SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11 ( c ) or Rule 14a-12
- --------------------------------------------------------------------------------
TAPISTRON INTERNATIONAL, INC.
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] 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 of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
TAPISTRON INTERNATIONAL, INC.
6203 Alabama Highway
P. O. Box 1067
Ringgold, Georgia 30736
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JANUARY 6, 2000
- --------------------------------------------------------------------------------
To the Shareholders of Tapistron International, Inc.:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders of
Tapistron International, Inc. (the "Company"), which will be held on January 6,
2000, at 1:00 p.m., local time, at the Northwest Georgia Trade and Convention
Center in Dalton, Georgia for the following purposes:
1. To approve the expansion of the board of directors from six (6) to nine (9)
members.
2. To elect three (3) directors to serve a three-year term or until their
successors have been duly elected and qualified.
3. To approve an amendment to the 1992 Stock Option Plan increasing the number
of shares available for grant from 1,350,000 to 5,400,000 shares.
4. To approve an amendment to the by-laws to authorize the removal of
non-attending board members.
5. To ratify the selection of Dudley, Hopton-Jones, Sims & Freeman, PLLP, as
the Company's independent public auditors for fiscal year 2000.
6. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Detailed information relating to the Company's activities and operating
performance during the fiscal year ended July 31, 1999, is contained in the
Annual Report on Form 10-K of the Company, which is being mailed to you with
this Proxy Statement, but is not a part of the proxy soliciting material. If you
do not receive or have access to the 1999 Annual Report, please notify Floyd S.
Koegler, Jr., Chief Financial Officer, Tapistron International, Inc. 6203
Alabama Highway, P. O. Box 1067, Ringgold, Georgia 30736-1067, (706) 965-9300.
The close of business on November 12, 1999 has been fixed as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
1999 Annual Shareholders' Meeting. The stock transfer books of the Company will
not be closed.
By Order of the Board of Directors
/s/ Reg Burnett
-------------------------------
Chairman of the Board
December 1, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE STAMPED ENVELOPE
PROVIDED. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE EXERCISE, AND IF YOU
ARE PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AND VOTE YOUR
SHARES PERSONALLY.
<PAGE>
TAPISTRON INTERNATIONAL, INC.
6203 Alabama Highway
P. O. Box 1067
Ringgold, Georgia 30736
PROXY STATEMENT
For
Annual Meeting of Shareholders
To be Held January 6, 2000
This statement (the "Proxy Statement") is furnished in connection with the
solicitation of proxies for use at the Annual Meeting of Shareholders (the "1999
Annual Meeting") of the Company to be held on January 6, 2000, at 1:00 p.m.,
local time, at the Northwest Georgia Trade & Convention Center, Dalton, Georgia,
and at any adjournment or adjournments thereof.
The solicitation of proxies in the enclosed form is made on behalf of the Board
of Directors of the Company. The entire cost of soliciting these proxies will be
borne by the Company. In addition to being solicited through the mails, proxies
may be solicited personally or by telephone or telegraph by officers, directors
and employees of the Company who will receive no additional compensation for
such activities. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of shares held of record by such persons, who will be
reimbursed for their reasonable expenses in such connection.
It is expected that this Proxy Statement and the accompanying form of proxy will
first be sent to shareholders on or about December 1, 1999.
At the 1999 Annual Meeting, the shareholders will vote to approve the expansion
of the board of directors from six (6) to nine (9) members, to elect three (3)
directors, approve an amendment to the 1992 Stock Option Plan increasing the
number of shares available for grant from 1,350,000 to 5,400,000 shares, approve
an amendment to the by-laws to authorize the removal of non-attending board
members, and ratify the Board of Directors' selection of the Company's
independent auditors for fiscal year 2000.
The affirmative vote of a plurality of the shares present or represented at the
meeting, if a quorum exists, is required to elect the directors and to ratify
the Board of Directors' selection of the Company's independent auditors for the
fiscal year 2000. The presence in person or by proxy of the holders of a
majority of the issued and outstanding shares of common stock entitled to vote
at the 1999 Annual Meeting is necessary to constitute a quorum.
Shareholders are urged to sign the enclosed form of proxy and return it promptly
in the envelope enclosed for that purpose. Proxies will be voted in accordance
with the shareholders' directions. If no directions are given, proxies will be
voted FOR the approval of the expansion of the Board of Directors from six (6)
to nine (9) members, FOR the election of the nominees named herein as directors,
FOR the approval of the proposal to amend the 1992 Stock Option Plan to increase
the number of shares available for grant from 1,350,000 to 5,400,000 shares, FOR
the approval to amend the by-laws to authorize the removal of non-attending
board members, and FOR the ratification of the authority of the Board of
Directors' selection of the Company's independent auditors for the fiscal year
2000.
The Board of Directors knows of no other business to be presented at the 1999
Annual Meeting. If any other business is properly presented, the person named in
the enclosed proxy will use his discretion in voting the shares. The proxy may
be revoked at any time prior to the voting thereof by written request to the
Company at 6203 Alabama Highway, P.O. Box 1067, Ringgold, Georgia 30736-1067,
Attention: Floyd S. Koegler, Jr., CFO. The proxy may also be revoked by
submission to the Company of a more recently dated proxy. The giving of the
proxy will not affect the right of a shareholder to attend the 1999 Annual
Meeting and vote in person.
Outstanding Voting Securities
Only shareholders of record on November 12, 1999 are entitled to notice of and
to vote at the 1999 Annual Meeting. On that date there were 34,785,611 shares of
common stock issued and outstanding. The holder of each share of common stock is
entitled to one vote on all matters submitted before the 1999 Annual Meeting or
any adjournments of the 1999 Annual Meeting.
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table sets forth information regarding beneficial ownership of
Company common stock by (i) each person known by the Company to beneficially own
more than 5% of the Company's shares; (ii) directors and person nominated to
become directors of the Company and executive officers; and (iii) directors and
executive officers of the Company as a group, all as of November 12, 1999, and
by Mr. Poe on the date of his death.
<TABLE>
<CAPTION>
Percentage
Name and Address of Beneficial Owner (a) Shares Beneficially Owned Ownership
- ---------------------------------------- ------------------------- ---------
<S> <C> <C>
(i) Tristram Colket (b)................................ 3,333,333 9.6%
(ii) Reg Burnett (c)................................... 1,333,500 3.8%
Henry Christopher (d)(k)........................ 200,000 0.6%
Gary L. Coulter.................................. 1,077,887 3.1%
Bruce C. Elliston (e)............................. 202,600 0.6%
Jack F. Godfrey.................................. 20,000 0.1%
Peter Greenberg (f)............................... 619,706 1.8%
Rodney C. Hardeman, Jr. (g).................... 378,333 1.1%
Edward Hine, Jr. (h).............................. 135,000 0.4%
Floyd S. Koegler, Jr. (i)(k)....................... 351,667 1.0%
King Oehmig..................................... 350,000 1.0%
J. Darwin Poe..................................... 820,000 2.4%
(iii) Group (eleven persons) (j)..................... 5,488,693 15.8%
</TABLE>
- ---------------------
(a) Addresses are shown only for the beneficial owners of at least five-
percent of the class of security shown.
(b) The address of the shareholder is 500 Chester Field Parkway, #170, Melvern
Pennsylvania 19058.
(c) Includes 666,750 shares owned by RBI International Carpet Consultants of
which Mr. Burnett is the majority owner.
(d) Includes 100,000 shares which may be acquired upon the exercise of options
granted under the 1992 Stock Option Plan which are presently exercisable
and 100,000 shares purchased for the benefit of Mr. Christopher from the
Davenport Trust.
(e) Includes 163,000 shares which may be acquired upon the exercise of options
granted under the 1992 Stock Option Plan which are presently exercisable.
(f) Includes 13,000 shares owned by Mr. Greenberg's wife.
(g) Includes 333,333 shares which may be acquired upon the exercise of options
which are presently exercisable.
(h) Includes 135,000 shares jointly owned with Mr. Hine's wife. Does not
include 32,000 shares owned by Mr. Hine's children for which Mr. Hine's
wife is custodian. Also does not include 185,000 shares owned by a trust of
which Mr. Hine is a trustee and 1,000 shares owned by a minor of which Mr.
Hine is the custodian.
(i) Includes 166,667 shares which may be acquired upon the exercise of options
granted under the 1992 Stock Option Plan which are presently exercisable
and 185,000 shares purchased for the benefit of Mr. Koegler from the
Davenport Trust.
(j) Includes 1,048,000 shares which may be acquired upon the exercise of
options which are presently exercisable.
(k) During the Company's successful reorganization, the Company determined to
reward the employees of the Company who were employed during the period of
reorganization and the Board of Directors authorized two Board members,
Gary L. Coulter and J. Darwin Poe, who then served as the Secretary and
President, respectively, of the Company negotiate the purchase of 1,000,000
shares of Tapistron common stock at a purchase price of 15 cents per share
from the Lanier M. Davenport, Sr. Family Trust, the "Trust". This
authorization, however, is not reflected in
<PAGE>
the minutes of Board actions taken during this time period. To finance the
purchase price, Messrs. Coulter and Poe executed and delivered a Secured,
Non-recourse Promissory Note and Stock Pledge Agreement, in the aggregate
the "Financing Documents", with the Trust and financed the entire purchase
price.
Although Messrs. Coulter and Poe executed the Financing Documents as "Trustees"
and the shares purchased from the Trust were issued to Messrs. Coulter and Poe
as "Trustees," there was no written trust agreement other than a list of the 26
employees of the Company who were employed during the Reorganization and hand
written notes of the number of shares for each employee.
The intent of the purchase of the shares from the Trust as explained to the
Board of Directors was to grant a stock bonus of 10,000 shares each to the 26
employees who remained employed by the Company during its Reorganization, when
the shares were fully paid for and released from the security interest in favor
of the Trust under the Financing Documents. The balance of the shares were to be
offered to 11 employees whose efforts contributed to the successful
reorganization of the Company, in the opinion of Messrs. Coulter and Poe, at the
same price and on the same conditions as the shares were purchased from the
Trust.
There are, however, no records of the Board taking any action to memorialize or
ratify the intended plan of distribution for the shares purchased from the
Trust.
In September, 1998, the Company made the payment of the first installment due to
the Trust under the Financing Documents. Although the Board of Directors was
briefed and informally approved the payment of the first installment, no formal
authority was requested through an oversight.
On September 16, 1999, the Board of Directors approved the payment of the final
installment due the Trust and the grant of 10,000 shares to each of the 26
employees, who were employed during the period of the Reorganization, in the
aggregate, the "Grant Shares", and the Board also approved the offer of the
remaining 740,000 shares purchased form the Trust, the "Purchased Shares," to
the persons allotted as follows:
Kim Amos 115,000 shares
Joe Barker 90,000 shares
Henry Christopher 90,000 shares
Brenda Cooper 30,000 shares
Roger Ensley 30,000 shares
Shelly Garner 30,000 shares
Floyd Koegler 175,000 shares
Ronnie McGregor 30,000 shares
Jerry Ricketts 30,000 shares
John Samilo 90,000 shares
Yvonne Walko 30,000 shares
The Company expects to finalize the delivery of the Grant Shares to the 26
employees during the quarter ending January 31, 2000. The balance of the shares
purchased from the Trust will be offered to the 11 persons on the list at the
price purchased, and the Company will take no charge from that offer. To the
extent that the persons who have the right to purchase shares do not consummate
their full purchase allotment those shares will be held by the Company as
treasury stock.
<PAGE>
(ITEM 1)
TO INCREASE THE BOARD OF DIRECTORS FROM SIX TO NINE DIRECTORS
Currently, the Board of Directors consists of six (6) Directors, each
serving a three (3) year term. The Board recommends that the shareholders expand
the Board from six to nine Directors. Under the current arrangement, the Board
of Directors includes four (4) insiders, Mr. Reg Burnett, Chairman of the Board,
Mr. Rod Hardeman, President, Mr. Henry Christopher, chief manufacturing
consultant to the Company, and Mr. Edward Hine, Jr., General Counsel to the
Company. By increasing the number of directors from six to nine directors, and
electing three (3) directors for the term expiring 2002, the Board believes that
it can diversify the Board of Directors by including constituencies and
viewpoints that are important to the Company and who are not employed by the
Company. Beyond the election of Messrs. Peter Greenberg and King Oehmig, who
are, with their affiliates, two of the Company's larger individual stockholders,
the Board does not have any present plans to fill the vacancies created if the
Board is expanded.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPROVAL OF THE EXPANSION OF
THE BOARD OF DIRECTORS FROM SIX TO NINE MEMBERS.
(ITEM 2)
ELECTION OF DIRECTORS
Board of Directors
The Board of Directors is divided into three classes, each class to be
elected for three-year terms. The Board of Directors has nominated three persons
to serve until the 2002 Annual Meeting or until their successors are duly
elected and qualified. It is intended that the accompanying proxy will be voted
for the election, as directors, of the three persons named below, unless the
proxy contains contrary instructions. If any nominee should be unable to accept
nomination or election as a director, which is not expected, the proxies may be
voted with discretionary authority for a substitute designated by the Board of
Directors; provided, however, that the proxies may not be voted for more than
four nominees to the Board of Directors at the 1999 Annual Meeting. The election
of a director requires the affirmative vote of a plurality of shares present or
represented at the meeting.
J. Darwin Poe served as Director and President and Chief Executive
Officer of the Company from July 1, 1995 until his death on February 27, 1999.
Mr. Poe guided the Company successfully through several years of adversity and
challenging times including a Chapter 11 reorganization. Under Mr. Poe's
leadership, the Company began a strong growing process that continues today.
Mr. Poe's term as a Director would have expired at the 1999 Annual
Meeting. Also, the term of Gary L. Coulter, a Director of the Company since
April 1996, expires at the meeting. Mr. Coulter is Chairman and Chief Executive
Officer of Spintek Gaming Technologies, Inc. and a partner in the law firm,
Coulter & Davenport.
In the event that the shareholders approve the increase in the Board of
Directors from six to nine Directors, the Board of Directors recommends the
election of two new Directors, Messrs. Peter Greenberg and King Oehmig, and the
election of Edward Hine, Jr. for a full term. In the event that the shareholders
do not approve the expansion of the Board of Directors from six to nine members,
Mr. Hine will withdraw his name from consideration.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF THE FOLLOWING
THREE NOMINEES TO SERVE UNTIL THE 2002 ANNUAL MEETING:
NOMINEES FOR ELECTION TO TERM EXPIRING 2002
Peter Greenberg Nominee
Age: 36
Mr. Greenberg graduated from the University of Florida in 1985 with a
Bachelor's Degree in Finance. He has had a diversified work experience, which
includes ownership in both manufacturing and sales businesses. Between 1985 and
1996, Mr. Greenberg had been a self-employed investor specializing in equity
markets and foreclosure real estate. Currently, he is engaged in the hospitality
industry and owns and operates the Morrison House in Alexandria, Virginia. He is
also a partner in
<PAGE>
Vacation Time, which is a private corporation focused upon resort development
and time-shares sales and marketing. Mr. Greenberg serves as Chairman of the
Alexandria Convention and Visitors Association.
Edward Hine, Jr. Director since 1999
Age: 46
Edward Hine, Jr. has represented the Company as General Counsel since
1998. In March 1999, he was elected to serve as a director on the Company's
Board of Directors to fill the vacancy created by the death of Darwin Poe. He is
a lawyer and principal in the firm Hine & Niedrach, P.C. The firm, which is
based in Rome, Georgia has a business practice and has represented
manufacturers, lenders and other entities involved in the carpet industry for
over 20 years. Mr. Hine was an Honor graduate of Emory University in 1973 and
received his law degree from Emory University School of Law in 1976. He is
active in professional, state and local affairs. In the event that the
shareholders do not approve the expansion of the Board of Directors from six to
nine members, Mr. Hine will withdraw his name from consideration.
King Oehmig Nominee
Age: 48
Mr. Oehmig received his education at Baylor School, University of
Virginia, B.A., University of the South, M. Div.; D. Min. He is an Episcopal
Priest serving parishes in Tennessee, Mississippi, and Georgia and is currently
at St. Barnabas Church in Trion, Georgia. Mr. Oehmig is an author of church
literature and founder of the Synthesis Company, a publishing company. He is a
general partner and investment advisor to 711 East, Ltd., an investment
partnership created in 1987. He is past President of Habitat for Humanity in
Cartersville, Georgia and in Chattanooga, Tennessee. He is on the Board of
Trustees for Baylor School and University of the South.
INCUMBENT DIRECTORS - TERM EXPRING 2001
Henry B. Christopher Director since 1998
Age: 64
Henry Christopher has served as a Director since his retirement from
the Company in July 1998. He has been associated with the Company for the past
five years, most recently as Vice President of Operations. Prior to joining the
Company, he managed his own company, Oxford Textile Mills, Inc. and was a
pioneer in the development of fabricated area rugs. He is a native of Dalton,
Georgia and has spent his entire career in the tufted carpet industry. Mr.
Christopher is a graduate of Georgia Tech with a degree in Textiles.
Jack F. Godfrey Director since 1999
Age: 59
Jack Godfrey joined the Company's Board of Directors as of January 7,
1999 to serve a term of three years. Mr. Godfrey is currently President of
Wayn-Tex, Inc. in Waynesboro, Virginia with offices in Dalton, Georgia. Prior to
joining Wayn-Tex, Mr. Godfrey worked for Amoco Fabrics and Floor Covering
Division from 1969 to 1997 as a Vice President and General Manager. He has
numerous patents filed and assigned to Amoco during his tenure with the company.
He is a graduate of Georgia Tech with a degree in mechanical engineering and a
MBA from Valdosta State College. He has been recognized as a distinguished
engineer from Georgia Institute of Technology. He has served on the board of
directors for the Carpet & Rug Institute and the Floor Covering Marketing and
Manufacturing Association
<PAGE>
INCUMBENT DIRECTORS - TERM EXPIRING 2000
Reg Burnett Director since 1998
Age: 65
Reg Burnett has served as a Director since January 1998. He is the
founder of RBI International Carpet Consultants, which was originated in 1967,
and continues to serve as the President and Senior Consultant. Since 1981, Mr.
Burnett has also served on the board of directors for two banks. He was educated
at Bradford Textile College, now a division of Leeds University. He is
recognized throughout the world as one of the most knowledgeable individuals in
the carpet industry. Mr. Burnett has lectured on all aspects of carpet fibers,
carpet yarn spinning, and the carpet industry in general at North Carolina State
University; Auburn University; Kidder Minster College, England; Intercarpet in
Austria; TIFCON in Blackpool, England; The Japanese Carpet Institute; The
Australian Carpet Institute in China and at many other carpet conventions and
technical conferences throughout the world.
Rodney C. Hardeman, Jr. Director since 1998
Age: 53
Rodney C. Hardeman, Jr. has served as a Director since January 1998.
Mr. Hardeman became President & Chief Executive Officer on February 28, 1999.
Prior to joining the Company, Mr. Hardeman was the President of Roga
International - Division of EX-IM Marketing International, Inc. an international
marketing concern. He received his degree in Business from Shorter College, Rome
Georgia. Since 1991, he has served as a member of the Board for Shorter College
and is also a board member for Admiral Travel, Inc., Atlanta, Georgia. Since
1994, Mr. Hardeman has served as a partner in the Chattanooga firm of Manner
Technologies, L.L.C. and Vice President of Redux and Again, Inc., Rome, Georgia.
Mr. Hardeman specializes in International Sales and Marketing.
OTHER OFFICERS
Bruce C. Elliston
Bruce C. Elliston joined the Company's staff as Executive
Vice-President as of March 15, 1999. Mr. Elliston is a veteran of 26 years in
the carpet industry. Until recently, he was responsible for BASF's worldwide
Commercial Carpet Yarn business. He has broad experience with BASF in product
marketing working with carpet mills, architects and designers, and commercial
carpet specifiers and end-users. He is a graduate of Georgia Tech with a degree
in industrial management and received his MBA from Georgia State University with
a major in finance. Mr. Elliston serves on the board of directors of the
Northwest Georgia United Way and the Dalton State College Foundation.
Floyd S. Koegler, Jr.
Floyd S. Koegler, Jr. has served as Vice President Finance and Chief
Financial Officer for the Company since September 1996. He is a Certified Public
Accountant with a MBA from Brenau University in Gainesville, Georgia. He has an
extensive background in corporate finance, which includes auditing and financial
information analysis for Aladdin Mills, a carpet manufacturer, from 1994 until
joining Tapistron. From 1990 to 1994, Mr. Koegler held controller positions at
Crown America/Texture-Tex, Inc., a carpet yarn manufacturer, and Citizens
Federal Savings and Loan. In addition, he served as CFO of the fiber spinning
operations of Integrated Products, Inc. in Rome, Georgia, and he was a cost
analyst for dyes and chemicals for American Emulsions and Coronet Industries.
There are no arrangements or understandings known to the Company
between any of the Directors or executive officers of the Company and any other
person, pursuant to which any of such persons was or is to be selected as
Director or an executive officer. There are no family relationships between any
Director or executive officer of the Company. Directors hold office until the
expiration of their respective terms or until their successors are elected and
qualified. Officers are elected annually by the Board of Directors and serve at
the discretion of the Board of Directors.
Information Regarding Meetings of Directors
During the fiscal year ended July 31, 1999, the Company's Board of
Directors held ten meetings. All of the Company's directors attended at least
75% of such meetings except Gary L. Coulter, who attended 4 meetings.
<PAGE>
The Board of Directors has two committees, a Compensation Committee and
an Audit Committee. Messrs. Burnett and Coulter served as members of the
Compensation Committee during 1999. The Compensation Committee is responsible
for developing and communicating recommendations to the Board of Directors with
respect to the Company's executive compensation policies, and determines,
pursuant to the authority delegated by the Board of Directors, the compensation
(including stock options) to be paid to the chief executive officer and each of
the other executive officers of the Company. The Compensation Committee held one
meeting during fiscal 1999. The Audit Committee consisted of Messrs. Coulter and
Godfrey. The Audit Committee engages independent auditors and reviews audit
fees, supervises matters relating to audit functions, reviews audit results with
the auditors, and reviews the scope and results of the Company's internal
auditing procedures and the adequacy of the internal controls. The Audit
Committee did not meet during fiscal 1999.
Director Compensation
Directors receive $100 per attendance for their services at board
meetings of the Company as directors, which defrays personal expenses incurred
in attending board meetings.
Executive Compensation
The following table shows the aggregate cash compensation paid during
the fiscal year ended July 31, 1999, 1998, and 1997 to the Company's Chief
Executive Officer and Chief Financial Officer. No other executive officers of
the Company received cash compensation in excess of $100,000 in fiscal 1999. Mr.
Poe's compensation is also discussed, since he served as Chief Executive Officer
until his death in February 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------------
Annual Compenstion Securities
Fiscal ---------------------------- Underlying All Other
Name & Position Year Salary Bonus Options Compensation
- --------------------------------- -------- ------------- ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
J. Darwin Poe 1999 $126,984 $ 61,568 0 $0
President & 1998 196,004 0 0 0
Chief Executive Officer 1997 101,238 0 0 0
(Until February 27, 1999) (1)
Rodney C. Hardeman, Jr. 1999 $102,492 $0 333,333 $0
President & 1998 0 0 0 0
Chief Executive Officer (1) 1997 0 0 0 0
Floyd S. Koegler, Jr. 1999 $130,000 $0 166,667 $0
Chief Financial Officer 1998 131,000 0 0 0
1997 85,000 0 0 0
</TABLE>
(1) Mr. Hardeman was appointed President and Chief Executive Officer of the
Company on February 28, 1999, following the death of Mr. Poe on February 27,
1999, and such events are reflected in the compensation amounts disclosed for
1999. Mr. Hardeman had served as Executive Vice President of the Company since
August 17, 1998.
The following table sets forth information concerning stock options
granted in Fiscal 1999, including the potential realizable value of each grant
assuming that the market value of the Company's Common Stock appreciates from
the date of grant to the expiration of the option at annualized rates of (a) 5%
and (b) 10%, in each case compounded annually over the term of the option. These
assumed rates of appreciation have been specified by the Securities and Exchange
Commission for illustrative purposes only and are not intended to predict future
prices of the Company's Common Stock, which will depend upon various factors,
including market conditions and the Company's future performance and prospects.
All of the options listed below have exercise prices equal to the fair market
value of the Common Stock at the date of grant.
<PAGE>
<TABLE>
<CAPTION>
1999 Option Grants
Potential Realizable
Value at Assumed
Annual Rates
No. of % of Total of Stock Price
Shares Options Appreciation for
Underlying Granted to Exercise Option Term
Options Employees Price Expiration ---------------------------------
Name Granted 1999* ($/Share) Date 5% 10%
- ---- ------------ ----------- ------------ ------------ --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rodney C. Hardeman, Jr. 333,333 36% $ 0.23 3/18/09 $ 48,215 $ 122,187
Floyd S. Koegler, Jr. 166,667 18% $ 0.23 3/18/09 $ 24,108 $ 61,094
</TABLE>
*In Fiscal 1999, options were granted covering 926,000 shares of Common Stock.
The following table sets forth information concerning the aggregate
number of options held and the value of unexercised "in-the-money" options held
at July 31, 1999 (the difference between the aggregate exercise price of all
such options held and the market value of the shares covered by such options at
July 31, 1999). No options held by the Named Officers were exercised in Fiscal
1999.
1999 Year-end Option Values
<TABLE>
<CAPTION>
Options Value at July 31, 1999
------------------------------
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Options at Options at
July 31, 1999 July 31, 1999
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- ---- ------------- -------------
<S> <C> <C> <C> <C>
Rodney C. Hardeman, Jr. 333,333 / 333,333 $0 /$ 0
Floyd S. Koegler, Jr. 166,667 / 166,667 $0 /$ 0
</TABLE>
Report of the Compensation Committee
During fiscal year 1999, the Compensation Committee met on one
occasion. No bonuses or increases in salaries to executive officers of the
Company were approved at that meeting.
Subsequently and after the death of Mr. J. Darwin Poe, the Board of
Directors approved a posthumous bonus to Mr. Poe's Estate of $61,568, based on
the services rendered to the Company by Mr. Poe prior to his death. The Board
also elected Mr. Rodney C. Hardeman, Jr. as President and Chief Executive
Officer of the Company and his annual salary was increased from $75,088 to
$150,093 effective with the date of his election. In March 1999, the Company
hired Mr. Bruce C. Elliston as Executive Vice President of Sales and Marketing
at an annual salary of $70,096 plus a bonus based on the number of CYP machines
delivered.
The Company's Board of Directors also approved the grant of shares
under the 1992 Stock Option Plan as set forth in the discussion of executive
compensation, which discussion is incorporated herein by reference.
<PAGE>
Performance Graph
The following graph compares the percentage change in the Company's
cumulative total shareholder return with returns based on the NASDAQ Stock
Market (U. S. companies) Index and a peer group index, consisting of companies
reporting under the Standard Industrial Classification Code 355 (Special
Industry Machinery, Except Metalworking Machinery).
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
TAPISTRON INTERNATIONAL, INC.
Prepared by the Center for Research in Security Prices
Produced on 10/29/99 including data to 7/30/99
[Graph omitted]
<TABLE>
<CAPTION>
Legend
Symbol CRSP Total Returns Index for: 7/29/94 7/31/95 7/31/96 7/31/97 7/31/98 7/30/99
- ------ ----------------------------- ------- ------- ------- --------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
TAPISTRON INTERNATIONAL, INC. 100.0 50.0 6.8 11.4 11.3 5.1
- --------
...--... NASDAQ Stock Market (US Companies) 100.0 140.3 152.9 225.7 265.6 379.9
- -------- NASDAQ Stocks (SIC 3550-3559 US 100.0 233.7 121.8 331.9 213.9 402.4
Companies) Special Industry Machinery,
Except Metalworking Machinery
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 7/29/94.
E. Data for TAPISTRON INTERNATIONAL, INC. from 8/30/96 to 7/30/99 was provided
by the client.
<PAGE>
Certain Relationships and Related Transactions
All transactions involving related parties must be approved by a
majority of the disinterested members of the Company's Board of Directors. The
Company has, and expects to have, transactions in the ordinary course of its
business with Directors and Executive Officers of the Company and their
affiliates, including members of their families or corporations, partnerships or
other organizations in which such Directors or Executive officers have a
controlling interest, on substantially the same terms (including price, or
interest rates and collateral) as those prevailing at the time for comparable
transactions with unrelated parties.
During the year ended July 31, 1999, the Company borrowed amounts
totaling $155,000 from RBI International Carpet Consultants, Inc., a company of
which Mr. Burnett is majority stockholder. Mr. Burnett is also Chairman of the
Board of the Company. All but $50,000 was paid back to Mr. Burnett during the
year.
During the year ended July 31, 1999, the Company paid $56,085 for
consulting services to Oxford Textile Mills, Inc., a company that is owned by a
Mr. Christopher, a director of the Company.
During the year ended July 31, 1999, the Company paid $20,941 for legal
fees to Hine & Niedrach, P.C., a firm that is Mr. Hine, a director, is a
partner.
(ITEM 3)
To Increase the Number of Shares Authorized for Issuance Pursuant to the Stock
Option Plan of 1992 from 1,350,000 Shares to 5,400,000 Shares.
The existing stock option plan was adopted when the Company had
8,825,756 shares issued and outstanding. Since the recapitalization completed as
part of its successful reorganization, the Company now has 34,785,611 shares
issued and outstanding. While the number of shares has increased 25,959,855
since the original plan was adopted, the amendment to the stock option plan
would increase the number of shares, which could be issued pursuant to it by
4,050,000. Increasing the number of shares will allow the Company to offer
significant incentives to key persons in the form of stock options.
The Board of Directors anticipates that any future stock option grants
will be tied to performance benchmarks including, but not limited to, increases
in the underlying value of the Company's common stock.
At the present, the Company has granted 926,000 options to key
personnel, and unless the current Stock Option Plan is amended, the Board of
Directors will not have this incentive to reward outstanding future performance.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPROVAL OF THE PROPOSAL TO
AMEND THE 1992 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR
GRANT FROM 1,350,000 TO 5,400,000 SHARES.
(ITEM 4)
To Amend the By-Laws to Provide a Procedure for the Removal of Directors who do
not Attend Meetings of the Board of Directors
Currently, the By-Laws does not provide a provision for removing
directors who do not regularly attend meetings of the Board of Directors. During
the last year, one director attended only forty (40%) of the ten (10) regularly
scheduled meetings of the Board of Directors. Because the Company needs the
active involvement of its directors, the Board of Directors recommends that the
By-Laws be amended to provide a procedure for the removal of directors who miss
more than twenty-five (25%) percent of the regularly scheduled meetings of the
Board during any consecutive twelve (12) month period.
If amended, the Chairman of the Board may recommend to the full Board
the removal of any director who fails to attend at least seventy-five (75%)
percent of the regularly scheduled Board meetings in any twelve (12) month
period. If the full Board adopts that recommendation by resolution, the Director
is removed and the vacancy created by that removal may be filled according to
the By-Laws.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPROVAL TO AMEND THE BY-LAWS
TO AUTHORIZE THE REMOVAL OF A NON-ATTENDING BOARD MEMBER.
<PAGE>
(ITEM 5)
Ratification of Selection of 2000 Independent Auditors
The Board of Directors has selected the Company's independent auditors
for the year 2000, subject to approval by the shareholders not later than the
date of the 1999 Annual Meeting. Dudley, Hopton-Jones, Sims & Freeman PLLP
served as independent auditors of the Company for the year ended July 31, 1999.
Representatives of the firm will be present at the 1999 Annual Meeting, have an
opportunity to make a statement if they so desire and are expected to be
available to respond to appropriate questions.
The affirmative vote of the holders of a plurality of the outstanding
shares of common stock entitled to vote at the Meeting is required to ratify the
selection of the Company's independent auditors for the year 2000.
THE BOARD OF DRECTORS RECOMMENDS VOTING "FOR" THE RATIFICATION OF THE SELECTION
OF THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR 2000.
Compliance with Section 16(a) of the Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
directors, executive officers and 10% or greater shareholders of the Company
("Reporting Persons") to file with the Securities and Exchange Commission
initial reports of ownership (Form 3) and reports of changes in ownership of
equity securities of the Company (Form 4 and Form 5). To the Company's
knowledge, based solely on its review of the copies of such reports furnished to
the Company and written representations that certain reports were not required,
during the fiscal year ended July 31, 1999, the Reporting Persons have complied
with all applicable Section 16(a) filing requirements, except that Rodney C.
Hardeman, Jr., President and CEO, filed a Form 4 Report of Changes in Beneficial
Ownership of Securities with the SEC late.
Shareholders' Proposals for 2000 Annual Meeting to be Held in 2001
Shareholders' proposals intended to be presented at the 2000 Annual Meeting of
Shareholders to be held in 2001 must be received by the Company no later than
August 7, 2000 for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
Other Matters
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the meeting other than that
referred to herein. If any other business should come before the meeting, the
persons named in the enclosed Proxy will have discretionary authority to vote
all proxies in accordance with his best judgment.
Upon the written request of any record holder or beneficial owner of
common stock entitled to vote at the 1999 Annual Meeting, the Company, without
charge, will provide a complete copy of its Annual Report on Form 10-K for the
year ended July 31, 1999, as filed with the Securities and Exchange Commission.
Requests should be directed to Floyd S. Koegler, Jr., CFO, Tapistron
International, Inc., 6203 Alabama Highway, P.O. Box 1067, Ringgold, Georgia
30736, which is the address of the Company's principal executive offices.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Reg Burnett
--------------------------------
Chairman of the Board
Ringgold, Georgia
December 1, 1999
<PAGE>
ANNUAL REPORT
TAPISTRON INTERNATIONAL, INC.
6203 Alabama Highway
P.O. Box 1067
Ringgold, Georgia 30736-1067
(706) 965-9300 Fax (706) 965-9310
The annual report of the Company to the Securities and Exchange
Commission on Form 10-K is being distributed to the shareholders as the annual
report of the Company to accompany the Company's proxy statement for the annual
shareholders meeting.
<PAGE>
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JANUARY 6, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TAPISTRON INTERNATIONA, INC.
6203 Alabama Highway o P.O. Box 1067 o Ringgold, Georgia 30736
The undersigned shareholder hereby appoints Rodney C. Hardeman , as
Proxy, with the power to appoint his substitute, and hereby authorizes him to
represent and to vote, as designated below, all the shares of common stock of
Tapistron International, Inc., held of record by the undersigned on November 12,
1999, at the Annual Meeting of Shareholders to be held January 6, 2000, or any
adjournment thereof.
The Board of Directors recommends a vote FOR (1), (2), (3), (4) and
(5).
(1) TO EXPAND BOARD MEMBERS FROM SIX (6) TO NINE (9) MEMBERS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) ELECTION OF DIRECTORS WITH THE NOMINEES TO SERVE A THREE-YEAR TERM
EXPIRING AT FISCAL 2002 ANNUAL MEETING.
Peter Greenberg Edward Hine, Jr. King Oehmig
[ ] FOR [ ] FOR [ ] FOR
[ ] WITHHOLD AUTHORITY [ ] WITHHOLD AUTHORITY [ ] WITHHOLD AUTHORITY
(3) TO APPROVE AN AMENDMENT TO THE 1992 STOCK OPTION PLAN INCREASING THE
NUMBER OF SHARES AVAIALBLE FOR GRANT FROM 1,350,000 SHARES TO 5,400,000
SHARES.
(See Other Side)
(4) TO AMEND THE BY-LAWS TO AUTHORIZE THE REMOVAL OF NON-ATTENDING BOARD
MEMBERS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) TO RATIFY THE SELECTION OF DUDLEY, HOPTON-JONES, SIMS & FREEMAN, PLLP,
AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL YEAR 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- --------------------------------------------------------------------------------
(6) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2), (3), (4) AND (5).
Dated:
-------------------------------
-------------------------------------
Signature
-------------------------------------
Signature (if held jointly)
Please sign exactly as name appears on your
certificate. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
(See Other Side)
