IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION,

et al.1 Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes

STIPULATION BY AND AMONG (I) THE DEBTORS, (II) CONTINENTAL INSURANCE COMPANY AND NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, SUCCESSOR BY MERGER TO TRANSCONTINENTAL INSURANCE COMPANY, AND (III) FIREMANS FUND INSURANCE COMPANY AND NATIONAL SURETY COMPANY FOR ENTRY OF ORDER RESOLVING THE OBJECTIONS OF CONTINENTAL INSURANCE COMPANY AND NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, SUCCESSOR BY MERGER TO TRANSCONTINENTAL INSURANCE COMPANY, AND FIREMANS FUND INSURANCE COMPANY AND NATIONAL SURETY COMPANY TO DEBTORS MOTION FOR ENTRY OF AN ORDER APPROVING SETTLEMENT, INSURANCE POLICY PURCHASE AGREEMENT AND RELEASES This Stipulation resolving the objections of (a) Continental Insurance Company and National Fire Insurance Company of Hartford, Successor by Merger to Transcontinental

The Debtors in the jointly administered cases include: Collins & Aikman Corporation; Amco Convertible Fabrics, Inc., Case No. 05-55949; Becker Group, LLC (d/b/a/ Collins & Aikman Premier Mold), Case No. 05-55977; Brut Plastics, Inc., Case No. 05-55957; Collins & Aikman (Gibraltar) Limited, Case No. 05-55989; Collins & Aikman Accessory Mats, Inc. (f/k/a the Akro Corporation), Case No. 05-55952; Collins & Aikman Asset Services, Inc., Case No. 05-55959; Collins & Aikman Automotive (Argentina), Inc. (f/k/a Textron Automotive (Argentina), Inc.), Case No. 05-55965; Collins & Aikman Automotive (Asia), Inc. (f/k/a Textron Automotive (Asia), Inc.), Case No. 0555991; Collins & Aikman Automotive Exteriors, Inc. (f/k/a Textron Automotive Exteriors, Inc.), Case No. 05-55958; Collins & Aikman Automotive Interiors, Inc. (f/k/a Textron Automotive Interiors, Inc.), Case No. 05-55956; Collins & Aikman Automotive International, Inc., Case No. 05-55980; Collins & Aikman Automotive International Services, Inc. (f/k/a Textron Automotive International Services, Inc.), Case No. 05-55985; Collins & Aikman Automotive Mats, LLC, Case No. 05-55969; Collins & Aikman Automotive Overseas Investment, Inc. (f/k/a Textron Automotive Overseas Investment, Inc.), Case No. 05-55978; Collins & Aikman Automotive Services, LLC, Case No. 05-55981; Collins & Aikman Canada Domestic Holding Company, Case No. 05-55930; Collins & Aikman Carpet & Acoustics (MI), Inc., Case No. 05-55982; Collins & Aikman Carpet & Acoustics (TN), Inc., Case No. 05-55984; Collins & Aikman Development Company, Case No. 05-55943; Collins & Aikman Europe, Inc., Case No. 05-55971; Collins & Aikman Fabrics, Inc. (d/b/a Joan Automotive Industries, Inc.), Case No. 05-55963; Collins & Aikman Intellimold, Inc. (d/b/a M&C Advanced Processes, Inc.), Case No. 05-55976; Collins & Aikman Interiors, Inc., Case No. 05-55970; Collins & Aikman International Corporation, Case No. 05-55951; Collins & Aikman Plastics, Inc., Case No. 05-55960; Collins & Aikman Products Co., Case No. 05-55932; Collins & Aikman Properties, Inc., Case No. 0555964; Comet Acoustics, Inc., Case No. 05-55972; CW Management Corporation, Case No. 05-55979; Dura Convertible Systems, Inc., Case No. 05-55942; Gamble Development Company, Case No. 05-55974; JPS Automotive, Inc. (d/b/a PACJ, Inc.), Case No. 05-55935; New Baltimore Holdings, LLC, Case No. 05-55992; Owosso Thermal Forming, LLC, Case No. 05-55946; Southwest Laminates, Inc. (d/b/a Southwest Fabric Laminators Inc.), Case No. 05-55948; Wickes Asset Management, Inc., Case No. 05-55962; and Wickes Manufacturing Company, Case No. 05-55968.

K&E 11947132.1

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0555927070709000000000004

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Insurance Company (collectively, CNA) and (b) Firemans Fund Insurance Company and National Surety Company (collectively, FFIC) to the motion of the above-captioned debtors (collectively, the Debtors) for the entry of an order approving settlement, insurance policy purchase agreement and releases [Docket No. 7623] (the Motion) is made as of July 9, 2007, by and among the Debtors, CNA and FFIC. WHEREAS, on May 17, 2005, the Debtors filed petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. 101-1330 (the Bankruptcy Code), in the United States Bankruptcy Court for the Eastern District of Michigan (the Bankruptcy Court); and WHEREAS, on June 22, 2007, the Debtors filed the Motion; and WHEREAS, on July 3, 2007, FFIC filed its objection to the Motion [Docket No. 7683] (the FFIC Objection); and WHEREAS, on July 3, 2007, CNA filed its response to the Motion [Docket No. 7687] (the CNA Response, and together with the FFIC Objection, the Objections). NOW, THEREFORE, in consideration of the mutual premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby stipulated and agreed to by and between the parties as follows: 1. The Motion and the Objections are hereby resolved pursuant to the terms of the

order attached hereto as Exhibit A. 2. The Bankruptcy Court shall retain jurisdiction (and the Debtors, CNA and FFIC

consent to such retention of jurisdiction) to resolve any disputes or controversies arising from or related to this Stipulation. Any request for relief brought before the Bankruptcy Court to resolve a dispute arising from or related to this Stipulation shall be brought on proper notice and in

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accordance with relevant Federal Rules of Bankruptcy Procedure and Local Rules for the Bankruptcy Court of the Eastern District of Michigan. 3. This Stipulation may be executed in multiple counterparts, any of which may be

transmitted by facsimile, and each of which shall be deemed an original, but all of which together shall constitute one instrument. 4. This Stipulation shall not be modified, altered, amended or vacated without

written consent of all parties hereto. Any such modification, alteration, amendment or vacation, in whole or in part, shall be subject to the approval of the Bankruptcy Court. 5. The signatories to this Stipulation represent that they have been duly authorized

by their clients to execute this Stipulation. [Remainder of page intentionally left blank.]

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KIRKLAND & ELLIS LLP /s/ Ray C. Schrock Richard M. Cieri (NY RC 6062) Citigroup Center 153 East 53rd Street New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 -and-

MYERS & MYERS /s/ Leonard P. Goldberger Kelly A. Myers (P49143) 8163 Grand River Avenue Brighton, Michigan 48114 Telephone: (810) 229-6620 Facsimile: (810) 229-6650 -andSTEVENS & LEE, P.C.

David L. Eaton (IL 3122303) Ray C. Schrock (IL 6257005) Marc J. Carmel (IL 6272032) 200 East Randolph Drive Chicago, Illinois 60601 Telephone: (312) 861-2000 Facsimile: (312) 861-2200

Leonard P. Goldberger John C. Kilgannon 1818 Market Street 29th Floor Philadelphia, Pennsylvania 19103 Telephone: (215) 751-2864 Facsimile: (610) 371-7376 Counsel for FFIC

-andCARSON FISCHER, P.L.C. Joseph M. Fischer (P13452) 4111 West Andover Road West - Second Floor Bloomfield Hills, Michigan 48302 Telephone: (248) 644-4840 Facsimile: (248) 644-1832 Co-Counsel for the Debtors

K&E 11947132.1

STEINBERG SHAPIRO & CLARK /s/ David C. Christian II Mark H. Shapiro (P43134) 24901 Northwestern Highway Suite 611 Southfield, Michigan 48075 Telephone: (248) 352-4700 Facsimile: (248) 352-4488 -andSEYFARTH SHAW LLP David C. Christian II 131 South Dearborn Street Suite 2400 Chicago, Illniois 60603 Telephone: (312) 460-5000 Facsimile: (312) 460-7000 -andROSS, DIXON & BELL, LLP Clinton E. Cameron (P45567) 55 West Monroe Street Suite 3000 Chicago, Illinois 60603 Telephone: (312) 759-1920 Facsimile: (312) 759-1939 Co-Counsel for CNA

K&E 11947132.1

EXHIBIT A

K&E 11947132.1

IN THE UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORPORATION, et al).1 Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes

ORDER APPROVING SETTLEMENT, INSURANCE POLICY PURCHASE AGREEMENT AND RELEASES Upon the motion (the Motion)2 of the above captioned debtors (collectively, the Debtors) for the entry of an order Approving Settlement, Insurance Policy Purchase Agreement and Releases [Docket No. 7623]; it appearing that the relief requested is in the best interest of the Debtors estates, their creditors and other parties in interest; it appearing that the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; it appearing that this proceeding is a core proceeding pursuant to 28 U.S.C. 157(b)(2); it appearing that venue of this proceeding and this Motion in this District is proper pursuant to

The Debtors in the jointly administered cases include: Collins & Aikman Corporation; Amco Convertible Fabrics, Inc., Case No. 05-55949; Becker Group, LLC (d/b/a/ Collins & Aikman Premier Mold), Case No. 05-55977; Brut Plastics, Inc., Case No. 05-55957; Collins & Aikman (Gibraltar) Limited, Case No. 05-55989; Collins & Aikman Accessory Mats, Inc. (f/k/a the Akro Corporation), Case No. 05-55952; Collins & Aikman Asset Services, Inc., Case No. 05-55959; Collins & Aikman Automotive (Argentina), Inc. (f/k/a Textron Automotive (Argentina), Inc.), Case No. 05-55965; Collins & Aikman Automotive (Asia), Inc. (f/k/a Textron Automotive (Asia), Inc.), Case No. 05-55991; Collins & Aikman Automotive Exteriors, Inc. (f/k/a Textron Automotive Exteriors, Inc.), Case No. 05-55958; Collins & Aikman Automotive Interiors, Inc. (f/k/a Textron Automotive Interiors, Inc.), Case No. 05-55956; Collins & Aikman Automotive International, Inc., Case No. 05-55980; Collins & Aikman Automotive International Services, Inc. (f/k/a Textron Automotive International Services, Inc.), Case No. 05-55985; Collins & Aikman Automotive Mats, LLC, Case No. 05-55969; Collins & Aikman Automotive Overseas Investment, Inc. (f/k/a Textron Automotive Overseas Investment, Inc.), Case No. 05-55978; Collins & Aikman Automotive Services, LLC, Case No. 05-55981; Collins & Aikman Canada Domestic Holding Company, Case No. 05-55930; Collins & Aikman Carpet & Acoustics (MI), Inc., Case No. 05-55982; Collins & Aikman Carpet & Acoustics (TN), Inc., Case No. 05-55984; Collins & Aikman Development Company, Case No. 05-55943; Collins & Aikman Europe, Inc., Case No. 05-55971; Collins & Aikman Fabrics, Inc. (d/b/a Joan Automotive Industries, Inc.), Case No. 05-55963; Collins & Aikman Intellimold, Inc. (d/b/a M&C Advanced Processes, Inc.), Case No. 05-55976; Collins & Aikman Interiors, Inc., Case No. 05-55970; Collins & Aikman International Corporation, Case No. 05-55951; Collins & Aikman Plastics, Inc., Case No. 05-55960; Collins & Aikman Products Co., Case No. 05-55932; Collins & Aikman Properties, Inc., Case No. 05-55964; Comet Acoustics, Inc., Case No. 05-55972; CW Management Corporation, Case No. 05-55979; Dura Convertible Systems, Inc., Case No. 05-55942; Gamble Development Company, Case No. 05-55974; JPS Automotive, Inc. (d/b/a PACJ, Inc.), Case No. 05-55935; New Baltimore Holdings, LLC, Case No. 05-55992; Owosso Thermal Forming, LLC, Case No. 05-55946; Southwest Laminates, Inc. (d/b/a Southwest Fabric Laminators Inc.), Case No. 05-55948; Wickes Asset Management, Inc., Case No. 05-55962; and Wickes Manufacturing Company, Case No. 05-55968. 2 Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Motion.

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28 U.S.C. 1408 and 1409; it appearing that notice of this Motion and the opportunity for a hearing on this Motion was appropriate under the particular circumstances and that no other or further notice need be given; and after due deliberation and sufficient cause appearing therefor, it is hereby ORDERED: 1. 2. The Motion is granted in its entirety. For the reasons set forth herein and on the record at the hearing, all objections to

the Motion and the relief requested therein or granted in this Order that have not been withdrawn, waived, or settled, and all reservations of rights included in such objections, are overruled on the merits or have otherwise been adequately addressed by the terms of this Order. 3. C&A is authorized and directed to enter into the Agreement and, pursuant to

section 363(b) of the Bankruptcy Code, to sell, transfer and convey the Buyout Policies to Hartford in accordance with the terms and subject only to the conditions specified herein and in the Agreement. C&A is hereby authorized and directed to take any and all actions, and prepare, execute and file any and all documents necessary and appropriate to effect and implement the terms of the Agreement without further order of this Court. The Agreement and this Order constitute valid and binding obligations of the Estates, and shall be enforceable in accordance with the terms thereof. 4. This Order shall be binding upon (i) Hartford, (ii) C&A, (iii) the Estates, (iv) all

Persons having any Interest in the Buyout Policies, (v) all Persons having Claims against C&A or the Estates that could give rise to a claim for coverage under the Buyout Policies or the Remaining Policies, (vi) the Residual Claims Trust, and (vii) the respective successors and assigns of each of the foregoing Persons. Subject to the payment by Hartford of the

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Settlement Payment as provided for in the Agreement, the sale of the Buyout Policies by C&A to Hartford shall constitute a legal, valid and effective transfer of the Buyout Policies and shall vest Hartford with all right, title, and interest of the Estates in and to the respective Buyout Policies, free and clear of (a) all Interests in the Buyout Policies and (b) any and all Claims against C&A or the Estates that could give rise to a claim for coverage under the Policies, whether arising prior to, during, or subsequent to the Bankruptcy Cases or imposed by agreement, understanding, law, equity or otherwise. 5. The Settlement Payment shall be paid by Hartford as provided in the Agreement.

The proceeds realized from the Settlement Payment shall be deposited with the Residual Claims Trust within seven (7) days of the date upon which Hartford is notified in writing by the Debtors that (a) the Approval Order has become a Final Order, (b) the Residual Trust has been established and (c) the Debtors and Hartford have entered into a new Cost Share Agreement as set forth in the Agreement. Pursuant to the terms of the Agreement, once deposited with the Residual Claims Trust, these proceeds will be used to pay the administrative costs of the Residual Claims Trust and Tort Claims, following C&As recovery of the Disputed Payments and the turnover of the Disputed Cost Share Payments to the Certain Insurers. 6. Pursuant to section 363(f) of the Bankruptcy Code and subject to the

consummation of the sale of the Buyout Policies as provided under the Agreement, the Buyout Policies shall be and hereby are transferred to Hartford, free and clear of (a) all Interests in the Buyout Policies and (b) any and all Claims against C&A or the Estates that could give rise to a claim for coverage under the Policies, whether arising prior to, during, or subsequent to the Bankruptcy Case or imposed by agreement, understanding, law, equity or otherwise.

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7.

Any and all persons and entities holding Interests of any kind or nature

(including, without limitation, all debt security holders, equity security holders, governmental, tax and regulatory authorities, lenders, trade and other creditors, and Tort Claimants) against or in the Estate or the Buyout Policies are hereby barred, estopped and permanently enjoined from asserting such Interests against Hartford or any of its affiliates, stockholders, members, partners, parent entities, successors, assigns, officers, directors or employees, agents, representatives, and attorneys, or against the Buyout Policies. 8. Any and all Interests in the Buyout Policies shall be transferred, affixed, and

attached to the proceeds of the sale in accordance with the Agreement, with the same validity, priority, force, and effect as such Interests had upon the Buyout Policies immediately prior to the consummation of the sale of the Buyout Policies. 9. Pursuant to section 363(e) of the Bankruptcy Code, as adequate protection for any

Interest that other insurers of C&A may have in the Buyout Policies (Other Insurers), in the event that a court, arbitrator, or other tribunal with competent jurisdiction over a coverage dispute related to an Other Insurers policies determines that such Other Insurer would have been entitled, but for the terms of this Order, to recover from Hartford as a result of said Other Insurers claim for contribution, subrogation, indemnification, reimbursement, or other similar claim against Hartford that arises in relation to one or more of the Buyout Policies, including any claim for Hartfords alleged share or equitable share of the defense or indemnity of C&A or a successor-in-interest, such Other Insurers obligations under its policies shall be reduced, dollar for dollar, by the amount of said Other Insurers determined claim against Hartford that is eliminated by this Order. Further, nothing in this Order or in the Agreement shall prejudice such Other Insurers right, as a predicate to being provided with the foregoing adequate

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protection under section 363(e), to raise as an issue in any dispute arising under the Other Insurers policies, including any coverage dispute with C&A or its successor-in-interest, that such Other Insurer, but for this Order, would have had a right to pursue a claim for contribution, subrogation, indemnification, reimbursement or other similar relief against Hartford, which claim is now barred. Such Other Insurer shall not name or be required to name Hartford as a party to such dispute to assert, effect or otherwise enforce the foregoing right to adequate protection under section 363(e). Further, nothing in the Agreement or this Order shall, or shall be deemed to alter, restrict, modify, prejudice, or limit the right of any Other Insurer of C&A to assert any rights, claims, counterclaims or defenses under their respective insurance policies in any coverage dispute relating to those policies. 10. In the event that any Other Insurer either (i) obtains a final binding award (whether

by judgment, arbitration award, or other judicial or quasi-judicial proceeding) against Hartford after a contested proceeding; or (ii) agrees to a settlement with Hartford with the consent of C&A or its successor-in-interest (not to be unreasonably withheld) entitling such Other Insurer to obtain a sum certain from Hartford as a result of such Other Insurers claim for contribution, subrogation, indemnification, reimbursement, or other similar claim against Hartford that arises in relation to one or more of the Buyout Policies for its alleged share or equitable share of the defense and/or indemnity of C&A, then C&A and its successors-in-interest shall voluntarily reduce such Other Insurers obligation under its policies by the amount of such award or settlement, or return to such Other Insurer an amount equal of such final award or settlement for claims released pursuant to the Agreement, which amount shall be sufficient to eliminate Hartfords obligation to satisfy the settlement or award against it. 11. This Order shall be effective and enforceable immediately upon entry and its

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provisions shall be self-executing and shall not be stayed under Bankruptcy Rule 6004(g). The provisions of this Order are nonseverable and mutually dependent. 12. This Order, the Agreement and all related agreements or documents necessary to

effect and implement the Agreement shall be binding upon and inure to the benefit of the Estates, Hartford and any of its respective successors and assigns. The provisions of this Order shall survive any order dismissing the Bankruptcy Case. 13. The failure specifically to include any particular provision of the Agreement in

this Order shall not diminish or impair the efficacy of such provisions, it being the intent of this Court that the Agreement and each and every provision, term and condition thereof be authorized and approved in its entirety. 14. The Debtors are authorized to take all actions necessary to effectuate the relief

granted pursuant to this Order in accordance with the Motion. 15. The terms and conditions of this Order shall be immediately effective and

enforceable upon its entry. 16. Other than as specifically set forth in this Order, nothing in this Order, the

Motion, or the Agreement (including any provision that purports to be preemptory or supervening) shall in any way operate to, or have the effect of, impairing any of the Other Insurers legal, equitable, or contractual rights in any respect. The rights of the Other Insurers shall be determined under the Other Insurers respective policies or applicable insurance settlement agreements. 17. The Court retains jurisdiction with respect to all matters arising from or related

to the implementation of this Order.

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