
expiration date of the options, if earlier). The agreement also provided that
if Mr. Hannah retired prior to December 31, 1999, he would be entitled to
receive a pro rata bonus under the executive incentive compensation plan
(based on the number of months he was employed) and a bonus based upon the
extent to which the reorganization plan targets have been achieved as of the
date of retirement.
As of January 1, 1999, the Company entered into an employment and retention
agreement with Mr. Stepp. The agreement provided for the employment of Mr.
Stepp for calendar year 1999 at a base salary of $300,000. Under the
agreement, Mr. Stepp was granted options under the Company's 1994 Stock Option
Plan for 50,000 shares of the Common Stock of the Company, exercisable in full
on December 31, 1999. The agreement also provided for a one-time transition
bonus related to the achievement of targets under the Company's transition
20
<PAGE>
plan. The standard amount of the transition bonus was set at 100% of Mr.
Stepp's base salary. The agreement also provided for employee benefits and
such other fringe benefits as are generally available to executive officers of
the Company from time to time, including but not limited to participation
under the Company's bonus plan with a standard bonus of not less than 50% of
base salary. On December 17, 1999, the Company entered into a letter agreement
with Mr. Stepp, which modified the January 1, 1999 agreement. The letter
agreement states that he would receive a bonus for fiscal year 1999 in the
amount of $150,000. Additionally, he would receive a one-time transition bonus
of $300,000, both bonuses were paid during or before January 2000. Mr. Stepp
also received a lump-sum severance benefit in the amount of $415,000, paid in
January 2000 and the employment of Mr. Stepp with the Company terminated
effective December 31, 1999. In December 1999, the Company also entered into a
consulting agreement with Mr. Stepp from January 1, 2000 until March 31, 2000,
under which Mr. Stepp received reimbursement of his out-of-pocket expenses.
In July 1990, Products entered into an employment agreement with Ms. Philipp
at an initial base salary of $225,000 per year. The agreement provided for
employee benefits and such other fringe benefits as are available to
executives or salaried employees from time to time. The agreement was
automatically renewed each year. In the event of involuntary termination for
reasons other than cause, including failure to renew the agreement, the
agreement provided for severance benefits equal to Ms. Philipp's base salary
then in effect for a period of one year from the termination date plus the pro
rata portion of any cash bonuses she would have received had she been employed
for the entire fiscal year and, to the extent permitted by law and
regulations, participation in employee benefit programs for the one year
period following termination or until she commences employment with another
entity. On May 12, 1999, the Company and Ms. Philipp entered into a letter
agreement whereby her active employment with Products, including her position
with the Company, ceased on June 30, 1999, in view of the decision to relocate
the Company headquarters, including the general counsel position, to Troy,
Michigan. In July 1999, Ms. Philipp received a lump-sum payment of $500,000 in
lieu of severance and of any 1999 bonus payment otherwise payable under her
employment agreement, and she has the right to exercise the options which have
been granted to her under the 1993 Plan to purchase 91,853 shares of Common
Stock until December 31, 2000. Ms. Philipp will continue to receive benefits
at her previous level through December 2000.
In March 1998, the Company entered into letter agreements with each of Mr.
Hannah, Mr. Hiller, Ms. Philipp, Mr. Stepp, Mr. Gaskins and Mr. Weston which
provide for certain benefits if, during the period commencing three months
prior to a Change in Control (as defined) of the Company and ending one year
thereafter (or 45 days after notice of intent to constructively terminate
employment, if later) (a "Change in Control Period"), (i) the executive's
employment is involuntarily terminated other than for cause or (ii) there is a
constructive termination of executive's employment (which is a termination by
the executive due to involuntary relocation, a material reduction in
executive's total compensation and benefit package or a significant reduction
in executive's responsibilities, position or authority). The benefits payable
in a lump sum to the executive in such an event are as follows: (a)
executive's base salary through the date of termination; (b) a pro rata bonus
equal to executive's target bonus immediately preceding the Change in Control
Period multiplied by a fraction, the numerator of which is the number of
months in the year prior to termination and the denominator of which is
twelve; (c) twenty-four months of base salary; and (d) two times executive's
target annual bonus in effect immediately preceding the Change in Control
Period. The Company shall also (w) offer executive an opportunity to purchase
his Company automobile at its net book value, (x) deem executive to continue
as an employee of the Company for two years following termination for purposes
of eligibility and vesting (but not benefit accrual) under retirement plans,
(y) allow executive to continue to participate in welfare benefit plans for
two years (or until new employment) and (z) reimburse executive for costs of
continued coverage for executive and dependents under the Company's group
health plans at the end of the welfare benefit continuation period described
in (y). The letter agreements provide that any such benefits to an executive
which constitute "Parachute Payments" under Section 280G of the U.S. Internal
Revenue Code of 1986 (the "Code") may be reduced so that the Company shall not
be caused to have paid an "Excess Parachute Payment" under such Section 280G
of the Code. In addition, any lump sum payment shall be reduced by the amount
of cash severance or salary continuation benefits paid to the executive under
any other plan or policy of the Company or a written employment agreement
between the Company (or one of its affiliates) and executive.
21
<PAGE>
In January 1999, Products entered into an employment agreement with Mr.
Hiller for a period of three years ending January 19, 2002, subject to the
terms and conditions of the agreement. The agreement provides for an initial
base salary of $400,000 per year and a guaranteed cash bonus of no less than
$200,000 for his participation in the annual executive incentive compensation
plan during 1999. Mr. Hiller's target bonus under the annual executive
incentive compensation plan is initially set at 50% of his base salary.
Pursuant to the agreement, Mr. Hiller was granted options under the 1994 Plan
for 100,000 shares of Common Stock, which options vest one-third each year
beginning one year after grant. The agreement provides that Mr. Hiller shall
be entitled to such fringe benefits and perquisites and to participate in such
benefit plans as are generally made available to executives of the Company,
including the use of an automobile (and reimbursement for gas and maintenance
charges) and country club membership. The agreement also provides for (i)
reimbursement for reasonable expenses incurred by Mr. Hiller in connection
with relocating from Davidson, North Carolina to Troy, Michigan, (ii) a one-
time relocation allowance of $135,000 payable in a lump sum upon completion of
the move (plus a gross-up to cover taxes) and (iii) a payment equal to any
positive difference between the appraised value of his house in North Carolina
and its selling price. In the event Mr. Hiller's employment is terminated by
Products without cause or by Mr. Hiller due to a "constructive termination"
(which includes a material reduction in compensation and benefits or an
adverse change in his responsibilities, position (including status, office,
title, reporting relationships or working conditions, authority or duties)
prior to the expiration of the term of the agreement, Mr. Hiller shall receive
his base salary for the greater of twenty-four months or the remaining term of
the agreement and a pro rata bonus for the year of termination based on the
number of months elapsed prior to termination. In such event, all Mr. Hiller's
options will vest and will remain exercisable for a period of 90 days after
termination (or the original expiration date of the options, if earlier).
In January 1999, Products entered into an amended and restated employment
agreement with Mr. Weston for a period of two years ending March 31, 2001,
subject to the terms and conditions of the agreement. The agreement provides
for an initial base salary of $330,000 per year and a guaranteed cash bonus of
no less than $165,000 for his participation in the annual executive incentive
compensation plan during 1999. Mr. Weston's target bonus under the annual
executive incentive compensation plan is initially set at 50% of his base
salary. Pursuant to the agreement, Mr. Weston was granted options under the
1994 Plan for 100,000 shares of Common Stock, which options vest 50% after the
first year and the remainder the following year. The agreement provides that
Mr. Weston shall be entitled to such fringe benefits and perquisites and to
participate in such benefit plans as are generally made available to
executives of the Company, including the use of an automobile (and
reimbursement for gas and maintenance charges) and country club membership.
Mr. Weston, who relocated to Germany at the Company's request, will also
receive benefits in accordance with the Company's standard expatriate policy.
In the event of termination as a result of death or disability prior to the
expiration of the term of the agreement, the agreement provides for a payment
of twelve months of his base salary. In the event Mr. Weston's employment is
terminated by Products without cause or by Mr. Weston due to a "constructive
termination" (which includes a material reduction in compensation and benefits
or an adverse change in his responsibilities, position (including status,
office, title, reporting relationships or working conditions), authority or
duties), Mr. Weston shall receive his base salary for the greater of twelve
months or the remaining term of the agreement and reimbursement of all
reasonable expenses incurred in relocating to the United States. In the event
of such a without cause or constructive termination, all of Mr. Weston's
options will vest and will remain exercisable for a period of 90 days after
termination (or the original expiration date of the options, if earlier). The
agreement also includes a provision that Mr. Weston will not compete with the
Company during the term of the agreement and any severance period. If Mr.
Weston is not offered a comparable position with the Company in the United
States at the end of the term of the agreement, Mr. Weston shall receive
twelve months base salary, one year's target bonus under the annual executive
incentive compensation plan, reimbursement of reasonable expenses in
relocating to the United States and an extension of the period in which to
exercise his stock options of two years following termination (or the original
expiration date of the options, if earlier).
22
<PAGE>
Performance Graph
The following graph compares the cumulative total stockholder return from
January 28, 1995 through December 25, 1999 of (i) the Company, (ii) the S&P 500
and (iii) a peer group of companies selected by the Company (consisting of Lear
Corporation, Magna International Inc., Johnson Controls, Inc., Superior
Industries International Inc., MascoTech Inc., Arvin Industries, Inc., Dana
Corporation, Eaton Corporation and Borg Warner Automotive Inc.) (the
"Automotive Peer Group"). Dividend reinvestment has been assumed and, with
respect to the companies in the Automotive Peer Group, the returns of each such
company have been weighted to reflect relative stock market capitalization. The
graph assumes an investment of $100 on January 28, 1995 in each of the Common
Stock and the stocks comprising the S&P 500 and the Automotive Peer Group.
[Performance Graph]
CUMULATIVE TOTAL RETURN
Based upon an initial investment of $100 on January 28, 1995
with dividends reinvested
<TABLE>
<CAPTION>
28-Jan-95 26-Jan-96 27-Dec-96 26-Dec-97 24-Dec-98 23-Dec-99
<S> <C> <C> <C> <C> <C> <C>
Collins & Aikman Corp. $100.00 $82.35 $72.06 $101.47 $58.82 $75.07
S&P 500 $100.00 $135.55 $168.54 $212.24 $282.15 $339.86
Automotive Peer Group $100.00 $125.73 $156.93 $195.23 $186.82 $158.66
</TABLE>
Compensation of Directors
Each director of the Company and Products who is not a full-time employee
thereof (or the Partner who designates such director to the Board of Directors)
receives a fee of $40,000 per year, payable quarterly.
23
<PAGE>
In addition, under the Directors Plan, each non-employee director of the
Company who is not affiliated with a major stockholder, and was not affiliated
with a major stockholder at the time of his most recent election to the Board
of Directors, receives an annual automatic grant of ten-year options for
10,000 shares of Common Stock each November. The options have a per share
exercise price equal to the closing sales price of the Common Stock on the New
York Stock Exchange on the date of grant and are exercisable six months and
one day after the date of grant. Any options not exercisable prior to a
termination of directorship are canceled. Currently, only Mr. Clark and Mr.
Rudman are eligible to receive grants under the Directors Plan.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is currently composed of Mr. Lappin and Dr.
Barnes. Mr. Lappin replaced David A. Stockman on September 10, 1999. Prior to
February 10, 1999, the Compensation Committee was composed of Mr. Stockman and
Randall J. Weisenburger. Dr. Barnes replaced Mr. Weisenburger. Mr.
Weisenburger resigned as a director of the Company on March 15, 1999. None of
Mr. Stockman, Dr. Barnes, Mr. Lappin or Mr. Weisenburger is or has been an
employee of the Company or any of its subsidiaries, including Products, or is
or has been separately compensated for serving as an officer of the Company or
any of its subsidiaries, including Products. See "COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION". Mr. Stockman and Mr. Weisenburger
participated in deliberations during the last completed fiscal year concerning
compensation of executive officers who are separately compensated for serving
as executive officers. None of the executive officers who are separately
compensated for serving as executive officers (or who received options) serve
on the Compensation Committee.
Mr. Lappin is a Senior Managing Director of Blackstone. Dr. Barnes is a
managing director of WP & Co., which is a subsidiary of WP Group. WP Group
formed WP Partners. See "Security Ownership of Management" and "Information as
to Nominees and Other Directors--Certain Relationships". Mr. Weisenburger was,
until August 1998, a managing director of WP & Co. Mr. Stockman was, until
September 1, 1999, a managing director of BGH, BMA and Blackstone Management
Partners, L.L.C.
Pursuant to the Stockholders Agreement, each of Blackstone Partners and WP
Partners or their affiliates receives a $1 million annual monitoring fee
payable quarterly and the reimbursement of expenses from the Company. Since
the beginning of fiscal 1999, pursuant to the Stockholders Agreement, the
Company has paid to each of Blackstone Partners and WP Partners or their
affiliates $1.25 million in annual monitoring fees plus expenses.
Wasserstein Perella Securities, Inc. ("WP Securities"), a wholly-owned
subsidiary of WP Group, has acted, and may in the future act, as agent for the
Company in the repurchase from time to time of shares of Common Stock. Since
the beginning of fiscal 1999, approximately $14,000 in fees have been paid or
accrued to WP Securities in connection with such repurchases.
For a description of the relationships of the Company's directors with any
of BGH, Blackstone Partners, Blackstone Management, WP Partners, WP & Co. or
WP Management, see "Security Ownership of Management" and "Information as to
Nominees and Other Directors--Certain Relationships" above.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file. Based solely on review of the copies of such reports
furnished to the Company during or with respect to fiscal 1999, or written
representations that no Forms 5 were required, the Company believes that
during the fiscal year ended December 25, 1999 all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except
24
<PAGE>
that (1) one report covering one transaction was filed late by Mr.
Weisenburger, a former director of the Company, (2) one report covering one
transaction was filed late by Mr. Majoros, a director of the Company, (3) one
report covering one transaction was filed late by Mr. Townsend Ziebold, a
former director of the Company and (4) WPPN Inc., an indirect subsidiary of WP
Group filed one late report covering three transactions concerning its
transfer of shares of Common Stock to Messrs. Weisenburger, Ziebold and
Majoros, which is the subject of the reports of these individuals referenced
above.
PROPOSAL II
AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION PLAN
The Company and the Board of Directors have approved the submission of
proposed amendments to the Company's 1994 Stock Option Plan ("1994 Plan") for
approval at the 2000 annual meeting of stockholders of the Company. The
material provisions of the proposed amendments to the 1994 Plan are described
below.
Proposed Amendment of Articles III and V
The amendments to Articles III and V of the 1994 Plan increase the maximum
aggregate number of shares that may be issued under the 1994 Plan from
2,980,534 to 3,980,534, provided that all such grants of options for such
additional shares shall be subject to stockholder approval of the amendment
within one year after June 3, 1999 or at the year 2000 annual meeting of the
Company, whichever is later.
Proposed Amendment of Article VI
Under Article VI, as amended, the purchase price per share deliverable upon
the exercise of a nonqualified stock option or incentive stock option shall be
determined by the Compensation Committee and shall not be less than 100% of
the fair market value of a share at the time of grant, provided if an
incentive stock option is granted to a 10% shareholder, the purchase price
shall be no less than 110% of the fair market value of a share.
Proposed Amendment of Article VIII
Under Article VIII, as amended, each option granted under the 1994 Plan
shall not be assignable or transferable other than by will or the laws of
dissent and distribution and may be exercised during the participant's
lifetime only by the participant. A nonqualified stock option may be
transferred to any family member of the participant or transferred to entities
controlled by the participant and/or such family members for or without
consideration.
The vote required for approval of Proposal II is the affirmative vote of the
holders of a majority of the votes cast on the proposal at the annual meeting
of stockholders. Abstentions, withheld votes and broker non-votes will not be
deemed affirmative or negative votes in determining approval of this proposal,
but will be counted in determining the number of shares of Common Stock
present or represented by proxy in determining whether a quorum is present.
The Board does not intend to place the amendments to the 1994 Plan into effect
unless such approval is obtained at the Meeting, and such approval is sought,
in part, in order to exempt the granting of options under the 1994 Plan from
the provisions of Section 162(m) of the Code and in order to comply with
stockholder approval requirements for securities traded on the New York Stock
Exchange.
SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE 1994 PLAN
(as proposed to be amended)
Shares Subject to Options. The 1994 Plan authorizes the issuance of up to
3,980,534 shares of Common Stock, par value $0.01 per share, upon the exercise
of incentive stock options ("ISOs") and nonqualified stock options ("NQSOs")
granted to key employees and NQSOs granted to executive consultants of the
Company
25
<PAGE>
under the 1994 Plan. No more than 1,000,000 (1,500,000 shares in the first
year a grant is made to a key employee or executive consultant) shares may be
subject to options granted to any employee or executive consultant under the
1994 Plan in any calendar year, with any unused portion thereof carried
forward. Unless the 1994 Plan has terminated, shares covered by the
unexercised portion of canceled, expired or otherwise terminated options under
the 1994 Plan are again available for option and sale. Key employees are those
active executive officers or other valuable employees of the Company that are
selected by the Compensation Committee to participate in the 1994 Plan.
Executive consultants are those executive-level consultants of the Company
that are selected by the Compensation Committee to participate in the 1994
Plan. No Options may be granted under the 1994 Plan after April 15, 2004.
Options. In the case of ISOs, the exercise price of an option may not be
less than 100% of the fair market value of a share of Common Stock at the time
of grant (or 110% of such fair market value if the grantee owns more than 10%
of the shares of Common Stock outstanding at the time of grant (a "Ten Percent
Shareholder")). NQSOs issued pursuant to the 1994 Plan will be exercisable at
such price, not less than the fair market value of a share of Common Stock at
the time of grant, as may be fixed by the Compensation Committee. The fair
market value of the Common Stock on March 15, 2000 was $5.0625 per share.
Shares purchased pursuant to the exercise of options must be paid for at the
time of exercise as follows: (i) in cash or by check, bank draft or money
order; (ii) if the shares are traded on a national securities exchange,
through the delivery of instructions to a broker to deliver the purchase
price; or (iii) on other terms acceptable to the Compensation Committee (which
may include payment by transfer of shares owned by the participant for at
least six months or the surrender of options).
The Compensation Committee sets the number of shares, optionees and schedule
of exercisability with regard to each option grant, subject to acceleration in
the event of a Change in Control of the Company (as defined in the 1994 Plan).
No option may be exercisable after the expiration of ten years from the date
of its grant (or five years, in the case of ISOs granted to a Ten Percent
Shareholder). No ISO may be transferred, assigned, pledged or hypothecated in
any way except by will or under applicable laws of descent and distribution.
NQSOs may be transferred to any family member of the participant or
transferred to entities controlled by the participant and/or such family
members for or without consideration.
In consideration of the grant of options, each employee is required to agree
not to engage, without the written consent of the Compensation Committee, in
any Competitive Activity (as defined in the 1994 Plan) during the
participant's employment by the Company, and in the event any options vest,
for a period of one year following termination of employment. Options that
were exercisable upon a participant's termination of employment or consultancy
other than for cause remain exercisable following such termination for a
period of: (i) one year, in the case of death or disability, (ii) 90 days, in
the case of retirement or termination other than for cause and (iii) in all
other instances, 30 days following such termination, in each case subject to
extension by the Compensation Committee. Options that were exercisable upon a
participant's termination of employment or consultancy for cause are canceled
upon such termination. Except as otherwise determined by the Compensation
Committee, options that were not exercisable at the time of a participant's
termination of employment or consultancy by the Company shall automatically be
canceled upon such termination. The Compensation Committee has the discretion
under the 1994 Plan 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.
The 1994 Plan provides for the Compensation Committee to have the right to
make appropriate adjustments in the number and kind of securities receivable
upon the exercise of options or the exercise price in the event of a stock
split, stock dividend, merger, consolidation, reorganization, spinoff, partial
or complete liquidation or other similar changes in the capital structure or
other corporate transactions. The 1994 Plan also gives the Compensation
Committee the option to terminate all outstanding options effective upon the
consummation of a merger or consolidation in which the Company is not the
surviving entity or of any other transaction that results in the acquisition
of substantially all of the Company's outstanding Common Stock by a single
person or entity or by a group of persons and/or entities acting in concert,
or upon the consummation of the sale or transfer of all of the Company's
assets (any such event an "Acquisition Event"), subject to the right of
participants to exercise all outstanding options prior to the effective date
of the Acquisition Event.
26
<PAGE>
As of the date hereof, options for approximately 2,981,541 shares granted to
71 employees and no consultants are outstanding and options to purchase
109,656 shares have been exercised, leaving options for approximately 889,337
shares available for grant to employees and consultants in the future.
Approximately 100 employees and no consultants are eligible to participate in
the 1994 Plan.
The purpose of the 1994 Plan is to provide key employees and executive
consultants of the Company and its subsidiaries with an increased incentive to
make contributions to the long-term performance and growth of the Company, to
join the interests of key employees and executive consultants with the
interests of stockholders of the Company and to facilitate attracting and
retaining key employees and executive consultants of the Company. The 1994
Plan, however, could have an "anti-takeover" effect, particularly with regard
to acceleration of the exercisability of options in connection with a Change
in Control.
Persons deemed to be affiliates of the Company, i.e., persons who directly
or indirectly through one or more intermediaries, control, are controlled by,
or are under common control with, the Company, must resell securities acquired
under the 1994 Plan pursuant to a registration statement under the Securities
Act of 1933, as amended, and the rules and regulations thereunder (the
"Securities Act"), Rule 144 under the Securities Act or an applicable
exemption under the Securities Act.
The Company is the issuer of the securities offered pursuant to the 1994
Plan. The shares of Common Stock of the Company issuable upon exercise of
options granted under the 1994 Plan may be either authorized and unissued or
reacquired shares of Common Stock of the Company. The 1994 Plan is not subject
to any provisions of the Employee Retirement Income Security Act of 1974 and
is not qualified under Section 401(a) of the Code.
Federal Income Tax Consequences. The rules governing the tax treatment of
options and shares acquired upon the exercise of options are quite technical.
Therefore, the description of federal income tax consequences set forth below
is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the tax consequences under applicable state and local income tax laws
may not be the same as under the federal income tax laws.
Under federal income tax law as currently in effect, neither ISOs nor NQSOs
require a participant to recognize income at the time of grant. Upon the
exercise of a NQSO, the participant will recognize ordinary income in an
amount equal to the excess of the fair market value of the Common Stock
received over the aggregate exercise price. Subsequent appreciation or decline
in the value of the share will generally be treated as capital gain or loss on
the sale or other disposition of the shares. With respect to an ISO, no income
is recognized by the participant in connection with the exercise, although the
excess of the fair market value of the Common Stock at exercise over the
aggregate exercise price results in alternative minimum taxable income which
is used in determining alternative minimum tax liability of the participant.
The participant will be subject to taxation at the time shares acquired upon
the exercise of an ISO are sold or otherwise disposed of. If the sale occurs
at least two years after the date the ISO was granted and at least one year
after the date it was exercised, the participant generally will recognize
capital gain or loss in an amount equal to the excess of the proceeds of the
sale over the aggregate exercise price of the shares sold. If the participant
disposes of such shares within two years of the date the ISO was granted or
within one year of receipt of the shares pursuant to the exercise of the ISO,
the participant will recognize ordinary income, in an amount equal to the
excess of the fair market value of the shares on the date of the exercise over
the exercise price or the gain on disposition, if lower. The excess, if any,
of the amount realized upon disposition of such shares over the fair market
value of the shares on the date of exercise will be long or short term capital
gain, depending upon the holding period of the shares, providing the
participant holds the shares as a capital asset at the time of disposition. If
such disposition of the shares by the participant within two years of the date
of grant of the ISO or one year of its exercise is a sale or exchange with
respect to which a loss (if sustained) would be recognized by the participant,
then the amount which is includable in the gross income of the participant
shall not exceed the excess (if any) of the amount realized on the sale or
exchange over the adjusted basis of such shares.
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<PAGE>
The Company's tax consequences will also depend upon whether an option is an
ISO or a NQSO. In the case of a NQSO, the Company will be entitled, subject to
the possible application of Sections 162(m) and 280G of the Code as discussed
below, to a deduction in connection with the participant's exercise in an
amount equal to the income recognized by the participant, provided that the
amount of constitutes reasonable compensation. If the Option is an ISO,
however, the Company will not be entitled to a deduction if the participant
satisfies holding period requirements and recognizes capital gain. If those
requirements are not satisfied, the Company will be entitled to a deduction
corresponding to the ordinary income recognized by the participant, subject to
the possible application of Section 162(m) of the Code as discussed below, if
the amount constitutes reasonable compensation.
If upon the exercise of any NQSO or a disqualifying disposition (within the
meaning of Section 422 of the Code) of shares acquired upon exercise of an
ISO, there shall be payable by the Company or a subsidiary any amount for
income tax withholding, in the Committee's discretion, either the participant
shall pay such amount to the Company or such subsidiary, or the amount of
shares of Common Stock delivered by the Company to the participant will be
appropriately reduced, to reimburse the Company or such subsidiary for such
payment.
The Company or any of its subsidiaries will have the right to withhold the
amount of such taxes from any other sums or property due or to become due from
the Company or any of its subsidiaries to the participant upon such terms and
conditions as the Committee shall prescribe. The Company may also defer
issuance of the Common Stock upon exercise of an option until payment by the
participant to the Company of the amount of any such tax. The Committee may
permit participants to satisfy such withholding obligations, in whole or in
part, by electing to have the amount of shares of Common Stock delivered or
deliverable by the Company upon exercise of an option appropriately reduced,
or by electing to tender shares of Common Stock back to the Company subsequent
to exercise of an option to reimburse the Company for such income tax
withholding, subject to such rules and regulations, if any, as the Committee
may adopt. The Committee may make such other arrangements with respect to
income tax withholding as it shall determine.
Section 162(m) of the Code precludes a publicly held corporation from
claiming a compensation deduction for compensation in excess of $1 million
paid to the chief executive officer or any of the four most highly compensated
officers other than the chief executive officer required to be shown in the
Summary Compensation Table. This limitation does not apply, however, to
"qualified performance-based compensation." In accordance with the "qualified
performance-based compensation" requirements of Section 162(m) of the Code,
options granted under the 1994 Plan must have an exercise price equal at least
to fair market value at the date of grant and the 1994 Plan limits the number
of shares that may be the subject of awards granted to any employee during any
calendar year. However, because the Compensation Committee members are
affiliated with the Company's principal stockholders and those stockholders
have reportable related-party transactions with the Company, compensation from
the exercise of options may not qualify as "qualified performance-based
compensation" for purposes of Section 162(m) of the Code.
If there is an acceleration of the exercisability of Options upon a change
of ownership or control of the Company or a change in the ownership of a
substantial portion of the assets of the Company (within the meaning of
Section 280G of the Code), all or a portion of the income realized by the
participant (from the exercise of options and from any other payments made to
the participant by the Company) may constitute "excess parachute payments"
under Section 280G. The participant receiving excess parachute payments incurs
an excise tax of 20% of the amount of the payments in excess of the employee's
average annual compensation for the five calendar years preceding the year of
the event causing the acceleration, and the Company is not entitled to a
deduction for such excess amounts.
Option Grants. The following table sets forth, as to Thomas E. Evans, Thomas
E. Hannah, Dennis E. Hiller, Elizabeth R. Philipp, J. Michael Stepp, D.
Michael Weston and Dean C. Gaskins, all current executive officers as a group,
all current directors who are not executive officers as a group and all
employees (including officers) who are not executive officers, as a group, the
options granted by the Company during the fiscal year ended December 25, 1999
and during the period from December 26, 1999 through March 15, 2000:
28
<PAGE>
NEW PLAN BENEFITS
1993 Stock Option Plan
1994 Stock Option Plan
<TABLE>
<CAPTION>
Number of Shares of Number of Shares of
Common Stock Common Stock
Subject to Options Subject to Options
Granted Under the Plans Granted Under the Plans
in the Fiscal Year from December 26, 1999
Name and Position Ended December 25, 1999 to March 15, 2000
----------------- ----------------------- -----------------------
<S> <C> <C>
Thomas E. Evans, Chairman of
the Board and Chief Executive
Officer...................... 1,200,000 0
Thomas E. Hannah, former Chief
Executive Officer............ 0 0
Dennis E. Hiller, President
North American Automotive
Interior Systems............. 100,000 0
Elizabeth R. Philipp, former
Executive Vice President,
General Counsel and
Secretary.................... 0 0
J. Michael Stepp, former
Executive Vice President
Strategic Planning and
Business Development......... 50,000 0
D. Michael Weston, President
European Automotive Interior
Systems...................... 100,000 0
Dean C. Gaskins, President
Automotive Fabrics........... 0 0
All Current Executive Officers
as a Group (8 persons)....... 1,590,000 40,000
All Current Directors who are
not Executive Officers as a
Group (8 persons)............ 110,000 0
All Employees (including
Officers as a Group) (37
persons)..................... 1,999,000 40,000
</TABLE>
The dollar values of such options cannot be determined because they depend
on the market value of the underlying shares on the date of exercise. No
associate of any director, nominee or executive officer has been granted
options under the plans. In addition, no person not named above has received
five percent or more of the options authorized under the plans, in the
aggregate.
Amendment or Termination of the 1994 Plan. The Board of Directors may
terminate or amend the 1994 Plan, or amend any option under the 1994 Plan, at
any time; provided that, (1) no such amendment or revision may increase the
maximum number of shares in the aggregate that are subject to the 1994 Plan
without the approval or ratification of stockholders of the Company, and (2)
no such amendment or revision may change the option price or alter or impair
any option previously granted under the 1994 Plan, in a manner adverse to a
participant, without the consent of such participant.
Management recommends a vote FOR Proposal II.
PROPOSAL III
APPROVAL OF THE COMPANY'S 2000 EMPLOYEE STOCK OPTION PLAN
The Compensation Committee of the Company and the Board of Directors of the
Company have approved the submission of the Company's 2000 Employee Stock
Option Plan ("2000 Plan") for approval at the 2000 annual meeting of
stockholders of the Company.
The vote required for approval of Proposal III is the affirmative vote of
the holders of a majority of the total number of votes cast on the proposal at
the annual meeting of stockholders. Abstentions, withheld votes and broker
non-votes will not be deemed affirmative or negative votes in determining
approval of this proposal, but will be counted in determining the number of
shares of Common Stock present or represented by proxy in
29
<PAGE>
determining whether a quorum is present. The Board does not intend to place
the 2000 Plan into effect unless such approval is obtained at the Meeting, and
such approval is sought, in part, in order to exempt the granting of options
under the 2000 Plan from the provisions of Section 162(m) of the Code and in
order to comply with stockholder approval requirements for securities traded
on the New York Stock Exchange.
SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE 2000 PLAN
Shares Subject to Options. The 2000 Plan authorizes the issuance of up to
6,000,000 shares of Common Stock, par value $0.01 per share, upon the exercise
of incentive stock options ("ISOs") and nonqualified stock options ("NQSOs")
granted to key employees and NQSOs granted to executive consultants of the
Company under the 2000 Plan. No more than 1,000,000 shares may be subject to
options granted to any employee or executive consultant under the 2000 Plan in
any calendar year, with any unused portion thereof carried forward. Unless the
2000 Plan has terminated, shares covered by the unexercised portion of
canceled, expired or otherwise terminated options under the 2000 Plan are
again available for option and sale. Key employees are those active executive
officers or other valuable employees of the Company that are selected by the
Compensation Committee to participate in the 2000 Plan. Executive consultants
are those executive-level consultants of the Company that are selected by the
Compensation Committee to participate in the 2000 Plan. Non-United States
employees may participate in the 2000 Plan, and modifications may be made to
the terms and conditions of awards made under the 2000 Plan to comply with
local laws. No director of the Company who is a managing director, general
partner, limited partner, director, officer or employee of Wasserstein Perella
& Co., Inc. or The Blackstone Group, L.P. or their affiliates will be eligible
to participate in the 2000 Plan. No options may be granted under the 2000 Plan
after February 24, 2010.
Options. In the case of ISOs, the exercise price of an option may not be
less than 100% of the fair market value of a share of Common Stock at the time
of grant (or 110% of such fair market value if the grantee owns more than 10%
of the shares of Common Stock outstanding at the time of grant (a "Ten Percent
Shareholder")). NQSOs issued pursuant to the 2000 Plan will be exercisable at
such price, not less than the fair market value of a share of Common Stock at
the time of grant, as may be fixed by the Compensation Committee. The fair
market value of the Common Stock on March 15, 2000 was $5.0625 per share.
Shares purchased pursuant to the exercise of options must be paid for at the
time of exercise as follows: (i) in cash or by check, bank draft or money
order; (ii) if the shares are traded on a national securities exchange,
through the delivery of instructions to a broker to deliver the purchase
price; or (iii) on other terms acceptable to the Compensation Committee (which
may include payment by transfer of shares owned by the participant for at
least six months or the surrender of options).
The Compensation Committee sets the number of shares, optionees and schedule
of exercisability with regard to each option grant, subject to acceleration in
the event of a Change in Control of the Company (as defined in the 2000 Plan).
No option may be exercisable after the expiration of ten years from the date
of its grant (or five years, in the case of ISOs granted to a Ten Percent
Shareholder). No ISO may be transferred, assigned, pledged or hypothecated in
any way except by will or under applicable laws of descent and distribution.
NQSOs may be transferred to any family member of the participant or
transferred to entities controlled by the participant and/or such family
members for or without consideration.
In consideration of the grant of options, each employee is required to agree
not to engage, without the written consent of the Compensation Committee, in
any Competitive Activity (as defined in the 2000 Plan) during the
participant's employment by the Company, and in the event any options vest,
for a period of one year following termination of employment. Options that
were exercisable upon a participant's termination of employment or consultancy
other than for cause remain exercisable following such termination for a
period of: (i) one year, in the case of death or disability, (ii) 90 days, in
the case of retirement or termination other than for cause and (iii) in all
other instances, 30 days following such termination, in each case subject to
extension by the Compensation Committee. Options that were exercisable upon a
participants' termination of employment or consultancy for cause are canceled
upon such termination. Except as otherwise determined by the Compensation
Committee, options that were not exercisable at the time of a participant's
termination of employment or
30
<PAGE>
consultancy by the Company shall automatically be canceled upon such
termination. The Compensation Committee has the discretion under the 2000 Plan
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.
The 2000 Plan provides for the Compensation Committee to have the right to
make appropriate adjustments in the number and kind of securities receivable
upon the exercise of options or the exercise price in the event of a stock
split, stock dividend, merger, consolidation, reorganization, spinoff, partial
or complete liquidation or other similar changes in the capital structure or
other corporate transactions. The 2000 Plan also gives the Compensation
Committee the option to terminate all outstanding options effective upon the
consummation of a merger or consolidation in which the Company is not the
surviving entity or of any other transaction that results in the acquisition
of substantially all of the Company's outstanding Common Stock by a single
person or entity or by a group of persons and/or entities acting in concert,
or upon the consummation of the sale or transfer of all of the Company's
assets (any such event an "Acquisition Event"), subject to the right of
participants to exercise all outstanding options prior to the effective date
of the Acquisition Event.
As of the date of this Proxy Statement approximately 650 key employees and
no executive consultants are currently eligible to participate in the 2000
Plan. No options have yet been granted under the 2000 Plan.
The purpose of the 2000 Plan is to provide key employees and executive
consultants of the Company and its subsidiaries with an increased incentive to
make contributions to the long-term performance and growth of the Company, to
join the interests of key employees and executive consultants with the
interests of stockholders of the Company and to facilitate attracting and
retaining key employees and executive consultants of the Company. The 2000
Plan, however, could have an "anti-takeover" effect, particularly with regard
to the acceleration of the exercisability of options in connection with a
Change in Control.
Persons deemed to be affiliates of the Company, i.e., persons who directly
or indirectly through one or more intermediaries, control, are controlled by,
or are under common control with, the Company, must resell securities acquired
under the 2000 Plan pursuant to a registration statement under the Securities
Act of 1933, as amended, and the rules and regulations thereunder (the
"Securities Act"), Rule 144 under the Securities Act or an applicable
exemption under the Securities Act.
The Company is the issuer of the securities offered pursuant to the 2000
Plan. The shares of Common Stock of the Company issuable upon exercise of
options granted under the 2000 Plan may be either authorized and unissued or
reacquired shares of Common Stock of the Company. The 2000 Plan is not subject
to any provisions of the Employee Retirement Income Security Act of 1974 and
is not qualified under Section 401(a) of the Code.
Federal Income Tax Consequences. The rules governing the tax treatment of
options and shares acquired upon the exercise of options are quite technical.
Therefore, the description of federal income tax consequences set forth below
is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the tax consequences under applicable state and local income tax laws
may not be the same as under the federal income tax laws.
Under federal income tax law as currently in effect, neither ISOs nor NQSOs
require a participant to recognize income at the time of grant. Upon the
exercise of a NQSO, the participant will recognize ordinary income in an
amount equal to the excess of the fair market value of the Common Stock
received over the aggregate exercise price. Subsequent appreciation or decline
in the value of the shares will generally be treated as capital gain or loss
on the sale or other disposition of the shares. With respect to an ISO, no
income is recognized by the participant in connection with the exercise,
although the excess of the fair market value of the
31
<PAGE>
Common Stock at exercise over the aggregate exercise price results in
alternative minimum taxable income which is used in determining alternative
minimum tax liability of the participant. The participant will be subject to
taxation at the time shares acquired upon the exercise of an ISO are sold or
otherwise disposed of. If the sale occurs at least two years after the date
the ISO was granted and at least one year after the date it was exercised, the
participant generally will recognize capital gain or loss in an amount equal
to the excess of the proceeds of the sale over the aggregate exercise price of
the shares sold. If the participant disposes of such shares within two years
of the date the ISO was granted or within one year of receipt of the shares
pursuant to the exercise of the ISO, the participant will recognize ordinary
income, in an amount equal to the excess of the fair market value of the
shares on the date of the exercise over the exercise price or the gain on
disposition, if lower. The excess, if any, of the amount realized upon
disposition of such shares over the fair market value of the shares on the
date of exercise will be long or short term capital gain, depending upon the
holding period of the shares, providing the participant holds the shares as a
capital asset at the time of disposition. If such disposition of the shares by
the participant within two years of the date of grant of the ISO or one year
of its exercise is a sale or exchange with respect to which a loss (if
sustained) would be recognized by the participant, then the amount which is
includable in the gross income of the participant shall not exceed the excess
(if any) of the amount realized on the sale or exchange over the adjusted
basis of such shares.
The Company's tax consequences will also depend upon whether an option is an
ISO or a NQSO. In the case of a NQSO, the Company will be entitled, subject to
the possible application of Sections 162(m) and 280G of the Code as discussed
below, to a deduction in connection with the participant's exercise in an
amount equal to the income recognized by the participant, provided that the
amount constitutes reasonable compensation. If the Option is an ISO, however,
the Company will not be entitled to a deduction if the participant satisfies
holding period requirements and recognizes capital gain. If those requirements
are not satisfied, the Company will be entitled to a deduction corresponding
to the ordinary income recognized by the participant, subject to the possible
application of Section 162(m) of the Code as discussed below, if the amount
constitutes reasonable compensation.
If upon the exercise of any NQSO or a disqualifying disposition (within the
meaning of Section 422 of the Code) of shares acquired upon exercise of an
ISO, there shall be payable by the Company or a subsidiary any amount for
income tax withholding, in the Committee's discretion, either the participant
shall pay such amount to the Company or such subsidiary, or the amount of
shares of Common Stock delivered by the Company to the participant will be
appropriately reduced, to reimburse the Company or such subsidiary for such
payment.
The Company or any of its subsidiaries will have the right to withhold the
amount of such taxes from any other sums or property due or to become due from
the Company or any of its subsidiaries to the participant upon such terms and
conditions as the Committee shall prescribe. The Company may also defer
issuance of the Common Stock upon exercise of an option until payment by the
participant to the Company of the amount of any such tax. The Committee may
permit participants to satisfy such withholding obligations, in whole or in
part, by electing to have the amount of shares of Common Stock delivered or
deliverable by the Company upon exercise of an option appropriately reduced,
or by electing to tender shares of Common Stock back to the Company subsequent
to exercise of an option to reimburse the Company for such income tax
withholding, subject to such rules and regulations, if any, as the Committee
may adopt. The Committee may make such other arrangements with respect to
income tax withholding as it shall determine.
Section 162(m) of the Code precludes a publicly held corporation from
claiming a compensation deduction for compensation in excess of $1 million
paid to the chief executive officer or any of the four most highly compensated
officers other than the chief executive officer required to be shown in the
Summary Compensation Table. This limitation does not apply, however, to
"qualified performance-based compensation." In accordance with the "qualified
performance based compensation" requirements of Section 162(m) of the Code,
options granted under the 2000 Plan must have an exercise price equal at least
to fair market value at the date of grant and the 2000 Plan limits the number
of shares that may be the subject of awards granted to any employee during any
calendar year. However, because the Compensation Committee members are
affiliated with the Company's principal stockholders and those stockholders
have reportable related-party transactions with the Company,
32
<PAGE>
compensation from the exercise of options may not qualify as "qualified
performance-based compensation" for purposes of Section 162(m) of the Code.
If there is an acceleration of the exercisability of Options upon a change
of ownership or control of the Company or a change in the ownership of a
substantial portion of the assets of the Company (within the meaning of
Section 280G of the Code), all or a portion of the income realized by the
participant (from the exercise of Options and from any other payments made to
the participant by the Company) may constitute "excess parachute payments"
under Section 280G. The participant receiving excess parachute payments incurs
an excise tax of 20% of the amount of the payments in excess of the employee's
average annual compensation for the five calendar years preceding the year of
the event causing the acceleration, and the Company is not entitled to a
deduction for such excess amounts.
Amendment or Termination of the 2000 Plan. The Board of Directors may
terminate or amend the 2000 Plan, or amend any option under the 2000 Plan, at
any time; provided that, (1) no such amendment or revision may increase the
maximum number of shares in the aggregate that are subject to the 2000 Plan
without the approval or ratification of the stockholders of the Company, and
(2) no such amendment or revisions may change the option price or alter or
impair any option previously granted under the 2000 Plan, in a manner adverse
to a participant, without the consent of such participant.
Option Grants. See "Option Grants" in part II of this Proxy Statement for a
description of the options granted under the Company's plans.
Management recommends a vote FOR Proposal III.
RELATIONSHIPS WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP served as independent auditors of the Company for the
fiscal year ended December 25, 1999, and has served as independent auditors of
the Company since the Company's inception in 1988. The Board of Directors has
selected Arthur Andersen LLP to serve as independent auditors of the Company
for the fiscal year ending December 30, 2000. A representative of Arthur
Andersen LLP is expected to be present at the Meeting with the opportunity to
make a statement if he or she desires to do so and to respond to appropriate
questions from stockholders.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for action to be included in
the proxy materials for the Company's Year 2001 Annual Meeting must submit
such proposal so that it is received by the Secretary of the Company not later
than December 6, 2000. Proposals must be in writing and sent via registered,
certified or express mail. Facsimile or other forms of electronic submissions
will not be accepted.
OTHER MATTERS TO COME BEFORE THE MEETING
The federal proxy rules specify what constitutes timely submission for a
stockholder proposal to be included in the Proxy Statement, as discussed above
under "STOCKHOLDER PROPOSALS". If a stockholder desires to bring business
before an annual meeting which is not the subject of a proposal timely
submitted for inclusion in the Proxy Statement, the stockholder must follow
procedures outlined in the Company's bylaws. A copy of these bylaw procedures
is available upon request from the Secretary of the Company, 5755 New King
Court, Troy, Michigan 48098. One of the procedural requirements in the bylaws
is timely notice in writing of the business the stockholder proposes to bring
before the annual meeting. Notice must be received not less than 90 days nor
more than 120 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders (which is between January 1, 2001 and January
31, 2001 for the purposes of the Year 2001 Annual Meeting); provided, however,
that if the annual meeting is called for a date that is not within 30 days
before or after such anniversary
33
<PAGE>
date, notice by the stockholder in order to be timely must be so received not
later than the close of business on the tenth day following the day on which
notice of the date of the annual meeting was mailed or public disclosure was
made, whichever occurs first. It should be noted that those bylaw procedures
govern proper submission of business to be put before an annual meeting and do
not preclude discussion by any stockholder of any business properly brought
before an annual meeting.
For a description of the requirements for recommending director candidates
for consideration to the Nominating Committee, see "Information as to Nominees
and Other Directors--Committees of the Board." If a stockholder wants to
nominate a person for election to the Board of Directors other than a director
nominated by the Nominating Committee, notice of the proposed nomination must
be delivered to or mailed and received by the Secretary of the Company at the
address set forth in the previous paragraph by the time periods set forth in
the previous paragraph in the case of an annual meeting and, in the case of a
special meeting called for the purpose of electing directors, by the close of
business on the tenth day following the day on which public disclosure of the
date of the special meeting was made. The bylaw provision contains other
requirements for notice and a copy thereof is available upon request from the
Secretary of the Company.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the fiscal year ended December
25, 1999, including financial statements and financial statement schedules, is
being sent to the stockholders of the Company as the 1999 Annual Report to
Stockholders. The Company will furnish a copy of any of the exhibits
referenced in the Annual Report on Form 10-K upon the request in writing of a
stockholder for a fee of not more than $.50 per page to cover the cost of
reproduction and mailing. Requests may be directed to: Collins & Aikman
Corporation, 5755 New King Court, Troy, Michigan 48098, Attention: Investor
Relations.
The Annual Report on Form 10-K (and any of the financial statements
contained therein) is not to be considered filed as part of this Proxy
Statement or deemed soliciting material.
OTHER MATTERS
As of the date of mailing this Proxy Statement, the Company has received no
notice of any other matters to be brought by a stockholder before the Meeting.
Accordingly, no other matters may be brought before the Meeting, unless the
Company in its sole discretion waives the advance notice bylaw provision
discussed above or unless the matter is incident to the conduct of the
Meeting. If the Company in its sole discretion waives the advance notice bylaw
provision or there is a matter incident to the conduct of the Meeting and
consequently a matter not described in this Proxy Statement properly comes
before the Meeting, the persons named in the accompanying proxy will vote the
proxy in accordance with their best judgment unless a stockholder, by striking
out the appropriate provision of the proxy, chooses to withhold authority to
vote on such matters.
By Order of the Board of Directors,
/s/ RONALD T. LINDSAY
RONALD T. LINDSAY
Secretary
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY. NO
POSTAGE STAMP IS NECESSARY IF MAILED IN THE UNITED STATES.
34
<PAGE>
PROXY
COLLINS & AIKMAN CORPORATION
This Proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders
to be held on May 1, 2000 and any adjournment or postponement thereof
The undersigned hereby appoints Thomas E. Evans, Bruce R. Barnes and Richard
C. Lappin (the "Agents") as proxies (each with the power to act alone and to
appoint a substitute) and hereby authorizes each of them to represent and to
vote, as designated hereon, all the shares of Common Stock, par value $0.01 per
share, of Collins & Aikman Corporation (the "Company") held of record by the
undersigned at the close of business on March 15, 2000 at the Annual Meeting of
Stockholders of the Company to be held on May 1, 2000 at 11:00 a.m., Eastern
Daylight Savings Time, and at any adjournment or postponement thereof on the
proposals referred to below.
This Proxy, when executed, will be voted in accordance with the
specifications hereon. In the absence of such specifications, this Proxy will
be voted FOR Proposal I and if any nominee shall be unavailable to serve as a
director, this proxy will be voted for the election of such other person or
persons as the Nominating Committee of the Board of Directors or the Company
may select and will be voted FOR Proposals II and III.
The Board of Directors recommends a vote FOR Proposals I, II and III.
The undersigned hereby revokes any proxies heretofore given and directs the
Agents to vote as follows:
1. Proposal I: Election of the following nominees as Directors: Robert C.
Clark, Marc S. Goldberg and Neil P. Simpkins.
[_] FOR all [_] WITHHOLD [_] If you wish to withhold
nominees AUTHORITY (for authority to vote for any
(except as all nominees) nominee(s), write his
indicated) (their) name(s) on the lines
below.
----------------------------------------
----------------------------------------
----------------------------------------
(Continued and to be signed and dated on reverse side)
<PAGE>
(continued from reverse side)
2. Proposal II: A proposal to amend certain provisions of the Company's 1994
Employee Stock Option Plan, primarily to increase the number of shares that may
be issued under the Plan by one million shares.
[_] FOR Proposal II [_] AGAINST Proposal II
[_] ABSTAIN
3. Proposal III: A proposal to approve the Company's 2000 Employee Stock
Option Plan.
[_] FOR Proposal III [_] AGAINST Proposal III
[_] ABSTAIN
In their discretion, the Agents are authorized to vote on any other matters
as may properly come before the meeting or any adjournment or postponement
thereof.
The undersigned hereby
ratifies and confirms all
that these Agents may do
by virtue hereof and
hereby acknowledges
receipt of the notice of
Annual Meeting of
Stockholders and the Proxy
Statement.
Dated: _____________ , 2000
Signature(s)* _____________
*Please sign your name(s)
exactly as if (they)
appear(s) opposite. When
shares are held by joint
owners, all should sign.
When signing as attorney,
executor, administrator,
trustee or guardian,
please give full title as
such. If a corporation,
please sign in full
corporate name by
president or other
authorized officer and
indicate title. If a
partnership, please sign
in partnership name by
authorized person and
indicate title.
Please mark, sign, date Votes should be indicated
and return the Proxy Card (x) in black or blue ink.
promptly using the
enclosed envelope.
<PAGE>
- --------------------------------------------------------------------------------
COLLINS & AIKMAN CORPORATION
1994 EMPLOYEE STOCK OPTION PLAN
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
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. 8
G. [Reserved]. 9
H. Non-Competition and Other Provisions. 9
I. [Reserved]. 9
J. Incentive Stock Option Limitations. 9
VII. Effect of Termination of Relationship 10
A. Death, Disability, Retirement, etc. 10
B. Cause 10
C. Other Termination 10
D. Cancellation of Options 11
VIII.Transferability of Options 11
IX. Rights as a Stockholder 11
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
X. Termination, Amendment and Modification 11
A. General Amendments 11
XI. Use of Proceeds 12
XII. General Provisions 12
A. Right to Terminate Employment 12
B. Purchase for Investment 12
C. Trusts, etc. 12
D. Notices 13
E. Severability of Provisions 13
F. Payment to Minors, Etc. 13
G. Headings and Captions 13
H. Controlling Law 13
I. Section 162(m) Deduction Limitation 13
J. Section 16(b) of the Act 13
XIII.Issuance of Stock Certificates; Legends; Payment of Expenses 14
A. Stock Certificates 14
B. Legends 14
C. Payment of Expenses 14
XIV. Listing of Shares and Related Matters 14
XV. Withholding Taxes 14
Schedule I: 1997 U.K. Executive Stock Option Scheme 16
</TABLE>
ii
<PAGE>
Collins & Aikman Corporation
1994 Employee Stock Option Plan
(As Amended Through June 3, 1999)
I. Purposes of the Plan
--------------------
The purposes of this 1994 Employee Stock Option Plan (as amended
through June 3, 1999 the "Plan") are to enable Collins & Aikman Corporation
(formerly 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 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.
<PAGE>
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, provided however that for the purpose of
determining any compensation under the Plan of a "covered employee" within the
meaning of Section 162(m) of the Code and the regulations relating thereto
("Section 162(m)" which is intended to qualify as "performance-based" within the
meaning of Section 162(m) ("Qualified Compensation") and deciding all matters
related to Qualified Compensation which are required under Section 162(m) to be
decided by "outside directors" (including without limitation making grants and
determining material terms of grants), "Committee" shall mean the Section 162(m)
Committee of the Board. 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 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 (S) 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 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
2
<PAGE>
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.
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. [Reserved]
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
3
<PAGE>
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.
III. Effective Date
--------------
The Plan became effective initially on April 15, 1994 (the "Effective
Date") and was subsequently amended, including without limitation by an
amendment as of June 3, 1999. The amendment to the Plan as of June 3, 1999,
among other things, increased the number of Shares available for issuance under
the Plan from 2,980,534 to 3,980,534, subject to approval of the Plan, as so
amended, by the holders of a majority of the Common Stock (at the time of
approval) within one year after June 3, 1999 or at the year 2000 annual meeting
of the Company, whichever is later. Any Shares issued under the Plan in excess
of 2,980,534 Shares shall be referred to as the "Additional Shares". Grants of
Options by the Committee under the Plan for Additional Shares may be made,
provided that all such grants of Options for Additional Shares shall be subject
to approval of the Plan, as amended through June 3, 1999, by the holders of a
majority of the Common Stock (at the time of approval) within one year after
June 3, 1999 or at the year 2000 annual meeting of the Company, whichever is
later. If the Plan is not so approved by the holders of a majority of the
Common Stock (at the time of approval), all Options for Additional Shares which
have been granted by the Committee shall be null and void. No Options for
Additional Shares may be exercised prior to the approval of the Plan, as amended
through June 3, 1999, by the holders of a 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
4
<PAGE>
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 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
5
<PAGE>
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 3,980,534. 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) and VI(A),
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 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
6
<PAGE>
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 1,500,000. 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.
Any Incentive Stock Option shall be granted within ten years of the date the
Plan is adopted by the Board or approved by shareholders, whichever is earlier.
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 or 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:
7
<PAGE>
(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 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:
8
<PAGE>
(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. [Reserved]
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. [Reserved]
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
9
<PAGE>
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.
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.
10
<PAGE>
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 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. Transferability of Options
--------------------------
Except as provided in this Article VIII, each Option granted hereunder
shall by its terms not be assignable or transferable other than by will or the
laws of descent and distribution and may be exercised, during the Participant's
lifetime, only by the Participant. A Non-Qualified Stock Option may be
transferred to any family member (as hereinafter defined ) of the Participant or
transferred to entities controlled by the Participant and/or such family members
for or without consideration. For purposes of this Article VIII, "family
member" shall mean any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the Participant's household
(other than a tenant or employee), a trust in which these persons have more than
fifty percent of the beneficial interest, a foundation in which these persons
(or the Participant) control the management of assets, and any other entity in
which these persons (or the Participant) own more than fifty percent of the
voting interests.
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. 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
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 require the approval of the
stockholders of the Company for listing of the Shares issuable upon exercise of
the Options on the New York Stock Exchange.
11
<PAGE>
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.
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 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:
12
<PAGE>
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 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.
13
<PAGE>
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.
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 include the following:
the Withholding Election shall be subject to the approval of the full Board of
Directors of the Company or a committee of the Board which consists of "non-
employee directors" within the meaning of Rule 16b-3 promulgated under Section
16(b) of the Exchange Act.
14
<PAGE>
SCHEDULE I
----------
COLLINS & AIKMAN CORPORATION 1997 U.K. EXECUTIVE STOCK OPTION SCHEME -
Schedule to the Collins & Aikman Corporation 1994 Employee Stock Option
Plan
1. Definitions and Interpretation
(a) Unless the context otherwise requires, all expressions defined in the
U.S. Plan shall have the same meaning in the U.K. Scheme, save that:-
"Fair Market Value" has the meaning set forth in sub-rule 53;
"Option" includes an Approved Stock Option as defined in sub-rule 12;
"Related Person or Related Persons" includes "Subsidiary" as defined in
sub-rule 1.(2).
(b) In addition, the following expressions shall have the following
meanings in the U.K. Scheme unless the context otherwise requires:
"Approved Stock Option" means an Option granted in accordance with the U.K.
Scheme;
"the Inland Revenue" means the United Kingdom's Commissioners of Inland
Revenue;
"Participating Company" means the Company or a Subsidiary of the Company;
"the U.K. Scheme" means the Collins & Aikman Corporation 1997 U.K.
Executive Stock Option Scheme as herein set out but subject to any
alterations or additions made under Rule 8 below;
"Schedule 9" means Schedule 9 to the Taxes Act;
"Subsidiary" shall mean a body corporate, whether now or hereafter existing
which is:
(i) a subsidiary of the Company within the meaning of Section 736 of
the United Kingdom Companies Act 1985; and is
(ii) under the control of the Company within the meaning of Section
840 of the Taxes Act.
"the Taxes Act" means the United Kingdom's Income and Corporation Taxes Act
1988;
"the U.S. Plan" means the Collins & Aikman Corporation (formerly Collins &
Aikman Holdings Corporation) 1994 Employee Stock Option Plan.
(a) Expressions not otherwise defined herein have the same meanings as they
have in Schedule 9.
15
<PAGE>
(b) Any reference herein to any enactment includes a reference to that
enactment as from time to time modified, extended or re-enacted.
2. Applicability of the U.S. Plan
Save as hereinafter specified, all the terms and provisions of the U.S.
Plan shall apply mutatis mutandis to the grant of Approved Stock Options
under the U.K. Scheme.
3. Eligibility
(a) Subject to sub-rule (3) below, a person is eligible to be granted an
Approved Stock Option if (and only if) he is a full-time director or
qualifying employee of a Participating Company.
(b) For the purposes of sub-rule (1) above:-
(i) a person shall be treated as a full-time director of a
Participating Company if he is obliged to devote to the
performance of the duties of his office or employment with that
and any other Participating Company not less than 25 hours a week
(excluding meal breaks);
(ii) a qualifying employee, in relation to a Participating Company, is
an employee of the Participating Company (other than one who is a
director of a Participating Company).
(c) A person is not eligible to be granted an Option under the U.K. Scheme
at any time when he is not eligible to participate in the U.K. Scheme
by virtue of paragraph 8 of Schedule 9.
4. Grant of Options
(a) Subject to sub-rule (3) below, the Committee may grant to any person
who is eligible to be granted an Option under the U.K. Scheme an
Approved Stock Option to acquire Shares which satisfy the requirements
of paragraphs 10 to 14 of Schedule 9, upon the terms set out in the
U.K. Scheme and upon such other objective terms as the Committee may
reasonably specify (provided that no such other terms may be so
specified at a time when the U.K. Scheme is approved by the Inland
Revenue under Schedule 9 without the prior approval of the Inland
Revenue).
(b) The grant of an Approved Stock Option shall be subject to obtaining any
approval or consent which may be required under the provisions of any
regulation or enactment.
(c) No person shall be granted Approved Stock Options under the U.K. Scheme
which would, at the time they are granted, cause the aggregate market
value of the Shares which he may acquire in pursuance of options
granted to him under the U.K. Scheme or under any other share option
scheme, not being a savings-related share option scheme, approved under
Schedule 9 and established by the Company or by any associated company
of the Corporation (and not exercised) to exceed
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or further exceed (Pounds)30,000. Any Stock Options granted in excess
of this amount shall be granted under the unapproved Collins & Aikman
Corporation 1994 Employee Stock Option Plan.
(d) For the purposes of sub-rule (3) above:-
(i) in the case of an Option granted under the U.K. Scheme the
aggregate market value of the shares shall be calculated as on the
day by reference to which the price at which Shares may be
acquired by the exercise thereof is determined as mentioned in
Rule 5(2) below;
(ii) in the case of an Option granted under any other approved scheme,
as at the time when it was granted or, in a case where an
agreement relating to the shares has been made under paragraph 29
of Schedule 9, such earlier time or times as may be provided in
the agreement; and
(iii) In the case of any other Option, the aggregate fair market
value of shares shall be calculated as on the day or days by
reference to which the price at which shares may be acquired by
the exercise hereof was determined.
(e) Unless otherwise agreed with the Inland Revenue, the United States
dollar exchange rate for pounds sterling for the purposes of
calculating the limit in sub-rule (3) above shall be the noon buying
rate in the City of London on the day by reference to which the price
at which Shares may be acquired on the exercise of the Option is
determined as mentioned in Rule 5(2) below.
(f) Article V (A) of the U.S Plan shall not apply to the grant of Approved
Stock Options under the U.K. Scheme and options under the U.K. Scheme
shall not be granted, or adjustments made to them which would create an
entitlement to a fraction of a share.
5. Exercise Price and Consideration
(a) Shares shall be issued to the Optionee pursuant to the exercise of an
Option only upon receipt by the Company from the Optionee of payment in
full in cash. The provisions of Article VI (F) of the U.S. Plan
permitting the purchase of Shares on exercise by means other than the
payment of cash shall not apply to the grant of Approved Stock Options
under the U.K. Scheme.
(b) The price per Share under each Approved Stock Option granted by the
Committee shall be such price as is determined by the Committee before
the grant thereof, provided that it shall not be less than 100% of the
Fair Market Value per Share on the Option Grant Date (or such other
dealing day as may be agreed with the Inland Revenue).
(c) The Fair Market Value per Share on any day shall be determined as
follows:-
(i) if shares of the same class as the Shares are quoted on the New
York Stock Exchange, the Fair Market Value per Share shall be the
average between the
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highest and lowest quoted selling price per Share in the New York
Stock Exchange Composite Transactions Tape on that day (and if
there shall be no sale of Shares reported on such date, the Fair
Market Value shall be deemed equal to the average between the
highest and lowest sale price of a Share on such Composite Tape
for the last preceding date on which sales of Shares were
reported);
(ii) if paragraph (a) above does not apply, the Fair Market Value
shall be equal to the higher of (i) market value (within the
meaning of Part VIII of the United Kingdom's Capital Gains Tax
Act 1992) of Shares, as agreed in advance for the purposes of the
U.K. Scheme with the Shares Valuation Division of the Inland
Revenue, on that day; and (ii) Fair Market Value in accordance
with the definition set out in the U.S. Plan.
6. Exercise of Option
(a) A person is not eligible to exercise an Approved Stock Option granted
under the U.K. Scheme at any time when he is not eligible to
participate in the U.K. Scheme by virtue of paragraph 8 of Schedule 9.
(b) The provisions of Article VI (D) of the U.S. Plan which allows the
Committee to accelerate the exercise of options which have not yet
vested shall not apply to the grant of Approved Stock Options under the
U.K. Scheme.
(c) For the avoidance of doubt Article VI (I) of the U.S. Plan is no longer
in effect and therefore does not apply to the grant of Approved Stock
Options under the U.K. Scheme.
(d) Article VII of the U.S. Plan shall apply in respect of Approved Stock
Options granted under the UK Scheme, save that Approved Stock Options
granted under the U.K. Scheme may not be exercised more than 12 months
following the death of a Participant.
7. Adjustments upon Changes in Capitalization or Merger
(a) Article V(C) of the U.S. Plan shall apply to Approved Stock Options
granted under the U.K. Scheme in respect of a variation of capital of
the Company only, save that no adjustment under Article V(C) shall be
made to an Approved Stock Option at a time when the UK Scheme is
approved by the Inland Revenue under Schedule 9 without the prior
approval of the Inland Revenue.
(b) If any company ("the acquiring company") obtains control of the Company
as a result of making -
(i) a general offer to acquire the whole of the Common Stock of the
Company which is made on a condition such that if it is satisfied
the person making the offer will have control of the Company, or
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(ii) a general offer to acquire all the shares in the Company which
are of the same class as the Shares which may be acquired by the
exercise of Options granted under the U.K. Scheme,
any Optionee may at any time within the appropriate period (which
expression shall be construed in accordance with paragraph 15(2) of
Schedule 9), by agreement with the acquiring company, release any Option
granted under the U.K. Scheme which has not lapsed ("the old option") in
consideration of the grant to him of an option ("the new option") which
(for the purposes of that paragraph) is equivalent to the old option but
relates to shares in a different company (whether the acquiring company
itself or some other company falling within paragraph 10(b) or (c) of
Schedule 9).
(c) The new option shall not be regarded for the purposes of sub-rule (2)
above as equivalent to the old option unless the conditions set out in
paragraph 15(3) of Schedule 9 are satisfied, but so that the
provisions of the U.K. Scheme shall for this purpose be construed as
if:-
(i) the new option were an Option granted under the U.K. Scheme at the
same time as the old option;
(ii) except for the purposes of the definitions of "Participating
Company" and "Subsidiary" in Rule 1 above and the references to
"the Committee" in Rule 4(1) above, the reference to Collins &
Aikman Corporation in the definition of "Company" in Article II
of the U.S. Plan were a reference to the different company
mentioned in sub-rule (2) above.
8. Amendment and Termination of the U.K. Scheme
(a) The provisions of Article X of the U.S. Plan shall apply mutatis
mutandis to the U.K. Scheme, save that if an amendment is made to the
U.K. Scheme or to the terms of an Approved Stock Option at a time when
the U.K. Scheme is approved by the Inland Revenue under Schedule 9, the
approval will not thereafter have effect unless the Inland Revenue have
approved the alteration or addition.
(b) As soon as reasonably practicable after making any amendment to the
U.K. Scheme under sub-rule (1) above, the Committee shall give notice
in writing thereof to any Optionee affected thereby and, if the U.K.
Scheme is then approved by the Inland Revenue under Schedule 9, to the
Inland Revenue.
(c) In accordance with the Committees' powers under Article IV of the US
Plan, the Committee shall if it deems necessary delegate authority to
any one or more of the officers of the Corporation to be responsible
for the administration of the U.K. Scheme.
9. Miscellaneous
(a) Within thirty days after an Option has been exercised by any person,
the Committee on
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behalf of the Company shall allot to him or, as appropriate, procure
the transfer to him of the number of Shares in respect of which the
Option has been exercised.
(b) All Shares allotted under the U.K. Scheme shall rank pari passu in all
respect with the Shares of the same class for the time being in issue
save as regards any rights attaching to such shares by reference to a
record date prior to the date of the allotment.
(c) For the avoidance of doubt, it is hereby confirmed that Awards of
Incentive Stock Options may not be made under the U.K. Scheme.
CLIFFORD CHANCE
200 Aldersgate Street
LONDON
EC1A 4JJ
Tel. 071 600 0000
Fax. 071 600 5555
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================================================================================
COLLINS & AIKMAN CORPORATION
2000 EMPLOYEE STOCK OPTION PLAN
================================================================================
As Adopted January 1, 2000
<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.............................................. 8
G. [Reserved]....................................................... 9
H. Non-Competition and Other Provisions............................. 9
I. [Reserved]....................................................... 9
J. Incentive Stock Option Limitations............................... 9
VII. EFFECT OF TERMINATION OF RELATIONSHIP.................................. 10
A. Death, Disability, Retirement, etc............................... 10
B. Cause............................................................ 10
C. Other Termination................................................ 11
D. Cancellation of Options.......................................... 11
VIII. TRANSFERABILITY OF OPTIONS....................................... 11
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IX. RIGHTS AS A STOCKHOLDER.......................................... 11
X. TERMINATION, AMENDMENT AND MODIFICATION.......................... 11
A. General Amendments............................................... 11
XI. USE OF PROCEEDS.................................................. 12
XII. GENERAL PROVISIONS..................................................... 12
A. Right to Terminate Employment ................................... 12
B. Purchase for Investment.......................................... 12
C. Trusts, etc...................................................... 12
D. Notices.......................................................... 13
E. Severability of Provisions....................................... 13
F. Payment to Minors, Etc........................................... 13
G. Headings and Captions............................................ 13
H. Controlling Law.................................................. 13
I. Section 162(m) Deduction Limitation.............................. 13
J. Section 16(b) of the Act......................................... 14
XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES 14
A. Stock Certificates............................................... 14
B. Legends.......................................................... 14
C. Payment of Expenses.............................................. 14
XIV. LISTING OF SHARES AND RELATED MATTERS.................................. 14
XV. WITHHOLDING TAXES...................................................... 14
Schedule I. 2000 U.K. EXECUTIVE STOCK OPTION SCHEME .................... 16
ii
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Collins & Aikman Corporation
2000 Employee Stock Option Plan
(Adopted January 1, 2000)
I. PURPOSES OF THE PLAN
The purposes of this 2000 Employee Stock Option Plan are to enable
Collins & Aikman Corporation (formerly 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 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.
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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, provided however that for the purpose
of determining any compensation under the Plan of a "covered employee", within
the meaning of Section 162(m) of the Code and the regulations relating thereto
("Section 162(m)"), which is intended to qualify as "performance-based" within
the meaning of Section 162(m) ("Qualified Compensation") and deciding all
matters related to Qualified Compensation which are required under Section
162(m) to be decided by "outside directors" (including without limitation making
grants and determining material terms of grants), "Committee" shall mean the
Section 162(m) Committee of the Board. 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 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 ss. 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 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
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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.
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. [Reserved]
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.
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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.
III. EFFECTIVE DATE
The Plan became effective on January 1, 2000 (the "Effective Date").
Grants of Options by the Committee under the Plan may be made, provided that all
such grants of Options shall be subject to approval of the Plan, by the holders
of a majority of the Common Stock (at the time of approval) . If the Plan is not
so approved by the holders of a 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
holders of a 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
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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 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.
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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 on an annual basis, at the sole
discretion of the Committee, either from authorized but unissued Shares or from
Shares reacquired by the 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 6,000,000. 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) and VI(A),
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 the 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 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
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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. 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. Any Incentive Stock
Option shall be granted within ten years of the date the Plan is adopted by the
Board or approved by shareholders, whichever is earlier. 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 or 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 V above and 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:
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(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 the 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 and (z) individuals who were members of the
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).
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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;
(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 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. [Reserved]
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. [Reserved]
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
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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 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.
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
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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 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. TRANSFERABILITY OF OPTIONS
Except as provided in this Article VIII, each Option granted
hereunder shall by its terms not be assignable or transferable other than by
will or the laws of descent and distribution and may be exercised, during the
Participant's lifetime, only by the Participant. A Non-Qualified Stock Option
may be transferred to any family member (as hereinafter defined) of the
Participant or transferred to entities controlled by the Participant and/or such
family members for or without consideration. For purposes of this Article VIII,
"family member" shall mean any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in law, or sister-in-law,
including adoptive relationships, any person sharing the Participant's household
(other than a tenant or employee), a trust in which these persons have more than
fifty percent of the beneficial interest, a foundation in which these persons
(or the Participant) control the management of assets, and any other entity in
which these persons (or the Participant) own more than fifty percent of the
voting interests.
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. At any time 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 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 require the
approval of the stockholders of the Company for
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listing of the Shares issuable upon exercise of the Options on the New York
Stock Exchange.
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.
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 exemption.
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 the 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 the Company in connection with the Plan shall continue to be part
of the general funds of the Company, and no individual or entity other than the
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 the Company pursuant to the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Company.
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D. Notices. Any notice to the Company required by or in
respect of this Plan will be addressed to the Company at 5755 New King Court,
Troy, MI 48098, Attention: Sr. 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 (248) 824-1613, Attention:
Sr. 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 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 Act involving shares of
Common Stock are intended to comply with all exemptive conditions under Rule
16b-3 promulgated under Section 16(b) of the Act. The Committee may
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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 the Company or a book entry shall be made by the 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 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 Act. To the extent necessary under then current law, such
conditions
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shall include the following: the Withholding Election shall be subject to the
approval of the full Board of Directors of the Company or a committee of the
Board which consists of "non-employee directors" within the meaning of Rule
16b-3 promulgated under Section 16(b) of 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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SCHEDULE I
COLLINS & AIKMAN CORPORATION 2000 U.K. EXECUTIVE STOCK OPTION SCHEME -
SCHEDULE TO THE COLLINS & AIKMAN CORPORATION 1994 EMPLOYEE STOCK OPTION
PLAN
1. DEFINITIONS AND INTERPRETATION
(a) Unless the context otherwise requires, all expressions defined in
the U.S. Plan shall have the same meaning in the U.K. Scheme,
save that:-
"Fair Market Value" has the meaning set forth in sub-rule 5.(c);
"Option" includes an Approved Stock Option as defined in sub-rule
1.(b);
"Related Person or Related Persons" includes "Subsidiary" as defined in
sub-rule 1.(b).
(b) In addition, the following expressions shall have the following
meanings in the U.K. Scheme unless the context otherwise
requires:
"Approved Stock Option" means an Option granted in accordance with the
U.K. Scheme;
"the Inland Revenue" means the United Kingdom's Commissioners of Inland
Revenue;
"Participating Company" means the Company or a Subsidiary of the
Company;
"the U.K. Scheme" means the Collins & Aikman Corporation 2000 U.K.
Executive Stock Option Scheme as herein set out but subject to any
alterations or additions made under Rule 8 below;
"Schedule 9" means Schedule 9 to the Taxes Act;
"Subsidiary" shall mean a body corporate, whether now or hereafter
existing which is:
(i) a subsidiary of the Company within the meaning of Section
736 of the United Kingdom Companies Act 1985; and is
(ii) under the control of the Company within the meaning of
Section 840 of the Taxes Act.
"the Taxes Act" means the United Kingdom's Income and Corporation Taxes
Act 1988;
"the U.S. Plan" means the Collins & Aikman Corporation (formerly
Collins & Aikman Holdings Corporation) 2000 Employee Stock Option Plan.
(a) Expressions not otherwise defined herein have the same meanings
as they have in Schedule 9.
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(b) Any reference herein to any enactment includes a reference to
that enactment as from time to time modified, extended or
re-enacted.
2. APPLICABILITY OF THE U.S. PLAN
Save as hereinafter specified, all the terms and provisions of the U.S.
Plan shall apply mutatis mutandis to the grant of Approved Stock
Options under the U.K. Scheme.
3. ELIGIBILITY
(a) Subject to sub-rule (b) below, a person is eligible to be
granted an Approved Stock Option if (and only if) he is a
full-time director or qualifying employee of a Participating
Company.
(b) For the purposes of sub-rule (a) above:-
(i) a person shall be treated as a full-time director of
a Participating Company if he is obliged to devote to
the performance of the duties of his office or
employment with that and any other Participating
Company not less than 25 hours a week (excluding meal
breaks);
(ii) a qualifying employee, in relation to a Participating
Company, is an employee of the Participating Company
(other than one who is a director of a Participating
Company).
(c) A person is not eligible to be granted an Option under the
U.K. Scheme at any time when he is not eligible to participate
in the U.K. Scheme by virtue of paragraph 8 of Schedule 9.
4. GRANT OF OPTIONS
(a) Subject to sub-rule (c) below, the Committee may grant to any
person who is eligible to be granted an Option under the U.K.
Scheme an Approved Stock Option to acquire Shares which
satisfy the requirements of paragraphs 10 to 14 of Schedule 9,
upon the terms set out in the U.K. Scheme and upon such other
objective terms as the Committee may reasonably specify
(provided that no such other terms may be so specified at a
time when the U.K. Scheme is approved by the Inland Revenue
under Schedule 9 without the prior approval of the Inland
Revenue).
(b) The grant of an Approved Stock Option shall be subject to
obtaining any approval or consent which may be required under
the provisions of any regulation or enactment.
(c) No person shall be granted Approved Stock Options under the
U.K. Scheme which would, at the time they are granted, cause
the aggregate market value of the Shares which he may acquire
in pursuance of options granted to him under the U.K. Scheme
or under any other share option scheme, not being a
savings-related share option scheme, approved under Schedule 9
and established by the Company or by any
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associated company of the Corporation (and not exercised) to
exceed or further exceed (pound)30,000. Any Stock Options
granted in excess of this amount sHall be granted under the
unapproved Collins & Aikman Corporation 1994 Employee Stock
Option Plan.
(d) For the purposes of sub-rule (c) above:
(i) in the case of an Option granted under the U.K.
Scheme the aggregate market value of the shares shall
be calculated as on the day by reference to which the
price at which Shares may be acquired by the exercise
thereof is determined as mentioned in Rule 5(e)
below;
(ii) in the case of an Option granted under any other
approved scheme, as at the time when it was granted
or, in a case where an agreement relating to the
shares has been made under paragraph 29 of Schedule
9, such earlier time or times as may be provided in
the agreement; and
(iii) In the case of any other Option, the aggregate fair
market value of shares shall be calculated as on the
day or days by reference to which the price at which
shares may be acquired by the exercise hereof was
determined.
(e) Unless otherwise agreed with the Inland Revenue, the United
States dollar exchange rate for pounds sterling for the
purposes of calculating the limit in sub-rule (d) above shall
be the noon buying rate in the City of London on the day by
reference to which the price at which Shares may be acquired
on the exercise of the Option is determined as mentioned in
Rule 5 below.
(f) Article V (A) of the U.S Plan shall not apply to the grant of
Approved Stock Options under the U.K. Scheme and options under
the U.K. Scheme shall not be granted, or adjustments made to
them which would create an entitlement to a fraction of a
share.
5. EXERCISE PRICE AND CONSIDERATION
(a) Shares shall be issued to the Optionee pursuant to the
exercise of an Option only upon receipt by the Company from
the Optionee of payment in full in cash. The provisions of
Article VI (F) of the U.S. Plan permitting the purchase of
Shares on exercise by means other than the payment of cash
shall not apply to the grant of Approved Stock Options under
the U.K. Scheme.
(b) The price per Share under each Approved Stock Option granted
by the Committee shall be such price as is determined by the
Committee before the grant thereof, provided that it shall not
be less than 100% of the Fair Market Value per Share on the
Option Grant Date (or such other dealing day as may be agreed
with the Inland Revenue).
(c) The Fair Market Value per Share on any day shall be determined
as follows:
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(i) if shares of the same class as the Shares are quoted
on the New York Stock Exchange, the Fair Market Value
per Share shall be the average between the highest
and lowest quoted selling price per Share in the New
York Stock Exchange Composite Transactions Tape on
that day (and if there shall be no sale of Shares
reported on such date, the Fair Market Value shall be
deemed equal to the average between the highest and
lowest sale price of a Share on such Composite Tape
for the last preceding date on which sales of Shares
were reported);
(ii) if paragraph (a) above does not apply, the Fair
Market Value shall be equal to the higher of (i)
market value (within the meaning of Part VIII of the
United Kingdom's Capital Gains Tax Act 1992) of
Shares, as agreed in advance for the purposes of the
U.K. Scheme with the Shares Valuation Division of the
Inland Revenue, on that day; and (ii) Fair Market
Value in accordance with the definition set out in
the U.S. Plan.
6. EXERCISE OF OPTION
(a) A person is not eligible to exercise an Approved Stock Option
granted under the U.K. Scheme at any time when he is not
eligible to participate in the U.K. Scheme by virtue of
paragraph 8 of Schedule 9.
(b) The provisions of Article VI (D) of the U.S. Plan which allows
the Committee to accelerate the exercise of options which have
not yet vested shall not apply to the grant of Approved Stock
Options under the U.K. Scheme.
(c) For the avoidance of doubt Article VI (I) of the U.S. Plan is
no longer in effect and therefore does not apply to the grant
of Approved Stock Options under the U.K. Scheme.
(d) Article VII of the U.S. Plan shall apply in respect of
Approved Stock Options granted under the UK Scheme, save that
Approved Stock Options granted under the U.K. Scheme may not
be exercised more than 12 months following the death of a
Participant.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER
(a) Article V(C) of the U.S. Plan shall apply to Approved Stock
Options granted under the U.K. Scheme in respect of a
variation of capital of the Company only, save that no
adjustment under Article V(C) shall be made to an Approved
Stock Option at a time when the UK Scheme is approved by the
Inland Revenue under Schedule 9 without the prior approval of
the Inland Revenue.
(b) If any company ("the acquiring company") obtains control of
the Company as a result of making -
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(i) a general offer to acquire the whole of the Common
Stock of the Company which is made on a condition
such that if it is satisfied the person making the
offer will have control of the Company, or
(ii) a general offer to acquire all the shares in the
Company which are of the same class as the Shares
which may be acquired by the exercise of Options
granted under the U.K. Scheme,
any Optionee may at any time within the appropriate period
(which expression shall be construed in accordance with
paragraph 15(2) of Schedule 9), by agreement with the
acquiring company, release any Option granted under the U.K.
Scheme which has not lapsed ("the old option") in
consideration of the grant to him of an option ("the new
option") which (for the purposes of that paragraph) is
equivalent to the old option but relates to shares in a
different company (whether the acquiring company itself or
some other company falling within paragraph 10(b) or (c) of
Schedule 9).
(c) The new option shall not be regarded for the purposes of
sub-rule (2) above as equivalent to the old option unless the
conditions set out in paragraph 15(3) of Schedule 9 are
satisfied, but so that the provisions of the U.K. Scheme shall
for this purpose be construed as if:-
(i) the new option were an Option granted under the U.K.
Scheme at the same time as the old option;
(ii) except for the purposes of the definitions of
"Participating Company" and "Subsidiary" in Rule 1
above and the references to "the Committee" in Rule
4(1) above, the reference to Collins & Aikman
Corporation in the definition of "Company" in Article
II of the U.S. Plan were a reference to the different
company mentioned in sub-rule (2) above.
8. AMENDMENT AND TERMINATION OF THE U.K. SCHEME
(a) The provisions of Article X of the U.S. Plan shall apply
mutatis mutandis to the U.K. Scheme, save that if an amendment
is made to the U.K. Scheme or to the terms of an Approved
Stock Option at a time when the U.K. Scheme is approved by the
Inland Revenue under Schedule 9, the approval will not
thereafter have effect unless the Inland Revenue have approved
the alteration or addition.
(b) As soon as reasonably practicable after making any amendment
to the U.K. Scheme under sub-rule 8(a) above, the Committee
shall give notice in writing thereof to any Optionee affected
thereby and, if the U.K. Scheme is then approved by the Inland
Revenue under Schedule 9, to the Inland Revenue.
(c) In accordance with the Committees' powers under Article IV of
the US Plan, the Committee shall if it deems necessary
delegate authority to any one or more of the officers of the
Corporation to be responsible for the administration of the
U.K. Scheme.
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9. MISCELLANEOUS
(a) Within thirty days after an Option has been exercised by any
person, the Committee on behalf of the Company shall allot to
him or, as appropriate, procure the transfer to him of the
number of Shares in respect of which the Option has been
exercised.
(b) All Shares allotted under the U.K. Scheme shall rank pari
passu in all respect with the Shares of the same class for the
time being in issue save as regards any rights attaching to
such shares by reference to a record date prior to the date of
the allotment.
(c) For the avoidance of doubt, it is hereby confirmed that Awards
of Incentive Stock Options may not be made under the U.K.
Scheme.
CLIFFORD CHANCE
200 Aldersgate Street
LONDON
EC1A 4JJ
Tel. 071 600 0000
Fax. 071 600 5555
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