Sample Business Contracts


Employment Agreement - Collins & Aikman Corp. and J. Michael Stepp

Employment Forms

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                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of January 25, 2004, by and between COLLINS & AIKMAN CORPORATION, a Delaware
corporation (the "Company"), and J. MICHAEL STEPP ("Employee").

                               W I T N E S S E T H

         WHEREAS, the Company wishes to retain Employee's services by providing
Employee the compensation and benefits set forth in this Agreement;

         WHEREAS, Employee wishes to continue his employment with the Company
under the terms and conditions set forth below;

         NOW, THEREFORE, in consideration of 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 1, 2003 and ending December 31, 2005, subject to the terms
and conditions of this Agreement. At the end of such initial three (3) year
term, unless the Company shall have given Employee thirty (30) days prior
written notice of its intention to terminate this Agreement at the end of the
initial term hereof, the term of this Agreement shall automatically be extended
by an additional one year period. Thereafter, unless the Company shall have
given Employee thirty (30) days prior written notice of its intention to
terminate this Agreement at the end of the term then in effect, the term of this
Agreement shall automatically be extended by an additional one year period.

         2. Position of Employment. During the term of this Agreement, Employee
shall be employed in the position of Vice Chairman and Chief Financial Officer
of the Company and Chief Financial Officer of Collins & Aikman Products Co., a
Delaware corporation ("Products") and shall perform such services for the
Company and Products and their affiliates as may be assigned to him from time to
time by the President and Chief Executive Officer of the Company. Employee shall
devote his entire business time and attention to the affairs of the Company and
Products and the performance of his duties hereunder and shall serve the Company
and Products diligently and to the best of his abilities.

         Nothing in this Agreement shall prohibit Employee from participating in
civic or community organizations or from making passive investments using his
personal assets so long as such participation and investments do not interfere
with the performance of Employee's duties under this Agreement. In addition,
Employee may, with the prior written approval of the Compensation Committee,
serve as a member of the board of directors of any business that is not a direct
or indirect competitor of the Company, Products or their affiliates.


<PAGE>

         3. Compensation.

                  (a) Base Salary. The Company shall pay to Employee base salary
         at an annual rate of not less than Six Hundred Thousand Dollars
         ($600,000) during the term of his employment hereunder. Such amount
         shall be reviewed annually by the President and Chief Executive Officer
         of the Company and may be increased by the President and Chief
         Executive Officer with the advice of the Compensation Committee.

                  (b) Bonus Plans. During the term of Employee's employment
         hereunder, Employee shall be eligible to participate in the Company's
         annual bonus plan, subject to the policies and procedures that the
         Compensation Committee has adopted or shall, in its discretion, adopt
         including, without limitation, policies regarding setting performance
         objectives, targets amounts, evaluation, and the form and timing of
         payments. The annual bonus target for Employee shall be One Hundred
         Percent (100%) of Employee's base salary.

         4. Other Benefits and Perquisites. Employee shall be entitled to such
fringe benefits and perquisites, and to participate in such pension, savings
plan and benefit plans, as are generally made available to similarly situated
executives of the Company during the term hereof, including consideration for
annual stock option awards, major medical, extended medical and disability
insurance, supplemental retirement income plan, group term life insurance and
appropriate annual holidays, sick days, perquisite account, and vacation time,
as such plans, policies and programs may exist from time to time, subject to the
terms and conditions of such plans, policies and programs.

         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. The Company shall reimburse
Employee for the cost of legal counsel in connection with the review of this
Agreement on Employee's behalf, provided that such reimbursement shall not
exceed Five Thousand Dollars ($5,000).

         6. Termination of Employment. Employee's employment under this
Agreement may be terminated:

                  (a) by the Company upon Employee's death (which shall be
         referred to as a "Death Termination") or in the event of Employee's
         absence from work for one-hundred and twenty (120) or more work days
         out of any three hundred and sixty (360) day period on account of
         Employee's physical or mental disability (which shall be referred to as
         an "Inability Termination");

                  (b) 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) failure by Employee to perform his duties and responsibilities and
         to carry out his authority, (iii) malfeasance or misfeasance or breach
         of fiduciary duty or misrepresentation to the Company or its
         stockholders, (iv) failure to act in accordance with any


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<PAGE>





         specific lawful instructions of the Board of Directors of the Company
         or the President and Chief Executive Officer, (v) any grossly negligent
         act or omission by Employee relating to the performance of his duties
         hereunder which the Board, in its sole discretion, determines damages
         the Company's reputation or future business prospects, (vi) any
         intentional breach of the Company's written employment policies, or
         (vii) any conviction of Employee of a felony (all of which shall be
         referred to as a "For Cause Termination"); provided, however, that
         Employee may, in the fourteen (14) day period following the date of any
         written notice of termination as a result of the occurrence of any of
         the events described in clauses (i) through (vi) above, provide written
         evidence to the Committee that such determination was based on a
         mistake of fact or that the circumstance giving rise to Cause has been
         cured in such fourteen (14) day period. If the Committee finds that the
         determination of Cause was based on a mistake of fact, or that the
         Employee has given evidence satisfactory to the Committee in its sole
         discretion that Cause has been cured within the fourteen (14) day
         period, then the notice of termination may be revoked by the Committee.
         If the Board or the Committee takes no action within such fourteen (14)
         day period, the Termination Date shall be the date set forth in the
         notice delivered to the Employee. The Committee may require Employee to
         absent himself from the premises of the Company during any such
         fourteen (14) day period. Failure of the Company to give notice of
         Cause at the first instance of an event giving rise to Cause shall not
         preclude Company from finding Cause in subsequent instances;

                  (c) by the Company at any time for any reason other than a For
         Cause Termination, Death Termination or Inability Termination (which
         shall be referred to as a "No Cause Termination");

                  (d) by Employee at any time for any reason other than a
         "Constructive Termination" (as defined below) (which shall be referred
         to as a "Voluntary Termination"); or

                  (e) by Employee within thirty (30) days after the occurrence
         of one or more of the following: (i) any material reduction in
         Employee's base salary, bonus opportunity, or health benefits, unless
         such reduction is being made in conjunction with an across-the-board
         reduction in the salaries of all similarly situated executives of the
         Company or (ii) a material reduction in Employee's duties and
         responsibilities or other breach of this Agreement by the Company,
         (which shall be referred to as a "Constructive Termination"); provided,
         however, that no event or circumstance described in clause (i) or (ii)
         shall give rise to a "Constructive Termination" for purposes of this
         Agreement unless Employee shall have given notice to the Company of
         Employee's determination of the occurrence of an event or circumstance
         described in clause (i) or (ii) and such event or circumstance shall be
         continuing as of the end of forty-five (45) days after the giving of
         such notice.




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<PAGE>

         7. Termination Procedure.

                  (a) Notice of Termination. Any termination of Employee's
         employment by the Company or by Employee under Paragraph 6 hereof shall
         be communicated by written Notice of Termination to the other party
         hereto in accordance with Paragraph 13. For purposes of this Agreement,
         a "Notice of Termination" shall mean notice that indicates the specific
         termination provision in this Agreement relied upon and sets forth in
         reasonable detail the facts and circumstances providing a basis for
         termination of Employee's employment under the provision so indicated.

                  (b) Termination Date. "Termination Date" shall mean (i) if
         Employee's employment is terminated pursuant to Paragraph 6(a) or (b)
         above, the date on which a Notice of Termination is given or (ii) if
         Employee's employment is terminated pursuant to Paragraph 6(c), (d) or
         (e) above, thirty (30) days after the date on which a Notice of
         Termination is given.

         8. Benefits Upon Termination.

                  (a) Termination as a Result of Death, Inability, Voluntary 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 Death Termination, an Inability Termination, a Voluntary
         Termination or a For Cause Termination, the Company shall pay Employee
         or, if applicable, Employee's estate or legal representative, (i)
         Employee's unpaid base salary under Paragraph 3(a) accrued to the date
         on which his employment terminates, (ii) any accrued but unused
         vacation, and (iii) all vested and accrued benefits earned by Employee
         under any employee benefit plans and programs sponsored by the Company
         in which Employee participates, subject to the terms and conditions of
         such plans and programs.

                  (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 and provide to Employee the following benefits:

                           (i) Employee's unpaid base salary accrued to the
                  Termination Date, any accrued but unused vacation, any
                  declared but unpaid bonus for the year preceding the
                  Termination Date;

                           (ii) base salary for twenty-four (24) months, based
                  on the rate of base salary in effect immediately preceding the
                  Termination Date;

                           (iii) an amount determined by multiplying Employee's
                  average actual, annual bonus under Section 3(b) for the prior
                  three (3) years (or such shorter term as Employee has
                  participated in a Company bonus program) by a fraction, the
                  numerator of which is




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<PAGE>

                  the number of whole months of service by Employee during the
                  year in which occurs the Termination Date and the denominator
                  of which is twelve (12); and

                           (iv) continued participation in the benefit plans,
                  programs and arrangements described in Paragraph 4 during the
                  severance period described in Paragraph 8(b)(ii) above (other
                  than the vacation, holiday and sick pay policies, the annual
                  executive physical program, long-term disability plan and
                  supplemental retirement income plan); provided, however, that
                  participation in such benefit plans, programs and arrangements
                  shall cease prior to the expiration of the severance period to
                  the extent Employee has been offered or actually participates
                  in comparable benefit plans, programs or arrangements with
                  another employer during such period, and Employee shall report
                  any such offer or participation to the Company.

         In addition, all outstanding stock options granted to Employee under
         the Company's stock option plans 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 vested and accrued benefits earned by Employee
         under all employee benefit plans and programs sponsored by the Company
         in which Employee participates.

                  (c) Method of Payment of Severance Compensation. The amount
         due to Employee pursuant to Paragraph 8(b)(ii) above shall be paid on a
         periodic basis in accordance with the Company's normal pay practice and
         shall be subject to all customary withholding and tax deposit
         requirements. The amount due to Employee pursuant to Paragraph
         8(b)(iii) above shall be paid in a lump sum upon the expiration of the
         severance period described in Paragraph 8(b)(ii), subject to all
         appropriate withholding and tax deposit requirements.

                  (d) Employee's entitlement in the event of termination of
         employment for any reason to benefits or payments under any retirement
         or deferred compensation plans shall be determined in accordance with
         and subject to the terms and conditions of such plans.

         9. Covenants of Employee.

                  (a) Non-disparagement. Employee shall 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) Non-Competition. Employee shall not Compete (as
         hereinafter defined) with the Company or any of its subsidiaries or
         affiliates in any way



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<PAGE>

         during the term of his employment with the Company and for the
         twenty-four (24) month period following the Termination Date (the
         "Restricted Period"). "Compete" means to engage in any business
         activity whatsoever related in any manner or fashion to any business of
         the Company or any of its subsidiaries or affiliates. Without limiting
         the generality of the foregoing, Employee shall not, during the
         Restricted Period, 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 an employee or
         consultant for, any business which Competes with the Company or any of
         its subsidiaries of affiliates; provided, however, that notwithstanding
         the foregoing, nothing contained in the Agreement shall be deemed to
         preclude Employee from owning not more than five percent (5%) of the
         publicly traded securities of any entity which Competes with the
         Company.

                  (c) Non-Solicitation. Employee covenants and agrees that he
         will not, during the Restricted Period, (i) solicit, employ or
         otherwise engage as an employee, independent contractor or otherwise,
         any person who is or was an employee of the Company or any of its
         subsidiaries or affiliates at any time during the twelve (12) month
         period immediately preceding Employee's Termination, (ii) induce or
         attempt to induce any employee of the Company or any of its
         subsidiaries or affiliates to terminate such employment or (iii)
         interfere with the relationship of the Company or any of its
         subsidiaries or affiliates with any person, including any person who,
         at any time during the twelve (12) month period immediately preceding
         Employee's Termination Date, was an employee, contractor, supplier or
         customer of the Company or any of its subsidiaries or affiliates.

                  (d) Confidential Information. Employee understands that in the
         performance of services hereunder Employee may obtain knowledge of
         "confidential information" (as hereinafter defined) relating to the
         business of the Company (or of any of its subsidiaries or affiliates).
         Employee shall not, without the prior written consent of the President
         and Chief Executive Officer of the Company, either during Employee's
         employment by the Company or at any time thereafter, (i) use or
         disclose any such confidential information outside the Company (or any
         of its subsidiary or affiliated companies) except as otherwise required
         by law, (ii) publish any article with respect thereto, (iii) except in
         the performance of services hereunder, remove from the premises of the
         Company, or aid in such removal, any such confidential information or
         any property or material related thereto or (iv) sell, exchange or give
         away or otherwise dispose of any such confidential information now or
         hereafter owned by the Company whether or not the same shall or may
         have been originated, discovered or developed by Employee. It is
         understood that for purposes of this Agreement the term "confidential
         information" shall be construed broadly to include all information or
         compilations of information which (i) is, or was designed to be, used
         in the business of the Company (or any of its subsidiaries or
         affiliates) or results from its (or their) research or development
         activities, (ii) is private or confidential in that it



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<PAGE>


         is not generally known or available to the public and (iii) is intended
         to give the Company (or any of its subsidiaries or affiliates) an
         opportunity to obtain an advantage over competitors who do not know or
         use it.

                  (e) Return of Materials. Upon the termination of Employee's
         employment, Employee shall return to the Company all property of the
         Company in or under Employee's possession or control, including without
         limitation all tangible "confidential information" described in
         Paragraph 9(d) above. Such return shall be made at such place in Troy,
         Michigan as the Company shall specify and shall be made within five (5)
         days after Employee's Termination Date.

                  (f) Cooperation. During Employee's employment by the Company
         and thereafter, Employee shall promptly notify the Company of any
         threatened, pending or completed investigation, claim, action, suit or
         proceeding, whether civil, criminal, administrative or investigative
         ("Proceeding"), in which he may be involved, whether as an actual or
         potential party or witness or otherwise, or with respect to which he
         may receive requests for information, by reason of his future, present
         or past association with the Company or any of its subsidiaries or
         affiliates. Before the Termination Date and during any period for which
         payments are received under Section 8, Employee shall cooperate fully
         with the Company and its subsidiaries and affiliates in connection with
         any Proceeding at no expense to the Company or any of its subsidiaries
         or affiliates other than the reimbursement of Employee's reasonable
         out-of-pocket expenses. If Employee is required to assist the Company
         or any of its subsidiaries or affiliates with any Proceeding after the
         Termination Date and the completion of any continuing payments under
         Section 8, the Company shall pay Employee a reasonable per diem fee, in
         addition to any expense reimbursement, for such assistance, based on
         Employee's annual base salary rate immediately preceding the
         Termination Date. Employee shall not disclose any confidential or
         privileged information in connection with any Proceeding without the
         consent of the Company and shall give prompt notice to the Company of
         any request therefore.

                  (g) Acknowledgement Regarding Covenants. Executive
         acknowledges and agrees that the promises and restrictive covenants set
         forth in this Paragraph 9 are reasonable and necessary to protect the
         interests of the Company and reasonably limited in time, scope and
         territory. Executive acknowledges that, given his former position and
         the information he possesses regarding the Company and its operations,
         the business of the Company would be substantially and materially
         damaged in the event of any violation of the promises and covenants
         herein contained, and the Company shall be entitled (in addition to any
         other remedy that may be available to it) to (i) a decree or order for
         specific performance of any such promise or covenant and (ii) an
         injunction restraining the violation or threatened violation of any
         such promise or covenant. In addition, Employee shall immediately
         forfeit all rights to any payments or benefits to which he may be
         otherwise entitled under this Agreement in the event of a breach of any
         of the covenants given in this Paragraph 9. The covenants of Employee
         contained



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<PAGE>

         in this Paragraph 9 shall survive the expiration of this Agreement or
         the termination of this Agreement by either party.

         10. Release. In consideration of the compensation continuance available
in certain events pursuant to this Agreement, and as a condition to the receipt
of any such salary continuation and other benefits provided by this Agreement
following the Termination Date, Employee shall sign a written release by which
Employee shall unconditionally release and covenant not to sue the Company and
its affiliates and directors, officers, employees and stockholders thereof, and
release the Company and its affiliates and directors, officers, employees and
stockholders 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.

         11. Governing Law; Jurisdiction. 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. Any legal proceeding filed in connection with a claim under
this Agreement shall be brought in a federal or state court in Michigan, and the
parties hereby submit to personal jurisdiction in those courts for such purpose.

         12. Entire Agreement. 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.

         13. 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.
                                            250 Stephenson Highway
                                            Troy, MI  48083
                                            Attention:   Jay Knoll
                                                         General Counsel

                  To Employee:              J. Michael Stepp
                                            250 Stephenson Highway
                                            Troy, MI  48083

or such other address as may be stated in notice given under this Paragraph 13.


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<PAGE>

         14. 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.

         15. 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 10
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. 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, 7 and 8 or otherwise.

         16. Amendment. This Agreement may be amended or canceled only by an
instrument in writing duly executed and delivered by each party to this
Agreement.

         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/ J. Michael Stepp
                                     -------------------------------------------
                                                  J. Michael Stepp


                                     COLLINS & AIKMAN CORPORATION


                                     By: /S/ David A. Stockman
                                        ----------------------------------------

                                     Its: Chairman and Chief Executive Officer
                                         ---------------------------------------


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