<PAGE>
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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
FOAMEX INTERNATIONAL 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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) 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:
[X] 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>
[GRAPHIC OMITTED - COMPANY LOGO]
FOAMEX INTERNATIONAL INC.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Dear Stockholders:
On behalf of the Board of Directors, it is my pleasure to invite you to attend
the 1996 Annual Meeting of Stockholders which will be held on Thursday, May
23, 1996, at 10:30 a.m., local time, at the Company's offices, 1000 Columbia
Avenue, Linwood, Pennsylvania. All holders of the Company's outstanding common
stock as of April 1, 1996 are entitled to vote at the Annual Meeting.
The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
describe the formal business to be transacted at the Annual Meeting. Directors
and Officers will be present at the Annual Meeting to respond to any questions
you may have.
Please sign, date and return the enclosed Proxy Card in the envelope provided
as soon as possible so that your shares can be voted at the meeting in
accordance with your instructions. If you plan to attend the meeting, please
mark the box on the Proxy Card.
Very truly yours,
MARSHALL S. COGAN
CHAIRMAN OF THE BOARD
<PAGE>
FOAMEX INTERNATIONAL INC.
-----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 23, 1996
------------------------------
The Annual Meeting of Stockholders of Foamex International Inc., a
Delaware corporation (the "Company"), will be held at the offices of the
Company, 1000 Columbia Avenue, Linwood, Pennsylvania 19061, on Thursday, May
23, 1996, at 10:30 a.m., local time, for the purpose of considering and acting
upon the following matters, which are described more fully in the accompanying
Proxy Statement:
(a) To amend the Company's Restated Certificate of
Incorporation to provide for a single class of directors;
(b) To elect nine directors to serve until the 1997 annual
meeting of stockholders or until their respective successors
are duly elected and qualified;
(c) To amend the Company's Restated Certificate of
Incorporation to eliminate the Company's Class A Common
Stock;
(d) To ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the year ending
December 29, 1996 ("Fiscal 1996"); and
(e) To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
Holders of Common Stock of record at the close of business on April
1, 1996 (the "Record Date") are entitled to vote at the Annual Meeting and any
adjournment thereof. A list of stockholders of the Company as of the Record
Date will be available for inspection during business hours through May 22,
1996, at the Company's offices, 1000 Columbia Avenue, Linwood, Pennsylvania
19061, and will also be available for inspection at the Annual Meeting.
Stockholders are requested to complete, date and sign the enclosed
proxy card and return it promptly in the enclosed envelope which has been
provided for your convenience and which requires no postage if mailed in the
United States. The prompt return of proxy cards will ensure a quorum. Any
stockholder present at the Annual Meeting may revoke his or her proxy, and
vote personally on all matters brought before the Annual Meeting.
By Order of the Board of Directors,
PHILIP N. SMITH, JR.
SECRETARY
<PAGE>1
FOAMEX INTERNATIONAL INC.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Foamex International Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held on Thursday, May 23, 1996, at
10:30 a.m., local time, at the offices of the Company, 1000 Columbia Avenue,
Linwood, Pennsylvania 19061, or at any adjournment or postponement thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. It is expected that the Notice of Annual Meeting of Stockholders,
this Proxy Statement and the enclosed proxy card will be mailed to stockholders
entitled to vote at the Annual Meeting commencing on or about May 7, 1996.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Foamex International Inc., Investor
Relations, 375 Park Avenue, 11th Floor, New York, New York 10152, (212)
230-0400. To provide the Company sufficient time to arrange for reasonable
assistance, please submit all requests by May 15, 1996.
Record Date and Voting Securities
Stockholders can ensure that their shares are voted at the Annual
Meeting by signing and returning the enclosed proxy card in the envelope
provided. The submission of a signed proxy will not affect a stockholder's right
to attend the Annual Meeting and vote in person. Stockholders who execute
proxies retain the right to revoke them at any time before they are voted by
filing with the Secretary of the Company a written revocation or a proxy bearing
a later date. The presence at the Annual Meeting of a stockholder who has signed
a proxy does not itself revoke that proxy unless the stockholder attending the
Annual Meeting files written notice of revocation of the proxy with the
Secretary of the Company at any time prior to the voting of the proxy.
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted FOR the proposals submitted for
approval. The proxy card provides space for a stockholder to withhold voting for
any or all nominees to the Board of Directors or to abstain from voting for any
proposal if the stockholder chooses to do so. For purposes of determining the
number of votes cast with respect to any voting matter, only those cast "for" or
"against" are included. Abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present at the Annual Meeting.
The Board of Directors has fixed the close of business on April 1, 1996
as the record date (the "Record Date") for the determination of the stockholders
of the Company who are entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on the Record Date, the Company had
outstanding 25,457,148 shares of common stock, par value $0.01 per share (the
"Common Stock"), excluding treasury shares.
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the issued and outstanding Common Stock is necessary to
constitute a quorum. The holders of Common Stock are entitled to one vote for
each share held on the Record Date.
<PAGE>2
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors is responsible for the management and direction
of the Company and for establishing broad corporate policies. The Board of
Directors held four meetings during the year ended December 31, 1995 ("Fiscal
1995") and acted by written consent seven times. No director attended less than
75% of the board and committee meetings scheduled during Fiscal 1995. The Board
of Directors had originally scheduled four regular meetings during Fiscal 1996;
however, the meeting scheduled to be held in March 1996 was canceled. On April
2, 1995 and November 2, 1995, Frank G. Zarb and Sidney Harman, respectively,
resigned as directors of the Company. In connection with Mr. Zarb's resignation,
the Board of Directors of the Company reduced the number of directors
constituting the entire Board from nine to eight members. In February 1996, the
Board of Directors voted to increase the number of directors constituting the
entire Board to nine members.
Committees of the Board of Directors
The Board of Directors has four standing committees: the Executive
Committee, the Audit Committee, the Compensation Committee and the Stock Option
Plan Committee. The Company does not have a standing committee on nominations.
The principal responsibilities of each committee are described in the following
paragraphs.
Executive Committee. The Executive Committee held one meeting in Fiscal
1995. It is comprised of Marshall S. Cogan, who serves as its Chairman, Robert
J. Hay and John Rallis. The Executive Committee's primary function is to assist
the Board of Directors by acting upon matters when the Board is not in session.
The Executive Committee has the full power and authority of the Board, except to
the extent limited by law or the Company's Restated Certificate of Incorporation
or By-Laws.
Audit Committee. The Audit Committee held two meetings in Fiscal 1995.
It is comprised of Etienne Davignon, who serves as its Chairman, Robert J. Hay
and John V. Tunney, all of whom are non-employee directors. The Audit Committee
is responsible for overseeing the Company's financial reporting process. The
Audit Committee consults with management and the Company's independent
accountants during the year on matters related to the annual audit, internal
controls, the published financial statements, and the accounting principles and
auditing procedures being applied. The Audit Committee also recommends a firm of
certified independent accountants to serve as the Company's independent
accountants, authorizes all audit fees and other professional services rendered
by the accountants and periodically reviews the independence of the accountants.
Compensation Committee. On May 18, 1995, the Board of Directors
dissolved the Compensation and Stock Option Plan Committee (the
"Compensation/SOP Committee") and formed two separate committees. Prior to that
time the Compensation and Stock Option Committee held one meeting. The
Compensation Committee held one meeting during Fiscal 1995. It is comprised of
John V. Tunney, who serves as its Chairman, Stuart J. Hershon and Carl
Spielvogel, all of whom are non-employee directors. The Compensation Committee
reviews and recommends to the Board of Directors the compensation to be paid to
the executive officers of the Company.
Stock Option Plan Committee. The Stock Option Plan Committee is
comprised of John V. Tunney, who serves as its Chairman, and Stuart J.
Hershon. The Stock Option Plan Committee administers and makes awards under
the Company's Stock Option Plan. The Stock Option Plan Committee held two
meetings during Fiscal 1995.
<PAGE>3
Compensation of Directors
In 1993, the Company instituted the Foamex International Inc.
Non-Employee Director Compensation Plan (the "Non-Employee Plan"), to provide
compensation to its non-employee directors (the "Outside Directors"). Pursuant
to the Non-Employee Plan, each Outside Director receives an annual retainer of
$50,000, payable in cash or Common Stock, and a $1,000 fee for each meeting of
the Board of Directors attended by such Outside Director. In addition, for
serving on a committee of the Board of Directors, each Outside Director receives
a $1,000 fee for each meeting of such committee attended by such Outside
Director and Outside Directors who serve as Chairman of a Committee receive an
additional fee of $1,000 per meeting attended. Messrs. Davignon, Hershon and
Spielvogel elected to receive their director and meeting fees for Fiscal 1995 in
shares of the Company's Common Stock. Mr. Tunney elected to receive his payment
in cash. Currently, there are four Outside Directors of the Company and five
employee directors. Robert J. Hay, who was previously employed by the Company,
retired in December 1995, and is now considered to be an Outside Director. All
directors are entitled to reimbursement for their reasonable out-of-
pocket expenses in connection with their travel to and attendance at meetings of
the Board of Directors or committees thereof. Directors who are also employees
of the Company or its subsidiaries receive no cash compensation for serving as
Directors or as members of Board committees.
ELIMINATION OF CLASSES AND STAGGERED TERMS OF THE BOARD OF DIRECTORS
The Company's Restated Certificate of Incorporation currently provides
that the Board of Directors, other than those, if any, elected by the holders of
any series of the Company's preferred stock, shall be divided into three classes
of directors serving staggered three-year terms, with the number of directors in
each class to be as nearly equal as possible. These provisions were intended to
enhance the likelihood of continuity and stability on the Board of Directors and
to discourage certain types of transactions which may involve an actual or
threatened change of control of the Company. Approximately 49% of the Company's
outstanding Common Stock is held by the Company's principal stockholder and
officers, directors and employees of the Company. Therefore, the Board of
Directors does not believe that such provisions are necessary or beneficial to
the Company.
The Board of Directors has unanimously approved, and recommends that
the stockholders approve, an amendment to the Company's Restated Certificate of
Incorporation (the "Board Term Amendment") to eliminate the division of
directors into three separate classes with staggered three-year terms and to
provide for the election of a single class of directors at each annual meeting
of stockholders. A draft of the proposed Board Term Amendment is attached hereto
as Exhibit A.
Vote Required
The affirmative vote of at least two-thirds of the outstanding shares
of Common Stock of the Company is required for approval of the Board Term
Amendment.
The Board of Directors recommends a vote "FOR" the proposed Board Term
Amendment.
<PAGE>4
ELECTION OF DIRECTORS
Upon approval of the Staggered Term Amendment, the Company will have
only one class of directors who will be elected at each annual meeting of
stockholders. Each director whose term would not have expired until the annual
meetings of stockholders to be held in 1997 or 1998 has signed a waiver to the
expiration of his staggered election term and has agreed to sit for re-election
this year. Accordingly, nine directors have been nominated by the Board of
Directors for re-election and to serve in such capacity for a term of one year
until the 1997 Annual Meeting of Stockholders.
Unless otherwise specified in the proxy, it is the intention of the
persons named in the proxies solicited by the Board of Directors to vote FOR the
nine nominees whose biographies are set forth below. If events not now known or
anticipated make any of the nominees unable to serve, the proxies will be voted,
at the discretion of the holders thereof, for other nominees supported by the
Board of Directors in lieu of those unable to serve.
Name and Principal Occupation Age and Biographical Information
- - - ----------------------------- --------------------------------
SALVATORE J. BONANNO Salvatore "Sam" J. Bonanno, 55, has been
Executive Vice President of Executive Vice President of Manufacturing,
Manufacturing, Corporate Corporate Planning of the Company and
Planning of the Company, President of Foamex L.P., a Delaware limited
and President of Foamex L.P. partnership and a subsidiary of the Company
engaged in the foam business ("Foamex L.P."),
since July 1995 and a director of the Company
since February 1996. Prior to joining the
Company, Mr. Bonanno was employed with
Chrysler Corporation for thirty years, most
recently serving as the General Manager of
International Manufacturing Operations. Mr.
Bonanno currently serves on the Industrial
Advisory Board of Lawrence Livermore National
Laboratories.
MARSHALL S. COGAN Marshall S. Cogan, 58, has been the
Chairman of the Board and Chairman of the Board and Chairman of the
Chief Executive Officer of Executive Committee of the Company since its
the Company and Chairman inception in September 1993 and Chief
and Chief Executive Officer Executive Officer since January 1994. Mr.
of Trace International Cogan served as Vice Chairman of Foamex L.P.
Holdings, Inc. from January 1993 until January 1994. Mr.
Cogan has been a director of Trace Foam
Company, Inc., formerly known as '21' Foam
Company, Inc. ("Trace Foam"), since December
1991 and the Chairman of the Board and
President of Trace Foam and its wholly-owned
subsidiary Trace Foam Sub, Inc., formerly
known as '21' Foam Sub, Inc. ("Trace Foam
Sub"), since January 1992 and March 1995,
respectively. Mr. Cogan has also served as
a director of JPSGP Inc. ("JPSGP"), the
managing general partner of JPS Automotive
L.P. ("JPS Automotive"), and JPS Automotive
Products Corp. ("Products Corp"), which are
subsidiaries of the Company, since October
and June of 1994, respectively. Mr. Cogan
has served as a director of Perfect Fit
<PAGE>5
Industries, Inc. ("Perfect Fit"), a
subsidiary of the Company, since November
1993. Mr. Cogan has been the principal
stockholder, Chairman or Co-Chairman of the
Board and Chief Executive Officer or Co-Chief
Executive Officer of Trace International
Holdings, Inc., formerly known as '21'
International Holdings, Inc. ("Trace
Holdings"), since 1974. He has also been a
member of the Board of Directors of United
Auto Group, Inc. ("UAG"), the fourth largest
retailer of automobiles in the United Stated
and an affiliate of Trace Holdings, since
November 1990, and of Recticel s.a.
("Recticel") since February 1993.
Additionally, Mr. Cogan serves on the Board
of Directors of the American Friends of the
Israel Museum and the American Ballet
Theater, the Board of Trustees of The Museum
of Modern Art, the Boston Latin School and
New York University Medical Center. Mr.
Cogan also serves on several committees of
Harvard University.
ETIENNE DAVIGNON Etienne Davignon, 63, has been a director of
Chairman of Societe the Company since December 1993. Mr. Davignon
Generale de Belgique has been the Chairman of Societe Generale de
Belgique, a Belgian bank and holding company,
and a director of its subsidiary Recticel since
April 1989. Mr. Davignon was a Vice President
of the EEC Commission in charge of industry,
research and energy from 1977 through 1984. He
was the first President of the International
Energy Agency. Mr. Davignon currently serves
as a director of, among other companies,
Generale de Banque s.a., Gilead Sciences,
Compagnie de Suez s.a., Solvay s.a. and
Kissinger Associates. Mr. Davignon also
serves as a member of the International
Advisory Board of Fiat S.p.A. He is the
Chairman of the Association for the Monetary
Union of Europe, the Paul-Henri Spaak
Foundation and the Royal Institute for
International Relations and is a member of the
European Roundtable of Industrialists, chairing
the working group on Trade and Investment.
<PAGE>6
ANDREA FARACE Andrea Farace, 40, has been a director of the
President of Trace Company since February 1996. Mr. Farace has
International Holdings, Inc. been President and a director of Trace Holdings
since December 1994 and December 1993,
respectively. Prior to that, Mr. Farace held
several executive positions within Trace
Holdings beginning in April 1991. Mr. Farace
was Senior Executive of C.I.R S.p.A. from May
1990 to March 1991. Prior to that, Mr.
Farace was a Managing Director at Shearson
Lehman Hutton, Inc. Mr. Farace is a director
of Trace Foam and CHF Industries, Inc., both of
which are subsidiaries of Trace Holdings as
well as Atlantic Auto Finance, Inc., an
affiliate of Trace Holdings, and General Felt
Industries, Inc. ("General Felt") and Foamex
Capital Corporation, both of which are
subsidiaries of the Company. Additionally, Mr.
Farace is a director of the Managed High
Income Portfolio, Inc. and a member of the
Advisory Board of the Italy Fund, both of which
are NYSE-listed mutual funds.
ROBERT J. HAY Robert Hay, 70, has been the Chairman Emeritus
Chairman Emeritus and a director of the Company since its
inception in September 1993. Mr. Hay served
as Chairman and Chief Executive Officer of
Foamex L.P. from January 1993 until January
1994. Mr. Hay was President of Foamex L.P.
and its predecessor from 1972 through 1992.
Mr. Hay began his career as a chemist with The
Firestone Tire and Rubber Company, a
predecessor of Foamex L.P., in 1948.
STUART J. HERSHON Stuart Hershon, 58, has been a director of
Orthopedic Surgeon the Company since December 1993. He was a
member of the Board of Directors of Trace
Holdings from April 1986 until May 1994. He is
a board certified, practicing orthopedic
surgeon at North Shore University Hospital and
at Columbia Presbyterian Medical Center in
New York where he is an assistant clinical
professor of orthopedic surgery. Dr. Hershon
has served as orthopedic consultant and team
physician for certain New York area
professional sports teams.
JOHN RALLIS John Rallis, 58, has been a director of the
President and Chief Company since its inception in September 1993
Operating Officer of the and has been the President and Chief Operating
Company Officer of the Company since January 1994. Mr.
Rallis served as President of Foamex L.P.
from January 1994 until July 1995. Prior to
<PAGE>7
that, Mr. Rallis served as a Senior Vice
President of the Company and Foamex L.P. from
September 1993 until January 1994. Mr. Rallis
has been a director of JPSGP and Products Corp
since October and June of 1994, respectively.
He held various managerial and executive
positions with The General Tire & Rubber
Company beginning in 1962 prior to becoming
President of the foam operations of that
company in 1977. In 1980, Mr. Rallis became
Chairman and Chief Executive Officer of Great
Western Foam Products Corporation and certain
related entities ("Great Western"), which was
acquired by the Company in 1993.
CARL SPIELVOGEL Carl Spielvogel, 67, has been a director of
Chairman and Chief the Company since December 1993. Since
Executive Officer of November 1994, Mr. Spielvogel has been
United Auto Group, Inc. Chairman and Chief Executive Officer of UAG.
Mr. Spielvogel was Chief Executive Officer,
Chairman of the Board and Chairman of the
Executive Committee of Bates Worldwide, Inc.,
formerly Backer Spielvogel, Bates Worldwide,
Inc. ("Bates Worldwide") from July 1987 until
October 1994. Mr. Spielvogel was Chairman and
Chief Executive Officer of Backer & Spielvogel,
Inc., a predecessor of Bates Worldwide of which
he was the founder, from 1979 to 1987. Prior to
that, Mr. Spielvogel was Vice Chairman,
Chairman of the Executive Committee and a
member of the Board of Directors of the
Interpublic Group of Companies, Inc.
("Interpublic"), with which he was associated
from 1960 to 1979. Before joining
Interpublic's parent group in 1972, he was
Chairman of the Executive Committee, Executive
Vice President and General Manager of
McCann-Erickson, Inc., Interpublic's largest
operating subsidiary. Mr. Spielvogel is a
director of Hasbro, Inc., Alliant Foodservice,
Inc. (formerly Kraft Foodservice, Inc.) and
Data Broadcasting Corporation. Mr. Spielvogel
is a member of the Board of Trustees and the
Executive Committee of the Metropolitan Museum
of Art, Lincoln Center and Mt. Sinai Hospital,
and is a member of the Board of Directors of
The Philharmonic-Symphony Society of New York,
Inc. He is also a member of the Council of
Foreign Relations and the Broadcasting Board of
Governors of the U.S. Government.
<PAGE>8
JOHN V. TUNNEY John Tunney, 61, has been a director of the
Chairman of the Board of Company since May 1994. He has been Chairman
Cloverleaf Group, Inc. of the Board of Cloverleaf Group, Inc., an
investment company, since 1981, President of
John V. Tunney & Associates, Inc. since 1991
and Chairman of the Board of Logan
Manufacturing Company since 1993. Mr. Tunney
has served as Vice Chairman of the Board of the
Corporate Fund for Housing since 1988. Mr.
Tunney served as a U.S. Senator from the State
of California from 1971 until 1977. Prior to
that, Mr. Tunney served as a member of
Congress from the 38th district of California
from 1965 until 1971. Mr. Tunney currently
serves as a member of the Board of Directors of
The Prospect Group, Inc., Garnet Resources
Corporation, Illinois Central Railroad Corp.,
Enterprise Plan, Inc. and The Forschner Group.
Vote Required
The affirmative vote of a plurality of the shares of Common Stock
present or represented at the Annual Meeting and entitled to vote is required
for the election of directors of the Company.
The Board of Directors recommends a vote "FOR" election of the nominees
listed above.
<PAGE>9
OWNERSHIP OF COMMON STOCK OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 1,
1996, regarding the beneficial ownership of Common Stock by (i) each stockholder
who is known by the Company to own more than 5% of the outstanding shares of
Common Stock, (ii) each director, (iii) each executive officer named in the
Summary Compensation Table and (iv) all directors and executive officers as a
group. Except as otherwise indicated, each stockholder has (i) sole voting and
investment power with respect to such stockholder's shares of stock, except to
the extent that authority is shared by spouses under applicable law and (ii)
record and beneficial ownership with respect to such stockholder's shares of
stock.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owners Beneficial
------------------------------------- Ownership (1)(2)
Number of Shares % of Class Outstanding
---------------- ----------------------
<S> <C> <C>
Trace International Holdings, Inc. (2) 11,349,900 44.6%
375 Park Avenue, 11th Floor
New York, New York 10152
Trace Foam Sub, Inc. (2) 7,000,247 27.5
375 Park Avenue, 11th Floor
New York, New York 10152
Lion Advisors, L.P. (3) 3,347,421 13.1
1301 Avenue of the Americas
New York, New York 10019
Apollo Advisors, L.P. (3) 3,347,421 13.1
2 Manhattanville Road
Purchase, New York 10577
Farmers Group, Inc. (4) 1,347,100 5.3
4680 Wilshire Blvd.
Los Angeles, California 90010
Marshall S. Cogan (2) (5) 11,734,900 46.1
Jerry A. Burns(5) 710 *
Murphy L. Fontenot(6) 64,097 *
Philip N. Smith, Jr.(5) 10,000 *
Dean C. Gaskins(5) 710 *
John Rallis 359,813 1.4
Salvatore J. Bonanno(5) 30,000 *
Etienne Davignon 15,527 *
Robert J. Hay 5,000 *
Andrea Farace 2,000 *
Stuart J. Hershon (7) 27,973 *
Carl Spielvogel 22,763 *
John V. Tunney (8) 12,200 *
All executive officers and directors 12,235,650 48.1%
as a group (19 persons)(2)(5)(6)(7)(8)
</TABLE>
<PAGE>10
- - - ----------------------
* Less than 1%.
(1) Each named person is deemed to be the beneficial owner of securities
which may be acquired within sixty days through the exercise of
options, warrants and rights, if any, and such securities are deemed to
be outstanding for purpose of computing the percentage of the class
beneficially owned by such person. However, any such shares are not
deemed to be outstanding for the purpose of computing the percentage of
the class beneficially owned by any other person, except as noted. Each
Named Executive Officer (as defined herein) elected to exchange his
options under the Stock Exchange Program pursuant to which none of
their options will be exercisable until December 1996 (other than Mr.
Fontenot, whose options were terminated in February in connection with
his termination of employment); therefore, no such options have been
included above.
(2) Trace Foam Sub is wholly-owned by Trace Foam, which, in turn, is
wholly-owned by Trace Holdings. The number of shares beneficially owned
by Trace Holdings includes the shares beneficially owned by Trace Foam
Sub. Additionally, 50,000 shares of the Common Stock reported herein
are held in trust for the exclusive benefit of participants under the
Trace International Holdings, Inc. Retirement Plan for Salaried
Employees. Marshall S. Cogan, Chairman of the Board and President of
each of Trace Foam Sub and Trace Foam, is the Chairman of the Board,
Chief Executive Officer and majority stockholder of Trace Holdings. Mr.
Cogan disclaims beneficial ownership of the Common Stock owned by Trace
Foam Sub or Trace Holdings.
(3) Lion Advisors, L.P. ("Lion"), pursuant to an investment advisory
contract with its client, Marely I s.a. ("Marely"), possesses the sole
power to vote and dispose of 1,548,710 of the indicated shares, which
shares are held for the account of Marely. Apollo Advisors, L.P., which
is an affiliate of Lion, possesses the sole power to vote and dispose
of 1,798,711 of the shares in its capacity as managing general partner
of AIF II, L.P., for whose account the shares are held. The Common
Stock presented in the table includes 531,174 shares of Common Stock
issuable to Marely and 531,175 shares issuable to AIF II, L.P. upon the
exercise of warrants exercisable at any time on or before October 12,
1999 at an exercise price of approximately $12.30 per share.
(4) Farmers Group, Inc. ("Farmers") is the beneficial owner of the
shares reported herein through various subsidiaries of Farmers, by
insurance exchanges for which Farmers acts as attorney-in-fact or by
benefit plans for employees of Farmers and its subsidiaries for
which Farmers has investment discretion. BAT Industries p.l.c. may
be deemed to be the beneficial owner of such shares by indirectly
owning 100% of the issued and outstanding stock of Farmers.
<PAGE>11
(5) Includes, as of December 31, 1995 (the latest available date for such
information), shares of the Company's Common Stock held by officers
and directors under the Company's 401(k) Plan or 401(k) Plans of its
subsidiaries. In the above table (i) 710 of such shares have been
included for each of Messrs. Burns and Gaskins under the JPS
Automotive 401(k) Plan; and (ii) 3,724 of such shares have been
included for All Executive Officers and Directors as a Group under
the Company's and JPS Automotive's 401(k) Plans, as applicable.
Includes 2,450 shares of Common Stock held by the immediate family
members of an executive officer, as to which such executive officer
disclaims beneficial ownership.
(6) Mr. Fontenot resigned as an officer of the Company and its
subsidiaries in February 1996. The shares beneficially owned by him
have not been included in the total ownership of officers and
directors as a group.
(7) Includes 1,075 shares of Common Stock held in a trust of which Dr.
Hershon is the sole trustee.
(8) Includes 9,000 shares of Common Stock held in a trust of which Mr.
Tunney serves as a co-trustee.
EXECUTIVE OFFICERS
Executive officers are elected by the Board of Directors and hold
office until their successors have been duly elected and qualified or until
their earlier resignation or removal from office. A brief biography of each
executive officer of the Company who served during 1995 is provided below
(other than Messrs. Bonanno, Cogan and Rallis, whose biographies are set forth
above).
William H. Bundy, 55, has been a Senior Vice President of the
Company since March 1994 and Senior Vice President of Manufacturing
Operations of Foamex L.P. since October 1995. Mr. Bundy served as a
director of the Company from September 1993 until May 1994. Mr. Bundy
served as President and Chief Operating Officer of the Company from
September 1993 until January 1994 and as President and Chief Operating
Officer of Foamex L.P. from January 1993 until January 1994. Mr. Bundy was
Senior Vice President of Manufacturing of Foamex L.P. from 1984 through
1992. Mr. Bundy began his career as a production manager for the predecessor
to Foamex L.P. in 1967.
Leonard P. Gineitis, 49, has been the Senior Vice President of
Procurement since January 1995. Prior to that, Mr. Gineitis was Vice President
of Purchasing of Sealy, Inc. from November 1990 until December 1994 and
Director of Corporate Purchasing of Invacare Corporation from October 1988
until November 1990. Prior to that, Mr. Gineitis was the Supervisor of
Purchasing for the Intelligent Motion Controls division of Allen Bradley &
Company from September 1984 until 1988.
<PAGE>12
Kenneth R. Fuette, 51, has been the Senior Vice President - Finance,
Chief Financial Officer and Chief Accounting Officer since January 1996. Prior
to that Mr. Fuette served as a Vice President of the Company or its
predecessors from 1983 to 1995 and as Controller of the Company or its
predecessors from 1977 to 1995.
Paul A. Haslanger, 49, has been the Senior Vice President of
Manufacturing of the Company since its inception in September 1993 and Senior
Vice President of Strategic Planning and the Technical Products Segment
Group since October 1995. Mr. Haslanger has been Senior Vice President of
Manufacturing of Foamex L.P. since February 1993. Mr. Haslanger was Vice
President of Manufacturing of Foamex L.P. and its predecessor from 1984
through January 1993. He began his career with the predecessor to Foamex L.P.
in 1969.
Barry Zimmerman, 58, has been the Senior Vice President of
Productivity and Quality of Foamex L.P. since October 1995 and Chairman,
President and a director of Foamex Latin America, Inc. since September
1993. Mr. Zimmerman has been a Senior Vice President or Vice President and
Managing Director of Trace Holdings since October 1986. Prior to that,
Mr. Zimmerman held several executive positions within Trace Holdings
beginning in August 1978. Mr. Zimmerman has been a director of Trace Foam
since October 1990. Mr. Zimmerman has served as director of General
Felt since March 1993 and Foamex Capital Corporation since July 1992.
Philip N. Smith, Jr., 53, has been Vice President, Secretary and
General Counsel of the Company since its inception in September 1993. Mr.
Smith has been the Secretary of Trace Foam since its inception in October 1990
and a Vice President of Trace Foam since December 1991. Mr. Smith has been a
Vice President or Senior Vice President and the Secretary and General Counsel
of Trace Holdings since January 1988 and has overseen and been actively
involved in transaction negotiations, litigation, stockholder and director
relations and other corporate legal matters. Prior to joining Trace Holdings,
he was the sole shareholder of a professional corporation which was a partner
of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Jerry A. Burns, 56, has been a director, Chairman and Chief Executive
Officer of Products Corp since February 1994 and Chief Executive Officer of
JPS Automotive since June 1994. Mr. Burns has been a Vice President and
director of JPSGP since October 1994 and has been its Chairman of the Board
since May 1995. Prior to the formation of Products Corp, Mr. Burns was Chief
Executive Officer of JPS Auto Inc. ("JPS Auto") beginning in January 1992 and
from September 1990 to January 1992, he was Executive Vice President --
Operations. Mr. Burns joined JPS Auto in November 1988 as Vice President --
Manufacturing. From October 1985 until 1988, Mr. Burns was Vice President --
Manufacturing Services for a division of Springs Industries, Inc. For 21 years
prior thereto, Mr. Burns held various other general management and financial
positions in the textile industry.
<PAGE>13
Robert B. Sparks, 48, has been a director and President of Products
Corp since February 1994 and President of JPS Automotive since June 1994. Mr.
Sparks has been a director of JPSGP since October 1994. Prior to the formation
of Products Corp, Mr. Sparks was President of JPS Auto from September 1985
until June 1994. From 1982 to September 1985, he was Vice President --
Marketing and prior thereto held various other positions in marketing, product
development and technical services within JPS Auto and JP Stevens Inc. since
1973.
Dean C. Gaskins, 51, has been a director and Executive Vice
President of Products Corp since February 1994 and Executive Vice President
of JPS Automotive since June 1994. Mr. Gaskins was appointed Chief Operating
Officer of JPS Automotive in September 1995. Mr. Gaskins has been a
director of JPSGP since June 1994. Mr. Gaskins has served as Executive
Vice President of Cramerton Automotive Products L.P., a majority-owned
subsidiary of JPS Automotive, since March 1992. Prior thereto, Mr.
Gaskins held a variety of positions with Milliken & Company, a large,
diversified textile manufacturer, from 1969 until 1992.
David E. Bright, 39, has been Vice President, Director of
Communications of the Company since March 1994. Prior to joining the Company,
Mr. Bright served as the Vice President of Communications for The Knoll Group
from 1989 until 1993 and as Vice President of Communications for Knoll
International Inc., its predecessor company, from 1987 until 1989.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation
The following Summary Compensation Table contains information
concerning annual and long-term compensation provided to the Chief Executive
Officer and each of the four next most highly compensated executive officers of
the Company in Fiscal 1995 (the "Named Executive Officers") for services
rendered in all capacities during the fiscal years 1995, 1994 and 1993.
<TABLE>
<CAPTION>
Summary Compensation Table (1)
Long-Term
Annual Compensation Compensation
------------------- ------------
Awards
------
Name and Principal Position Year Salary Bonus Securities
- - - --------------------------- ---- ------ ----- Underlying All Other
Options/SARs(2) Compensation (3)
--------------- ----------------
<S> <C> <C> <C> <C> <C>
Marshall S. Cogan(4) 1995 $750,000 -- --
Chairman of the Board, 1994 750,000 -- 229,167 --
Chief Executive Officer 1993 452,727 -- -- --
750,000
Jerry A. Burns(3)(6) 1995 250,000 $82,908 49,107 $2,821
Senior Vice President of the 1994 125,000 365,653 75,000 963
Company and Chairman and Chief 1993 -- -- -- --
Executive Officer of JPS
Automotive
Dean C Gaskins(2)(3)(6) 1995 212,083 130,093 41,353 2,954
Executive Vice President and 1994 88,615 72,500 30,000 977
Chief Operating Officer of 1993 -- -- -- --
JPS Automotive
Philip N. Smith, Jr.(3)(5) 1995 315,000 -- 7,028 3,202
Vice President and General 1994 315,000 110,000 -- 1,140
Counsel 1993 83,330 -- 15,000 --
Murphy L. Fontenot(3)(7)(8) 1995 298,000 224,583 -- 3,451
Senior Vice President of 1994 277,667 224,583 -- 4,665
the Company and President of 1993 32,167 198,162 25,000 352
Perfect Fit
</TABLE>
<PAGE>14
- - - --------------------
(1) Because none of the Named Executive Officers received (i) perquisites
in excess of the lesser of $50,000 or 10% of their reported salary
and bonus, (ii) any other annual compensation required to be
reported, (iii) LTIP payouts or (iv) any restricted stock awards,
information relating to "Other Annual Compensation", "LTIP Payouts"
and "Restricted Stock Awards" is inapplicable and has therefore been
omitted from the table.
(2) On December 6, 1995, the Stock Option Plan Committee approved a stock
option exchange program (the "Stock Option Exchange Program") which
permitted optionees of record as of that date to exchange all options
previously granted to be exchanged for new options priced at the fair
market value ("FMV") share price as of the close of business on that
date. The number of new options (the "New Options") to be exchanged
for previously granted options (the "Old Options") was determined on
the basis of the ratio of the FMV on December 6, 1995 to the FMV or
the discount share value of the options when originally granted. The
table above indicates the number of New Options issued to the Named
Executive Officers in exchange for their Old Options. See "Company
Stock Option Plan". Mr. Gaskins was awarded 30,000 additional options
to purchase stock in September 1995 pursuant to his employment
agreement. The above table indicates the number of New Options issued
to Mr. Gaskins pursuant to the Stock Option Exchange Program.
(3) The amounts shown represent (i) the Company's matching contribution
to the Company's 401(k) plan on behalf of Mr. Smith; (ii) Perfect
Fit's matching contribution to Perfect Fit's 401(k) plan on behalf of
Mr. Fontenot and (iii) JPS Automotive's matching contribution to JPS
Automotive's 401(k) plan on behalf of Messrs. Burns and Gaskins. Mr.
Smith did not participate in the Company's 401(k) plan in 1993.
(4) Marshall S. Cogan was elected Chairman of the Board of the Company in
September 1993 and Chief Executive Officer of the Company and Foamex
L.P. in January 1994. The salary set forth in the chart was paid by
the Company in 1993, which amount was reimbursed to the Company by
Trace Holdings.
(5) The compensation for Mr. Smith in 1993 represents compensation for
only part of the year.
(6) The compensation reported for Messrs. Burns and Gaskins in 1994
represents compensation for only part of the year paid after the
acquisition, through JPS Automotive, of the business and assets of
the automotive products and industrial fabrics divisions of JPS
Textile Group, Inc. ("JPS Textile") (the "JPS Automotive
Acquisition").
(7) Mr. Fontenot resigned from the Company and Perfect Fit in February
1996.
(8) The compensation reported for Mr. Fontenot in 1993 includes
compensation for only part of the year paid after the Company's
acquisition of Perfect Fit.
<PAGE>15
Employment Agreements
In connection with the JPS Automotive Acquisition, the Company and JPS
Automotive entered into an employment agreement with Jerry A. Burns, Chief
Executive Officer of JPS Automotive. The agreement provides for a three-year
term commencing on July 22, 1994, and automatically renews for additional
one-year terms unless notice of termination is given by the JPSGP Board of
Directors. The agreement provides that as compensation for all services
rendered, Mr. Burns will receive compensation of $250,000 per year plus salary
increases and bonuses during the term of the agreement at the discretion of the
JPSGP Board of Directors. Additionally, Mr. Burns may participate in certain
other bonus plans specified in his employment agreement contingent on JPS
Automotive achieving certain performance and EBITDA levels, may participate in
employee benefit plans on the same basis as other senior officers of JPS
Automotive and may be granted such other perquisites as Mr. Burns and the JPSGP
Board of Directors may agree upon. Mr. Burns' employment agreement further
provides for the grant by the Company's Compensation Committee to Mr. Burns of
non-qualified options to purchase 75,000 shares of Common Stock at a per share
price equivalent to the closing price of the Common Stock on June 28, 1994,
which options were exercisable on the date of grant as to 20% of the Common
Stock subject thereto, and an additional 20% exercisable on each of the first
four anniversaries of the date of grant. On December 6, 1995, Mr. Burns elected
to exchange these options pursuant to the Stock Option Exchange Program. (See
"Company Stock Option Program -- Stock Option Exchange Program"). In the event
Mr. Burns' employment agreement is terminated for any reason other than for
"cause" or "good reason" (as such terms are defined in the agreement), Mr. Burns
is entitled to receive an amount equal to his annual base salary (excluding
bonuses) payable in monthly installments over not more than twelve months plus
continuation, during the severance payment period, of all medical benefits to
which Mr. Burns was entitled under the agreement. Additionally, for a period of
one year from the termination of the agreement for "cause" or a voluntary
termination without "good reason" (as such terms are defined in the agreement),
Mr. Burns may not (i) induce JPS Automotive employees to leave the employ of JPS
Automotive, (ii) solicit customers of JPS Automotive within six months of such
termination or (iii) engage in any business which would be competitive with the
Company or JPS Automotive, or any subsidiary of either existing as of July 22,
1994. The Company has guaranteed all of JPS Automotive's payment obligations
under Mr. Burns' employment agreement.
On September 1, 1995, JPS Automotive and Mr. Gaskins entered into an
employment agreement. The agreement provides for a three-year term commencing on
September 1, 1995, and automatically renews for additional one-year terms unless
notice of termination is given by the JPSGP Board of Directors. The agreement
further provides that as compensation for all services rendered, Mr. Gaskins
will receive compensation of $250,000 per year and shall be eligible to receive
annual bonuses and participate in any executive incentive programs and employee
benefit plans commensurate with his position as may from time to time be in
effect. Mr. Gaskins' agreement provides for the grant by the Company's Stock
Option Plan Committee of options to purchase 30,000 shares of Common Stock at a
per share price equivalent to the closing price of the Common Stock on September
1, 1995, which options will be exercisable 20% annually, beginning one year
after the date of grant. On December 6, 1995, Mr. Gaskins elected to exchange
his options pursuant to the Stock Option Exchange Program. (See "Company Stock
Option Program -- Stock Option Exchange Program"). In the event the agreement is
terminated for any reason, Mr. Gaskins shall be entitled to receive any base
salary or other compensation earned and not paid, including any bonuses for
<PAGE>16
which Mr. Gaskins is eligible and has not yet received prior to the effective
date of such termination. In the event the agreement is terminated by (i) JPS
Automotive for "cause" or (ii) Mr. Gaskins other than for "good reason" (as such
terms are defined in the agreement), Mr. Gaskins shall be entitled to receive an
amount equal to one years's then current base salary, in twelve equal monthly
installments following the date of such termination plus continuation during the
severance period of all health care benefits, at JPS Automotive's expense, and
participation in other JPS Automotive benefit plans to the extent permissible
under the terms of such plans. Additionally, for a period of one year from any
termination of employment with JPS Automotive, Mr. Gaskins shall not, directly
or indirectly, (i) engage in any business activities reasonable determined by
the Company to be competitive with JPS Automotive at the time of such
termination; (ii) solicit or induce JPS Automotive employees to leave the employ
of JPS Automotive or (iii) divert, or attempt to divert, any customer or
supplier from doing business with JPS Automotive.
In connection with the Company's acquisition of Perfect Fit, the
Company entered into an amendment to an existing employment agreement, dated
November 18, 1993, with Murphy L. Fontenot, a former Senior Vice President of
the Company and President of Perfect Fit. Mr. Fontenot resigned from the Company
and Perfect Fit in February 1996, thereby terminating the agreement, which would
have otherwise expired on December 31, 1996. Pursuant to the terms of this
agreement, Mr. Fontenot's base salary was $298,000 in Fiscal 1995.
Severance Plans
In October 1995, the Board of Directors of the Company approved a plan
to evaluate the potential reduction of long-term debt with, among other things,
substantially all of the proceeds from the possible sale of the automotive
carpet, trim and/or textile business of JPS Automotive (which together comprise
substantially all of the assets of JPS Automotive). In connection with such
plans, the Company implemented special severance benefits and a bonus plan for
certain executives of JPS Automotive, including Messrs. Burns and Gaskins. Under
the severance plan, if either Mr. Burns or Mr. Gaskins were involuntarily
separated from the Company within one year of closing of such a sale, he would
be entitled to the benefits under his employment agreement. The bonus plan
provides for bonuses which are payable only upon the sale of one or more of the
divisions of JPS Automotive.
Company Stock Option Plan
Upon completion of the Company's initial public offering in December
1993 (the "IPO"), pursuant to the Company's 1993 Stock Option Plan (the "Stock
Option Plan"), non-qualified stock options were issued to purchase (i) 248,600
shares of Common Stock at an exercise price equal to 90% of the $15.00 per share
offering price in the IPO (the "IPO Price"), (ii) 1,000,000 shares of Common
Stock at an exercise price equal to the IPO Price and (iii) 750,000 shares of
Common Stock at an exercise price equal to 150% of the IPO Price. All of the
options are exercisable at 90% and 150% of the IPO Price will become exercisable
in cumulative annual installments of 20% each, beginning as of January 1, 1994,
and all of the options exercisable at the IPO Price will become exercisable in
cumulative annual installments of 20% each, beginning January 1, 1995.
<PAGE>17
On January 11, 1995 and December 6, 1995, the Compensation Committee
granted 210,000 (the "January Options") and 85,000 (the "December Options")
options to purchase Common Stock to officers or key employees of the Company,
respectively, pursuant to the Stock Option Plan. The January Options were
granted at exercise prices ranging from $7.875 to $19.50 per share, representing
the closing price of the Common Stock on each grantees' date of hire or date of
grant. With the exception of Messrs. Burns and Gaskins and one other employee
who is not a Named Executive Officer, whose vesting provisions were determined
in accordance with their respective employment agreements, all options granted
on such date will vest 20% annually, beginning one year after such grantees'
date of hire. The December Options were granted pursuant to the terms of each
grantees' employment agreement at exercise prices ranging from $7.625 to $9.50
per share, representing the closing price of the stock on the execution dates of
the optionees' respective employment agreements.
The following table provides information on option grants in
Fiscal 1995 by the Company to the Named Executive Officers.
<TABLE>
<CAPTION>
Foamex Option/SAR Grants in Last Fiscal Year
Name Number of Percent Exercise Expira- Market Potential
- - - ---- Securities of Total or Base tion Price on Realizable
Underlying Options/SARs Price Date Date of Value at
Options/ Granted to ($/Sh) -------- Grant Assumed
SARs Employees in -------- -------- Annual
Granted(#)(1) Fiscal Rates of
------------- Year Stock
------------ Price
Appreciation
for
Option
Term(1)
------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Marshall S. Cogan 229,167 25.0% $6.875 12/06/04 $6.875 $1,046,387 $2,409,660
Chairman of the Board
and Chief Executive
Officer
Jerry A. Burns 49,107 5.4% 6.875 12/06/04 6.875 224,225 516,353
Senior Vice President
of the Company and
Chairman and Chief
Executive Officer of
JPS Automotive
Dean C. Gaskins 41,353 4.5% 6.875 12/06/04 6.875 188,820 434,821
Executive Vice
President and Chief
Operating Officer of
JPS Automotive
Philip N. Smith, Jr. 7,028 0.8% 6.875 12/06/04 6.875 32,090 73,898
Vice President and
General Counsel
</TABLE>
- - - -----------------------
(1) Based on December 31, 1995 market value of the Company's Common Stock
of $7-3/8 per share.
<PAGE>18
Stock Option Exchange Program
On December 6, 1995, the Stock Option Plan Committee approved the Stock
Option Exchange Program which permitted optionees of record as of that date to
exchange all options previously granted to be exchanged for options priced at
the FMV share price, $6.875, as of the close of business on that date. The
number of New Options to be exchanged for previously granted Old Options was
determined on the basis of the ratio of the FMV on December 6, 1995 to the FMV
or the discountshare value of the options when originally granted. New Options
may not be exercised until December 6, 1996 and expire upon the same terms as
the Old Options.
STOCK OPTION PLAN COMMITTEE
John V. Tunney, Chairman
Stuart J. Hershon
The following table provides information on the Old Options repriced
pursuant to the Stock Option Exchange Program in Fiscal 1995 by the Company to
the Named Executive Officers.
<TABLE>
<CAPTION>
Foamex Option/SAR Repricings (1)(2)(3)
Number of
Securities Exercise
Underlying Number of New Market Price of price at Length of
Options/SARs Options After Stock at Time of Time of New Original Option
Repriced or the Exchange Repricing or Repricing or Exercise Term Remaining
Name Date Amended Amendment Amendment Price at
- - - ---- ---- ------------ ------------- --------------- ------------ -------- Date of
Repricing
---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Marshall S. Cogan 12/06/95 750,000 229,167 $6.875 $22.50 $6.875 12/06/04
Chairman and Chief
Executive Officer
Jerry A. Burns 12/06/95 75,000 49,107 6.875 10.50 6.875 6/28/04
Senior Vice
President
of the Company and
Chairman and Chief
Executive Officer
of JPS Automotive
Dean C. Gaskins 12/06/95 30,000 19,643 6.875 10.50 6.875 6/28/04
Executive Vice 12/06/95 30,000 21,711 6.875 9.50 6.875 9/01/05
President and
Chief
Operating Officer
of JPS Automotive
Philip N. Smith, 12/06/95 3,000 1,528 6.875 13.50 6.875 12/06/04
Jr. 12/06/95 12,000 5,500 6.875 15.00 6.875 12/06/04
Vice President and
General Counsel
</TABLE>
<PAGE>19
- - - ------------------
(1) The Stock Option Exchange Program was adopted on December 6, 1995 and
all exchanges were effected as of that date. There have been no other
stock option repricings or amendments other than through the Stock
Option Exchange Program by the Company since its inception in 1993;
therefore, references in the table to "repricings in the past ten
years" have been omitted.
(2) Murphy L. Fontenot resigned from the Company in February 1996 and
all options granted to him were terminated at that time pursuant to
the Stock Option Plan.
(3) Options exchanged pursuant to the Stock Exchange Program may not be
exercised until December 6, 1996.
Trace Holdings Stock Option Plan
In 1987, Trace Holdings established a Nonqualified Stock Option Plan
(the "Trace Holdings Option Plan"), under which options for the purchase of
shares of common stock of Trace Holdings may be granted to officers, directors
and employees of Trace Holdings or its affiliates. Under the Trace Holdings
Option Plan, options may generally be granted for a term not to exceed eleven
years and are exercisable at the cumulative rate of one-third per year on the
fifth, sixth and seventh anniversaries of the date of grant. Under the Trace
Holdings Option Plan, the option exercise price of an option may not be less
than the FMV of the common stock of Trace Holdings as of the date of grant. In
1988, Trace Holdings granted options to Mr. Smith to purchase 120 shares of
common stock of Trace Holdings. The options expire eleven years from the date of
grant and have an exercise price of $1,450.00 per share. No options have been
subsequently granted to Named Executive Officers of the Company.
Aggregate Option Values
The following table sets forth as of December 31, 1995 the number of
options for the Company's Common Stock, the number of options for Trace
Holdings' common stock and the value of the unexercised options and SARs held by
the Named Executive Officers.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values(1)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/
Options/ SARs
SARs at at Fiscal
Fiscal Year Year
End End
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Marshall S. Cogan -- 229,167(2) $ 0 $114,584
Jerry A. Burns -- 49,107(2) 0 24,554
Dean C. Gaskins -- 41,353(2) 0 24,822
Philip N. Smith, Jr. -- 7,028(2) 0 3,514
120(3) -- (4) (4)
Murphy L. Fontenot (5) -- 11,560(2) (6) (6)
</TABLE>
<PAGE>20
- - - -----------------
(1) No stock options or SARs were exercised in Fiscal 1995.
(2) These options are for Common Stock of the Company and were granted
pursuant to the Company's Stock Option Plan. (3)These options are for
common stock of Trace Holdings and were granted pursuant to the Trace
Holdings Option Plan.
(4) Trace Holdings is a privately-held company. There is no public market
for its securities and no valuation of Trace Holdings for the purpose
of ascertaining the value of stock options has been undertaken.
(5) Mr. Fontenot resigned as an officer of the Company in February 1996.
The options referred to in the above table were terminated pursuant to
the Stock Option Plan.
(6) As of December 31, 1995, the exercise price of the reported options
was greater than the current market price.
Pension Plans
Effective December 31, 1994, the Foamex L.P. Salaried Employees
Retirement Plan (the "Foamex Plan") merged with the General Felt Industries,
Inc. Retirement Plan for Salaried Employees and the General Felt Industries
Pension Plan for Bargaining Unit Employees National Sponge Cushion Division. The
surviving plan is called the Foamex Group Salaried Employees Pension Plan (the
"Retirement Plan"). The Retirement Plan is a defined benefit pension plan that
is qualified under the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), and in which executive officers are eligible to participate.
The Retirement Plan is a career pay plan. The Retirement Plan formula is
1.25% of annual compensation up to the Social Security Wage Base and 1.75% of
annual compensation in excess of the Social Security Wage Base, subject to an
annual compensation limit of $150,000. Prior to September 1, 1994, the Foamex
Plan was a final average pay plan, with retirement benefits based upon earnings
for the five consecutive years within the last ten years which yield the highest
average yearly salary ("Final Average Compensation"). Annual benefit
calculations under the Foamex Plan for service prior to June 1, 1994 will be the
years of credited service multiplied by the sum of 2.0% of Final Average
Compensation and 0.4% of Final Average Compensation in excess of the average of
the Social Security Wage Bases over the 35-year period ending with the year an
employee reaches age 65 (such 35-year average referred to herein as the "Covered
Compensation"). For service subsequent to May 31, 1994, but before September 1,
1994, annual benefit calculations will be the years of credited service
multiplied by the sum of 1.1% of Final Average Compensation and 0.4% of Final
Average Compensation in excess of Covered Compensation. The actuarially
determined cost of providing benefits under the Retirement Plan is provided by
the Company. The participants are neither required nor permitted to make
contributions.
The compensation used as a basis for computing pension is salary as set
forth in the Summary Compensation Table. In 1995, the compensation used as a
basis for computing the pension of each of the Named Executive Officers
participating in the Retirement Plan was $150,000 for each of Messrs. Cogan and
Smith. Messrs. Burns, Gaskins and Fontenot were not plan participants in 1995.
<PAGE>21
The estimated annual benefits under the Retirement Plan payable on
retirement at normal retirement age, or immediately if the individual has
reached normal retirement age, for each of the employees named in the Summary
Compensation Table are as follows: Mr. Cogan, $23,900 and Mr. Smith, $34,900.
These amounts assume the employees continue their employment with Foamex L.P. at
present salary levels until normal retirement age. As of January 2, 1996, the
Named Executive Officers participating in the Retirement Plan had been credited
with years of service under the plan as follows: Mr. Cogan, 2.833 years and Mr.
Smith, 2.833 years.
JPS Automotive Plan
Prior to the JPS Automotive Acquisition, Messrs. Burns and Gaskins were
participants in the Retirement Plan for Employees of JPS Textile (the "Textile
Plan"). Upon the JPS Automotive Acquisition, Messrs. Burns and Gaskins ceased
accruing benefits under the Textile Plan. As a consequence of the JPS Automotive
Acquisition, JPS Automotive obligated itself to adopt a plan that would be
substantially comparable to the Textile Plan (the "New JPS Automotive Plan").
JPS Automotive adopted the New JPS Automotive Plan effective January 1, 1995 at
which time Messrs. Burns and Gaskins became participants in the New JPS
Automotive Plan.
In determining a participant's pension benefit under the New JPS
Automotive Plan, all periods of employment with JPS Textile and any entity
affiliated with JPS Textile have been disregarded and such benefit was
determined solely on the basis of service with JPS Automotive since June 28,
1994. However, when determining an employee's eligibility and vested benefits,
all periods of employment with JPS Textile and any entity affiliated with JPS
Textile prior to December 29, 1994, and with JPS Automotive since June 28, 1994
were taken into account. The New JPS Automotive Plan is a final average
compensation plan. Retirement benefits are based on the earnings (subject to an
annual $150,000 maximum) for five consecutive years within the last ten years
which yield the highest average yearly salary ("Final Average Compensation").
The annual benefit will be the years of credited service multiplied by the sum
of 0.6% of final average compensation and 0.6% of final average compensation in
excess of the Covered Compensation. The participants are neither required or
permitted to make contributions.
<PAGE>22
The following table illustrates estimated annual pensions under the New
JPS Automotive Plan for various compensation levels and periods of credited
service, assuming present compensation rates at all points in the past and until
Normal Retirement Age (as defined in the New JPS Automotive Plan) and a constant
Social Security Wage Base ($62,700 in 1996). The pension amount is expressed as
a life annuity.
<TABLE>
<CAPTION>
Pension Plan Table
Years of Credited Service
15 20 25 30 35
------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Current Compensation
$125,000 $16,992 $22,656 $28,320 $33,984 $39,648
$150,000 and above $21,492 $28,656 $35,820 $42,984 $50,148
</TABLE>
The compensation used for Messrs. Burns and Gaskins in computing
pension is the salary set forth in the Summary Compensation Table. In 1995, the
compensation used as a basis for computing each of Messrs. Burns' and Gaskins'
pension was $150,000. The estimated annual benefit under the New JPS Automotive
Plan payable at normal retirement age is $18,089 for Mr. Burns and $26,312 for
Mr. Gaskins and assumes that each of them will continue their respective
employment with JPS Automotive at their present salaries until normal retirement
age. As of January 2, 1996, the Named Executive Officers participating in the
New JPS Automotive Plan had been credited with years of service under the New
JPS Automotive Plan as follows: Mr. Burns, 2 years and Mr. Gaskins, 2 years.
IRS Limitations
Under the Internal Revenue Code, a participant's compensation in excess
of $150,000 (as adjusted to reflect cost of living increases) is disregarded for
purposes of determining pension benefits. Benefits accrued for plan years prior
to 1994 on the basis of certain compensation in excess of $150,000 are
preserved. In addition, as required by law, the maximum annual pension payable
to a participant under a qualified pension plan in 1995 is $120,000, in the form
of a qualified joint and survivor annuity, although certain benefits accrued
prior to 1994 in excess of $120,000 are not subject to such limitation. Such
limits have been included in the calculation of estimated annual benefit amounts
listed above for each of the Named Executive Officers. The Company does not have
a non-qualified defined benefit plan to provide payments in excess of limits
imposed by the Internal Revenue Service.
Notwithstanding anything to the contrary set forth in any of the
Company's filings under the Securities Act of 1933, as amended (the "Securities
Act"), or the Securities Exchange Act or 1934, as amended (the "Exchange Act"),
that might incorporate filings by reference, including this Proxy Statement, in
whole or in part, the following Report of the Compensation
Committee (the "Compensation Committee") and Stock Option Plan Committee (the
"Stock Option Committee") on Executive Compensation and the Performance Graph
shall not be incorporated by reference into any such filings.
<PAGE>23
REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK OPTION PLAN COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibilities include establishing the
Company's policies governing the compensation of officers and other key
executives of the Company. The Compensation Committee approves all elements of
compensation for Executive Officers. The Stock Option Committee is responsible
for the administration of the 1993 Stock Option Plan.
Executive Compensation The Company's compensation program consists of base
salary, annual incentive payments, stock options and employee benefits. The goal
of the Company's compensation program is to motivate and reward its executive
officers and other key employees to improve long-term stockholder value and to
attract and retain the highest quality executive and key employee talent
available. The Company's executive compensation program is designed to align
executive compensation practices with increasing the value of the Company's
Common Stock and to foster adherence to, and promotion of, the Company's
business mission, values, strategic goals and annual objectives. The
compensation levels for Messrs. Burns and Gaskins and certain other officers of
the Company (or its subsidiaries) who are not Named Executive Officers, are
determined pursuant to the terms of their respective employment agreements. Mr.
Fontenot's compensation was determined pursuant to the terms of his employment
agreement until his resignation in February 1996. See "Compensation of Executive
Officers--Employment Agreements."
The Compensation Committee will meet at least annually to review salary
increases for the current year and incentive payments to be made in connection
with the previous year's performance. The Compensation Committee will consider
an executive's scope of responsibilities, level of experience, individual
performance and attainment of pre-established goals as well as the Company's
business plan and general economic factors. In making its decisions, and to
maintain the desired levels of competitiveness and congruity with the Company's
long-term performance goals, the Compensation Committee will receive input from
the Company's President, Chief Operating Officer and Executive Vice President of
Manufacturing and the Company's Human Resources Department.
Base Salary The salary levels for executive officers are determined by such
officer's level of job responsibility and experience, job performance and
attainment of pre-established goals. Additional consideration is given to
salaries for a comparable position within the industry and the Company's ability
to pay. In December 1995, the Compensation Committee adopted a salary reduction
program (the "Salary Reduction Program") pursuant to which all key employees of
Foamex L.P. with annual salaries in excess of $150,000 received a 5% salary
reduction effective January 1, 1996. The Salary Reduction Program further
provides that if certain pre-established goals are met, (i) executives will
receive a cash award equal to the amount of the salary reduction; (ii) salaries
will be re-set to pre-reduction levels and (iii) a merit increase pool will be
reinstated for potential salary increases. No cash awards will be made to
executives who fail to meet the pre-established goals. The Compensation
Committee believes that the Salary Reduction Program emphasizes the importance
of reducing costs and focusing on performance, thereby helping to increase
earnings and shareholder value.
<PAGE>24
Bonus Bonus payouts to executive officers and other key employees of the
Company are based on the attainment of corporate earnings goals. Based on
earnings results for Fiscal 1995, no bonus payments were made to the Company's
executive officers and key employees, with the exception of Messrs. Burns,
Gaskins and Fontenot, and certain other employees who are not Named Executive
Officers, whose bonuses were determined pursuant to the terms of their
respective employment agreements and were based upon achieving certain
pre-established financial goals for JPS Automotive. For more information on
Messrs. Burns', Gaskins' and Fontenot's bonus arrangements, see "Compensation
of Executive Officers--Employment Agreements."
Options The Stock Option Committee believes strongly that the interests of
senior management must be closely aligned with those of the stockholders.
Long-term incentives in the form of stock options provide a vehicle to reward
executive officers only if there is an increase in stockholder value. Stock
options are granted on a discretionary basis within a guideline range that takes
into account the position responsibilities of executive officers and key
employees of the Company whose contributions and skills are important to the
long-term success of the Company. Stock options to purchase Common Stock
providing long-term incentives may be granted to executive officers with a
maximum term of ten years.
In January 1995 and December 1995, the Stock Option Committee granted
210,000 and 85,000 options, respectively, to purchase Common Stock to officers
or key employees of the Company. The January Options were awarded retroactive to
the grantees' date of hire in 1994 and the December Options were granted in
connection with the execution of the grantees' employment agreements. Such
options were granted at exercise prices ranging from $7.875 to $19.50 per share,
which prices represent the closing price of the Common Stock on each
grantees' date of hire or effective date of their employment agreements, as
the case may be.
On December 6, 1995, the Stock Option Committee approved a stock option
exchange which permitted optionees of record as of that date to exchange all
options previously granted to be exchanged for options priced at the FMV share
price, $6.875, as of the close of business on that date (the "Exchange Date").
The number of New Options to be exchanged for previously granted Old Options was
determined on the basis of the ratio of the FMV on the Exchange Date to the FMV
or the discount share value of the options when originally granted. This action
was taken to restore the motivational value of option grants to Company
executives and key employees which were granted at prices far above the
Company's Fiscal 1995 stock prices.
<PAGE>25
Chief Executive Officer In 1995, Mr. Cogan received $750,000 in compensation
from the Company. Mr. Cogan's salary was approved based upon a review of market
data for similar positions, the exceptional contribution already made by Mr.
Cogan to the Company as well as his continued leadership in positioning the
Company to take advantage of emerging domestic and international long-term
growth opportunities. Effective January 1, 1996, Mr. Cogan's salary was reduced
by 5% pursuant to the Company's Salary Reduction Plan.
Policy Regarding Qualifying Compensation Section 162(m) of the Internal
Revenue Code imposes a $1,000,000 ceiling on tax-deductible remuneration paid
to the five most highly compensated executive officers of a publicly-held
corporation, unless the compensation is treated as performance related. The
compensation paid to each of the Company's Named Executive Officers is less
than the $1,000,000 threshold. The Compensation Committee has not yet made any
policy decisions with respect to this limit.
COMPENSATION COMMITTEE STOCK OPTION PLAN COMMITTEE
John V. Tunney, Chairman John V. Tunney, Chairman
Stuart J. Hershon Stuart J. Hershon
Carl Spielvogel
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of Outside Directors.
No employee of the Company serves on the Compensation Committee. The Securities
and Exchange Commission (the "SEC") requires issuers to disclose the existence
of any other corporation in which both (i) an executive officer of the Company
serves on the board of directors and/or compensation committee and (ii) a
director of the Company serves as an executive officer. Carl Spielvogel is a
member of the Committee and is the Chairman and Chief Executive Officer of UAG,
an affiliate of Trace Holdings of which Trace Holdings indirectly owns
approximately 40%. Mr. Cogan is Chairman of the Executive Committee of UAG,
which would determine Mr. Spielvogel's compensation at UAG.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company regularly enters into transactions with its affiliates on
terms it believes to be the same as could be obtained in third party
transactions. Payments to affiliates by Foamex L.P., JPS Automotive and their
respective subsidiaries in connection with any such transactions are governed by
the provisions of the indentures for their public debt securities which
generally provide that such transactions be on terms comparable to those
generally available in equivalent transactions with third parties.
Certain Registration Rights
As part of the IPO, the Company granted to each of Trace Holdings, Trace
Foam, Marely and DLJ Funding, Inc. ("DLJ Funding") the right to demand the
registration of the shares of Common Stock issued in exchange for their
partnership interests, and to have such shares included in certain registration
statements otherwise prepared by the Company. Each of Trace Foam Sub, as
assignee of Trace Foam, Marely and DLJ Capital Corporation, as assignee of DLJ
Funding ("DLJ Capital"), may only exercise such right twice. The Company also
granted to John Rallis the right to have the shares issued in exchange for his
partnership interest in Foamex L.P. included in certain registration statements
otherwise prepared by the Company. The registration rights agreements between
<PAGE>26
the Company and each of Trace Holdings, Trace Foam Sub, Marely, DLJ Capital and
John Rallis provide for cross-indemnification and contribution rights, and for
the Company to pay the expenses of registration (other than with respect to
underwriting discounts, commissions and fees attributable to the sale of any
securities as to which such entity possesses registration rights). Trace
Holdings, Trace Foam Sub, Marely, DLJ Capital and Mr. Rallis have exercised
their right to have their shares of Common Stock included in a registration
statement under the Securities Act, which registration statement has been
declared effective by the SEC. Pursuant to the terms of such Registration Rights
Agreements, the Company filed a registration statement under the Securities Act
relating to the shares subject to such agreements. The SEC declared such
registration statement effective on December 13, 1994.
In connection with the IPO, on December 14, 1993, Trace Holdings amended
and restated its promissory notes to Recticel Foam Corporation ("RFC") (the "RFC
Note") and to Generale Bank, New York Branch ("GBNY") (the "GBNY Note") and
further pledged shares of Common Stock of the Company to RFC to secure the
repayment of the RFC Note and to GBNY to secure the repayment of the GBNY Note.
On December 14, 1993, the Company and each of RFC and GBNY executed a
registration rights agreement pursuant to which the Company granted to each of
RFC and GBNY the right to demand registration, at the Company's expense, of the
shares pledged to secure the repayment of the RFC Note or the GBNY Note, as the
case may be, at any time after an Event of Default (as defined in such notes)
has occurred under the respective pledge agreements pursuant to which the shares
of Common Stock are pledged.
For a discussion of registration rights granted to certain former
shareholders of Perfect Fit, see "--Certain Transactions Relating to the
Acquisition of Perfect Fit.".
Loan Commitment Agreements
As part of the IPO, the Company entered into Loan Commitment Agreements
with DLJ Funding and Marely. These agreements provide that the Company will lend
to DLJ Capital (assignee of DLJ Funding) and Marely amounts equal to certain tax
liabilities incurred by DLJ Capital and Marely upon the closing of certain
portions of the IPO. The Company currently estimates that it could be required
to lend approximately $1.0 million to DLJ Capital and $4.0 million to Marely
(without interest). In addition, the Company agreed to indemnify DLJ Capital and
Marely against certain tax interest and tax penalties should they be imposed.
Recticel Supply Agreement
On September 1, 1991, Foamex L.P. and Recticel (then known as Gechem
s.a.), the parent corporation of RFC, entered into an agreement
providing for the purchase by Foamex L.P. of scrap polyurethane foam, a
major raw material in the production of bonded carpet cushion. During
Fiscal 1995, Foamex L.P. paid Recticel $2.5 million for the purchase of scrap
polyurethane foam under the contract which expired in June 1995.
Management believes that the agreement was no less favorable to Foamex
L.P. than that which Foamex L.P. could have obtained from unaffiliated
third parties. Both Messrs. Cogan and Davignon are directors of Recticel.
<PAGE>27
Technology Sharing Arrangements
In December 1992, Foamex L.P., Recticel and Beamech Group Limited
("Beamech"), an unaffiliated third party, formed a Swiss corporation to develop
new manufacturing technology for the production of polyurethane foam. Each of
Foamex L.P., Recticel and Beamech contributed or caused to be contributed to
such corporation a combination of cash and technology valued at $1.5 million,
$3.0 million and $1.5 million, respectively, for a 25%, 50% and 25% interest,
respectively, in the corporation. Foamex L.P., Recticel and their affiliates
have been granted a royalty-free license to use certain technology, and it is
expected that the corporation will license use of such technology to other foam
producers in exchange for royalty payments.
Aircraft Purchase Agreement
Foamex L.P. was party to a lease agreement for an aircraft (the
"Aircraft") with Trace Aviation Corp. (formerly known as '21' Aviation Corp.), a
subsidiary of Trace Holdings ("Trace Aviation") until July 1995, pursuant to
which Foamex L.P. paid Trace Aviation approximately $1.6 million under the lease
agreement. The lease agreement also provided for the use of the airplane by
Trace Holdings with remuneration to Foamex L.P. based on actual usage of the
airplane, pursuant to which Trace Holdings paid to Foamex L.P. $0.6 million
during Fiscal 1995.
In August 1995, Foamex Aviation, Inc. ("Aviation"), a wholly-owned
subsidiary of the Company, acquired the Aircraft ("Aircraft Purchase") from
Trace Aviation for a purchase price of $3.0 million plus the assumption of
approximately $11.6 million of debt relating to the Aircraft. The Foamex
L.P. lease and other agreements were terminated in connection with the
Aircraft Purchase. Aviation has engaged a third party to sell the Aircraft.
Until the Aircraft is sold, Aviation has contracted with a third party for
the exclusive charter of the Aircraft. In connection with the Aircraft
Purchase, Trace Holdings has guaranteed to Aviation that it will receive
certain minimum net proceeds from the sale and/or lease of the Aircraft.
Management believes that the Aircraft Purchase and related transactions
are no less favorable to the Aviation than that which Aviation could have
obtained from an unaffiliated third party. Tax Sharing Agreement
In 1992, Foamex L.P. and its partners entered into a tax sharing
agreement, as amended (the "Foamex L.P. Tax Sharing Agreement"), pursuant to
which Foamex L.P. agreed to make quarterly distributions to its partners which,
in the aggregate, will equal the tax liability that Foamex L.P. would have paid
if it had been a Delaware corporation filing separate tax returns rather than a
Delaware partnership. In connection with the IPO and the attendant reallocation
of partnership interests, the Foamex L.P. Tax Sharing Agreement was amended to
provide that 99% of the payments would be made to the Company and its
subsidiaries and 1% of the payments would be made to Trace Foam. In 1995, Foamex
L.P. made payments of approximately $2.6 million pursuant to the terms of the
Foamex L.P. Tax Sharing Agreement to the Company and its subsidiaries. Trace
Foam did not receive any payments under the Tax Sharing Agreement during Fiscal
1995.
<PAGE>28
Noncompetition Agreement
Pursuant to an agreement with Recticel, unless Recticel otherwise
agrees, until December 18, 1996, the Company's operations are to be conducted
only in North America, South America, Asia, New Zealand and Australia, subject
to certain exceptions. An agreement among Trace Holdings, the Company, Foamex
L.P. and Recticel provides that, subject to certain exceptions, until December
18, 1996, Recticel and its affiliates will only engage in the foam business in
North America to the extent of such activities as of October 13, 1992. Recticel
currently does not operate in North America in competition with the Company. The
agreement also provides that, until December 18, 1996, Trace Holdings will not
engage in the design, engineering, manufacture or marketing of polyurethane or
other foam products other than through the Company, Foamex L.P. or any of their
subsidiaries. Both Messrs. Cogan and Davignon, directors of the Company, are
directors of Recticel.
Indemnification Regarding Environmental Matters
Pursuant to an Asset Transfer Agreement between Foamex L.P. and RFC (the
"RFC Asset Transfer Agreement"), Foamex L.P. is indemnified by RFC for any
liabilities incurred by Foamex L.P. arising out of or resulting from, among
other things, the ownership or use of any of the assets transferred pursuant to
the RFC Asset Transfer Agreement or the conduct of the transferred business on
or prior to October 2, 1990, including, without limitation, any loss actually
arising out of or resulting from any events, occurrences, acts or activities
occurring before October 2, 1990 or occurring after October 2, 1990 to the
extent resulting from conditions existing on or prior to October 2, 1990,
relating to (i) injuries to or the contraction of any diseases by any person
resulting from exposure to Hazardous Substances (as defined in the RFC Asset
Transfer Agreement) without regard to when such injuries or diseases are first
manifested, (ii) the generation, processing, handling, storage or disposition of
or contamination by any waste or Hazardous Substance, whether on or off the
premises from which the transferred business has been conducted or (iii) any
pollution or other damage or injury to the environment, whether on or off the
premises from which the transferred business has been conducted. Foamex L.P. is
also indemnified by RFC for any liabilities arising under Environmental Laws (as
defined in the RFC Asset Transfer Agreement) relating to current or former RFC
assets and for any liability for property damage or bodily harm relating to
products of the transferred business shipped on or prior to October 2, 1990.
Such indemnification is limited after December 1993 unless such liability is
covered by insurance. Foamex L.P. has agreed to assume certain known
environmental liabilities relating to the assets transferred by RFC to Foamex
L.P., with an estimated remediation cost of less than $0.5 million, in exchange
for a cash payment by RFC to Foamex L.P. approximately equal to the remediation
cost for such environmental liabilities.
Pursuant to the Asset Transfer Agreement, dated as of October 2, 1990,
as amended, between Trace Holdings and Foamex L.P. (the "Trace Holdings Asset
Transfer Agreement"), Foamex L.P. is indemnified by Trace Holdings for any
liabilities incurred by Foamex L.P. arising out of or resulting from, among
other things, the ownership or use of any of the assets transferred pursuant to
the Trace Holdings Asset Transfer Agreement or the conduct of the transferred
business on or prior to October 2, 1990, including, without limitation, any loss
actually arising out of or resulting from any events, occurrences, acts or
activities occurring after October 2, 1990, to the extent resulting from
conditions existing on or prior to October 2, 1990, relating to (i) injuries to
or the contraction of any diseases by any person resulting from exposure to
<PAGE>29
Hazardous Substances (as defined in the Trace Holdings Asset Transfer Agreement)
without regard to when such injuries or diseases are first manifested, (ii) the
generation, processing, handling, storage or disposition of or contamination by
any waste or Hazardous Substance, whether on or off the premises from which the
transferred business has been conducted or (iii) any pollution or other damage
or injury to the environment, whether on or off the premises from which the
transferred business has been conducted. Foamex L.P. is also indemnified by
Trace Holdings for any liabilities arising under Environmental Laws (as defined
in the Trace Holdings Asset Transfer Agreement) relating to current or former
Trace Holdings' assets and for any liability relating to products of the
transferred business shipped on or prior to October 2, 1990.
Certain Transactions Relating to the Acquisition of General Felt
In connection with the Company's acquisition of General Felt in March
1993, Trace Holdings and General Felt entered into the General Felt
Reimbursement Agreement pursuant to which Trace Holdings has agreed to reimburse
General Felt on a pro rata basis reflecting the period of time each has occupied
the facility for costs relating to a cleanup plan for a facility in Trenton, New
Jersey formerly owned by General Felt. In Fiscal 1995, such pro rata amount
attributable to Trace Holdings was $278,300.
Certain Transactions Relating to the Acquisition of Great Western
In connection with its acquisition of Great Western in May 1993, Foamex
L.P. entered into lease agreements dated May 1993, with Mr. Rallis,
individually, or an affiliate of Mr. Rallis, relating to former Great Western
manufacturing facilities. Aggregate lease payments in 1995 were $1.6 million. In
connection therewith, Foamex L.P. has the option to purchase each of these
properties at any time after April 2001 at a price equal to fair market value.
Part of the aggregate consideration paid by Foamex L.P. for the assets
of Great Western was in the form of a subordinated promissory note payable to
Mr. Rallis in an original principal amount of $7,014,864 that bears interest at
a rate of 6.0% per annum payable semi-annually.
Certain Transactions Relating to the Acquisition of Perfect Fit
In connection with the acquisition of Perfect Fit in November 1993, Mr.
Fontenot executed an amended promissory note (the "Fontenot Note") in favor of
Perfect Fit pursuant to which Mr. Fontenot owes Pe rfect Fit approximately
$620,725, including accrued interest. Pursuant to the terms of the Fontenot
Note, Mr. Fontenot pledged shares of Common Stock owned by him in an amount
equal to the principal amount of the Fontenot Note. The Fontenot Note is payable
no later than November 1998, and may be prepaid in whole or in part at any time
or from time to time without penalty. In April 1996, the Company requested
prompt payment of the Fontenot Note.
<PAGE>30
In 1993, the Company entered into a registration rights agreement with
certain former shareholders of Perfect Fit. Such registration rights agreement
provides for cross-indemnification and contribution rights, and for the Company
to pay the expenses of registration (other than with respect to underwriting
discounts, commissions and fees attributable to the sale certain shares of
Common Stock issued in connection with the acquisition of Perfect Fit (the
"Perfect Fit Shares). Pursuant to such registration rights agreement, the
Company has included the Perfect Fit Shares in two registration statements under
the Securities Act, which registration statements have been declared effective
by the Commission.
Other Transactions
The Company made charitable contributions to the Trace International
Holdings, Inc. Foundation (the "Foundation") in the amount of $200,000 in Fiscal
1995. The Foundation is a Delaware tax-exempt private foundation. Marshall S.
Cogan, Chairman and Chief Executive Officer of the Company and Foamex L.P., is
the sole director of the Foundation.
On July 8, 1993, Foamex L.P. loaned $3.0 million to Trace Holdings which
loan was evidenced by a promissory note from Trace Holdings to Foamex L.P. at a
rate of 9.5% interest in the original principal amount of $3.0 million. Interest
is due and payable on demand, or if no demand is made, then on the same date as
the original principal amount. On July 7, 1995, such note was amended and
restated to include the original loan amount of $3.0 million and other
receivables of $1.4 million and such note is due on July 7, 1996.
In 1992, Foamex L.P. and Trace Foam entered into a management services
agreement pursuant to which Trace Foam provides Foamex L.P. with general
managerial services of a financial, technical, legal, commercial, administrative
and/or advisory nature for an annual fee of $1.75 million, and reimbursement of
expenses incurred. Management believes that the agreement is no less favorable
to Foamex L.P. than that which Foamex L.P. could have obtained from unaffiliated
third parties. In addition, certain employees of Trace Holdings and its
affiliates provide services to the Company. The Company pays an allocated
portion of the salaries of such employees based on the amount of time devoted to
the Company's matters by such employees. During Fiscal 1995, such payments
totaled approximately $1.1 million. Additionally, Trace Holdings subleases
approximately 5,900 square feet of general, executive and administrative office
space in New York, New York from Foamex L.P. on substantially the same terms as
Foamex L.P. leases such space from a third party lessor. During Fiscal 1995,
Trace Holdings was charged $590,000 in lease payments pursuant to the terms of
the sublease.
<PAGE>31
ELIMINATION OF CLASS A COMMON STOCK
The Company's Restated Certificate of Incorporation currently provides
that the Company is authorized to issue 25,000,000 shares of Class A Common
Stock, par value, $0.01 per share (the "Class A Common Stock") and, upon
conversion or repurchase of all shares of the Class A Common Stock outstanding
by the Company, such Class A Common Stock may not be reissued. These shares were
authorized and issued prior to the Company's IPO in 1993 in connection with the
purchase of Perfect Fit. All issued and outstanding shares of Class A Common
Stock were converted into Common Stock at the closing of the IPO.
The Company currently pays to the State of Delaware annual franchise
taxes of approximately $14,000 on the Class A Common Stock. Because the Class A
Common Stock may not be reissued and the existence of such shares provide no
benefit to the Company, the Board of Directors has unanimously approved, and
recommends that the stockholders approve, an amendment to the Company's Restated
Certificate of Incorporation (the "Class A Common Stock Amendment") that would
eliminate the Class A Common Stock from the authorized capital stock of the
Company. A draft of the Class A Common Stock Amendment is attached hereto as
"Exhibit A".
Vote Required
The affirmative vote of at least two-thirds of the outstanding shares of
Common Stock of the Company is required for approval of the Class A Common Stock
Amendment.
The Board of Directors recommends a vote "FOR" the proposed Class A
Stock Amendment.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to stockholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Coopers &
Lybrand L.L.P. as the independent accountants of the Company for Fiscal 1996.
Coopers & Lybrand L.L.P. will examine the financial statements of the Company
for the year 1996. This firm has examined the accounts of the Company since its
inception in 1993 and for Foamex L.P. and its subsidiaries since fiscal year
1992. If the stockholders do not ratify this appointment, the Board will
consider other independent accountants. One or more members of Coopers & Lybrand
L.L.P. is expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire and will be available to
respond to questions.
Vote Required
The affirmative vote of a majority of the issued and outstanding shares
of Common Stock is required for the ratification of the independent accountants.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of Coopers & Lybrand L.L.P. as independent accountants.
SHARE INVESTMENT PERFORMANCE
The following graph compares the cumulative total stockholder returns on
the Common Stock based on an investment of $100 after the close of the market on
(i) December 7, 1993, the date of the Company's IPO; (ii) the close of the
market on December 31, 1993; (iii) the close of the market on December 31, 1994
and (iv) the close of the market on December 31, 1995 against the Standard &
Poor's Index ("S&P 500") and an industry peer group consisting of the following
companies: Armstrong World Industries, Inc., Leggett & Platt, Inc., Sealed Air
Corporation and Shaw Industries, Inc.
<PAGE>32
Comparison of 25-Month Cumulative Total Return*
Among the Company, the S & P 500 and Industry Peer Group
12/7/93 12/31/93 12/31/94 12/31/95
------- -------- -------- --------
Company $100 111 66 48
S & P 500 $100 100 101 139
Peer Group $100 116 82 110
- - - ------------------
* $100 invested on 12/07/93 in stock or index, including reinvestment of
dividends.
FILINGS UNDER SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires executive officers and
directors, and persons who beneficially own more than 10% of the Company's
stock, to file initial reports of ownership and reports of changes of ownership
with the SEC and the NASDAQ National Market System, Inc. Executive officers,
directors and greater than 10% beneficial owners are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms
furnished to the Company and written representations from the executive
officers, directors and greater than 10% beneficial owners, the Company believes
that all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% owners were complied with.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 1997
Any proposals intended to be presented to stockholders at the Company's
1997 Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statements for such annual meeting by December 4, 1996.
Such proposals must also meet other requirements of the rules of the SEC
relating to stockholders' proposals and the requirements set forth in the
Company's By-Laws.
Pursuant to the By-Laws, stockholders proposing business to be brought
before the Annual Meeting must deliver written notice thereof to the Secretary
of the Company not later than the close of business on the tenth day following
the date on which the Company first makes public disclosure of the date of the
annual meeting. The stockholders' notice must contain a brief description of the
business and reasons for conducting the business at an annual meeting, the name
and address of the stockholder making the proposal, and any material interest of
the stockholder in the business. The stockholder is also required to furnish a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at such meeting to propose such business.
OTHER BUSINESS
It is not anticipated that there will be presented to the Annual Meeting
any business other than the election of directors and the proposals described
herein, and the Board of Directors was not aware, a reasonable time before this
solicitation of proxies, of any other matters which might properly be presented
for action at the meeting. If any other business should come before the Annual
Meeting, the persons named on the enclosed proxy card will have discretionary
authority to vote all proxies in accordance with their best judgment.
<PAGE>33
Proxies in the form enclosed are solicited by or on behalf of the Board
of Directors. The cost of this solicitation will be borne by the Company. In
additional to the solicitation of the proxies by use of the mails, some of the
officers and regular employees of the Company, without extra remuneration, may
solicit proxies personally, or by telephone or otherwise. In addition,
arrangements will be made with brokerage houses and other custodian, nominees
and fiduciaries to forward proxies and proxy material to their principals, and
the Company will reimburse them for their expenses in forwarding soliciting
materials, which are not expected to exceed $5,000.
It is important the proxies be returned promptly. Therefore,
stockholders are urged to sign, date and return the enclosed proxy card in the
accompanying stamped and addressed envelope.
By Order of the Board of Directors
Philip N. Smith, Jr.
May 6, 1996
<PAGE>1
Exhibit A
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
FOAMEX INTERNATIONAL INC.
------------------------------------------
Under Section 242 of the General
Corporation Law of the State of Delaware
------------------------------------------
The undersigned, Philip N. Smith, Jr. and Tambra S. King, Vice
President and Assistant Secretary, respectively, of Foamex International
Inc., a Delaware corporation (the "Company"), do hereby certify as follows:
FIRST: That the name of the Company is Foamex
International Inc.
SECOND: That the following resolutions were duly adopted by the Board
of Directors of the Company, by means of a written consent, in accordance with
the provisions of Sections 141(f) and 242(b) of the General Corporation Law of
the State of Delaware (the "Delaware Law"):
RESOLVED, that Paragraph A of Article IV of the Restated Certificate
of Incorporation of the Company be amended and restated as follows:
"ARTICLE IV.
AUTHORIZED CAPITAL STOCK
A. The Corporation shall be authorized to issue two classes of shares of
stock to be designated respectively, "Common Stock," and "Preferred
Stock". The total number of shares of Common Stock that the Corporation
shall have authority to issue shall be Fifty Million (50,000,000), par
value $0.01 per share and the total number of shares of Preferred Stock
that the Corporation shall have the authority to issue shall be Five
Million (5,000,000), par value of $1.00 per share.
RESOLVED FURTHER, that paragraph B of Article IV be deleted, and that
paragraph C be redesignated paragraph B and that paragraph D be
redesignated paragraph C.
RESOLVED FURTHER, that Article VI of the Restated Certificate of
Incorporation of the Company be amended and restated as follows:
ARTICLE VI.
ELECTION OF DIRECTORS
A. The business and affairs of the Corporation shall be conducted and
managed by, or under the direction of, the Board. Except as otherwise
provided for or fixed pursuant to the provisions of Article IV of this
Restated Certificate of Incorporation relating to the rights of the
holders of any series of Preferred Stock to elect additional directors,
the total number of directors constituting the entire Board shall be
fixed from time to time by or pursuant to a resolution passed by the
Board.
B. Except as otherwise provided for or fixed pursuant to the
provisions of Article IV of this Restated Certificate of
Incorporation relating to the rights of the holders of any series
of Preferred Stock to elect additional directors, and subject to the
provisions hereof, newly created directorships resulting from any
increase in the authorized number of directors, and any
vacancies on the Board resulting from death, resignation,
disqualification, removal, or other cause, may be filled only by the
affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the Board.
C. During any period when the holders of any series of Preferred
Stock have the right to elect additional
<PAGE>2
directors as provided for or fixed pursuant to the provisions of
Article IV of the Restated Certificate of Incorporation, then upon
commencement and for the duration of the period during which such right
continues (i) the then otherwise total authorized number of directors of
the Corporation shall automatically be increased by such specified
number of directors, and the holders of such Preferred Stock shall be
entitled to elect the additional directors so provided for or fixed
pursuant to said provisions, and (ii) each such additional director
shall serve until such director's successor shall have been duly elected
and qualified, or until such director's right to hold such office
terminated pursuant to said provisions, whichever occurs earlier,
subject to his death, disqualification, resignation or removal. Except
as otherwise provided by the Board in the resolution or resolutions
establishing such series, whenever the holders of any series of
Preferred Stock having such right to elect additional directors are
divested of such right pursuant to the provisions of such stock, the
terms of office of all such additional directors elected by the holders
of such stock, or elected to fill any vacancies resulting from death,
resignation, disqualification or removal of such additional directors,
shall forthwith terminate and the total and authorized number of
directors of the Corporation shall be reduced accordingly.
Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article VI of this Restated Certificate of Incorporation, the holders of
any one or more series of Preferred Stock shall have the right, voting
separately as a series or together with holders of other such series, to
elect directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of
such directorships shall be governed by the terms of the Restated
Certificate of Incorporation and the Certificate of Designations
applicable thereto.
D. Except for such additional directors, if any, as are elected by the
holders of any series of Preferred Stock as provided for or fixed pursuant
to the provisions of Article IV of this Restated Certificate of
Incorporation, any director may be removed from office only for cause and
only by the affirmative vote of the holders of 66-2/3% or more of the
combined voting power of the then-outstanding shares of Voting Stock at a
meeting of stockholders called for that purpose, voting together as a
single class.
FOURTH: That the foregoing amnedment was approved by at least
two-thirds of the issued and outstanding shares of stock of the Company
at a duly called meeting of the Company in accordance with the provisions of
Section 242(b) of the Delaware Law.
IN WITNESS WHEREOF, said Company has caused this Certificate of
Amendment to the Restated Certificate of Incorporation of the Company to be
signed by the undersigned, this the 23rd day of May, 1996.
FOAMEX INTERNATIONAL INC.
By:________________________________
Philip N. Smith, Jr.
Vice President
ATTEST:
By:_________________________________
Tambra S. King, Assistant Secretary
<PAGE>
[FRONT OF PROXY CARD]
0116150.01
FOAMEX INTERNATIONAL INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes all prior proxies and appoints
Marshall S. Cogan, John Rallis and Philip N. Smith, Jr., and each of them, as
proxies with full power of substitution, to vote on behalf of the undersigned
the same number of shares of Foamex International Inc. Common Stock which the
undersigned is then entitled to vote, at the Annual Meeting of Stockholders to
be held on Thursday, May 23, 1996, at 10:30 a.m., the offices of the
Corporation, 1000 Columbia Avenue, Linwood, PA 19061, and at any adjournments
thereof, on any matter properly coming before the meeting, and specifically
the following:
The proxy will be voted as specified. If no specification is made, it
will be voted for the election of directors and for proposals 1, 2, & 4.
[BACK OF PROXY CARD]
Please mark your |X|
votes as
indicated in
this example
<TABLE>
<S> <C>
1. To amend the Company's Restated Certificate of 2. To elect nine directors to serve until the 1997
Incorporation to provide for a single class of annual meeting of stockholders or until their
directors; respective successors are duly elected and
qualified;
FOR all nominees listed WITHHOLD authority
(except as marked to to vote for all nominees
FOR AGAINST ABSTAIN the contrary) listed
[ ] [ ] [ ] [ ] [ ]
3. To amend the Company's Restated Certificate of 4. To ratify the selection of Coopers & Lybrand
Incorporation to eliminate the Company's Class A L.L.P. as the Company's independent accountants
Common Stock; for the year ending December 29, 1996 ("Fiscal
1996"); and
FOR AGAINST ABSTAIN
[ ] [ ] [ ] FOR AGAINST ABSTAIN
[ ] [ ] [ ]
SALVATORE J. BONANNO, MARSHALL S. COGAN, ETIENNE 5. To transact such other business as may properly
DAVIGNON, ANDREA FARACE, ROBERT J. HAY, STUART J. come before the meeting of any adjournment or
HERSHON, JOHN RALLIS, CARL SPIELVOGEL, JOHN V. TUNNEY postponement thereof.
Instructions: To withhold authority to vote for any
nominee, write that nominee's name in the
space provided below.
-----------------------------------------
Signature of Stockholder(s)
-----------------------------------------
- - - ------------------------------------------ Date
</TABLE>
Note: Please sign your name exactly as it is shown at the
left. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your
full title as such. EACH joint owner is requested to
sign.
Please sign, date and return this proxy promptly in the enclosed
postage paid envelope.
