UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 30, 1994
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File Number: 0-22138
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Triangle Pacific Corp.
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(Exact name of registrant as specified in its charter)
Delaware 94-2998971
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State or other jurisdiction or (I.R.S. Employer
incorporation or organization Identification No.)
16803 Dallas Parkway, Dallas, Texas 75248
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 931-3000
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, Par Value $.01 per share
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
At March 1, 1995, the aggregate market value of the registrant's
common stock held by non-affiliates was $188,170,605.
The number of shares outstanding of the registrant's Common Stock,
par value $.01 per share, as of March 21, 1995: Common Stock -
14,662,609 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates certain information by
reference from the registrant's Proxy Statement to be issued in
connection with its Annual Meeting of Shareholders to be held May 3,
1995.
PART I
Item 1. Business
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The Company is a Delaware corporation organized in February 1986
for the purpose of acquiring Triangle Pacific Corp., a New York
corporation ("Old Triangle"), in a leveraged buyout transaction
completed in May 1986. In September 1988, TPC Holding Corp. ("Holding")
acquired the Company in a second leveraged buyout transaction pursuant
to which the Company became a wholly-owned subsidiary of Holding.
On June 8, 1992, the Company successfully completed a capital
restructuring (the "1992 Restructuring") pursuant to which substantially
all of the Company's outstanding long-term indebtedness, redeemable
preferred stock and common stock were exchanged for new debt with lower
interest rates and new common stock.
The Company filed two registration statements with the Securities
and Exchange Commission in 1993 and sold to the public 7,939,750 shares
of the Company's Common Stock and $160 million aggregate principal
amount of 10 1/2% Senior Notes due 2003 (collectively, "the Offerings").
The net proceeds of the Offerings together with borrowings under a new
$90 million credit facility were used (i) to repay the entire unpaid
balance under the Company's previously-existing senior debt financing
agreements, redeem certain previously outstanding debentures and pay
related accrued interest, for a total of approximately $227 million, and
(ii) for working capital and general corporate purposes.
The Company's operations are conducted through a single business
segment which consists of the manufacture and distribution of building
products. The Company through its Hardwood Floors Division produces
hardwood flooring and through its Cabinet Division manufactures and
distributes kitchen and bathroom cabinets. The Company's products are
used primarily in residential new construction and remodeling. The
Company through its Building Products Division also operates a general
building materials distribution center located in Beltsville, Maryland.
The Company's business is seasonal, with demand for its products
generally highest between April and November.
Presented below is a summary of sales results for each of the
fiscal years 1990 through 1994.
1994 1993 1992 1991 1990
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(in millions)
Net Sales:
Hardwood
Floors Division $ 244.0 $ 202.0 $ 152.9 $ 117.2 $ 129.9
Cabinet Division 146.5 125.6 123.2 125.1 165.3
Building Products
Division 21.5 20.7 19.2 16.2 29.2
Intracompany
sales* (1.8) (2.0) (2.5) (2.4) (3.3)
------ ------ ------ ------ ------
Total Net Sales $ 410.2 $ 346.3 $ 292.8 $ 256.1 $ 321.1
====== ====== ====== ====== ======
*Represents intracompany sales from the Cabinet Division to the
Building Products Division which are eliminated in consolidation.
Hardwood Floors Division
------------------------
The Company's Hardwood Floors Division is the largest and best
known manufacturer of hardwood flooring in the United States. The
Company produces a complete line of hardwood flooring products and
believes that it is generally recognized for its superior quality and
service. The Company believes the Bruce name is the most recognized
brand name in hardwood flooring.
Industry Overview
Sales of hardwood flooring have grown from 2.9% of total United
States floorcovering sales in 1982 to an estimated 6.6% of estimated
total United States floorcovering sales in 1993. The Company believes
that the growth of hardwood flooring sales is due to increased consumer
preference for the aesthetic appeal of hardwood flooring and
technological advances in the production, installation and maintenance
of hardwood flooring.
Hardwood flooring competes primarily with carpet, vinyl and ceramic
tile in the floorcovering market. The increased sales of hardwood
flooring during the last decade have been achieved at the expense of
carpet and vinyl floorcovering. The Company believes that the principal
competitive factors in the floorcovering market are aesthetic appeal,
price, durability and ease of installation and maintenance.
Products and Product Development
The Company offers approximately 100 varieties of hardwood flooring
products in four basic categories - 3/4" solid strip and plank, 3/8"
laminated strip, plank and parquet and 5/16" solid strip and parquet -
in unfinished and a variety of pre-finished styles and colors. The
Company's hardwood flooring products are generally available in various
widths and lengths and are differentiated in terms of quality and price
based primarily on whether the product is finished or unfinished and on
the grade of the raw materials used to produce the product.
The Company has been a leader in developing a wide variety of new
hardwood flooring products, including (i) 5/16" solid parquet flooring,
(ii) 3/8" laminated flooring, (iii) 3/8" laminated, square-edge, pre-
finished flooring, (iv) 3/8" acrylic-impregnated flooring for commercial
applications (all of the above for glue-down installation) and (v) 3/4"
square-edge, pre-finished flooring and (vi) most recently, 5/16" solid
strip flooring. The Company believes that new product development has
enabled it to increase its sales and has contributed to the overall
growth of hardwood flooring since the mid-1970s. The Company's product
innovations have made hardwood flooring a viable alternative for a
variety of floorcovering applications for which hardwood flooring
previously had been unsuitable.
The Company has been instrumental in the development of thinner
hardwood flooring products which can be glued to the concrete slab
foundations increasingly used in new home construction. Installation of
3/4" hardwood flooring over concrete slabs requires the construction of
a false floor above the slab to which the hardwood flooring can be
nailed, thereby increasing installation time and expense. The Company
has developed 5/16" flooring products, which can be glued to wood or
concrete slab foundations, eliminating the need for a false floor. The
development of 3/8" laminated flooring (consisting of multiple layers of
oak veneer, glued and pressed together), which can be glued to a wood or
concrete sub-floor, further expanded the uses for hardwood flooring.
The dimensional stability of laminated flooring permits its installation
in kitchens and basements where the presence of moisture had previously
rendered hardwood flooring impractical.
In 1994, the Company finalized development of a water-based
solvent-free adhesive, Everbond SF, an environmentally sound mastic used
to glue down laminated and 5/16-inch solid parquet floors. Everbond SF
meets the requirements of a federal mandate scheduled to become
effective in 1996.
Also in 1994, the Company acquired Premier Wood Floors in
Statesville, North Carolina. This facility adds 100,000 square feet per
shift per week of laminated flooring capacity to its operations, with
near term potential to double that output. Premier will be operated as
a separate brand name with its own product line and marketing programs.
The Company will report the combined operations of Bruce and Premier as
the "Hardwood Floors Division".
Manufacturing
The Company manufactures its 3/4" solid oak hardwood flooring
products at its plants in Nashville, and Jackson, Tennessee; Beverly,
West Virginia, and West Plains, Missouri. These plants have the
capacity to produce a total of 1.7 million square feet of 3/4" flooring
per week. The Beverly, West Virginia plant also produces 5/16" "solid
strip" prefinished flooring with a capacity of 150,000 square feet per
week. The Company manufactures its 3/8" laminated hardwood flooring
products at its plants in Center, Texas and Port Gibson, Mississippi.
The Center plant has a capacity of 500,000 square feet of 3/8" flooring
per week and produces sufficient 1/8" oak veneer to supply approximately
one-half of its veneer requirements. The Port Gibson, Mississippi plant
has a capacity of 200,000 square feet of 3/8" flooring per week and also
supplies most of the remainder of the Center plant's veneer requirements
for the production of 3/8" laminated products. The Company manufactures
its 5/16" solid parquet products at its plant in Jackson, Tennessee,
which has the capacity to produce 400,000 square feet of 5/16" flooring
per week in addition to its production of 3/4" product.
To alleviate capacity limitations, in 1994 the Company further
expanded the plants in Beverly, West Virginia and Port Gibson,
Mississippi. The West Virginia project enabled that plant to increase
its capacity to produce 3/4" product from 540,000 square feet per week
to 690,000 square feet per week. The Port Gibson project expanded that
plants capacity to produce 3/8" laminated flooring from 200,000 square
feet per week to 350,000 square feet per week, while maintaining the
Port Gibson plant's ability to supply veneer to the Center plant. These
capacity expansions, including the Premier acquisition, have increased
total hardwood flooring capacity from 2.65 million to 3.2 million square
feet per week.
The Beverly, West Virginia facility is operated by the Company
under an 18-year lease with the West Virginia Economic Development
Corporation expiring 2007 (subject to extension until 2017 at the option
of the Company). In connection with the Beverly, West Virginia plant
expansion, the Company made capital expenditures of $7.5 million for the
purchase of equipment in the name of the West Virginia Economic
Development Corporation. Pursuant to the operating lease, the West
Virginia Economic Development Corporation reimbursed the Company for
$5.5 million of the cost of such equipment.
The following table sets forth certain information concerning the
manufacturing facilities operated by the Hardwood Floors Division.
Owned/ Capacity (1)
Location Leased Product (Sq. Ft./Week)
-------- ------ ------------------------ --------------
Nashville, TN Owned 3/4" strip and plank; 450,000
pre-finished, unfinished
West Plains, MO Owned 3/4" strip; pre-finished, 360,000
unfinished
Beverly, WV Leased 5/16" solid strip; pre-finished 150,000
and 3/4" strip; pre-finished, 690,000
unfinished
Jackson, TN (2) Owned 5/16" solid parquet; 400,000
pre-finished, unfinished
3/4" strip; unfinished 200,000
Center, TX (3) Owned 3/8" laminated strip, plank 500,000
and parquet; pre-finished,
unfinished
Port Gibson, MS (3) Owned 3/8" laminated strip, plank 350,000
and parquet; pre-finished,
unfinished
Statesville, NC Owned 3/8" laminated strip, plank, 100,000
pre-finished, unfinished ---------
Total Capacity 3,200,000
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(1) Production capacity based on multiple shift operations.
(2) The Jackson plant also manufactures dimension parts used by the
Cabinet Division in cabinet production. See "- Cabinet Division -
Manufacturing" below.
(3) The Center and Port Gibson plants also produce 1/8" veneer, which
is used in the manufacture of 3/8" laminated products at these
plants and at the Statesville, N.C. plant.
Raw materials for the hardwood flooring products produced at the
Nashville, Jackson, Beverly and West Plains plants consist primarily of
rough cut oak lumber. Each plant obtains lumber from local independent
sawmill operators, purchasing entire truckloads of ungraded, mixed
specie lumber. The Company maintains an inventory of purchased lumber
which is sufficient for approximately three to four months of
operations. The quality and efficiency of lumber purchasing and grading
operations are important determinants of manufacturing yields and
productivity.
Purchased lumber is stacked for drying in the open air for 90 to
120 days, and then placed in dry kilns for approximately five to seven
days to reduce moisture content. Where necessary, the Company operates
pre-drying kilns, which shorten the required open-air drying time. The
Company's drying processes are another important determinant of
satisfactory product yields. Following drying, the flooring-grade
lumber is cut into various sizes of strip, plank and parquet flooring.
The products are then sanded and, in most cases, beveled. A majority of
the Company's products are pre-finished with a urethane or combination
stain and wax finish. Pre-finished products are more durable and do not
require a time-consuming sanding and finishing process at the
installation site. Recently, the Company began treating a portion of
its 3/8" laminated product with an acrylic impregnating process to
produce its new Wear Master line of commercial flooring. The
Statesville, N.C. plant purchases veneer from outside sources and also
obtains veneer from the Port Gibson plant, which is converted into
laminated products.
Raw materials for the laminated hardwood flooring products
manufactured at the Company's plants in Center, Texas and Port Gibson,
Mississippi consist of oak logs which are purchased primarily from
independent loggers located within about 100 miles of the respective
plants. Purchased logs are stored in soaking ponds until needed, and
then debarked, soaked in hot water or steamed, cut into five-foot
lengths, loaded into a lathe, and peeled to produce sheets of thin oak
veneer. Layers of veneer are then pressed into plywood which is cut
into strip, plank and parquet hardwood flooring and pre-finished. The
Company employs advanced veneer manufacturing processes which
substantially increase material yields, thereby reducing costs. The
total conversion time for laminated products, from log to finished
product, is approximately one week.
Sales
The Hardwood Floors Division sells its products to over 100
independent wholesale floorcovering distributors located throughout the
United States and eight other countries. Most distributors handle a
diverse line of floorcovering products in addition to hardwood flooring.
The Company's distributors sell their products to retail floorcovering
dealers, installation contractors, builders, remodelers and retail home
center stores. The Company believes that new home construction and
remodeling account for approximately 40% and 60%, respectively, of its
hardwood flooring sales.
The Bruce trademark is a valuable asset because of its significant
brand name recognition. Based on independent surveys, the Company
believes that Bruce has the highest consumer brand name recognition of
any hardwood flooring product. Sales and marketing efforts for Bruce
hardwood floors are designed to further solidify its well-recognized
position among resellers of hardwood flooring and to heighten Bruce's
brand name recognition among end users. The Company advertises its
Bruce hardwood flooring products in national and regional publications,
including House Beautiful, Better Homes and Gardens, Sunset, Southern
Living and others.
The Company has developed Bruce product displays, more than 50,000,
of which have been placed in floorcovering dealer showrooms. These
product displays are available in a variety of sizes designed to
accommodate the varying floor spaces available in dealer showrooms. The
Company has also developed marketing programs specifically tailored to
retail home center stores and commercial users and has developed
displays to demonstrate the ease of do-it-yourself installation of
hardwood floors. The do-it-yourself installation displays have been
placed in approximately 4,000 retail locations. Management believes that
both the product displays and the do-it-yourself installation displays
are important sales promotion devices.
The Company operates a training facility at its Nashville plant to
give its Bruce floorcovering distributors, dealers and contractors
training in the sale, installation and maintenance of hardwood floors.
Providing this training, results in better educated resellers and
installers, which the Company believes should enhance their ability to
sell more Bruce products and improve consumer satisfaction with the
installed products.
The Hardwood Floors Division currently employs 53 salespersons who
are assigned geographical sales territories. In addition to making
direct sales to independent distributors, the sales force assists
distributors in broadening their market penetration by making joint
sales calls on dealers, conducting installation training for
distributors and their customers, and advising on the use of advertising
and special product promotions. Salespersons earn bonuses, in addition
to their salaries, based on volume and sales mix.
Competition
The Hardwood Floors Division is currently the largest manufacturer
of hardwood flooring in the United States.
The floorcovering industry, which includes carpeting, sheet vinyl,
vinyl tile, hardwood flooring and ceramic tile, is highly competitive.
The principal competitive factors in floorcovering are aesthetic appeal,
price, durability and ease of installation and maintenance. Hardwood
flooring is generally more durable than other floorcoverings. Thus,
although the average selling price of hardwood flooring is higher than
that of the selling price of most other floorcoverings, the Company
believes that the overall cost is competitive after taking into account
average product life, maintenance expenses and removal and replacement
costs.
The Company believes it competes favorably based on the high
quality of the Company's products and the additional product support
services offered by the Company and on the Company's network of
independent distributors, its production of a complete line of hardwood
flooring products, its innovative product development and manufacturing
technology, and its well-known Bruce trademark.
Cabinet Division
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The Company estimates that new construction accounts for
approximately one-third of the total cabinet industry sales with
remodeling generating the remaining two-thirds. Residential new
construction activity is more cyclical than remodeling activity, which
has historically been relatively stable. Cabinet manufacturing is a
highly fragmented industry with competitors of widely varying production
capacities, distribution capabilities and financial resources. In
recent years, contraction in the industry has resulted in smaller
competitors leaving the market and more aggressive cost controls and
marketing programs being implemented by the remaining participants. The
Kitchen Cabinet Manufacturing Association estimates that there are 8,000
manufacturers of kitchen and bathroom cabinets competing for
approximately 50% of the total cabinet market. The balance of the
market is supplied by trim carpenters and job-site cabinet makers. The
market is dependent on new home construction and remodeling activity.
The entire cabinet manufacturing industry is characterized by
substantial excess capacity. In the late 1970's, new construction
expanded to meet the demands of more than two million housing starts
annually plus remodeling. Price competition is severe, due principally
to the excess industry capacity.
Products and Product Development
The Company manufactures kitchen and bathroom cabinets in
approximately 100 different styles and colors. Cabinets are marketed
under the brand names "TriPac", "IXL", "Classic Bath Products" and
"Bruce"." The Company continues to develop new product styles. While the
styles of the Company's cabinets vary from other manufacturers' brands,
kitchen and bathroom cabinet construction is fundamentally the same
throughout the industry. Differences in the price and quality of the
Company's cabinets result from variations in basic materials (e.g.,
solid oak, plywood, particleboard or fiberboard doors), the type and
quality of exterior and interior finish, the quality of the hardware and
other features such as adjustable shelves and interior storage aids.
In 1994, the Company introduced three new products: Baseline, and
Gemini, both price-competitive lines aimed at the multi-family market;
and Ultrawood, an all-wood cabinet developed for the home center market.
These new lines complement the existing Premier cabinet line, which was
designed primarily for the single-family market.
Manufacturing
The Company operates seven cabinet manufacturing plants, generally
located within 500 miles of most major population centers in the United
States. These regional plants enable the Company to compete with local
and regional manufacturers on the basis of the cost of freight, speed of
delivery and service to customers. The Company also operates a
manufacturing facility at Jefferson City, Tennessee which supplies
cultured marble vanity tops, primarily to the Cabinet Division, and to
retail home center stores.
The following table sets forth certain information concerning the
Company's cabinet manufacturing facilities:
Owned/ Capacity (1)
Location Leased Product (Units/Week)
-------- ------ -------------------- ------------
Auburn, NE Owned Kitchen and bathroom 10,000
cabinets
Elizabeth City, NC Owned Bruce and IXL kitchen 15,000
and bathroom cabinets
and European frameless
cabinets
McKinney, TX Owned Kitchen and bathroom 6,000
cabinets
Morristown, TN Owned Kitchen and bathroom 9,000 (2)
cabinets
Morristown, TN Owned Kitchen and bathroom 7,500
cabinets
Thompsontown, PA Owned Kitchen and bathroom 15,000
cabinets
Union City, IN Owned Kitchen and bathroom 9,000
cabinets _______
71,500
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(1) Production capacity based on single shift operations.
(2) This plant also produces finished end panels for certain other
cabinet plants.
The plants are primarily cabinet assembly operations. The plant
inventories consist of raw materials, component parts and a limited
amount of work in process. Raw materials utilized by the plants consist
of sheet stock of plywood, particleboard or fiberboard, and component
parts consist of dimension parts (front frame parts, doors and drawer
fronts), finished end panels, finishing materials and hardware. In the
cabinet assembly operations, front frame parts, doors and drawer fronts
are sanded smooth and color stained and finished. Then, end panels,
tops, bottoms and shelves are glued and stapled to the front frames,
drawers are assembled to drawer fronts and hardware is attached. The
completed cabinet is inspected, packed and staged for shipment.
Sheet stock is a commodity product purchased from a variety of
suppliers. The Company obtains its dimension parts, consisting of front
frame parts, doors and drawer fronts, primarily from its manufacturing
facility located at the hardwood flooring plant in Jackson, Tennessee.
See "- Hardwood Floors Division - Manufacturing" above. The Jackson
plant supplies 74% of the Cabinet Division's front frame parts
requirements. The Company manufacturers finished end panels at its
Morristown, Tennessee cabinet plants. Finishing materials and hardware
are purchased from several suppliers.
The Cabinet Division is not dependent on any single supplier for
any of its raw materials or component parts, other than the Jackson
dimension parts plant. The Company believes its sources of supply are
adequate to meet its needs. Imports from foreign suppliers, which
account for less than ten percent of the Company's cabinet materials,
consist of wood veneer, laminated veneer door panels and certain
hardware items. While the Company maintains insurance coverage on all
of its properties, including the Jackson dimension parts plant, the loss
of that plant could have an adverse effect on the Company's operations.
See "- Properties" below.
Sales and Marketing
The Company distributes its cabinets directly from the factories
and also through 42 company-owned distribution centers, including seven
new locations opened in 1994, in major markets accross the country.
These centers, which cater largely to builders and remodeling
contractors, generate more than 50% of the Cabinet Division's total
sales.
The Company-operated distribution centers are also used to support
sales to major builders and retail home centers by providing prompt
replacements for lost or damaged cabinets and delivery and storage for
truckload quantities of cabinets pending staged deliveries to job sites.
The Company believes that its distribution centers are an important
factor in maintaining and increasing its sales, and intends to open
additional distribution centers in new geographic markets as conditions
warrant.
Buyers Choice is an innovative marketing strategy developed to
enable buyers to design semi-custom cabinets to meet their individual
preferences. Buyers Choice product displays contain samples of the
various types, colors and qualities of basic materials, hardware and
other features available to complete a semi-custom cabinet design. The
buyer chooses the preferred combination and the Cabinet Division
assembles the cabinets in accordance with the buyer's specifications.
The Buyers Choice program has been popular with single-family home
builders, who use the displays in model homes in connection with their
marketing efforts.
The Company provides personal computer software for use primarily
by retail home center stores to create complete kitchen floor plans,
including elevations and product specifications lists, with related
prices, based on room measurements provided by customers. Management
believes this software package to be a significant sales aid.
The Cabinet Division has one of the largest sales forces in the
cabinet industry, currently employing approximately 223 salespersons.
The sales force makes direct sales and service calls on builders,
independent distributors and retail home center stores, and offers
kitchen design, cabinet installation and cabinet display and marketing
advice to retail home center stores and independent distributors. Most
sales personnel are affiliated with one of the Company's distribution
centers and are responsible for sales to all customers within their
sales area including sales of cabinets directly by the plant. The
Cabinet Division maintains a competitive salary base and provides
performance incentives by compensating its sales force with bonuses tied
to volume and profitability.
Competition
The Company is one of the largest manufacturers of kitchen and
bathroom cabinets in the U.S.
The cabinet industry is a mature, highly competitive, regionalized
and highly fragmented industry with thousands of cabinet makers
competing primarily on a local basis. There is a relatively high manual
labor content in cabinet products. Because of the low capital
requirements for cabinet assembly, it is relatively easy and inexpensive
for small cabinet makers to enter the industry as manufacturing
competitors. In addition, high transportation costs limit the area to
which a manufacturer can ship cabinets and still remain competitive.
This has led the Company, and more recently, some of its larger
competitors, to open regional manufacturing plants and distribution
centers. The Company's seven regional manufacturing plants and 42
Company-operated distribution centers are important factors in the
Company's ability to maintain cost and price competitiveness with local
and regional manufacturers.
Due to significant excess manufacturing capacity, the cabinet
industry has been subject to severe price competition. Other
competitive factors include quality of product, production capacity and
speed of delivery. The Company believes it competes favorably because
of its breadth and quality of product offerings, and its production
capacity, regional manufacturing facilities, national sales force and
distribution capabilities.
Building Products Division
--------------------------
The Company operates a general building materials distribution
center in Beltsville, Maryland, located between Baltimore and
Washington, D.C. Principal products sold, primarily to builders,
include lumber, doors, windows, kitchen and bathroom cabinets and custom
millwork. The Building Products Division is the largest customer of the
Cabinet Division and also purchases hardwood flooring products from
local distributors of the Hardwood Floors Division. Management believes
that the Building Products Division has a reputation in its market area
for quality products and a high level of customer service.
Backlog
-------
The Company generally sells its flooring products from inventories
on hand. The company produces its cabinets primarily in response to
firm orders and, to a lesser extent, to maintain a working inventory at
distribution centers operated by the Company. The Company generally
ships its cabinets within a short time (e.g., one week) after receipt of
an order. Accordingly, the dollar amount of backlog orders believed to
be firm is not significant or indicative of the Company's future sales
and earnings.
Employees
---------
As of December 30, 1994, the Company employed approximately 4,001
persons, of which 2,380 were employed by the Hardwood Floors Division,
1,491 by the Cabinet Division, 121 by the Beltsville Division and the
remainder in the Company's headquarters and other operations. The
Company has entered into collective bargaining agreements with hourly
employees at three of its seven hardwood flooring plants, and three of
its seven cabinet plants covering in the aggregate approximately 1,623
employees. Management considers its employee relations to be
satisfactory.
Environmental Matters
---------------------
The Company's operations are subject to extensive federal, state
and local laws and regulations relating to the generation, storage,
handling, emission, transportation and discharge of materials into the
environment. Permits are required for certain of the Company's
operations, and these permits are subject to revocation, modification
and renewal by issuing authorities. Governmental authorities have the
power to enforce compliance with their regulations, and violations may
result in the payment of fines or the entry of injunctions, or both.
The Company does not believe it will be required under existing
environmental laws and enforcement policies to expend amounts which will
have a material adverse effect on its results of operations or financial
condition. However, the requirements of such laws and enforcement
policies have generally become stricter in recent years. Accordingly,
the Company is unable to predict the ultimate cost of compliance with
environmental laws and enforcement policies.
Item 2. Properties
----------
The Company's principal manufacturing facilities are described
under "- Hardwood Floors Division - Manufacturing" and "- Cabinet
Division - Manufacturing" above. Management believes that the Company's
plants and properties are generally well-maintained and in good
operating condition.
The Company maintains blanket property insurance coverage on all
its properties with aggregate limits of $100 million. The Company is
also insured for losses arising from loss of inventory, business
interruption and certain extra expense. Although this coverage is
sufficient to replace any of the Company's manufacturing facilities, the
complete loss of the dimension parts plant in Jackson, Tennessee for an
extended period of time could adversely affect the Company's operations.
See "- Cabinet Division - Manufacturing" above.
Item 3. Legal Proceedings
-----------------
The Company is not a party to any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Executive Officers of the Registrant
------------------------------------
Set forth below as of December 30, 1994 are the names, ages and
principal occupations of the executive officers of the Company, as well
as certain other information concerning their business experience.
Name and Positions held Principal Occupation
with the Company and Other Information
----------------------- ---------------------
Floyd F. Sherman Mr. Sherman has served as Chairman
Chairman of the Board of of the Board and Chief Executive
Directors, and Chief Officer since July, 1992. Prior to
Executive Officer November, 1994 he served as
President of the Company since 1981.
Prior to 1981, he served as
Executive Vice President of the
Company. Mr. Sherman is 55 years
old and became a director of the
Company in 1986.
M. Joseph McHugh Mr. McHugh has served as President
Director, President and Chief Operating Officer of the
and Chief Operating Company since November, 1994.
Officer Prior thereto, he served as Senior
Executive Vice President and
Treasurer of the Company since 1981.
Prior to 1981, he served as
Executive Vice President of the
Company. He became a director of
the Company in 1986. Mr. McHugh is
also a director of Pillowtex
Corporation. He is 57 years old.
Robert J. Symon Mr. Symon has served as Executive
Executive Vice President, Vice President, Treasurer and
Treasurer and Chief Chief Financial Officer of the
Financial Officer Company since November, 1994. Prior
thereto he served as Vice President
- Controller of the Company since
1978. Mr. Symon is 63 years old and
served as a director of the Company
from December 1988 to June 1992.
John G. Conklin Mr. Conklin has served as
Executive Vice President Executive Vice President of the
Company since November, 1994. Prior
thereto he served as a Vice
President of the Company since 1978.
He has been President of the Cabinet
Division since September 1993.
Prior thereto he was responsible for
cabinet manufacturing. Mr. Conklin
is 61 years old.
Darryl T. Marchand Mr. Marchand has served as Vice
Vice President, Secretary President, Secretary and General
and General Counsel Counsel of the Company since 1986.
Prior thereto he served as Vice
President - Legal of the Company
from 1981 to 1986 and as Treasurer
from February to August, 1981. Mr.
Marchand is 52 years old.
Charles A. Engle Mr. Engle has served as a Vice
Vice President President of the Company since 1979.
His primary responsibility for the
Company is Cabinet Division sales.
Mr. Engle is 51 years old.
John W. Esch Mr. Esch has served as a Vice
Vice President President of the Company since
November, 1994. He has been a
division Controller of the Cabinet
Division since 1977. Mr. Esch is
50 years old.
James T. Fidler Mr. Fidler has served as a Vice
Vice President President of the Company since 1981.
Mr. Fidler is primarily responsible
for data processing for the Company.
Mr. Fidler is 52 years old.
Michael J. Kearins Mr. Kearins has served as a Vice
Vice President President of the Company since 1985.
He had been a divisional Vice
President of sales of the Bruce
Hardwood Floors Division from
December, 1983 to May, 1985. He is
primarily responsible for sales and
marketing in the Bruce Hardwood
Floors Division. Prior to 1983, he
had been a Regional Sales Manager of
the Company. Mr. Kearins is 48
years old.
E. Dwain Plaster Mr. Plaster has served as a Vice
Vice President President of the Company since
November, 1994. He has been a
divisional Controller of the Bruce
Hardwood Floors Division since 1977.
Mr. Plaster is 45 years old.
James E. Price Mr. Price has served as a Vice
Vice President President of the Company since
November, 1994. He has been Vice
President of manufacturing of the
Bruce Hardwood Floors Division since
March, 1993. Prior thereto he was
General Manager of that division
since 1984. He had been a Plant
Manager of the Company since 1979.
Mr. Price is 52 years old.
Allen Silver Mr. Silver has served as a Vice
Vice President President of the Company since 1985.
Prior to that time he had been a
divisional Vice President of
manufacturing of the Cabinet
Division. Mr. Silver is 55 years
old.
David Weaver Mr. Weaver has served as a Vice
Vice President President of the Company since
November, 1994. He has been General
Manager of the Building Products
Division since June, 1989. Prior
thereto he was a Sales Manager of
the Company since 1987 and a Sales
Representative of the Company since
1968. Mr. Weaver is 48 years old.
PART II
Item 5. Market for the Registrant's Common Equity and Related
-----------------------------------------------------
Stockholder Matters
-------------------
A) Price range of common stock
The following table shows the range of market prices for the common
stock on the NASDAQ National Market System for each quarter during the
past two fiscal years. (Trading began August 11, 1993).
Market Price
1993 High Low
---- ------------
Third Quarter 12-1/4 10
Fourth Quarter 15-7/8 11-3/8
1994
----
First Quarter 17-1/4 12-5/8
Second Quarter 14-1/8 11-1/4
Third Quarter 14-3/8 11-1/2
Fourth Quarter 13-7/8 11-3/4
B) Approximate number of equity security holders (As of December
30, 1994)
Class of Security Number of Record Holders
Common Stock ($.01 par value) 1,950
C) Dividend Policy
The Company has not declared or paid any dividends on its Common
Stock. Management currently intends to retain future earnings for the
operation and expansion of the Company's business and does not
anticipate paying any cash dividends in the foreseeable future. The
payment of cash dividends is prohibited under the terms of the bank
credit facility and is restricted under the terms of the indenture
relating to the Company's 10 1/2% Senior Notes due 2003.
Item 6. Selected Consolidated Financial Data
------------------------------------
(In thousands, except per share amounts)
The selected consolidated financial data of the Company presented
below for the five fiscal years ended December 30, 1994 was derived from
the consolidated financial statements of the Company and should be read
in conjunction with the consolidated financial statements and related
notes included herein.
Fiscal Fiscal Seven Five Fiscal Fiscal
year year months months year year
ended ended ended ended ended ended
Dec. Dec. Jan. Jun. Jan. Dec.
INCOME 30, 31, 1, 8, 3, 28,
STATEMENT 1994 1993 1993 1992* 1992* 1990*
DATA ----------------------------------------------------------
Net sales $410,159 $346,296 $173,426 $119,417 $256,112 $321,126
Cost of
sales 300,160 269,360 137,413 90,991 204,026 250,305
----------------------------------------------------------
Gross
profit 109,999 76,936 36,013 28,426 52,086 70,821
Selling,
general and
admin-
istrative 57,928 44,213 27,179 19,404 41,597 47,383
Gain on
insurance
settlement - - (1,350) (3,624) - -
Amortization
of goodwill 1,520 1,613 884 1,863 4,463 4,463
Interest 18,920 19,406 11,289 25,786 59,719 56,983
-----------------------------------------------------------
Income (loss)
before income
taxes and
extra-
ordinary
item 31,631 11,704 (1,989) (15,003) (53,693) (38,008)
Provision
(benefit) for
income
taxes 12,829 4,501 (940) - (10,028) (12,857)
-----------------------------------------------------------
Income (loss)
before extra-
ordinary
item 18,802 7,203 (1,049) (15,003) (43,665) (25,151)
Extraordinary
items - gain
from extin-
guishment
of debt - - - 201,308 - -
- Loss from
repayment of
debt - (11,307) - - - -
-----------------------------------------------------------
Net income
(loss) $ 18,802 $ (4,104) $ (1,049) $186,305 $(43,665) $(25,151)
===========================================================
Per share
data: (1)
Net income
(loss)
before
extraordinary
items $ 1.28 $ 0.74 $ (0.16)
Net income
(loss) $ 1.28 $ (0.42) $ (0.16)
Weighted
average
shares out-
standing 14,660 9,714 6,707
Fiscal years ended
---------------------------
December 31, January 1,
1993 1993
------------ ----------
Pro-Forma Income Data (3)
Net income (loss) before
extraordinary items, as reported $ 7,203 $ (16,052)
Pro-Forma adjustments re:
1992 restructuring & 1993
recapitalization 490 16,852
---------- ----------
Pro-Forma net income before
extraordinary items $ 7,693 $ 800
========== ==========
Pro-Forma net income before
extraordinary items, per share $ 0.53 0.05
Weighted average shares
outstanding 14,648 14,648
Dec. Dec. Jan. June Jan. Dec.
BALANCE 30, 31, 1, 8, 3, 28,
SHEET DATA 1994 1993 1993 1992* 1992* 1990*
---------------------------------------------------------
Working
capital $ 94,354 $ 74,082 $ 53,480 $ 79,421 $ 78,927 $ 63,599
Total assets 363,451 326,545 302,259 323,563 453,105 465,352
Long-term
debt, net
of current
maturities, and
redeemable
preferred
stock 168,388 162,897 198,332 222,483 470,506 450,948
Common
shareholders'
investment 106,894 $ 88,047 $ 18,951 $ 20,000 $(121,081) $(71,218)
* Prior to the restructuring on June 8, 1992 (See Notes 2 and 3 to the
Consolidated Financial Statements).
__________
(1) As the Company was a wholly-owned subsidiary of another company,
earnings per share are not meaningful for the periods prior to
June 8, 1992.
(2) The balance sheet data as of June 8, 1992 (unaudited) reflects the
quasi-reorganization adjustments recorded by the Company on that
date. (See Notes 2 and 3 to the Consolidated Financial
Statements).
(3) See Note 10 to the Consolidated Financial Statements.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
---------------------
The following table sets forth selected information concerning the
Company's results of operations for fiscal 1994, 1993 and 1992. For
clarity of presentation, the discussion of results of operations for
fiscal 1992 reflects the combined results of operations for the five
month period ended June 8, 1992, the date the 1992 Restructuring was
completed, and the seven month period ended January 1, 1993.
Fiscal Year
------------------------
1994 1993 1992
------ ------ ------
(Dollars in millions)
Net sales:
Hardwood Floors Division $244.0 $202.0 $152.9
Cabinet Division 146.5 125.6 123.2
Building Products Division 21.5 20.7 19.2
Intracompany sales (1.8) (2.0) (2.5)
----- ----- -----
Total net sales 410.2 346.3 292.8
===== ===== =====
Gross profit 110.0 76.9 64.4
Selling, general and administrative
expenses 57.9 44.2 46.6
Gain on insurance settlement - - (5.0)
Amortization of goodwill 1.5 1.6 2.7
----- ----- -----
Operating income $ 50.6 $ 31.1 $ 20.1
===== ===== =====
As a percent of net sales:
Gross profit 26.8% 22.2% 22.0%
Selling, general and administrative
expenses 14.1 12.8 15.9
Operating income 12.3 9.0 6.9
Fiscal year 1994 compared to Fiscal year 1993
---------------------------------------------
Net sales for fiscal 1994 were $410.2 million, or 18.4% greater
than the $346.3 million in net sales for fiscal 1993. Net sales for the
Hardwood Floors Division increased 20.8% to $244.0 million from $202.0
million in the prior year. The increase in hardwood flooring sales
resulted primarily from an increase in units sold. The second half of
1994 benefited from the sales generated by Premier Wood Floors which was
acquired on July 1, 1994.
Cabinet Division net sales for 1994 were $146.5 million, or an
increase of 16.7% over 1993 net sales of $125.6 million. While unit
sales increased by 2.7% the major portion of the growth in sales was
attributable to a more favorable mix of cabinets sold and to a lesser
extent to price increases.
Net sales of the Building Products Division increased 3.9% in 1994
to $21.5 million compared to $20.7 million in 1993.
Gross profit for fiscal 1994 was $110.0 million, or 26.8% of net
sales, compared to $76.9 million or 22.2% of net sales in fiscal 1993.
The improvement in gross profit resulted primarily from higher unit
sales and to a lesser extent from increased prices. Lower lumber costs
in 1994 compared to 1993 were also a significant factor. In addition
the Company benefited from improved efficiency generated at the plants
and in part by capital improvements in recent years to increase
productivity.
Selling, general and administrative expenses were $57.9 million, or
14.1% of net sales, in fiscal 1994 compared to $44.2 million, or 12.8%
of net sales in fiscal 1993. The major portion of the increased
expenses was higher spending levels for selling expense in the Hardwood
Floors Division. These increased expenses were for consumer, co-op and
trade advertising, display and tradeshow expenses and the expenses
associated with the promotion of new products. Administrative expenses
were higher due to larger provisions for incentive bonuses and profit
sharing plans in accordance with pre-set goals.
Operating income was $50.6 million, or 12.3% of net sales, in
fiscal 1994 compared to $31.1 million, or 9.0% of net sales in fiscal
1993. These improved results were generated by the improved performance
in gross profit offset in part by higher levels of spending for selling,
general and administrative expenses.
Interest expense was $18.9 million in fiscal 1994 compared to $19.4
million in fiscal 1993.
Net income for fiscal 1994 was $18.8 million compared to net income
before an extraordinary item for fiscal 1993 of $7.2 million. Higher
net sales along with an increase in operating income accounted for this
improvement.
Fiscal year 1993 compared to Fiscal year 1992
---------------------------------------------
Net sales for fiscal 1993 were $346.3 million, or 18.3% greater
than the $292.8 million in net sales for fiscal 1992. Net sales for the
Hardwood Floors Division increased 32.1% to $202.0 million from $152.9
million in the prior year. The increase in hardwood flooring sales
resulted from increased unit sales and increased average sales prices.
Cabinet Division net sales for the year were $125.6 million or an
increase of 1.9% over 1992 net sales of $123.2 million. During 1993, we
focused our sales and marketing attention on the stronger and more
stable single-family housing markets, yet without deserting either the
multi-family or home center business. Net sales of the Building
Products Division increased 7.8% to $20.7 million from $19.2 million in
the prior year. The increased sales resulted primarily from an improved
housing market in the Washington, D.C., Baltimore and Northern Virginia
areas.
Gross profit for fiscal 1993 was $76.9 million or 22.2% of net
sales, compared to $64.4 million, or 22.0% of net sales in the previous
year. All divisions experienced higher raw material prices, especially
for lumber and logs. Increased sales prices, together with improved
operations and plant utilization, especially in the Hardwood Floors
Division, resulted in the modest improvement in gross profit as a
percent of sales.
Selling, general and administrative expenses were $44.2 million or
12.8% of net sales, in fiscal 1993 compared to $46.6 million, or 15.9%
of net sales, in the prior year. The reduction in spending for selling,
general and administrative expenses was primarily in the Cabinet
Division where salaried payroll and related expenses were reduced. Also
in 1992, selling, general and administrative expenses included a $.9
million expense relating to the common stock issued to management in
connection with the 1992 Restructuring.
Operating income was $31.1 million, or 9.0% of net sales, in fiscal
1993 compared to $20.1 million or 6.9% of net sales, in the previous
year. The improvement was $16.0 million before the gain in 1992 of $5.0
million from the Thompsontown cabinet plant fire insurance settlement.
The improved results were attributable to higher net sales, slightly
higher gross margins, lower selling, general and administrative expenses
and lower goodwill amortization attributable to the 1992 Restructuring.
Interest expense was $19.4 million in fiscal 1993 compared to $37.1
million, in the prior fiscal year due principally to the effects of the
1992 Restructuring.
Net income before an extraordinary item for fiscal 1993 was $7.2
million compared to a net loss of $16.1 million before an extraordinary
item in fiscal 1992. Higher net sales, the reduction in interest
expense and increase in operating income were significant factors in
this improvement.
Liquidity And Capital Resources
-------------------------------
In 1993 the Company completed two public offerings of 7,939,750
shares of the Company's common stock and $160 million aggregate
principal amount of 10-1/2% senior notes. The net proceeds of the
public offerings, together with borrowings under a new $90 million bank
credit facility executed on August 4, 1993, (the "New Credit Facility")
were used (i) to repay the entire unpaid balance under the Company's
previously existing senior debt financing agreements, redeem certain
previously outstanding debentures and pay related accrued interest, for
a total of approximately $227 million, and (ii) for working capital and
general corporate purposes. As a result of this repayment of debt, the
Company incurred an extraordinary loss of approximately $11.3 million,
net of tax, as a result of the original issue discount on certain of the
repaid notes as well as the premium required to redeem the debentures.
The New Credit Facility provides for up to $90 million of revolving
credit loans for working capital and for letters of credit.
Availability of borrowings under the New Credit Facility is based upon a
formula related to inventory and accounts receivable. At December 30,
1994, there were no borrowings under this facility.
For the fiscal year ended December 30, 1994, cash increased by
$24.1 million. Net cash provided by operating activities was $37.0
million and $7.0 million was received from Industrial Revenue Bond Notes
issued to finance the expansion of the Bruce Hardwood Floors plant in
Port Gibson, Mississippi. Cash of $20.9 million was used primarily for
additions to property, plant and equipment, the expansion of the Port
Gibson plant, construction deposits relating to expansion of the
Hardwood Floors plant in West Virginia, long-term debt payments and the
acquisition of Premier Wood Floors on July 1, 1994 for approximately
$5.1 million.
At December 30, 1994, the Company had working capital of $94.4
million, or 26.0% of total assets, and $56.3 million of unused bank
borrowing capacity.
As of December 30, 1994, the Company has utilized all net operating
loss carryforward benefits. For 1994 $10.7 million of Federal and state
income taxes have been paid or are payable. In 1993 the comparable
amount was $.2 million.
The Company believes that borrowing availability under the New
Credit Facility and cash generated from operations will be adequate to
fund working capital requirements, debt service payments and the planned
capital expenditures of $34 million, of which $8 million is applicable
to a portion of a planned new hardwood floors plant scheduled to start
construction in the third quarter of 1995.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Triangle Pacific Corp.:
We have audited the accompanying consolidated balance sheets of
Triangle Pacific Corp. and subsidiaries (a Delaware corporation) as of
December 30, 1994 and December 31, 1993, and the related consolidated
statements of operations, changes in shareholders' investment and cash
flows for the fiscal years ended December 30, 1994 and December 31,
1993, the seven-month period ended January 1, 1993 and the five-month
period ended June 8, 1992. These financial statements and the schedule
referred to below, are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Triangle Pacific Corp. and subsidiaries as of December 30, 1994 and
December 31, 1993 and the results of their operations and their cash
flows for the fiscal years ended December 30, 1994 and December 31,
1993, the seven-month period ended January 1, 1993 and the five-month
period ended June 8, 1992, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. Schedule II
is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's
rules and is not part of the basic consolidated financial statements.
This schedule has been subjected to the auditing procedures applied in
our audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic consolidated
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Dallas, Texas
February 6, 1995
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 30, December 31,
ASSETS 1994 1993
Current assets: ----------- ------------
Cash and cash equivalents $ 24,906 $ 785
Receivables (net of allowances
of $2,491 & $3,323 respectively) 43,303 39,454
Inventories 70,900 64,072
Prepaid expenses 3,934 4,273
-------- --------
Total current assets 143,043 108,584
-------- --------
Property, plant and equipment:
Land 12,003 13,452
Buildings 43,452 43,382
Equipment, furniture and fixtures 79,568 65,759
-------- --------
135,023 122,593
Less accumulated depreciation 21,110 13,171
-------- --------
113,913 109,422
Other assets:
Goodwill 56,617 58,026
Trademark 29,933 30,733
Other 13,237 11,654
Deferred financing costs 6,708 8,126
-------- --------
Total assets $ 363,451 $ 326,545
======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities
Current portion of long-term debt $ 1,527 $ 1,467
Accounts payable 17,723 13,336
Accrued liabilities 28,112 19,699
Income taxes payable 1,327 -
-------- --------
Total current liabilities 48,689 34,502
-------- --------
Long-term debt, net of current portion 168,388 162,897
-------- --------
Deferred income taxes 39,480 41,099
-------- --------
Total liabilities 256,557 238,498
======== ========
Shareholders' investment:
Common stock - $.01 par value,
authorized shares - 30,000,000
issued and outstanding shares -
14,662,609 at December 30, 1994
and 14,647,607 at
December 31, 1993 147 146
Additional paid-in capital 93,098 93,054
Retained earnings (deficit) 13,649 (5,153)
-------- --------
Total shareholders' investment 106,894 88,047
-------- --------
Total liabilities and shareholders'
investment $ 363,451 $ 326,545
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share amounts)
Fiscal Fiscal Seven Five
Year Year Months Months
Ended Ended Ended Ended
December 30, December 31, January 1, June 8,
1994 1993 1993 1992*
-------------------------------------------------
Net Sales $410,159 $346,296 $173,426 $119,417
------- ------- ------- -------
Costs and expenses:
Cost of sales 300,160 269,360 137,413 90,991
Selling, general
and administrative 57,928 44,213 27,179 19,404
Gain on insurance
settlement - - (1,350) (3,624)
Amortization of
goodwill 1,520 1,613 884 1,863
Interest 18,920 19,406 11,289 25,786
------- ------- ------- -------
378,528 334,592 175,415 134,420
Income (loss) before
income taxes and
extraordinary items 31,631 11,704 (1,989) (15,003)
Provision (benefit)
for income taxes 12,829 4,501 (940) -
------- ------- ------- -------
Net income (loss) before
extraordinary items 18,802 7,203 (1,049) (15,003)
Extraordinary items
Gain from exting-
uishment of debt - - - 201,308
Loss from re-
payment of debt,
net of tax - (11,307) - -
------- ------- ------- -------
Net income (loss) $ 18,802 $ (4,104) $ (1,049) $186,305
======= ======= ======= =======
Per Share Data:
Net income (loss) before
extraordinary items $ 1.28 $ 0.74 $ (0.16) (1)
Net income (loss) $ 1.28 $ (0.42) $ (0.16)
Weighted average share
outstanding 14,660 9,714 6,707
Fiscal Years Ended
------------------------
December 31, January 1,
1993 1993
------------------------
Pro-Forma Income Data(unaudited) (See Note 10)
Net income (loss)
before extraordinary
items, as reported $ 7,203 $(16,052)
Pro-Forma adjustments
re: 1992 restructuring
and 1993 recapitalization 490 16,852
------- -------
Pro-Forma net income before
extraordinary items $ 7,693 $ 800
======= =======
Pro-Forma net income before
extraordinary items,
per share $ 0.53 $ 0.05
Weighted average shares
outstanding 14,648 14,648
(1) As the Company was a wholly-owned subsidiary of another company,
earnings per share for the periods prior to June 8, 1992, are not
meaningful.
* Prior to the restructuring on June 8, 1992 (see Notes 2 and 3 for
additional information).
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT
for the Five Months Ended June 8, 1992,
for the Seven Months Ended January 1, 1993,
for the Fiscal Year Ended December 31, 1993,
and for the Fiscal Year Ended December 30, 1994
(In Thousands)
Carryover
Additional Basis of Retained
Common Paid-in Common Earnings
Stock Capital Stock (Deficit) Total
-----------------------------------------------------
Balance,
January 3, 1992* $ 1 $ 14,999 $(26,000) $(110,081) $(121,081)
Net income - - - 186,305 186,305
Dividends on
mandatory redeemable
preferred stock - - - (2,913) (2,913)
Quasi-reorganization
adjustments - net 66 4,934 26,000 (73,311) (42,311)
-----------------------------------------------------------------------
Balance,
June 8, 1992 $ 67 $ 19,933 $ - $ - $ 20,000
Net loss - - - (1,049) (1,049)
-----------------------------------------------------------------------
Balance,
January 1, 1993 $ 67 $ 19,933 $ - $ (1,049) $ 18,951
Net loss - - - (4,104) (4,104)
Sale of Common
Stock - net 79 73,121 - - 73,200
-----------------------------------------------------------------------
Balance,
December 31, 1993 $146 $ 93,054 $ - $ (5,153) $ 88,047
Net income - - - 18,802 18,802
Exercise of stock
options 1 44 - - 45
-----------------------------------------------------------------------
Balance,
December 30, 1994 $147 $ 93,098 $ - $ 13,649 $ 106,894
=======================================================================
*Prior to the restructuring on June 8, 1992 (See Notes 2 and 3 for
additional information).
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Fiscal Fiscal Seven Five
Year Year Months Months
Ended Ended Ended Ended
December 30, December 31, January 1, June 8,
1994 1993 1993 1992*
------------------------------------------------------------------------
Cash flows from
operating activities:
Net income (loss) $ 18,802 $ (4,104) $ (1,049) $ 186,305
Adjustments:
Depreciation 8,217 7,929 5,255 3,734
Deferred income
taxes 2,163 2,680 (940) -
Gain on insurance
settlement - - (1,350) (3,624)
Amortization of
goodwill and
trademark 2,320 2,413 1,351 2,279
Amortization of
deferred financing
costs 1,432 536 - 1,603
Amortization of
original issue
discount - 1,037 749 -
Extraordinary items - 11,307 - (201,308)
Provision for
doubtful accounts 884 485 1,438 678
Other - - - 106
Changes in assets
and liabilities:
Receivables (3,936) (7,522) (2,351) (4,529)
Inventories (6,328) (16,460) 2,151 (7,387)
Prepaid expenses 364 982 1,436 (1,316)
Accounts payable 4,238 1,502 5,553 (408)
Accrued liabilities-
other 6,637 1,414 (3,115) 4,058
Accrued liabilities-
interest 1,197 3,688 2,795 10,052
Income taxes payable 1,327 - - -
Deferred
compensation - (5,068) 147 105
Other (278) 1,684 (2,821) (2,087)
------------------------------------------------------------------------
Net cash provided by
(used in) operating
activities 37,039 2,503 9,249 (11,739)
------------------------------------------------------------------------
Cash flows from investing
activities:
Proceeds from sale
of property, plant
and equipment 913 34 3 41
Additions to
property, plant
and equipment (12,217) (7,636) (2,386) (890)
Acquisition of
Premier Wood Floors (5,123) - - -
Construction deposits (2,073) (7,504) - (18)
------------------------------------------------------------------------
Net cash used in
investing activities (18,500) (15,106) (2,383) (867)
------------------------------------------------------------------------
Cash flows from financing
activities:
Long-term debt
borrowings 7,000 500 - -
Long-term debt
payments (1,449) (10,332) (22,890) (908)
Tranche I and II
Note payments - (207,400) - -
Restructuring costs - - - (2,994)
Refinancing costs (14) (14,860) - -
Proceeds from senior
notes issued - 160,000 - -
Sale of common stock - 79,398 - -
Exercise of stock
options 45 - - -
Reimbursement of
construction deposits - 5,535 - -
------------------------------------------------------------------------
Net cash provided by
(used in) financing
activities 5,582 12,841 (22,890) (3,902)
------------------------------------------------------------------------
Net increase (decrease)
in cash $ 24,121 $ 238 $ (16,024) $(16,508)
Cash and cash
equivalents, beginning
of period 785 547 16,571 33,079
------------------------------------------------------------------------
Cash and cash
equivalents end of
period $ 24,906 $ 785 $ 547 $ 16,571
========================================================================
Supplemental disclosures
of cash flow information:
Cash paid during
the period for:
Interest (net of
amount
capitalized) $ 16,969 $ 14,667 $ 8,035 $ 14,029
Income taxes 8,935 45 - -
Supplemental schedule of
non-cash investing and
financing activities:
Accrued dividends on
preferred stock $ - $ - $ - $ 2,913
*Prior to the restructuring on June 8, 1992 (see Notes 2 and 3 for
additional information).
The accompanying notes to consolidated financial statements are an
integral part of these statements.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - 1993 RECAPITALIZATION:
The Company filed in 1993 two registration statements with the
Securities and Exchange Commission and sold to the public 7,939,750
shares of the Company's Common Stock and $160 million aggregate
principal amount of 10 1/2% Senior Notes due 2003 ("the Offerings").
The net proceeds of the Offerings together with borrowings under a new
$90 million bank credit facility (the "New Credit Facility") were used
(i) to repay the entire unpaid balance under the Company's previously-
existing senior debt financing agreements, redeem certain previously
outstanding debentures and pay related accrued interest, for a total of
approximately $227 million, and (ii) for working capital and general
corporate purposes. As a result of this repayment of debt the Company
incurred an extraordinary loss of $11.3 million, net of tax, as a result
of the original issue discount on certain of the repaid notes as well as
the premium required to redeem the debentures.
On June 14, 1993, the Company's Board of Directors approved a
reclassification pursuant to which each share of Series A Common Stock
was changed and converted into .67 of a share of Common Stock. The
transaction became effective upon completion of the Offerings described
above and has been reflected retroactively in the accompanying
consolidated financial statements.
NOTE 2 - 1992 RESTRUCTURING:
On June 8, 1992, the Company successfully completed a capital
restructuring (the "1992 Restructuring") pursuant to which substantially
all of the Company's then outstanding long-term indebtedness, redeemable
preferred stock and common stock were exchanged for new debt with lower
interest rates and new common stock.
Under the 1992 Restructuring, the Company entered into amendments
to its previously existing senior debt financing agreements pursuant to
which $237.4 million principal amount of senior indebtedness outstanding
prior to the restructuring plus accrued and unpaid interest through June
8, 1992 was restructured as approximately $150.0 million principal
amount of Tranche I Term Notes, $30.0 million principal amount of
Tranche I Revolving Notes, $57.4 million principal amount of Tranche II
Notes and approximately 9% of the Company's new Series A Common Stock.
In addition, approximately $11.6 million of letters of credit remained
outstanding under a facility pursuant to which they could be renewed or
replaced. The Tranche II Notes were recorded at $37.3 million, which
the Company and its investment bankers estimated to be the market value.
The difference was treated as original issue discount and amortized over
the life of the Tranche II Notes, which were to have matured on June 30,
1999.
The senior subordinated split coupon reset debentures, a note
payable to the former principal shareholder, other obligations, the
mandatory redeemable preferred stock and common stock outstanding prior
to the 1992 Restructuring were exchanged for new shares of common stock.
The mandatory redeemable preferred stock and the special preferred stock
were retired in conjunction with the 1992 Restructuring.
In addition to the exchange for common stock, the principal
shareholder prior to the 1992 Restructuring received warrants entitling
the holder to purchase up to approximately .8 million shares of common
stock at prices ranging from $22.39 to $37.31 per share. The Warrants
are currently exercisable and will terminate, if not previously
exercised, on June 8, 1999. No value was assigned to these warrants
since the exercise prices are significantly higher than the current
value of the common stock.
In connection with the 1992 Restructuring, the Company entered into
an agreement with certain members of management pursuant to which,
shortly after the 1992 Restructuring, the Company issued to such members
of management 200,990 shares of common stock and stock options to
purchase 201,007 shares of common stock. The exercisability of such
options is tied to the achievement of certain levels of operating
income. A portion of the options became exercisable as a result of the
Company's 1992, 1993 and 1994 operating results. In connection with the
issuance of the common stock in 1992, management shareholders incurred
ordinary income tax liability and were compensated by the Company for a
portion of the tax liability arising from receipt of such shares and
such incremental compensation. Such compensation was expensed in
conjunction with the 1992 Restructuring.
NOTE 3 - QUASI-REORGANIZATION ELECTION:
In connection with the 1992 Restructuring, the Company's Board of
Directors approved quasi-reorganization accounting procedures. Under
these procedures an entity restates its assets and liabilities at fair
value and eliminates its accumulated deficit. Such adjustments are
reflected entirely through the Company's capital accounts. None of the
adjustments are recorded through the income statement. Such adjustments
included both the quasi-reorganization related fair value restatements
of assets, liabilities, and equity as well as the recognition of the
1992 Restructuring. Because the Company's historical and future
expected operations exhibited an ability to cover amortization of its
intangibles on an earnings before interest and tax basis, the partial
write-down of such intangibles by approximately $98.4 million was
reflected by the Company as a quasi-reorganization adjustment. Other
principal adjustments made in conjunction with the quasi-reorganization
election included (i) the extinguishment of senior bank debt of
approximately $261.0 million, senior subordinated debentures of
approximately $218.9 million, notes, obligations, and payables of
approximately $10.3 million, mandatory redeemable preferred stock of
approximately $44.9 million and the common stock of $15.0 million and
(ii) the recording of new senior debt of approximately $217.3 million
and new common stock of $20.0 million. This transfer resulted in a gain
from extinguishment of debt of approximately $201.3 million, net of
deferred financing costs and restructuring costs of $11.6 million. In
addition, the property, plant and equipment was revalued resulting in a
decrease in net book value of $3.0 million. An additional decrease in
net book value of $6.5 million was recorded prior to January 1, 1993.
The trademark was also reduced by approximately $4.3 million to fair
value. In addition, a write-down of certain deferred financing costs of
approximately $4.5 million and restructuring costs of approximately $5.9
million was included as part of the quasi-reorganization adjustments.
Because the Company has adopted the provision of SFAS No. 109,
Accounting for Income Taxes, it is required to gross up the fair value
of the net assets to, in effect, ignore the tax consequences of the
differences between the market value and tax bases of its assets and
liabilities. Such tax consequences are then recognized through the
recording of a corresponding deferred tax asset or liability. The
deferred tax liability was increased by approximately $20.3 million due
to the loss of the net operating loss carryforwards, and by
approximately $10.4 million for the tax effects of other quasi-
reorganization adjustments. The final quasi-reorganization accounting
adjustment was to eliminate the accumulated deficit of the Company.
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Consolidation:
-----------------------
The consolidated financial statements include the financial
statements of Triangle Pacific Corp. and its subsidiaries. The Company
maintains its records on a 52/53 week year.
Prior Period Reclassifications:
-------------------------------
Certain reclassifications have been made to the December 31, 1993
balances, in order to conform to the current year presentation.
Cash and Cash Equivalents:
--------------------------
The Company considers all investments with an original maturity of
less than three months to be cash equivalents.
Inventories:
------------
Inventories are valued at the lower of cost or market. The last-
in, first-out (LIFO) method is used for certain lumber inventories and
the first-in, first-out (FIFO) method is used for all other inventories.
Inventories valued by the LIFO method were $20,870,000 at December 30,
1994 and $23,965,000 at December 31, 1993. Had all inventories been
valued by the FIFO method, which approximates current cost, inventories
would have been increased by $2,069,000 at December 30, 1994 and
$4,420,000 at December 31, 1993. Raw materials inventories include
purchased parts and supplies to be used in manufactured products. Work-
in-process and finished goods inventories include material, labor and
overhead costs incurred in the manufacturing process. The major
components of inventories are as follows:
December 30, December 31,
1994 1993
------------------------------
(in thousands)
Raw materials $ 39,092 $ 42,045
Work-in-process 3,640 3,125
Finished goods 28,168 18,902
------ ------
Total $ 70,900 $ 64,072
======= =======
Property, Plant and Equipment:
------------------------------
Property, plant and equipment are stated at fair value as of June
8, 1992, plus acquisition or construction cost subsequent thereto.
Expenditures for maintenance, repairs, renewals and improvements which
do not extend the useful life's of assets are charged to appropriate
expense accounts in the year incurred. Upon disposition of an asset,
cost and accumulated depreciation are removed from the accounts, and any
gain or loss is included in the results of operations. Depreciation and
amortization are computed on the straight-line basis using the following
estimated useful lives:
Buildings 10 to 50 years
Equipment, furniture and fixtures 3 to 22 years
Amortization of leasehold improvements is provided over the terms
of the leases or the useful lives of the assets, whichever is shorter.
For income tax purposes, all assets are depreciated under allowable tax
depreciation methods.
Intangible Assets:
------------------
The Company annually evaluates its carrying value and expected
period of benefit of trademark and goodwill in relation to results of
operations. In determining the recoverability of these assets the
Company analyzes its historical and future ability to generate earnings
before interest and taxes using the non-discounted method. Deferred
financing costs are being amortized on the straight-line method over the
lives of the related debt. The trademark and goodwill are being
amortized over 40 years. Accumulated amortization of trademark and
goodwill is $2,067,000 and $4,017,000 respectively at December 30, 1994
and $1,267,000 and $2,497,000, respectively at December 31, 1993.
Fair Value of Financial Instruments:
------------------------------------
The Company's cash equivalents and long-term debt are recorded at
cost, which approximates fair market value at December 30, 1994.
NOTE 5 - LONG TERM DEBT:
Long-term debt consists of the following:
December 30, December 31,
1994 1993
------------------------------
(in thousands)
Mortgages payable $ 9,915 $ 4,364
Senior Notes, 10 1/2%
due 8-1-2003 160,000 160,000
-------- --------
169,915 164,364
Less: Current portion
of long-term debt (1,527) (1,467)
-------- --------
$ 168,388 $ 162,897
======== ========
Letters of credit outstanding at December 30, 1994 and December 31,
1993 were $9.8 million under a facility pursuant to which they can be
renewed or replaced.
Senior Notes:
-------------
The Senior Notes are senior unsecured obligations of the Company
with an aggregate principal of $160 million. The Senior Notes mature on
August 1, 2003 and bear interest at an annual rate of 10 1/2%, payable
in two equal semi-annual installments of $8,400,000 each, with each
semi-annual period deemed to have 180 days. The Senior Notes were
issued under an Indenture (the "Indenture") between the Company and a
predecessor to Texas Commerce Bank National Association, as Trustee (the
"Trustee"). The Senior Notes rank pari passu with all present and
future senior indebtedness of the Company and senior to all present and
future subordinated indebtedness of the Company. However, because
borrowings under the New Credit Facility are secured by inventory and
accounts receivable of the Company and the proceeds thereof, the Senior
Notes are effectively subordinated to such borrowings to the extent of
such security interest.
The Senior Notes are not redeemable prior to August 1, 1998.
Thereafter, the Senior Notes are redeemable at the option of the Company
at redemption prices specified in the Indenture. The Senior Notes are
not subject to any mandatory sinking fund requirements.
Upon a "change of control" (as defined in the Indenture), the
Company is required to offer to purchase all outstanding Senior Notes at
101% of the principal amount thereof, plus accrued interest to the date
of repurchase. In addition, the Company may be required to offer to
purchase the Senior Notes at 100% of the principal amount plus accrued
interest with the net cash proceeds of certain sales or other
dispositions of assets.
The Indenture contains covenants which limit, among other things,
the incurrence of additional indebtedness by the Company and its
subsidiaries, the payment of dividends on or the purchase of the capital
stock of the Company ("Restricted Payments"), the creation of liens on
the assets of the Company and its subsidiaries, the creation of certain
restrictions on the payment of dividends and other distributions by the
Company's subsidiaries, the issuance of preferred stock by the Company's
subsidiaries, and certain mergers, sales of assets and transactions with
affiliates.
Based on the Company's operations through December 30, 1994, the
amount of Restricted Payments that the Company could make under the
Indenture was $15,440,000.
The Indenture specifies a number of events of default including,
among others, the failure to make timely principal and interest payments
or to perform the covenants contained therein. The Indenture contains a
cross-default to other indebtedness of the Company aggregating more than
$5,000,000 and certain customary bankruptcy and insolvency defaults.
Upon the occurrence of an event of default under the Indenture, the
Trustee or the holders of not less than 25% in principal amount of the
outstanding Senior Notes may declare all amounts thereunder immediately
due and payable, except that such amounts automatically become
immediately due and payable in the event of a bankruptcy or insolvency
default.
New Credit Facility:
--------------------
The Company has entered into the New Credit Facility, which
provides for up to $90 million of revolving loans for working capital
and general corporate purposes and for letters of credit. Availability
of borrowings under the New Credit Facility is based upon a formula
related to inventory and accounts receivable. At December 30, 1994, the
Company had no borrowings under the New Credit Facility and had $56.3
million of Borrowing capacity under this facility. Borrowings under the
New Credit Facility bear interest at the agent's prime rate plus 1%
(9.5% at December 30, 1994) or, at the Company's option, at certain
alternate floating rates and is secured by a pledge of the Company's
inventory and accounts receivable. The New Credit Facility expires on
August 4, 1996.
The New Credit Facility contains covenants which restrict, among
other things, the incurrence of additional indebtedness and rental
obligations by the Company and its subsidiaries, the payment of
dividends and other distributions in respect of the capital stock of the
Company, the creation of liens on the assets of the Company and its
subsidiaries, the creation of certain restrictions on the payment of
dividends and other distributions by the Company's subsidiaries, the
making of investments and capital expenditures by the Company and its
subsidiaries, the creation of new subsidiaries by the Company, and
certain mergers, sales of assets and transactions with affiliates.
The New Credit Facility also contains certain financial covenants
relating to the consolidated financial condition of the Company and its
subsidiaries, including covenants relating to their net worth, the ratio
of their earnings to their fixed charges, the ratio of their earnings to
their interest expense, the ratio of their current assets to their
current liabilities, and the ratio of their indebtedness to their total
capitalization. At December 30, 1994, the Company was in compliance
with all financial covenants.
The New Credit Facility specifies a number of events of default
including, among others, the failure to make timely payments of
principal, fees, and interest, the failure to perform the covenants
contained therein, the failure of representations and warranties to be
true, the occurrence of a "change of control" (as defined in the New
Credit Facility, to include, among other things, the ownership by any
person or group of more than 25% or, (in case of The TCW Group, Inc. and
its affiliates, 50%) of the total voting securities of the Company), and
certain impairments of the security for the New Credit Facility. The
New Credit Facility also contains a cross-default to other indebtedness
of the Company aggregating more than $2,000,000 and certain customary
bankruptcy, insolvency and similar defaults. Upon the occurrence of an
event of default under the New Credit Facility, at least three of the
lenders holding at least 60% in amount of the principal indebtedness
outstanding under the New Credit Facility may declare all amounts
thereunder immediately due and payable, except that such amounts
automatically become immediately due and payable in the event of certain
bankruptcy, insolvency or similar defaults.
The New Credit Facility generally prohibits the Company from
prepaying the Senior Notes whether the prepayment would result from the
redemption of the Senior Notes, an offer by the Company to purchase the
Senior Notes following a change of control or a sale or other
disposition of assets, or the acceleration of the due date for payment
of the Senior Notes.
Mortgages payable represent primarily various Industrial Revenue
Bond (IRB) notes. In June 1994, the Company entered into an industrial
revenue financing agreement in the amount of $7,000,000 with Mississippi
Business Finance Corp., a public corporation in Mississippi, to finance
the expansion of the Bruce Hardwood Floors plant in Port Gibson,
Mississippi. The funds required were provided by a bank term loan which
matures on June 28, 2001. Collateral for the loan is the plant and
equipment at Port Gibson, Mississippi. The IRB notes vary in interest
rate, with several notes dependent upon the prime rate. At December 30,
1994 and December 31, 1993 the interest rates ranged up to 9.0%.
These notes are payable through 2001 and are collateralized by the
related underlying assets.
Maturities for all long-term debt are as follows:
(in thousands)
1995 $ 1,527
1996 1,538
1997 1,215
1998 632
1999 561
Thereafter 164,442
--------
Total $ 169,915
========
NOTE 6 - INCOME TAXES:
The components of the deferred tax liability and asset are as
follows:
December 30, December 31,
1994 1993
-----------------------------
(in thousands)
Deferred Tax Liability:
Property, plant and equipment $ 22,511 $ 25,875
Trademark 11,764 12,078
Other 8,527 7,123
-------- --------
Total $ 42,802 $ 45,076
======== ========
Deferred Tax Asset:
Tax carryforwards $ - $ 1,991
Other 3,322 1,986
-------- --------
Total $ 3,322 $ 3,977
======== ========
The provision (benefit) for income taxes consists of the following:
Fiscal Fiscal Seven Five
Year Year Months Months
Ended Ended Ended Ended
December 30, December 31, January 1, June 8,
1994 1993 1993 1992
--------------------------------------------------
(in thousands)
Current
Federal $ 10,015 $ 168 $ - $ -
State and local 651 - - -
------- -------- ------- ------
$ 10,666 $ 168 $ - $ -
======= ======== ======= ======
Deferred:
Federal $ 1,926 $ 3,841 $ (834) $ -
State and local 237 492 (106) -
------- -------- ------- ------
$ 2,163 $ 4,333 $ (940) $ -
------- -------- ------- ------
Subtotal $ 12,829 $ 4,501 $ (940) $ -
======= ======== ======= =====
Extraordinary benefit:
Federal $ - $ (6,251) $ - $ -
State and local - (768) - -
------- -------- ------- ------
$ - $ (7,019) $ - $ -
------- -------- ------- ------
Total $ 12,829 $ (2,518) $ (940) $ -
======= ======== ======= ======
The tax provision or benefit for the periods ending December 30,
1994, December 31, 1993, January 1, 1993 and June 8, 1992 is 40.6%,
38.5%, 47.28% and 0% of pre-tax income or losses, respectively. The
factors causing the rate to vary from the U.S. Federal Statutory rate
are as follows:
Fiscal Fiscal Seven Five
Year Year Months Months
Ended Ended Ended Ended
December 30, December 31, January 1, June 8,
1994 1993 1993 1992
--------------------------------------------------
(in thousands)
Computed (expected)
tax provision
(benefit) $ 11,059 $ 4,097 $ (676) $ (5,101)
Increase (decrease)
from:
State and local
taxes 1,359 503 (106) -
Amortization of
goodwill 597 634 546 -
Change due to
limitation of
net operating loss
carryforwards - - - 5,101
Other book to tax
differences, net (186) (733) (704) -
------ ------- ------- ------
Total $ 12,829 $ 4,501 $ (940) $ -
======= ======= ======= ======
In 1993, the Company adjusted the deferred liability and current
provision for taxes to reflect the change in tax rate form 34% to 35%
enacted by the Revenue Reconciliation Act of 1993. As of December 30,
1994, all net operating loss carryforwards have been fully utilized.
NOTE 7 - LEASE COMMITMENTS:
The Company rents certain real estate and equipment under leases
expiring at various dates to 2008. Several leases include options for
renewal or purchase and contain clauses for payment of real estate taxes
and insurance. In most cases, management expects that in the normal
course of business, leases will be renewed or replaced by other leases.
The following is a summary of minimum future rental payments
required under operating leases that have initial non-cancelable lease
terms in excess of one year:
(in thousands)
1995 $ 2,907
1996 2,024
1997 1,679
1998 1,351
1999 1,060
Thereafter 292
--------
Total $ 9,313
========
Rental expense for operating leases amounted to $7,704,000,
$6,309,000, $3,562,000, and $2,538,000 for the fiscal years ended
December 30, 1994, December 31, 1993, for the seven months ended January
1, 1993 and for the five months ended June 8, 1992, respectively.
The Company has an agreement with the West Virginia Economic
Development Authority to lease land, buildings and equipment for the
Bruce Hardwood Floors plant which is located in Beverly, West Virginia.
Land and buildings have a lease term of 18 years and equipment has a
term of 10 years, both with 10 year renewal options. In June, 1990, the
Company was reimbursed $22,653,000 by the West Virginia Economic
Development Authority for the Phase I construction costs, which included
all costs advanced by the Company in 1989 and the first six months of
1990 except for 28% of the cost of equipment. In December 1993 the
Company was reimbursed $5,535,000 by the West Virginia Economic
Development Authority for 72% of the Phase II equipment cost.
NOTE 8 - EMPLOYEE BENEFIT PLANS:
Pension and Profit Sharing Plans:
---------------------------------
The Company sponsors several defined benefit pension plans and is
required to contribute to several labor union-related defined
contribution plans. Total pension expense was $991,000, $967,000,
$483,000, and $217,000 for the fiscal years ended December 30, 1994, and
December 31, 1993, for the seven months ended January 1, 1993, and for
the five months ended June 8, 1992, respectively, including $419,000,
$481,000, $290,000, and $207,000, respectively, for defined benefit
plans, which includes amortization of prior service costs over the
estimated average remaining service period of active employees. The
Company does not have any requirement to provide life or health
insurance coverage for retired employees. The following table sets
forth the defined benefit pension plans' funded status at December 30,
1994, and December 31, 1993.
Fiscal years ended
---------------------------
December 30, December 31,
1994 1993
------------ ------------
(in thousands)
Actuarial present value
of benefit obligation:
Vested $ 9,011 $ 8,382
Non-vested 426 481
------- -------
Accumulated and projected
benefit obligation 9,437 8,863
Plan assets at fair value 8,276 8,109
------- -------
Projected benefit
obligation in excess
of plan assets (1,161) (754)
Unrecognized prior service
costs 143 105
Unrecognized net loss from
past experience different
from that assumed and
effects of changes in
assumptions 1,684 928
Adjustment to recognize
minimum liability (1,762) (1,121)
------- -------
Accrued pension expense $ (1,096) $ (842)
======= =======
Net periodic pension costs for defined benefit pension plans for
the fiscal years ended December 30, 1994 and December 31, 1993, for the
seven months ended January 1, 1993, and for the five months ended June
8, 1992, include the following components:
Fiscal Fiscal Seven Five
year year months months
ended ended ended ended
December 30, December 31, January 1, June 8,
1994 1993 1993 1992
------------ ------------ ---------- -------
(in thousands)
Service cost-benefits
earned during the
period $ 267 $ 258 $ 152 $ 111
Interest cost on
projected benefit
obligation 735 696 383 273
Actual return on plan
assets 106 (872) (247) (177)
Net amortization and
deferral (689) 399 2 -
-------- -------- -------- -----
Net periodic pension
cost $ 419 $ 481 $ 290 $ 207
======== ======== ======== =====
A weighted average discount rate of 8.50% was used in 1994, 1993
and 1992 to determine the benefit obligations of the Company's defined
benefit pension plans. The plans do not provide for future compensation
increases in calculating benefit obligations as the benefits do not
derive from compensation levels but from length of service. The plans'
assets are invested in a diversified portfolio of common stocks and
fixed income securities. The expected long-term rate of return on plan
assets was 8.0% in 1994, 1993, and 1992.
The Company has a profit sharing plan for salaried employees, and a
supplemental profit sharing plan for certain salaried employees to which
contributions are made at the discretion of its Board of Directors as
long as the Company has met specified financial goals. The fiscal 1994,
1993 and 1992 contributions were $1,255,385, $500,000, and $400,000,
respectively.
Long-Term Incentive Plan:
-------------------------
In June 1993, the Company adopted the Triangle Pacific Corp. Long-
Term Incentive Compensation Plan, which authorizes grants of various
incentive awards to all regular salaried full-time officers and key
employees of the Company. There are 1,000,000 shares of common stock
reserved for this plan. In February and March 1994, stock options were
granted for 551,300 shares at 100% of fair market value at the date of
grant. These options expire in 10 years. Also granted in February 1994
were 28,200 stock bonus shares and $425,517 in deferred cash bonuses.
These awards vested 25% at the date of grant and will vest 25% each year
thereafter, with the vested amount payable on the third anniversary of
the date of grant.
In 1994, the Company established a performance-based cash incentive
plan for officers and other key employees to make annual bonus awards
based upon pre-established criteria which were approved by the Board of
Directors. The expense for 1994 was $1,780,000. In 1993, the Company
awarded $744,000 in cash bonuses to the same group of officers and key
employees under a discretionary bonus arrangement.
Stock Option Plan:
------------------
In connection with the 1992 Restructuring, certain members of
management received options for 201,007 shares of Common stock pursuant
to a Stock Option Plan which was adopted by the Board of Directors of
the Company. The management options are exercisable at a price of $2.99
per share. The exercisability of the management options is tied to the
achievement of certain levels of operating income. Twenty percent of
the management options will become exercisable in any fiscal year in
which the Company meets the annual target for such fiscal year.
For the years ended December 30, 1994, December 31, 1993 and
January 1, 1993, twenty percent each year became exercisable. In
addition, if the Company fails to meet the annual target in any fiscal
year but meets the cumulative target in such fiscal year or any
subsequent fiscal year, the management options for such fiscal year and
all prior fiscal years will become exercisable if they had not
previously become exercisable.
Non-Employee Director Stock Option Plan:
----------------------------------------
In June 1993, the Company adopted a Non-employee Director Stock
Option Plan for up to 50,000 shares of common stock. Options have been
granted to six non-employee directors for an aggregate of 30,000 shares,
with option prices at 100% of fair market value at the date of grant.
These options are currently exercisable and generally expire 10 years
from the date of grant.
Post-retirement And Post-employment Benefits:
---------------------------------------------
The Company, as of December 30, 1994, does not provide post-
retirement medical benefits or any post-employment benefits other than
those previously discussed.
NOTE 9 - ACCRUED LIABILITIES:
Amounts included in accrued liabilities are as follows:
December 30, December 31,
1994 1993
---------------------------
(in thousands)
Payroll $ 5,342 $ 2,960
Pension and profit
sharing 3,360 2,060
Taxes, other than
income 2,647 2,013
Insurance 4,712 3,043
Interest 7,819 6,623
Other 4,232 3,000
------- -------
Total $ 28,112 $ 19,699
======= =======
NOTE 10 - PRO-FORMA INCOME DATA (unaudited):
Pro-forma figures assume that the Company's third quarter 1993
Recapitalization and the 1992 Restructuring occurred on the first day of
fiscal 1992.
NOTE 11 - SUPPLEMENTARY QUARTERLY FINANCIAL DATA (unaudited):
(In thousands, except per share amounts)
Income
Before
Income Extra- Net
Before ordinary Income
Extra- Items Net (loss)
Net Gross ordinary Per Income Per
Quarters Sales Profit Items Share (loss) Share
--------------------------------------------------------------------
1994
First Quarter $ 90,710 $ 22,083 $ 2,142 $0.15 $ 2,142 $ 0.15
Second Quarter 106,918 29,447 5,860 0.40 5,860 0.40
Third Quarter 104,236 28,176 5,217 0.35 5,217 0.35
Fourth Quarter 108,295 30,293 5,583 0.38 5,583 0.38
1993
First Quarter $ 78,482 $ 17,947 $ 373 $0.04 $ 373 $ 0.04
Second Quarter 87,853 20,832 2,917 0.43 2,917 0.43
Third Quarter 85,911 18,274 1,835 0.17 (9,472)(a) (0.88)(a)
Fourth Quarter 94,050 19,883 2,078 0.10 2,078 0.10
(a) The third quarter of 1993 reflects the results of the 1993
Recapitalization. (See Note 1)
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
None
PART III
Item 10. Directors and Executive Officers of the Company
-----------------------------------------------
The section entitled "Election of Directors" appearing in the
definitive proxy statement of the Registrant for the annual meeting of
shareholders to be held on May 3, 1995 sets forth certain information
regarding the directors and is incorporated herein by reference. The
section entitled "Executive Compensation-Compliance with Section 16(a)
of the Exchange Act" appearing in the definitive proxy statement of the
Registrant for the annual meeting of shareholders to be held on May 3,
1995 sets forth certain information regarding reporting under Section 16
of the Securities Exchange Act of 1934, as amended, and is incorporated
herein by reference. Certain information with respect to the executive
officers of the Registrant is set forth in Part I of this Form 10-K
under the caption "Executive Officers of the Company."
Item 11. Executive Compensation
----------------------
Information regarding the compensation of management is contained
in the definitive proxy statement of the Registrant for the annual
meeting of shareholders to be held on May 3, 1995, under the caption
"Executive Compensation" and, except for the report of the compensation
committee of the Board of Directors and the information contained under
the caption "Performance Graph," is incorporated herein
by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
Information regarding ownership of the Company's Common Stock is
contained in the definitive proxy statement of the Registrant for the
annual meeting of shareholders to be held on May 3, 1995, under the
captions "Security Ownership of Certain Beneficial Owners" and "Security
Ownership of Management" and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
None
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
------------------------------------------------------
Form 8-K
--------
(a)(1) Financial Statements
Included in Part II of this report.
- Report of independent public accountants
- Consolidated balance sheets as of December 30, 1994 and
December 31, 1993.
- Consolidated statements of operations for the fiscal
years ended December 30, 1994 and December 31, 1993,
for the seven months ended January 1, 1993, and for the
five months ended June 8, 1992.
- Consolidated statements of changes in shareholders'
investment for the fiscal years ended December 30, 1994
and December 31, 1993, for the seven months ended
January 1, 1993, and for the five months ended
June 8, 1992.
- Consolidated statements of cash flows for the fiscal
years ended December 30, 1994 and December 31, 1993,
for the seven months ended January 1, 1993, and for the
five months ended June 8, 1992.
- Notes to consolidated financial statements.
(a)(2) Financial Statement Schedules
Included in Part IV of this report:
For the fiscal years ended December 30, 1994 and December
31, 1993, for the seven months ended January 1, 1993, and
for the five months ended June 8, 1992.
- Schedule II - Valuation and qualifying accounts
and reserves.
Information required by other schedules called for under
Regulation S-X is either not applicable or is included in
the consolidated financial statements or notes thereto.
(a)(3) Exhibits
--------
The information required by this Item 14(a)(3) is set forth
in the Index to Exhibits accompanying this annual report on
form 10-K.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the fourth quarter
of the year ended December 30, 1994.
(c) Exhibits
--------
3.1 - Restated Certificate of Incorporation of the
Registrant (incorporated herein by reference to
Exhibit 3.1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1993).
3.2 - Amended and Restated Bylaws of the Registrant
(incorporated herein by reference to Exhibit 3.2 to
the Registrant's Form 10-K for the fiscal year ended
December 31, 1993).
4.1 - Form of 10 1/2% Senior Notes due 2003 (incorporated
herein by reference to Exhibit 4.2 to the
Registrant's Form 10-K for the fiscal year ended
December 31,1993).
4.2 - Indenture governing 10 1/2% senior Notes due 2003
(incorporated herein by reference to Exhibit 4.2 to
the Registrant's Form 10-K for the fiscal year ended
December 31, 1993).
4.3 - Credit Agreement dated as of August 4, 1993, as
amended, among the Registrant, the Lenders listed
therein and CitiCorp USA, Inc., as the Co-Agent for
the Lenders, and the Bank of Nova Scotia, as the
Agent for the Lenders (the "Credit Agreement")
(incorporated herein by reference to Exhibit 4.4 to
the Registrant's Registration Statement on Form S-1
(Registration No. 33-64530)).
4.4 - Amendment No. 4 to the Credit Agreement dated as of
December 2, 1994.
10.1 - Registration Rights Agreement, dated as of June 5,
1992 by and among the Registrant and the Persons
listed therein (incorporated herein by reference to
Exhibit 10.1 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-50724)).
10.2 - Lenders' Equity Agreement dated as of June 5, 1992 by
and among the Registrant and the Banks and other
financial institutions listed herein (incorporated
herein by reference to Exhibit 10.2 to the
Registrant's Registration Statement on Form S-1
(Registration No. 33-50724)).
10.3 - ESJ Exchange Agreement dated as of June 5, 1992 by
and among the Registrant, TPC Holding Corp. and the
ESJ Entities (incorporated herein by reference to
Exhibit 10.3 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-50724)).
10.4* - Management Equity Agreement dated as of June 5, 1992
by and among the Registrant and the individuals
listed therein, and including a form of the Triangle
Pacific Corp. Stock Option Plan (incorporated herein
by reference to Exhibit 10.4 to the Registrant's
Registration Statement on Form S-1 (Registration No.
33-50724)).
10.5* - Form of Amended and Restated Employment Agreement
dated as of March 8, 1995 between the Company and the
individuals named on Schedule 1 thereto.
10.6* - Form of Employment Agreement dated as of March 8,
1995 between the Company and the individuals named on
Schedule 1 thereto.
10.7* - Salaried Employees Profit Sharing Plan (as restated
January 1, 1993) of the Registrant
10.8* - Annual Cash Incentive Bonus System of the Registrant
for Officers and Managers.
10.9* - Form of Stock Option Plan of the Registrant
(incorporated herein by reference to Exhibit 10.12 to
the Registrant's Registration Statement on Form S-1
(Registration No. 33-64530)).
10.10* - Form of Stock Option Agreement of the Registrant
(incorporated herein by reference to Exhibit 10.13 to
the Registrant's Registration Statement on From S-1
(Registration No. 33-64530)).
10.11 - Lease dated as of June 1, 1988 by and between West
Virginia Jobs and Development Corporation and
Registrant (incorporated herein by reference to
Exhibit 10.11 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-50724)).
10.12 - Amendment to lease effective as of April 14, 1989 by
and between West Virginia Jobs and Development
Corporation and the Registrant (incorporated herein
by reference to Exhibit 10.15 to the Registrant's
Registration Statement on Form S-1 (Registration No.
33-64530)).
10.13 - Second Amendment to lease effective as of November 1,
1991 by and between West Virginia Economic
Development Authority, as successor to West Virginia
Jobs and Development Corporation, and the Registrant
(incorporated herein by reference to Exhibit 10.16 to
the Registrant's Registration Statement on Form S-1
(Registration No. 33-64530)).
10.14 - Third Amendment to lease effective as of March 10,
1993 by and between West Virginia Economic
Development Authority, as successor to West Virginia
Jobs and Development Corporation, and the Registrant
(incorporated herein by reference to Exhibit 10.17 to
the Registrant's Registration Statement on Forms S-1
(Registration No. 33-64530)).
10.15* - Triangle Pacific Corp. 1993 Long-Term Incentive
Compensation Plan (incorporated herein by reference
to Exhibit 10.18 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-64530)).
10.16* - Triangle Pacific Corp. Nonemployee Director Stock
Option Plan (incorporated herein by reference to
Exhibit 10.19 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-64530)).
10.17 - Form of Indemnity Agreement between the Registrant
and each of its directors and executive officers
(incorporated herein by reference to Exhibit 10.20 to
the Registrant's Registration Statement on Form S-1
(Registration No. 33-64530)).
10.18* - Supplemental Profit Sharing and Deferred Compensation
Plan of the Registrant.
23.1 - Consent of Arthur Andersen LLP
27.1 - Financial Data Schedule.
--------------
* Management contract or compensatory plan or arrangement required to
be filed as an exhibit hereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereto duly
authorized.
TRIANGLE PACIFIC CORP.
By: /s/ Floyd F. Sherman
---------------------------
Floyd F. Sherman
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Floyd F. Sherman Chairman of the Board March 28, 1995
---------------------------- and Chief Executive Officer
Floyd F. Sherman (Principal Executive Officer)
/s/ M. Joseph McHugh Director and President March 28, 1995
----------------------------
M. Joseph McHugh
/s/ Robert J. Symon Executive Vice President March 28, 1995
---------------------------- Treasurer and Chief
Robert J. Symon Financial Officer
(Principal Financial & Accounting Officer)
/s/ B. William Bonnivier Director March 28, 1995
----------------------------
B. William Bonnivier
/s/ Charles M. Hansen, Jr. Director March 28, 1995
----------------------------
Charles M. Hansen, Jr.
/s/ David R. Henkel Director March 28, 1995
----------------------------
David R. Henkel
/s/ Jack L. McDonald Director March 28, 1995
----------------------------
Jack L. McDonald
/s/ Carson R. McKissick Director March ___, 1995
----------------------------
Carson R. McKissick
Director March ___, 1995
----------------------------
Karen Gordon Mills
SCHEDULE II
-----------
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
---------------------------------------
VALUATION AND QUALIFYING
------------------------
ACCOUNTS AND RESERVES
---------------------
(in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance at charged to Balance
beginning costs and at end of
Classifications of period expenses Deductions (1) period
-----------------------------------------------------------------------
Five months ended
June 8, 1992:
Reserve for
doubtful accounts
and returns and
and allowances $ 3,438 $ 678 $ (19) $ 4,135
=================================================
Seven months ended
January 1, 1993:
Reserve for
doubtful accounts
and returns and
and allowances $ 4,135 $ 1,438 $ 475 $ 5,098
=================================================
Fiscal Year ended
December 31, 1993:
Reserve for
doubtful accounts
and returns and
and allowances $ 5,098 $ 485 $ 2,260 $ 3,323
=================================================
Fiscal Year ended
December 30, 1994:
Reserve for
doubtful accounts
and returns and
and allowances $ 3,323 $ 884 $ 1,716 $ 2,491
=================================================
(1) Write-offs of specific accounts, net of recoveries.
Exhibit 23.1
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K into the
Company's previously filed Registration Statement Files Nos. 33-69682,
33-69684 and 33-50724.
ARTHUR ANDERSEN LLP
Dallas, Texas
March 28, 1995
49
Exhibit 4.4
-----------
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of December 2,
1994 (herein called this "Amendment"), is entered into by and among
Triangle Pacific Corp., a Delaware corporation (herein called the
"Borrower", the various financial institutions as are or may become
parties to the Credit Agreement referenced below (collectively, the
"Lenders"), CITICORP USA, INC., as co-agent (in such capacity, the "Co-
Agent") for the Lenders, and THE BANK OF NOVA SCOTIA, as agent (in such
capacity, the "Agent") for the Lenders. Unless otherwise defined, terms
defined in the Credit Agreement are used herein with the same meaning.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders, the Co-Agent and the Agent have
heretofore entered into a certain Credit Agreement, dated as of August
4, 1993, as amended by Amendment No. 1 to Credit Agreement dated as of
August 9, 1993, Amendment No. 2 to Credit Agreement dated as of August
11, 1993 and Amendment No. 3 to credit Agreement dated as of August 13,
1993 (such agreement, as so amended, herein called the "Credit
Agreement"); and
WHEREAS, the Borrower and the Lenders now desire to amend the
Credit Agreement in certain respects, as hereinafter provided,
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower, the Lenders, the Co-Agent and
the Agent hereby agree as follows:
SECTION 1. Amendment of Section 1.1. Section 1.1 of the Credit
Agreement is hereby amended as follows:
(i) Clauses (b) and (c) of the definition of "Change in
Control" are hereby amended by deleting the percentage
"40%" in the tenth line of clause (b) and the eighth line
of clause (c) and inserting in lieu of each thereof the
percentage "50%".
(ii) The definition of "Disclosure Schedule" is hereby
amended to read in its entirety as follows:
"Disclosure Schedule" means the Disclosure Schedule
attached hereto as Schedule I, as it may be amended,
supplemented or otherwise modified from time to time by
the Borrower with the written consent of the Required
Lenders, provided that the Borrower may amend Item 6.8
("Existing Subsidiaries") of the Disclosure Schedule to
add the names of Permitted Foreign Subsidiaries upon
written notice to the Agent without the consent of the
Required Lenders.
(iii) The following definition is hereby added to Section 1.1
of the Credit Agreement immediately preceding the
definition of "Person":
"Permitted Foreign Subsidiary" means a wholly-owned
Subsidiary of the Borrower organized under the laws of
a jurisdiction other than a State of the United States
of which the Agent has received written notice from the
Borrower; provided that Investment in such Permitted
Foreign Subsidiaries, is at all times subject to the
provisions of clause (g) of Section 7.2.5.
SECTION 2. Amendment of Section 6.1. Section 6.1 of the Credit
Agreement is hereby amended by inserting immediately after the word
"State" in the third line thereof the phrase "or other jurisdiction."
SECTION 3. Amendment of Section 7.2.2. Section 7.2.2 of the
Credit Agreement is amended hereby as follows:
(i) Clause (h) of Section 7.2.2 of the Credit Agreement is
amended by deleting the word "and" following the semi-colon
in such clause (h).
(ii) Additional clauses (j) and (k) are added to Section 7.2.2 of
the Credit Agreement, which read as follows:
(j) Indebtedness of a Permitted Foreign Subsidiary to the
Borrower as permitted by Section 7.2.5 (g); and
(k) Indebtedness of the Borrower to a Permitted Foreign
Subsidiary, which Indebtedness shall be evidenced by
one or more notes substantially in the form of Exhibit
O and subordinated to the Obligations of the Borrower
pursuant to the terms thereof;
SECTION 4. Amendment of Section 7.2.5. Section 7.2.5 of the
Credit Agreement is hereby amended as follows:
(i) Clause (e) of Section 7.2.5 of the Credit Agreement is hereby
amended by (I) inserting after the word "Subsidiaries" in the
second line thereof the parenthetical phrase "(except
Permitted Foreign Subsidiaries)" and (II) by deleting the
word "and" in the fourth line thereof.
(ii) Clauses (f) of Section 7.2.5 of the Credit Agreement is
hereby amended by adding the word "and" after the final semi-
colon.
(iii) Clauses (g) and (h) of Section 7.2.5 of the Credit Agreement
are hereby redesignated as clauses (h) and (i), respectively,
and the following new clause (g) added immediately after
clause (f) and immediately preceding the words "provided
that":
(g) Investments by the Borrower in one of more Permitted
Foreign Subsidiaries, including contributions to
capital and Indebtedness permitted pursuant to clause
(j) of Section 7.2.2 (including Contingent Liabilities
incurred on behalf of, and trade credit extended by
means of sales on account to, such Permitted Foreign
Subsidiaries), provided that the outstanding balance of
Investments in all such Permitted Foreign Subsidiaries
after the Effective Date shall not exceed $5,000,000 in
the aggregate (calculated without giving any effect to
reduction in such Investment by reason of losses of
such Subsidiaries);
(iv) Clause (i) of Section 7.2.5 of the Credit Agreement (as
redesignated by paragraph (iii) of this Section 4) is hereby
amended by adding the following phrase immediately before the
final period: ", except the formation of one or more
Permitted Foreign Subsidiaries to the extent provided in
clause (g) of this Section 7.2.5."
SECTION 5. Amendment of Section 7.2.11. Section 7.2.11 of the
Credit Agreement is hereby amended by adding as a final sentence thereto
the following: "Notwithstanding anything to the contrary in this
Section 7.2.11, the Borrower will not sell, transfer, lease contribute
or otherwise convey or grant options, warrants or other rights with
respect to, any capital stock of any Permitted Foreign Subsidiary."
SECTION 6. Amendment of Section 7.2.16. Section 7.2.16 of the
Credit Agreement is hereby amended by adding the following phrase
immediately before the final period: "except for the formation of a
Permitted Foreign Subsidiary, subject to the provisions of clause (g) of
Section 7.2.5."
SECTION 7. Addition of Section 7.1.9. The following Section 7.1.9
is added to the Credit Agreement immediately following Section 7.1.8
thereof:
SECTION 7.1.9 Foreign Sales Corporations. Each
Permitted Foreign Subsidiary which shall qualify as an
FSC at all times thereafter shall maintain its status
as an FSC under the Code.
SECTION 8. Amendment of Disclosure Schedule. Item 6.8 ("Existing
Subsidiaries") of the Disclosure Schedule to the Credit Agreement is
hereby amended and restated to read as follows:
Item 6.8 Existing Subsidiaries
Jurisdiction of
Name Incorporation Ownership
---- --------------- ---------
Worldwide Kitchens, Inc. Delaware, USA 100%
Bruce Hardwood Floors England 100%
(UK), Limited
SECTION 9. Addition of Exhibit O. Exhibit O in the form of
Exhibit O to this Amendment is hereby added to the Credit Agreement.
SECTION 10. Representations and Warranties. To induce the lenders
to enter into this Amendment, the Borrower hereby reaffirms, as of the
date hereof, the representations and warranties contained in Article VI
of the Credit Agreement (except to the extent such representations and
arranties relate solely to an earlier date and giving effect to this
Amendment) and additionally represents and warrants as follows:
(i) The Borrower and each of its Subsidiaries is a
corporation validly organized and existing and in good
standing under the laws of the State or jurisdiction of
its incorporation; is dully qualified and in good
standing as a foreign corporation authorized to do
business in each jurisdiction where the failure to so
qualify could have a Material Adverse Effect and has
full power and authority and holds all requisite
governmental licenses, permits and other approvals to
enter into and perform its Obligations under this
Amendment and each Loan document to which it is a party
and to own and hold under lease its property and to
conduct its business substantially as currently
conducted by it.
(ii) The execution, delivery and performance by the Borrower
of this Amendment are within the Borrower's corporate
powers, have been duly authorized by all necessary
corporate action, and do not
(A) contravene the Borrower's Organic Documents;
(B) contravene any contractual restriction, law or
governmental regulation or court decree or order
binding on or affecting the Borrower; or
(C) result in, or require the creation or imposition
of, any Lien on any of the Borrower's properties.
(iii) Except for those which have been received or made, no
authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body or other Person is required for the due
execution, delivery or performance by the Borrower of
this Amendment.
(iv) This Amendment is the legal, valid and binding
obligation of the Borrower enforceable against the
Borrower in accordance with its terms, subject to the
effects of (i) bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally
and (ii) general principles of equity, whether applied
by a court of law or equity.
(v) Except as disclosed by the Borrower to the Agent and the
Lenders pursuant to Section 6.7 of the Credit Agreement,
no labor controversy, litigation, arbitration or
governmental investigation or proceeding is pending or,
to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries which could result
in a Material Adverse Effect, and no development has
occurred in any labor controversy, litigation,
arbitration or governmental investigation or proceeding
disclosed pursuant to Section 6.7 of the Credit
Agreement which could result in a Material Adverse
Effect. Other than any liability incident to such
litigation or proceedings, none of the Borrower or its
Subsidiaries has any material contingent liabilities not
disclosed in writing to the Agent.
SECTION 11. Conditions to Effectiveness. The effectiveness of this
amendment is conditioned upon receipt by the Agent of all the following
documents, each in form and substance satisfactory to the Agent:
(i) A certificate of the Secretary or an Assistant Secretary
of the Borrower as to resolutions of its Board of
Directors (or an authorized committee thereof) then in
full force and effect authorizing the execution,
delivery and performance of this Amendment and the
incumbency and signatures of those of its officers
authorized to act with respect to this Amendment;
(ii) The opinion of Darryl Marchand, Esq., counsel to the
Borrower, in form and substance satisfactory to the
Agent; and
(iii) Such other documents as the Agent shall have reasonably
requested.
SECTION 12. Effect of Amendment. This Amendment shall be deemed to
be an amendment to the Credit Agreement, and the Credit Agreement, as
amended hereby, is hereby ratified, approved and confirmed in each and
every respect. All references to the Credit Agreement in any other
document, instrument, agreement or writing shall hereafter be deemed to
refer to the Credit Agreement as amended hereby.
SECTION 13. Governing Law; Etc. This Amendment shall be a contract
made under and governed by the internal laws of the State of New York.
All obligations of the Borrower and rights of the Agent and lenders
expressed herein shall be in addition to and not in limitation of those
provided by applicable law. Whenever possible each provision of this
Amendment shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Amendment shall
be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Amendment.
SECTION 14. Counterpart Execution. This Amendment may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any party hereto may execute
this Amendment by signing one or more counterparts.
SECTION 15. Successors and Assigns. This Amendment shall be
binding upon the Borrower, the Agent, the Co-Agent and each Lender and
their respective successors and assigns, and shall inure to the benefit
of the Borrower, the Agent, the Co-Agent and each Lender and the
successors and assigns of each.
SECTION 16. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AMENDMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE CO-
AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENTS AND THE OTHER LOAN
DOCUMENTS.
SECTION 17. WAIVER OF JURY TRIAL. THE AGENT, THE CO-AGENT THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AMENDMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE CO-
AGENT, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH LOAN DOCUMENT TO WHICH IT IS
A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT
AND THE LENDERS ENTERING INTO THIS AMENDMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereto duly authorized as
of the day and year first written above.
TRIANGLE PACIFIC CORP.
By
------------------------------
Title
------------------------
16803 Dallas Parkway
Dallas, Texas 75248
Attn: Robert J. Symon
Darryl T. Marchand
THE BANK OF NOVA SCOTIA, as Agent
and Lender
By
--------------------------------
Title
---------------------------
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: A. Norsworthy
CITICORP USA, INC., as Co-Agent and
Lender
By
--------------------------------
Title
---------------------------
400 Perimeter Terrace
Suite 600
Atlanta, Georgia 30346
Attn: John H. Rexford
BANK OF AMERICA NT&SA
By
--------------------------------
Title
---------------------------
Global Payments Operations #5693
1850 Gateway Boulevard
Concord, California 94520
Attention: Account Administration
with a copy to:
333 Clay Street, Suite 4550
Houston, Texas 77002
Attention: Jody B. Schneider
THE BANK OF NOVA SCOTIA, as Agent
and Lender
By
--------------------------------
Title
---------------------------
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: A. Norsworthy
CITICORP USA, INC., as Co-Agent and
Lender
By
--------------------------------
Title
---------------------------
400 Perimeter Terrace
Suite 600
Atlanta, Georgia 30346
Attn: John H. Rexford
BANK OF AMERICA NT&SA
By
--------------------------------
Title
---------------------------
Global Payments Operations #5693
1850 Gateway Boulevard
Concord, California 94520
Attention: Account Administration
with a copy to:
333 Clay Street, Suite 4550
Houston, Texas 77002
Attention: Jody B. Schneider
THE BANK OF NOVA SCOTIA, as Agent
and Lender
By
--------------------------------
Title
---------------------------
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: A. Norsworthy
CITICORP USA, INC., as Co-Agent and
Lender
By
--------------------------------
Title
---------------------------
400 Perimeter Terrace
Suite 600
Atlanta, Georgia 30346
Attn: John H. Rexford
BANK OF AMERICA NT&SA
By
--------------------------------
Title
---------------------------
Global Payments Operations #5693
1850 Gateway Boulevard
Concord, California 94520
Attention: Account Administration
with a copy to:
333 Clay Street, Suite 4550
Houston, Texas 77002
Attention: Jody B. Schneider
BANQUE PARIBAS
By
--------------------------------
Title
---------------------------
By
--------------------------------
Title
---------------------------
1200 Smith, Suite 3100
Houston, Texas 77002
Attention: Operations Officer
with a copy to:
2121 San Jacinto
Suite 930
Dallas, Texas 75201
Attention: J. McDowell
COMERICA BANK - TEXAS
By
--------------------------------
1300 North Park Center
Dallas, Texas 75265
Attention: Reed Allton
BANQUE PARIBAS
By
--------------------------------
Title
---------------------------
By
--------------------------------
Title
---------------------------
1200 Smith, Suite 3100
Houston, Texas 77002
Attention: Operations Officer
with a copy to:
2121 San Jacinto
Suite 930
Dallas, Texas 75201
Attention: J. McDowell
COMERICA BANK - TEXAS
By
--------------------------------
1300 North Park Center
Dallas, Texas 75265
Attention: Reed Allton
EXHIBIT O
SUBORDINATED PROMISSORY NOTE
$ 19
---------------------------- ---------------------- ------
FOR VALUE RECEIVED, Triangle Pacific Corp., a Delaware corporation
("Maker"), promises to pay to the order of [Name of Permitted Foreign
Subsidiary], a corporation ("Payee"), at its
offices at [address of principal office of Payee] or such other address
as to which the Payee shall have given notice to the Maker, the sum of
[AMOUNT] DOLLARS ($ ), or so much thereof as may be
advanced and outstanding hereunder from time to time, together with
interest at a [varying] rate per annum (the "Standard Rate"). The
Standard Rate shall equal the lesser of (i) [specify interest rate] or
(ii) the Highest Lawful Rate (as hereinafter defined); provided that, so
long as the Credit Agreement (as hereinafter defined) shall remain in
effect, the Standard Rate shall not exceed the sum of (i) the rate of
interest established by the Bank of Nova Scotia ("Scotiabank") or by any
successor Agent to Scotiabank pursuant to the Credit Agreement, in each
case at its Domestic Office (as defined in the Credit Agreement), as its
base rate for loans in United States Dollars, which rate of interest is
not necessarily intended to be the lowest rate of interest determined by
Scotiabank or its successor with respect to extensions of credit, plus
(ii) two percent per annum. This Promissory Note shall be due and
payable on [Date occurring after Stated Maturity Date]. All accrued and
unpaid interest shall be added to principal on the last day of each
calendar quarter after the date hereof.
This Promissory Note may be prepaid, in whole or in part, without
premium or penalty, provided that no payment or prepayment of principal,
interest, collection expenses or any other amounts hereon shall be made
(i) if a Default or an Event of Default (each term as defined in the
Credit Agreement) shall have occurred and be continuing or would
otherwise be existing or resulting from any such payment or prepayment
or (ii) otherwise in violation of Section 7.2.6 of the Credit Agreement.
Maker may borrow, repay and reborrow hereunder as long as such
borrowing, repayment or reborrowing is not in violation of the Credit
Agreement.
Presentment for payment, notice of dishonor, demand, and protest
are hereby waived by Maker and all other makers, sureties, guarantors
and endorsers hereof.
"Highest Lawful Rate" shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on this Promissory Note, or
under laws applicable to the Payee which are presently in effect or, to
the extent allowed by applicable law, under such laws which may
hereafter be in effect and which allow a higher maximum nonusurious
interest rate than applicable laws now allow, and determination of the
rate of interest for the purpose of determining whether the loan is
usurious under all applicable laws shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during the period
of the full stated term of the indebtedness represented hereby, all
interest at any time contracted for, charged, or received from the
undersigned in connection with such indebtedness; however, in the event
such indebtedness and the interest received for the actual period of
existence of such indebtedness exceed the Highest Lawful Rate, the Payee
shall refund to the undersigned the amount of the excess or shall credit
the amount of the excess against amounts owing under such loan and shall
not be subject to any of the penalties provided by law for contracting
for, charging, or receiving interest in excess of the Highest Lawful
Rate.
To the extent that Article 5069-1.04 of Vernon's Civil Statutes is
relevant to Payee for the purposes of determining the Highest Lawful
Rate, Payee hereby elects to determine the applicable rate ceiling under
such Article by the indicated (weekly) rate ceiling from time to time in
effect, subject to Payee's right subsequently to change such method in
accordance with applicable law.
This Promissory Note is a note evidencing Indebtedness permitted by
Section 7.2.2 (k) of that certain Credit Agreement dated as of August 4,
1993, entered into among Maker, the lenders' signatories thereto
(collectively, the "Lenders" and individually, a "Lender"), Citicorp
USA, Inc., as Co-Agent for the Lenders, and The Bank of Nova Scotia as
agent (together with its successors in such capacity, the "Agent") for
the Lenders, as amended by amendments dated August 9, 1993, August 11,
1993, August 13, 1993 and December 2, 1994 (such Credit Agreement, as so
amended and as the same may be further amended, extended, supplemented,
restated or otherwise modified, the "Credit Agreement"). Terms defined
in the Credit Agreement are used herein with the meanings provided
therein, unless otherwise defined.
The undersigned agrees that if any of the following events of
default shall occur: (i) Default shall be made in the payment when due
of any principal of or interest on this Promissory Note; or (ii) The
Maker becomes insolvent or generally fails to pay, or admits in writing
its inability or unwillingness to pay, debts as they become due; or the
Maker applies for, consents to, or acquiesces in the appointment of, a
trustee, receiver, sequestrator, or other custodian for the Maker or for
any of its property, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or
acquiescence, permits or suffers to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Maker or for a
substantial part of its property and such trustee, receiver,
sequestrator or other custodian is not discharged within sixty (60)
days; or any bankruptcy, reorganization, debt arrangement, or other case
or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, is commenced in
respect of the Maker, and if such case or proceeding is not commenced by
the Maker, it is consented to or acquiesced in by the Maker or remains
for sixty (60) days undismissed; or the Maker takes any action to
authorize, or in furtherance of any of the foregoing (each of the
foregoing events described in this clause (ii) an "Insolvency Event"),
then, after the undersigned or the holder shall have given written
notice to the Agent of any such event of default listed in clause (i)
above if the Credit Agreement shall still be in effect and a period of
sixty (60) days from the date of such notice shall have expired, the
principal balance hereof and the interest accrued hereon may be declared
to be forthwith due and payable by the holder hereof so long as any
event of default shall be continuing, and any indebtedness of payee or
any other holder of this Promissory Note to the undersigned may be
appropriated and applied heron, but any other payments hereon will be
subject to the provisions of the second paragraph hereof.
In addition to and not in limitation of the foregoing, the
undersigned further agrees, subject only to any limitation imposed by
applicable law, that should the indebtedness represented by this
Promissory Note or any part thereof be collected at law or in equity or
in bankruptcy, receivership or other court proceedings, or this
Promissory Note be placed in the hands of attorneys for collection, the
undersigned agrees to pay, in addition to the principal and interest due
and payable hereon, all reasonable expenses, including reasonable
attorneys' fees and legal expenses, incurred by the holder of this
Promissory Note in endeavoring to collect any amounts payable hereunder
which are not paid when due.
Any notice to Maker provided for in this Promissory Note shall be
in writing and shall be given and be effective upon delivery to Maker.
Any notice to the Payee shall be in writing and shall be given and be
effective upon delivery to the Payee.
Maker hereby authorizes the holder hereof to endorse on the
Schedule attached to this Promissory Note or any continuation thereof
all advances made to Maker hereunder and all payments made on account of
the principal thereof, which endorsements shall be prima facie evidence
as to the outstanding principal amount of this Promissory Note;
provided, however, any failure by the holder hereof to make any
endorsement shall not limit or otherwise affect the obligations of Maker
under this Promissory Note.
Maker covenants and agrees, and the Payee, by its acceptance of
this Promissory Note, likewise covenants and agrees, that the payment of
the principal of and interest on this Promissory Note is hereby
expressly subordinated in right of payment to the payment in full of all
Senior Liabilities (as hereinafter defined) to the extent and in the
manner set forth in the second paragraph of this Promissory Note and in
the following paragraphs 1 through 9 (collectively the "Subordination
Provisions"):
1. In the event of any Insolvency Event, the Senior Liabilities
shall first be paid in full before the Payee shall be entitled to
receive and to retain any payment or distribution in respect of this
Promissory Note and, in order to implement the foregoing: (a) all
payments and distributions of any kind or character in respect of this
Promissory Note to which the Payee would be entitled if this Promissory
Note were not subordinated, shall be made directly to the Agent until
the Senior Liabilities shall be paid in full; (b) the Payee shall
promptly file a claim or claims, in the form required in such
proceedings, for the full outstanding amount of this Promissory Note,
and shall cause said claim or claims to be approved and all payments and
other distributions in respect thereof to be made directly to the Agent
until the Senior Liabilities shall be paid in full; and (c) the Payee
hereby irrevocably agrees that the Agent may, at its sole discretion, in
the name of the Payee or otherwise, demand, sue for, collect, receive
and receipt for any and all such payments or distributions, and file,
prove and vote or consent in any such proceedings with respect to any
and all claims of the Payee relating to this Promissory Note until the
Senior Liabilities shall be paid in full.
2. In the event that the Payee receives any payment or other
distribution of any kind or character from Maker, or from any other
source whatsoever, in respect of this Promissory Note, other than as
expressly permitted by the terms of this Promissory Note, such payment
or other distribution shall be received in trust for the Agent for the
benefit of the Lenders and promptly turned over by the Payee to the
Agent. The Payee will mark its books and records, and cause Maker to
mark its books and records, so as clearly to indicate that this
Promissory Note is subordinated in accordance with the terms hereof,
will execute such further documents or instruments and will take such
further action as the Agent may reasonably from time to time request to
carry out the intent of these Subordination Provisions.
3. All payments and distributions received by the Agent in
respect of this Promissory Note, to the extent received in or converted
to cash, may be applied by the Agent first to the payment of any and all
reasonable expenses (including reasonable attorneys' fees and legal
expenses) paid or incurred by the Agent in enforcing these Subordination
Provisions, or in endeavoring to collect or realize upon this Promissory
Note or any security therefor and any balance thereof shall, solely as
between the Payee and the Agent, be applied by the Agent in such order
of application as the Agent may from time to time select, toward, the
payments of the Senior Liabilities remaining unpaid, but, as between
Maker and its creditors, no such payments or distributions of any kind
or character shall be deemed to be payments or distributions in respect
of the Senior Liabilities; and, notwithstanding any such payments or
distributions received by the Agent in respect of this Promissory Note
and so applied by the Agent toward the payment of the Senior
Liabilities, the Payee shall be subrogated to the then existing rights
of the Agent, if any, in respect of the Senior Liabilities, only at such
time as these Subordination Provisions shall have been discontinued by
the Required Lenders or the Agent shall have received payment of the
full amount of the Senior Liabilities.
4. The payee hereby waives: (a) notice of the existence, or
creation or non-payment of all or any of the Senior Liabilities; and (b)
all diligence in collection or protection of, or realization upon the
Senior Liabilities, or any thereof, or any security therefor.
5. The payee will not, without prior written consent of the
Required Lenders: (a) after the occurrence of an Insolvency Event,
cancel, waive or forgive this Promissory Note or any rights in respect
hereof; (b) transfer or assign, or attempt to enforce or collect, or
subordinate to any obligations of Maker other than the Senior
Liabilities, this Promissory Note or any rights in respect hereof; (c)
take any collateral security for this Promissory Note; (d) after the
occurrence of an Insolvency Event, convert this Promissory Note into
stock of Maker; (e) commence, or join with any other creditor in
commencing, any bankruptcy, reorganization or insolvency proceedings
with respect to Maker; or (f) amend or modify the Subordination
Provisions of this Promissory Note.
6. The Agent, the Co-Agent, any Lender, or any holder of a Note
issued under the Credit Agreement may, from time to time, whether before
or after any discontinuance of this Promissory Note, at its sole
discretion and without notice to the Payee, take any or all of the
following actions; (a) retain or obtain a security interest in any
property to secure any of the Senior Liabilities; (b) retain or obtain
the primary or secondary obligations of any other obligor or obligors
with respect to any of the Senior Liabilities; (c) extend or renew for
one or more periods (whether or not longer than the original period),
alter or exchange any of the Senior Liabilities; and (d) release its
security interest in, or surrender, release or permit any substitution
or exchange for all or any part of any property securing any of the
Senior Liabilities, or extend or renew for one or more periods (whether
or not longer than the original period), or release, compromise, alter
or exchange any obligations of any nature of any obligor with respect to
any such property.
7. Each Lender may, from time to time, whether before or after
any discontinuance of these Subordination Provisions, without notice to
the undersigned, assign or transfer any or all of the Senior Liabilities
in accordance with any provisions regarding such assignment or transfer
from time to time contained in the Credit Agreement, or any interest
therein; and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer thereof, such Senior Liabilities shall
be and remain Senior Liabilities for the purposes of these Subordination
Provisions, and every immediate and successive assignee or transferee of
any of the Senior Liabilities or of any interest therein shall, to the
extent of the interest of such assignee or transferee in the Senior
Liabilities, be entitled to the benefits of these Subordination
Provisions to the same extent as if such assignee or transferee were the
transferring Lender; provided, however, that, unless the transferring
Lender shall otherwise consent in writing, the transferring Lender shall
have an unimpaired right, prior and superior to that of any such
assignee or transferee, to enforce these Subordination Provisions, for
the benefit of the transferring Lender, as to those of the Senior
Liabilities which the transferring Lender has not assigned or
transferred.
8. Nothing contained in this Promissory Note shall, so long as no
Default or Event of Default shall have occurred and be continuing under
the Credit Agreement or any other Senior Liabilities (a) affect the
obligation of Maker to make, or prevent Maker from making, payments of
principal of or interest on this Promissory Note, or (b) prevent the
application by the Payee, free of all rights of the holders of the
Senior Liabilities, of any monies paid to the Payee hereunder for the
payment of or on account of the principal of or interest on this
Promissory Note.
9. The term "Senior Liabilities" means (a) any and all
obligations of Maker, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, or now or hereafter
existing, or due or to become due, to any Lender, the Agent, the Co-
Agent or any holder of a Note issued pursuant to the Credit Agreement or
any other Loan Document and all security therefor; and (b) any and all
increased renewals, extensions or rearrangements or restructurings of
the obligations described in (a) above.
THE TERMS OF THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
TRIANGLE PACIFIC CORP.
a Delaware corporation
By:
--------------------------
Name:
------------------------
Title:
-----------------------
ACKNOWLEDGMENT AND AGREEMENT
The undersigned hereby acknowledges receipt of the Subordinated
Promissory Note dated , 19 ,of Triangle Pacific
Corp. in the original principal amount of $ and agrees
with the Lenders, the Co-Agent and the Agent (as such terms are defined
in the Promissory Note) to be bound by the terms and provisions thereof
(including, without limitation the Subordination Provisions), to receive
no payments or distributions contrary to the terms and provisions
thereof, and to do every other act and thing necessary or appropriate to
carry out such terms and provisions.
The undersigned hereby appoints the Agent the undersigned's
attorney-in-fact, with full power of substitution, for the purpose of
taking such action and executing agreements, instruments, and other
documents in the name of the undersigned, or otherwise, as the Agent may
deem reasonably necessary or advisable subsequent to an Insolvency Event
to accomplish the purposes of such Promissory Note, which appointment is
coupled with an interest and is irrevocable.
DATED: , 19
----------------------- ----
[Name of Permitted Foreign
Subsidiary], a
corporation ----------
BY:
-----------------------
NAME:
---------------------
TITLE:
--------------------
Schedule
DATE ADVANCE PRINCIPAL PAYMENT BALANCE
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Exhibit 10.5
------------
FORM OF AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-------------------------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"),
made and entered into as of the 8th day of March, 1995, is between
Triangle Pacific Corp., a Delaware corporation (the "Company"), and
(the "Executive").
---------------
WHEREAS, the Company recognizes that the Executive's contribution
to the growth and success of the Company has been substantial and
desires to assure the Company of the Executive's continued employment;
and
WHEREAS, the Executive is desirous of continuing to serve the
Company on the terms herein provided; and
WHEREAS, the Company and the Executive previously executed an
Amended and Restated Employment Agreement, dated January 10, 1992, which
they now wish to modify, amend and restate by this Agreement.
NOW, THEREFORE, in consideration of the promises hereafter set
forth, the parties agree as follows:
1. Employment. The Company agrees to continue to employ the
Executive, and the Executive agrees to continue to be employed by the
Company, subject to the terms and conditions set forth herein.
2. Term. The employment of the Executive by the Company as
provided in paragraph 1 hereof will be for a three-year period
commencing on the date hereof through and ending on the third
anniversary of the date hereof unless further extended as provided in
the following sentence of this paragraph 2 or sooner terminated as
provided in paragraph 5 hereof (the "Employment Term"). Commencing on
March 8, 1996, and on each anniversary of such date (such date and each
anniversary thereof herein called the "Renewal Date"), the Employment
Term will be automatically extended so as to terminate on the third
anniversary of the Renewal Date, unless, not less than 12 months prior
to the Renewal Date, either party delivers to the other party written
notice of its or his election not to so extend the Employment Term.
3. Position and Duties. During the Employment Term, the
Executive shall serve as President and Chief Operating Officer of the
Company or in such other executive capacity as determined by the
Company's Board of Directors (the "Board") from time to time. The
Executive agrees to devote his business time, skill, attention and best
efforts to the business of the Company to the extent necessary to
discharge the responsibilities assigned to him during the Employment
Term, provided, that he may (i) engage in any business or enterprise
which is not in competition with, or a supplier, vendor, or customer of,
the Company and does not significantly interfere with his duties
hereunder, (ii) serve on other civic or charitable boards or committees,
or, with the prior consent of the Board, on other corporate boards,
(iii) take usual, ordinary and customary periods of vacation, and (iv)
except as otherwise provided for total disability (as hereinafter
defined), be absent due to illness or other disability.
4. Compensation.
(i) Base Salary. The Executive shall receive a base salary
("Base Salary") at an annual rate equal to his current base salary
during the remainder of calendar year 1995. In respect of each
remaining calendar year of the Employment Term, the Board may in its
sole discretion increase the Executive's Base Salary effective as of
January 1 of such calendar year in an amount that the Board deems
appropriate, provided that the Board shall increase the Executive's Base
Salary in respect of each remaining calendar year of the Employment Term
by a percentage not less than the percentage, if any, by which the
Consumer Price Index for Urban Wage Earners and Clerical Workers for
Dallas, Texas: All items (1967=100), published by the Bureau of Labor
Statistics, United States Department of Labor (the "CPI") for the year
ending immediately prior to such calendar year increased as measured by
the CPI for the year ending one year prior to such calendar year. Any
increase in Base Salary or other compensation shall in no way limit or
reduce any other obligation of the Company hereunder and, once
established at an increased specified rate, the Base Salary hereunder
shall not thereafter be reduced. Base Salary shall be paid in
accordance with the normal payroll practices of the Company, but in no
event less frequently than monthly.
(ii) Incentive Compensation; Bonuses. In addition to Base
Salary, the Executive shall be entitled to (A) participate in the
Salaried Employees Annual Cash Incentive Bonus System, (B) participate
in any other incentive plan for executive employees in effect from time
to time, and (C) receive such other bonuses or discretionary
compensation payments as the Board may determine from time to time. Any
bonus and incentive plans covered by this subparagraph 4(ii) shall be
referred to herein in the aggregate as the "Incentive Plans".
(iii) Expenses. During the Employment Term, the Executive
shall be entitled to receive prompt reimbursement in accordance with the
policies and procedures of the Company for all reasonable expenses
incurred by the Executive in the normal course of the Company's
business.
(iv) Benefit Plans. The Executive shall be entitled to
continue to participate in or receive benefits under all of the
Company's employee benefit plans, policies, practices and arrangements
in which the Executive is presently eligible to participate, or plans
and arrangements substituted therefor; provided that with respect to any
such substitutions, the Executive's total employee benefits package
shall be at least as favorable as the one presently in force. The
Executive shall be entitled to participate in or receive benefits under
any benefit plans, including any pension, profit-sharing, savings, stock
option, life insurance, health and accident plans, and short- and long-
term disability plans or arrangements, made available by the Company in
the future to its executive employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such
benefit plans and arrangements. All such benefit plans and arrangements
available to the Executive now or at any time during the Employment Term
shall be referred to herein collectively as the "Benefit Plans."
(v) Vacations. The Executive shall be entitled to paid
vacations in accordance with the Company's vacation policy as in effect
from time to time. The Executive shall also be entitled to all paid
holidays given by the Company to its executive officers.
(vi) Perquisites. The Executive shall be entitled to
continue to receive the fringe benefits and perquisites he currently
receives, including, without limitation, the use of an automobile (or an
automobile allowance in lieu thereof) and the payment by the Company of
initiation fees and dues for country clubs, luncheon clubs, or similar
facilities, in accordance with the Company's policies presently in
effect.
(vii) Location of Employment. The Executive shall be based
in the metropolitan Dallas area, except for required travel on the
Company's business in accordance with the Company's past management
practices.
5. Termination.
(i) Death. This Agreement shall terminate automatically
upon the death of the Executive, subject to the provisions of
subparagraph 6(i) hereof.
(ii) Termination by the Company. Subject to subparagraph
5(v) and paragraph 6 hereof, the Company may terminate the Executive's
employment for cause or for inadequate performance and subject to the
provisions of subparagraph 6(ii) hereof, may terminate the Executive's
employment for total disability; provided, however, that the Company
shall not have the right to terminate Executive's employment for
inadequate performance during the six-month period following a Change of
Control (as hereinafter defined). The term "cause" in this Agreement
means the Executive's conviction of a felony or his conviction of any
misdemeanor involving moral turpitude; excessive use of alcohol; the use
of illegal drugs; acts of fraud or dishonesty; or any material breach by
the Executive of this Agreement. The term "inadequate performance"
means, in the good faith opinion of the Company's Chief Executive
Officer, a significant deviation from the Executive's past performance
under similar business conditions and not resulting from factors beyond
the reasonable control of Executive. The term "total disability" means
the physical or mental condition which, in the judgment of the
Executive's attending physician, based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive
from satisfactorily performing his usual duties for the Company. The
receipt of Social Security Disability payments shall be presumptive
evidence of total disability.
(iii) Termination by the Executive. The Executive may
terminate his employment (A) for any reason at any time within six (6)
months following a Change of Control (as hereinafter defined) and (B)
upon the occurrence at any time of any event constituting Good Reason
(as hereinafter defined). For purposes of this Agreement, "Good Reason"
shall mean (A) the assignment to the Executive by the Company of any
duties materially inconsistent with the Executive's offices with the
Company at the time of such assignment, (B) the removal by the Company
from the Executive of a material portion of those duties usually
appertaining to the Executive's offices with the Company at the time of
such removal, (C) a material change by the Company in the Executive's
responsibilities to the Company, as such responsibilities are ordinarily
and customarily required from time to time of an individual employed in
a similar position with a corporation engaged in the Company's business,
or (D) any breach by the Company of any of the provisions of this
Agreement or any failure by the Company to carry out any of its
obligations hereunder.
(iv) Notice of Termination. Any termination by the Company
for cause, for inadequate performance, or because of the total
disability of the Executive, or by the Executive within six (6) months
following a Change of Control or for Good Reason, shall be communicated
by written "Notice of Termination" to the other party hereto. The
"Notice of Termination" shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provisions so
indicated.
(v) Cure; Notice of Cure. If the Executive's employment is
terminated for cause or for inadequate performance by the Company, or if
the Executive terminates his employment for Good Reason, the Executive
or the Company, as appropriate, shall have 10 days from the date of
delivery of Notice of Termination to give notice of intention to cure
the cause, inadequate performance, or Good Reason, if curable. If such
notice of intention to cure is given, the Executive or the Company, as
appropriate, shall have 45 days from the date of its delivery to effect
the cure. If on the last of such 45 days, the cause or inadequate
performance or Good Reason still remains, the Executive may then be
terminated for cause or inadequate performance or the Executive may then
terminate his employment for Good Reason, as the case may be.
(vi) Date of Termination. "Date of Termination" shall mean
(A) if the Executive's employment is terminated by his death, the date
of his death; (B) if the Executive's employment is terminated because of
the Executive's total disability, 30 days after Notice of Termination is
given (provided that the Executive shall not have returned to the
performance of his duties and performed the same free of any total
disability through such 30-day period); (C) if the Executive's
employment is terminated for cause or for inadequate performance or the
Executive terminates his employment for Good Reason and notice of
intention to cure is not given as provided in subparagraph 5(v) hereof,
10 days after Notice of Termination is given; and (D) if the Executive's
employment is terminated for cause or for inadequate performance or the
Executive terminates his employment for Good Reason and notice of
intention to cure is given but a cure is not effected, 55 days after
Notice of Termination is given; and (E) for all other terminations, the
date specified in the Notice of Termination, which date shall in no
event be earlier than the date the Notice is given.
6. Compensation and Other Rights Upon Termination, Death or
Change of Control. The following provisions of this paragraph 6 shall
apply in the event of a termination of the Executive's employment, or
the occurrence of a Change of Control, prior to the expiration of the
Employment Term.
(i) (i) If the Executive's employment is terminated by reason
of the Executive's death, this Agreement shall terminate, and no further
compensation shall be payable to the Executive hereunder except as
specifically provided herein; provided, however, that the Executive's
estate, heirs and beneficiaries shall be entitled, in addition to any
other benefits specifically provided to them under any Incentive Plans
or Benefit Plans, to receive the following amounts in a lump sum cash
payment promptly after the Executive's death (if any portion of the
amount in subparagraph 6(i)(B) is not determinable in time to be
included in such lump sum, that portion shall be paid in a separate lump
sum as soon as practicable after it becomes determinable): (A) the Base
Salary at the rate otherwise payable to the Executive for the 12-month
period following his death; and (B) all benefits under the Incentive
Plans that, if the Executive had lived and the Company had continued to
employ him under this Agreement, would have accrued to his benefit on
December 31 of the year of the date of his death.
(ii) If the Executive's employment is terminated by reason
of the Executive's total disability, this Agreement shall terminate, and
no further compensation shall be payable to the Executive hereunder
except as specifically provided herein; provided, however, that the
Executive shall be entitled, in addition to any other benefits
specifically provided to him under any Incentive Plans or Benefit Plans,
to receive the following amounts in a lump sum cash payment promptly
after the termination of the Executive's employment by reason of such
disability (if any portion of the amount in subparagraph 6(ii)(B) is not
determinable in time to be included in such lump sum, that portion shall
be paid in a separate lump sum as soon as practicable after it becomes
determinable): (A) the Base Salary at the rate otherwise payable to the
Executive for the 12-month period following his Date of Termination; and
(B) all benefits under the Incentive Plans that, if the Company had
continued to employ the Executive under this Agreement, would have
accrued to his benefit on December 31 of the year of the Date of
Termination.
(iii) If the Executive shall terminate his employment other
than pursuant to subparagraph 5(iii) hereof, or if the Company shall
terminate the Executive for cause, the Company (A) shall promptly pay
the Executive his full Base Salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given and all
amounts accrued on behalf of the Executive as of the Date of Termination
(including a pro rata amount for the current year) under the Incentive
Plans and (to the extent possible under the terms thereof) the Benefit
Plans, and (B) shall promptly reimburse the Executive for expenses
incurred by him through the Date of Termination in accordance with
subparagraph 4(iii) hereof. Such termination shall not impair the
Company's remedies for any breach of this Agreement by the Executive.
(iv) If the Company shall terminate the Executive's
employment (other than for cause, total disability or inadequate
performance), or employment of the Executive shall terminate for any
reason (other than Executive's voluntary decision to do so) within six
(6) months following a Change of Control, or the Executive shall
terminate his employment at any time for Good Reason, then the
provisions of subparagraph 6(vii) shall apply in full and the Company
shall pay to the Executive the following amounts:
(A) the amounts (including Base Salary) specified in
clauses (A) and (B) of subparagraph 6(iii) hereof;
(B) a lump sum cash payment in an amount equal to
three (3) times the average of the Executive's Annual Compensation (as
hereinafter defined) for the five full calendar years immediately
preceding the calendar year in which the Executive's employment
terminated, such amount to be paid within ten (10) days following the
Date of Termination (for purposes of this Agreement, "Annual
Compensation" for a calendar year means all wages, salary, bonus and
other compensation paid to or on behalf of the Executive with respect to
his employment by the Company or its affiliates during such calendar
year, which are includable in the gross income of the Executive for such
calendar year for federal income tax purposes);
(C) as soon as practicable after it becomes
determinable, all benefits under the Incentive Plans that, if the
Company had continued to employ the Executive under this Agreement,
would have accrued to his benefit on December 31 of the year of the Date
of Termination, prorated to the Date of Termination; and
(D) all actual moving expenses incurred in connection
with the Executive's reemployment as a result of such termination, at
least equal in amount to the level payable under the Company's moving
and relocation policy in effect on the Date of Termination.
(v) If the Executive voluntarily determines to terminate
his employment within six (6) months following a Change of Control, then
the Company shall pay to the Executive the following amounts:
(A) The amounts (including Base Salary) specified in
clauses (A) and (B) of subparagraph 6(iii) hereof;
(B) A lump sum cash payment in an amount equal to two
(2) times the average of the Executive's Annual Compensation (as
hereinabove defined) for the five full calendar years immediately
preceding the calendar year in which the Executive's employment
terminated, such amount to be paid within ten (10) days following the
Date of Termination; and
(C) The amounts provided in clauses (C) and (D) of
subparagraph 6(iv) hereof.
(vi) If the Company shall terminate the Executive's
employment for inadequate performance as provided in subparagraph 5(ii)
hereof, then the Company shall pay to the Executive the following
amounts:
(A) The amounts (including Base Salary) specified in
clauses (A) and (B) of subparagraph 6(iii) hereof; and
(B) A lump sum cash payment in an amount equal to two (2)
times the average of the Executive's Annual Compensation (as hereinabove
defined) for the five full calendar years immediately preceding the
calendar year in which the Executive's employment terminated, such
amount to be paid within ten (10) days following the Date of
Termination.
(vii) Notwithstanding any provisions to the contrary
contained in this Agreement, in any Incentive Plan or in any other
agreement between the Company and the Executive, if the Company shall
terminate the Executive's employment (other than for cause, total
disability or inadequate performance) or the Executive shall terminate
his employment for Good Reason, or if a Change of Control shall occur
during the Employment Term, then, effective immediately prior to the
Date of Termination or such Change of Control and continuing thereafter:
(A) All stock options and stock appreciation rights
that the Executive then holds under any Incentive Plan or Benefit Plan
shall become immediately and fully vested and exercisable;
(B) All shares of restricted stock that the Executive
then holds under any Incentive Plan or Benefit Plan shall become
immediately and fully vested and all restrictions applicable to such
shares under such plans shall immediately terminate;
(C) All performance share awards, performance unit
awards and other similar performance-based awards that the Executive
then holds under any Incentive Plan or Benefit Plan shall become
immediately and fully vested, all performance measures applicable to
such awards shall be deemed to have been fully satisfied, and payment of
the then value of such awards shall be made to the Executive as soon as
administratively feasible following the Date of Termination or such
Change of Control, with the value of such awards to be based, to the
extent applicable, on the Market Value (as hereinafter defined) or the
Change of Control Value (as hereinafter defined) of the common stock of
the Company, whichever is applicable;
(D) All other incentive compensation awards,
including deferred cash bonuses or stock awards, then held by the
Executive under any Incentive Plan or Benefit Plan shall become
immediately and fully vested and payable; and
(E) The Executive shall have the right, exercisable
effective immediately prior to any Change of Control referenced in
clause (a) of the definition thereof or effective at any time and from
time to time within 180 days after the Date of Termination or any Change
of Control referenced in clause (b) of the definition thereof, to (1)
sell to the Company any or all of the shares of common stock of the
Company then held by or on behalf of the Executive, and, upon the
delivery to the Company of such shares, the Company shall pay to the
Executive an amount of cash per share equal to the Market Value or the
Change of Control Value, whichever is applicable, of such shares; and
(2) surrender to the Company any or all of the outstanding stock options
then held by the Executive under any Incentive Plan or Benefit Plan,
and, upon such surrender, the Company shall pay to the Executive an
amount of cash per option share equal to the excess of the Market Value
or the Change of Control Value, whichever is applicable, of such shares
over the exercise prices under such options for such shares. Any such
sale or surrender of shares or option shares shall be consummated on
such date and at such time and place as shall be mutually agreed on by
the parties, but if the parties are unable to agree on such matters,
then such sale or surrender shall be consummated at the principal
executive offices of the Company on the date of any Change of Control
referenced in clause (a) of the definition thereof or, if such right is
exercised after the Date of Termination or the Change of Control, on the
fifth business day following the date on which the Executive's notice of
election to exercise such right shall have been given.
(viii) Notwithstanding any other provisions of this Agreement,
if applicable law or any material agreement by which the Company is
bound imposes any restrictions on the Company's fulfilling its
obligations under this paragraph 6 at the time provided, the Company
shall fulfill its obligations to the maximum extent possible at that
time without violating such restrictions, such obligations shall survive
until the Company is able to fulfill them and the Company shall use its
best efforts to fulfill such obligations as soon as reasonably
practicable thereafter.
(ix) If the Executive's employment is terminated under the
circumstances described in subparagraph 6(iv) hereof, the Company shall
maintain in full force and effect for the continued benefit of the
Executive and his eligible dependents and beneficiaries, for a period of
18 months following the Date of Termination, the employee benefits under
the Benefit Plans that they were eligible to receive immediately prior
to the Date of Termination, subject to the terms and conditions of the
Benefit Plans, at no greater cost to the Executive than he would have
incurred had he remained in the employ of the Company; provided that the
Executive's continued participation or the participation of such
eligible dependents or beneficiaries is possible under the general terms
and provisions of such Benefit Plans and would not jeopardize the Plans'
qualified status under the Internal Revenue Code or the rules and
regulations promulgated thereunder. In the event that the Executive's
participation or the participation of such eligible dependents or
beneficiaries in any such Benefit Plan is barred pursuant to the
preceding sentence, the Company shall arrange to provide the Executive
or such eligible dependents or beneficiaries, for the period of coverage
specified in the preceding sentence, with benefits substantially similar
to those which the Executive and such eligible dependents or
beneficiaries were entitled to receive under such Benefit Plans
immediately prior to the Date of Termination. Upon the Executive
obtaining other employment or becoming self-employed, the Company's
obligations under this subparagraph 6(ix) hereof shall cease effective
upon the date of the Executive's eligibility to participate in his new
employer's benefits plans or in any benefit plans established by the
Executive pursuant to his self-employment, irrespective of whether such
benefit plans are comparable to the Company's Benefit Plans.
(x) If the Executive's employment is terminated for
inadequate performance or if the Executive terminates his employment
voluntarily within six (6) months following a Change of Control, the
Executive shall be required to mitigate the amount of any payment
provided for under this paragraph 6 by seeking other employment or
becoming self-employed, and any such payment shall be reduced (or
refunded to the Company by the Executive) by any compensation earned by
the Executive as a result of such employment or otherwise during the
specified period following his termination of employment for which he
has been compensated by the Company.
7. Certain Definitions.
(i) For purposes of this Agreement, "Change of Control"
means a change in control of the Company after the date of this
Agreement in any one of the following circumstances: (a) the Company is
a party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest, as a consequence of which members of
the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board thereafter; or (b) during
any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (including for this purpose any new
director whose election or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period) cease for any reason to constitute at least a majority of
the Board. A Change of Control shall have occurred for purposes of this
Agreement in any of the foregoing circumstances, and the Executive shall
have all of the rights provided by this Agreement upon the occurrence of
such Change of Control, regardless of whether a previous Change of
Control shall have occurred during the Employment Term.
(ii) (ii) For purposes of this Agreement, the term "Change of
Control Value" means the amount determined in clause (i), (ii) or (iii)
below, whichever is applicable, as follows: (i) the per share price
offered to stockholders of the Company in any merger, consolidation,
sale of assets or reorganization transaction; (ii) the highest per share
price offered the stockholders of the Company in any tender offer or
exchange offer whereby a Change of Control takes place; or (iii) if a
Change of Control occurs other than as described in clause (i) or clause
(ii), the Market Value per share, as of the date of the Change of
Control, as determined by the Board in good faith. If the consideration
offered to stockholders of the Company in a transaction consists of
anything other than cash, the Board shall determine in good faith the
fair cash equivalent of the portion of the consideration offered which
is other than cash.
(iii) For purposes of this Agreement, the term "Market Value"
means the fair market value per share as of the date in question, as
determined by the Board in good faith; provided, however, that if a
share if listed or admitted to trading on a securities exchange
registered under the Securities Exchange Act of 1934, the Market Value
shall be the average of the closing prices of such share for the twenty
(20) trading days prior to the date in question on the principal
securities exchange on which such share is listed or admitted to
trading, or if a share is not listed or admitted to trading on any such
exchange but is listed as a national market security on the National
Association of Securities Dealers, Inc. Automated Quotations ("NASDAQ")
system or any similar system then in use, the Market Value shall be the
average of the closing prices of such share for the twenty (20) trading
days prior to the date in question on such system, or if a share is not
listed or admitted to trading on any such exchange and is not listed as
a national market security on NASDAQ but is quoted on NASDAQ or any
similar system then in use, the Market Value shall be the average of the
closing high bid and low asked quotations on such system for such share
for the twenty (20) trading days prior to the date in question.
8. Certain Payments.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution from the Company or from a member of the Company's
affiliated group (as provided in Section 280G(d)(5) of the Internal
Revenue Code of 1986, as amended (the "Code")) to or for the benefit of
the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, including the
value of the acceleration of vesting of any stock option, stock
appreciation right or similar award or right) following a Change of
Control which is considered to be a "parachute payment" within the
meaning of Section 280G of the Code, disregarding subsection
280G(b)(2)(A)(ii) thereof (a "Parachute Payment"), would be
nondeductible by the Company for Federal income tax purposes because of
Section 280G of the Code, then the aggregate present value of all such
Parachute Payments which are payable or distributable to or for the
benefit of the Executive pursuant to this Agreement, including the value
of the acceleration of vesting of any stock option, stock appreciation
right or similar award or right (such Parachute Payments pursuant to
this Agreement are hereinafter referred to as the "Agreement Parachute
Payments") shall be reduced (but not below zero) to the Reduced Amount
by reducing the amount of the Agreement Parachute Payments, beginning
with cash and similar payments. The "Reduced Amount" shall be the
maximum amount of the Agreement Parachute Payments which, when
aggregated with all other Parachute Payments, can be made to the
Executive without causing any Agreement Parachute Payment to be
nondeductible by the Company because of Section 280G of the Code.
(ii) All determinations required to be made under this
paragraph 8 shall be made by the Company's independent auditors
immediately prior to the Date of Termination or Change of Control (the
"Accounting Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15) business days
of any Change of Control or the Date of Termination or such earlier time
as is requested by the Company. Any such determination by the
Accounting Firm shall be binding upon the Company and the Executive.
All fees and expenses of the Accounting Firm shall be borne solely by
the Company.
Within five (5) business days after the determination by the
Accounting Firm, the Company shall pay to or distribute to or for the
benefit of the Executive such amounts as are then due to the Executive
under this Agreement and shall promptly pay to or distribute for the
benefit of the Executive in the future such amounts as become due to the
Executive under this Agreement.
(iii) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that payments will have been
made by the Company which should not have been made ("Overpayment") or
that additional payments which will have not been made by the Company
could have been made ("Underpayment"), in each case, consistent with the
calculations required to be made hereunder. In the event that the
Accounting Firm determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Executive
which Executive shall repay to the Company together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code.
In the event that the Accounting Firm determines that an Underpayment
has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at
the applicable Federal rate provided for in Section 7872(f)(2) of the
Code.
9. Non-Compete, Non-Disclosure and Remedies.
(i) The Executive agrees that if he terminates his employment
with the Company other than pursuant to subparagraph 5(iii) hereof, or
if the Company terminates the Executive's employment for cause or for
inadequate performance, in each case prior to the expiration of the
Employment Term, he will not, prior to six months from the Date of
Termination, directly or indirectly engage anywhere in Dallas, Texas, or
within a fifty (50)-mile radius of Dallas, Texas, in the manufacturing,
marketing and/or financing of cabinets, hardwood floors, products used
with hardwood floors, and products used in substitution of or
replacement for the foregoing, whether as an owner, employee, director,
officer, shareholder, partner, agent, or otherwise; nor for such period
will the Executive solicit the employment of any employee of the Company
or the patronage of any person or entity that is, or was within the 12-
month period preceding such Date of Termination, a customer of the
Company.
(ii) The Executive shall not, during his employment
hereunder or at any time thereafter, disclose or reveal to anyone (other
than persons within the Company) any information relating to the
business, techniques, operations, condition (financial or otherwise),
prospects or affairs of the Company which is not generally known or
recognized as a standard industry practice. The Executive confirms that
all confidential information regarding the business of the Company
received by him during his employment is and shall remain the exclusive
property of the Company. All business records, papers and documents
kept or made by the Executive relating to the business of the Company
shall be and remain its property. Upon the termination of his
employment with the Company or upon the Company's request at any time,
the Executive shall promptly deliver to the Company, and shall not,
without the consent of the Company, retain copies of, any written
materials not previously made available to the public made by the
Executive or coming into his possession concerning the business or
affairs of the Company or any predecessor to its business or any of its
affiliates. Notwithstanding the preceding provisions of this
subparagraph 9(ii) or any other provision of this Agreement, the
Executive shall be entitled to retain any written materials received by
the Executive in the capacity as a shareholder of the Company or the
Company's affiliates.
(iii) Without limiting its other remedies at law or equity for
any breach of subparagraphs 9(i) or (ii) hereof, the Executive agrees
that in the event of such breach, the Company shall be entitled to a
temporary restraining order and a preliminary and permanent injunction
(but, with respect to subparagraph 9(i) hereof, only for the duration of
the six-month period specified therein) to specifically enforce
subparagraphs 9(i) and (ii) hereof. Subparagraph 9(ii) hereof shall be
enforceable by the Company, irrespective of the reason for the
Executive's termination of employment.
10. Successors; Binding Agreement.
(I) The Company shall require any successor to all or
substantially all of the business and/or assets of the Company (whether
direct or indirect, by purchase, merger, consolidation or otherwise), by
agreement in form and substance reasonably satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place; provided that
with respect to the Company's Incentive Plans and Benefit Plans, the
Company's obligations under this subparagraph 10(i) shall be deemed
satisfied if the Executive is entitled to participate in the incentive
and benefit plans of the successor company that are generally offered to
the other executives of such successor company. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this subparagraph 10(i) or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(ii) This Agreement shall inure to the benefit of and be
enforceable by (A) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees, and (B) the Company's successors and assigns.
11. Notices. For the purposes of this Agreement, notices and
all other communications provided for in this Agreement shall be in
writing and shall be delivered by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee:
-----------------------------
-----------------------------
-----------------------------
If to the Company: Triangle Pacific Corp.
16803 Dallas Parkway
Dallas, Texas 75248
Attention: Chairman of the Board
1. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and the
Chairman of the Board of the Company. No waiver by a party at any time
of any breach by the other party of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or conditions at
the same time or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Texas.
2. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
3. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.
4. Supersession of Prior Agreement. This Agreement supersedes
any previous employment agreements between the Company or its
predecessor corporations and the Executive, and any amendments and
supplements thereto.
5. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto relating to the subject matter hereof
and there are no written or oral terms or representations made by either
party other than those contained herein.
6. Attorneys' Fees and Costs. In the event there is any
arbitration or litigation between the parties hereto with respect to
this Agreement, and the Executive is successful, on the merits or
otherwise, as to any claim in such arbitration or litigation (whether or
not he is wholly successful in such arbitration or litigation), then the
Executive shall be entitled to recover from the Company all reasonable
attorneys' fees and costs incurred by him in connection with such
arbitration or litigation.
7. Survival. Neither the expiration nor the termination of the
term of the Executive's employment hereunder shall impair the rights or
obligations of either party hereto which shall have accrued hereunder
prior to such expiration or termination. The provisions of paragraphs
6, 7, 8, 9, 17, 19 and 20 hereof, and the rights and obligations of the
parties thereunder, shall survive the expiration or termination of the
term of the Executive's employment hereunder.
8. No Effect on Other Contractual Rights. The provisions of
this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable to the Executive, or in any way diminish
the Executive's rights as an employee of the Company, whether existing
now or hereafter, under any employee benefit plan, program, or
arrangement or other contract or agreement of the Company providing
benefits to the Executive.
9. Arbitration. The parties agree that any disputes arising
from this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
TRIANGLE PACIFIC CORP.
By:
-------------------------------
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SCHEDULE 1 TO FORM OF AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
The following employees of the Registrant entered into employment
agreements substantially identical to the foregoing form:
John G. Conklin
M. Joseph McHugh
Floyd F. Sherman
Robert J. Symon
Exhibit 10.6
------------
FORM OF EMPLOYMENT AGREEMENT
----------------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into
as of the 8th day of March, 1995, is between Triangle Pacific Corp., a
Delaware corporation (the "Company"), and (the
"Executive"). ---------------------
WHEREAS, the Company recognizes that the Executive's contribution
to the growth and success of the Company has been substantial and
desires to assure the Company of the Executive's continued employment;
and
WHEREAS, the Executive is desirous of continuing to serve the
Company on the terms herein provided; and
NOW, THEREFORE, in consideration of the promises hereafter set
forth, the parties agree as follows:
1. Employment. The Company agrees to continue to employ the
Executive, and the Executive agrees to continue to be employed by the
Company, subject to the terms and conditions set forth herein.
2. Term. The employment of the Executive by the Company as
provided in paragraph 1 hereof will be for a two-year period commencing
on the date hereof through and ending on the second anniversary of the
date hereof unless further extended as provided in the following
sentence of this paragraph 2 or sooner terminated as provided in
paragraph 5 hereof (the "Employment Term"). Commencing on March 8,
1996, and on each anniversary of such date (such date and each
anniversary thereof herein called the "Renewal Date"), the Employment
Term will be automatically extended so as to terminate on the second
anniversary of the Renewal Date, unless, not less than 12 months prior
to the Renewal Date, either party delivers to the other party written
notice of its or his election not to so extend the Employment Term.
3. Position and Duties. During the Employment Term, the
Executive shall serve as Vice President, Secretary and General Counsel
of the Company or in such other executive capacity as determined by the
Company's Board of Directors (the "Board") from time to time. The
Executive agrees to devote his business time, skill, attention and best
efforts to the business of the Company to the extent necessary to
discharge the responsibilities assigned to him during the Employment
Term, provided, that he may (i) engage in any business or enterprise
which is not in competition with, or a supplier, vendor, or customer of,
the Company and does not significantly interfere with his duties
hereunder, (ii) serve on other civic or charitable boards or committees,
or, with the prior consent of the Board, on other corporate boards,
(iii) take usual, ordinary and customary periods of vacation, and (iv)
except as otherwise provided for total disability (as hereinafter
defined), be absent due to illness or other disability.
4. Compensation.
(i) Base Salary. The Executive shall receive a base salary
("Base Salary") at an annual rate equal to his current base salary
during the remainder of calendar year 1995. In respect of each
remaining calendar year of the Employment Term, the Board may in its
sole discretion increase the Executive's Base Salary effective as of
January 1 of such calendar year in an amount that the Board deems
appropriate, provided that the Board shall increase the Executive's Base
Salary in respect of each remaining calendar year of the Employment Term
by a percentage not less than the percentage, if any, by which the
Consumer Price Index for Urban Wage Earners and Clerical Workers for
Dallas, Texas: All items (1967=100), published by the Bureau of Labor
Statistics, United States Department of Labor (the "CPI") for the year
ending immediately prior to such calendar year increased as measured by
the CPI for the year ending one year prior to such calendar year. Any
increase in Base Salary or other compensation shall in no way limit or
reduce any other obligation of the Company hereunder and, once
established at an increased specified rate, the Base Salary hereunder
shall not thereafter be reduced. Base Salary shall be paid in
accordance with the normal payroll practices of the Company, but in no
event less frequently than monthly.
(ii) Incentive Compensation; Bonuses. In addition to Base
Salary, the Executive shall be entitled to (A) participate in the
Salaried Employees Annual Cash Incentive Bonus System, (B) participate
in any other incentive plan for executive employees in effect from time
to time, and (C) receive such other bonuses or discretionary
compensation payments as the Board may determine from time to time. Any
bonus and incentive plans covered by this subparagraph 4(ii) shall be
referred to herein in the aggregate as the "Incentive Plans".
(iii) Expenses. During the Employment Term, the Executive
shall be entitled to receive prompt reimbursement in accordance with the
policies and procedures of the Company for all reasonable expenses
incurred by the Executive in the normal course of the Company's
business.
(iv) Benefit Plans. The Executive shall be entitled to
continue to participate in or receive benefits under all of the
Company's employee benefit plans, policies, practices and arrangements
in which the Executive is presently eligible to participate, or plans
and arrangements substituted therefor; provided that with respect to any
such substitutions, the Executive's total employee benefits package
shall be at least as favorable as the one presently in force. The
Executive shall be entitled to participate in or receive benefits under
any benefit plans, including any pension, profit-sharing, savings, stock
option, life insurance, health and accident plans, and short- and long-
term disability plans or arrangements, made available by the Company in
the future to its executive employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such
benefit plans and arrangements. All such benefit plans and arrangements
available to the Executive now or at any time during the Employment Term
shall be referred to herein collectively as the "Benefit Plans."
(v) Vacations. The Executive shall be entitled to paid
vacations in accordance with the Company's vacation policy as in effect
from time to time. The Executive shall also be entitled to all paid
holidays given by the Company to its executive officers.
(vi) Perquisites. The Executive shall be entitled to
continue to receive the fringe benefits and perquisites he currently
receives, including, without limitation, the use of an automobile (or an
automobile allowance in lieu thereof) and the payment by the Company of
initiation fees and dues for country clubs, luncheon clubs, or similar
facilities, in accordance with the Company's policies presently in
effect.
(vii) Location of Employment. The Executive shall be based in
the metropolitan Dallas area, except for required travel on the
Company's business in accordance with the Company's past management
practices.
5. Termination.
(i) Death. This Agreement shall terminate automatically
upon the death of the Executive, subject to the provisions of
subparagraph 6(i) hereof.
(ii) Termination by the Company. Subject to subparagraph
5(v) and paragraph 6 hereof, the Company may terminate the Executive's
employment for cause or for inadequate performance and subject to the
provisions of subparagraph 6(ii) hereof, may terminate the Executive's
employment for total disability; provided, however, that the Company
shall not have the right to terminate Executive's employment for
inadequate performance during the six-month period following a Change of
Control (as hereinafter defined). The term "cause" in this Agreement
means the Executive's conviction of a felony or his conviction of any
misdemeanor involving moral turpitude; excessive use of alcohol; the use
of illegal drugs; acts of fraud or dishonesty; or any material breach by
the Executive of this Agreement. The term "inadequate performance"
means, in the good faith opinion of the Company's Chief Executive
Officer, a significant deviation from the Executive's past performance
under similar business conditions and not resulting from factors beyond
the reasonable control of Executive. The term "total disability" means
the physical or mental condition which, in the judgment of the
Executive's attending physician, based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive
from satisfactorily performing his usual duties for the Company. The
receipt of Social Security Disability payments shall be presumptive
evidence of total disability.
(iii) Termination by the Executive. The Executive may
terminate his employment (A) for any reason at any time within six (6)
months following a Change of Control (as hereinafter defined) and (B)
upon the occurrence at any time of any event constituting Good Reason
(as hereinafter defined). For purposes of this Agreement, "Good Reason"
shall mean (A) the assignment to the Executive by the Company of any
duties materially inconsistent with the Executive's offices with the
Company at the time of such assignment, (B) the removal by the Company
from the Executive of a material portion of those duties usually
appertaining to the Executive's offices with the Company at the time of
such removal, (C) a material change by the Company in the Executive's
responsibilities to the Company, as such responsibilities are ordinarily
and customarily required from time to time of an individual employed in
a similar position with a corporation engaged in the Company's business,
or (D) any breach by the Company of any of the provisions of this
Agreement or any failure by the Company to carry out any of its
obligations hereunder.
(iv) Notice of Termination. Any termination by the Company
for cause, for inadequate performance, or because of the total
disability of the Executive, or by the Executive within six (6) months
following a Change of Control or for Good Reason, shall be communicated
by written "Notice of Termination" to the other party hereto. The
"Notice of Termination" shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provisions so
indicated.
(v) Cure; Notice of Cure. If the Executive's employment is
terminated for cause or for inadequate performance by the Company, or if
the Executive terminates his employment for Good Reason, the Executive
or the Company, as appropriate, shall have 10 days from the date of
delivery of Notice of Termination to give notice of intention to cure
the cause, inadequate performance, or Good Reason, if curable. If such
notice of intention to cure is given, the Executive or the Company, as
appropriate, shall have 45 days from the date of its delivery to effect
the cure. If on the last of such 45 days, the cause or inadequate
performance or Good Reason still remains, the Executive may then be
terminated for cause or inadequate performance or the Executive may then
terminate his employment for Good Reason, as the case may be.
(vi) Date of Termination. "Date of Termination" shall mean
(A) if the Executive's employment is terminated by his death, the date
of his death; (B) if the Executive's employment is terminated because of
the Executive's total disability, 30 days after Notice of Termination is
given (provided that the Executive shall not have returned to the
performance of his duties and performed the same free of any total
disability through such 30-day period); (C) if the Executive's
employment is terminated for cause or for inadequate performance or the
Executive terminates his employment for Good Reason and notice of
intention to cure is not given as provided in subparagraph 5(v) hereof,
10 days after Notice of Termination is given; and (D) if the Executive's
employment is terminated for cause or for inadequate performance or the
Executive terminates his employment for Good Reason and notice of
intention to cure is given but a cure is not effected, 55 days after
Notice of Termination is given; and (E) for all other terminations, the
date specified in the Notice of Termination, which date shall in no
event be earlier than the date the Notice is given.
6. Compensation and Other Rights Upon Termination, Death or
Change of Control. The following provisions of this paragraph 6 shall
apply in the event of a termination of the Executive's employment, or
the occurrence of a Change of Control, prior to the expiration of the
Employment Term.
(i) If the Executive's employment is terminated by reason
of the Executive's death, this Agreement shall terminate, and no further
compensation shall be payable to the Executive hereunder except as
specifically provided herein; provided, however, that the Executive's
estate, heirs and beneficiaries shall be entitled, in addition to any
other benefits specifically provided to them under any Incentive Plans
or Benefit Plans, to receive the following amounts in a lump sum cash
payment promptly after the Executive's death (if any portion of the
amount in subparagraph 6(i)(B) is not determinable in time to be
included in such lump sum, that portion shall be paid in a separate lump
sum as soon as practicable after it becomes determinable): (A) the Base
Salary at the rate otherwise payable to the Executive for the 12-month
period following his death; and (B) all benefits under the Incentive
Plans that, if the Executive had lived and the Company had continued to
employ him under this Agreement, would have accrued to his benefit on
December 31 of the year of the date of his death.
(ii) If the Executive's employment is terminated by reason
of the Executive's total disability, this Agreement shall terminate, and
no further compensation shall be payable to the Executive hereunder
except as specifically provided herein; provided, however, that the
Executive shall be entitled, in addition to any other benefits
specifically provided to him under any Incentive Plans or Benefit Plans,
to receive the following amounts in a lump sum cash payment promptly
after the termination of the Executive's employment by reason of such
disability (if any portion of the amount in subparagraph 6(ii)(B) is not
determinable in time to be included in such lump sum, that portion shall
be paid in a separate lump sum as soon as practicable after it becomes
determinable): (A) the Base Salary at the rate otherwise payable to the
Executive for the 12-month period following his Date of Termination; and
(B) all benefits under the Incentive Plans that, if the Company had
continued to employ the Executive under this Agreement, would have
accrued to his benefit on December 31 of the year of the Date of
Termination.
(iii) If the Executive shall terminate his employment other
than pursuant to subparagraph 5(iii) hereof, or if the Company shall
terminate the Executive for cause, the Company (A) shall promptly pay
the Executive his full Base Salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given and all
amounts accrued on behalf of the Executive as of the Date of Termination
(including a pro rata amount for the current year) under the Incentive
Plans and (to the extent possible under the terms thereof) the Benefit
Plans, and (B) shall promptly reimburse the Executive for expenses
incurred by him through the Date of Termination in accordance with
subparagraph 4(iii) hereof. Such termination shall not impair the
Company's remedies for any breach of this Agreement by the Executive.
(iv) If the Company shall terminate the Executive's
employment (other than for cause, total disability or inadequate
performance), or employment of the Executive shall terminate for any
reason (other than Executive's voluntary decision to do so) within six
(6) months following a Change of Control, or the Executive shall
terminate his employment at any time for Good Reason, then the
provisions of subparagraph 6(vii) shall apply in full and the Company
shall pay to the Executive the following amounts:
(A) the amounts (including Base Salary) specified in
clauses (A) and (B) of subparagraph 6(iii) hereof;
(B) a lump sum cash payment in an amount equal to two
(2) times the average of the Executive's Annual Compensation (as
hereinafter defined) for the five full calendar years immediately
preceding the calendar year in which the Executive's employment
terminated, such amount to be paid within ten (10) days following the
Date of Termination (for purposes of this Agreement, "Annual
Compensation" for a calendar year means all wages, salary, bonus and
other compensation paid to or on behalf of the Executive with respect to
his employment by the Company or its affiliates during such calendar
year, which are includable in the gross income of the Executive for such
calendar year for federal income tax purposes);
(C) as soon as practicable after it becomes
determinable, all benefits under the Incentive Plans that, if the
Company had continued to employ the Executive under this Agreement,
would have accrued to his benefit on December 31 of the year of the Date
of Termination, prorated to the Date of Termination; and
(D) all actual moving expenses incurred in connection
with the Executive's reemployment as a result of such termination, at
least equal in amount to the level payable under the Company's moving
and relocation policy in effect on the Date of Termination.
(v) If the Executive voluntarily determines to terminate his
employment within six (6) months following a Change of Control, then the
Company shall pay to the Executive the following amounts:
(A) The amounts (including Base Salary) specified in
clauses (A) and (B) of subparagraph 6(iii) hereof;
(B) A lump sum cash payment in an amount equal to one
and one-half (1 1/2) times the average of the Executive's Annual
Compensation (as hereinabove defined) for the five full calendar years
immediately preceding the calendar year in which the Executive's
employment terminated, such amount to be paid within ten (10) days
following the Date of Termination; and
(C) The amounts provided in clauses (C) and (D) of
subparagraph 6(iv) hereof.
(vi) If the Company shall terminate the Executive's
employment for inadequate performance as provided in subparagraph 5(ii)
hereof, then the Company shall pay to the Executive the following
amounts:
(A) The amounts (including Base Salary) specified in
clauses (A) and (B) of subparagraph 6(iii) hereof; and
(B) A lump sum cash payment in an amount equal to one
and one-half (1 1/2) times the average of the Executive's Annual
Compensation (as hereinabove defined) for the five full calendar years
immediately preceding the calendar year in which the Executive's
employment terminated, such amount to be paid within ten (10) days
following the Date of Termination.
(vii) Notwithstanding any provisions to the contrary
contained in this Agreement, in any Incentive Plan or in any other
agreement between the Company and the Executive, if the Company shall
terminate the Executive's employment (other than for cause, total
disability or inadequate performance) or the Executive shall terminate
his employment for Good Reason, or if a Change of Control shall occur
during the Employment Term, then, effective immediately prior to the
Date of Termination or such Change of Control and continuing thereafter:
(A) All stock options and stock appreciation rights that
the Executive then holds under any Incentive Plan or Benefit Plan shall
become immediately and fully vested and exercisable;
(B) All shares of restricted stock that the Executive
then holds under any Incentive Plan or Benefit Plan shall become
immediately and fully vested and all restrictions applicable to such
shares under such plans shall immediately terminate;
(C) All performance share awards, performance unit
awards and other similar performance-based awards that the Executive
then holds under any Incentive Plan or Benefit Plan shall become
immediately and fully vested, all performance measures applicable to
such awards shall be deemed to have been fully satisfied, and payment of
the then value of such awards shall be made to the Executive as soon as
administratively feasible following the Date of Termination or such
Change of Control, with the value of such awards to be based, to the
extent applicable, on the Market Value (as hereinafter defined) or the
Change of Control Value (as hereinafter defined) of the common stock of
the Company, whichever is applicable;
(D) All other incentive compensation awards, including
deferred cash bonuses or stock awards, then held by the Executive under
any Incentive Plan or Benefit Plan shall become immediately and fully
vested and payable; and
(E) The Executive shall have the right, exercisable
effective immediately prior to any Change of Control referenced in
clause (a) of the definition thereof or effective at any time and from
time to time within 180 days after the Date of Termination or any Change
of Control referenced in clause (b) of the definition thereof, to (1)
sell to the Company any or all of the shares of common stock of the
Company then held by or on behalf of the Executive, and, upon the
delivery to the Company of such shares, the Company shall pay to the
Executive an amount of cash per share equal to the Market Value or the
Change of Control Value, whichever is applicable, of such shares; and
(2) surrender to the Company any or all of the outstanding stock options
then held by the Executive under any Incentive Plan or Benefit Plan,
and, upon such surrender, the Company shall pay to the Executive an
amount of cash per option share equal to the excess of the Market Value
or the Change of Control Value, whichever is applicable, of such shares
over the exercise prices under such options for such shares. Any such
sale or surrender of shares or option shares shall be consummated on
such date and at such time and place as shall be mutually agreed on by
the parties, but if the parties are unable to agree on such matters,
then such sale or surrender shall be consummated at the principal
executive offices of the Company on the date of any Change of Control
referenced in clause (a) of the definition thereof or, if such right is
exercised after the Date of Termination or the Change of Control, on the
fifth business day following the date on which the Executive's notice of
election to exercise such right shall have been given.
(viii) Notwithstanding any other provisions of this
Agreement, if applicable law or any material agreement by which the
Company is bound imposes any restrictions on the Company's fulfilling
its obligations under this paragraph 6 at the time provided, the Company
shall fulfill its obligations to the maximum extent possible at that
time without violating such restrictions, such obligations shall survive
until the Company is able to fulfill them and the Company shall use its
best efforts to fulfill such obligations as soon as reasonably
practicable thereafter.
(ix) If the Executive's employment is terminated under the
circumstances described in subparagraph 6(iv) hereof, the Company shall
maintain in full force and effect for the continued benefit of the
Executive and his eligible dependents and beneficiaries, for a period of
18 months following the Date of Termination, the employee benefits under
the Benefit Plans that they were eligible to receive immediately prior
to the Date of Termination, subject to the terms and conditions of the
Benefit Plans, at no greater cost to the Executive than he would have
incurred had he remained in the employ of the Company; provided that the
Executive's continued participation or the participation of such
eligible dependents or beneficiaries is possible under the general terms
and provisions of such Benefit Plans and would not jeopardize the Plans'
qualified status under the Internal Revenue Code or the rules and
regulations promulgated thereunder. In the event that the Executive's
participation or the participation of such eligible dependents or
beneficiaries in any such Benefit Plan is barred pursuant to the
preceding sentence, the Company shall arrange to provide the Executive
or such eligible dependents or beneficiaries, for the period of coverage
specified in the preceding sentence, with benefits substantially similar
to those which the Executive and such eligible dependents or
beneficiaries were entitled to receive under such Benefit Plans
immediately prior to the Date of Termination. Upon the Executive
obtaining other employment or becoming self-employed, the Company's
obligations under this subparagraph 6(ix) hereof shall cease effective
upon the date of the Executive's eligibility to participate in his new
employer's benefits plans or in any benefit plans established by the
Executive pursuant to his self-employment, irrespective of whether such
benefit plans are comparable to the Company's Benefit Plans.
(x) If the Executive's employment is terminated for
inadequate performance or if the Executive terminates his employment
voluntarily within six (6) months following a Change of Control, the
Executive shall be required to mitigate the amount of any payment
provided for under this paragraph 6 by seeking other employment or
becoming self-employed, and any such payment shall be reduced (or
refunded to the Company by the Executive) by any compensation earned by
the Executive as a result of such employment or otherwise during the
specified period following his termination of employment for which he
has been compensated by the Company.
7. Certain Definitions.
(i) For purposes of this Agreement, "Change of Control"
means a change in control of the Company after the date of this
Agreement in any one of the following circumstances: (a) the Company is
a party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest, as a consequence of which members of
the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board thereafter; or (b) during
any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (including for this purpose any new
director whose election or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period) cease for any reason to constitute at least a majority of
the Board. A Change of Control shall have occurred for purposes of this
Agreement in any of the foregoing circumstances, and the Executive shall
have all of the rights provided by this Agreement upon the occurrence of
such Change of Control, regardless of whether a previous Change of
Control shall have occurred during the Employment Term.
(ii) For purposes of this Agreement, the term "Change of
Control Value" means the amount determined in clause (i), (ii) or (iii)
below, whichever is applicable, as follows: (i) the per share price
offered to stockholders of the Company in any merger, consolidation,
sale of assets or reorganization transaction; (ii) the highest per share
price offered the stockholders of the Company in any tender offer or
exchange offer whereby a Change of Control takes place; or (iii) if a
Change of Control occurs other than as described in clause (i) or clause
(ii), the Market Value per share, as of the date of the Change of
Control, as determined by the Board in good faith. If the consideration
offered to stockholders of the Company in a transaction consists of
anything other than cash, the Board shall determine in good faith the
fair cash equivalent of the portion of the consideration offered which
is other than cash.
(iii) For purposes of this Agreement, the term "Market Value"
means the fair market value per share as of the date in question, as
determined by the Board in good faith; provided, however, that if a
share if listed or admitted to trading on a securities exchange
registered under the Securities Exchange Act of 1934, the Market Value
shall be the average of the closing prices of such share for the twenty
(20) trading days prior to the date in question on the principal
securities exchange on which such share is listed or admitted to
trading, or if a share is not listed or admitted to trading on any such
exchange but is listed as a national market security on the National
Association of Securities Dealers, Inc. Automated Quotations ("NASDAQ")
system or any similar system then in use, the Market Value shall be the
average of the closing prices of such share for the twenty (20) trading
days prior to the date in question on such system, or if a share is not
listed or admitted to trading on any such exchange and is not listed as
a national market security on NASDAQ but is quoted on NASDAQ or any
similar system then in use, the Market Value shall be the average of the
closing high bid and low asked quotations on such system for such share
for the twenty (20) trading days prior to the date in question.
8. Certain Payments.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution from the Company or from a member of the Company's
affiliated group (as provided in Section 280G(d)(5) of the Internal
Revenue Code of 1986, as amended (the "Code")) to or for the benefit of
the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, including the
value of the acceleration of vesting of any stock option, stock
appreciation right or similar award or right) following a Change of
Control which is considered to be a "parachute payment" within the
meaning of Section 280G of the Code, disregarding subsection
280G(b)(2)(A)(ii) thereof (a "Parachute Payment"), would be
nondeductible by the Company for Federal income tax purposes because of
Section 280G of the Code, then the aggregate present value of all such
Parachute Payments which are payable or distributable to or for the
benefit of the Executive pursuant to this Agreement, including the value
of the acceleration of vesting of any stock option, stock appreciation
right or similar award or right (such Parachute Payments pursuant to
this Agreement are hereinafter referred to as the "Agreement Parachute
Payments") shall be reduced (but not below zero) to the Reduced Amount
by reducing the amount of the Agreement Parachute Payments, beginning
with cash and similar payments. The "Reduced Amount" shall be the
maximum amount of the Agreement Parachute Payments which, when
aggregated with all other Parachute Payments, can be made to the
Executive without causing any Agreement Parachute Payment to be
nondeductible by the Company because of Section 280G of the Code.
(ii) All determinations required to be made under this
paragraph 8 shall be made by the Company's independent auditors
immediately prior to the Date of Termination or Change of Control (the
"Accounting Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15) business days
of any Change of Control or the Date of Termination or such earlier time
as is requested by the Company. Any such determination by the
Accounting Firm shall be binding upon the Company and the Executive.
All fees and expenses of the Accounting Firm shall be borne solely by
the Company.
Within five (5) business days after the determination by the
Accounting Firm, the Company shall pay to or distribute to or for the
benefit of the Executive such amounts as are then due to the Executive
under this Agreement and shall promptly pay to or distribute for the
benefit of the Executive in the future such amounts as become due to the
Executive under this Agreement.
(iii) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that payments will have been
made by the Company which should not have been made ("Overpayment") or
that additional payments which will have not been made by the Company
could have been made ("Underpayment"), in each case, consistent with the
calculations required to be made hereunder. In the event that the
Accounting Firm determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Executive
which Executive shall repay to the Company together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code.
In the event that the Accounting Firm determines that an Underpayment
has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at
the applicable Federal rate provided for in Section 7872(f)(2) of the
Code.
9. Non-Compete, Non-Disclosure and Remedies.
(i) The Executive agrees that if he terminates his employment
with the Company other than pursuant to subparagraph 5(iii) hereof, or
if the Company terminates the Executive's employment for cause or for
inadequate performance, in each case prior to the expiration of the
Employment Term, he will not, prior to six months from the Date of
Termination, directly or indirectly engage anywhere in Dallas, Texas, or
within a fifty (50)-mile radius of Dallas, Texas, in the manufacturing,
marketing and/or financing of cabinets, hardwood floors, products used
with hardwood floors, and products used in substitution of or
replacement for the foregoing, whether as an owner, employee, director,
officer, shareholder, partner, agent, or otherwise; nor for such period
will the Executive solicit the employment of any employee of the Company
or the patronage of any person or entity that is, or was within the 12-
month period preceding such Date of Termination, a customer of the
Company.
(ii) The Executive shall not, during his employment
hereunder or at any time thereafter, disclose or reveal to anyone (other
than persons within the Company) any information relating to the
business, techniques, operations, condition (financial or otherwise),
prospects or affairs of the Company which is not generally known or
recognized as a standard industry practice. The Executive confirms that
all confidential information regarding the business of the Company
received by him during his employment is and shall remain the exclusive
property of the Company. All business records, papers and documents
kept or made by the Executive relating to the business of the Company
shall be and remain its property. Upon the termination of his
employment with the Company or upon the Company's request at any time,
the Executive shall promptly deliver to the Company, and shall not,
without the consent of the Company, retain copies of, any written
materials not previously made available to the public made by the
Executive or coming into his possession concerning the business or
affairs of the Company or any predecessor to its business or any of its
affiliates. Notwithstanding the preceding provisions of this
subparagraph 9(ii) or any other provision of this Agreement, the
Executive shall be entitled to retain any written materials received by
the Executive in the capacity as a shareholder of the Company or the
Company's affiliates.
(iii) Without limiting its other remedies at law or equity
for any breach of subparagraphs 9(i) or (ii) hereof, the Executive
agrees that in the event of such breach, the Company shall be entitled
to a temporary restraining order and a preliminary and permanent
injunction (but, with respect to subparagraph 9(i) hereof, only for the
duration of the six-month period specified therein) to specifically
enforce subparagraphs 9(i) and (ii) hereof. Subparagraph 9(ii) hereof
shall be enforceable by the Company, irrespective of the reason for the
Executive's termination of employment.
10. Successors; Binding Agreement.
(i) The Company shall require any successor to all or
substantially all of the business and/or assets of the Company (whether
direct or indirect, by purchase, merger, consolidation or otherwise), by
agreement in form and substance reasonably satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place; provided that
with respect to the Company's Incentive Plans and Benefit Plans, the
Company's obligations under this subparagraph 10(i) shall be deemed
satisfied if the Executive is entitled to participate in the incentive
and benefit plans of the successor company that are generally offered to
the other executives of such successor company. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this subparagraph 10(i) or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(ii) This Agreement shall inure to the benefit of and be
enforceable by (A) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees, and (B) the Company's successors and assigns.
11. Notices. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be delivered by certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Employee:
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If to the Company: Triangle Pacific Corp.
16803 Dallas Parkway
Dallas, Texas 75248
Attention: Chairman of the Board
or such other address as a party may have furnished to the other in
writing in accordance herewith. Such notices and other communications
shall be effective upon the earlier of five days after deposit in the
mail or the date of delivery as shown by the return receipt therefor.
1. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and the
Chairman of the Board of the Company. No waiver by a party at any time
of any breach by the other party of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or conditions at
the same time or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Texas.
2. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
3. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.
4. Supersession of Prior Agreement. This Agreement supersedes
any previous employment agreements between the Company or its
predecessor corporations and the Executive, and any amendments and
supplements thereto.
5. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto relating to the subject matter hereof
and there are no written or oral terms or representations made by either
party other than those contained herein.
6. Attorneys' Fees and Costs. In the event there is any
arbitration or litigation between the parties hereto with respect to
this Agreement, and the Executive is successful, on the merits or
otherwise, as to any claim in such arbitration or litigation (whether or
not he is wholly successful in such arbitration or litigation), then the
Executive shall be entitled to recover from the Company all reasonable
attorneys' fees and costs incurred by him in connection with such
arbitration or litigation.
7. Survival. Neither the expiration nor the termination of the
term of the Executive's employment hereunder shall impair the rights or
obligations of either party hereto which shall have accrued hereunder
prior to such expiration or termination. The provisions of paragraphs
6, 7, 8, 9, 17, 19 and 20 hereof, and the rights and obligations of the
parties thereunder, shall survive the expiration or termination of the
term of the Executive's employment hereunder.
8. No Effect on Other Contractual Rights. The provisions of this
Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable to the Executive, or in any way diminish the
Executive's rights as an employee of the Company, whether existing now
or hereafter, under any employee benefit plan, program, or arrangement
or other contract or agreement of the Company providing benefits to the
Executive.
9. Arbitration. The parties agree that any disputes arising from
this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
TRIANGLE PACIFIC CORP.
By:
-----------------------------
Floyd F. Sherman,
Chairman of the Board and
Chief Executive Officer
SCHEDULE 1 TO FORM OF EMPLOYMENT AGREEMENT
The following employees of the Registrant entered into employment
agreements substantially identical to the foregoing form:
Charles A. Engle
John W. Esch
James T. Fidler
Michael J. Kearins
Darryl T. Marchand
E. Dwain Plaster
James E. Price
Allen Silver
David Weaver
Exhibit 10.7
------------
CERTIFICATE
Triangle Pacific Corp.
I, , Secretary of the above
organization, do hereby certify that attached hereto is a true and
correct copy of a resolution and a true and correct copy of:
Triangle Pacific Corp.
Salaried Employees Profit Sharing Plan
(As Restated January 1, 1993)
each of which was duly adopted by the Board of Directors of said
organization at a meeting duly held in accordance with its bylaws on the
day of , 1994.
I further certify that a quorum of the members of the Board of
Directors was present at said meeting and that said resolution has not
been altered, modified or rescinded and is now in full force and effect.
IN WITNESS WHEREOF, I have hereunto affixed my name and the
seal of the above organization, this day of ,
1994.
Secretary
(CORPORATE SEAL)
STATE OF TEXAS )
)ss.
COUNTY OF DALLAS)
SUBSCRIBED AND SWORN TO BEFORE ME THIS day of ,
1994.
Notary Public
My Commission Expires:
(NOTARY SEAL)
Triangle Pacific Corp.
RESOLUTION -- BOARD OF DIRECTORS
RESOLVED THAT:
(1) The Plan titled Triangle Pacific Corp. Salaried Employees
Profit Sharing Plan (As Restated January 1, 1993), copies of which have
been presented to the Board at this meeting, is hereby approved and
adopted, subject to its qualification under Section 401(a) of the
Internal Revenue Code of 1986, as amended from time to time (hereinafter
referred to as "Code");
(2) The proper officers of this Corporation be and they are hereby
authorized to do all acts and things necessary and proper to carry out
the purpose of said Plan and to make such amendments and changes, if
any, as may be necessary to qualify the Plan and related trust under the
applicable sections of the Code;
(3) The proper officers of this Corporation are hereby authorized
to submit, or have submitted, verified counterparts of the Plan and
related trust instruments and this resolution to the appropriate
District Director of Internal Revenue Service in support of a request
for a letter of determination approving the Plan and related trust as
qualifying for tax purposes;
(4) Announcement shall be made to all employees covered by the
Plan concerning the adoption of said Plan and the provisions thereof.
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES PROFIT SHARING PLAN
(As Restated January 1, 1993)
Effective: January 1, 1993
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES PROFIT SHARING PLAN
(As Restated January 1, 1993)
TABLE OF CONTENTS Page No.
PREAMBLE
ARTICLE I Purpose I-1
ARTICLE II Definitions and Construction II-1
2.1 - Definitions II-1
2.2 - Additional Defined Terms II-6
2.3 - Construction II-7
ARTICLE II Participation and Service III-1
3.1 - Participation III-1
3.2 - Service III-3
3.3 - Hours of Employment III-4
3.4 - Participation and Service Upon
Reemployment III-5
ARTICLE IV Contributions and Forfeitures IV-1
4.1 - Amount of Profit Sharing
Contributions IV-1
4.2 - Time and Method of Profit
Sharing Contribution IV-1
4.3 - Determination of Profit Sharing
Contributions IV-1
4.4 - No After-Tax Contributions by
Participants IV-2
4.5 - Disposition of Forfeitures IV-2
4.6 - Salary Deferral Contributions IV-5
4.7 - Matching Contributions and
Qualified Matching Contributions IV-10
4.8 - Qualified Nonelective
Contributions IV-12
ARTICLE V Allocations to Participants' Accounts V-1
5.1 - Individual Accounts V-1
5.2 - Account Adjustments V-2
5.3 - Limit on Annual Additions Under
Code Section 415 V-5
5.4 - Top-Heavy Provisions V-9
ARTICLE VI Distributions and Withdrawals VI-1
6.1 - Retirement or Disability VI-1
6.2 - Death VI-1
6.3 - Termination for Other Reasons VI-1
6.4 - Payment of Benefits VI-2
6.5 - Designation of Beneficiary VI-3
ARTICLE VI 6.6 - Distributions to Five Percent
(Cont'd) (5%) Owners VI-5
6.7 - Small Distributions VI-5
6.8 - Distributions to Participants
Who Are Not 5% Owners VI-6
6.9 - Withdrawals from Salary Deferral
Contribution Account VI-6
6.10 - Direct Rollovers VI-8
ARTICLE VII Trust Fund VII-1
ARTICLE VIII Administration VIII-1
8.1 - Allocation of Responsibility
Among Fiduciaries for Plan and
Trust Administration VIII-1
8.2 - Appointment of Committee VIII-2
8.3 - Claims Procedure VIII-2
8.4 - Records and Reports VIII-3
8.5 - Other Committee Powers and
Duties VIII-3
8.6 - Rules and Decisions VIII-4
8.7 - Committee Procedures VIII-4
8.8 - Authorization of Benefit
Payments VIII-5
8.9 - Application and Forms for
Benefits VIII-5
8.10 - Facility of Payments VIII-5
8.11 - Indemnification of the Committee VIII-6
ARTICLE IX Miscellaneous IX-1
9.1 - Nonguarantee of Employment IX-1
9.2 - Rights to Trust Assets IX-1
9.3 - Nonalienation of Benefits IX-1
9.4 - Non-forfeitability of Benefits IX-5
9.5 - Discontinuance of Employer
Contributions IX-5
9.6 - Waiver of Benefits IX-5
ARTICLE X Amendment and Termination X-1
10.1 - Amendment and Termination X-1
10.2 - Partial Termination X-2
10.3 - Liquidation of the Trust Fund X-2
10.4 - Manner of Distribution X-2
ARTICLE XI Successor Employer and Merger or
Consolidation of Plans XI-1
11.1- Successor Employer XI-1
11.2- Conditions Applicable to Mergers
or Consolidations of Plans XI-1
Triangle Pacific Corp.
Salaried Employees Profit Sharing Plan
(As Restated January 1, 1993)
---------------------------------------
PREAMBLE
--------
WHEREAS, effective January 5, 1976 Triangle Pacific Corp.
established a Profit Sharing Plan for its eligible salaried employees,
which Plan was amended in its entirety effective January 1, 1980 and
January 1, 1984 (hereinafter referred to as the "Previous Plan"); and
WHEREAS, said organization now desires to amend and continue the
Previous Plan by a separate restatement in its entirety and the right to
so amend is reserved to said organization under the provisions of the
Previous Plan;
NOW, THEREFORE, the Previous Plan is hereby restated, and amended
in its entirety, superseded and replaced by this separate restated Plan.
There will be no termination and no gap or lapse in time or effect
between such Plans, and the existence of a qualified Plan shall be
continuous and uninterrupted.
This restated Profit Sharing Plan is conditioned upon its
qualification under Section 401(a) of the Internal Revenue Code of 1986,
as amended from time to time, with employer contributions being
deductible under Section 404 of the Internal Revenue Code or any other
applicable sections thereof, as amended from time to time.
The terms and conditions of this restated Plan, effective January
1, 1993, (unless otherwise provided herein) are as follows:
ARTICLE I
Purpose
-------
The Plan and Trust are intended to meet the requirements of
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as
amended.
The provisions of this Plan shall apply only to an Employee who
terminates employment on or after the Effective Date. The rights and
benefits, if any, of a former employee shall be determined in accordance
with the prior provisions of the Plan or Previous Plan in effect on the
date his employment terminated.
ARTICLE II
Definitions and Construction
----------------------------
2.1 Definitions: Where the following words and phrases appear in
this Plan, they shall have the respective meanings set forth in this
Article II, unless the context clearly indicates to the contrary.
(a) Additions: Additions allocated to a Participant's Profit
Sharing Contribution Account, Matching Contribution Account, Qualified
Matching Contribution Account and Salary Deferral Contribution Account
as described in Section 5.3a(i).
(b) Affiliated Employer: Any business entity (including an
Employer hereunder) that, together with an Employer hereunder,
constitutes a controlled group of corporations, a group of trades or
businesses under common control, or an affiliated service group, all as
defined in Code Section 414 (subject, however, to the provisions of Code
Section 415(h) when applying the benefit limitations of Code Section
415).
(c) Allocation Date: The date as of which Contri-butions are
allocated to a Participant's Accounts, which date shall be any business
day of the Year and as soon as practicable following receipt of such
contributions by the Trustee.
(d) Authorized Leave of Absence: Any absence authorized by
the Employer under the Employer's standard personnel practices provided
that all persons under similar circumstances must be treated alike in
the granting of such Authorized Leaves of Absence and provided further
that the Employee returns or retires within the period of authorized
absence. An absence due to service in the Armed Forces of the United
States shall be considered an Authorized Leave of Absence provided that
the absence is caused by war or other emergency, or provided that the
Employee is required to serve under the laws of conscription in time of
peace, and further provided that the Employee returns to employment with
the Employer within the period provided by law.
(e) Beneficiary: A person or the persons (natural or
otherwise) designated by a Participant in accordance with the provisions
of Section 6.5 to receive any death benefit which shall be payable under
this Plan; provided that if the Participant is married, his Eligible
Spouse shall be his Beneficiary unless another individual is designated
by the Participant and the Eligible Spouse consents to such designation
(or change in designation) in the manner provided for herein.
(f) Code: The Internal Revenue Code of 1986, as amended from
time to time.
(g) Committee: The persons appointed pursuant to Article
VIII to administer the Plan in accordance with said Article.
(h) Company: Triangle Pacific Corp.
(i) Compensation: The total of all fixed amounts paid to or
accrued for a Participant by the Employer for personal services for a
Year, but excluding any benefits paid under this Plan, any payments for
overtime work, commissions and any bonuses of any kind or nature. For
purposes of determining a Participant's Compensation, any election by
such Participant to reduce his regular cash remuneration under Code
Section 401(k) or Code Section 125 shall be treated as if the
Participant did not make such election.
Notwithstanding the foregoing, Compensation for any Plan Year,
after December 31, 1988, shall not include any amounts in excess of the
dollar limit as may be permitted under Code Section 401(a)(17). If
during a year any Employee who is a Participant ("family member") is the
spouse or lineal descendant, below age 19, of an Employee who is a
Participant ("HCE") who either is a five percent (5%) owner (as defined
in Code Section 416(i)) or is a highly compensated employee (as defined
in Code Section 414(q)) in the group consisting of the ten (10) such
highly compensated employees with the greatest compensation during such
year, then, for purposes of the above dollar limitation, such "family
member's" compensation for such year will be aggregated with such
"HCE's" compensation for such year. If such aggregated compensation for
a year exceeds the above dollar limit, then the dollar limit applicable
to each such Participant's compensation for such year will be the dollar
limit otherwise applicable for such year for the Participant multiplied
by a fraction, the numerator of which is such Participant's unlimited
compensation for such year and the denominator of which is the sum of
all such Participants' unlimited compensation for such year.
(j) Disability: A physical or mental condition which, in the
judgment of the Committee, based upon medical reports and other evidence
satisfactory to the Committee, presumably permanently prevents an
Employee from satisfactorily performing his usual duties for the
Employer or the duties of such other position or job which the Employer
makes available to him and for which such Employee is qualified by
reason of his training, education or experience. The receipt of Social
Security Disability payments shall be presumptive evidence of
disability.
(k) Domestic Subsidiary: A subsidiary organized under the
laws of any state or territory of the United States.
(l) Effective Date: Unless otherwise provided herein,
January 1, 1993, the date on which the provisions of this amended and
restated Plan became effective.
(m) Eligible Spouse: The spouse to whom a Participant or
Former Participant is married on the date benefit payments under the
Plan are to commence pursuant to Section 6.4, or if the Participant or
Former Participant dies before benefit payments commence, the spouse to
whom he is married on the date of his death.
(n) Employee: Any person who, on or after the Effective
Date, is receiving remuneration for personal services rendered to the
Employers (or who would be receiving such remuneration except for an
Authorized Leave of Absence) and is not represented by a collective
bargaining agreement. A "leased employee" will also be deemed an
Employee. A "leased employee" is any leased employee within the meaning
of Code Section 414(n)(2), except that if such leased employees
constitute less than twenty percent (20%) of the Employer's nonhighly
compensated workforce within the meaning of Code Section
414(n)(5)(C)(ii), then the term "Employee" will not include those leased
employees covered by a plan described in Code Section 414(n)(5) unless
otherwise provided by the terms of such plan (or this Plan).
(o) Employer: Triangle Pacific Corp., a corporation
organized and existing under the laws of the State of New York
("Company") or any Domestic Subsidiary which, with its consent,
participates in the Plan. Triangle Pacific Corp. and such Domestic
Subsidiaries are sometimes referred to as the Employers.
(p) ERISA: Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended from time to time.
(q) Fiduciaries: The Employer, the Committee and the
Trustee, but only with respect to the specific responsibilities of each
for Plan and Trust administration, all as described in Section 8.1.
(r) Forfeiture: The forfeiture of the non vested portion of
a Participant's Profit Sharing or Matching Contribution Accounts after
his separation from service. A Forfeiture will occur on the earlier of
the distribution of the Participant's entire nonforfeitable account
balance, or the date the Participant incurs five consecutive one-year
breaks in service. If a Participant is 0% vested at the time of his
separation from service, such Participant will be deemed to have
received a distribution of his entire nonforfeitable account balance at
the time of his separation from service.
(s) Former Participant: A Participant whose employment with
the Employer has terminated but who has a vested account balance under
the Plan which has not been paid in full and, therefore, is continuing
to participate in the allocation of Trust Fund Income.
(t) Income: The net gain or loss of the Trust Fund from
investments, as reflected by interest payments, dividends, realized and
unrealized gains and losses on securities, other investment transactions
and expenses paid from the Trust Fund. In determining the Income of the
Trust Fund as of any date, assets shall be valued on the basis of their
then fair market value.
(u) Individual Account(s) or Account(s): Each of the
accounts maintained by the Committee showing individual interests in the
Trust of each Participant, former Participant and Beneficiary, as
described in Section 5.1.
(v) Matching Contributions: The contribution made by the
Employer, pursuant to Section 4.7, to the accounts of those Participants
who have had Salary Deferral Contributions made to their Salary Deferral
Contribution Account since the last Allocation Date.
(w) Matching Contribution Account: The account maintained
for a Participant to record the Matching Contributions made on his
behalf to the Plan, and adjustments relating thereto in accordance with
Article V.
(x) Participant: An Employee participating in the Plan in
accordance with the provisions of Section 3.1.
(y) Participation: The period commencing as of the date the
Employee becomes a Participant and ending on the date his employment
with the Employer terminates except that, with respect to a Former
Participant, limited participation in the Trust Fund Income continues
until his vested account balance is distributed.
(z) Plan: The Triangle Pacific Corp. Salaried Employees
Profit Sharing Plan, the Plan set forth herein, as amended from time to
time, and intended to be a profit sharing plan as determined in
accordance with Code section 401(a)(27).
(aa) Previous Plan: Triangle Pacific Corp. Salaried Employees
Profit Sharing Plan, as in force and effect immediately prior to the
Effective Date and the Plan being amended and hereby restated. Any
reference herein to the Previous Plan as of a certain date or for a
certain period shall be deemed in reference to the Previous Plan as then
in effect.
(bb) Profit Sharing Contribution: The Profit Sharing
Contribution made to the Plan in accordance with Section 4.1.
(cc) Profit Sharing Contribution Account: The account
maintained for a Participant to record his share of the Profit Sharing
Contributions of the Employer (and adjustments relating thereto) in
accordance with Article V.
(dd) Qualified Matching Contributions: The contributions made
by the Employer, pursuant to Section 4.7, to the accounts of those
Participants who have made Salary Deferral Contributions.
(ee) Qualified Matching Contribution Account: The account
maintained for a Participant to record the Qualified Matching
Contributions made on his behalf to the Plan, and adjustments relating
thereto in accordance with Article V.
(ff) Qualified Nonelective Contributions: The contribution
made by the Employer, pursuant to Section 4.8 in order to avoid a
violation of the average deferral percentage test described in Section
4.6.
(gg) Salaried Employee: An Employee, other than an hourly-
rated or daily-rated employee, who periodically receives compensation of
a fixed amount.
(hh) Salary Deferral Contribution: The pre-tax contributions
made under Article V thereof through Salary Deferral pursuant to Code
section 401(k).
(ii) Salary Deferral Contribution Account: The account
maintained for a Participant to record the Salary Deferral Contributions
made on his behalf to the Plan, and adjustments relating thereto in
accordance with Article V.
(jj) Service: A Participant's period of employment with the
Employer determined in accordance with Section 3.2.
(kk) Subsidiary: A corporation not less than 80% of whose
voting shares (not including shares having voting power only upon the
happening of an event of default) is at the time owned, directly or
indirectly, by the Company. Any such corporation shall be a subsidiary
only during such time as the foregoing share ownership requirements are
met.
(ll) Trust (or Trust Fund): Any fund maintained in accordance
with the terms of the trust agreement, as from time to time amended,
which constitutes a part of this Plan.
(mm) Trustee: The corporation or individuals appointed by the
Board of Directors of the Employer to administer the Trust.
(nn) Valuation Date: The last day of each Year or more
frequently as required by the Committee.
(oo) Year or Plan Year: The 12-month period commencing on
January 1 and ending on December 31.
2.2 Additional Defined Terms: In addition to the definitions
listed in Section 2.1, the Plan includes the following terms defined in
the Plan sections indicated:
Annual Addition: See Section 5.3(a)(i).
Contribution Percentage: See Section 4.7(a)
Deferral Percentage: See Section 4.6c.(6)(A).
Direct Rollover: See Section 6.10(d).
Distributee: See Section 6.10(c).
Earnings: See Section 5.3(a)(ii).
Eligible Retirement Plan: See Section 6.10(b).
Eligible Rollover Distribution: See Section 6.10(a).
Highly Compensated Contribution Percentage: See Section
4.7(b).
Highly Compensated Deferral Percentage: See Section
4.6c.(6)(B).
Highly Compensated Employee: See Section 4.6c.(1).
Key Employee: See Section 5.4(f).
Limitation Year: See Section 5.3(a)(iii).
Nonhighly Compensated Contribution Percentage: See Section
4.7(c)
Nonhighly Compensated Deferral Percentage: See Section
4.6c.(6)(C).
2.3 Construction: The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the singular,
where appearing in the Plan, shall be deemed to include the plural,
unless the context clearly indicates to the contrary. The words
"hereof", "herein", "hereunder" and other similar compounds of the word
"here" shall mean and refer to the entire Plan and not to any particular
provision or Section.
ARTICLE III
Participation and Service
-------------------------
3.1 Participation: An Employee included under the provisions of
the Previous Plan as of the Effective Date shall continue to participate
in accordance with the provisions of this amended and restated Plan if
such Employee is a Salaried Employee as of the Effective Date. Any
other Salaried Employee, whose Compensation, hours of employment or
conditions of employment shall not be determined by collective
bargaining, shall become a Participant (i) for all purposes of this Plan
other than Section 5.2(b) (relating to the allocation of Profit Sharing
Contributions) as of the later of the Effective Date or the day on which
he attains age twenty-one (21) and (ii) for purposes of Section 5.2(b)
of this Plan (relating to the allocation of Profit Sharing
Contributions) as of the later of the Effective Date, the day on which
he attains age twenty-one (21) or the date on which he has completed
twelve (12) consecutive months of employment with the Employer of at
least 1,000 hours commencing on the date his employment commences or any
anniversary thereof; provided, however, that in no event shall a leased
employee or an individual who is providing services to the Employer who
the Employer is treating as an independent contractor be eligible to
participate in the Plan. The initial eligibility computation period for
purposes of (ii) above shall begin on an Employee's employment
commencement date; after the initial eligibility computation period
years of service for eligibility purposes shall be measured by using
twelve (12) consecutive month periods beginning on anniversaries of an
Employee's employment commencement date. A break in service for
eligibility purposes shall occur when an Employee fails to complete more
than 500 hours of service during an eligibility computation period.
After termination of employment, a rehired Employee's subsequent
participation shall be subject to the provisions of Section 3.4, except
that any reference therein to years of service or break in service shall
be deemed for the purposes of this Section 3.1 to mean a year of service
or a break in service, respectively, as above provided. For purposes of
this Section former employees of Rainbow Industries, Inc., d/b/a Premier
Hardwood Floors and first employed by the Company on June 28, 1994 shall
be deemed to have an employment commencement date that is the latter of
the date first employed by Rainbow Industries, Inc. or January 1, 1994.
Anything above to the contrary notwithstanding, no Employee shall
become a Participant, or participate in the Plan during any period while
he is accruing benefits under or is a participant in any other pension
or profit sharing plan of the Company or any of its subsidiaries which
is designed to be an approved plan under the Internal Revenue Code. The
right of certain employees to gain credit for vesting purposes under the
Triangle Pacific Corp. Pension Plan for IXL Division for Service, as
defined in this Plan, subsequent to October 1, 1977 shall not be deemed
to constitute the accruing of benefits under or to be participation in
another pension or profit sharing plan of the Company.
In the event an Employee transfers to or from this Plan to any
other qualified pension or profit sharing plan of the Company or any of
its subsidiaries, then he will not receive any allocation of Profit
Sharing Contribution under this Plan in the Year in which such transfer
occurs, if he meets the service requirements for benefit accrual under
such other plan (and otherwise meets all requirements for benefit
accrual under such other plan) for the plan year under such other plan
in which such transfer occurs. In the event an Employee transfers to or
from this Plan to any other qualified pension or profit sharing plan of
the Company or any of its subsidiaries, and does not meet the service
requirement for benefit accrual under such other plan (or otherwise does
not meet all requirements for benefit accrual under such other plan) for
the plan year under such other plan in which such transfer occurs, then
the Employee will be deemed to be a Participant hereunder for the Year
in which such transfer occurs and will receive an allocation of Profit
Sharing Contribution if otherwise applicable under Section 5.2(b) and
the first paragraph of this Section 3.1. For this purpose Compensation
shall be that paid by the Company to such an Employee for the entire
Year in which such transfer occurs.
For purposes of making salary deferral contributions under Section
4.6, an Employee shall be eligible to make such contributions only
during those payroll periods in which he meets the participation
requirements of Section 3.1.
In no event shall a Leased Employee, as defined in Section 2.1(n)
hereof, become a Participant in this Plan.
3.2 Service: A Participant's eligibility for benefits shall be
determined by his period of Service. Subject to the reemployment
provisions of Section 3.4, a Participant shall accrue one Year of
Service for each Year during which he was in the continuous employ of
the Employer. Periods of temporary illness, temporary layoff and
Authorized Leaves of Absence shall not be deemed as breaking continuity
of employment, and shall be counted as periods of Service. For purposes
of this Section former employees of Rainbow Industries, Inc., d/b/a
Premier Hardwood Floors and first employed by the Company on June 28,
1994 shall be deemed to have an employment commencement date that is the
date first employed by Rainbow Industries, Inc.
For any Year during which the Participant has not been in the
continuous employ of the Employer throughout the Year, he shall receive
proportional credit for the fractional portions of the Year during which
he was in the employ of the Employer, provided that if such fractional
portions represent at least 1,000 hours of employment, then for all
purposes of the Plan, such fractional portions shall be deemed to be one
full Year of Service.
3.3 Hours of Employment: Under this Article III, hours of
employment shall include the following:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.
(b) Up to 501 hours for any single continuous period during which
the Employee performs no duties but is directly or indirectly paid or
entitled to payment by the Employer (regardless of whether employment
has terminated) due to vacation, holiday, illness, incapacity, including
disability, layoff, jury duty, military duty or leave of absence;
excluding, however, any period for which a payment is made or due under
this Plan or under a plan maintained solely for the purpose of complying
with workmen's compensation or unemployment compensation or disability
insurance laws, or solely to reimburse the Employee for medical or
medically-related expenses. An Employee shall be deemed to be "directly
or indirectly paid, or entitled to payment by the Employer" regardless
of whether such payment is (i) made by or due from the Employer
directly, or (ii) made indirectly through a trust fund, insurer or other
entity to which the Employer contributes or pays premiums.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer, without
duplication of hours provided above, and subject to the 501 hour
restriction for periods described in the foregoing subparagraph (b).
The foregoing provisions shall be administered in accordance with
Department of Labor rules set forth in Section 2530.200b-2 of the Rules
and Regulations for Minimum Standards for Employee Benefit Plans. In
addition to, but not in duplication of, the foregoing provisions, an
Employee shall receive hours of employment credit for any period of
Authorized Leave of Absence, and for any period of accrued vacation for
which Compensation is paid upon termination of employment However, no
hours of employment credit shall be granted for a period attributable to
any severance pay granted upon termination of employment.
3.4 Participation and Service Upon Reemployment: Except for the
continuing participation in Trust Fund Income of a Former Participant,
Participation in the Plan shall cease upon termination of employment
with the Employer. Termination of employment may have resulted from
Retirement, death, voluntary or involuntary termination of employment,
unauthorized absence, or by failure to return to active employment with
the Employer or to retire by the date on which an Authorized Leave of
Absence expired.
Upon an Employee's termination of employment on or after January l,
1976, a Year during which the Employee completes less than 501 hours of
employment due to a termination of employment shall constitute a Break
in Service.
Upon the reemployment of any person after January 1, 1976, who had
previously been employed by the Employer on or after January 1, 1976,
the following rules shall apply:
(a) Termination of Employment Prior to January 1, 1985: Except as
provided in (i) and (ii) below, all Years of Service with the Company or
with any corporation which is a member of the same controlled group of
corporations (as defined in Sections 414(b) and (c) of the Internal
Revenue Code) as the Company shall be taken into account in computing
the period of Service for purposes of this Section 3.4.
(i) In computing the Employee's period of Service for purposes of
this Section 3.4, in the case of any Employee who has a Break in
Service, Service before such Break shall not be taken into account under
the Plan until he has completed a Year of Service after his return.
(ii) As to any Employee who has not earned any vested benefits, in
computing the Employee's period of Service for purposes of this Section
3.4, Service before a Break in Service shall not be taken into account
if the number of consecutive Breaks in Service equals or exceeds the
number of Years of Service before the Break. The number of Years of
Service before the Break (for purposes of the preceding sentence) shall
be deemed not to include any Years of Service not taken into account by
reason of any prior Break in Service.
In any case where an Employee is required to, and does, resatisfy
the eligibility requirements of said Section 3.1, his participation in
the Plan shall be retroactive to his date of employment after such Break
in Service.
(b) Termination of Employment On or After January l, 1985: Upon
the reemployment of an Employee whose termination of employment occurred
on or after January l, 1985, the following rules shall apply in
determining his Participation in the Plan and his Service under Section
3.2:
(i) Participation: Before 5 consecutive one-year Breaks in
Service: if the Employee is rehired before he has 5 consecutive one-
year Breaks in Service, he shall participate in the Plan as of the date
of his reemployment, if he previously was a Participant, or on the date
following his reemployment on which he has completed the requirements
of Section 3.1.
After 5 consecutive one-year Breaks in Service: if an Employee
(whether or not previously a Participant) is rehired after he has 5
consecutive one-year Breaks in Service and after cancellation of pre-
break Service as determined in accordance with subparagraph (ii) below,
he must meet the requirements of Section 3.1 for Participation in the
Plan as if he were a new Employee. If an Employee is rehired after he
has 5 consecutive one-year Breaks in Service but prior to cancellation
of his pre-break Service as determined in accordance with subparagraph
(ii) below, he shall recommence Participation as of the date of his
reemployment, if he previously was a Participant, or the first date
following his reemployment on which he has completed the requirements of
Section 3.1.
(ii) Service: For Vested Participants - in the case of a
Participant who was vested when his prior period of employment
terminated, any Service attributable to his prior period of employment
shall not be canceled and shall be reinstated as of the date of his
reparticipation.
For other Employees - in the case of a reemployed Employee who was
not a Participant in the Plan during his prior period of employment, or
in the case of a Participant who was not vested when his prior period of
employment terminated, any Service attributable to his prior period of
employment shall be canceled as of the later of the date he has 5
consecutive one-year Breaks in Service or the date the number of his
consecutive years of Break in Service equals the aggregate number of his
years of pre-break Service. If Service attributable to his prior period
of employment is not canceled pursuant to the preceding sentence, it
shall be reinstated upon his commencing or recommencing Participation.
Notwithstanding the foregoing, if an Employee's termination of
employment is due to a "maternity or paternity leave", then subparagraph
(b) of this Section shall be read by substituting the number "6" for the
number "5" wherever it appears therein. For the purposes of this Plan,
"maternity or paternity leave" means termination of employment or
absence from work due to the pregnancy of the Employee, the birth of a
child of the Employee, the placement of a child in connection with the
adoption of the child by an Employee, or the caring for an Employee's
child during the period immediately following the child's birth or
placement for adoption. The Committee shall determine, under rules of
uniform application and based on information provided to the Committee
by the Employee, whether or not the Employee's termination of employment
or absence from work is due to "maternity or paternity leave."
ARTICLE IV
Contributions and Forfeitures
-----------------------------
4.1 Amount of Profit Sharing Contributions: Subject to the
provisions of Article X, the Employer shall contribute a Profit Sharing
Contribution to the Trust Fund for each Year in an amount not exceeding
15% of the aggregate Compensation paid in such Year to all Participants
in its employ who are eligible to receive an allocation to their Profit
Sharing Contribution Accounts in accordance with the provisions of
Section 5.2(b). In no event shall any such contribution for any Year
for the Company or any participating Domestic Subsidiaries exceed the
maximum amount deductible from the Employer's income for such year under
Section 404(a)(3) of the Internal Revenue Code, as amended, or any
statute of similar import.
4.2 Time and Method of Profit Sharing Contribution: The amount of
the Employer's Profit Sharing Contribution for each Year shall be paid
to the Trustee, either in a single payment or in installments and either
in cash or in common shares of the Company valued at the fair market
value thereof at the time of contribution and within such period as is
provided for in Section 404(a)(6) of the Internal Revenue Code, as
amended, or any other statute of similar import, or any rule or
regulation thereunder.
4.3 Determination of Profit Sharing Contribution: The amount of
the contribution shall be determined solely at the discretion of the
Board of Directors of the Company.
Neither the Trustee nor the Committee nor any other person shall be
under any duty to inquire into the correctness of the amount contributed
and paid over to the Trustee hereunder, nor shall the Trustee or the
Committee or any other person be under any duty to enforce the payment
of the contributions to be made hereunder by the Employer.
4.4 No After-Tax Contributions by Participants: Participants are
not required or permitted to make any after-tax contributions under this
Plan.
4.5 Disposition of Forfeitures: Amounts which have become
Forfeitures during a Plan Year will be allocated as of the last day of
the Plan Year in which the Forfeiture occurred. Allocation of
Forfeitures will be made in accordance with Plan Section 5.2(e).
In the case of a terminated Participant who has incurred five
consecutive One-Year Breaks in Service, or whose interest in the Plan
has been distributed on termination of participation and was not repaid
pursuant to the terms of the immediately succeeding paragraph, Vesting
Years of Service after such break or after such distribution shall not
be taken into account in determining the vested percentage of his Profit
Sharing or Matching Contribution Accounts which accrued prior to such
five consecutive One-Year Breaks in Service or such distribution, as the
case may be. Separate accounts for the prebreak and postbreak portions
of such person's interest in his Profit Sharing or Matching Contribution
Accounts will be maintained, if and to the extent necessary to properly
reflect the provisions of this Section 4.5.
If a Participant who has separated from service with the Employer
and received a distribution of the vested balance of his Profit Sharing
or Matching Contribution Accounts under the Plan shall return to the
employment of the Employer before incurring five consecutive One-Year
Breaks in Service, any amount previously forfeited shall be reinstated
to the Participant's Profit Sharing or Matching Contribution Accounts
upon repayment by the Participant of the full amount of the
distribution. Such repayment must be made before the earlier of five
(5) years after the date on which the Participant is subsequently
reemployed by the Employer or the close of the Plan Year within which
the Participant incurs a fifth consecutive One-Year Break in Service.
In such event, upon a subsequent termination of employment or
retirement, the Participant's vested interest in his Profit Sharing or
Matching Contribution Accounts shall be determined as if no previous
separation from service has occurred.
Any Forfeiture shall be applied pursuant to Section 5.2(e).
Notwithstanding the foregoing, if a Participant's termination of
employment is due to a "maternity or paternity leave" as described in
Section 3.4, then this Section 4.5 shall be read by substituting the
number "6" for the number "5" and the word "sixth" for the word "fifth"
wherever they appear in this Section.
4.6 Salary Deferral Contributions: The Employer shall, during any
Plan Year beginning on or after January 1, 1993, contribute a Salary
Deferral Contribution for each Participant employed by such Employer,
determined according to the Participant's salary deferral election for
the Year under (a) below. Such contribution shall be made no later than
thirty (30) days after the date such amount is withheld from the
Participant's pay and will be allocated to a Participant's Salary
Deferral Contribution Account in accordance with Section 5.2.
(a) Participant's (Pre-Tax) Salary Deferral Elections: When he
becomes a Participant hereunder, a Participant may enter into a written
salary deferral agreement with his Employer which shall provide that the
Participant elects to defer (on a pre-tax basis) a portion of his
Compensation; provided, however:
(1) The Committee may require such contributions to be a
whole dollar or a whole percentage of his Compensation.
(2) Such deferral must meet the deferral percentage test
in subsection (c) hereof, and the Committee may require modifications in
order to meet such test.
(3) Such deferral cannot exceed the dollar limit in (b)
below.
(4) The Committee may establish a maximum deferral for
any year.
A salary deferral agreement shall be entered into on such forms and
at such times as the Committee may prescribe. Changes, suspensions or
discontinuance of salary deferrals may be made by the Participant during
a Plan Year only if permitted by the Committee, but may be made by the
Committee if called for under subsection (b) or (c) hereof or if the
Employer's deduction limits under Code Section 404(a) would otherwise be
exceeded, or if the annual addition limitations under Code Section 415
would otherwise be exceeded as to any Employee.
(b) Dollar Limit on Salary Deferrals: If a Participant's Salary
Deferral Contributions hereunder should exceed the dollar limit
specified in Code Section 402(g)(1), but subject to the cost-of-living
adjustment set forth in Code Section 402(g)(5)), in any taxable year of
the Participant, the excess (with earnings thereon) shall be distributed
to the Participant. If the Participant also participates in another
elective deferral program (within the meaning of Code Section 402(g)(3))
and if, when aggregating his elective deferrals under all such programs,
an excess of deferral contributions arises under the dollar limitation
in Code Section 402(g) with respect to such Participant, the Participant
shall, no later than March 1st following the close of the Participant's
taxable year, notify the Committee as to the portion of such excess
deferrals to be allocated to this Plan and such excess so allocated to
this Plan (with earnings thereon) shall be distributed to the
Participant. In the event there is a loss allocable to an excess
deferral, any distribution to a Participant as required by this Section
shall be no less than the lesser of the Participant's Salary Deferral
Accounts or the Participant's excess deferral for the Plan Year. Any
distribution under this Section shall be made to the Participant no
later than the March 15th immediately following the close of the
Participant's taxable year for which such contributions were made.
(c) Deferral Percentage Test:
(1) Highly Compensated Employee: For purposes of this
subsection, the term Highly Compensated Employee shall mean any Employee
who, during the Year of determination or the immediately preceding Year:
(A) was at any time during such year(s) a five
percent (5%) owner (as defined in Code Section 416(i)(1));
(B) received compensation (as defined below) from
the Affiliated Employers in excess of Seventy-Five Thousand Dollars
($75,000) (subject to increase under Code Section 414(q)(1));
(C) received compensation (as defined below) from
the Affiliated Employers in excess of Fifty Thousand Dollars ($50,000)
(subject to increase under Code Section 414(q)(1)) and was in the top
twenty percent (20%) of the Employees of all Affiliated Employers (when
ranked on the basis of compensation paid during such year); excluding,
however, for purposes of determining the top twenty percent (20%):
(i) Employees who have not completed at least
six (6) months of service;
(ii) Employees who normally work less than
seventeen and one-half (17-1/2) hours per
week;
(iii) Employees who normally work during not
more than six (6) months during any Plan
Year;
(iv) Employees who have not attained age
twenty-one (21);
(v) Employees covered under a collective
bargaining agreement (to the extent
permitted in appropriate regulations);
and
(vi) Employees who are nonresident aliens and
who receive no earned income (as defined
in Code Section 911(d)(2) which
constitutes income from sources within
the United States (within the meaning of
Code Section 861(a)(3)); or
(D) was at any time an officer and received
compensation (as defined below) greater than fifty percent (50%) of the
defined benefit dollar limitation in effect under Code Section
415(b)(1)(A) for such Year; provided that, for purposes of this
subparagraph (D):
(i) no more than fifty (50) Employees (or if
lesser, the greater of three (3)
Employees or ten percent (10%) of the
Employees) of the Affiliated Employers
shall be considered as officers, and
(ii) if in such Plan Year, no officer
satisfied the requirements set forth in
this subparagraph (iv) above, the highest
paid officer of the Affiliated Employers
during such Plan Year shall be considered
an officer.
(2) For purposes of this subsection, the term
"compensation" shall have the same meaning as in Code Section 415(c)(3),
without regard to: (A) Code Sections 125, 402(e)(3), and 402(h)(1)(B),
and (B) Code Section 403(b) in the case of contributions made by an
Affiliated Employer under a salary reduction agreement.
(3) For purposes of determining whether an Employee is
highly compensated in the Plan Year for which the determination is being
made, any Employee not described in subparagraphs (B), (C), or (D) above
for the preceding year (disregarding this paragraph (2)), shall not be
treated as described in subparagraphs (B), (C), or (D) above unless such
Employee is a member of the group consisting of the one hundred (100)
Employees of the Employer who were paid the highest compensation during
the Year for which such determination is being made. Notwithstanding
the preceding sentence nor the first sentence in paragraph (1) above in
this Section, if the Employer so elects, the determination described in
said paragraph (1) above will be made only for the Year of determination
if such Year is a calendar year and no such determination will be made
for the immediately preceding Plan Year, in which event the preceding
sentence in this such paragraph (3) will not apply; provided, however,
the Employer may only make such election if the same election is made as
to all plans, entities and arrangements for the Employer with respect to
which a determination of Highly Compensated Employees is necessary.
(4) For purposes of this Section, if any individual is a
member of the family (spouse, and lineal ascendants or descendants and
the spouses of such lineal ascendants or descendants) of a five-percent
(5%) owner or of a Highly Compensated Employee in the group consisting
of the ten (10) highly compensated Employees paid the greatest
compensation during such Plan Year, then the following provisions shall
be applicable:
(A) such family member shall not be considered a
separate Employee, and
(B) any compensation paid to such family member (as
well as any applicable contribution (or benefit) paid to or on behalf of
such person) shall be treated as if it were paid to (or on behalf of)
said five-percent (5%) owner or Highly Compensated Employee.
(5) For purposes of this Section, former Employees shall
be treated as Highly Compensated Employees, if:
(A) such an Employee was a highly compensated
Employee upon termination of employment with the Affiliated Employers;
or
(B) such an Employee was a highly compensated
Employee at any time after attaining age fifty-five (55).
(6) Deferral Percentage Test: Each Plan Year, the
Committee shall determine:
(A) The "deferral percentage" for each Employee who
is then eligible for salary deferrals, which shall be the ratio of the
amount of such Employee's salary deferral for such Plan Year to the
Employee's compensation while a Participant for such Plan Year, or for
the entire Plan Year, as determined by the Committee. Such compensation
for any year shall be defined uniformly for all Employees and any such
definition must be allowed for this purpose under Code Sections 414(s)
and 401(a)(17).
(B) The "highly compensated deferral percentage",
which shall be the average of the "deferral percentages" for all Highly
Compensated Employees then eligible for salary deferrals.
(C) The "nonhighly compensated deferral
percentage", which shall be the average of the "deferral percentages"
for all Employees then eligible for salary deferrals who were not
included in the "highly compensated deferral percentage" in (B) above.
In no event shall the "highly compensated deferral percentage"
exceed the greater of:
(i) a deferral percentage equal to one and
one-fourth (1-1/4) times the "nonhighly
compensated deferral percentage"; and
(ii) a deferral percentage equal to two (2)
times the "nonhighly compensated deferral
percentage" but not more than two (2)
percentage points greater than the
"nonhighly compensated deferral
percentage".
If the above deferral percentage test would otherwise be violated
as of the end of the Year, then notwithstanding any other provision
hereof, every contribution included in the "highly compensated deferral
percentage" for a Participant whose deferral percentage is greater than
the permitted maximum shall automatically be revoked to the extent
necessary to comply with such deferral percentage test and the amount of
such contribution, to the extent revoked, shall constitute an "excess
contribution" to be distributed to such Participant (with earnings
thereon) within two and one-half (2-1/2) months following the close of
the Plan Year for which such contribution was made. To determine the
amount of the excess contribution and the Participants to whom the
excess contributions are to be distributed, the Salary Deferral
Contributions of Highly Compensated Employees shall be reduced in order
of the deferral percentages beginning with those Highly Compensated
Employees with the highest of the deferral percentages.
In the event there is a loss allocable to an excess contribution,
any distribution to a Participant as required by this Section shall be
no less than the lesser of the Participant's Individual Accounts or the
Participant's excess contributions for the Year.
If a Highly Compensated Employee participates in two or more plans
maintained by the Employer or Affiliated Employer, that are subject to
the deferral percentage test, then such Employee's deferral percentage
shall be determined by aggregating his participation in all such plans.
4.7 Matching Contributions and Qualified Matching Contributions:
The Board of Directors of the Company may elect to make a Matching
Contribution or Qualified Matching Contributions to the Plan. The
amount of such contributions shall be determined solely at the
discretion of the Board of Directors and shall be allocated to the
Matching Contribution Account or Qualified Matching Contribution
Account, as applicable, of the Participants eligible for such
contributions as determined in accordance with Section 5.2(e).
Each Plan Year, the Committee shall determine:
(a) The "contribution percentage" for each Employee who is then
eligible for salary deferrals, which shall be the ratio of the amount of
such Employee's Matching Contribution and Qualified Matching
Contribution for such Plan Year to the Employee's compensation while a
Participant for such Plan Year, or for the entire Plan Year, as
determined by the Committee. Such compensation for any year shall be
defined uniformly for all Employees and any such definition must be
allowed for this purpose under Code Sections 414(s) and 401(a)(17).
(b) The "highly compensated contribution percentage", which shall
be the average of the "contribution percentages" for all eligible Highly
Compensated Employees (as determined in accordance with Section
4.6(c)(1) above).
(c) The "nonhighly compensated contribution percentage", which
shall be the average of the "contribution percentages" for all Employees
then eligible who were not included in the "highly compensated
contributions percentage" described in the preceding paragraph.
In no event shall the "highly compensated contribution percentage"
exceed the greater of:
(A) a contribution percentage equal to one and one-
fourth (1-1/4) times the "nonhighly compensated
contribution percentage"; and
(B) a contribution percentage equal to two (2) times the
"nonhighly compensated contribution percentage" but
not more than two (2) percentage points greater than
the "nonhighly compensated contribution percentage".
If the above contribution percentage test would otherwise be
violated as of the end of the Plan Year, then notwithstanding any other
provision hereof every contribution included in the "highly compensated
contribution percentage" for a Participant whose contribution percentage
is greater than the permitted maximum shall automatically be revoked to
the extent necessary to comply with such contribution percentages test
and the amount of such contribution, to the extent revoked, shall
constitute an "aggregate excess contribution" to be distributed to such
Participant (with earnings thereon) or forfeited, if applicable, within
two and one-half (2-1/2) months following the close of the Plan Year for
which such contribution was made. To determine the amount of aggregate
excess contributions and the Participant to whom the aggregate excess
contributions are to be distributed, the applicable contributions of
Highly Compensated Employees are reduced in the order of their
contribution percentage beginning with those Highly Compensated
Employees (as determined in accordance with 4.6(c)(1) above) with the
highest contribution percentage. In the event there is a loss allocable
to an aggregate excess contribution, any distribution to a Participant
as required by this Section shall be no less than the lesser of the
Participant's Individual Accounts or the Participant's aggregate excess
contributions for the Plan Year.
If a Highly Compensated Employee participates in two (2) or more
plans maintained by the Employer or Affiliated Employer that are subject
to the contribution percentage test, then such Employee's contribution
percentage shall be determined by aggregating his participation in all
such plans. In addition, if the Employer maintains two (2) or more
plans subject to the contribution percentage test and such plans are
treated as a single plan for purposes of the coverage requirements for
qualified plans under Code Section 410(b), then such plans are treated
as a single plan for purposes of the contribution percentage test.
The determination of excess aggregate contributions shall be made
after first determining excess elective deferrals made under Section
4.6(b) and then determining excess contributions under Section 4.6(c).
4.8 Qualified Nonelective Contributions: The Board of Directors
of the Company may make a Qualified Nonelective Contribution to the
Plan. Such contribution shall be made solely at the discretion of the
Board of Directors and shall be allocated to the Salary Deferral
Contribution Account of Participants who are employed on the last day of
the Plan Year. Such a contribution shall be provided without regard to
any salary reduction agreement but shall be treated as a Salary Deferral
Contribution of the Participant.
ARTICLE V
Allocations to Participants' Accounts
-------------------------------------
5.1 Individual Accounts: The Committee shall create and maintain
adequate records to disclose the interest in the Trust of each
Participant, Former Participant and Beneficiary. Such records shall be
in the form of Individual Accounts, and credits and charges shall be
made to such Accounts in the manner herein described. The maintenance
of Individual Accounts is only for accounting purposes, and a physical
segregation of the assets of the Trust Fund to each account shall not be
required. Distributions and withdrawals made from an Individual Account
shall be charged to the account as of the date paid.
Such Accounts shall be referred to as follows:
(a) Profit Sharing Contribution Account: The account representing
Profit Sharing Contributions, Forfeitures from Profit Sharing
Contributions, and gains and losses allocable thereto.
(b) Salary Deferral Contribution Account: The account
representing Salary Deferral Contributions and Qualified Nonelective
Contributions, and gains and losses allocable thereto.
(c) Matching Contribution Account: The account representing
Matching Contributions, and gains and losses allocable thereto.
(d) Qualified Matching Contribution Account: The account
representing Qualified Matching Contributions, and gains and losses
allocable thereto.
5.2 Account Adjustments: The Individual Accounts of Participants,
Former Participants and Beneficiaries shall be adjusted in accordance
with the following:
(a) Income: Each Valuation Date the Income of each Investment
Fund as of such current Valuation Date shall be allocated to the
Individual Accounts of Participants, Former Participants and
Beneficiaries who have unpaid balances in their Accounts within such
Investment Fund as of such current Valuation Date. Such allocation
shall be made in proportion to the balances in such Accounts at the
previous Valuation Date, but after first reducing such account balance
by any distributions or withdrawals from the Account since the last
Valuation Date, or in accordance with any equitable method of allocation
specified by the investment vehicle utilized for such Investment Fund,
as determined by the Committee.
(b) Profit Sharing Contributions: Any Profit Sharing Contribution
made for a Plan Year pursuant to Section 4.1 of this Plan shall as soon
as practicable be allocated among and credited to the Profit Sharing
Contribution Accounts of those Participants who both (i) were employed
by (or on Authorized Leave of Absence from) an Employer as a Salaried
Employee on the last day of the Plan Year with respect to which such
Profit Sharing Contribution is being made, and (ii) completed a Year of
Service during such Plan Year. Such allocation shall be made in the
proportion that the Compensation of each such Participant for that year
bears to the total Compensation for all such Participants for that year.
For purposes of this Section, only the Compensation of the Participant
while both a Participant and a Salaried Employee shall be considered as
the Compensation of a Participant.
(c) Salary Deferral Contributions and Qualified Nonelective
Contributions: Any Salary Deferral Contribution and Qualified
Nonelective Contributions received hereunder on behalf of a Participant
shall be allocated to his Salary Deferral Contribution Account as of the
Allocation Date following the date such amount is withheld from the
Participant's Compensation.
(d) Matching Contributions and Qualified Matching Contributions:
As of each Allocation Date, the Employer's Matching Contributions, and
Qualified Matching Contributions, if any, shall be credited to the
Matching Contribution Accounts, or Qualified Matching Contribution
Accounts, as applicable, of those Participants who both (i) have had
Salary Deferral Contributions made to their Salary Deferral Contribution
Accounts during the Plan Year for which such Matching Contribution, or
Qualified Matching Contribution, is being made and (ii) were employed by
(or an Authorized Leave of Absence from) an Employer on the last day of
the Plan Year with respect to which such Matching Contributions or
Qualified Matching Contributions are being made. The Matching
Contributions and Qualified Matching Contributions shall be allocated on
the basis of the Salary Deferral Contributions (up to a percentage of
each Participant's Compensation to be determined at the time such
Matching Contributions are made) credited to the Participant's Matching
Contribution Account since the preceding Allocation Date.
(e) Forfeitures: Forfeitures from Profit Sharing Contributions
which become available as of the end of each Year shall be applied to
reduce any Profit Sharing Contributions to be made by the Employer of
the Participant who suffered such Forfeiture in the succeeding Plan Year
or Years. If no Profit Sharing Contributions are made by the Employer
in a particular Year, any Forfeitures which are available shall be
treated as though they were additional Profit Sharing Contributions.
Forfeitures from Matching Contributions shall be used to reduce Matching
Contributions in the succeeding Plan Year or Years.
5.3 Limit on Annual Additions Under Code Section 415:
Contributions hereunder shall be subject to the limitations of Code
Section 415 for Plan Years beginning on or after January 1, 1987 under
this Plan or the Previous Plan, as provided in this Section.
(a) Definitions: For purposes of this Section the following
definitions shall apply:
(i) "Annual Addition" shall mean the sum of the following
additions to a Participant's Individual Account for the
Limitation Year:
(a) Profit Sharing Contributions, Matching
Contributions, Qualified Matching Contributions,
Salary Deferral Contributions and Qualified
Nonelective Contributions; and
(b) Forfeitures, if any.
(ii) "Earnings" for any Limitation Year shall be the
Employee's earned income, wages, salaries, and fees for
professional services, and other amounts received for
personal services actually rendered in the course of
employment with the Employer (including, but not limited
to, commissions paid salesmen, compensation for services
on the basis of a percentage of profits, commissions on
insurance premiums, tips and bonuses), provided such
amounts are actually paid or includible in gross income
during such Year. Earnings shall exclude the following:
(A) Employer contributions to a plan of deferred
compensation which are not included in the
Employee's gross income for the taxable year in
which contributed or Employer contributions under a
simplified employee pension plan to the extent such
contributions are excludable by the Employee or any
distributions from a funded plan of deferred
compensation;
(B) Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely
transferable or is no longer subject to a
substantial risk of forfeiture;
(C) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified
stock option; and
(D) Other amounts which received special tax benefits,
or contributions made by the Employer (whether or
not under a salary reduction agreement) towards the
purchase of an annuity described in Section 403(b)
of the Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
(iii) "Limitation Year": The calendar year.
(b) Defined Contribution Plan(s) Only: The Annual Addition to a
Participant's Individual Account hereunder (together with the Annual
Additions to the Participant's account(s) under any other defined
contribution plan(s) maintained by an Affiliated Employer) for any
Limitation Year may not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000.00), or, if greater,
twenty-five percent (25%) of the defined benefit dollar
limitation under Code Section 415(b)(1)(A); or
(ii) Twenty-five percent (25%) of the Participant's Earnings
for the Limitation Year.
(c) Defined Contribution and Defined Benefit Plans: If, in any
Limitation Year, a Participant also participates in one (1) or more
defined benefit plans maintained by any Affiliated Employer (whether or
not terminated), then for such Limitation Year, the sum of the Defined
Benefit Plan Fraction (as defined below) for such Limitation Year and
Defined Contribution Plan Fraction (as defined below) for such
Limitation Year shall not exceed one (1.0).
The Defined Benefit Fraction for any Limitation Year shall mean a
fraction (a) the numerator of which is the projected annual benefit of
the member under the defined benefit plan(s) (determined as of the close
of the Limitation Year), and (b) the denominator of which is the lesser
of One Hundred Twenty-Five Percent (125%) of the dollar limitation under
Code Section 415(b)(1)(A) or One Hundred Forty Percent (140%) of the
percentage limitation under Code Section 415(b)(1)(B) for the year of
determination (taking into account the effect of Section 235(g)(4) of
the Tax Equity and Fiscal Responsibility Act of 1982).
The Defined Contribution Fraction for any Limitation Year shall
mean a fraction (a) the numerator of which is the sum of the Annual
Additions (as defined during each applicable Limitation Year) to the
Participant's accounts under all defined contribution plans maintained
by an Affiliated Employer as of the close of the Limitation Year
(subject to reduction to the extent permitted under the transition rule
in Section 235(g)(3) of the Tax Equity and Fiscal Responsibility Act of
1982), and (b) the denominator of which is the sum of the lesser of One
Hundred Twenty-Five Percent (125%) of the dollar limitation under Code
Section 415(c)(1)(A) or One Hundred Forty Percent (140%) of the
percentage limitation under Code Section 415(c)(1)(B), for such
Limitation Year and for all prior Limitation Years during which the
Employee was employed by an Affiliated Employer (provided, however, at
the election of the Committee, the denominator shall be increased by
using for Limitation Years ending prior to January 1, 1983, an amount
equal to the denominator in effect for the Limitation Year ending in
1982, multiplied by the transition fraction provided in Code Section
415(e)(6)(B)).
If, in any Limitation Year, the sum of the Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction for a Participant would
exceed one (1.0) without adjustment of the amount of Annual Additions
that can be allocated to such Participant under paragraph b. of this
Section, then the amount of maximum annual benefit that can be paid to
such Participant under any defined benefit plan(s) maintained by an
Affiliated Employer, shall be reduced to the extent necessary to reduce
the sum of the Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction for such Participant to one (1.0), or the Committee may
take such other action as will cause the sum to equal one (1.0) or less.
(d) Excess Allocation: If forfeitures available for allocation or
if a reasonable error in estimating a Participant's Earnings would cause
the limitation on Annual Additions described above to be exceeded, then
the amount of such excess shall be credited to and held unallocated in a
suspense account until the next succeeding Allocation Date when such
amount can be allocated without exceeding such limitation.
5.4 Top-Heavy Provisions: The following provisions shall become
effective in any Year after the 1983 Year in which the Plan (or Previous
Plan) is determined to be a Top-Heavy Plan.
(a) Determination of Top-Heavy: The Plan will be considered a
Top-Heavy Plan for the Year if as of the last day of the preceding Year,
(1) the value of the sum of Employer Contribution Accounts (but not
including any allocations to be made as of such last day of the Year
except contributions actually made on or before that date and allocated
pursuant to Section 5.2(b)) of Participants who are Key Employees (as
defined in subparagraph (f) below) exceeds 60% of the value of the sum
of Employer Contribution Accounts (but not including any allocations toe
be made as of such last day of the Year except contributions actually
made on or before that date and allocated pursuant to Section 5.2(b)) of
all Participants (the "60% Test") or (2) the Plan is part of a required
aggregation group (within the meaning of Section 416(g) of the Internal
Revenue Code) and the required aggregation group is top-heavy. However,
and notwithstanding the results of the 60% Test, the Plan shall not be
considered a Top-Heavy Plan for any Year in which the Plan is a part of
a required or permissive aggregation group (within the meaning of
Section 416(g) of the Internal Revenue Code) which is not top-heavy.
(b) Minimum Allocations: Notwithstanding the provisions of
Section 5.2(b), for any Year during which the Plan is deemed a top-heavy
plan, the Profit Sharing Contribution for such Year shall be allocated
in the following order of Priority:
(i) First, the Employer's Profit Sharing Contribution for a
Year, or a portion thereof, shall be allocated to the
Employer Contribution Accounts of all eligible
Participants according to the ratio that each
Participant's Compensation for the Year bears to the
total Compensation of all eligible Participants.
(ii) Second, that part of the Employer contributions for the
Year which exceeds the part of the contribution
allocated under subparagraph (i) shall be allowed to the
Employer Contribution Accounts of all eligible
Participants who earned Excess Compensation for such
Year. Such allocation shall be made on a pro-rata basis
according to the ratio that a Participant's Excess
Compensation for the Year bears to the Excess
Compensation of all eligible Participants for the Year.
However, the portion of the Employer contribution to be
allocated pursuant to this subparagraph shall not exceed
7% of the total Excess Compensation of all eligible
Participants. for Years prior to 1984, 5.7% of the total
Excess Compensation of all eligible Participants of the
Employer for Years 1984 through 1987, 6.06% of the total
Excess Compensation for all eligible Participants of the
Employer for the Years 1988 and 1989, 6.2% of the total
Excess Compensation of all eligible Participants of the
Employer for Years after 1989 or a rate equal to the
amount as may be provided under subsequent legislation
revising the tax rate applicable to employers for old
age, survivor and disability insurance under the Social
Security Act.
(iii) Third, that part of the Employer's Profit Sharing
Contribution for the Year which exceeds the part of the
contribution allocated under subparagraphs (i) and (ii)
shall be allocated to the Employer Contribution Accounts
of all eligible Participants according to the ratio that
each Participant's Compensation for the Year bears to
the total Compensation of all eligible Participants for
the Year.
(iv) Provided, however, for any Year in which the Plan is top
heavy, any Employee covered under this Plan (regardless
of his compensation level and regardless of the number
of hours of employment completed under Section 3.3
hereof) shall, during such Year, receive an allocated
Employer Contribution (subject to the vesting
requirements of this Plan) at least equal to a
percentage of his considered compensation (defined
below) for such Year, which percentage shall be the
lesser of:
(A) three percent (3%), and
(B) the actual percentage that the allocation, received
for such Year by the Key Employee receiving the
largest such allocation, represented as a
percentage of such Key Employee's considered
compensation (defined below).
An Employee's considered compensation is the amount of compensation
he received from the Employer for such Year not in excess of the dollar
limitation specified in Code Section 401(a)(17), reportable on income
tax Form W-2 or its equivalent.
(c) Minimum Vesting: Notwithstanding the provisions of Section
6.3, if a Participant's termination of employment occurs while the Plan
is a Top-Heavy Plan, such Participant's vested percentage in his Profit
Sharing Contribution Account and Matching Contribution Account shall not
be less than the percentage determined in accordance with the following
table:
Vested Forfeited
Years of Service Percentage Percentage
less than 2 0% 100%
2 but less than 3 20% 80%
3 but less than 4 40% 60%
4 but less than 5 60% 40%
5 but less than 6 80% 20%
6 or more 100% 0%
(d) Change in Top-Heavy Status: If the Plan becomes a Top-Heavy
Plan and subsequently ceases to be such, the vesting schedule in
subsection (c) of this section shall continue to apply in determining
the vested percentage of any Participant who had at least five years of
Service as of December 31 in the last Year of top-heaviness For other
Participants, said schedule shall apply only to their Employer
Contribution Account balance as of such December 31.
(e) Impact on Maximum Benefits: For any Year in which the Plan is
a Top-Heavy Plan, Section 5.3 shall be read by substituting the number
"1.00" for the number "1.25" wherever it appears therein except such
substitution shall not have the effect of reducing any benefit accrued
under a defined benefit plan prior to the first day of the Year in which
this provision becomes applicable.
(f) Key Employee: For purposes of this Section 5.4 a Key Employee
is any individual (whether or not deceased) who, at any time during the
five (5) Years immediately preceding the current Year, was:
(i) an officer of the Employer or Affiliated Employer (as
defined below in subparagraph (i)) having an annual
compensation from the Employer and/or Affiliated
Employer (as reported on income tax form W-2 or its
equivalent) greater than Fifty Percent (50%) of the
defined benefit plan dollar limitation in effect under
Code Section 415(b)(1)(A) for any such Year (except that
no more than fifty (50) Employees or, if less, the
greater of three (3) and ten percent (10%) of the
Employees, shall be treated as officers), or
(ii) one of the ten (10) Employees having an annual
compensation from the Employer and/or Affiliated
Employer (as reported on income tax form W-2 or its
equivalent) greater than the defined contribution plan
dollar limitation in effect under Code Section
415(c)(1)(A) and owning (or considered as owning under
Code Section 416(i)(1)) both more than a one-half
percent (1/2%) interest and the largest interests in the
Employer, or
(iii) a five percent (5%) owner of the Employer (taking into
account ownership he would be considered to have under
Code Section 416(i)(1)), or
(iv) a one percent (1%) owner of the Employer (taking into
account ownership he would be considered to have under
Code Section 416(i)(1)) having annual compensation from
the Employer and/or an Affiliated Employer during any
calendar year (as reported on income tax Form W-2 or its
equivalent) of more than One Hundred Fifty Thousand
Dollars ($150,000).
Any Employee who is not a Key Employee is a nonkey Employee.
(g) Terminated Employees and Affiliated Employers: For purposes
of this Section 5.4, if a former Employee has not performed any services
for the Employer at any time during the five (5) Years immediately
preceding the current Year, any account balance remaining hereunder for
such former Employee shall not be taken into account. Also, any account
balance attributable to deductible employee contributions (under Code
Section 219) or attributable to a rollover initiated by an Employee from
the plan of an employer that is not an Affiliated Employer shall not be
taken into account under this Section.
(h) Safe Harbor Rule: In the case of an Employee hereunder who is
also covered by another top heavy qualified defined contribution plan of
an Affiliated, the top heavy minimum allocation provided under Section
5.4(b)(iv) hereof shall not apply if the top heavy minimum allocation
under such other plan is applied to such Employee thereunder, and in the
case of an Employee hereunder who is also covered by a top heavy
qualified defined benefit plan of an Affiliated Employer, said top heavy
minimum allocation shall not apply if the top heavy minimum benefit
under such other plan is applied to such Employee thereunder, but if
such top heavy minimum benefit is not applied to such Employee, then the
top heavy minimum allocation described in Section 5.4(b)(iv) hereof
shall be applied except that the percentage specified therein shall be
five percent (5%).
ARTICLE VI
Distributions and Withdrawals
-----------------------------
6.1 Retirement or Disability: If a Participant's employment with
the Employer is terminated at or after he attains age 59-1/2, or if his
employment is terminated at an earlier age because of Disability, he
shall be vested in, and entitled to receive, the entire amount in his
Individual Account as of the date employment terminates.
If a Participant shall continue in active employment following
attainment of age 59-1/2, he shall continue to participate under the
Plan. Upon actual retirement, such Participant shall be entitled to his
Plan benefits as of his actual retirement date.
Payment of benefits due under this Section shall be made in
accordance with Section 6.4.
6.2 Death: In the event that the termination of employment of a
Participant is caused by his death, his Beneficiary shall be vested in
and paid the entire amount in his Individual Account as of his date of
death. Payment of benefits due under this Section shall be made in
accordance with Section 6.4.
6.3 Termination for Other Reasons: If a Participant's employment
with the Employer is terminated before age 59-1/2 for any reason other
than Disability or death, he shall be vested in, and entitled to
receive, an amount equal to the vested percentage of the balance of his
Profit Sharing Contribution Account and Matching Contribution Account,
if any, as of the date employment terminates. Such percentage shall be
determined in accordance with the applicable schedule as set forth
below.
The following vesting schedule shall apply, to the extent required
under this Article VI, in the event a Participant's employment with the
Employer is terminated before January 1, 1989.
Vested Forfeitable
Years of Service Percentage Percentage
---------------- ---------- -----------
less than 5 years 0% 100%
5 but less than 6 years 50% 50%
6 but less than 7 years 60% 40%
7 but less than 8 years 70% 30%
8 but less than 9 years 80% 20%
9 but less than 10 years 90% 10%
10 years or more 100% 0%
The following vesting schedule shall apply, to the extent required
under this Article VI, in the event a Participant's employment with
this Employer is terminated on or after January 1, 1989.
Vested Forfeitable
Years of Service Percentage Percentage
Less than 5 years 0% 100%
5 years or more 100% 0%
A Participant shall always be one hundred percent (100%) vested in
his Salary Deferral Contribution Account and Qualified Matching
Contribution Account and entitled to receive the balance of such
Accounts upon termination of employment.
Payment of benefits under this Section shall be made in accordance
with Section 6.4.
6.4 Payment of Benefits: Subject to Section 6.10, payment of
benefits under Sections 6.1, 6.2 or Section 6.3 shall be made in a
single cash distribution of the full amount payable. Subject to Section
6.7, such distribution under Sections 6.1 (Retirement or Disability) and
6.2 (Death) shall be made within thirty (30) days after the Participant
terminates employment. Subject to Section 6.7, such distribution under
Section 6.3 (Termination for Other Reasons) shall be made within thirty
(30) days after the later of (a) the end of the year following the date
the Participant terminates employment or (b) the date the Participant
attains age sixty-two (62). Notwithstanding the above, a Participant may
elect to receive a distribution of his Salary Deferral Contribution
Account within sixty (60) days after he terminates employment with the
Employer and all Affiliated Employers.
6.5 Designation of Beneficiary: Designation of a Beneficiary or
Beneficiaries under the Plan shall be governed by the following rules:
(a) Designation Procedure: Subject to the provisions of
subparagraph (b), each Participant or Former Participant from time to
time may designate any person or persons as his Beneficiary or
Beneficiaries to whom his Plan benefits are to be paid if he dies before
receipt of all such benefits. Each Beneficiary designation shall be in
a form prescribed by the Committee and will be effective only when filed
with the Committee during the Participant's lifetime.
Each Beneficiary designation filed with the Committee will cancel
all Beneficiary designations previously filed with the Committee. The
revocation of a Beneficiary designation no matter how effected, shall
not require the consent of any designated Beneficiary except as provided
in subparagraph (b) below.
(b) Spousal Consent: No Beneficiary designation or change in
Beneficiary designation shall be effective under the Plan unless the
Participant's Eligible Spouse consents in writing to such designation,
the Eligible Spouse's consent acknowledges the effect of such
designation and the Eligible Spouse's signature is witnessed by a member
of the Committee or a notary public.
For purposes of this Section, spousal consent shall not be
necessary if it is established to the satisfaction of the Committee that
a Participant does not have an Eligible Spouse, or that the Eligible
Spouse cannot be located, or because of such other circumstances as may
be prescribed in regulations issued by the Secretary of the Treasury.
(c) Lack of Designations: If any Participant or Former
Participant fails to designate a Beneficiary in the manner provided
above, or if the Beneficiary designated by a deceased Participant dies
before him or before complete distribution of the Participant's
benefits, such Participant's benefits shall be paid in accordance with
the following order of priority:
(i) to the Participant's Eligible Spouse, or if there
be none surviving,
(ii) to the Participant's surviving spouse, or if there
be none surviving,
(iii) to the Participant's descendants, in equal parts,
or if there be none surviving,
(iv) to the Participant's father and mother, in equal
parts, or if there be none surviving,
(v) to the Participant's estate.
6.6 Distributions to Five Percent (5%) Owners: Notwithstanding
anything contained herein to the contrary, any benefits to which a
Participant who is a 5-Percent Owner is entitled shall commence not
later than the April 1 following the calendar year in which the
Participant attains age 70-1/2, whether or not his employment had
terminated in such year. If a benefit distribution under the Plan is
made to a 5-Percent Owner before he attains age 59-1/2, the Participant
shall be advised by the Committee that an additional income tax may be
imposed equal to 10% of the portion of the amount so received which is
included in his gross income for such taxable year and which is
attributable to benefits accrued while he was a 5-Percent Owner, unless
such distribution is made on account of death or Disability.
A 5-Percent Owner is a Participant who is a 5-Percent owner of the
Employer within the meaning of Section 416(i) of the Internal Revenue
Code.
6.7 Small Distributions: If the value of the Participant's vested
account balance is not, and has never been at the time of any
distribution to, or withdrawal by, the Participant, greater than $3,500,
subject to the provisions of Section 6.10, such amount shall be
distributed in a lump sum without the consent of the Participant, Former
Participant or Beneficiary; provided that in the event a Participant's
vested Account balance exceeds $3,500, such vested account balance may
not be distributed without the Participant's consent prior to such
Participant's attainment of age sixty-two (62).
6.8 Distributions to Participants Who Are Not 5% Owners: Not-
withstanding anything contained herein to the contrary, any benefits to
which a Participant who is not a 5-Percent Owner (as such term is
defined in Section 6.6 hereof) is entitled shall commence not later than
April 1 following the later of: (i) the calendar year in which such
Participant attains age 70-1/2 or (ii) if later, the calendar year in
which he retires; provided that if such Participant reached age 70-1/2
on or after January 1, 1988, then benefits shall commence no later than
April 1 of the calendar year in which he attains age 70-1/2 regardless
of his status as an Employee.
6.9 Withdrawals from Salary Deferral Contribution Account: Each
Participant, by filing a request with the Committee (on a form provided
by the Committee) may withdraw amounts from his Salary Deferral
Contribution Account while in the employment of the Employer, in
accordance with the following paragraphs.
The amount to be withdrawn may be all or any portion of a
Participant's balance of his Salary Deferral Contribution Account,
except as otherwise provided below.
No such withdrawal is permitted by a Participant prior to his
attainment of age fifty-nine and one-half (59-1/2) unless (i) the
withdrawal is made on account of the immediate and heavy financial need
of the Participant as determined under (a) below and (ii) the withdrawal
is necessary to satisfy the immediate and heavy financial need as
determined under (b) below.
(a) Deemed Immediate and Heavy Financial Need: An immediate heavy
financial need shall be deemed to exist with respect to a Participant if
the withdrawal request is on account of:
(i) expenses for medical care described in Code Section
213(d) incurred by the Participant, the Participant's
spouse, or any dependents of the Participant (as defined
in Code Section 152), or necessary for those persons to
obtain medical care as described in Code Section 213(d).
(ii) purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) payment of tuition and related educational fees for the
twelve (12) months of post-secondary education for the
Participant, his spouse, children, or dependents;
(iv) the need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage
on the Participant's principal residence; or
(v) such other events as may be acceptable to the Internal
Revenue Service.
(b) Deemed Necessity of Withdrawal to Satisfy immediate and Heavy
Financial Need: A hardship withdrawal request shall be deemed to be
necessary to satisfy an immediate and heavy financial need if all of the
following conditions are satisfied:
(i) the amount of the withdrawal request is not in excess of
the immediate and heavy financial need of the
Participant, including any amount necessary to pay any
federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal;
(ii) the Participant has obtained all distributions, other
than hardship distributions from his Salary Deferral
Contribution Account, and all nontaxable loans currently
available from all plans maintained by the Employer;
(iii) The Participant's right to make salary deferral
contributions to this Plan and all other plans
maintained by the Employer or Affiliated Employers is
(and shall be) suspended for twelve (12) months after
receipt of the hardship distribution.
In the event more than one (1) distribution is made
hereunder within a twelve (12) month period, the
suspension period shall not be tacked to the remaining
portion of the prior suspension period but rather shall
start anew.
(iv) The Participant's right to make salary deferral
contributions to this Plan and all other plans
maintained by the Employer or Affiliated Employers in
the taxable year following the taxable year of the
hardship distribution is (and shall be) limited to an
amount equal to the applicable limit under Code Section
402(g) reduced by the Participant's salary deferral
contributions in the taxable year of the hardship
distribution. The term "taxable year" as used hereunder
means the Participant's taxable year.
(c) Source of Hardship Withdrawal: In the event of a hardship
withdrawal, such withdrawal may be made from Salary Deferral
Contributions and not from earnings on such Salary
Deferral Contributions.
(d) Payment of Withdrawal: Subject to Section 6.10, payment of
any withdrawal under this Section 6.9 shall be made in cash to the
Participant as soon as practicable following the date such request for
withdrawal is approved by the Committee.
6.10 Direct Rollovers: This Section 6.10 applies to distributions
or hardship withdrawals made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article VI, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in
a direct rollover. For purposes of this Section 6.10, the following
definitions shall apply:
(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance to
the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution to the extent such
distribution is required under section 401(a)(9) of the Code, and the
portion of any distribution that is not includible in gross income.
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of the Code,
an individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts
the distributee's eligible rollover distribution. However, in the case
of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or
individual retirement annuity.
(c) Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, are distributees with regard
to the interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the plan
to the eligible retirement plan specified by the distributee.
ARTICLE VII
Trust Fund
----------
All contributions under this Plan shall be paid to the Trustee and
deposited in the Trust Fund. Upon the Employer's request, a
contribution which was made by a mistake of fact, or conditioned upon
qualification of the Plan or any amendment thereof or upon the
deductibility of the contribution under Section 404 of the Internal
Revenue Code of 1986, shall be returned to the Employer within one year
after the payment of the contribution, the denial of the qualification
or the disallowance of the deduction (to the extent disallowed),
whichever is applicable. Upon the Employer's request, a contribution
which was conditioned upon qualification of the Plan shall be returned
to the Employer within one year after the denial of the qualification.
Except as provided above, all assets of the Trust Fund, including
investment Income, shall be retained for the exclusive benefit of
Participants, Former Participants and Beneficiaries and shall be used to
pay benefits to such persons or to pay administrative expenses of the
Plan and Trust Fund to the extent not paid by the Employer and shall not
revert to or inure to the benefit of the Employer.
The assets of the Trust Fund shall be invested in certain
Investment Funds approved by the Investment Committee and communicated
to the Participants.
Any contribution allocated to a Participant's Account hereunder
will be invested in the Investment Fund (or Funds) designated by the
Participant on a form furnished by the Committee. Failure to select one
of the investment options will result in the Participant's Account being
invested in a Fund selected by the Investment Committee. A Participant
or vested Former Participant may change his investment selection three
(3) times each calendar quarter.
ARTICLE VIII
Administration
--------------
8.1 Allocation1 of Responsibility Among Fiduciaries for Plan and
Trust Administration: The Fiduciaries shall have only those specific
powers, duties, responsibilities and obligations as are specifically
given them under this Plan or the Trust. The Employer shall have the
sole responsibility for making the contributions provided for under
Article IV and shall have the sole authority to appoint and remove the
Trustee, members of the Committee and any Investment Manager which may
be provided for under the Trust, and to amend or terminate, in whole or
in part, this Plan or the Trust. The Committee shall have the sole
responsibility for the administration of this Plan, which responsibility
is specifically described in this Plan and the Trust.
The Trustee shall have the sole responsibility for the
administration of the Trust and the management of the assets held under
the Trust, all as specifically provided in the Trust. Each Fiduciary
warrants that any directions given, information furnished, or action
taken by it shall be in accordance with the provisions of the Plan or
the Trust, as the case may be, authorizing or providing for such
direction, information or action. Furthermore, each Fiduciary may rely
upon any such direction, information or action of another Fiduciary as
being proper under this Plan or the Trust, and is not required under
this Plan or the Trust to inquire into the propriety of any such
direction, information or action. It is intended under this Plan and
the Trust that each Fiduciary shall be responsible for the proper
exercise of its own powers, duties, responsibilities and obligations
under this Plan and the Trust and shall not be responsible for any act
or failure to act of another Fiduciary. No Fiduciary guarantees the
Trust Fund in any manner against investment loss or depreciation in
asset value.
8.2 Appointment of Committee: The Plan shall be administered by a
Profit Sharing Committee consisting of at least three persons who shall
be appointed by and serve at the pleasure of the Board of Directors of
the Employer. All usual and reasonable expenses of the Committee may be
paid in whole or in part by the Employer, and any expenses not paid by
the Employer shall be paid by the Trustee out of the principal or income
of the Trust Fund. Any members of the Committee who are Employees shall
not receive compensation with respect to their services for the
Committee.
8.3 Claims Procedure: The Committee shall make all determinations
as to the right of any person to a benefit. Any denial by the Committee
of the claim for benefits under the Plan by a Participant or Beneficiary
shall be stated in writing by the Committee and delivered or mailed to
the Participant or Beneficiary; and such notice shall set forth the
specific reasons for the denial, written to the best of the Committee's
ability in a manner that may be understood without legal or actuarial
counsel. In addition, the Committee shall afford a reasonable
opportunity to any Participant or Beneficiary whose claim for benefits
has been denied for a review of the decision denying the claim.
8.4 Records and Reports: The Committee shall exercise such
authority and responsibility as it deems appropriate in order to comply
with ERISA and governmental regulations issued thereunder relating to
records of Participants' Service, account balances and the percentage of
such account balances which are nonforfeitable under the Plan;
notifications to Participants; annual registration with the Internal
Revenue Service; and annual and other reports to the Department of
Labor.
8.5 Other Committee Powers and Duties: The Committee shall have
such duties and powers as may be necessary to discharge its duties
hereunder, including, but not by way of limitation the following:
(a) discretionary and final authority to construe and interpret
the Plan, decide all questions of eligibility and determine the amount,
manner and time of payment of any benefits hereunder;
(b) to prescribe procedures to be followed by Participants or
Beneficiaries filing applications for benefits;
(c) to prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the Plan;
(d) to receive from an Employer and from Participants such
information as shall be necessary for the proper administration of the
Plan;
(e) to furnish an Employer, upon request, such annual reports with
respect to the administration of the Plan as are reasonable and
appropriate;
(f) to receive, review and keep on file (as it deems convenient
and proper) reports of benefit payments by the Trustee and reports of
disbursements for expenses directed by the Committee;
(g) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems advisable,
including legal and actuarial counsel;
(h) to direct the voting of any common shares of the Company held
by the Trustee under this Plan.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan.
8.6 Rules and Decisions: The Committee may adopt such rules as it
deems necessary, desirable or appropriate. All rules and decisions of
the Committee shall be uniformly and consistently applied to all
Participants in similar circumstances. When making a determination or
calculation, the Committee shall be entitled to rely upon information
furnished by a Participant or Beneficiary, the Employer, the legal
counsel of the Employer, or the Trustee.
8.7 Committee Procedures: The Committee may act at a meeting or
in writing without a meeting. The Committee shall elect one of its
members as chairman, appoint a secretary, who may or may not be a
Committee member, and advise the Trustee of such action in writing. The
secretary shall keep a record of all meetings and forward all necessary
communications to the Employer, or the Trustee. The Committee may adopt
such bylaws and regulations as it deems desirable for the conduct of its
affairs. All decisions of the Committee shall be made by the vote of
the majority including actions in writing taken without a meeting. A
dissenting Committee member who, within a reasonable time after he has
knowledge of any action or failure to act by the majority, registers his
dissent in writing delivered to the other Committee members, the
Employer and the Trustee shall not be responsible for any such action or
failure to act.
8.8 Authorization of Benefit Payments: The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid
from the Trust Fund pursuant to the provisions of the Plan, and warrant
that all such directions are in accordance with this Plan.
8.9 Application and Forms for Benefits: The Committee may require
a Participant to complete and file with the Committee an application for
a benefit and all other forms approved by the Committee, and to furnish
all pertinent information requested by the Committee. The Committee may
rely upon all such information so furnished it, including the
Participant's current mailing address.
8.10 Facility of Payments: Whenever, in the Committee's opinion, a
person entitled to receive any payment of a benefit or installation
thereof hereunder is under a legal disability or is incapacitated in any
way so as to be unable to manage his financial affairs, the Committee
may direct the Trustee to make payments to such person or to his legal
representative or to a relative or friend of such person for his
benefit, or the Committee may direct the Trustee to apply the payment
for the benefit of such person in such manner as the Committee considers
advisable. Any payment of a benefit or installment thereof in
accordance with the provisions of this Section shall be a complete
discharge of any liability for the making of such payment under the
provisions of the Plan.
8.11 Indemnification of the Committee: The Committee and the
individual members thereof shall be indemnified by the Employer and not
from the Trust Fund against any and all liabilities arising by reason of
any act or failure to act made in good faith pursuant to the provisions
of the Plan, including expenses reasonably incurred in the defense of
any claim relating thereto.
ARTICLE IX
Miscellaneous
-------------
9.1 Nonguarantee of Employment: Nothing contained in this Plan
shall be construed as a contract of employment between the Employer and
any Employee, or as a right of any Employee to be continued in the
employment of the Employer, or as a limitation of the right of the
Employer to discharge any of its Employees, with or without cause.
9.2 Rights to Trust Assets: No Employee or Beneficiary shall have
any right to, or interest in, any assets of the Trust Fund upon
termination of his employment or otherwise, except as provided from time
to time under this Plan, and then only to the extent of the benefits
payable under the Plan to such Employee or Beneficiary out of the assets
of the Trust Fund. All payments of benefits as provided for in this
Plan shall be made solely out of the assets of the Trust Fund and none
of the Fiduciaries shall be liable therefor in any manner.
9.3 Nonalienation of Benefits: Except with respect to federal
income tax withholding, benefits payable under this Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution, or levy
of any kind, either voluntary or involuntary, including any such
liability which is for alimony or other payments for the support of a
spouse or former spouse or for any other relative of the Employee, prior
to actually being received by the person entitled to the benefit under
the terms of the Plan; and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any
right to benefits payable hereunder, shall be void. The Trust Fund
shall not in any manner be liable, or subject to the debts, contracts,
liabilities, engagements or torts of any person entitled to benefits
hereunder.
Notwithstanding the above, the Committee may direct the Trustee to
comply with a Qualified Domestic Relations Order.
A Qualified Domestic Relations Order is a judgment, decree or order
(including approval of a property settlement agreement) made pursuant to
a state domestic relations law (including community property law) that
relates to the provision of child support, alimony payments or marital
property rights to a spouse, former spouse, child or other dependent of
a Participant ("Alternate Payee") and which:
(a) creates or recognizes the existence of an Alternate Payee's
right to, or assigns to an Alternate Payee the right to, receive all or
a portion of the benefits payable to the Participant under this Plan;
and
(b) specifies (i) the name and last known mailing address (if any)
of the Participant and each Alternate Payee covered by the order (ii)
the amount or percentage of the Participant's Plan benefits to be paid
to any Alternate Payee, or the manner in which such amount or percentage
is to be determined and (iii) the number of payments or the period to
which the order applies and each plan to which the order relates; and
(c) does not require the Plan to:
(i) provide any type or form of benefit or any option not
otherwise provided under the Plan
(ii) pay any benefits to any Alternate Payee prior to the
earlier of the affected Participant's termination of
employment or attainment of age 59-1/2
(iii) provide increased benefits, or
(iv) pay benefits to an Alternate Payee that are required to
be paid to another Alternate Payee under a prior
Qualified Domestic Relations Order.
For purposes of this Plan, an Alternate Payee who had been married
to the Participant for at least one year may be treated as an Eligible
Spouse with respect to the portion of the Participant's benefit in which
such Alternate Payee has an interest provided that the Qualified
Domestic Relations Order provides for such treatment. However, under no
circumstances may the spouse of an Alternate Payee (who is not a
Participant hereunder) be treated as an Eligible Spouse under the terms
of the Plan.
Upon receipt of any judgment, decree or order (including approval
of a property settlement agreement) relating to the provision of payment
by the Plan to an Alternate Payee pursuant to a state domestic relations
law, the Committee shall promptly notify the affected Participant and
any Alternate Payee of the receipt of such judgment, decree or order and
shall notify the affected Participant and any Alternate Payee of the
Committee's procedure for determining whether or not the judgment,
decree or order is a Qualified Domestic Relations Order.
The Committee shall establish a procedure to determine the status
of a judgment, decree or order as a Qualified Domestic Relations Order
and to administer Plan distributions in accordance with Qualified
Domestic Relations Orders. Such procedure shall be in writing, shall
include a provision specifying the notification requirements enumerated
in the preceding paragraph, shall permit an Alternate Payee to designate
a representative for receipt of communications from the Committee and
shall include such other provisions as the Committee shall determine,
including provisions required under regulations promulgated by the
Secretary of the Treasury.
During any period in which the issue of whether a judgment, decree
or order is a Qualified Domestic Relations Order is being determined (by
the Committee, a court of competent jurisdiction or otherwise), the
Committee shall segregate in a separate account under the Plan the
amount, if any, which would have been payable to the Alternate Payee
during such period if the judgment, decree or order had been determined
to be a Qualified Domestic Relations Order. Such segregated account
under the Plan shall be held as uninvested cash.
If the judgment, decree or order is determined to be a Qualified
Domestic Relations Order within the 18-month period following the
receipt by the Committee of the Qualified Domestic Relations Order, then
payment from the segregated account shall be paid to the appropriate
Alternate Payee as soon as practicable after such determination if
allowed under the terms of the Qualified Domestic Relations Order. If
such a determination is not made within the 18-month period, the
segregated account shall be returned to the Participant's accounts under
the Plan and shall be paid at the time and the manner provided under the
Plan as if no order, judgment or decree had been received by the
Committee.
If distributions are made from a Participant's Employer
Contribution Account pursuant to the requirements of a Qualified
Domestic Relations Order prior to his termination of employment and
prior to the date the Participant is 100% vested in his Employer
Contribution Account, the Participant's vested interest in his Employer
Contribution Account shall not become greater due to the prior
distribution(s) made pursuant to the Qualified Domestic Relations Order.
9.4 Non-forfeitability of Benefits: Subject only to the specific
provisions of this Plan, nothing shall be deemed to divest a Participant
of his right to the non-forfeitable benefit to which he becomes entitled
in accordance with the provisions of this Plan.
9.5 Discontinuance of Employer Contributions: In the event an
Employer elects, by a duly adopted resolution of its Board of Directors,
a complete discontinuance of contributions to the Plan, the accounts of
all Participants shall, as of the date of such discontinuance, become
100% vested and non-forfeitable.
9.6 Waiver of Benefits: Anything herein to the contrary
notwithstanding, anyone entitled to be a Participant in the Plan, who,
at the time is earning in excess of $25,000 per annum, may, if the
Committee consents thereto, waive by an instrument in writing his right
to participate.
ARTICLE X
Amendment and Termination
-------------------------
10.1 Amendment and Termination: The Board of Directors of the
Company shall have the right and power at any time and from time to time
to amend or terminate this Plan, in whole or in part, on behalf of all
Employers. Any such amendment to or termination of this Plan shall be
made by or pursuant to a resolution duly adopted by the Board of
Directors of the Company and shall be evidenced by such resolution or by
a written instrument executed by such person as the Board of Directors
of the Company shall authorize for such purpose. With the consent of
the Board of Directors of the Company and subject to such procedures as
the Board of Directors of the Company may prescribe, each Employer shall
have the right and power at any time and from time to time to amend or
terminate this Plan, in whole or in part, with respect to the Plan's
application to the Participants of the particular amending or
terminating Employer and the assets held in the Trust for their benefit,
or to transfer such assets or any portion thereof to a new trust for the
benefit of such Participants. However, in no event shall any amendment
or new trust permit any portion of the trust fund to be used for or
diverted to any purpose other than the exclusive benefit of the
Participants and their beneficiaries, nor shall any amendment or new
trust reduce a Participant's vested interest under the Plan. The
Company shall in writing notify the Committee of any amendment or change
in the provisions of the Plan.
10.2 Partial Termination: Upon termination of the Plan by the
Employer with respect to a group of Participants, the Trustee shall, in
accordance with the directions of the Committee, allocate and segregate
for the benefit of the Employees then or theretofore employed by the
Employer with respect to which the Plan is being terminated the
proportionate interest of such participants in the Trust Fund. The
funds so allocated and segregated shall be used by the Trustee to pay
benefits to or on behalf of Participants in accordance with Section
10.3.
10.3 Liquidation of the Trust Fund: Upon termination of the Plan,
the accounts of all Participants affected thereby shall become fully
vested, and the Committee may direct the Trustee: (a) to continue to
administer the Trust Fund and pay account balances in accordance with
Section 6.4 or Section 6.10, to Participants affected by the termination
upon their termination of employment or to their Beneficiaries upon such
a Participant's death, until the Trust Fund has been liquidated, or (b)
to distribute the assets remaining in the Trust Fund, after payment of
any expenses properly chargeable thereto, to Participants, Former
Participants and Beneficiaries in proportion to their respective account
balances.
In case the Committee directs liquidation of the Trust Fund
pursuant to (a) above, the expenses of administering the Plan and Trust,
if not paid by the Employer, shall be paid from the Trust Fund.
10.4 Manner of Distribution: To the extent that no discri-
mination in value results, any distribution after termination of the
Plan may be made, in whole or in part, in cash, or in securities or
other assets in kind, as the Committee (in its discretion) may
determine. All non-cash distributions shall be valued at fair market
value at the date of distribution.
ARTICLE XI
Successor Employer and Merger
or Consolidation of Plans
-----------------------------
11.1 Successor Employer: In the event of the dissolution, merger,
consolidation or reorganization of an Employer, provision may be made by
which the Plan and Trust will be continued by the successor; and, in
that event, such successor shall be substituted for the Employer under
the Plan. The substitution of the successor shall constitute an
assumption of Plan liabilities by the successor and the successor shall
have all the powers, duties and responsibilities of the Employer under
the Plan.
11.2 Conditions Applicable to Mergers or Consolidations of Plans:
In the event of any merger or consolidation of the Plan with, or
transfer in whole or in part of the assets and liabilities of the Trust
Fund to another trust fund held under, any other plan of deferred
compensation maintained or to be established for the benefit of all or
some of the Participants of this Plan, the assets of the Trust Fund
applicable to such Participants shall be merged or consolidated with or
transferred to the other trust fund only if:
(a) each Participant would (if either this Plan or the other plan
then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated);
(b) resolutions of the Board of Directors of an Employer under
this Plan, or of any new or successor employer of the affected
Participants, shall authorize such transfer of assets; and, in the case
of the new or successor employer of the affected Participants, its
resolutions shall include an assumption of liabilities with respect to
such Participants' inclusion in the new employer's plan; and
(c) such other plan and trust are qualified and exempt under
Sections 401(a) and 501(a) of the Internal Revenue Code.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of
the foregoing instrument comprising Triangle Pacific Corp. Salaried
Employees Profit Sharing Plan (As Restated January 1, 1993), TRIANGLE
PACIFIC CORP., the Employer, has caused its corporate seal to be affixed
hereto and these presents to be duly executed in its name and behalf by
its proper officers thereunto authorized this day of ,
1994. --- -------------
ATTEST: TRIANGLE PACIFIC CORP.
By
-------------------------------
Secretary Name:
Title:
(CORPORATE SEAL)
Exhibit 10.8
------------
Annual Cash Incentive Bonus System for those Triangle Pacific Officers
and Managers not currently covered by a previously established and
approved performance incentive plan
The following bonus plan which is both performance and discretionary
based will be used for determining the annual cash bonus compensation
for all Triangle Pacific officers and managers not currently covered by
a previously established and approved performance incentive plan. This
plan totally replaces the one hundred percent discretionary approach to
annual cash bonus determination which has been used in this company over
the past 25 plus years. I believe this new bonus plan for determining
an individual's annual cash bonus is a fair and sound one for all
concerned. This plan meets the Board of Directors' desire to have in
place a performance based plan to determine key managers' annual cash
compensation rather than rely on our old 100% discretionary plan. With
this approach both the Board and the individuals get to participate in
the process of setting and approving the standards which performance is
measured against. The plan insures that if the company and shareholders
do well, the individual would share in this improvement. If performance
is not there the individual obviously suffers. The plan is clear,
concise, easy to administer and utilizes the key measurements we use
constantly in our business to monitor performance. This plan still
allows us to preserve our philosophy of compensation which has served
this company very well in the past and which I think is essential to
maintaining our well being in the future. In short the individual is
rewarded when the company does well and is adversely affected bonus wise
when the company performance is below budget. Bonus payments will be
determined and paid as soon as possible after the year-end financial
results are available and confirmed. This means bonus payments to all
individuals covered by this plan will most likely be paid around the end
of January or the beginning of February versus in December as has been
done traditionally in the past.
The performance-based bonus will be comprised of two equal components
which are determined from the annual plan and operating budget approved
for the corporation and each operating division by the Board of
Directors. The two performance standards are Operating Income as a % of
working assets and Operating Cash Flow. Both of these performance
factors will utilize the bonus determination chart shown below. Bonus
dollars earned by an individual are determined for each performance
criteria by multiplying the performance level % achieved times the
individual's current annual base salary. Interpolation will be used to
determine the exact performance factor achieved.
Annual Base Performance Level - % of Plan Objective
Grade Salary Range 80% 90% 100% 110% 120%
-----------------------------------------------------------------------
1 $200,000+ 7% 13% 20% 27% 34%
2 $150,000 to $199,999 6% 12% 18% 25% 32%
3 $100,000 to $149,999 5% 10.5% 16% 22% 28%
4 $ 90,000 to $ 99,999 5% 9.5% 14% 19% 24%
5 $ 80,000 to $ 89,999 4% 8% 12% 16% 20%
6 $ 70,000 to $ 79,999 4% 7% 10% 13% 16%
7 $ 60,000 to $ 69,999 4% 6% 8% 10% 12%
8 $ 50,000 to $ 59,999 3% 4.5% 6% 7.5% 9%
9 $ 40,000 to $ 49,999 2% 3% 4% 5% 6%
10 $ 20,000 to $ 39,999 1% 2% 3% 4% 5%
The discretionary based portion of the annual cash bonus will be based
on a manager's written evaluation of an individual covering ten factors.
Each factor will carry a weighting factor of zero to ten points. This
portion of the annual cash bonus expressed as a % of base salary is as
follows:
Up to 20% of base salary for Grade 1
Up to 15% of base salary for Grade 2 and 3
Up to 10% of base salary for Grade 4 and 5
Up to 5% of base salary for Grade 6 through 8
Up to 3% of base salary for Grade 9 and 10
Evaluation factors for determining discretionary bonus:
Factors Rating Range # Points Earned
1. Works as a team player
and promotes a team
attitude 0 to 10 points
2. Willingness to act in
company's best interest 0 to 10 points
3. Dedication to job and
achievement of division
and corporate goals 0 to 10 points
4. Willingness to accept
responsibility, make
quality decisions and
demonstrate excellent
judgment based on factual
analysis 0 to 10 points
5. Ability to set a proper
balance of both long and
short term objectives 0 to 10 points
6. Leadership skills as
directed to achievement of
consistent and challenging
goals which were properly
set and communicated 0 to 10 points
7. Ability to communicate in a
clear, consistent, accurate
and thorough manner 0 to 10 points
8. Demands quality performance
from subordinates 0 to 10 points
9. Ability to hire and retain
quality people 0 to 10 points
10. Develops subordinates for
future management succession
i.e. training skills 0 to 10 points
---------------
Total Points Earned =
----------------
% Bonus factor Base Salary
Discretionary Bonus = Total Points Earned X allowed for X of
$ Earned 100 salary grade Individual
The participant's total annual cash bonus earned will be the sum of the
total bonus dollars earned from each of the plans three components;
Return on Assets, Operating Cash Flow and discretionary.
Division managers will be measured against their respective division
objectives which are determined from their respective division's Board
approved annual operating budget. Corporate managers will be measured
against the total corporate objective as determined by the Board
approved annual operating plan. The corporate managers will earn a
bonus providing the overall corporate performance standards are achieved
regardless of whether each division achieves budget.
The description of operating income as a % of working assets and cash
flow are the same as those used for the 1993 long term incentive plan
previously submitted to the board and provided you with your 1993 Long-
Term Incentive award.
Exhibit 10.18
-------------
TRIANGLE PACIFIC CORP.
SUPPLEMENTAL PROFIT SHARING AND
DEFERRED COMPENSATION PLAN
THIS PLAN, made and executed at Dallas, Texas by Triangle Pacific
Corp., a Delaware corporation (the "Company"), is being established
primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees of the
Company and its participating affiliates.
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. Unless the context clearly indicates
otherwise, when used in this Plan:
(a) "Account" or "Accounts" means a Participant's Employer
Contribution Account and Deferral Account.
(b) "Adjustment Date" means the last day of each calendar month
and such other dates as the Administrative Committee in its discretion
may prescribe.
(c) "Affiliated Company" means any corporation or organization
which together with the Company would be treated as a single employer
under Section 414 of the Code.
(d) "Administrative Committee" means the committee designated
pursuant to Section 2.1 to administer this Plan.
(e) "Board" means the Board of Directors of Triangle Pacific
Corp.
(f) "Change of Control" with respect to an entity which is a
corporation means: (a) there shall have occurred an event required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
(or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the entity is then subject to such
reporting requirement; (b) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) shall have become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the entity representing more
than 50% of the combined voting power of the entity's then outstanding
voting securities; (c) the entity is a party to a merger, consolidation,
sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the board of directors of such entity in
office immediately prior to such transaction or event constitute less
than a majority of the board of directors of such entity thereafter; or
(d) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of such
entity (including for this purpose any new director whose election or
nomination for election by the entity's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who
were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the board of directors of the entity.
(g) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(h) "Company" means Triangle Pacific Corp. and its successors.
(i) "Compensation" means the sum of (i) the fixed remuneration
payable by an Employer to an Employee for personal services rendered to
an Employer to the extent includible in the gross income of the
Employee, including wages and salaries, but excluding any benefits paid
under this Plan or the Profit Sharing Plan, any payments for overtime
work, commissions, any bonuses of any kind or nature, reimbursements or
other expense allowances, fringe benefits, moving expenses, deferred
compensation and welfare benefits, plus (ii) any elective contributions
made to a plan by an Employer on behalf of such Employee which are not
includible in the gross income of the Employee under Sections 125,
402(a)(8) or 402(h) of the Code.
(j) "Deferral Account" means the account established and
maintained on the books of an Employer to record a Participant's
interest under this Plan attributable to amounts credited to such
Participant pursuant to Plan Section 3.3 and Section 3.4.
(k) "Election Period" means such period immediately prior to the
beginning of a Plan Year specified by the Administrative Committee for
the making of deferral elections for such Plan Year pursuant to Plan
Sections 3.3 and 3.4.
(l) "Eligible Employee" means any employee of an Employer who is
one of a select group of management or highly compensated employees
designated by the Chairman of the Board as an Eligible Employee for
purposes of the Plan.
(m) "Employer" includes the Company and any other Affiliated
Company which adopts this Plan with the consent of the Chairman of the
Board.
(n) "Employer Contribution Account" means the account established
and maintained on the books of an Employer to record a Participant's
interest under this Plan attributable to amounts credited to such
Participant pursuant to Plan Section 3.2.
(o) "Participant" means an Eligible Employee or former Eligible
Employee for whom an Account is being maintained under this Plan.
(p) "Plan" means this Triangle Pacific Corp. Supplemental Profit
Sharing and Deferred Compensation Plan as in effect from time to time on
and after December 1, 1994.
(q) "Plan Year" means the twelve-month period commencing each
January 1 and ending the following December 31.
(r) "Profit Sharing Plan" means the Triangle Pacific Corp.
Salaried Employees Profit Sharing Plan, as in effect from time to time,
and any successor plan thereto.
ARTICLE II.
PLAN ADMINISTRATION
Section 2.1 Administrative Committee. This Plan shall be
administered by an Administrative Committee composed of at least three
individuals appointed by the Chairman of the Board. Each member of the
Administrative Committee so appointed shall serve in such office until
his or her death, resignation or removal by the Chairman of the Board.
The Chairman of the Board may remove any member of the Administrative
Committee at any time by giving written notice thereof to the members of
the Administrative Committee. Vacancies shall likewise be filled from
time to time by the Chairman of the Board. The Administrative Committee
shall have discretionary and final authority to interpret and implement
the provisions of the Plan, including without limitation, authority to
determine eligibility for benefits under the Plan. The Administrative
Committee shall act by a majority of its members at the time in office
and such action may be taken either by a vote at a meeting or in writing
without a meeting. The Administrative Committee may adopt such rules
and procedures for the administration of the Plan as are consistent with
the terms hereof and shall keep adequate records of its proceedings and
acts. Every interpretation, choice, determination or other exercise by
the Administrative Committee of any power or discretion given either
expressly or by implication to it shall be conclusive and binding upon
all parties having or claiming to have an interest under the Plan or
otherwise directly or indirectly affected by such action, without
restriction, however, on the right of the Administrative Committee to
reconsider and redetermine such action.
Section 2.2 Indemnification of Administrative Committee. The
Employers shall indemnify and hold harmless each member of the
Administrative Committee and each director, officer and employee of an
Employer against any claim, cost, expense (including attorneys' fees),
judgment or liability (including any sum paid in settlement of a claim
with the approval of the Company) arising out of any act or omission to
act as a member of the Administrative Committee or any other act or
omission to act relating to this Plan, except in the case of such
person's fraud or willful misconduct.
ARTICLE III.
DEFERRED COMPENSATION PROVISIONS
Section 3.1 Participant Accounts. An Employer shall establish and
maintain on its books an Employer Contribution Account and a Deferral
Account for each Eligible Employee employed by such Employer. Each such
Account shall be designated by the name of the Participant for whom it
is established. The amount of any Employer contribution declared by an
Employer for a Plan Year for a Participant pursuant to Section 3.2 shall
be credited by such Employer to such Participant's Employer Contribution
Account as of the last day of the Plan Year with respect to which such
contribution is made. The amount of any base salary and/or cash bonus
from an Employer for a Plan Year that is deferred for a Participant
pursuant to Section 3.3 and/or Section 3.4 shall be credited by such
Employer to such Participant's Deferral Account as of the date such
amount would otherwise have been paid to such Participant by such
Employer. An Employer shall continue maintaining an Account as long as
a positive balance remains credited to such Account.
Section 3.2 Employer Contributions. As of the last day of each
Plan Year, each Employer shall declare an Employer contribution for each
Participant who is an Eligible Employee of the Employer as of the last
day of such Plan Year in an amount equal to the excess of (i) the amount
that would have been allocated to such Participant's "Profit Sharing
Contribution Account" under the Profit Sharing Plan as of the last day
of such Plan Year had the employer profit sharing contribution and
forfeitures under the Profit Sharing Plan for such Plan Year been
allocated among eligible participants' accounts thereunder in accordance
with the profit sharing contribution allocation formula in effect under
the Profit Sharing Plan as of December 31, 1993, over (ii) the actual
amount of employer contributions and forfeitures allocated to such
Participant's "Profit Sharing Contribution Account" under the Profit
Sharing Plan for such Plan Year. In addition, as of the last day of
each Plan Year, each Employer may declare an additional Employer
contribution in such amount as may be determined by such Employer in its
absolute discretion. Any such additional Employer contribution shall be
allocated among and credited to the Employer Contribution Accounts of
each Participant who is an Eligible Employee of such Employer as of the
last day of such Plan Year and who completed a "Year of Service" for
purposes of the Profit Sharing Plan during such Plan Year in the
proportion that the Compensation of each such Participant for that Plan
Year bears to the total Compensation of all such eligible Participants
for that Plan Year.
Section 3.3 Compensation Deferral Election. If the Company so
permits in its absolute discretion, as determined by the Chairman of the
Board, during the Election Period prior to the beginning of a Plan Year,
an Eligible Employee may elect to have the payment of an amount of up to
25% of the annual base salary otherwise payable by an Employer to such
Eligible Employee for such Plan Year deferred for payment in the manner
and at the time specified in Article IV; provided, however, that the
minimum amount of annual base salary that an Eligible Employee may elect
to defer for a Plan Year pursuant to this Section 3.3 is $5,000. The
amount of annual base salary a Participant elects to defer pursuant to
this Section 3.3 shall be deducted from the Participant's pay in
substantially equal amounts over all pay periods during the Plan Year.
All elections made pursuant to this Plan Section 3.3 shall be made in
writing on a form prescribed by and filed with the Administrative
Committee and shall be irrevocable.
Section 3.4 Bonus Deferral Election. If the Company so permits in
its absolute discretion, during the Election Period prior to the
beginning of a Plan Year, an Eligible Employee may elect to have the
payment of an amount up to 50% of the cash portion of any future bonus
otherwise payable by an Employer with respect to services to be
performed by such Eligible Employee during such Plan Year deferred for
payment in the manner and at the time specified in Article IV; provided,
however, that the minimum amount of a bonus that an Eligible Employee
may elect to defer pursuant to this Section 3.4 is $5,000 or, if less,
50% of the cash portion of such bonus. All elections made pursuant to
this Plan Section 3.4 shall be made in writing on a form prescribed by
and filed with the Administrative Committee and shall be irrevocable.
Section 3.5 Account Adjustments. As of each Adjustment Date, the
amount credited to each Account shall be adjusted to reflect such gain,
loss and/or expenses as the Administrative Committee shall reasonably
determine to be appropriate based on the experience of the investments
selected by the Participant for the investment of such Account and
taking into account additional deferrals credited to and distributions
made from such Account since the last Adjustment Date. The
Administrative Committee shall have sole and absolute discretion with
respect to the number and type of investment choices made available for
selection by Participants pursuant to this Section and the method by
which adjustments are made. The designation of investment choices by
the Administrative Committee shall be for the sole purpose of adjusting
Accounts pursuant to this Section; provided, however, that an Employer
may invest a portion of its general assets in investments, including
investments which are the same as or similar to the investment choices
designated by the Administrative Committee and selected by Participants,
but any such investments shall remain part of the general assets of such
Employer and shall not be deemed or construed to grant a property
interest of any kind to any Participant, designated beneficiary or
estate, except as provided under a grantor trust which conforms to the
terms of the model trust described in Revenue Procedure 92-64. The
Administrative Committee shall notify the Participants of the investment
choices available and the procedures for making and changing investment
elections.
Section 3.6 Vesting. If a Participant is not fully vested and
does not become fully vested in the amount credited to his or her
"Profit Sharing Contribution Account" under the Profit Sharing Plan at
the time of his or her termination of employment with an Employer or
Affiliated Company for any reason other than transfer of employment to
another Employer or Affiliated Company, the amount credited to such
Participant's Employer Contribution Account hereunder shall be reduced
at the time of such termination of employment to an amount equal to the
amount then credited to said Employer Contribution Account multiplied by
the vested percentage applicable to such Participant's "Profit Sharing
Contribution Account" under the Profit Sharing Plan as of the date of
such termination of employment. The amount of such reduction shall be a
forfeiture for such Plan Year to be allocated as provided in Section
3.7. All amounts credited to a Participant's Deferral Account shall be
fully vested and nonforfeitable at all times. The preceding provisions
of this Section to the contrary notwithstanding, (i) in the event of a
Change of Control of the Company, the Accounts of all Participants in
the employ of an Employer on the date of such Change of Control shall
become fully vested and nonforfeitable and (ii) in the event of a Change
of Control of an Employer other than the Company, the Accounts
maintained by such Employer of all Participants in the employ of any
Employer on the date of such Change of Control, and the Accounts
maintained by other Employers of all Participants in the employ of the
Employer undergoing the Change of Control on the date of such Change of
Control, shall become fully vested and nonforfeitable.
Section 3.7 Allocation of Forfeitures. The amount of any
forfeitures arising during a Plan Year shall be allocated and credited
as of the last day of such Plan Year as an additional Employer
contribution in accordance with the provisions of Section 3.2 hereof.
ARTICLE IV.
BENEFITS
Section 4.1 Source of Benefit Payments. Benefit payments to be
made with respect to a Participant's Accounts maintained pursuant to the
Plan will be paid in cash and will be the obligation solely of the
Employer maintaining such Accounts; provided, however, that whenever a
payment hereunder is to be made by an Employer, the Company may, in its
discretion, satisfy such payment obligation on behalf of such Employer,
and the Company will be liable to satisfy any such payment obligation in
the event the Employer otherwise liable therefor fails to pay such
amount when due for any reason. Obligations of the Company and each
Employer as provided herein shall also be obligations of any successor
to any such entity, by reason of merger, liquidation, reorganization or
other similar transaction, or by reason of the sale or other transfer of
substantially all of the assets of any such entity.
Section 4.2 Amount of Benefit Payments. The amount payable from a
Participant's Accounts shall be determined based upon the amount
credited to such Accounts as of the Adjustment Date immediately
preceding the date of payment after any reduction described in Section
3.6, plus any deferrals credited to and less any distributions made from
such Accounts since such Adjustment Date. The amount of each payment
made with respect to an Account shall be deducted from the balance
credited to such Account at the time of payment.
Section 4.3 Timing of Payment. Upon a Participant's termination
of employment with an Employer or Affiliated Company for any reason
other than transfer to employment with another Employer or Affiliated
Company, the amount payable from such Participant's Accounts, as
determined in accordance with Section 4.2, shall be paid by the Employer
to such Participant (or, in the event of the Participant's death, to the
beneficiary or beneficiaries designated by such Participant pursuant to
Plan Section 4.4) in a single lump sum in cash as soon as practicable
but no later than 15 days following the Participant's termination of
employment.
Section 4.4 Designation of Beneficiaries. Any amount payable
under this Plan on account of the death of a Participant shall be paid
when otherwise due hereunder to the beneficiary or beneficiaries
designated by such Participant. Such designation of beneficiary or
beneficiaries shall be made in writing on a form prescribed by and filed
with the Administrative Committee and shall remain in effect until
changed by such Participant by the filing of a new beneficiary
designation form with the Administrative Committee. If a Participant
fails to so designate a beneficiary, or in the event all of the
designated beneficiaries are individuals who either predecease the
Participant or survive the Participant but die prior to receiving the
full amount payable under this Plan, any remaining amount payable under
this Plan shall be paid to such Participant's estate when otherwise due
hereunder.
Section 4.5 Hardship Distributions. If a Participant encounters
an unanticipated severe financial emergency which is caused by an event
or series of events beyond the control of such Participant and which has
or will result in a severe financial hardship to such Participant if he
or she does not receive an early distribution from a Deferral Account
being maintained for such Participant under this Plan, the
Administrative Committee in its absolute discretion may direct the
Employer maintaining such Deferral Account to pay to such Participant
and deduct from such Deferral Account such portion of the amount then
credited to such Deferral Account (including, if appropriate, the entire
amount determined in accordance with Section 4.2) as the Administrative
Committee shall determine to be necessary to alleviate the severe
financial hardship of such Participant. No distribution shall be made
to a Participant pursuant to this Section 4.5 unless such Participant
requests such a distribution in writing and provides to the
Administrative Committee such information and documentation with respect
to his or her financial emergency and hardship as may be requested by
the Administrative Committee.
ARTICLE V.
AMENDMENT AND TERMINATION
Section 5.1 Amendment and Termination. The Board shall have the
right and power at any time and from time to time to amend this Plan, in
whole or in part, on behalf of all Employers, and the Board shall have
the right and power at any time to terminate this Plan or any Employer's
participation hereunder. Any amendment to or termination of this Plan
shall be made by or pursuant to a resolution duly adopted by the Board
and shall be evidenced by such resolution or by a written instrument
executed by such person as the Board shall authorize for such purpose.
Any provision of this Plan to the contrary notwithstanding, no amendment
to or termination of this Plan shall reduce the amounts actually
credited to a Participant's Accounts as of the date of such amendment or
termination, or further defer the dates for the payment of such amounts,
without the consent of the affected Participant. Upon termination of
this Plan, the Administrative Committee shall calculate final Account
balances and each Employer shall make immediate lump sum payments to
each Participant (or beneficiary in the case of a deceased Participant)
with respect to which such Employer maintains an Account in the amount
determined to be credited to such Participant's Accounts as of the final
Adjustment Date.
Section 5.2 Change of Control. The preceding provisions of this
Article to the contrary notwithstanding, (i) no action to amend or
terminate this Plan taken on or within two years following a Change of
Control of the Company shall be effective unless written consent thereto
is obtained from a majority of the Participants in the Plan at such
time, and (ii) no action to amend or terminate this Plan with respect to
Participants for whom an Employer other than the Company is maintaining
an Account taken on or within two years following a Change of Control of
such Employer shall be effective unless written consent thereto is
obtained from a majority of such Participants.
ARTICLE VI.
MISCELLANEOUS PROVISIONS
Section 6.1 Nature of Plan and Rights. This Plan is unfunded and
maintained by the Employers primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees of the Employers. The Accounts established and
maintained under this Plan by an Employer are for its accounting
purposes only and shall not be deemed or construed to create a trust
fund or security interest of any kind for or to grant a property
interest of any kind to any Participant, designated beneficiary or
estate. The amounts credited by an Employer to Accounts maintained
under this Plan are and for all purposes shall continue to be a part of
the general assets and liabilities of such Employer, and to the extent
that a Participant, designated beneficiary or estate acquires a right to
receive a payment from such Employer pursuant to this Plan, such right
shall be no greater than the right of any unsecured general creditor of
such Employer; provided, however, that the Company shall establish and
fund for purposes of satisfying its obligations hereunder, a grantor
trust which conforms to the terms of the model trust described in
Revenue Procedure 92-64.
Section 6.2 Spendthrift Provision. No Account balance or other
right or interest under this Plan of a Participant, designated
beneficiary or estate may be assigned, transferred or alienated, in
whole or in part, either directly or by operation of law, and no such
balance, right or interest shall be liable for or subject to any debt,
obligation or liability of such Participant, designated beneficiary or
estate.
Section 6.3 Employment Noncontractual. The establishment of this
Plan shall not enlarge or otherwise affect the terms of any
Participant's employment with an Employer, and such Employer may
terminate the employment of such Participant as freely and with the same
effect as if this Plan had not been established.
Section 6.4 Adoption by Other Employers. With the consent of the
Chairman of the Board, this Plan may be adopted by any Affiliated
Company, such adoption to be effective as of the date specified by such
Affiliated Company at the time of adoption.
Section 6.5 Claims Procedure. If any person (hereinafter called
the "Claimant") feels that he or she is being denied a benefit to which
he or she is entitled under this Plan, such Claimant may file a written
claim for said benefit with the Administrative Committee. Within sixty
days following the receipt of such claim the Administrative Committee
shall determine and notify the Claimant as to whether he or she is
entitled to such benefit. Such notification shall be in writing and, if
denying the claim for benefit, shall set forth the specific reason or
reasons for the denial, make specific reference to the pertinent
provisions of this Plan, and advise the Claimant that he or she may,
within sixty days following the receipt of such notice, in writing
request to appear before the Administrative Committee or its designated
representative for a hearing to review such denial. Any such hearing
shall be scheduled at the mutual convenience of the Administrative
Committee or its designated representative and the Claimant, and at any
such hearing the Claimant and/or his or her duly authorized
representative may examine any relevant documents and present evidence
and arguments to support the granting of the benefit being claimed. The
final decision of the Administrative Committee with respect to the claim
being reviewed shall be made within sixty days following the hearing
thereon, and the Administrative Committee shall in writing notify the
Claimant of said final decision, again specifying the reasons therefor
and the pertinent provisions of this Plan upon which said final decision
is based. The final decision of the Administrative Committee shall be
conclusive and binding upon all parties having or claiming to have an
interest in the matter being reviewed.
Section 6.6 Reimbursement of Expenses. In the event that a
dispute arises between a Participant or beneficiary and the
Participant's Employer or the Company with respect to the payment of
benefits hereunder and the Participant or beneficiary is successful in
pursuing a benefit to which he or she is entitled under the terms of the
Plan against the Participant's Employer, the Company or any other party
in the course of litigation or otherwise and incurs attorneys' fees,
expenses and costs in connection therewith, the Participant's Employer
and the Company shall be liable for reimbursing the Participant or
beneficiary for the reasonable amount of any such attorneys' fees,
expenses and costs, and for the payment to the Participant or
beneficiary of interest on the amount recovered calculated from the date
the payment should have been made in accordance with this Plan using the
prime rate published in the Wall Street Journal during such period.
Section 6.7 Withholding Tax. There shall be deducted from all
amounts paid under this Plan any taxes required to be withheld by any
Federal, state, local or other government. The Participant and/or his
or her beneficiary (including his or her estate) shall bear all taxes on
amounts paid under this Plan to the extent that no taxes are withheld,
irrespective of whether withholding is required.
Section 6.8 Arbitration. Any dispute, controversy, or claim
arising out of or relating to this Plan shall be settled by arbitration
in Dallas, Texas, in accordance with the Commercial Arbitration Rules of
the American Arbitration Association then in effect, and judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction.
Section 6.9 Applicable Law. This Plan shall be governed and
construed in accordance with the internal laws (and not the principles
relating to conflicts of laws) of the State of Texas, except where
superseded by federal law.
IN WITNESS WHEREOF, this Plan has been executed on this 21st day of
December, 1994 to be effective as of January 1, 1994.
TRIANGLE PACIFIC CORP.
------------------------------
By
Title:
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] QTR-4
[FISCAL-YEAR-END] DEC-30-1994
[PERIOD-END] DEC-30-1994
[CASH] 24,906,000
[SECURITIES] 0
[RECEIVABLES] 45,794,000
[ALLOWANCES] 2,491,000
[INVENTORY] 70,900,000
[CURRENT-ASSETS] 143,043,000
[PP&E] 135,023,000
[DEPRECIATION] 21,110,000
[TOTAL-ASSETS] 363,451,000
[CURRENT-LIABILITIES] 48,689,000
[BONDS] 0
[COMMON] 147,000
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 106,747,000
[TOTAL-LIABILITY-AND-EQUITY] 363,451,000
[SALES] 410,159,000
[TOTAL-REVENUES] 410,159,000
[CGS] 300,160,000
[TOTAL-COSTS] 300,160,000
[OTHER-EXPENSES] 58,564,000
[LOSS-PROVISION] 884,000
[INTEREST-EXPENSE] 18,920,000
[INCOME-PRETAX] 31,631,000
[INCOME-TAX] 12,829,000
[INCOME-CONTINUING] 18,802,000
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 18,802,000
[EPS-PRIMARY] 1.28
[EPS-DILUTED] 1.28
</TABLE>
