SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Paragraph 240.14a-11(c)
or Paragraph 240.14a-12
TRIANGLE PACIFIC CORP.
(Name of Registrant as Specified In Its Charter)
TRIANGLE PACIFIC CORP.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:1
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1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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TRIANGLE PACIFIC CORP.
16803 Dallas Parkway
Dallas, Texas 75248
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 1, 1996
To the Shareholders of
Triangle Pacific Corp.:
The annual meeting of shareholders of Triangle Pacific Corp., a Delaware
corporation (the "Company"), will be held on Wednesday, May 1, 1996, at 9:00
a.m., local time, at the Company's offices, 16803 Dallas Parkway, Dallas,
Texas, for the following purposes:
1. To elect three directors, comprising the members of the class
of directors designated as Class III and whose term expires at the annual
meeting, for a three-year term expiring in 1999;
2. To approve the appointment of Arthur Andersen LLP as
independent auditors for the Company for the fiscal year ending January
3, 1997;
3. To approve an amendment to the Nonemployee Director Stock
Option Plan increasing the number of shares subject to the plan from
50,000 shares to 100,000 shares and providing for additional, automatic
annual grants of options.
4. To approve an amendment to the Long-Term Incentive Compensation
Plan increasing the number of shares subject to the plan from 1,000,000
to 1,400,000 shares; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 29, 1996
as the record date for the determination of shareholders entitled to notice of
and to vote at the annual meeting or any adjournment thereof. Only holders of
recordof Common Stock at the close of business on the record date are
entitled to notice of and to vote at the meeting. A complete list of such
shareholders will be available for examination at the offices of the Company
in Dallas, Texas during normal business hours for a period of 10 days prior
to the meeting.
A record of the Company's activities during 1995 and financial statements
for the fiscal year ended December 29, 1995 are contained in the Company's 1995
Annual Report to shareholders and in the Company's Form 10-K filed with the
Securities and Exchange Commission. The Annual Report and Form 10-K do not form
any part of the material for solicitation of proxies.
All shareholders are cordially invited to attend the meeting. Shareholders
are urged, whether or not they plan to attend the meeting, to sign, date and
mail the enclosed proxy card in the postage-paid envelope provided. If a
shareholder who has returned a proxy attends the meeting in person, such
shareholder may revoke the proxy and vote in person on any or all matters
submitted at the meeting.
By Order of the Board of Directors
Darryl T. Marchand
Secretary
Dallas, Texas
March 29, 1996
TRIANGLE PACIFIC CORP.
16803 Dallas Parkway
Dallas, Texas 75248
PROXY STATEMENT
For Annual Meeting of Shareholders
To Be Held on May 1, 1996
GENERAL
This proxy statement is furnished to shareholders of Triangle Pacific Corp.
(the "Company") in connection with the solicitation by the Board of Directors of
the Company of proxies for use at the annual meeting of shareholders to be held
at the time and place and for the purposes set forth in the accompanying notice.
The approximate date of mailing of this proxy statement and the accompanying
proxy card is March 29, 1996.
Proxy Cards
The enclosed proxy card serves to appoint proxies for record holders of
Common Stock of the Company. Shares represented by a proxy in such form, duly
executed and returned to the Company and not revoked, will be voted at the
meeting in accordance with the directions given. If no direction is made, the
proxy will be voted for election of the directors named in the proxy, approval
of the appointment of Arthur Andersen LLP as independent auditors for the
Company for the fiscal year ending January 3, 1997, and in favor of all
proposals. Any shareholder giving a proxy may revoke it at any time before it
is voted by communicating such revocation in writing to the Secretary of the
Company or by executing and delivering a later-dated proxy.
Voting Procedures and Tabulation
The Company will appoint one or more inspectors of election to act at the
meeting and to make a written report thereof. Prior to the meeting, the
inspectors will sign an oath to perform their duties in an impartial manner and
according to the best of their ability. The inspectors will ascertain the
number of shares outstanding and the voting power of each, determine the shares
represented at the meeting and the validity of proxies and ballots, count all
votes and ballots, and perform certain other duties as required by law.
The inspectors will tabulate (i) the number of votes cast for or withheld
as to the vote on each nominee for director, (ii) the number of votes cast for,
against or withheld, as well as the number of abstentions and broker non-votes,
as to the proposal to approve the appointment of the independent auditors, and
(iii) the number of votes cast for, against or withheld, as well as the number
of abstentions and broker non-votes, as to each other proposal. The treatment
and effect of abstentions and broker non-votes under Delaware law and the
Company's Certificate of Incorporation and Bylaws are described in the following
paragraphs.
An abstention or broker non-vote with respect to the election of directors
will have no effect on the voting on such matter, provided a quorum is present,
because directors are elected by a plurality of the shares of Common Stock
present in person or by proxy at the meeting and entitled to vote.
The Company's Bylaws provide that the vote required to approve matters
other than the election of directors is the affirmative vote of the holders of a
majority of the shares entitled to vote on the matter and present or represented
by proxy at the meeting. The shares represented by a broker non-vote (or other
limited proxy) will not be entitled to be voted on any proposal at the meeting
and therefore will not be considered part of the voting power present with
respect to such proposal. Thus, the effect of such non-votes with respect to
each proposal (other than the election of directors) will be to reduce the
number of affirmative votes required to block approval of such proposal.
Abstentions with respect to such proposal will effectively count as a vote
against such proposal.
VOTING SECURITIES
The only voting security of the Company outstanding is its Common Stock,
par value $.01 per share ("Common Stock"). Only holders of record of Common
Stock at the close of business on March 29, 1996, the record date for the
meeting, are entitled to notice of and to vote at the meeting. On the record
date for the meeting, there were 14,667,259 shares of Common Stock outstanding
and entitled to be voted at the meeting. A majority of such shares, present in
person or represented by proxy, is necessary to constitute a quorum. Each share
of Common Stock is entitled to one vote.
ELECTION OF DIRECTORS
The Certificate of Incorporation and Bylaws of the Company provide for
three classes of directors, designated Class I, Class II and Class III, with
approximately one-third of the directors constituting each class. Directors
serve for staggered terms of three years each. The Class III directors, whose
term expires at the 1996 annual meeting, are B. William Bonnivier, Jack L.
McDonald, and Charles M. Hansen, Jr. The Board of Directors has nominated
Messrs. Bonnivier, McDonald, and Hansen for re-election as directors of the
Company to serve a three-year term expiring at the 1999 Annual Meeting.
The directors will be elected by a plurality of the shares of Common Stock
present in person or represented by proxy at the meeting and entitled to vote.
All duly submitted and unrevoked proxies in the form enclosed will be voted for
the nominees selected by the Board of Directors, except where authorization so
to vote is withheld. The Board recommends that shareholders vote FOR the
election of its nominees for director.
Information with respect to the directors nominated for election this year,
and the directors whose terms do not expire at the 1996 annual meeting, is
presented below.
CLASS I DIRECTORS
Floyd F. Sherman,
age 56, director since 1982 Mr. Sherman has served as Chairman of the
Board and Chief Executive Officer since July,
1992. Prior to November, 1994 he served as
President of the Company since 1981. Prior to
1981, he served as Executive Vice President of
the Company. He has been an employee of the
Company since 1973.
M. Joseph McHugh,
age 58, director since 1986 Mr. McHugh has served as President and Chief
Operating Officer of the Company since
November, 1994. 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 has been an employee of the
Company since 1976. Mr. McHugh is also a
director of Pillowtex Corporation, a
manufacturer of pillows and other bedroom
textile furnishings.
CLASS II DIRECTORS
David R. Henkel,
age 44, director since 1992 Mr. Henkel has been Chief Operating Officer of
7th Level Inc., an interactive entertainment
company since 1995. He has been a director
since 1993. Prior to that, he was Executive
Vice President and Chief Financial Officer,
since January, 1994. Prior thereto, Mr.
Henkel had been a director, Senior Vice
President and Chief Financial Officer of
Value-Added Communications, Inc., since April,
1993. From April, 1991 to April, 1993, Mr.
Henkel served as Executive Vice President,
Chief Financial Officer and a director of
Micrografx, Inc., a personal computer graphics
software company. Prior thereto, he was an
audit partner at Arthur Andersen LLP.
Karen Gordon Mills,
age 42, director since 1988 Mrs. Mills has been President of MMP Group, a
management company, since January, 1993. From
December, 1983 to January, 1993, she was a
Managing Director of ES Jacobs & Company, an
investment banking firm. Prior thereto, Mrs.
Mills had been a consultant with McKinsey &
Co. and a product manager with General Foods
Corp. Mrs. Mills is also a director of Armor
All Products Corp., Arrow Electronics, Inc.,
Telex Communications Inc. and the Scotts
Company.
Carson R. McKissick,
age 63, director since 1993 Mr. McKissick has been Senior Advisor of Trust
Company of the West, an investment management
company, since 1992. Prior thereto, he was
Managing Director of the Mergers and
Acquisitions department of Citibank. Mr.
McKissick is also a director of Alexander &
Baldwin, Inc.
CLASS III DIRECTORS
B. William Bonnivier,
age 53, director since 1992 Mr. Bonnivier has been the Vice Chairman and
Director of Corporate Planning of Maxim
Technoligies, Inc., an environmental
consulting firm since May, 1995. He has been
the Chairman and Chief Executive Officer of
Refrigerant Management Systems Inc., since
December, 1993. Prior thereto, Mr. Bonnivier
had been the Chairman and Chief Executive
Officer of Princeton Packaging, Inc. since
March, 1991. Prior thereto he was the
President, Chief Operating Officer and a
director of SnyderGeneral Corporation, a
manufacturer of heating and air conditioning
products.
Charles M. Hansen, Jr.,
age 55, director since 1992 Mr. Hansen has been president of Pillowtex
Corporation since 1974 and, in addition,
became Chairman and Chief Executive Officer of
that company in December, 1992. Pillowtex
Corporation manufactures pillows and other
bedroom textile furnishings.
Jack L. McDonald,
age 62, director since 1992 Mr. McDonald has been a private investor and
consultant for over five years. He served as
President and Chief Operating Officer of
Centex Corporation from 1978 until his
retirement in 1985. He is a director of Amre,
Inc., Bally's Grand, Inc., U.S. Homes Corp.
and American Home Star Corp.
ADDITIONAL INFORMATION REGARDING THE BOARD OF DIRECTORS
Board Meetings and Committees
During 1995 the Board of Directors held five meetings. Each director of
the Company attended at least 75% of the aggregate number of meetings of the
full Board and of the Board committees on which he or she served in 1995.
The Company has a standing Finance/Audit Committee and a standing
Compensation Committee. The Company does not have a standing nominating
committee. The members of the committees, number of meetings held by each
committee in 1995 and a brief description of the functions performed by each
committee are set forth below:
Finance/Audit Committee (three meetings). The Finance/Audit
Committee consists of three non-employee directors, Messrs. Bonnivier,
Henkel and McDonald. This committee is primarily responsible for
reviewing the quality of the financial reporting of the Company and the
effectiveness of the audit of the Company's financial statements by its
independent public accountants; reviewing the scope and results of such
audits; reviewing the organization and scope of the Company's internal
systems of accounting and financial control; and establishing the
accounting standards and principles to be followed by the Company.
Compensation Committee (two meetings). The Compensation Committee
consists of four non-employee directors, Messrs. Hansen, McDonald and
McKissick and Mrs. Mills. This committee approves the compensation of
officers and makes awards under the Company's 1993 Long-Term Incentive
Compensation Plan.
Compensation Committee Interlocks and Insider Participation. Mr. McHugh,
an executive officer of the Company, serves as a director of Pillowtex
Corporation. Mr. Hansen, a director of the Company and a member of the
Company's Compensation Committee, is an executive officer and director of
Pillowtex Corporation.
Compensation of Directors
Fees. Directors who are not also employees of the Company receive an
annual retainer of $30,000 or $35,000 in the event that the director is a
committee chairman, beginning in May, 1996, for serving as such, plus $1,000 per
meeting attended for each meeting of the Finance/Audit Committee or the
Compensation Committee not held in conjunction with a regularly scheduled
quarterly meeting of the Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 21, 1996 information with
respect to the only persons who were known to the Company to be the beneficial
owners of more than five percent of the outstanding shares of Common Stock.
Common Stock Beneficially Owned (1)
-----------------------------------
Name and Address of Number Percent of
Beneficial Owner of Shares Class
- ------------------- ------------- -----------
The TCW Group, Inc. (through certain
affiliates which act as general
partners of limited partnerships,
trustees of certain trusts and
investment managers of third party
accounts which hold shares of Common
Stock) (2) 5,223,953 35.6%
865 South Figueroa Street
Los Angeles, California 90017
Hibridge Capital Corporation (3) 804,146 5.2%
Seven Mile Beach
Grand Cayman, Cayman Islands
British West Indies
United High Income Fund, Inc. 788,286 5.4%
and United High Income Fund II, Inc.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
Bea Associates . 774,779 5.3%
153 East 53rd Street (4)
One City Corp. Center
New York, New York 10022
- ----------
(1) The information contained in this table with respect to beneficial
ownership reflects "beneficial ownership" as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
All information with respect to the beneficial ownership of any
beneficial owner is based upon filings made by such beneficial owner with
the Securities and Exchange Commission and, unless otherwise indicated,
each beneficial owner has sole voting and investment power with respect
to shares listed as beneficially owned by such beneficial owner.
(2) The TCW Group, Inc. ("TCW") and its affiliates may be deemed to be
beneficial owners of all shares of Common Stock currently held by such
limited partnerships, third party accounts and trusts for purposes of the
reporting requirements of the Exchange Act. In a Schedule 13D filed by
TCW on March 1, 1996, TCW stated that the filing of the Schedule 13D
shall not be construed as an admission that TCW or any of its affiliates
is, for purposes of Section 13(d) or for any other purpose under the
Exchange Act, the beneficial owner of any securities covered by the
Schedule 13D.
(3) Hibridge Capital Corporation may be deemed to beneficially own the number
of shares of Common Stock shown opposite its name in the table by virtue
of the ownership of certain warrants to purchase such shares which have
exercise prices that range from $22.39 to $37.31 per share.
(4) In a Schedule 13D filed by BEA Associates on January 15, 1996, BEA
Associates stated that it disclaims beneficial ownership of all the
shares reported and that such securities are held in discretionary
accounts which Bea Associates manages.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 21, 1996, the beneficial
ownership of Common Stock by each director of the Company, each named executive
officer listed in the Summary Compensation Table appearing elsewhere in this
proxy statement, and all directors and executive officers as a group.
Common Stock Beneficially Owned (1)
-----------------------------------
Number Percent of
Name of Shares Class
------------ ------------
Directors
B. William Bonnivier (2) 10,000 *
Charles M. Hansen, Jr. (2) 5,000 *
David R. Henkel (2) 10,000 *
Jack L. McDonald (2) 5,000 *
M. Joseph McHugh (3) 119,875 *
Carson R. McKissick (2) 6,000 *
Karen Gordon Mills (2) 7,867 *
Floyd F. Sherman (3) 158,325 1.1%
Named Executive Officers
(excluding any director named
above) and Group (4)
Robert J. Symon (3) 95,875 *
Michael J. Kearins (3) 54,717 *
All directors and executive
officers as a group (17 persons) 699,987 4.8%
* less than 1%
- -----------
(1) The information contained in this table with respect to beneficial
ownership reflects "beneficial ownership" as defined in Rule 13d-3 under
the Exchange Act. All information with respect to the beneficial
ownership of any director or named executive officer has been furnished
by such director or named executive officer and, unless otherwise
indicated, each director or named executive officer has sole voting and
investment power with respect to shares listed as beneficially owned by
such director or named executive officer.
(2) The number of shares set forth above as being beneficially owned by Mrs.
Mills and Messrs. Bonnivier, Hansen, Henkel, McKissick and McDonald
include 5,000 shares issuable to each of such individuals upon exercise
of stock options granted to them under the Company's Nonemployee Director
Option Plan.
(3) The number of shares set forth above as being beneficially owned by
Messrs. Sherman, McHugh, Symon and Kearins, include 81,887, 59,937,
49,937 and 28,891 shares, respectively, issuable to such individuals upon
exercise of currently exercisable stock options held by them.
EXECUTIVE COMPENSATION
The following report of the compensation committee on executive
compensation and the information herein under "Executive Compensation-
Performance Graph" shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission (the "SEC") or subject to
the SEC's proxy rules, except for the required disclosure herein, or to the
liabilities of Section 18 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and such information shall not be deemed to be
incorporated by reference into any filing made by the Company under the
Securities Act of 1933, as amended, or the Exchange Act .
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of Messrs. Charles M. Hansen, Jr., Carson R. McKissick and Jack L.
McDonald, and Mrs. Karen Gordon Mills. The Committee determines on an annual
basis the compensation to be paid to the Chief Executive Officer and, based upon
the recommendations of the Chief Executive Officer, the other executive
officers. Under the supervision of the Committee, the Corporation has developed
and implemented compensation policies, plans and programs which seek to enhance
the profitability of the Company, and thus shareholder value, by aligning
closely the financial interests of the Company's executives with those of its
shareholders. The objectives of the Company's executive compensation program
are to:
- - Support the achievement of Company strategic operating objectives.
- - Provide compensation that will attract and retain superior talent and
reward the executives based upon Company and individual performance.
- - Align the executive officers' financial interests with the success of the
Company by placing a substantial portion of pay at risk (i.e. pay that is
dependent upon Company performance).
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options, restricted stock and deferred cash awards and various
benefits, including medical and profit sharing plans generally available to
salaried employees of the Company.
The objective of the compensation program is to set base salary levels for
the Company's executive officers relative to companies in the building products
manufacturing industry and to maintain base salaries that are below the average
amounts paid to senior executives with comparable qualifications, experience and
responsibilities at other companies engaged in the same or similar business as
the Company. The Compensation Committee believes base salaries for the
Company's executive officers in fiscal 1995 were below the average for the peer
group companies.
Annual cash incentive compensation payments to executive officers related
to fiscal 1995 were awarded under a performance-based annual incentive plan (the
"Annual Cash Incentive Bonus System") that made annual bonus awards based upon
pre-established objectively measurable Company and individual performance
criteria. The size of the awards made under the plan were established to
maintain the objective of providing awards sufficient to place the total cash
compensation of the executive officers at or above the average for their peer
group when the Company performs in an outstanding manner in relation to the
peer group.
The Triangle Pacific Corp. 1993 Long-Term Incentive Compensation Plan (the
"Long-Term Incentive Plan) was approved by the Board of Directors and the
stockholders in 1993. The specific objective of the Long-Term Incentive Plan is
to align executive and shareholder long-term interests by creating a strong link
between executive pay and shareholder return. It is the intention of the Company
that executives develop and maintain a significant, long-term stock ownership
position in the Company's Common Stock. It is the Committee's intention that
the size of awards made to any participant under the Long-Term Incentive Plan be
in an amount that bears a relationship to the executive's organizational
responsibility and such that it encourages a balanced perspective between short-
term and long-term strategic decision making.
Mr. Floyd F. Sherman has served as Chairman of the Board and Chief
Executive Officer of the Company since July, 1992. His base salary paid in
fiscal year 1995 was $300,000. Mr. Sherman's salary is reviewed annually by the
Committee. Mr. Sherman's bonus for fiscal 1995 totaled $275,000. The bonus was
primarily determined in accordance with the Annual Cash Incentive Bonus System
based upon pre-established criteria which were approved by the Board of
Directors. The earnings performance of the Company and the Committee's analysis
of Mr. Sherman's individual contribution to the achievement of the Company's
performance were also taken into consideration. The profit sharing and medical
benefits provided to Mr. Sherman during fiscal 1995 are consistent with the
benefits provided to substantially all employees of the Company, and where
applicable, are shown in the Summary Compensation Table contained herein.
Members of the Compensation Committee
Jack L. McDonald, Chairman
Charles M. Hansen, Jr.
Carson R. McKissick
Karen Gordon Mills
The following table sets forth summary compensation data for the Chief
Executive Officer of the Company and each of the other four most highly-paid
executive officers of the Company (collectively, the "named executive officers"
for the 1995 fiscal year).
<TABLE>
<CAPTION>
Summary Compensation Table
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LONG TERM
Annual Compensation Compensation
-------------------------------- ------------------------------------
Other Options De- All
Annual Re- (number ferred Other
Name and Compen- stricted of Cash Compensa
Principal Position Year Salary Bonus .sation Stock(1) shares Awards -tion(2)
- ------------------ ---- -------- -------- ------- -------- ------- ------- --------
Floyd F. Sherman 1995 $300,000 $275,000 $52,070 - - $12,037
Chairman of the 1994 285,000 250,000 49,218 $71,088 106,300 $72,646 14,156
Board and 1993 265,697 225.000 45,926 - - 11,068
Chief Executive
Officer
M. Joseph McHugh 1995 $225,000 $200,000 $25,221 - - $12,037
President and 1994 179,167 138,316 23,766 $40,838 63,700 $41,390 14,156
Chief Operating 1993 161,061 75,000 22,301 - - 7,071
Officer
Robert J. Symon 1995 $190,000 $135,000 $24,789 - - $12,037
Executive Vice 1994 170,000 128,945 21,756 $40,838 43,700 $41,390 14,156
President, 1993 161,061 75,000 22,338 - - 7,071
Treasurer and
Chief Financial
Officer
Michael J. Kearins 1995 $155,000 $104,718 $29,064 - - $12,037
Vice President 1994 150,000 115,575 23,976 $30,250 37,000 $29,713 14,156
1993 105,000 90,000 22,100 - - 4,074
John G. Conklin 1995 $160,000 $126,400 $23,525 - - $12,037
Executive Vice 1994 150,000 94,440 22.254 35,000 - 14,156
President 1993 110,250 - 20,547 - - 4,473
</TABLE>
(1) There were 12,100 restricted shares at December 29, 1995 valued at
$207,213. Of such 12,100 restricted shares, Mr. Sherman received 4,700
restricted shares, Messrs. McHugh and Symon each received 2,700
restricted shares and Mr. Kearins received 2,000 restricted shares.
Twenty-five percent of the restricted shares awarded vested at the date
of grant. The unvested restricted shares will vest at the rate of
twenty-five percent in each of the three succeeding years after the date
of grant. Dividends are not paid on restricted shares.
(2) Amounts shown for each officer consist of amounts contributed by the
Company to the Company's Profit Sharing Plan for fiscal 1993, 1994 and
1995, and, for 1994 and 1995 to the Company's Supplemental Profit
Sharing and Deferred Compensation Plan that are allocable to such
officer.
The following table sets forth certain information with respect to the
unexercised options held at December 29, 1995, and the value thereof, by each of
the named officers. No options were exercised during 1995 by the named
officers, and the Company has not issued any stock appreciation rights.
OPTION VALUES AT DECEMBER 29, 1995
Value of Unexercised
In-the-Money
----------------------
Options at 12/29/95 Options at
(Number of shares) 12/29/95
------------------- ----------------------
Date of Exer- Unexer- Exer- Unexer-
Name Grant cisable cisable cisable cisable
- ---------------- -------- ------- ------- -------- --------
Floyd F. Sherman 6/10/92 27,162 7,360 $383,934 $104,034
2/16/94 4,725 1,575 9,450 3,150
3/21/94 50,000 50,000 134,375 134,375
M. Joseph McHugh 6/10/92 27,162 7,360 $383,934 $104,034
2/16/94 2,775 925 5,550 1,850
3/21/94 30,000 30,000 80,625 80,625
Robert J. Symon 6/10/92 27,162 7,360 $383,934 $104,034
2/16/94 2,775 925 5,550 1,850
3/21/94 20,000 20,000 53,750 53,750
Michael J. Kearins 6/10/92 9,366 2,539 $132,388 $ 35,889
2/16/94 2,025 675 4,050 1,350
3/21/94 17,500 17,500 47,031 47,031
John G. Conklin 6/10/92 9,366 2,529 $132,388 $ 35,889
3/21/94 17,500 17,500 47,031 47,031
Performance Graph
The following graph sets forth an indication of the total shareholder
return to a purchaser of Common Stock as compared to the Standard & Poor's 400
MidCap Stock Price Index and the Standard & Poor's Building Materials Industry
Group Index.
COMPARISON OF QUARTERLY CUMULATIVE TOTAL RETURN (1)
AMONG TRIANGLE PACIFIC CORP., STANDARD & POOR'S 400 MIDCAP INDEX
AND STANDARD & POOR'S BUILDING MATERIALS INDEX
8/11/93 12/31/93 12/30/94 12/30/95
-------- -------- -------- --------
Company $100 $159 $123 $171
S&P 400 MidCap 100 106 96 128
S&P Building Materials 100 116 86 110
(1) Total return assuming reinvestment of dividends. Assumes $100 invested
on August 11, 1993, the day quotations for the Common Stock were first
carried on NASDAQ, in Common Stock , the Standard & Poor's 400 MidCap
Stock Price Index and the Standard & Poor's Building Materials Industry
Group Index.
Employment Agreements
In March 1995, the Company entered into amended and restated employment
agreements with Floyd F. Sherman, M. Joseph McHugh and Robert J. Symon, and
new employment agreements with Michael J. Kearins and the eight other
executive officers of the Company (each an Employment Agreement and
collectively the "Employment Agreements"). The Employment Agreements provide
for base compensation at the employees' current annual rates through the end
of 1995, with annual percentage increases not less than the percentage
increase in the Consumer Price Index, as defined in the Employment Agreements.
In addition, the Employment Agreements provide that the employees are
entitled to participate in the Annual Cash Incentive Bonus System and all
other incentive compensation plans for executive employees in effect from time
to time.
Each Employment Agreement provides for an initial employment term of
three years (for Messrs. Sherman, McHugh and Symon) or two years (for Mr.
Kearins and other executive officers). On each anniversary of the effective
date of the Employment Agreements (March 8, 1995), the employment term will be
automatically extended for one year, unless either party gives notice not to
extend. The Company may terminate the executive's employment for "cause,"
"total disability" or "inadequate performance", and the executive may
terminate his employment for any reason within six months following a "change
of control" or at any time for "good reason" (as such events permitting
termination are defined in the Employment Agreements).
If the Company terminates the executive's employment other than for
cause, total disability, or inadequate performance, or employment of the
executive terminates (other than voluntarily) within six months following a
change of control, or if the executive terminates employment for good reason,
the Company is required to pay the executive certain amounts, including a lump
sum cash payment equal to three times (for Messrs. Sherman, McHugh and Symon)
or two times (for the other executives) the executive's average annual
compensation for the preceding five years and certain benefits under the
incentive compensation plans. If the Company terminates the executive's
employment for inadequate performance, or if the executive voluntarily
terminates employment following a change of control, the Company is required
to pay the executive certain amounts, including a lump sum cash payment equal
to two times (for Messrs. Sherman, McHugh and Symon) or one and one-half times
(for the other executives) the executive's average annual compensation and
certain benefits under the incentive compensation plans. If any executive's
employment is terminated by reason of death or total disability, the executive
or his estate is entitled to receive a lump sum payment equal to the sum of
(i) one year's base salary plus (ii) the incentive compensation that would
have accrued to the executive's benefit at the end of the year of termination
had his employment continued until then.
In addition, if the Company terminates the executive's employment (other
than for cause, total disability or inadequate performance), or if the
executive terminates employment for good reason, or if a change of control
occurs during the term of the Employment Agreements, (i) all stock options and
other awards the executives hold under any Company incentive compensation or
benefit plans will become fully vested and exercisable or their market value
payable and (ii) the executive will have the right to sell to the Company any
or all shares of common Stock held by the executive at market value. The total
payments to be received by the executive following a change of control are
restricted to the maximum amount which could be deducted by the Company for
federal income tax purposes
AMENDMENT OF
1993 LONG-TERM INCENTIVE COMPENSATION PLAN
General
In June 1993, the Board of Directors of the Company adopted the Triangle
Pacific Corp. 1993 Long-Term Incentive Compensation Plan (the "Long-Term
Incentive Plan"). The Long-Term Incentive Plan was approved by stockholders in
July 1993 and became effective upon the consummation in August 1993 of the
Company's public offerings of Common Stock (the "1993 Equity Offering") and
10-1/2% Senior Notes Due 2003 (collectively, the "1993 Offerings").
The Long-Term Incentive Plan is administered by the Compensation
Committee of the Board of Directors of the Company. The Compensation
Committee has plenary and discretionary authority to grant cash or noncash
compensation ("Incentive Awards") under the Long-Term Incentive Plan, to
interpret the Long-Term Incentive Plan, to establish any rules or regulations
relating to and not inconsistent with the Long-Term Incentive Plan that it
determines to be appropriate and to make any other determination that it
believes necessary or advisable for the proper administration of the Long-Term
Incentive Plan.
All regular salaried full-time officers and key employees of the Company
and its subsidiaries are eligible to receive Incentive Awards under the Long-
Term Incentive Plan. Incentive Awards may be granted by the Compensation
Committee in any one or a combination of the following forms: (a) incentive
stock options; (b) nonqualified stock options; (c) stock appreciation rights
("SARs"); (d) stock awards; (e) restricted stock; (f) performance shares; and
(g) cash awards. No Incentive Awards may be granted under the Long-Term
Incentive Plan after the tenth anniversary of the date of effectiveness of the
Long-Term Incentive Plan. A total of 1,000,000 shares of Common Stock have
been reserved for issuance under the Long-Term Incentive Plan.
On February 23, 1996 options covering 205,500 shares were granted,
leaving 225,875 shares of Common Stock available for grant under the Long-Term
Incentive Plan. If any award expires or terminates without having been
exercised in full, the unissued shares subject to such expired or terminated
award will again be available for grant under the Long-Term Incentive Plan.
As of March 21, 1996, there were approximately 100 persons eligible to
receive grants under the Long-Term Incentive Plan.
The Long-Term Incentive Plan provides for the granting of both incentive
and nonqualified options exercisable for Common Stock. The terms and
conditions of each option granted under the Long-Term Incentive Plan will be
determined by the Compensation Committee at the time of grant, provided that
(a) the term of an option may not be longer than ten years from the date of
grant, (b) the per share exercise price of a nonqualified option may not be
less than 85% of the fair market value of a share of Common Stock on the date
of grant and (c) the per share exercise price of an incentive option may not
be less than 100% of such fair market value. Furthermore, the exercise price
of any incentive option granted to a person who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or a subsidiary must be at least 110% of the fair market value of the
Common Stock on the date of grant, and the term of an incentive option granted
to any such person may not exceed five years from the date of grant. The
exercise price of an option may be paid in cash or, with the consent of the
Compensation Committee, by delivery of shares of Common Stock owned by the
optionee.
An SAR is a right to receive, without payment to the Company, a number of
shares of Common Stock, cash or any combination thereof. Generally, the
payment to be made upon the exercise of an SAR is calculated under the Long-
Term Incentive Plan pursuant to a formula based on the appreciation in value
of the Common Stock from the date of grant to the date of exercise.
A stock award consists of shares of Common Stock issued by the Company to
a participant as additional compensation for his or her services to the
Company for which the employee provides no additional consideration.
Restricted stock consists of shares of Common Stock that (i) are issued by the
Company to a participant for services previously provided to the Company or
its subsidiaries or (ii) are sold by the Company to a participant at a price
below the fair market value thereof, but in each case subject to such
restrictions, including forfeiture of the shares, as may be established by the
Compensation Committee. The Compensation Committee also determines the price
at which shares of restricted stock are to be sold to a participant, which
price may be less than 85% of the fair market value of such shares on the date
of grant.
A performance share is an Incentive Award payable in shares of Common
Stock (which may be restricted stock) based on and subject to the achievement
of performance objectives established by the Compensation Committee. A cash
award consists of a monetary payment by the Company to a participant as
additional compensation for his or her services to the Company or its
subsidiaries. Payment of a cash award may depend upon achievement of
performance objectives established by the Compensation Committee.
If a participant ceases to be an employee of at least one of the Company
or its subsidiaries for any reason, any outstanding Incentive Awards held by
the participant may be exercised or paid or shall continue, expire or
terminate at or during such times or periods of time as the Compensation
Committee shall determine.
The Board of Directors of the Company may at any time amend, suspend or
terminate the Long-Term Incentive Plan, except that it may not without the
approval of the stockholders of the Company (i) increase the maximum number of
shares of Common Stock subject thereto or (ii) reduce the exercise price for
stock options granted under the Long-Term Incentive Plan, or reduce the price
at which shares of restricted stock may be sold to participants thereunder,
below the applicable prices currently specified therein.
Proposed Amendment
On February 23, 1996, the Board of directors of the Company approved,
subject to stockholder approval, an amendment of the 1993 Long-Term Incentive
Plan to increase from 1,000,000 to 1,400,000 the number of shares of Common
Stock authorized for issuance thereunder. The amendment is intended to
promote and advance the interests of the Company by providing eligible
employees, through additional shares subject to the Long-Term Incentive Plan,
added incentive to continue in the service of the Company and a more
significant personal financial stake in the future success of the Company's
operations, thus aligning the interests of eligible employees more closely
with the interests of the other stockholders of the Company. The amendment is
also intended to enhance the ability of the Company to attract and retain well
qualified individuals as employees. The amendment provides for additional
Incentive Awards by increasing by 400,000 shares the aggregate number of
shares of Common Stock that may be issued under the 1993 Long-Term Incentive
Plan. All other terms and conditions of the 1993 Long-Term Incentive Plan
are unchanged and are described above under the General heading.
Required Vote
At the annual meeting, stockholders will be asked to consider and adopt a
proposal to approve the Proposed Amendment. The affirmative vote of the
holders of a majority of the shares of Common Stock present in person, or
represented by proxy, and entitled to vote at the annual meeting is required
to approve the Proposed Amendment. The Proposed Amendment will become
effective on the date of its approval by the stockholders.
The Board of Directors unanimously recommends a vote FOR approval of the
amendment to the Long-Term Incentive Plan.
AMENDMENT OF
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
General
In June 1993, the Board of Directors of the Company adopted the Triangle
Pacific Corp. Nonemployee Director Stock Option Plan (the "Director Option
Plan"), which provides for the granting of nonqualified stock options to
directors who are not officers or employees of the Company or a subsidiary
thereof ("nonemployee directors"). The Director Option Plan was approved by
stockholders in July 1993 and became effective upon the consummation in August
1993 of the Company's 1993 Offerings.
The Director Option Plan covers an aggregate of 50,000 shares of Common
Stock. The Director Option Plan provides that one nonqualified stock option
will be granted automatically to each newly elected nonemployee director on
the date that is ten days after his or her initial election as a director,
except that an initial grant of options, one to each nonemployee director,
occurred upon consummation of the 1993 Offerings. Each such option ("Initial
Option") is exercisable for 5,000 shares of Common Stock, has a term of ten
years, is fully exercisable commencing on the date of grant, and has an
exercise price equal to the fair market value of the Common Stock on the date
of grant (or, in the case of the Initial Options granted upon consummation of
the 1993 Offerings, equal to the initial public offering price per share of
the Common Stock offered in the 1993 Equity Offering), provided that an
Initial Option will terminate upon the termination of the option holder's
service as a director of the Company, subject to certain grace periods.
Proposed Amendment
On February 23, 1996, the Board of Directors of the Company approved,
subject to stockholder approval, an amendment and restatement of the Director
Option Plan to provide for annual grants of options to nonemployee directors,
in addition to Initial Option grants, and to increase from 50,000 to 100,000
the number of shares of Common Stock authorized for issuance thereunder. The
amendment is intended to promote and advance the interests of the Company by
providing nonemployee directors, through additional option grants, added
incentive to continue in the service of the Company and a more significant
personal financial stake in the future success of the Company's operations,
thus aligning the interests of the nonemployee directors more closely with the
interests of the other stockholders of the Company. The amendment is also
intended to enhance the ability of the Company to attract and retain well
qualified individuals as nonemployee directors. The amendment provides for
the additional option grants by increasing by 50,000 shares the aggregate
number of shares of Common Stock that may be issued under the Director Option
Plan.
Under the Director Option Plan, as amended and restated (the "Amended
Director Option Plan"), a newly elected nonemployee director will continue to
receive automatically an Initial Option for 5,000 shares of Common Stock upon
his or her initial election to the Board of Directors. In addition to the
Initial Option grants, however, the Amended Director Option Plan provides that
each nonemployee director to whom an Initial Option has been granted
(including the currently serving nonemployee directors) shall, for so long as
such person remains a nonemployee director, automatically be granted an
additional option under the Amended Director Option Plan on the date of and
immediately following the annual meeting of stockholders of the Company
occurring on or after the effective date of the Amended Director Option Plan.
Each such additional option will be exercisable for 1,500 shares of Common
Stock, will have a term of ten years, will be fully exercisable commencing on
the date of grant, and will have an exercise price equal to the fair market
value of the Common Stock on the date of grant, provided that such option will
terminate upon the termination of the option holder's service as a director of
the Company, subject to certain grace periods.
The Amended Director Option Plan will be administered by the Board of
Directors, which will have no authority, discretion, or power with respect to
the selection of participants in, or the exercise price of, number of shares
covered by, or exercise period of options granted under, the Amended Director
Option Plan. The Board of Directors may from time to time amend, modify,
suspend, or terminate the Amended Director Option Plan, subject to the
limitations set forth therein. Unless sooner terminated, the Amended Director
Option Plan will terminate on the tenth anniversary of the date of its
effectiveness. Any shares of Common Stock allocable to the unexercised
portion of an option that expires or terminates will again be available for
grant under the Amended Director Option Plan. The number and kind of shares
issuable under the Amended Director Option Plan may be adjusted to reflect
stock dividends, stock splits, recapitalizations, reorganizations, and similar
changes.
All options granted under the Amended Director Option Plan will be
nonqualified options not entitled to special tax treatment under Section 422
of the Internal Revenue Code of 1986. An optionee will not recognize income
for federal income tax purposes upon the grant of a nonqualified option under
the Amended Director Option Plan. Upon the exercise of the option, the
optionee will recognize ordinary income in an amount equal to the excess of
the fair market value of the shares received on the date of exercise over the
option price for such shares. The Company will be allowed a deduction equal
to the amount of ordinary income recognized by the optionee due to the
exercise of the option at the time of such recognition by the optionee. The
basis of shares transferred to an optionee pursuant to the exercise of the
option will be the price paid for such shares plus an amount equal to any
income recognized by the optionee as a result of the exercise of the option.
If an optionee thereafter sells shares acquired upon exercise of the option,
any amount realized over the basis of such shares will constitute capital gain
to such optionee for federal income tax purposes.
A copy of the Amended Director Option Plan is attached hereto as Exhibit
A. The foregoing summary of the Amended Director Option Plan is qualified in
its entirety by reference thereto.
Required Vote
At the annual meeting, stockholders will be asked to consider and adopt a
proposal to approve the Amended Director Option Plan. The affirmative vote of
the holders of a majority of the shares of Common Stock present in person, or
represented by proxy, and entitled to vote at the annual meeting is required
to approve the Amended Director Option Plan.. The Amended Director Option
Plan will become effective on the date of its approval by the stockholders.
The Board of Directors unanimously recommends a vote FOR the amendment of
the Amended Director Option Plan.
Awards Under the Long-Term Incentive Plan and Nonemployee Director Option Plan
The following table sets forth certain information relating to awards
granted under the Plans to the named executive officers and specified groups.
The average of the high and low sales price of the Common Stock on the NASDAQ
National Markets System on February 23, 1996 was $16.50 per share and the
closing price on such date was $16.375.
Awards Granted :Under Long-Term Incentive Plan and
Nonemployee Director Option Plan
Options Granted
------------------------------
Stock No. Price Exercise
Name and Cash Awards of Per Expiration
Principal Position Awards (Shares) Shares Share Date
- ------------------ ------ -------- ------- ------ ----------
Floyd F. Sherman, $72,646 4,700 6,300 $15.13 02/16/04
Chairman of the Board 100,000 14,44 03/21/04
and Chief Executive 45,000 16.38 02/15/06
Officer
M. Joseph McHugh, $41,390 2,700 3,700 $15.13 02/16/04
President and 60,000 14.44 03/21/04
Chief Operating 35,000 16.38 02/15/06
Officer
Robert J. Symon, $41,390 2,700 3,700 $15.13 02/16/04
Executive Vice 40,000 14.44 03/21/04
President Treasurer 20,000 16.38 02/15/06
Michael J. Kearins $29,713 2,000 2,700 $15.13 02/16/04
Vice President 35,000 14.44 03/21/04
20,000 16.38 02/15/06
John G. Conklin 35,000 $14.44 03/21/04
Executive Vice
President
Charles A. Engle 25,000 $14.44 03/21/04
Vice President 20,000 16.38 02/15/06
James Price $25,990 1,700 1,700 $15.13 02/16/04
Vice President 35,000 14.44 03/21/04
12,500 16.38 02/15/06
Current executive $276,773 18,100 24,400 $15.13 02/16/04
officers as a group 425,000 14.44 03/21/04
190,000 16.38 02/15/06
Employees who are $127,084 8,525 10,600 $15.13 02/16/04
not executive 85,000 14.44 03/21/04
officers as a group 12,500 16.38 02/15/06
Nominees for
re-election as
directors
B. William Bonnivier 5,000 $10.00 08/17/03
Jack L. McDonald 5,000 $10.00 08/17/03
Charles A. Hansen, Jr.. 5,000 $10.00 08/17/03
Nonemployee Directors 25,000 $10.00 08/17/03
as a group 5,000 11.75 09/25/03
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
officers of the Company, and persons who own more than 10 percent of the Common
Stock, to file with the SEC initial reports of ownership and reports of changes
in ownership of the Common Stock. Directors, officers and more than 10 percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the year ended December 29, 1995, all Section 16(a) filing
requirements applicable to its directors, officers and more than 10 percent
beneficial owners were complied with.
APPROVAL OF AUDITORS
The Finance/Audit Committee of the Board of Directors has selected, and
the Board of Directors has approved, Arthur Andersen LLP as the principal
independent auditor to audit the financial statements of the Company for 1996,
subject to ratification by the shareholders. If the shareholders do not
approve the selection of Arthur Andersen LLP, the selection of another
independent auditor will be considered by the Finance/Audit Committee.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR approval of this
selection.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
Shareholder proposals for inclusion in the Company's proxy materials in
connection with the 1997 Annual Meeting of shareholders must be received by the
Company at its office in Dallas, Texas, addressed to the Secretary of the
Company, no later than December 10, 1996.
The cost of solicitation of proxies will be borne by the Company. In
addition, certain officers and employees of the Company, who will receive no
additional compensation for their services, may solicit proxies in person or by
mail, telephone, facsimile telecommunication or telegraph.
The Board of Directors does not intend to present any other matter at the
meeting and knows of no other matters that will be presented. However, if any
other matter comes before the meeting, the persons named in the enclosed proxy
intend to vote thereon in accordance with their best judgment.
THE COMPANY HAS PROVIDED WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED HEREBY A COPY OF THE COMPANY'S 1995 ANNUAL REPORT. COPIES OF THE
COMPANY'S 1995 FORM 10-K MAY BE OBTAINED WITHOUT CHARGE BY ANY PERSON WHOSE
PROXY IS SOLICITED HEREBY UPON WRITTEN REQUEST TO DARRYL T. MARCHAND, SECRETARY,
TRIANGLE PACIFIC CORP., 16803 DALLAS PARKWAY, DALLAS, TEXAS 75248.
TRIANGLE PACIFIC CORP.
Floyd F. Sherman
Chairman of the Board
and Chief Executive Officer
Dallas, Texas
April 5, 1996
Exhibit A
TRIANGLE PACIFIC CORP.
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
As Amended and Restated
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.01 Establishment. The Plan constitutes an amendment and
restatement of the Triangle Pacific Corp. Nonemployee Director Stock Option
Plan, which became effective on August 17, 1993 (the "Original Plan"). The
Plan shall become effective on the date (the "Plan Effective Date") of its
approval and adoption by the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote at the 1996 annual meeting
of stockholders of the Company. If not so approved, the Plan shall terminate,
all actions hereunder shall be null and void, and the Original Plan shall
remain in full force and effect.
1.02 Purpose. It is the purpose of the Plan to promote the interests
of the Company and its stockholders by attracting and retaining qualified
Nonemployee Directors by giving them the opportunity to acquire a proprietary
interest in the Company and an increased personal interest in its continued
success and progress. The Options granted hereunder shall not be qualified as
"incentive stock options" within the meaning of Section 422(b) of the Code.
ARTICLE II
DEFINITIONS
As used herein the following terms have the following meanings:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the $.01 par value Common Stock of the
Company.
(d) "Company" means Triangle Pacific Corp., a Delaware corporation.
(e) "Fair Market Value" means, with respect to Options granted on
the Public Offering Effective Date, the initial public offering price per
share of the Common Stock offered in the Equity Offering. With respect to
Options subsequently granted, "Fair Market Value" means the closing sales
price on the date in question (or, if there was no reported sale on such date,
on the last preceding day on which any reported sale occurred) of a share of
Common Stock as reported on the principal national stock exchange on which the
Common Stock is then listed or admitted to trading or, if the Common Stock is
not listed or admitted to trading on any national stock exchange but is listed
as a national market security on the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ"), as reported on NASDAQ;
or, if the Common Stock 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, "Fair Market Value" shall
mean the average of the closing high bid and low asked quotations on such
system for the Common Stock on the date in question (or, if no such quotations
are available on such date, on the last preceding day on which such quotations
were available).
(f) "Grant Date" means, with respect to any Option granted under the
Plan, the date of grant of such Option.
(g) "Holder" means a Nonemployee Director to whom an Option has
been granted under the Plan.
(h) "Initial Option" means an Option granted under the Original
Plan as described in Section 4.02(a) hereof or an Option granted pursuant to
Section 4.02(b)(i) hereof.
(i) "Nonemployee Director" means, a member of the Board who (i) is
neither an employee nor an officer of the Company or any direct or indirect
majority-owned subsidiary of the Company and (ii) has not elected to decline
to participate in the Plan pursuant to the following sentence. A newly
elected director otherwise eligible to participate in the Plan may make an
irrevocable, one-time election, by written notice to the Company within ten
days after his or her initial election to the Board, to decline to participate
in the Plan. For purposes of the Plan, "employee" shall mean an individual
whose wages are subject to the withholding of federal income tax under Section
3402 of the Code, and "officer" shall mean an individual elected or appointed
by the Board or the board of directors of the subsidiary, as the case may be,
or chosen in such other manner as may be prescribed in the bylaws of the
Company or the subsidiary, to serve as such.
(j) "Option" means any option to purchase shares of Common Stock
granted under the Plan.
(k) "Plan" means this Triangle Pacific Corp. Nonemployee Director
Stock Option Plan, as amended and restated effective as of the Plan Effective
Date.
(l) "Public Offering Effective Date" means August 17, 1993, the
date of consummation of the Public Offerings.
(m) "Public Offerings" means (i) the underwritten public offering
by the Company of shares of Common Stock registered with the Securities and
Exchange Commission (the "Commission") pursuant to a Registration Statement
No. 33-64530 filed by the Company with the Commission on June 16, 1993 (the
"Equity Offering"), and (ii) the underwritten public offering by the Company
of its senior notes registered with the Commission pursuant to a Registration
Statement No. 33-64598 filed by the Company with the Commission on June 18,
1993.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have no
authority, discretion or power to select the participants who will receive
Options, to set the number of shares to be covered by any Option, to set the
exercise price of any Option or to set the period within which Options may be
exercised, or to alter any other terms or conditions specified herein, except
in the sense of administering the Plan subject to the express provisions of
the Plan and except in accordance with Section 6.02 hereof. Subject to the
foregoing limitations, the Board shall have authority and power to adopt such
rules and regulations and to take such action as it shall consider necessary
or advisable for the administration of the Plan, and to construe, interpret
and administer the Plan. The decisions of the Board relating to the Plan
shall be final and binding upon the Company, the Holders and all other
persons. No member of the Board shall incur any liability by reason of any
action or determination made in good faith with respect to the Plan or any
stock option agreement entered into pursuant to the Plan.
ARTICLE IV
OPTIONS
4.01 Participation. Each Nonemployee Director who does not elect to
decline to participate in the Plan pursuant to paragraph (i) of Article II
hereof shall be granted Options to purchase Common Stock under the Plan on the
terms and conditions herein described.
4.02 Terms and Conditions of Options; Stock Option Agreements. Each
Option granted under the Plan shall be evidenced by a written stock option
agreement entered into by the Company and the Holder to whom the Option is
granted, which agreement shall include, incorporate or conform to the
following terms and conditions, and such other terms and conditions not
inconsistent therewith or with the terms and conditions of the Plan as the
Board considers appropriate in each case:
(a) Option Grants Under Original Plan. Under the Original
Plan, an Option was granted automatically as of the Public Offering
Effective Date to each Nonemployee Director who is was serving the
Company as a director on such date. Thereafter, under the Original Plan,
an Option was granted automatically to each newly elected Nonemployee
Director who became a member of the Board after the Public Offering
Effective Date on the date that is was ten days after his or her initial
election as a director of the Company. Options granted under the
Original Plan shall be deemed to be Options granted under the Plan.
(b) Option Grants Commencing on Plan Effective Date.
Commencing on the Plan Effective Date:
(i) An Option shall be granted automatically under the
Plan to each Nonemployee Director who is newly elected to the
Board on or after the Plan Effective Date, irrespective of
whether such Nonemployee Director is elected by the Board or the
stockholders. The Grant Date of such Option shall be the date
that is ten days after such person's initial election as a
director of the Company, provided that such person has not
elected to decline to participate in the Plan pursuant to
paragraph (i) of Article II hereof. For purposes of this
Section 4.02(b)(i), the term "newly elected to the Board" shall
mean that the Nonemployee Director was not serving as a director
of the Company immediately prior to the time of his or her
election in respect of which such Option is granted.
(ii) Each Nonemployee Director to whom an Initial Option
has been granted shall, for so long as such person remains a
Nonemployee Director, automatically be granted an additional
Option under the Plan on the date of and immediately following
the 1996 annual meeting of stockholders of the Company and on
the date of and immediately following each subsequent annual
meeting of stockholders of the Company occurring after the Plan
Effective Date.
(c) Number of Shares. Each Initial Option shall entitle the
Holder to purchase, in accordance with the terms of such Initial Option
and the Plan, 5,000 shares of Common Stock, subject to adjustment in
accordance with Section 5.02 hereof. Each Option granted pursuant to
Section 4.02(b)(ii) hereof shall entitle the Holder to purchase, in
accordance with the terms of such Option and the Plan, 1,500 shares of
Common Stock, subject to adjustment in accordance with Section 5.02
hereof.
(d) Price. The price at which each share of Common Stock
covered by an Option may be purchased pursuant to the Plan shall be the
Fair Market Value of a share of Common Stock on the Grant Date of the
Option.
(e) Option Period. The period within which each Option may be
exercised shall commence on the Grant Date of the Option and shall expire
on the tenth anniversary of such Grant Date (the "Option Period"), unless
terminated sooner pursuant to Section 4.02(f) hereof.
(f) Termination of Service, Death, Etc. The following
provisions shall apply with respect to the exercise of an Option granted
hereunder in the event that the Holder thereof ceases to be a director of
the Company for the reasons described in this Section 4.02(f):
(i) If the directorship of the Holder is terminated within
the Option Period on account of any act of (a) fraud or
intentional misrepresentation or (b) embezzlement,
misappropriation or conversion of assets or opportunities of the
Company or any direct or indirect majority-owned subsidiary of
the Company, the Option shall automatically terminate as of the
date of such termination;
(ii) If the Holder dies during the Option Period while such
Holder is a director of the Company (or during the additional
three-month period provided by paragraph (iii) of this Section
4.02(f)), the Option may be exercised, to the extent that the
Holder was entitled to exercise it at the date of the Holder's
death, within one year after such death (if within the Option
Period), but not thereafter, by the executor or administrator of
the estate of the Holder, or by the person or persons who shall
have acquired the Option directly from the Holder by bequest or
inheritance; or
(iii) If the directorship of the Holder is terminated for
any reason (other than the circumstances specified in paragraphs
(i) and (ii) of this Section 4.02(f)) within the Option Period,
including a failure by the stockholders of the Company to
reelect the Holder as a director, the Option may be exercised,
to the extent the Holder was entitled to do so at the date of
termination of the directorship, within three months after such
termination (if within the Option Period), but not thereafter.
(g) Transferability. An Option granted under the Plan shall
not be transferable by the Holder, otherwise than by will or pursuant to
the laws of descent and distribution, and during the lifetime of the
Holder the Option shall be exercisable only by the Holder or his or her
guardian or legal representative.
(h) Requirement of Directorship. Except as provided in Section
4.02(f) hereof, an Option may not be exercised unless the Holder is at
the time of exercise serving as a director of the Company, and, except as
provided in Section 4.02(f) hereof, such Option shall terminate upon
termination of the Holder's service as a director of the Company.
(i) Exercise, Payments, Etc. Each Option granted hereunder may
be exercised, in whole or in part, by the Holder thereof at any time or
(with respect to partial exercises) from time to time during the Option
Period, subject to the provisions of the Plan and the stock option
agreement evidencing such Option, and the method for exercising an Option
shall be by the personal delivery to the Secretary of the Company of, or
by the sending by United States registered or certified mail, postage
prepaid, addressed to the Company (to the attention of its Secretary),
of, written notice signed by the Holder specifying the number of shares
of Common Stock with respect to which such Option is being exercised.
Such notice shall be accompanied by the full amount of the purchase price
of such shares, in cash and/or by delivery of shares of Common Stock
already owned by the Holder having an aggregate Fair Market Value
(determined as of the date of exercise) equal to the purchase price,
including an actual or deemed multiple series of exchanges of such
shares. Any such notice shall be deemed to have been given on the date
of receipt thereof (in the case of personal delivery as above-stated) or
on the date on which the same was deposited in a regularly maintained
receptacle for the deposit of United States mail, addressed and sent as
above-stated. In addition to the foregoing, promptly after demand by the
Company, the exercising Holder shall pay to the Company an amount equal
to applicable withholding taxes, if any, due in connection with such
exercise. No shares of Common Stock shall be issued upon exercise of an
Option until full payment therefor and for all applicable withholding
taxes has been made, and a Holder shall have none of the rights of a
stockholder until shares of Common Stock are issued to such Holder.
ARTICLE V
AUTHORIZED COMMON STOCK
5.01 Common Stock. The total number of shares as to which Options
may be granted under the Plan shall be 100,000 shares of Common Stock, in the
aggregate, except as such number of shares shall be adjusted from and after
the Plan Effective Date in accordance with the provisions of Section 5.02
hereof. If any outstanding Option under the Plan shall expire or be
terminated for any reason, the shares of Common Stock allocable to the
unexercised portion of such Option shall again be available for grant under
the Plan.
5.02 Adjustments Upon Changes in Common Stock. In the event the
Company shall effect a split of the Common Stock or a dividend payable in
Common Stock, or in the event the outstanding Common Stock shall be combined
into a smaller number of shares, the maximum number of shares as to which
Options may be granted under the Plan shall be increased or decreased
proportionately. In the event that before delivery by the Company of all the
shares of Common Stock in respect of which any Option has been granted under
the Plan, the Company shall have effected such a split, dividend or
combination, the shares still subject to the Option shall be increased or
decreased proportionately and the purchase price per share shall be increased
or decreased proportionately so that the aggregate purchase price for all the
then optioned shares shall remain the same as immediately prior to such split,
dividend or combination.
In the event of a reclassification of the Common Stock not covered by the
foregoing, or in the event of a liquidation or reorganization, including a
merger, consolidation or sale of assets, the Board shall make such
adjustments, if any, as it may deem appropriate in the number, purchase price
and kind of shares covered by the unexercised portions of Options theretofore
granted under the Plan. The provisions of this Section 5.02 shall only be
applicable if, and only to the extent that, the application thereof does not
conflict with any valid governmental statute, regulation or rule.
ARTICLE VI
GENERAL PROVISIONS
6.01 Termination of Plan. The Plan shall terminate whenever the
Board adopts a resolution to that effect. If not sooner terminated in
accordance with the preceding sentence, the Plan shall wholly cease and expire
on the tenth anniversary of the Plan Effective Date. After termination of the
Plan, no Options shall be granted under the Plan, but the Company shall
continue to recognize, and perform its obligations with respect to, any
Options previously granted.
6.02 Amendment of Plan. The Board may from time to time amend,
modify or suspend the Plan. Nevertheless, (a) no such amendment, modification
or suspension shall impair any Options theretofore granted under the Plan or
deprive any Holder of any shares of Common Stock which such Holder might have
acquired through or as a result of the Plan, and (b) after the stockholders of
the Company have approved and adopted the Plan in accordance with Section 1.01
hereof, no such amendment or modification shall be made without the approval
of the holders of the outstanding shares of capital stock of the Company
entitled to vote in the election of directors generally where such amendment
or modification would (i) increase the total number of shares of Common Stock
as to which Options may be granted under the Plan or decrease the exercise
price at which Options may be granted under the Plan (other than as provided
in Section 5.02 hereof), (ii) materially alter the class of persons eligible
to be granted Options under the Plan, (iii) materially increase the benefits
accruing to Holders under the Plan or (iv) extend the term of the Plan or the
Option Period specified in Section 4.02(e) hereof.
Notwithstanding the foregoing, the provisions of the Plan relating to (a)
the number of shares of Common Stock covered by, and the exercise price of,
Options granted under the Plan, (b) the timing of grants of Options under the
Plan and (c) the class of persons eligible to be granted Options under the
Plan shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
6.03 Treatment of Proceeds. Proceeds from the sale of Common Stock
pursuant to Options granted under the Plan shall constitute general funds of
the Company.
6.04 Section Headings. The section headings included herein are only
for convenience, and they shall have no effect on the interpretation of the
Plan.
[Proxy Card]
TRIANGLE PACIFIC CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Floyd F. Sherman, M. Joseph McHugh and Darryl
T. Marchand, and each of them, proxies with power of substitution in each, and
hereby authorizes them to represent and to vote, as designated below, all shares
of Common Stock of Triangle Pacific Corp. (the "Company") standing in the name
of the undersigned on March 29, 1996, at the annual meeting of shareholders to
be held on May 1, 1996 at 9:00 a.m. at Dallas, Texas, and at any adjournment
thereof and especially to vote on the items of business specified below, as more
fully described in the notice of the meeting and the proxy statement
accompanying the same, receipt of which is hereby acknowledged.
1. ELECTION OF DIRECTORS FOR all nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) [] nominees listed below []
B. WILLIAM BONNIVIER JACK L. McDONALD CHARLES M. HANSEN, JR.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. FOR [] AGAINST [] ABSTAIN [] Approval of appointment
of Arthur Andersen LLP as independent auditors for the Company for the fiscal
year ending January 3, 1997.
3. FOR [] AGAINST [] ABSTAIN [] Approval of the
amendment of the Nonemployee Director Option Plan to increase the number of
shares subject to the Plan and to provide for additional, automatic annual
grants of options.
4. FOR [] AGAINST [] ABSTAIN [] Approval of the
amendment of the 1993 Long-Term Incentive Compensation Plan to increase the
number of shares subject to the Plan.
5. In their discretion, the proxies are authorized to vote upon such other
business or matters as may properly come before the meeting or any adjournment
thereof.
(Continued and to be signed on reverse side)
[Reverse of Proxy Card]
THIS PROXY, WHEN DULY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DESIGNATED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF THIS PROXY IS DULY
EXECUTED AND RETURNED, BUT WITHOUT A CLEAR VOTING DESIGNATION, IT WILL BE VOTED
FOR ITEMS 1, 2, 3 AND 4.
The undersigned hereby revokes any proxy or proxies heretofore given to
represent or vote such Common Stock and hereby ratifies and confirms all actions
that said proxies, their substitutes, or any of them, may lawfully take in
accordance with the terms hereof.
Dated: , 1996
---------------------------
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Signature(s) of Shareholder(s)
This proxy should be signed exactly as
your name appears hereon. Joint owners
should both sign. If signed as attorney,
executor, guardian or in some other
representative capacity, or as officer of
a corporation, please indicate your
capacity or title.
Please complete, date and sign this proxy
and return it promptly in the enclosed
envelope, which requires no postage if
mailed in the United States.
1
