<PAGE> 1
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 (AMENDMENT NO. )
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
SYNTHETIC INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
SYNTHETIC INDUSTRIES, INC. LOGO
January 28, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Synthetic Industries, Inc. to be held on February 25, 1998, at 10:00 a.m.,
New York City time. The meeting will be held at the Walker County Civic Center,
10052 N. Highway 27, Rock Springs, Georgia 30737.
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the meeting. To acquaint you better with the director nominees, the
Proxy Statement contains biographical sketches of each nominee.
During the meeting, I will report on the operations of the Company during
fiscal 1997 and the first quarter of fiscal 1998, and its plans for fiscal 1998.
Directors and officers of the Company will be present to respond to questions
from stockholders.
The Board of Directors appreciates and encourages stockholder participation
in the Company's affairs. There is a space on the enclosed proxy for you to
indicate if you will be able to attend the meeting. Whether or not you plan to
attend the meeting, please sign, date and return the enclosed proxy promptly in
the postage-paid envelope provided. If you attend the meeting, you may, at your
discretion, vote in person, which will have the effect of revoking any earlier
dated proxy submitted.
If you plan to attend the meeting, please call Marianne Robinson of the
Company at (706) 375-3121, ext. 1219 for directions to the Walker County Civic
Center.
Sincerely,
LEONARD CHILL
LEONARD CHILL
President and Chief Executive
Officer
<PAGE> 3
SYNTHETIC INDUSTRIES, INC.
309 LAFAYETTE ROAD
CHICKAMAUGA, GEORGIA 30707
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 25, 1998
To the Stockholders of Synthetic Industries, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Synthetic
Industries, Inc. (the "Company") will be held at the Walker County Civic Center,
10052 N. Highway 27, Rock Springs, Georgia 30737, on February 25, 1998, at 10:00
a.m., local time, for the following purposes:
1. To elect five (5) directors to serve until the next Annual Meeting
of Stockholders or until their successors are elected and qualified;
2. To consider and vote upon a proposal to approve the Synthetic
Industries, Inc. Employee Stock Purchase Plan;
3. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending September 30, 1998; and
4. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on January 6, 1998,
as the record date for determining stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof. Only stockholders of record at
the close of business on such date will be entitled to notice of and to vote at
the meeting and any adjournment thereof.
All stockholders are cordially invited and urged to attend the meeting.
Even if you expect to attend the meeting, you are requested to sign, date and
promptly return the accompanying proxy in the enclosed addressed envelope. You
may vote in person if you attend the meeting, regardless of whether you have
previously returned your proxy.
By Order of the Board of Directors
JOSEPH SINICROPI
JOSEPH SINICROPI
Secretary
Chickamauga, Georgia
January 28, 1998
<PAGE> 4
SYNTHETIC INDUSTRIES, INC.
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Synthetic Industries, Inc.
(the "Company") for use at the Annual Meeting of Stockholders of the Company to
be held at the Walker County Civic Center, 10052 N. Highway 27, Rock Springs,
Georgia 30737, on February 25, 1998, at 10:00 a.m., local time, and at any
adjournment thereof pursuant to and for the purposes set forth in the
accompanying Notice of Meeting. The date of the first mailing to stockholders of
this Proxy Statement and the related form of proxy included herewith was on or
about January 28, 1998.
The costs of soliciting proxies will be borne by the Company, including
reasonable costs incurred by custodians, nominees, fiduciaries and other agents
in forwarding the proxy material to their principals. The Company has retained
D.F. King & Co., Inc. to assist in the solicitation of proxies for a fee
estimated at $6,500, plus reimbursement of out-of-pocket expenses. In addition
to such solicitation and the solicitation made hereby, certain directors,
officers and employees of the Company may solicit proxies by facsimile, telex,
telephone and personal interview.
A proxy will be voted in accordance with the stockholder's instruction, or
if no instruction is indicated, it will be voted in favor of the proposals set
forth in the notice attached hereto. Any stockholder may revoke his or her proxy
at any time prior to its exercise by written notice or by execution of a
subsequent proxy sent to Joseph Sinicropi, Secretary, Synthetic Industries,
Inc., 309 LaFayette Road, Chickamauga, Georgia 30707. The proxy also may be
revoked if the stockholder is present at the meeting and elects to vote in
person.
VOTING SECURITIES AND CERTAIN BENEFICIAL OWNERS
At the close of business on January 6, 1998, the record date for
determination of stockholders entitled to notice of and to vote at the meeting,
there were issued and outstanding 8,668,750 shares of the Company's common
stock, par value $1.00 per share ("Common Stock"), excluding Common Stock held
by the Company, each share being entitled to one vote upon each of the matters
to be voted upon at the meeting. There are no other voting securities
outstanding.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding Common Stock, excluding Common Stock held by the Company,
is necessary to constitute a quorum at this meeting. In the absence of a quorum
(4,334,375 shares) at the meeting, the meeting may be adjourned from time to
time without notice, other than announcement at the meeting, until a quorum
shall be formed. A plurality of the votes of the shares present in person or by
proxy at the meeting and entitled to vote is required for the election of
directors, meaning that the five nominees with the largest number of affirmative
votes will be elected as directors. Any other matter that may come before the
meeting shall be adopted if the votes cast for such matter exceed the votes cast
against. Under Delaware law and under the Company's Restated Certificate of
Incorporation, each share of Common Stock entitles a stockholder to one vote.
In certain circumstances, a stockholder will be considered to be present at
the meeting for quorum purposes but will not be deemed to have cast a vote on a
matter. Such circumstances exist when a stockholder is present but abstains from
voting on a matter or when shares are represented at the meeting by a proxy
conferring authority to vote only on certain matters, as in the case of broker
non-votes. In conformity with the Company's Bylaws, shares abstaining from
voting or not voted on certain matters coming before the meeting, including
broker non-votes, will not be treated as votes cast with respect to those
matters, and therefore will not affect the outcome of any such matter.
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of September 30, 1997 by: (i) each
stockholder known by the Company to own beneficially 5% or more of the
outstanding shares of Common Stock; (ii) each director of the Company; (iii)
each of the executive officers named in the Summary Compensation Table; and (iv)
all executive officers and directors of
<PAGE> 5
the Company as a group. Unless otherwise indicated, the address for each
officer, director and 5% stockholder is c/o Synthetic Industries, Inc., 309
LaFayette Road, Chickamauga, Georgia 30707.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES PERCENT
---- --------- -------
<S> <C> <C>
5% STOCKHOLDERS:
Synthetic Industries, L.P. ................................. 5,781,250 64.31%
NAMED EXECUTIVE OFFICERS:
Leonard Chill............................................... 73,554(1)(2)(3) *
W. Wayne Freed.............................................. 31,453(1)(2)(3) *
William Gardner Wright, Jr. ................................ 31,453(1)(2)(3) *
Ralph Kenner................................................ 31,453(1)(2)(3) *
Robert J. Breyley........................................... 5,473(2)(4) *
DIRECTORS:
Joseph F. Dana.............................................. 28,906(2) *
Lee J. Seidler.............................................. 57,813(2) *
William J. Shortt........................................... 19,271(2) *
Robert L. Voigt............................................. 19,271(2) *
All executive officers and directors as a group (14
persons)(3)(4)(5)......................................... 331,896 3.69%
</TABLE>
- ---------------
* Less than 1.0%.
(1) Includes 9,632 shares as to which such person may be deemed to have
beneficial ownership as a result of his indirect beneficial ownership of
0.1666% of a partnership interest in the Partnership.
(2) Includes shares of Common Stock subject to options exercisable within 60
days, as follows: Leonard Chill -- 63,922 shares; W. Wayne Freed -- 21,821
shares; William Gardner Wright, Jr. -- 21,821 shares; Ralph Kenner -- 21,821
shares; Robert J. Breyley -- 4,843 shares; Joseph F. Dana -- 28,906 shares;
Lee J. Seidler -- 57,813 shares; William J. Shortt -- 19,271 shares; Robert
L. Voigt -- 19,271 shares.
(3) Does not include 2,781,250 shares (other than the 9,632 shares described in
footnote 1 above) as to which Messrs. Chill, Wright, Kenner and Freed may be
deemed to have beneficial ownership by virtue of their indirect control of
the Partnership. See "Executive Officers."
(4) Includes 630 shares as to which Mr. Breyley may be deemed to have beneficial
ownership as a result of his indirect beneficial ownership of 0.0109% of a
partnership interest in the Partnership.
(5) Does not include (i) an aggregate of 16,344 shares of Common Stock subject
to options exercisable within 60 days that are owned by employees of the
Company other than the executive officers and (ii) an aggregate of 450,944
shares of Common Stock subject to options that are not exercisable within 60
days that are owned by directors, officers and employees of the Company.
Includes an aggregate of 38,528 shares as to which Messrs. Chill, Wright,
Kenner and Freed may be deemed to have beneficial ownership as a result of
their indirect beneficial ownership of 0.1666% each of a partnership
interest in the Partnership.
ELECTION OF DIRECTORS
PROPOSAL 1: THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
NOMINEES FOR THE BOARD OF DIRECTORS DESCRIBED BELOW. PROXIES WILL BE SO VOTED
UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. NOMINEES FOR DIRECTOR
WILL BE ELECTED BY A PLURALITY OF VOTES.
The Board recommends election of the nominees listed below as directors to
hold office until the next annual meeting of stockholders or until their
successors are elected and qualified. All of the nominees were previously
elected by the Company's sole stockholder. If, at the time of the 1998 Annual
Meeting of Stockholders, any of such nominees should be unable to serve or for
good cause will not serve, discretionary authority provided in the proxy will be
used to vote for a substitute or substitutes designated by the Board. The Board
has no reason to believe that any substitute nominees will be required.
2
<PAGE> 6
The nominees, and certain information with respect to each of them, are as
follows:
Leonard Chill, age 65, joined the Company in December 1973 as President and
was appointed Chief Executive Officer in 1986. He has been a director since
1986. From 1967 until joining the Company, he held a number of positions with
Thiokol Corporation in its Fibers Division, including that of General Manager.
Mr. Chill is also the sole director and sole stockholder of one of the general
partners of Synthetic Management G.P., the entity which is the sole general
partner of the general partner of Synthetic Industries, L.P. (the
"Partnership"), the principal stockholder of the Company. In addition, Mr. Chill
is a director of Synthetic Textiles Ltd.
Joseph F. Dana, age 50, was appointed Chief Operating Officer and General
Counsel on May 21, 1997. Prior to joining the Company, Mr. Dana had been engaged
in the private practice of law for over twenty years and had been a member of
the law firm Watson & Dana, LaFayette, Georgia, since its formation in 1978,
serving as general counsel to the Company since 1987. He has been a Director
since 1993.
Lee J. Seidler, age 62, was professor of accounting and Price Waterhouse
professor of auditing at New York University. Dr. Seidler was Senior Managing
Director at Bear, Stearns & Co. Inc. from 1981 to 1989. He is presently
associated with Bear, Stearns & Co. Inc. as Managing Director Emeritus. Dr.
Seidler is a director of the Shubert Foundation, The Shubert Organization, and
Players International, Inc. and has been a director of SafeCard Services, Inc.
and Eastbank, N.A. He has been a Director since 1993.
William J. Shortt, age 72, retired from Johnson & Johnson in 1989. From
1977 to 1989, he was Director of Government and Trade Relations, Southeast at
Johnson & Johnson. Mr. Shortt has also been a director of Standard Telephone
Company, Standard Group Inc., and First National Bank of Habersham. He has been
a Director since 1993.
Robert L. Voigt, age 79, served as a consultant to Dixie Yarns Inc. from
1985 until his retirement at the end of 1991. Mr. Voigt also served as a
director of Dixie Yarns, Inc. from 1981 to 1987. He has been a Director since
1993.
COMMITTEES AND MEETINGS OF THE BOARD
The Board has established a Compensation Committee, composed of Messrs.
Seidler, Shortt and Voigt, which establishes salary, incentives and other forms
of compensation and administers the Company's 1994 Stock Option Plan and 1996
Stock Option Plan and other incentive compensation and benefit plans applicable
to the Company's officers. The Board has also established an Audit Committee,
composed of Messrs. Seidler, Shortt and Voigt, which recommends to the Board the
selection of independent auditors, and reviews the scope and results of the
audit and other services provided by the independent auditors.
During the year ended September 30, 1997, the Board held a total of 9
meetings, the Audit Committee held 2 meetings and the Compensation Committee
held 2 meetings.
DIRECTOR COMPENSATION
Outside directors receive $15,000 per annum for services as a director and
$800 per meeting attended. Directors who are members of management do not
receive any meeting attendance fees or additional compensation for service as a
director or service on committees of the Board. All directors are reimbursed for
reasonable out-of-pocket expenses incurred in connection with their attendance
at meetings of the Board and its committees on which they serve.
Under the Company's 1994 Stock Option Plan for Non-Employee Directors (the
"Directors' Plan"), Messrs. Dana, Seidler, Shortt and Voigt were granted
non-qualified stock options (the "Directors' Options") to purchase 28,906,
57,813, 19,271 and 19,271 shares of Common Stock, respectively. The Directors'
Plan does not provide for any further grants of options thereunder.
The purchase price of the shares of Common Stock subject to the Directors'
Options was determined by reference to the fair market value of the Common
Stock, as determined by the Compensation Committee, at the time Messrs. Dana,
Seidler, Shortt and Voigt became members of the Board. As of October 1, 1996,
100%
3
<PAGE> 7
of the number of shares of Common Stock subject to each Director Option are
vested and are exercisable. As a Company employee, Mr. Chill is not eligible to
participate in the Directors' Plan. In the event that the outstanding shares of
Common Stock are changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination or exchange of
shares and the like, or dividends payable in Common Stock, an appropriate
adjustment shall be made by the Committee in the aggregate number of shares of
Common Stock available under the Directors' Plan and in the number of shares and
price per share subject to outstanding Directors' Options. The term of each
Directors' Option is ten years from the date of grant.
APPROVAL OF SYNTHETIC INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
PROPOSAL 2: THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS
A VOTE FOR THE APPROVAL OF THE SYNTHETIC INDUSTRIES, INC. EMPLOYEE STOCK
PURCHASE PLAN. PROXIES WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN
THEIR PROXIES. PROPOSAL 2 WILL BE ADOPTED IF THE VOTES CAST IN FAVOR EXCEED THE
VOTES CAST OPPOSING THIS PROPOSAL.
GENERAL
The Company believes in providing the opportunity for its employees to
obtain a proprietary interest in the Company. To that end, on December 16, 1997,
the Board of Directors voted to adopt, subject to shareholder approval, the
Synthetic Industries, Inc. Employee Stock Purchase Plan (the "Stock Purchase
Plan"). A summary of the Stock Purchase Plan follows, but this summary is
qualified in its entirety by reference to the full text of the Stock Purchase
Plan, which is attached as Exhibit A to this Proxy Statement.
The Stock Purchase Plan provides eligible employees of the Company and its
subsidiaries the opportunity to purchase shares of Common Stock at a discounted
price through accumulated payroll deductions. The purpose of the Stock Purchase
Plan is to attract and retain individuals with a high degree of training,
experience, expertise and ability, to provide an opportunity for such
individuals to acquire a proprietary interest in the success of the Company and
to more closely align their interests with those of the Company's shareholders.
ELIGIBILITY
In order to be eligible to participate in the Stock Purchase Plan, an
individual must be an employee of the Company or one of its subsidiaries and
must have become employed in such capacity in the calendar quarter prior to the
first day of any Option Period (as defined below); provided, however, any
employee whose customary employment is twenty hours per week or less or whose
customary employment is for not more than five months in any calendar year is
not eligible to participate in the Stock Purchase Plan. Also, any employee who
is a five percent or greater shareholder of the Company's voting stock is not
eligible to participate in the Stock Purchase Plan.
If the Company acquires or creates a new subsidiary, employees of such
subsidiary will automatically become eligible to participate in the Stock
Purchase Plan, unless otherwise determined by the Board of Directors. As of
September 30, 1997, approximately 2,500 employees were eligible to participate
in the Stock Purchase Plan.
PARTICIPATION
Participation in the Stock Purchase Plan is voluntary and eligible
employees may enroll for the purpose of purchasing shares of the Company's
Common Stock by specifying the amount of the employee's compensation to be
deducted during each payroll or by making a lump-sum contribution to their Stock
Purchase Plan Accounts for the purchase of Common Stock. The Stock Purchase Plan
operates on the basis of successive calendar quarters (each of which is
hereinafter referred to as an "Option Period"). Assuming shareholder approval is
obtained, the first Option Period will begin on April 1, 1997.
4
<PAGE> 8
Pursuant to the terms of the Stock Purchase Plan, eligible employees of the
Company may elect to (i) deduct a specific amount or a specific percentage of
their salary or wages per pay period or (ii) make a contribution to the Stock
Purchase Plan no more than once each Option Period (subject to the limitations
set forth below). All deductions and contributions are to be used to purchase
shares of Common Stock on the last trading day of each Option Period (the
"Exercise Date") at a purchase price equal to the lesser of (i) 85% of the
closing market price of the Common Stock on the Exercise Date or (ii) 85% of the
closing market price of the Common Stock on the first trading date of each
Option Period (the "Grant Date"). Purchases by each participant are limited to
not more than $25,000 of Common Stock in any calendar year. If the total number
of shares of Common Stock to be purchased by all participants on an Exercise
Date exceeds the number of shares of Common Stock remaining authorized for
issuance under the Stock Purchase Plan, a pro rata allocation of the shares of
Common Stock available for issuance will be made among participants.
To be eligible or to change the amount of withholding for an Option Period,
a participant must complete an enrollment form specifying the amount to be
withheld no later than ten (10) days prior to the commencement of an Option
Period. An employee may at any time elect to withdraw from the Stock Purchase
Plan and to have the employee's contributions returned to him or her, unless
such withdrawal request is made within ten (10) days of the Exercise Date in an
Option Period. In such a case, the employee's contributions during such Option
Period will be used to purchase shares on the Exercise Date for the benefit of
the participant.
Upon termination of employment of any participant during an Option Period,
no further contributions can be made to a participant's account. If, however,
the termination is on account of death, disability or retirement, the
participant or his or her legal representative may elect to withdraw the balance
of the participant's account, but if no such request is made, the balance will
be used to purchase shares of Common Stock on the next Exercise Date. In the
event of a termination of a participant's employment for a reason other than
death, disability or retirement during an Option Period, the remaining balance
will be paid in cash to the former employee. For purposes of the Plan,
"disability" means eligibility for benefits during the Company's long-term
disability plan, and "retirement" means termination at or after age 65.
FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan is intended to qualify for favorable tax treatment
under Section 423 of the Code. Pursuant to the Code, participants generally
would not immediately recognize income for federal tax purposes of the amount of
the initial discount when shares of Common Stock are purchased. If the recipient
of Common Stock under the Stock Purchase Plan disposes of the shares before the
end of the required holding period (two years after the Grant Date), he or she
generally will recognize ordinary income in the year of disposition in an amount
equal to the excess of the market value of the Common Stock on the Exercise Date
over his or her purchase price. The excess (if any) of the amount received upon
disposition over the market value on the Exercise Date will be taxed as capital
gain. If a disposition does not occur until after the expiration of the two-year
holding period, the recipient generally will recognize ordinary income in the
year of disposition equal to the lesser of (i) the excess of the market value of
the shares of Common Stock on the Grant Date over the purchase price computed on
such date or (ii) the excess of the fair market value of such shares on the date
of disposition over the price paid by the recipient on the Exercise Date. The
excess (if any) of the amount received upon disposition over the tax basis
(i.e., purchase price plus amount taxed as ordinary income) will be taxed as
capital gain. The Company generally will not be entitled to a tax deduction for
compensation expense of the original sales to participants, but may be entitled
to a deduction if a participant disposes of Common Stock received under the
Stock Purchase Plan prior to the expiration of the two-year holding period.
ADMINISTRATION
A committee composed of one or more individuals to whom authority is
delegated by the Board of Directors (the "Plan Administrator") will administer
the Stock Purchase Plan. The Plan Administrator will administer the Stock
Purchase Plan and keep records of the contribution account balance of each
participant, interpret the Stock Purchase Plan, and determine all questions
arising as to eligibility, contributions,
5
<PAGE> 9
determination of the Exercise Price and all other matters of administration. The
Plan Administrator may delegate any or all of the foregoing duties. The initial
Plan Administrator shall be the Compensation Committee. All costs and expenses
of administering the Stock Purchase Plan shall be paid by the Company. No
brokerage commissions will be charged on a participant's purchase of Common
Stock.
AMENDMENT
The Board of Directors may at any time amend the Stock Purchase Plan in any
respect, including termination of the Stock Purchase Plan, without notice to
participants. If the Stock Purchase Plan is terminated, all options outstanding
at the time of termination shall become null and void and the balance in each
participant's contribution account shall be paid to that participant. Without
the approval of the shareholders of the Company, however, the Stock Purchase
Plan may not be amended to increase the number of shares reserved under the
Stock Purchase Plan (except pursuant to certain changes in the capital structure
of the Company).
NUMBER OF SHARES UNDER STOCK PURCHASE PLAN
The Company has reserved, subject to shareholder approval, 325,000 shares
of Common Stock for issuance under the Stock Purchase Plan. The aggregate number
of shares of Common Stock reserved under the Stock Purchase Plan and the
calculation of the Exercise Price shall be adjusted by the Plan Administrator
(subject to direction by the Board of Directors) in an equitable manner to
reflect changes in the capitalization of the Company, including, but not limited
to, such changes as a result from merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, combination of shares, exchange of shares and change in corporate
structure. If any such adjustment would create a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock, such fractional
share shall be disregarded and the number of shares available under the Stock
Purchase Plan and the number of shares covered under any options granted
pursuant to the Stock Purchase Plan shall be the next lower number of shares,
rounding all fractions downward.
RIGHT AS A SHAREHOLDER
At the time funds are used to purchase Common Stock under the Stock
Purchase Plan, a participant shall have all the rights and privileges of a
shareholder of the Company with respect to whole shares purchased under the
Stock Purchase Plan, whether or not certificates representing such shares have
been issued. A participant's rights under the Stock Purchase Plan are not
transferable, except by will and the laws of descent and distribution.
NEW PLAN BENEFITS
It is not possible to determine how many eligible employees will
participate in the Stock Purchase Plan in the future. Therefore, it is not
possible to determine with certainty the dollar value or number of shares of
Common Stock that will be distributed under the Stock Purchase Plan.
RECOMMENDATION
The Board of Directors believes it is in the best interests of the Company
and its shareholders to adopt the Stock Purchase Plan. The Board of Directors
recommends a vote FOR the approval of this proposal.
6
<PAGE> 10
RATIFICATION OF SELECTION OF ACCOUNTANTS
PROPOSAL 3: THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS
A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
("DELOITTE & TOUCHE") AS THE COMPANY'S INDEPENDENT ACCOUNTANTS TO SERVE UNTIL
THE NEXT ANNUAL MEETING OF STOCKHOLDERS. PROXIES WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. PROPOSAL 3 WILL BE ADOPTED IF
THE VOTES CAST IN FAVOR EXCEED THE VOTES CAST OPPOSING THIS PROPOSAL.
The Board and the Audit Committee recommend ratification of the appointment
of Deloitte & Touche. Deloitte & Touche has audited the financial statements of
the Company since December 4, 1986. Deloitte & Touche will have a representative
at the meeting who will have the opportunity to make a statement, if the
representative desires to do so, and will be available to respond to appropriate
questions.
OTHER MATTERS
It is not anticipated that there will be presented to the meeting any
business other than election of directors, the Stock Purchase Plan proposal and
the ratification of the appointment of independent accountants. If any other
matters requiring the vote of the stockholders arise, including the question of
adjourning the meeting and other matters not known reasonably in advance by the
Company, the persons appointed as proxies in the accompanying proxy will vote on
such matters according to their best judgment.
Regardless of the number of shares owned by you, it is important that they
be represented at the meeting, and you are respectfully requested to sign, date
and return the accompanying proxy at your earliest convenience.
EXECUTIVE OFFICERS
Set forth below are the current executive officers of the Company elected
by the Board of Directors.
Leonard Chill, age 65, joined the Company in December 1973 as President and
was appointed Chief Executive Officer in 1986. He has been a director since
1986. From 1967 until joining the Company, he held a number of positions with
Thiokol Corporation in its Fibers Division, including that of General Manager.
Mr. Chill is also the sole director and sole stockholder of one of the general
partners of Synthetic Management G.P., the entity which is the sole general
partner of the general partner of the Partnership. In addition, Mr. Chill is a
director of Synthetic Textiles Ltd.
Joseph F. Dana, age 50, was appointed Chief Operating Officer and General
Counsel on May 21, 1997. Prior to joining the Company, Mr. Dana had been engaged
in the private practice of law for over twenty years and had been a member of
the law firm Watson & Dana, LaFayette, Georgia, since its formation in 1978,
serving as general counsel to the Company since 1987. He has been a Director
since 1993.
Joseph Sinicropi, age 44, joined the Company in 1995 as Chief Accounting
Officer. He was named Chief Financial Officer and Secretary in February 1996.
Prior to joining the Company, he was an audit senior manager in the
international accounting firm of Deloitte & Touche LLP from 1985 to 1995.
W. Wayne Freed, age 62, joined the Company in 1981 and became Vice
President -- Market Development in 1987. Prior thereto, he had 28 years
experience in the textile industry. Mr. Freed is also the sole director and sole
stockholder of one of the general partners of Synthetic Management G.P.
Ralph Kenner, age 53, has been Vice President -- Manufacturing since 1984.
He joined the Company in 1974 as Director, Industrial Relations and served in
that capacity until 1976. In 1976, he was appointed Plant Manager and served in
that capacity until 1984. Mr. Kenner is also the sole director and sole
stockholder of one of the general partners of Synthetic Management G.P.
C. Ted Koerner, age 48, joined the Company in 1990 and became Vice
President -- Construction Products Division in 1993. He was named Vice
President -- General Manager of the Construction/Civil Engineering Products
Group in 1995. Prior thereto, Mr. Koerner was an engineer with the Ohio
Department
7
<PAGE> 11
of Transportation; a sales engineer, product supervisor and regional engineer
with Armco Steel Corporation; and a sales manager with National Seal
Corporation.
John Michael Long, age 54, was Vice President -- Nonwoven Fabrics from 1991
to 1996 at which time he was named Vice President -- General Manager of the
Technical Textiles Group. Prior thereto, he held a variety of managerial
positions with Spartan Mills, a manufacturer of nonwoven geotextile fabrics.
During his last five years at Spartan, he was Vice President and General
Manager.
William Gardner Wright, Jr., age 68, was Vice President -- Marketing and
Sales from 1983 to 1996 at which time he was named Vice President -- General
Manager of the Carpet Backing Division. From 1977 until 1983, he was President
of Synca Marketing Corp., a textile sales agency which served as a sales agent
for the Company's primary carpet backing, as well as the products of other
manufacturers. Mr. Wright is a director of the Sun Trust Bank of Northwest
Georgia. Mr. Wright is also the sole director and sole stockholder of one of the
general partners of Synthetic Management G.P.
Robert J. Breyley, age 68, joined the Company in 1984 and became Vice
President -- Fibermesh(R) Division in December 1984. Prior thereto, he held a
variety of managerial positions with Master Builders, Inc., a leading concrete
admixtures supplier. During his last six years with Master Builders, he was
Senior Vice President of Sales and Marketing. Mr. Breyley retired on October 3,
1997.
Bobby Callahan, age 55, joined the Company in 1977 and has been Controller
since 1980. Prior thereto, he held a variety of financial management positions
in the carpet industry.
W.O. Falkenberry, Jr., age 55, joined the Company in 1993 as Vice
President -- Human Resources. Prior thereto, he was Director of Human Resources
with the Champion Products Division of the Sara Lee Corporation from 1989 to
1993.
Richard E. Hingson, age 42, joined the Company in 1984 as Quality Control
Manager and became Technical Director in 1989. He was promoted to Vice
President -- Technical Services in 1997. Prior thereto, he held a variety of
managerial positions with Amoco Fabrics Company, a producer of polypropylene and
polyethylene yarns and fabrics.
The Company's Bylaws provide that each officer shall hold office until the
officer's successor is elected or appointed or until the officer's death,
resignation or removal by the Board.
8
<PAGE> 12
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information regarding aggregate cash
compensation, stock option awards and other compensation earned by the Company's
Chief Executive Officer and the four other most highly compensated executive
officers for services rendered in all capacities to the Company and its
subsidiaries in the fiscal years 1995 to 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- ------------
FISCAL OTHER SECURITIES
NAME AND YEAR ENDED ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION SEPTEMBER 30, SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
------------------ ------------- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Chill 1997 $270,163 $144,720 $2,168 -- $ 10,174(1)
Chief Executive Officer 1996 254,871 118,119 2,170 -- 9,924(1)
and President 1995 254,871 89,939 3,200 -- 10,044(1)
Ralph Kenner 1997 $154,731 $ 69,768 $5,771 -- $ 4,750(2)
Vice President -- 1996 145,973 55,063 5,395 -- 4,170(2)
Manufacturing 1995 145,973 41,926 5,294 -- 4,482(2)
William Gardner Wright, Jr. 1997 $249,803 $ 91,800 $ 427 -- $ 4,750(2)
Vice President -- General 1996 235,664 81,920 700 -- 4,170(2)
Manager -- Carpet Backing 1995 235,664 70,238 880 -- 4,005(2)
Division
Robert J. Breyley 1997 $141,720 $ 47,656 $ -- -- $ 4,750(2)
Vice President -- 1996 141,720 48,144 -- -- 4,170(2)
Fibermesh(R) Division 1995 141,720 49,500 455 -- 3,329(2)
W. Wayne Freed 1997 $161,544 $ 46,980 $6,842 -- $ 4,750(2)
Vice President -- Market 1996 152,400 37,123 4,826 -- 4,170(2)
Development 1995 142,000 28,267 5,278 -- 4,090(2)
</TABLE>
- ---------------
(1) These amounts consist of $5,424 of insurance premiums paid by the Company
under a term life insurance policy in each of 1997, 1996 and 1995, and
$4,750, $4,500 and $4,620 contributed by the Company under its 401(k) plan
in 1997, 1996 and 1995, respectively.
(2) These amounts represent the annual contribution made by the Company under
its 401(k) Plan in the respective year.
9
<PAGE> 13
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the executive
officers named in the Summary Compensation Table concerning the exercise of
options during fiscal 1997 and unexercised options held as of the end of fiscal
1997, which include grants made under the Company's 1994 and 1996 Stock Option
Plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(1) AT FY-END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Chill............... -- -- 63,922 81,360 $1,168,494 $1,487,261
Ralph Kenner................ -- -- 21,821 32,050 398,888 585,874
William Gardner Wright,
Jr........................ -- -- 21,821 32,050 398,888 585,874
Robert J. Breyley........... -- -- 4,843 4,843 88,530 88,530
W. Wayne Freed.............. -- -- 21,821 32,050 398,888 585,874
</TABLE>
- ---------------
(1) Any shares of Common Stock received upon the exercise of options are subject
to "lock-up" agreements with the underwriters of the Common Stock Offering.
(2) Based on the September 30, 1997 price ($29.00 per share) less the exercise
price ($10.72 per share) payable for such shares.
DESCRIPTION OF CERTAIN EMPLOYMENT AGREEMENTS
Each of Messrs. Chill, Freed, Kenner and Wright (the "Executives") are
employed by the Company pursuant to individual employment agreements effective
as of September 6, 1996 (the "Effective Date"). The term of employment under
these agreements is three years from the Effective Date; provided that on each
anniversary of the month following the first Effective Date, and each successive
month, the term is automatically extended for one successive month, providing a
minimum remaining term of two years, unless either party terminates the
agreement by written notice. The current annual salaries for Messrs. Chill,
Freed, Kenner and Wright pursuant to these agreements are $270,163, $161,544,
$154,731 and $249,803, respectively, and are subject to annual review by the
Board.
The Company has the right to terminate the Executive's employment for
"cause" or "without cause," in each case as defined in the applicable employment
agreement. In the event that an Executive is terminated by the Company "without
cause," other than following a "Change in Control" (as defined below), the
Executive is entitled to receive his base salary at the rate in effect on the
date of termination of employment for a period of two years from the date of
termination, any unpaid, accrued amounts under the annual incentive plan, a pro
rata payment under the annual incentive plan for the termination year, a payment
equal to the three year average of incentive payments received under the
Company's annual incentive plan and any stock option rights due through the end
of the term. Under each employment agreement, a "Change in Control" occurs when
(i) any person or group becomes the beneficial owner of capital stock of the
Company representing 35% of all the voting stock, (ii) the members of the Board
on the Effective Date cease to constitute a majority of the Board, or (iii) the
Company combines with another entity and a person holds more than 35% of the
voting stock of the Company or the Company's directors, as of the date
immediately before such combination, constitute less than a majority of the
board of directors of the combined entity.
If the Executive is terminated by the Company "without cause" prior to the
occurrence of a Change in Control and it can be shown such termination occurred
in connection with, prior to or in anticipation of the Change in Control, or if
the termination resulted from a Change in Control, the Executive is entitled to
(i) a lump sum payment equal to two times the Executive's annual base salary and
annual incentive plan for the year in which the Change in Control occurs or the
prior year, whichever is greater, (ii) unpaid, accrued
10
<PAGE> 14
amounts under the annual incentive plan and a payment that equals the average of
the incentive payment received by the Executive under the annual incentive plan
for the immediately preceding three years and (iii) certain other supplemental
insurance coverages, for a maximum of 18 months (the "Change in Control
Provision"). In the event of a Change in Control, whether or not the Executive's
employment continues with the Company, all options granted to such Executive
under any of the Management Plans (as defined below) shall vest immediately on
the date of the Change in Control.
In the event that an Executive's employment is terminated for disability or
death, the Executive (or his estate) is to be paid (a) his base salary at the
rate in effect on the date of termination until the earlier of six months from
the date of termination or the date of commencement of long term disability
payments, if applicable, and (b) any unpaid, accrued amounts under the annual
incentive plan, and will receive any stock option rights to which such Executive
would otherwise be entitled. In the case of termination by reason of death, the
executive is also entitled to a payment under the annual incentive plan equal to
the pro rata amount due for the termination year.
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return (change in year-end stock price plus
reinvested dividends) on the Company's Common Stock against the cumulative total
return of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Building Materials Industry Index from November 1, 1996 to September 30, 1997.
LOGO
11
<PAGE> 15
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMPENSATION PROGRAM
The Company's compensation program for all executives, including the
executive officers named in the Summary Compensation Table, is administered by
the Compensation Committee (the "Committee") of the Company's Board of
Directors. The Committee currently consists of three members, all of whom are
non-employee directors. Set forth below is a report submitted by the Committee
addressing the Company's executive compensation program for fiscal 1997.
The Committee believes that executive compensation should reward long-term
value created for stockholders and reflect the business strategies and
long-range plans of the Company. The guiding principles with respect to
compensation are (i) to provide a competitive package that enables the Company
to attract, motivate and retain the key executives needed to accomplish its
corporate goals; (ii) to integrate compensation programs with the Company's
annual and long-term business objectives and strategy; and (iii) to provide
variable compensation opportunities that are directly linked with the
performance of the Company and that align executive remuneration with the
interests of the stockholders. In connection with this philosophy, the
compensation package of the executive employees of the Company consists of three
components: a base salary, an annual incentive bonus and long-term incentives in
the form of stock options. The Committee is responsible for reviewing the
Company's compensation program to ensure that pay levels and incentive
opportunities are competitive and reflect the performance of the Company. Each
component of the executive compensation program is described below.
BASE SALARY
The factors considered in determining the appropriate salary are level of
responsibility, prior experience and accomplishments, and the relative
importance of the job in terms of achieving corporate objectives. Each
executive's salary is reviewed annually. Adjustments may be recommended based
upon individual performance, inflationary and competitive factors and overall
corporate results.
In setting base salaries for fiscal 1997, the Committee attempted to
establish base salary levels consistent with the median base salary for
executives in similar positions within a peer group of approximately 24
companies of similar size and market orientation. The Chief Executive Officer,
after consultation with the senior human resources executive of the Company and
the Chief Financial Officer, reviewed with the Committee a proposed 1997 salary
plan for the Company's executive officers, following which the Committee
approved the proposed 1997 plan at the October 29, 1996 meeting.
ANNUAL INCENTIVE COMPENSATION
Cash bonuses are paid annually based upon individual performance and
relevant corporate performance measures, including operating income and customer
satisfaction. These performance measures vary depending upon the executive and
the related line of business. Bonuses are paid only if the Company has met
certain targets established by the Board at the beginning of the year. Target
awards are established for each position as a percentage of base salary, based
on competitive salary data, and performance is assessed at the end of the year.
Whether or not an executive officer earns a bonus in any year is based upon
actual corporate performance relative to the targets established at the
beginning of the year and on individual performance. Partial bonuses may be
awarded if minimum corporate performance measures are achieved. For executive
officers, the percentage of base salary payable as bonus ranges from 15% to 55%.
The Committee administers the Company's incentive program, recommends to
the Board the aggregate amount of incentive compensation and approves individual
officer awards. The Board approves the aggregate amount of the incentive
compensation awards to all participants.
12
<PAGE> 16
STOCK OPTIONS
The Company has, on certain occasions, awarded stock options to executive
officers to provide competitive compensation packages and because the Company
believes it is important that all of its key executive officers have a strong
economic interest in maximizing stock price appreciation, thereby aligning their
interests with the Company's stockholders. Option exercise prices are set at
100% of fair market value on the date of the grant and options expire after 10
years. The stock options granted by the Committee vest at a rate of 25% per year
beginning one year after the grant date in order to encourage management
continuity and better tie compensation to long-term stock value. In fiscal 1997,
the Company granted options to certain newly hired or promoted executive
officers and certain other officers who previously had only nominal stock
holdings in the Company. The Company did not grant any of the executive officers
named in the Summary Compensation Table any options in fiscal 1997.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In connection with the Company's initial public offering on November 1,
1996, the Company entered into an employment agreement with Mr. Chill effective
as of September 6, 1996. Accordingly, Mr. Chill's fiscal 1997 compensation was
largely determined by the terms of that employment agreement. The terms of Mr.
Chill's employment agreement provide for a base salary of $270,163 per annum and
a bonus determined by the Committee with reference to the performance of Mr.
Chill and the performance and results of operations of the Company. The
Committee considered certain performance goals and achievements in determining
the bonus for Mr. Chill for fiscal 1997. The Committee's determination of Mr.
Chill's bonus for fiscal 1997 was based on the factors cited above and such
bonus and his salary reflect the overall responsibilities inherent in his
position as President and Chief Executive Officer.
OTHER COMPENSATION POLICIES
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the tax deduction that the Company may take with respect to the
compensation of certain executive officers, unless the compensation is
"performance based" as defined in the Code. The Company has not adopted a policy
with respect to qualifying compensation paid to its executive officers for
deductibility under Section 162(m) since no executive officer currently
receives, or has received, taxable compensation in excess of $1 million per
year.
The report of the Committee shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act or under the Exchange Act, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
Compensation Committee of the Board of Directors:
Robert L. Voigt, Chairman
Lee J. Seidler
William J. Shortt
January 28, 1998
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal 1996 and 1997, the Company paid legal fees totaling
approximately $232,000 and $241,000 to the law firm of Watson & Dana. Until May
21, 1997, Mr. Dana, a director of the Company and a member of the Compensation
Committee, was a member of Watson & Dana. Effective May 21, 1997, Mr. Dana
became employed as Chief Operating Officer and General Counsel.
During fiscal 1997, the members of the Compensation Committee were Mr. Lee
J. Seidler, Mr. William J. Shortt, and Mr. Robert L. Voigt.
13
<PAGE> 17
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's Proxy Statement relating to
the 1999 Annual Meeting of Stockholders, a stockholder proposal must be received
in proper form at the Company's principal executive office no later than
September 30, 1998, and must otherwise comply with the requirements of Rule
14a-8 under the Exchange Act. See "Election of Directors" and the Company's
Bylaws for notice procedures to recommend a person for nomination as a director
and to propose business to be considered by the stockholders at a meeting,
including one that is not the subject of a proposal timely submitted for
inclusion in the Company's proxy statement.
ANNUAL REPORT AND INFORMATION FOR STOCKHOLDERS
The annual report to stockholders, including consolidated financial
statements, accompanies this Proxy Statement but does not constitute a part of
the proxy soliciting materials. THE COMPANY WILL FURNISH WITHOUT CHARGE AN
ADDITIONAL COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER
30, 1997, INCLUDING FINANCIAL STATEMENTS BUT WITHOUT EXHIBITS, TO EACH PERSON
WHOSE VOTE IS SOLICITED BY THIS PROXY STATEMENT, UPON WRITTEN REQUEST TO JOSEPH
SINICROPI, CHIEF FINANCIAL OFFICER AND SECRETARY, SYNTHETIC INDUSTRIES, INC.,
309 LAFAYETTE ROAD, CHICKAMAUGA, GEORGIA 30707. Upon the payment of the
Company's reasonable expense of furnishing the exhibit requested, the Company,
upon request, will furnish any exhibit to the Form 10-K to any person whose vote
is solicited by this Proxy Statement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership (Forms 3, 4 and 5) of Common Stock and other equity
securities of the Company with the SEC and The Nasdaq Stock Market, Inc.
Officers, directors and greater-than-10% beneficial holders are required by SEC
regulation to furnish the Company with copies of all such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company and, if applicable, written
representations from certain reporting persons that no reports on Form 5 were
required, the Company believes that during the fiscal year ended September 30,
1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater-than-10% beneficial owners were complied with.
By Order of the Board of Directors,
JOSEPH SINICROPI
JOSEPH SINICROPI
Secretary
Chickamauga, Georgia
January 28, 1998
14
<PAGE> 18
EXHIBIT A
SYNTHETIC INDUSTRIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.1 ESTABLISHMENT OF PLAN.
Synthetic Industries, Inc., a Delaware corporation ("Synthetic Industries")
with principal offices located in Chickamauga, Georgia, adopts the following
employee stock purchase plan for its eligible employees, effective on April 1,
1998. This Plan shall be known as the Synthetic Industries, Inc. Employee Stock
Purchase Plan.
1.2 PURPOSE.
The purpose of this Plan is to provide an opportunity for eligible
employees of the Employer to become shareholders of Synthetic Industries. It is
believed that broad-based employee participation in the ownership of the
business will help to achieve the unity of purpose conducive to the continued
growth of the Employer and to the mutual benefit of its employees and
shareholders.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall have the meanings
specified below:
2.1 Board of Directors. The Board of Directors of Synthetic Industries.
2.2 Closing Market Price. The last sale price of the Stock as reported in
the Nasdaq National Market System (or other over-the-counter market or an
exchange, if applicable) on the date specified; or if no sales occurred on such
day, at the mean between the closing "bid" and "asked" prices on such day; but
if there should be any material alteration in the present system of reporting
sales prices of such Stock, or if such Stock should no longer be listed on
Nasdaq's National Market System (or other over-the-counter market or an
exchange), the market value of the Stock as of a particular date shall be
determined in such a method as shall be specified by the Plan Administrator.
2.3 Code. The Internal Revenue Code of 1986, as amended from time to time.
2.4 Commencement Date. The first day of each Option Period. The first
Commencement Date shall be April 1, 1998.
2.5 Contribution Account. As set forth in Article V, the account
established on behalf of a Participant to which shall be credited the amount of
the Participant's contribution.
2.6 Effective Date. April 1, 1998.
2.7 Employee. Each employee of an Employer except:
(i) any employee whose customary employment is twenty (20) hours per
week or less, or
(ii) any employee whose customary employment is for not more than five
months in any calendar year.
2.8 Employer. Synthetic Industries and any corporation which is a
Subsidiary of Synthetic Industries (except for a Subsidiary which by resolution
of the Board of Directors is expressly not authorized to become a participating
Employer). The term "Employer" shall include any corporation into which an
Employer may be merged or consolidated or to which all or substantially all of
its assets may be transferred, provided such corporation does not affirmatively
disavow this Plan.
A-1
<PAGE> 19
2.9 Exercise Date. The last trading date of each Option Period on the
Nasdaq National Market System.
2.10 Exercise Price. The price per share of the Stock to be charged to
Participants at the Exercise Date, as determined in Section 6.3.
2.11 Five-Percent Shareholder. An Employee who owns five percent (5%) or
more of the total combined voting power or value of all classes of stock of
Synthetic Industries or any Subsidiary thereof. In determining this five percent
test, shares of stock which the Employee may purchase under outstanding options,
warrants or other convertible securities, as well as stock attributed to the
Employee from members of his family or otherwise under Section 424(d) of the
Code, shall be treated as stock owned by the Employee in the numerator, but
shares of stock which may be issued under options, warrants or other convertible
securities shall not be counted in the total of outstanding shares in the
denominator.
2.12 Grant Date. The first trading date of each Option Period on the
Nasdaq National Market System (or other over-the-counter market or an exchange,
if applicable).
2.13 Nasdaq. The National Association of Securities Dealers Automated
Quotation System.
2.14 Option Period. Successive periods of three (3) months (i) commencing
on April 1 and ending on June 30; (ii) commencing on July 1 and ending on
September 30; (iii) commencing on October 1 and ending on December 31; and (iv)
commencing on January 1 and ending on March 31.
2.15 Participant. Any Employee of an Employer who has met the conditions
for eligibility as provided in Article IV and who has elected to participate in
the Plan.
2.16 Plan. Synthetic Industries, Inc. Employee Stock Purchase Plan.
2.17 Plan Administrator. The committee composed of one or more individuals
to whom authority is delegated by the Board of Directors to administer the Plan,
which committee shall be known as the Employee Stock Purchase Plan Committee.
2.18 Stock. Those shares of common stock of Synthetic Industries which are
reserved pursuant to Section 6.1 for issuance upon the exercise of options
granted under this Plan.
2.19 Subsidiary. Any corporation in an unbroken chain of corporations
beginning with Synthetic Industries each of which (other than the last
corporation in the chain) owns stock possessing fifty percent (50%) or more of
the combined voting power of all classes of stock in one of the other
corporations in such chain.
ARTICLE III
SHAREHOLDER APPROVAL
3.1 SHAREHOLDER APPROVAL REQUIRED.
If the Plan is not approved by the shareholders of Synthetic Industries by
April 1, 1998, the Plan and all options thereunder shall terminate, the balance,
if any, in each Participant's Contribution Account shall be refunded in cash as
soon as practicable.
Additionally, no amendment to this Plan shall increase the number of shares
reserved under the Plan, other than as provided in Section 10.4. Approval by
shareholders must comply with applicable provisions of the corporate charter and
bylaws of Synthetic Industries and with Delaware law prescribing the method and
degree of shareholder approval required for issuance of corporate stock or
options.
A-2
<PAGE> 20
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
4.1 CONDITIONS.
Each Employee shall become eligible to become a Participant in the Plan on
the Commencement Date of the Option Period following the date on which his
employment with the Employer begins. However, no Employee who is a Five-Percent
Shareholder shall be eligible to participate in the Plan. Notwithstanding
anything to the contrary contained herein, no individual who is not an Employee
shall be granted an option to purchase Stock under the Plan.
4.2 APPLICATION FOR PARTICIPATION.
Each Employee who becomes eligible to participate shall be furnished a
summary of the Plan and an enrollment form. If such Employee elects to
participate hereunder, Employee shall complete such form and file it with
Employer no later than ten (10) days prior to the next Commencement Date or, in
the case of the first Commencement Date, no later than March 20, 1997. The
completed enrollment form shall indicate the amount of Employee contribution
authorized by the Employee. If no new enrollment form is filed by a Participant
in advance of any Option Period after the initial Option Period, that
Participant shall be deemed to have elected to continue to participate with the
same contribution previously elected. If any Employee does not elect to
participate in any given Option Period, such Employee may elect to participate
on any future Commencement Date so long as such Employee continues to meet the
eligibility requirements.
4.3 DATE OF PARTICIPATION.
All Employees who elect to participate shall be enrolled in the Plan
commencing with the first paydate after the Commencement Date following their
submission of the enrollment form. Upon becoming a Participant, the Participant
shall be bound by the terms of this Plan, including any amendments whenever
made.
4.4 ACQUISITION OR CREATION OF SUBSIDIARY.
If the stock of a corporation is acquired by Synthetic Industries or
another Employer so that the acquired corporation becomes a Subsidiary, or if a
Subsidiary is created, the Subsidiary in either case shall automatically become
an Employer and its Employees shall become eligible to participate in the Plan
on the first Commencement Date after the acquisition or creation of the
Subsidiary, as the case may be.
Notwithstanding the foregoing, the Board of Directors may by appropriate
resolutions (i) provide that the acquired or newly created Subsidiary shall not
be a participating Employer, (ii) specify that the acquired or newly created
Subsidiary will become a participating Employer on a date other than the first
Commencement Date after the acquisition or creation, or (iii) attach any
conditions whatsoever (including denial of credit for prior service) to
eligibility of the employees of the acquired or newly created Subsidiary.
ARTICLE V
CONTRIBUTION ACCOUNT
5.1 EMPLOYEE CONTRIBUTIONS.
(a) Payroll Deduction Contributions. In order to make contributions to
the Plan through payroll deductions, a Participant shall authorize the
Employer (in writing or in a manner expressly permitted by the Plan
Administrator) to deduct from the Participant's compensation an after-tax
amount in an exact number of dollars during each payroll period, with each
such deduction equaling not less than five ($5.00) per payroll period. The
dollar amount deducted each payday shall be credited to the Participant's
Contribution Account.
(b) Lump-Sum Contributions. A Participant, whether or not
participating in the Plan pursuant to paragraph (a) of this Section 5.1,
may make a lump-sum contribution to the Plan one (1) time during each
Option Period. Any such lump-sum contribution shall be paid by check at any
time prior to ten (10) days before the Exercise Date, which contribution
shall be credited to the Participant's Contribution Account.
A-3
<PAGE> 21
(c) Participant contributions will not be permitted to commence at any time
during the Option Period other than on a Commencement Date. No interest will
accrue on any contributions or on the balance in a Participant's Contribution
Account.
5.2 MODIFICATION OF CONTRIBUTION RATE.
No change shall be permitted in a Participant's amount or rate of payroll
deduction contributions except upon a Commencement Date, and then only if the
Participant files a new enrollment form with the Employer at least ten (10) days
in advance of the Commencement Date. Notwithstanding the foregoing, a
Participant may notify the Employer at any time that Participant wishes to
discontinue his contributions (except during the last ten (10) days of the
Option Period). This notice shall be in writing on such forms as provided by the
Employer and shall become effective as of a date of such notice, but not more
than thirty (30) days following its receipt by the Employer. The Participant
shall become eligible to recommence contributions on the next Commencement Date.
5.3 WITHDRAWAL OF CONTRIBUTIONS.
A Participant may elect to withdraw the balance of his Contribution Account
at any time during the Option Period prior to the Exercise Date (except during
the last ten (10) days of the Option Period). The option granted to a
Participant shall be canceled upon his withdrawal of the balance in his
Contribution Account. This election to withdraw must be in writing on such forms
as may be provided by the Employer. If contributions are withdrawn in this
manner, further contributions during that Option Period will be discontinued in
the same manner as provided in Section 5.2, and the Participant shall become
eligible to recommence contributions on the next Commencement Date.
ARTICLE VI
ISSUANCE AND EXERCISE OF OPTIONS
6.1 RESERVED SHARES OF STOCK.
Synthetic Industries shall reserve three hundred twenty five thousand
(325,000) shares of Stock for issuance upon exercise of the options granted
under this Plan.
6.2 ISSUANCE OF OPTIONS.
On each Grant Date each Participant shall be deemed to receive an option to
purchase a maximum number of shares of Stock, with such maximum number of shares
determined as the number equal to (i) the number of shares that can be purchased
with $25,000 using the fair market value of the Stock on the Grant Date minus
(ii) the fair market value of any shares of Stock purchased under this Plan
during any preceding Option Period during the same calendar year (with the fair
market value of any such previously purchased shares being equal to the fair
market value of the Stock on the Grant Date of the option under which it was
purchased).
6.3 DETERMINATION OF EXERCISE PRICE.
The Exercise Price of the options granted under this Plan for any Option
Period shall be the lesser of
(i) eighty-five percent (85%) of the Closing Market Price of the Stock
on the Grant Date, or
(ii) eighty-five percent (85%) of the Closing Market Price of the Stock
on the Exercise Date.
6.4 PURCHASE OF STOCK.
On an Exercise Date, the Contribution Account of each Participant shall be
used to pay the Exercise Price of the number of shares of Stock, including
fractional shares, that can be purchased with the amount equal to (i) the
balance of the Participant's Contribution Account divided by (ii) the Exercise
Price (but not in excess of the number of shares for which his option was
granted pursuant to Section 6.2). Any excess that may remain in the Contribution
Account after the exercise of the maximum number of shares that were granted
pursuant to Section 6.2, shall be returned to the Participant. The Participant's
right to purchase any
A-4
<PAGE> 22
shares for which the Exercise Price was not contributed to the Contribution
Account during the Option Period shall expire on the Exercise Date. Options of a
Participant who has terminated employment pursuant to Section 7.1 shall not be
exercised and shall expire.
6.5 TERMS OF OPTIONS.
Options granted under this Plan shall be subject to such amendment or
modification as the Employer shall deem necessary to comply with any applicable
law or regulation, including but not limited to Section 423 of the Code, and
shall contain such other provisions as the Employer shall from time to time
approve and deem necessary.
6.6 LIMITATIONS ON OPTIONS.
The options granted hereunder are subject to the following limitations:
(a) No Participant shall be permitted to purchase during any calendar
year Stock under this Plan (and any other plan of the Employer or
Subsidiary which is qualified under Section 423 of the Code) having a
market value in excess of $25,000 (as determined on the Grant Date for the
Option Period during which each such share of Stock is purchased).
(b) No option may be granted to a Participant if the Participant
immediately after the option is granted would be a Five-Percent
Shareholder.
(c) No Participant may assign, transfer or otherwise alienate any
options granted to him under this Plan, otherwise than by will or the laws
of descent and distribution, and such options must be exercised during the
Participant's lifetime only by the Participant.
6.7 PRO RATA REDUCTION OF OPTIONED STOCK.
If the total number of shares of Stock to be purchased under option by all
Participants on an Exercise Date exceeds the number of shares of Stock remaining
authorized for issuance under Section 6.1, a pro rata allocation of the shares
of Stock available for issuance will be made among Participants in proportion to
their respective Contribution Account balances on the Exercise Date, and any
money remaining in the Contribution Accounts shall be returned to the
Participants.
6.8 STATE SECURITIES LAWS.
Notwithstanding anything to the contrary contained herein, the Company
shall not be obligated to issue shares of Stock to any Participant if to do so
would violate any State securities law applicable to the sale of Stock to such
Participant. In the event that the Company refrains from issuing shares of Stock
to any Participant in reliance on this Section, the Company shall return to such
Participant the amount in such Participant's Contribution Account that would
otherwise have been applied to the purchase of Stock.
ARTICLE VII
TERMINATION OF PARTICIPATION
7.1 TERMINATION OF EMPLOYMENT.
Any Employee whose employment with the Employer is terminated during the
Option Period and prior to the Exercise Date for any reason except death,
disability or retirement at or after age 65 shall cease being a Participant
immediately. The option granted to such Participant shall be null and void. The
balance of such Participant's Contribution Account shall be paid to such
Participant as soon as practical after his termination.
7.2 DEATH.
If a Participant should die while employed by the Employer, no further
contributions on behalf of the deceased Participant shall be made. The legal
representative of the deceased Participant may elect to withdraw the balance in
said Participant's Contribution Account by notifying the Employer in writing
prior to the Exercise Date in the Option Period during which the Participant
died. In the event no election to withdraw is made prior to the Exercise Date,
the balance accumulated in the deceased Participant's Contribution
A-5
<PAGE> 23
Account shall be used to purchase shares of Stock in accordance with Section
6.4. Any money remaining which is insufficient to purchase a whole share shall
be paid to the legal representative.
7.3 RETIREMENT.
If a Participant should retire from the employment of the Employer at or
after age 65, no further contributions on behalf of the retired Participant
shall be made. The Participant may elect to withdraw the balance in his
Contribution Account by notifying the Employer in writing prior to the Exercise
Date in the Option Period during which the Participant retired. In the event no
election to withdraw is made prior to the Exercise Date, the balance accumulated
in the retired Participant's Contribution Account shall be used to purchase
shares of Stock in accordance with Section 6.4, and any money remaining which is
insufficient to purchase a whole share shall be paid to the retired Participant.
7.4 DISABILITY.
If a Participant should terminate employment with the Employer on account
of disability, as determined by such Participant's eligibility for benefits
under the Employer's long-term disability plan, no further contributions on
behalf of the disabled Participant shall be made. The Participant may elect to
withdraw the balance in his Contribution Account by notifying the Employer in
writing prior to the Exercise Date in the Option Period during which the
Participant became disabled. In the event no election to withdraw is made prior
to the Exercise Date, the balance accumulated in the disabled Participant's
Contribution Account shall be used to purchase shares of Stock in accordance
with Section 6.4, and any money remaining which is insufficient to purchase a
whole share shall be paid to the disabled Participant.
ARTICLE VIII
OWNERSHIP OF STOCK
8.1 STOCK CERTIFICATES.
Stock purchased through exercise of the options granted hereunder shall be
uncertificated. However, as soon as practical after the request by an eligible
Participant, certificates will be issued in 10 share increments only, in the
name of the Participant, jointly in the name of the Participant and a member of
the Participant's family, or to the Participant as custodian for the
Participant's child under the applicable jurisdiction's Gift to Minors Act. In
addition, upon the termination of employment of an Employee, or if necessary to
facilitate the transfer of Stock by an Employee, certificates will be issued in
the name of such persons in increments of other than 10 shares, if appropriate.
The Participant's request for certificates shall be in writing unless another
manner for making such requests is expressly authorized by the Plan
Administrator.
8.2 PREMATURE SALE OF STOCK.
A Participant (or former Participant) who sells or otherwise disposes of
any shares of Stock obtained under this Plan prior to the later of two (2) years
after the Grant Date of the option under which such shares were obtained, or one
(1) year after the Exercise Date on which such shares were obtained must notify
the Employer immediately in writing concerning such disposition.
ARTICLE IX
ADMINISTRATION AND AMENDMENT
9.1 ADMINISTRATION.
The Plan Administrator shall (i) administer the Plan and keep records of
the Contribution Account balance of each Participant, (ii) interpret the Plan,
and (iii) determine all questions arising as to eligibility to participate,
amount of contributions permitted, determination of the Exercise Price, and all
other matters of administration. The Plan Administrator shall have such duties,
powers and discretionary authority as may be necessary to discharge the
foregoing duties, and may delegate any or all of the foregoing duties to any
individual or individuals (including officers or other Employees who are
Participants). The Board of Directors shall have the right at any time and
without notice to remove or replace any individual or committee of individuals
serving as Plan Administrator. All determinations by the Plan Administrator
shall be conclusive
A-6
<PAGE> 24
and binding on all persons. Any rules, regulations, or procedures that may be
necessary for the proper administration or functioning of this Plan that are not
covered in this Plan document shall be promulgated and adopted by the Plan
Administrator.
9.2 AMENDMENT.
The Board of Directors of the Employer may at any time amend the Plan in
any respect, including termination of the Plan, without notice to Participants.
Notwithstanding the foregoing, no amendment of the Plan as described in Section
3.1 shall become effective until and unless such amendment is approved by the
shareholders of Synthetic Industries.
9.3 Notwithstanding any provision of the Plan to the contrary, the Plan
and all rights hereunder shall terminate upon the earlier of:
(i) the date on which no Stock remains reserved for issuance under the
Plan with respect to future contributions to the Plan, or
(ii) the termination of the Plan by the Board of Directors of the
Company.
If the Plan is terminated, all options outstanding at the time of
termination shall become null and void and the balance in each Participant's
Contribution Account shall be paid to that Participant.
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES.
The Employer will pay all expenses of administering this Plan that may
arise in connection with the Plan.
10.2 TAX QUALIFICATION AND RULE 16B-3 COMPLIANCE.
This Plan is intended to be an employee stock purchase plan which qualifies
for favorable Federal income tax treatment under Section 423 of the Code. Any
provisions required to be included in the Plan under Section 423 of the Code and
regulations promulgated thereunder are hereby incorporated by reference. This
Plan is also intended to comply with Rule 16b-3 under the Securities Exchange
Act of 1934, and should be interpreted in accordance therewith.
10.3 NO CONTRACT OF EMPLOYMENT.
Nothing in this Plan shall be construed to constitute a contract of
employment between an Employer and any Employee or to be an inducement for the
employment of any Employee. Nothing contained in this Plan shall be deemed to
give any Employee the right to be retained in the service of an Employer or to
interfere with the right of an Employer to discharge any Employee at any time,
with or without cause, regardless of the effect which such discharge may have
upon him as a Participant of the Plan.
10.4 ADJUSTMENT UPON CHANGES IN STOCK.
The aggregate number of shares of Stock reserved for purchase under the
Plan as provided in Section 6.1, and the calculation of the Exercise Price as
provided in Section 6.3, shall be adjusted by the Plan Administrator (subject to
direction by the Board of Directors) in an equitable manner to reflect changes
in the capitalization of Synthetic Industries, including, but not limited to,
such changes as result from merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, combination of shares, exchange of shares and change in corporate
structure. If any adjustment under this Section 10.4 would create a fractional
share of Stock or a right to acquire a fractional share of Stock, such
fractional share shall be disregarded and the number of shares available under
the Plan and the number of shares covered under any options granted pursuant to
the Plan shall be the next lower number of shares, rounding all fractions
downward.
A-7
<PAGE> 25
10.5 EMPLOYER'S RIGHTS.
The rights and powers of any Employer shall not be affected in any way by
its participation in this Plan, including but not limited to the right or power
of any Employer to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
10.6 LIMIT ON LIABILITY.
No liability whatever shall attach to or be incurred by any past, present
or future shareholders, officers or directors, as such, of Synthetic Industries
or any Employer, under or by reason of any of the terms, conditions or
agreements contained in this Plan or implied therefrom, and any and all
liabilities of any and all rights and claims against Synthetic Industries, an
Employer, or any shareholder, officer or director as such, whether arising at
common law or in equity or created by statute or constitution or otherwise,
pertaining to this Plan, are hereby expressly waived and released by every
Participant as a part of the consideration for any benefits under this Plan;
provided, however, no waiver shall occur, solely by reason of this Section 10.5,
of any right which is not susceptible to advance waiver under applicable law.
10.7 GENDER AND NUMBER.
For the purposes of the Plan, unless the contrary is clearly indicated, the
use of the masculine gender shall include the feminine, and the singular number
shall include the plural and vice versa.
10.8 GOVERNING LAW.
The validity, construction, interpretation, administration and effect of
this Plan, and any rules or regulations promulgated hereunder, including all
rights or privileges of any Participants hereunder, shall be governed
exclusively by and in accordance with the laws of the State of Georgia, except
that the Plan shall be construed to the maximum extent possible to comply with
Section 423 of the Code and the Treasury regulations promulgated thereunder.
10.9 HEADINGS.
Any headings or subheadings in this Plan are inserted for convenience of
reference only and are to be ignored in the construction of any provisions
hereof.
10.10 SEVERABILITY.
If any provision of this Plan is held by a court to be unenforceable or is
deemed invalid for any reason, then such provision shall be deemed inapplicable
and omitted, but all other provisions of this Plan shall be deemed valid and
enforceable to the full extent possible under applicable law.
IN WITNESS WHEREOF, Synthetics Industries, Inc. has adopted this Plan,
effective April 1, 1998, subject to the approval of the shareholders of
Synthetic Industries pursuant to Section 3.1 of the Plan.
A-8
<PAGE> 26
PROXY
SYNTHETIC INDUSTRIES, INC.
Annual Meeting of Stockholders-February 25, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement of SYNTHETIC INDUSTRIES, INC. (the "Company"),
each dated January 28, 1998, and appoints LEONARD CHILL and JOSEPH F. DANA, or
either of them, as the proxies and attorneys-in-fact, with full power to each of
substitution on behalf and in the name of the undersigned to vote and otherwise
represent all of the shares registered in the name of the undersigned at the
1998 Annual Meeting of Stockholders of the Company to be held on February 25,
1998 at 10:00 a.m., local time, at the Walker County Civic Center, 10052 N.
Highway 27, Rock Springs, Georgia 30737, and any adjournments thereof with the
same effect as if the undersigned were present and voting such shares, on the
following matters and in the following manner set forth on the reverse side:
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 27
[X] Please mark votes as in this example.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
This proxy will be voted as directed or, if no contrary direction is indicated, will be voted FOR the election of Directors,
FOR approval of the Company's Employee Stock Purchase Plan, FOR the ratification of the appointment of Deloitte & Touche LLP
as independent public accountants, and as said proxies deem advisable on such other matters as may come before the meeting.
1. ELECTION OF DIRECTORS. 2. PROPOSAL TO APPROVE THE FOR AGAINST ABSTAIN
Nominees: Leonard Chill, Joseph F. Dana, COMPANY'S EMPLOYEE STOCK [ ] [ ] [ ]
Lee J. Seidler, William J. Shortt, PURCHASE PLAN.
Robert L. Voight
FOR WITHHELD
[ ] [ ]
3. PROPOSAL TO RATIFY THE [ ] [ ] [ ]
(INSTRUCTIONS: To withhold authority to vote for APPOINTMENT OF DELOITTE &
any individual nominee, strike a line through the TOUCHE LLP AS THE COMPANY'S
nominee's name on the list above.) INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE 1998
FISCAL YEAR.
and upon such other matters which may properly come before the
meeting or any adjournment or adjournments thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
(This proxy should be dated, signed by the stockholder(s) exactly as his or
her name appears hereon and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If the shares
are held by joint tenants or as community property, both should sign.)
Signature: _______________________________ Date: __________ Signature: _________________________________ Date: ___________
</TABLE>
