Employment Agreement - Collins & Aikman Products Co. and J. Michael Stepp
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 6, 1995 between COLLINS &
AIKMAN PRODUCTS CO. (the "Company") and J. MICHAEL STEPP
("Employee").
WHEREAS, the Company desires to employ Employee and to enter
into an agreement embodying the terms of such employment; and
WHEREAS, Employee desires to a accept such employment and to
enter into such agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the parties hereto hereby agree as follows:
1. Term of Employment. The Company hereby agrees to
employ Employee and Employee hereby accepts employment for a
period of three (3) years, commencing April 6, 1995 and ending
April 5, 1998 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 not less
than Executive Vice President and Chief Financial Officer of the
Company 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 positions.
3. Salary, Bonus Plan and Stock Options
3.1 Salary. The Company shall pay Employee a base salary
at an annual rate of not less than $240,000 during the term of
his employment hereunder. Such amount shall be reviewed with the
salaries of the other members of the Company Operating Committee,
from time to time, 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.
3.2 Bonus Plan. 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 Plan; however, in no event for the first year of Employee's
participation in the EIC Plan shall Employee receive a cash bonus
of less than $92,000.
3.3 Stock Options. Employee shall be eligible to
participate in the Collins & Aikman Holdings Corporation 1994
Employee Stock Option Plan (the "Option Plan") and shall be
granted the option to purchase up to 100,000 shares, in
accordance with the applicable terms and conditions of the Option
Plan and the Option Agreement
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between Collins & Aikman Holdings Corporation and Employee.
4. Benefits. 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 and such other fringe benefits as
may be determined by the Company during the term hereof,
including major medical, extended medical and disability
insurance, group term life insurance and appropriate annual
holidays, sick days and annual vacation time.
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. Perquisites. Employee shall be entitled to use of a
Company car (Buick Park Avenue or comparable vehicle) and
reimbursement of reasonable expenses related thereto incurred by
Employee. Such Company car use shall be subject to applicable
terms and policies of the Company. Employee also shall be
entitled to reimbursement of the initiation fee (not to exceed
$15,000), monthly dues and reasonable business related expenses
incurred by Employee at a local country club of Employee's
choice.
7. Termination of Employment
7.1 Voluntary Termination. Employees may terminate his
employment with the Company at any time. In the event Employee
terminates such employment voluntarily, upon such termination the
Company shall pay Employee his unpaid base salary under Section
3.1 accrued to the date on which his employment terminates (the
"Termination Date").
7.2 Involuntary Termination.
(a) Employee's employment with the Company shall
automatically terminate upon Employee's death or, unless the
Board of Directors of the Company in its sole discretion shall
otherwise elect, Employee's physical or mental disability for any
consecutive six-month period (measured from the first date on
which Employee is absent from work due to such disability to the
same date in the sixth succeeding calendar month, or, if there is
no such date or such date is not a business day, the next
succeeding business day). In the event Employee's employment
with the Company is terminated due to Employee's death or
physical or mental disability, the Company shall pay to Employee
or, if applicable, his estate or legal representative his unpaid
base salary under Section 3.1 accrued to the Termination Date,
but in no event less than an amount equal to one year's base
salary. The amount due to Employee
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pursuant to this paragraph (a) shall be paid, at the sole election
of Employee or, if applicable, his estate or legal representative,
at the time of termination, either in a lump sum or in a number of
equal annual installments to be specified by Employee or, if applicable,
Employee's estate or legal representative at the Termination
Date.
(b) In the event Employee's employment with the Company is
involuntarily terminated for any other reason, other than
termination for Cause (as hereinafter defined), prior to the
expiration of the term of employment then in effect under Section
1, upon such termination the Company shall be obligated to pay
Employee an amount equal to his base salary under Section 3.1 for
the entire remaining portion of such term of employment then in
effect under Section 1; or if longer, for a one year period
following the Termination Date. The amount due to Employee
pursuant to this paragraph (b) shall be paid, at the sole
discretion of the Compensation Board at the Termination Date,
either in a lump sum or on a periodic basis in accordance with
normal pay practice. Employee shall receive the same letter
agreement as all other members of the Company Operating Committee
regarding termination relating to a change of control.
(c) The Company may at any time without notice terminate
Employee's employment with the Company for Cause. In the event
Employee's employment with the Company is terminated for Cause,
Employee shall receive the same amount that would be payable
under Section 7.1 if such termination were voluntary.
(d) As used herein, the term "Cause" 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 stockholder, (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.
8. Representations and Covenants of Employee.
8.1 No Violation. Employee represents and warrants that he
has not disclosed and will not disclose any confidential
information or trade secrets concerning his former employer to
the Company or its subsidiaries or any directors or officers
thereof, and that he can perform his duties for the Company
without disclosing or using any such confidential information or
trade secrets. Employee covenants and agrees that he will not
use any confidential information or trade secrets concerning any
former employer or its subsidiaries in violation of any
obligations to such former employer during the term of his
employment by the
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Company.
8.2 No Conflicts. Employee represents and warrants that
the terms of this Agreement do not conflict with any other
agreement, written or oral, to which Employee is a party or by
which Employee is bound, including, without limitation, any
noncompetition agreement for the benefit of any former employer.
8.3 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 and its subsidiaries.
8.4 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
substantially his entire business time and attention to the
performance of his duties hereunder, serve the Company diligently
and to the best of his abilities and shall not compete with the
Company in any way whatsoever. Without limiting the generality
of the foregoing, Employee shall not, during such term, directly
or indirectly (whether for compensation or otherwise), alone or
as an agent, principal, partner, officer, employee, trustee,
director, shareholder or in any other capacity, own, manage,
operate, join, control or participate in the ownership,
management, operation or control of, or furnish any capital to,
or be connected in any manner with or provide any services as a
consultant for any business which competes with the business of
the Company, its parent company or their subsidiaries or
affiliates as it may be conducted from time to time, provided,
however, that notwithstanding the foregoing, nothing contained in
the Employment Agreement shall be deemed to preclude Employee
from owning not more than 5% of the publicly traded securities of
any entity which is in competition with the business of the
Company, its parent company or their subsidiaries or affiliates.
8.5 Company Information. Employee agrees that so long as
he is employed by the Company and following any termination of
this employment Employee will keep confidential all confidential
information and trade secrets of the Company or 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
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continuance available in certain events pursuant to this
Agreement, Employee unconditionally releases and covenants not to
sue 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
North Carolina, regardless of the laws that might be applied
under applicable principles of conflicts of laws.
11. Entire Agreement and Survivorship. This Agreement
constitutes the entire agreement and understanding between the
parties hereto with respect to the matters referred to herein and
supersedes all prior agreements and understandings between the
parties hereto with respect to the matters referred to herein.
The representations, warranties and covenants of Employee
contained in all parts of Section 8, except 8.4, and the release
contained in Section 9 shall survive 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 28262
Attention: Harold R. Sunday
To Employee:
Attention: J. Michael Stepp
or such other address as may be stated in notice given under this
Section 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.
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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 Section 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 interest under this Agreement.
Employees understands that the assignment of this Agreement or
any benefits hereof or obligations hereunder by the Company to
any subsidiary, or to any purchaser of all or a substantial
portion of the assets of the Company, and the employment of
Employee by such subsidiary 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
Section 7.2 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. Headings. Headings contained in this Agreement are for
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.
J. Michael Stepp
_______________________________
J. Michael Stepp
COLLINS & AIKMAN PRODUCTS CO.
Thomas E. Hannah
By: ___________________________
Thomas E. Hannah, President
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