Employment Agreement - Collins & Aikman Products Co. and Dennis E. Hiller
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of January 20, 1999, by and between COLLINS & AIKMAN PRODUCTS CO., a Delaware
corporation (the "Company"), and DENNIS E. HILLER ("Employee").
W I T N E S S E T H
WHEREAS, Employee is currently employed by the Company; and
WHEREAS, the Company wishes to retain Employee's services by providing
Employee the compensation and benefits set forth in this Agreement.
NOW, THEREFORE, in consideration of Employee's continued employment and the
mutual agreements contained herein, the parties agree as follows:
1. Term of Employment. The Company hereby agrees to employ Employee, and
Employee hereby accepts employment, for a period of three (3) years, commencing
January 20, 1999 and ending January 19, 2002, subject to the terms and
conditions of this Agreement.
2. Position of Employment. During the term of this Agreement, Employee
shall be employed in the position of President - Collins & Aikman North American
Interior Systems Group based initially in Troy, Michigan, and shall perform such
services for the Company and its subsidiaries as may be assigned to him from
time to time by the Board of Directors of the Company. Employee shall devote his
full time and attention to the affairs of the Company and his duties in such
position.
3. Compensation.
(a) Base Salary. The Company shall pay to Employee base salary at an annual
rate of not less than $400,000 during the term of his employment hereunder. Such
amount shall be reviewed annually by the Board of Directors of the Company or an
appropriate committee thereof (the Company's Board of Directors or such
committee being referred to herein as the "Compensation Board") and may be
increased in the sole discretion of the Compensation Board.
(b) Bonus Plans. During the term of Employee's employment hereunder,
Employee shall be eligible to participate in the Company's annual Executive
Incentive Compensation Plan (the "EIC Plan") in accordance with the applicable
provisions of the EIC Plan. The standard bonus for Employee under the EIC Plan
initially shall be fifty percent (50%) of Employee's base salary and shall be
reviewed by the Compensation Board from time-to-time during the term of
Employee's employment hereunder. In no event shall Employee receive a cash bonus
of less than $200,000 for Employee's participation in the EIC Plan during 1999.
(c) Stock Options. Employee shall be eligible to participate in the Collins
& Aikman Corporation 1994 Employee Stock Option Plan (the "Option Plan") and
shall be granted the
<PAGE>
option to purchase up to 100,000 shares of the Common Stock of Collins & Aikman
Corporation, in accordance with the applicable terms and conditions of the
Option Plan and an Option Agreement between Collins & Aikman Corporation and
Employee to be entered into, dated and effective as of the date of this
Agreement. The option price for all such shares shall be the closing price of
Collins & Aikman Corporation shares on the New York Stock Exchange as of January
20, 1999. Subject to the terms and conditions of the Option Plan and the Option
Agreement, the option of Employee to purchase up to the 100,000 shares shall
vest as follows:
--------------------------------------------------------------------------------
Total Number of
Vesting Date Shares Vested Percentage Vested
--------------------------------------------------------------------------------
January 19, 2000 33,334 33-1/3%
--------------------------------------------------------------------------------
January 19, 2001 66,667 66-2/3%
--------------------------------------------------------------------------------
January 19, 2002 100,000 100%
--------------------------------------------------------------------------------
4. Benefits and Perquisites.
(a) General. Employee shall be entitled to such fringe benefits and
perquisites, and to participate in such pension, profit sharing and benefit
plans as are generally made available to executives of the Company during the
term hereof, including major medical, extended medical and disability insurance,
supplemental retirement income plan, group term life insurance and appropriate
annual holidays, sick days and vacation time of four weeks per year. Included in
such benefits to Employee, the Company shall furnish the use of an automobile
subject to applicable Company policies and practice and shall reimburse Employee
for normal gasoline and maintenance charges, subject to proper allocation of
personal use for income tax purposes. The Company also shall pay the monthly
dues and a reasonable initiation fee for membership at a country club in the
Troy, Michigan area of Employee's choice. The Company shall not be liable for
any other charges or fees payable by Employee to such club.
(b) Relocation Expenses. The Company shall reimburse Employee for the
reasonable expenses incurred by Employee in connection with the relocation of
Employee and his family from Davidson, North Carolina to Troy, Michigan, in
accordance with the relocation policy of the Company; provided, however, the
Company shall also pay Employee:
(i) the positive difference (if any) between (A) the appraised fair
market value of Employee's residence in Davidson, North Carolina as
determined by two (2) independent appraisers selected by the Company and
(B) the selling price of Employee's said residence; and
(ii) a one-time relocation allowance of $135,000, payable in a lump
sum payment upon completion of the relocation of Employee and his family to
Troy, Michigan. In addition to the payment of the relocation allowance as
provided in this Paragraph 4(b)(ii), the Company shall pay Employee an
additional amount such that after all applicable federal, state and local
income, employment and other taxes on Employee's relocation allowance and
on any additional amount payable in accordance with this sentence, Employee
has received the entire $135,000 relocation allowance on an after-tax
basis.
2
<PAGE>
5. Reimbursement of Expenses. The Company shall reimburse Employee for all
reasonable travel, entertainment and other reasonable business expenses
reasonably incurred by Employee in connection with the performance of his duties
hereunder, provided that Employee furnishes to the Company adequate records or
other evidence respecting such expenditures.
6. Termination of Employment. Employee's employment under this Agreement
may be terminated:
(a) by the Company for Cause, which means: (i) fraud or
misappropriation with respect to the business of the Company or intentional
material damage to the property or business of the Company, (ii) willful
failure by Employee to perform his duties and responsibilities and to carry
out his authority, (iii) willful malfeasance or misfeasance or breach of
fiduciary duty or representation to the Company or its stockholders, (iv)
willful failure to act in accordance with any specific lawful instructions
of a majority of the Board of Directors of the Company, or (v) conviction
of Employee of a felony (which shall be referred to as a "For Cause
Termination");
(b) by the Company for any reason other than a For Cause Termination
(which shall be referred to as a "No Cause Termination");
(c) by Employee for any reason other than a "Constructive Termination"
(as defined below) at any time (which shall be referred to as a "Voluntary
Termination"); or
(d) by Employee upon the occurrence of one or more of the following:
(i) a material reduction in Employee's total compensation and benefits
package, or (ii) an adverse change (in the judgment of Employee) in
Employee's responsibilities, position (including status, office, title,
reporting relationships or working conditions), authority or duties (which
shall be referred to as a "Constructive Termination").
7. Benefits Upon Termination.
(a) Termination as a Result of Voluntary Termination or For Cause
Termination. If Employee's employment under this Agreement is terminated prior
to the expiration of the term of this Agreement as a result of a Voluntary
Termination or a For Cause Termination, the Company shall pay Employee (i) his
unpaid base salary under Paragraph 3(a) accrued to the date on which his
employment terminates (the "Termination Date"), (ii) any accrued but unused
vacation and (iii) all benefits earned by Employee under any employee benefit
plans and programs sponsored by the Company in which Employee participates.
(b) Termination as a Result of No Cause Termination or Constructive
Termination. If Employee's employment under this Agreement is terminated prior
to the expiration of the term of this Agreement as a result of a No Cause
Termination or a Constructive Termination, the Company shall pay to Employee the
following benefits:
3
<PAGE>
(i) Employee's unpaid base salary accrued to the Termination Date and
any accrued but unused vacation;
(ii) a pro rata bonus under the EIC Plan for the current fiscal year
(based on the number of months of such fiscal year preceding the
Termination Date over twelve (12)); and
(ii) Employee's base salary for the greater of (A) twenty-four (24)
months or (B) the remaining term of this Agreement, based on the rate of
base salary in effect immediately preceding the Termination Date.
The amount due to Employee pursuant to 7(b)(iii) above shall be paid, at the
sole discretion of the Compensation Board, either in a lump sum or on a periodic
basis in accordance with the Company's normal pay practice.
In addition, all outstanding stock options granted to Employee under the
Option Plan will immediately vest upon a No Cause Termination or a Constructive
Termination prior to the expiration of the term of this Agreement and will
continue to be fully exercisable until the earlier of ninety (90) days after the
Termination Date or the original expiration date of said options. The Company
shall also cause Employee to receive all benefits earned by Employee under all
employee benefit plans and programs sponsored by the Company in which Employee
participates.
8. Representations and Covenants of Employee.
(a) Conduct. Employee will at all times refrain from taking any action or
making any statements, written or oral, which are intended to and do disparage
the goodwill or reputation of the Company or any of its subsidiaries or
affiliates or any directors or officers thereof or which could adversely affect
the morale of employees of the Company or its subsidiaries.
(b) Performance of Duties. In consideration of the payments to be made
hereunder, Employee agrees that during the term of his employment under this
Agreement, he shall devote his entire business time and attention to the
performance of his duties hereunder and serve the Company diligently and to the
best of his abilities.
(c) Company Information. Employee agrees that so long as he is employed by
the Company and following any termination of his employment Employee will keep
confidential all confidential information and trade secrets of the Company and
any of its subsidiaries or affiliates and will not disclose such information to
any person without the prior approval of the Board of Directors of the Company
or use such information for any purpose other than in the course of fulfilling
his duties of employment with the Company pursuant to this Agreement. It is
understood that for purposes of this Agreement the term "confidential
information" is to be construed broadly to include all material nonpublic or
proprietary information.
9. Release. In consideration of the compensation continuance available in
certain events pursuant to this Agreement, Employee unconditionally releases and
covenants not to sue
4
<PAGE>
the Company and its subsidiaries and affiliates and directors, officers,
employees and stockholders thereof, from any and all claims, liabilities and
obligations of any nature pertaining to termination of employment other than
those explicitly provided for by this Agreement including, without limitation,
any claims arising out of alleged legal restrictions on the Company's rights to
terminate its employees, such as any implied contract of employment or
termination contrary to public policy.
10. Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by the laws of Michigan, regardless of the laws that
might be applied under applicable principles of conflicts of laws.
11. Entire Agreement and Survivorship. This Agreement and that certain
Change in Control Agreement between Employee and Collins & Aikman Corporation
dated March 17, 1998 constitute the entire agreement and understanding between
the parties hereto with respect to the matters referred to herein and therein
and supersede all prior agreements and understandings between the parties hereto
with respect to the matters referred to herein and therein. The representations,
warranties and covenants of Employee contained in all parts of Paragraph 8, and
the release contained in Paragraph 9 shall survive the expiration or termination
of this Agreement by either party.
12. Notice. Any written notice required to be given by one party to the
other party hereunder shall be deemed effective if mailed by certified or
registered mail:
To the Company: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 26262
Attention: Harold R. Sunday
To Employee: Dennis E. Hiller
19327 River Falls Drive
Davidson, North Carolina 28036
or such other address as may be stated in notice given under this Paragraph 12.
13. Severability. The invalidity, illegality or enforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement or
such provision in any other jurisdiction, it being the intent of the parties
hereto that all rights and obligations of the parties hereto under this
Agreement shall be enforceable to the fullest extent permitted by law.
14. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their personal representatives, and, in
the case of the Company, its successors and assigns, and Paragraph 9 shall also
inure to the benefit of the other persons and entities identified therein;
provided, however, that Employee shall not, without the prior written consent of
the Company, transfer, assign, convey, pledge or encumber this Agreement or any
5
<PAGE>
interest under this Agreement. Employee understands that the assignment of this
Agreement or any benefits hereof or obligations hereunder by the Company to any
of its subsidiaries or affiliates or to any purchaser of all or a substantial
portion of the assets of the Company or of any affiliated company then employing
Employee, and the employment of Employee by such subsidiary or affiliate or by
any such purchaser or by any successor of the Company in a merger or
consolidation, shall not be deemed a termination of Employee's employment for
purposes of Paragraphs 6 and 7 or otherwise.
15. Amendment. This Agreement may be amended or canceled only by an
instrument in writing duly executed and delivered by each party to this
Agreement.
16. Tax Withholding. The Company may withhold from any amounts payable
under this Agreement such federal, state and local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
17. Headings. Headings contained in this Agreement are for or convenience
only and shall not limit this Agreement or affect the interpretation thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
/s/ Dennis E. Hiller
----------------------------------------
Dennis E. Hiller
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ Thomas E. Hannah
--------------------------------------
Thomas E. Hannah
President and Chief Executive Officer