FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number - 1-6797
TEXFI INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-0795032
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5400 Glenwood Avenue, Suite 215, Raleigh, North Carolina 27612
(Address of principal executive offices)
(ZIP Code)
(919) 783-4736
(Registrant's telephone number, including area code)
Number of shares of Common Stock outstanding
at June 9, 1995 - 8,652,683
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
<PAGE>
TEXFI INDUSTRIES, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED APRIL 28, 1995
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
The consolidated financial statements included herein have been
prepared by Texfi Industries, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. The consolidated balance sheet as of October
28, 1994 has been taken from the audited financial statements as of
that date. Certain information and note disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's latest Annual Report on Form 10-K.
The consolidated financial statements included herein reflect all
adjustments (none of which are other than normal recurring
accruals) which are, in the opinion of management, necessary for a
fair presentation of the information included. Operating results
for the thirteen-week and twenty-six week periods ended April 28,
1995 are not necessarily indicative of the results that may be
expected for the year ended November 3, 1995. The following
consolidated financial statements are included:
Consolidated Statements of Income for the thirteen weeks and
twenty-six weeks ended April 28, 1995 and April 29, 1994
Consolidated Balance Sheets as of April 28, 1995 and October
28, 1994
Consolidated Statements of Cash Flows for the thirteen weeks
and twenty-six weeks ended April 28, 1995 and April 29,
1994
Condensed Notes to Consolidated Financial Statements
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TEXFI INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
April 28, April 29, April 28, April 29,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales ........................... $ 63,652 $ 51,178 $ 126,899 $ 102,581
Cost and Expenses:
Cost of goods sold ............... 56,546 46,456 113,083 94,589
Selling, general and admin. ...... 3,974 3,759 8,504 7,377
Total ......................... 60,520 50,215 121,587 101,966
Operating Income..................... 3,132 963 5,312 615
Other Expense (Income):
Interest ......................... 3,054 2,516 6,191 5,030
Other, net ....................... 6 16 (4) 8
Total ......................... 3,060 2,532 6,187 5,038
Net Income (Loss) from Continuing
Operations .......................... 72 (1,569) (875) (4,423)
Discontinued Operations:
Loss from operations of discontinued
operations........................ (975) (1,837) (2,185) (2,538)
Loss from disposal of discontinued
operations .................... (6,407) -- (13,184) --___
Total.......................... (7,382) (1,837) (15,369) (2,538)
Net Loss Applicable to
Common Stockholders ................. $ (7,310) $ (3,406) $ (16,244) $ (6,961)
Loss per Share:
Income (loss) from continuing
operations .................... $ .01 $(.20) $(.10) $(.57)
Loss from discontinued
operations .................... (.85) (.24) (1.78) (.33)
Net loss.......................... $(.84) $(.44) $(1.88) $(.90)
</TABLE>
See Notes to Consolidated Financial Statements on page 5.
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TEXFI INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
April 28, October 28,
1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............... $ 230 1,468
Receivables:
Trade ................................. 73 170
Due from factor ....................... 3,739 10,024
Other ................................. 2,603 156
Inventories .............................. 32,885 42,131
Prepaid expenses ......................... 2,866 2,235
Total................................... 42,396 56,184
PROPERTY, PLANT AND EQUIPMENT - Net ......... 59,546 75,945
OTHER ASSETS ................................ 4,291 5,051
$106,233 $137,180
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ..... $ 8,342 $ 11,462
Accounts payable ......................... 25,833 25,531
Other liabilities ........................ 5,668 6,950
Federal and state income taxes ........... 70 70
Total.................................. 39,913 44,013
LONG-TERM DEBT .............................. 18,816 25,015
SUBORDINATED DEBENTURES ..................... 40,729 45,127
OTHER LONG-TERM OBLIGATIONS ................. 1,868 1,842
COMMON STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value ............ 8,651 8,653
Additional paid-in capital ............... 25,069 25,099
Retained earnings ........................ (28,813) (12,569)
Total.................................. 4,907 21,183
$106,233 $137,180
</TABLE>
See Notes to Consolidated Financial Statements on page 5.
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TEXFI INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
April 28, April 29, April 28, April 29,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ...................... $(7,310) $ (3,406) $(16,244) $ (6,961)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation & amortization .......... 2,338 2,759 5,130 5,516
Provision for losses on accounts
receivable .......................... 931 134 1,200 262
Loss (gain) on sale or disposition of
property, plant and equipment.......... 3,657 16 7,558 (2)
Change in operating assets and
liabilities:
Accounts receivable .............. (96) 1,086 2,735 5,582
Inventories ...................... 10,239 456 9,246 (1,443)
Prepaid and other assets ......... 398 273 (634) (1,237)
Accounts payables and accrued
liabilities ..................... (4,395) 91 (954) (440)
NET CASH PROVIDED BY OPERATING
ACTIVITIES ........................... 5,762 1,409 8,037 1,277
INVESTING ACTIVITIES
Purchases of property, plant and
equipment ............................. (1,105) (619) (2,046) (1,285)
Proceeds from sale of property, plant
and equipment......................... 6,046 20 6,520 37
NET CASH USED IN INVESTING ACTIVITIES . 4,941 (599) 4,474 (1,248)
FINANCING ACTIVITIES
Payments on long-term debt.............. (6,626) (870) (9,356) (2,172)
Redemption of subordinated debentures .. (4,393) -- (4,393) --
Proceeds from stock options exercised .. -- 24 -- 24
Restricted Stock Forfeitures............ (18) -- (32) --
NET CASH USED IN FINANCING
ACTIVITIES ........................... (11,037) (846) (13,749) (2,148)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ..................... (334) (36) (1,238) (2,119)
Cash and cash equivalents at
beginning of period ...................... 564 258 1,468 2,341
CASH AND CASH EQUIVALENTS
AT END OF PERIOD..................... $ 230 $ 222 $ 230 $ 222
</TABLE>
See Notes to Consolidated Financial Statements on page 5.
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TEXFI INDUSTRIES, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 28, 1995
1. Details of certain balance sheet captions are as follows (in thousands):
<TABLE>
<CAPTION>
(Unaudited)
April 28 October 28,
1995 1994
<S> <C> <C>
INVENTORIES:
Finished goods ............................. $ 13,557 $ 17,108
Goods in process ........................... 10,853 14,912
Raw materials .............................. 5,583 6,513
Supplies ................................... 2,892 3,598
Total ................................. $ 32,885 $ 42,131
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements ................. $ 3,792 $ 3,969
Buildings .................................. 25,683 27,414
Machinery, equipment, etc. ................. 88,074 105,492
Leasehold improvements ..................... 82 171
Construction in progress ................... 2,023 1,256
Total ................................. 119,654 138,302
Less accumulated depreciation .............. 60,108 62,357
Property, plant and equipment, net ......... $ 59,546 $ 75,945
LONG-TERM DEBT:
Term loan and revolving loans to a bank with
variable interest rate (9.18% at April 28,
1995 and 8.1875% at October 28, 1994)and
period options. Principal payments due
monthly through October 31, 1997.......... $ 20,498 $ 27,798
Term loan at prime plus 1%, payable in
monthly installments plus interest
through October 1997 ...................... 3,875 4,500
Term loan at 6.75%, payable in monthly
installments plus interest through November
1, 1998.................................... 2,247 3,502
Other obligations, principally at prime,
payable through 2009 ...................... 538 677
Total ................................. 27,158 36,477
Less current maturities .................... 8,342 11,462
Due after one year ......................... $ 18,816 $ 25,015
</TABLE>
5
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1. Continued
<TABLE>
<CAPTION>
April 28, October 28,
1995 1994
<S> <C> <C>
SUBORDINATED DEBENTURES:
Senior Subordinated Debentures, 8 3/4%
due August 1, 1999.................. $ 34,435 $ 34,440
Subordinated Extendible Debentures,
11%, due April 1, 2000 (Series C)... 2,757 7,150
Convertible Senior Subordinated
Debentures, 11-1/4% due October
1, 1997 ............................ 3,537 3,537
$ 40,729 $ 45,127
</TABLE>
2. Primary earnings per common share are based on the average
number of shares of common stock and common stock equivalents of
dilutive stock options outstanding during the year.
Fully diluted earnings per common share are computed assuming
conversion of the 11-1/4% Convertible Senior Subordinated
Debentures into common stock as of the beginning of the year,
and addition to net income of interest expense related to these
debentures when these debentures are considered dilutive stock
options outstanding during the year.
3. At April 28, 1995, shares of common stock were reserved for
possible issuance as follows:
Conversion of 11-1/4% Convertible Senior Subordinated
Debentures ...................................... 528,647
Stock options ................................... 728,668
Stock options granted to Chadbourne Corporation.. 600,000
1990 Executive Stock Purchase Plan .............. 186,565
1990 Restricted Incentive Stock Plan ............ 109,089
Directors' Deferred Stock Compensation Plan ..... 162,791
Total ....................................... 2,315,760
4. Subsequent to the end of the second quarter, on June 2, 1995,
the Company completed the sale of its corduroy and diaper fabric
facility in Jefferson, Georgia for $2.4 million. The sale
proceeds were used to reduce the term loan with its principal
factor. Losses resulting from the sale of this discontinued
operation were reflected in the first six months of earnings and
are not expected to have a material impact on future periods.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview:
At the beginning of the 1995 fiscal year, under the direction of its
Board of Directors, the new management team of Texfi Industries, Inc.,
identified what they considered were the three core business units of
the Company; Texfi Blends, Texfi Elastics and Kingstree Knits.
Management decided to discontinue or sell its three remaining
operations.; Highland Yarns, the Jefferson Mills Corduroy and Diaper
operations, and Marion Fabrics. The Company has recorded charges
totaling $15,390,000 during the first two fiscal quarters of 1995 in
order to close Highland and Jefferson and sell Marion, all of which are
accounted for as discontinued operations. Proceeds from the sale of
Marion, as well as from the sale of Jefferson which occurred subsequent
to its closure and the end of the second fiscal quarter, have been
applied as a long-term debt reduction. The Company does not anticipate
incurring any additional charges related to these discontinued
operations in the future. The Company's continuing operations are
comprised of its remaining three core business units. These business
units have experienced a 24% increase in sales and 3.1% improvement in
gross margin which have contributed to a $4,697,000 improvement in
operating income from continuing operations for the first six months of
1995 compared to 1994.
Results Of Operations:
Net sales for the thirteen weeks ended April 28, 1995 increased to
$63,652,000 as compared to $51,178,000 for the thirteen weeks ended
April 29, 1994. This $12,474,000 (24%) increase resulted from increased
sales of finished fabrics ($6,333,000), knitted apparel products
($4,568,000) and narrow elastic fabrics ($1,573,000). Year-to-date net
sales rose by $24,318,000 (24%) in 1995 over the comparable twenty-six
week period in 1994 as a result of increased sales of knitted apparel
products ($12,113,000), finished fabrics ($9,418,000), narrow elastic
fabrics ($2,513,000) and greige fabrics ($274,000). The higher sales of
knitted apparel products resulted from increased market demand for
knitted apparel, primarily T-shirts, and the Company's ongoing goal of
emphasizing more fashion-oriented apparel products. Finished fabrics
sales increased primarily due to greater demand for the Company's
synthetic fabrics used in womenswear and menswear apparel.
For the comparable thirteen-week period, cost of goods sold, as a
percentage of net sales, decreased 2% from 90.8% in 1994 to 88.8% in
1995. For the comparable twenty-six week period periods, cost of goods
sold as a percentage of net sales decreased 3.1%
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from 92.2% in 1994 to 89.1% in 1995. A portion of the decrease (1.1%
of the total 2% in the thirteen-week period and 1.5% of the total 3.1%
in the twenty-six week period) resulted from fixed manufacturing costs
remaining consistent with the prior year but decreasing as a percentage
of sales which rose 24% as described above. The remaining decrease (.9%
in the thirteen-week period and 1.6% in the twenty-six week period)
represented a combination of favorable changes in product mix, selling
prices and volume related operating costs.
Selling, general and administrative expenses ("SG&A") decreased from
7.3% to 6.2% as a percentage of sales for the thirteen weeks ended April
28, 1995 when compared to same period a year ago and decreased from 7.2%
to 6.7% for the comparable twenty-six week periods. These decreases
resulted primarily from the Company's success in maintaining these
expenses relatively constant despite sales volume increases.
Interest expense increased $ 538,000 (21%) from $2,516,000 during the
second thirteen-week period ended in 1994 to $3,054,000 in 1995. For
the comparable twenty-six week periods, interest expense increased
$1,161,000 (23%) from $5,030,000 to $6,191,000. This increase resulted
primarily from increases in the prime rate of interest from 6% effective
March 23, 1994 to its current level of 9% effective February 1, 1995
along with similar increases in the CD and LIBOR rates of interest.
These increased interest rates have negatively impacted interest expense
incurred on the Company's variable rate debt which consists primarily of
factor borrowings and term loan facility. The rising interest rates
offset decreases in interest expense attributable to a $10.8 million
reduction of average outstanding long-term and subordinated debt
obligations during the first six months of 1995 as compared to the
comparable period in 1994.
During the second quarter of 1995, the Company recorded a loss of
$4,469,000 as a result of disposal of the assets of its Marion Fabrics
greige goods operation at less than book value and an additional charge
of $1,938,000 to writedown the assets of Highland Yarn and Jefferson
Mills to an amount which more appropriately reflects their estimated
disposal value. These losses on disposal of assets, which total
$6,407,000, consisted primarily of a writedown of property, plant and
equipment ($3.6 million), inventory ($1.9 million), and other accruals
related to the ultimate disposition of assets ($900,000). In addition,
the Company incurred an operating loss on the discontinued operations of
Marion Fabrics totaling $975,000 for the months of February and March,
1995 representing the net of $6,219,000 sales less cost of goods sold of
$6,621,000 and SG&A of $573,000. The losses on disposal and writedown of
assets when combined with the operating loss on discontinued operations
resulted in a total
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loss from discontinued operations during the second
quarter of 1995 of $7,382,000.
During the first half of fiscal 1995, the Company recorded charges
totaling $15,369,000 to discontinue its Highland Yarn and Jefferson
Mills corduroy and diaper operations and dispose of its Marion Fabrics
greige goods operation, including a loss on operations of $2,185,000 and
a loss on disposal of assets of $13,184,000. The loss on disposal of
assets consisted primarily of a writedown of property, plant and
equipment ($7.6 million), inventory ($3.4 million) and other accruals
($2.2 million). The Company does not anticipate incurring any additional
charges relating to these discontinued operations in future earning
periods.
Financial Condition:
Despite a net loss of $16.2 million during the first two fiscal quarters
of 1995, operating activities generated net cash of $8 million. This
cash was generated as a result of the $16.2 million net loss being
adjusted to a cash basis for depreciation and amortization ($5.1
million), the provision for losses on accounts receivable ($1.2 million)
and the provision for losses on property, plant and equipment ($7.6
million), none of which required cash, together with a decrease in
inventories ($9.2 million) and accounts receivable ($2.7 million) which
offset decreases in accounts payable ($954,000) and increases in prepaid
and other assets ($634,000). Cash flow from operations along with
proceeds from the sale of property, plant and equipment of $6.5 million,
as well as cash on hand, provided funds to repay long-term debt and
subordinated debentures of $13.7 million and purchase equipment of $2
million.
Working capital is comprised chiefly of inventories and accounts
receivable. Traditionally, the Company has maintained financing
capacity for working capital and other general corporate purposes under
certain factoring agreements and other comparable short-term borrowing
arrangements, which have provided a major source of liquidity. Under
terms of the factoring agreements, the Company may be advanced funds in
amounts not to exceed 90% of eligible accounts receivable, which are
assigned without recourse to the factors. The amounts reported on the
balance sheets as "Due from Factor" represent accounts receivable with
factors net of advances.
In order for the Company to meet its working capital needs during the
first and second quarters of fiscal 1995 as it discontinued three of its
business units and to enable the Company
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to have sufficient cash to redeem $4.4 million of its Subordinated
Extendible Debentures due April 1, 2000 Series C (11%) (the "Series C
Debentures"), the Company has pledged its inventory pursuant to an
inventory security agreement with its principal factor. This
arrangement, which is in the process of being set forth in a formal
agreement, allows the Company to receive advances of funds up to 50% of
eligible inventory but not to exceed $10 million, in addition to funds
available based on eligible receivables. As of April 28, 1995, the
Company had approximately $8.6 million of funds available under its
factoring agreements based upon 90% of eligible accounts receivable and
50% of eligible inventory. Advances based on eligible accounts
receivable bear interest at the rate of prime plus 1/2%. Advances based
on eligible inventory bear interest at the rate of prime plus 3/4%.
At April 28, 1995, working capital equaled $2.5 million, a decrease of
$9.7 million from the fiscal year ended October 28, 1994. This decrease
in working capital is due primarily to decreases in cash ($1.2 million),
accounts receivable ($3.9 million) and inventory ($9 million) which more
than offset increases in prepaid expenses ($631,000) and decreases in
accounts payable ($1.0 million) and current maturities of long-term debt
($3.1 million). Discontinued operations and the charge for loss on sale
of assets, reduced working capital by $11.4 million while continuing
operations improved working capital by $1.7 million during the
twenty-six week period.
On October 29, 1990, the Company obtained a $40 million credit facility,
which has been fully funded. The proceeds of the credit facility were
used to reduce factor debt incurred principally to fund acquisitions and
capital improvements and for working capital and other general corporate
purposes. Borrowings under the credit facility bear interest, at the
Company's option, at either prime or an alternative rate based upon
LIBOR or CD rates. The remaining balance on the facility of $20.5
million is payable in monthly installments through the end of fiscal
1997. The credit facility places limitations on the Company's rental
expense, additional indebtedness, acquisitions, capital expenditures and
sale or disposal of assets. The Company is also required to maintain a
stated amount of working capital and tangible net worth as well as
certain financial ratios, including stated ratios of assets to current
liabilities and of earnings to fixed charges. This facility has been
amended from time to time to make the restrictive covenants less
restrictive, to defer principal repayments and to effect other changes.
On April 28, 1994, the credit facility was amended to (i) change the
installment payments from a quarterly to monthly basis, (ii) defer the
April quarterly installment payment over the remaining term of the
facility, (iii) amend the covenants described above
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to make them less restrictive, (iv) impose an interest rate margin of 1%
on the prime rate used with respect to the loan and (v) increase the
interest rate margin used in calculating the CD and LIBOR rates of
interest on the loan from a base of 1.25% to 2.25% as of April 28, 1994.
The amendment further provides (a) for the applicable interest rate
margin on CD and LIBOR rates of interest to be increased or decreased
within a range of 1.25% to 2.75% and (b) the prime interest rate margin
to be increased or decreased within a range of 0% to 1.5%, both based on
the ratio of the Company's senior debt plus factor advances to earnings
before inter est, taxes, depreciation and amortization. On January 27,
1995, the credit facility was amended to defer the February and March
1995 payments totaling $1.5 million and to make the restrictive
covenants less restrictive and bring the Company into compliance with
all the covenants contained in the credit facility, after giving
consideration to the charge the Company recorded in the first quarter of
1995 from discontinuance of the its commodity yarn, corduroy, and diaper
fabric operations. On April 28, 1995, the credit facility was further
amended to (a) restructure the payment schedule as follows; (i) reduce
the May through October 1995 monthly installment from $750,000 to
$350,000, and (ii) reduce the November 1995 through December 1996
monthly installments from $750,000 to $600,000; (b) allow the Company to
reduce its fiscal 1996 installments up to $1.2 million with the proceeds
it may realize if and when the discontinued Highland Yarn property,
plant and equipment is sold, and (c) amend the restrictive covenants to
make them less restrictive and bring the Company into compliance with
all the covenants contained in the credit facility, after giving
consideration to the additional charges the Company recorded in the
second quarter of 1995 from discontinuance of its commodity yarn,
corduroy and diaper fabric operations and sale of its Marion Fabrics
greige goods operations.
In April 1990, the Company issued $7.1 million in principal amount of
Subordinated Extendible Debentures due April 1, 2000, Series C (11%)
(the "Series C Debentures") in an underwritten public offering. The net
proceeds of this offering were used to reduce factor indebtedness
incurred to fund capital expenditures. The annual interest rate of the
Series C Debentures may be adjusted at the sole discretion of the
Company on April 1, 1995 and on each April 1 thereafter until maturity
in 2000. The Company reset the interest rate on the Series C Debentures
to 13% for the period beginning April 1, 1995 and ending March 31, 1996.
The Series C Debentures were redeemable on April 1, 1995 and will be
redeemable on each April 1 thereafter until maturity, in whole or in
part, at the option of the holder or the Company for the principal
amount thereof plus accrued interest through the date of redemption. On
April 1, 1995, $4,393,000 of the Series C Debentures were redeemed at
the option of the holders thereof.
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The remaining principal amount outstanding totaled $2,757,000 as of
April 28, 1995.
On October 1, 1991, the Company exchanged $3.6 million of its 11-1/4%
Convertible Senior Subordinated Debentures due October 1, 1997 (the "New
Debentures") for 11-1/4% Convertible Senior Subordinated Debentures due
October 1, 1991 (the "Old Debentures"). The New Debentures have a
conversion price of $6.69 per share, are convertible at the option of
the holders, and may be redeemed at face value by the Company any time
in the future.
On September 8, 1993, the Company issued $34.5 million in principal
amount of Senior Subordinated Debentures due August 1, 1999 ("8-3/4%
Debentures"). The annual interest rate of these debentures is 8.75%,
payable semiannually on August 1 and February 1 of each year commencing
February 1, 1994. The 8-3/4% Debentures, which cannot be called prior
to their maturity date, are unsecured obligations but contain covenants
that place limitations on the use of proceeds from disposal of assets
and on the incurrence of additional indebtedness and senior indebtedness
(as defined in the indenture) if such indebtedness would exceed stated
ratios of capitalization and earnings after such incurrence. The
Company is currently prohibited, by the covenant described in (i) below,
from incurring additional indebtedness. The Company may not incur
additional indebtedness if, after giving effect to such incurrence, the
aggregate amount of indebtedness of the Company would exceed either of
(i) 75% of the sum of all indebtedness, stockholders' equity and any
redeemable preferred stock or (ii) the product of (x) 4.25 multiplied by
(y) the Company's net income before interest, income taxes, depreciation
and amortization, and other noncash charges reducing income, all for the
four consecutive fiscal quarters preceding such incurrence (excluding
writedowns of discontinued operations). In addition, the Company may
not incur additional senior indebtedness (as defined in the indenture)
if, after giving effect of such incurrence, the aggregate amount of
senior indebtedness would exceed 60% of the sum of all indebtedness,
stockholders' equity and any redeemable preferred stock. Advances under
the Company's factoring agreements are not considered indebtedness for
the purpose of these covenants.
Net proceeds from the issue of 8-3/4% Debentures was $33.5 million (net
$1.0 million issue costs). These funds were used to redeem all
outstanding shares of preferred stock ($5.1 million) and all outstanding
Series A and Series B Debentures ($8.4 million), to repay long-term debt
($8.1 million) and to reduce factor advances ($11.9 million).
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The Company plans to place into service $5.2 million of machinery and
equipment during fiscal 1995. This equipment primarily will increase
fabric dyeing and finishing capacity as well as increase knit apparel
product sewing capacity. Management anticipates that approximately $3.2
million of the $5.2 million of equipment will be placed into service
through operating leases and therefore not reflected in the balance
sheet.
On March 31, 1995, the Company sold its Marion Fabrics greige goods
operations for approximately $10.7 million which included all property,
plant and equipment and inventory. The sales price, which is subject to
an inventory adjustment of approximately $200,000, was received in the
form of cash of $8.7 million and a subordinated note of $2 million which
is due within 180 days of closing. The sale of Marion, enabled the
Company to repay long-term debt of $5.7 million and factor advances of
approximately $3 million. The Company will further reduce its factor
advances by $2 million upon collection of the note and approximately $8
million as Marion Fabrics' accounts receivable are liquidated.
Subsequent to the end of the second quarter, on May 26, 1995, the
Company sold the property, plant and equipment of its previously
discontinued Jefferson corduroy and diaper fabrics operations for $2.4
million. The proceeds from the sale were used to reduce the term loan
with its principal factor.
As a result of the improved operating performance of the Company's
continuing operations and the discontinuance of the Company's greige
goods operations, the Company has been able to significantly improve its
cash flow from operations and sales of assets and reduce its long-term
debt and subordinated debentures by $13.7 million as of April 28, 1995.
The sale of Jefferson Mills subsequent to the end of the second quarter
enabled the Company to further reduce its long-term debt by $2.4
million. In addition, the Company, through the restructuring of its
term loan facility, has reduced its current maturities of long-term debt
by $3.3 million over the next twelve months. Management believes cash
flows from operations and funds available under factoring agreements,
will provide the Company with sufficient sources of funds to meet its
cash needs during the third and fourth quarters of 1995. The Company is
experiencing improved market conditions and, assuming that market
conditions continue to improve, management expects that operations will
improve and inventory levels will be reduced as compared to the same
quarterly periods in 1994, resulting in increased cash being generated
from operations as well as improved liquidity.
13
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
The Registrant's Annual Meeting of Stockholders was held on March 14,
1995. The proposals voted upon and the results of voting were as
follows:
(1) Election of Class II Directors for a three-year term:
Votes Votes
for Withheld
William D. Goldston, Jr. 5,989,808 83,250
Andrew J. Parise, Jr. 5,991,524 81,534
John S. Rainey 5,990,941 82,117
All Class I and Class III Directors continue as previously
reported.
(2) Proposal to amend Directors' Deferred Stock Compensation Plan to
increase by 100,000 shares of common stock, the number
of shares of common stock which may be issued under the
Plan.
Votes for: 5,634,244
Votes against: 316,948
Votes withheld: 69,133
(3) Proposal to approve ratification of Ernst & Young, LLP as
independent auditors for the fiscal year ending November
3, 1995.
Votes for: 6,009,082
Votes against: 37,967
Votes withheld: 26,009
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
Exhibits to this report are listed in the accompanying
index to exhibits.
(b) Reports on Form 8-K
On April 17, 1995, the Registrant filed Form 8-K Current
Report for Item 2 Acquisition or Disposition of Assets
with respect to its sale of
the Marion Fabrics greige goods facility.
The Form 8-K included the following financial information:
Introductory Statement
Unaudited Pro Forma Consolidated Balance Sheet as of
January 27, 1995
Note to Unaudited Pro Forma Consolidated Balance Sheet
Unaudited Pro Forma Statement of Consolidated Operations
for the thirteen weeks ended January 27, 1995
Unaudited Pro Forma Statement of Consolidated Operations
for the fiscal year ended October 28, 1994
Notes to Unaudited Pro Forma Statements of Consolidated
Operations
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEXFI INDUSTRIES, INC.
(Registrant)
Date: June 12, 1995 By:S/Dane L. Vincent
Dane L. Vincent
Vice President Finance
and Treasurer
16
<PAGE>
TEXFI INDUSTRIES, INC.
INDEX TO EXHIBITS
*2 Asset Purchase Agreement dated as of February 10, 1995,
by and between the Registrant and Marion, Inc. filed as
Exhibits 2(a) through 2(g) to the Registrant's Form 8K
Current Report dated March 31, 1995.
*4(a)(1) Restated Certificate of Incorporation of the Registrant
dated August 13, 1969, filed as Exhibit (3)(a)(1) to the
Registrant's Form 10-K Annual Report for the fiscal year
ended October 31, 1980.
*4(a)(2) Certificate of Amendment of Certificate of Incorporation
of the Registrant dated March 16, 1972, filed as Exhibit
(3)(a)(2) to the Registrant's Form 10-K Annual Report
for the fiscal year ended October 31, 1980.
*4(a)(3) Certificate of Amendment of Certificate of Incorporation
of the Registrant dated March 27, 1978, filed as Exhibit
(3)(a)(3) to the Registrant's Form 10-K Annual Report
for the fiscal year ended October 31, 1980.
*4(a)(4) Certificate of Amendment of Certificate of Incorporation
of the Registrant dated May 19, 1986, filed as Exhibit
4.4 to the Registrant's Form S-8 Registration Statement
(No. 33-14697).
*4(a)(5) Certificate of Amendment of Certificate of Incorporation
of the Registrant dated March 20, 1987, filed as Exhibit
4.5 to the Registrant's Form S-8 Registration Statement
(No. 33-14697).
*4(a)(6) Certificate of Amendment of Certificate of Incorporation
of the Registrant dated September 28, 1987, filed as
Exhibit 4(a)(6) to the Registrant's Form S-2
Registration Statement (No. 33-16794).
*4(a)(7) Certificate of Designations of the Registrant dated
November 20,1987, filed as Exhibit 4(a)(7) to the
Registrant's Form S-2 Registration Statement (No.
33-16794).
1
<PAGE>
*4(a)(8) Certificate of Designations of the Registrant dated
March 8, 1988, filed as Exhibit 4(a)(8) to the
Registrant's Form S-2 Registration Statement (No.
33-20131).
*4(a)(9) Certificate of Designations of the Registrant dated
August 4, 1988, filed as Exhibit 4(d)(9) to the
Registrant's Form 10-Q Quarterly Report for the fiscal
quarter ended July 29, 1988.
*4(b)(1) Bylaws of the Registrant, filed as Exhibit 4.6 to the
Registrant's Form S-8 Registration Statement (No.
33-14697).
*4(b)(2) Amendment to Bylaws of the Registrant, filed as Exhibit
4(b)(2) to the Registrant's Form S-2 Registration
Statement (No. 33-16794).
*4(b)(3) Amendment to Bylaws of the Registrant adopted by
Registrant's Board of Directors on January 18, 1991,
filed as Exhibit 3(b)(3) to the Registrant's Form 10-K
Annual Report for the fiscal year ended November 2,
1990.
*4(b)(4) Amendment to Bylaws of the Registrant adopted by
Registrant's Board of Directors on August 31, 1994,
filed as Exhibit 4(b)(4) to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended July 29,
1994.
*4(b)(5) Amendment to Bylaws of the Registrant adopted by
Registrant's Board of Directors on September 7, 1994,
filed as Exhibit 4(b)(5) to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended July 29,
1994.
*4(c)(1) Indenture between the Registrant and Rhode Island
Hospital Trust National Bank, Trustee, with a copy of
Subordinated Debentures due April 1, 1995, Series A,
Subordinated Debentures due April 1, 1995, Series B and
Subordinated Extendible Debentures due April 1, 2000,
Series C attached, filed as Exhibit 4(f) to the
Registrant's Form S-2 Registration Statement (No.
33-32485).
*4(c)(2) First Supplemental Indenture between the Registrant and
Rhode Island Hospital Trust National Bank, Trustee, with
a revised Subordinated Debenture due April 1, 1995,
Series B attached, filed as Exhibit 4 to the
Registrant's Form 8-K Current Form dated May 16, 1990.
2
<PAGE>
*4(c)(3) Indenture dated October 1, 1991 between the Registrant
and The First National Bank of Boston, Trustee, with
copy of 11-1/4% Convertible Senior Subordinated
Debenture due October 1, 1997, filed as Exhibit 4(a)(1)
to the Registrant's Form 10-K Annual Report for the
fiscal year ended November 1, 1991.
*4(c)(4) Indenture dated September 8, 1993 between the Registrant
and the First Union National Bank of North Carolina,
Trustee, with copy of 8-3/4% Senior Subordinated
Debenture due August 1, 1999, filed as Exhibit 4(c)(2)
to the Registrant's Form 10-Q Quarterly Report for the
fiscal quarter ended July 30, 1993.
*4(d)(1) Specimen Common Stock ($1 par value) certificates, filed
as Exhibit 4.01 to Amendment No. 2 to the Registrant's
Form S-1 Registration Statement (No. 2-41653).
*4(e)(1) Rights Agreement dated July 22, 1988 between Registrant
and First Union National Bank of North Carolina, as
Rights Agent, filed as Exhibit 1 to the Registrant's
Form 8-K Current Form dated July 22, 1988.
*4(e)(2) Form of Rights Certificate, filed as Exhibit B to
Exhibit 1 to the Registrant's Form 8-K Current Form
dated July 22, 1988.
*4(e)(3) Amendment to Rights Agreement between the Registrant and
First Union National Bank of North Carolina dated
October 31, 1988, filed as Exhibit 4(e)(3) to the
Registrant's Form S-2 Registration Statement (No.
33-32485).
*4(e)(4) Second Amendment to Rights Agreement dated May 24, 1994
between Registrant and First Union National Bank of
North Carolina, as Rights Agent, filed as Exhibit
4(e)(4) to the Registrant's Form 10-Q Quarterly Report
for the fiscal quarter ended April 29, 1994.
*4(e)(5) Third Amendment to Rights Agreement dated December 16,
1994 between Registrant and First Union National Bank of
North Carolina, as Rights Agent, filed as Exhibit
4(c)(5) to the Registrant's Form 10-K Annual Report for
the fiscal year ended October 28, 1994.
*4(f)(1) Loan Agreement dated October 29, 1990 between the
Registrant and NCNB National Bank of North Carolina,
filed as Exhibit 2(a) to the Registrant's Form 8-K
Current Form dated November 12, 1990.
3
<PAGE>
*4(f)(2) First Amendment to Loan Agreement dated March 14, 1991
between Registrant and NCNB National Bank of North
Carolina, filed as Exhibit 19(a)(1) to the Registrant's
Form 10-Q Quarterly Report for the fiscal quarter ended
May 3, 1991.
*4(f)(3) Second Amendment to Loan Agreement dated March 28, 1991
between Registrant and NCNB National Bank of North
Carolina, filed as Exhibit 19(a)(2) to the Registrant's
Form 10-Q Quarterly Report for the fiscal quarter ended
May 3, 1991.
*4(f)(4) Third Amendment to Loan Agreement dated May 29, 1991
between Registrant and NCNB National Bank of North
Carolina, filed as Exhibit 19(a)(3) to the Registrant's
Form 10-Q Quarterly Report for the fiscal quarter ended
May 3, 1991.
*4(f)(5) Fourth Amendment to Loan Agreement dated June 14, 1991
between Registrant and NCNB National Bank of North
Carolina, filed as Exhibit 19(a)(4) to the Registrant's
Form 10-Q Quarterly Report for the fiscal quarter ended
May 3, 1991.
*4(f)(6) Fifth Amendment to Loan Agreement dated January 28, 1992
between Registrant and NCNB National Bank of North
Carolina, filed as Exhibit 4(e)(6) to the Registrant's
Form 10-K Annual Report for the fiscal year ended
November 1, 1991.
*4(f)(7) Sixth Amendment to Loan Agreement dated November 4, 1992
between Registrant and NationsBank of North Carolina,
N.A. (formerly NCNB National Bank of North Carolina),
filed as Exhibit 4(e)(7) to the Registrant's Form 10-K
Annual Report for the fiscal year ended October 30,
1992.
*4(f)(8) Seventh Amendment to Loan Agreement dated December 22,
1992 between Registrant and NationsBank of North
Carolina, N.A. (formerly NCNB National Bank of North
Carolina), filed as Exhibit 4(e)(8) to the Registrant's
Form 10-K Annual Report for the fiscal year ended
October 30, 1992.
*4(f)(9) Eighth Amendment to Loan Agreement dated August 25, 1993
between Registrant and NationsBank of North Carolina,
N.A. (formerly NCNB National Bank of North Carolina),
filed as Exhibit 4(g)(9) to the Registrant's Form S-2
Registration Statement (No. 33-66678).
*4(f)(10) Ninth Amendment to Loan Agreement dated October 29, 1993
between Registrant and NationsBank of North Carolina,
N.A. (formerly NCNB National Bank of North Carolina),
filed as Exhibit 4(f)(10) to the Registrant's Form 10-K
Annual Report for the fiscal year ended October 29,
1993.
4
<PAGE>
*4(f)(11) Tenth Amendment to Loan Agreement dated April 28, 1994 between
Registrant and NationsBank of North Carolina, N.A.
(formerly NCNB National Bank of North Carolina), filed
as Exhibit 4(f)(11) to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended April 29,
1994.
*4(f)(12) Eleventh Amendment to Loan Agreement dated October 28,
1994 between Registrant and NationsBank of North
Carolina, N.A. (formerly NCNB National Bank of North
Carolina) filed as Exhibit 4(d)(12) to the Registrant's
Form 10-K Annual Report for the fiscal year ended
October 28, 1994.
*4(f)(13) Twelfth Amendment to Loan Agreement dated January 27, 1995
between Registrant and NationsBank of North Carolina,
N.A. (formerly NCNB National Bank of North Carolina),
filed as Exhibit 4(d)(13) to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended January
27, 1995.
4(f)(14) Thirteenth Amendment to Loan Agreement dated April 28,
1995 between Registrant and NationsBank of North
Carolina, N.A. (formerly NCNB National Bank of North
Carolina).
Management contract or compensatory plan or arrangement (Exhibits
10(a)(1) through 10(a)(17))
*10(a)(1) 1987 Nonqualified Stock Option Plan, as adopted by the
Registrant's Board of Directors on December 16, 1987 and
approved March 8, 1988 at a meeting of the stockholders,
filed as Exhibit 4(c)(11) to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended April 29,
1988.
*10(a)(2) Form of 1987 Nonqualified Stock Option Agreement, filed
as Exhibit 4(c)(12) to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended April 29,
1988.
*10(a)(3) Resolutions amending the 1987 Nonqualified Stock Option
Plan, as adopted by the Registrant's Board of Directors
on January 8, 1991 and the Registrant's Stockholders on
March 12, 1991, filed as Exhibit 10(a)(9) to the
Registrant's Form 10-K Annual Report for the fiscal year
ended November 1, 1991.
5
<PAGE>
*10(a)(4) Resolutions amending the 1987 Nonqualified Stock Option
Plan, as adopted by the Registrant's Board of Directors
on January 12, 1993 and the Registrant's stockholders on
March 9, 1993, filed as Exhibit 19(f) to the
Registrant's Form 10-Q Quarterly Report for the fiscal
quarter ended April 30, 1993.
*10(a)(5) Form of 1987 Nonqualified Stock Option Agreement between
Michael A. Miller and the Registrant, filed as Exhibit
10(a)(13) to the Registrant's Form 10-K Annual Report
for the fiscal year ended November 2, 1990.
*10(a)(6) Directors' Deferred Stock Compensation Plan as adopted
by the Registrant's Board of Directors on July 14, 1989,
filed as Exhibit 19 to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended July 28,
1989.
10(a)(7) Resolutions amending the Directors' Deferred Stock
Compensation Plan as adopted by the Registrant's Board
of Directors on November 30, 1994 and the Registrant's
Stockholders on March 14, 1995.
*10(a)(8) Agreement dated March 1, 1989 between the Registrant and
Michael A. Miller, filed as Exhibit 10(a)(12) to the
Registrant's Form S-2 Registration Statement (No.
33-32485).
*10(a)(9) 1990 Executive Stock Purchase Plan, dated January 9,
1990, filed as Exhibit 4(d)(16) to the Registrant's Form
10-Q Quarterly Report for the fiscal quarter ended
February 2, 1990.
*10(a)(10) Resolutions amending the 1990 Executive Stock Purchase
Plan, as adopted by the Registrant's Board of Directors
on March 9, 1993, filed as Exhibit 19(g) to the
Registrant's Form 10-Q Quarterly Report for the quarter
ended April 30, 1993.
*10(a)(11) 1990 Restricted Incentive Stock Plan, dated January 9, 1990,
filed as Exhibit 4(d)(17) to the Registrant's Form 10-Q
Quarterly Report for the fiscal quarter ended February
2, 1990.
*10(a)(12) Employment Agreement dated November 17, 1992 between the
Registrant and Michael A. Miller, filed as Exhibit 10
(a) (26) to the Registrant's Form 10-K Annual Report for
the fiscal year ended October 30, 1992.
*10(a)(13) Amendment to Employment Agreement dated January 29, 1993
between the Registrant and Michael A. Miller, filed as
Exhibit 19(d) to the Registrant's Form 10-Q Quarterly
Report for the fiscal quarter ended April 30, 1993.
6
<PAGE>
*10(a)(14) Employment Agreement dated October 31, 1994 between the
Registrant and Andrew J. Parise, Jr.
*10(a)(15) Description of the Registrant's 1994 Management
Incentive Compensation Plan adopted by the Registrant's
Board of Directors on February 15, 1994, filed as
Exhibit 10(a)(24) to the Registrant's Form 10-K Annual
Report for the year ended October 28, 1994.
*10(a)(16) Description of the Registrant's Target Ownership Program
adopted by the Registrant's Board of Directors on
February 15, 1994, filed as Exhibit 10(a)(25) to the
Registrant's From 10-K Annual Report for the year ended
October 28, 1994.
10(a)(17) Employment Agreement dated April 1, 1995 between the
Registrant and William L. Remley.
*10(b)(1) Term Loan Agreement dated September 15, 1989 between
Elastex, Inc. and BarclaysAmerican/Commercial, Inc.,
filed as Exhibit 10(e)(3) to the Registrant's Form S-2
Registration Statement (No. 33- 32485).
*10(b)(2) Deed of Trust and Security Agreement dated September 15,
1989 between Elastex, Inc., Eugene M. Anderson, Jr. and
BarclaysAmerican/Commercial, Inc., filed as Exhibit
10(e)(4) to the Registrant's Form S-2 Registration
Statement (No. 33-32485).
*10(b)(3) First Supplement to Deed of Trust dated September 15,
1989 among Elastex, Inc., Eugene M. Anderson, Jr. and
BarclaysAmerican Commercial, Inc., filed as Exhibit
10(e)(5) to the Registrant's Form S-2 Registration
Statement (No. 33-32485).
*10(b)(4) Assignment of Leases and Rents dated September 15, 1989
by Elastex, Inc. in favor of
BarclaysAmerican/Commercial, Inc., filed as Exhibit
10(e)(6) to the Registrant's Form S-2 Registration
Statement (No. 33-32485).
*10(b)(5) Security Agreement (Equipment and Machinery) dated July
24, 1987 by Elastex, Inc. in favor of BarclaysAmerican/
Commercial, Inc., filed as Exhibit 10(e)(7) to the
Registrant's Form S-2 Registration Statement (No.
33-32485).
7
<PAGE>
*10(b)(6) Amendment to Security Agreement dated September 15, 1989
between Elastex, Inc. and BarclaysAmerican/Commercial,
Inc., filed as Exhibit 10(e)(8) to the Registrant's Form
S-2 Registration Statement (No. 33-32485).
*10(b)(7) Guaranty by Corporation dated July 24, 1987 to
BarclaysAmerican/ Commercial, Inc. by the Registrant,
filed as Exhibit 10(e)(9) to the Registrant's Form S-2
Registration Statement (No. 33-32485).
*10(b)(8) Reaffirmation of Guaranty dated September 15, 1989 by
the Registrant, filed as Exhibit 10(e)(10) to the
Registrant's Form S-2 Registration Statement (No.
33-32485).
*10(b)(9) Term Loan Agreement dated October 30, 1992 between the
Registrant and Barclays Commercial Corporation, filed as
Exhibit 10(c)(9) to the Registrant's Form 10-K Annual
Report for the fiscal year ended October 30, 1992.
*10(b)(10) Amendment to Term Loan Agreement dated August 25, 1993
between Registrant and Barclays Commercial Corporation,
filed as Exhibit 10(c)(10) to the Registrant's Form S-2
Registration Statement (No. 33-66678).
*10(b)(11) Amendment to Term Loan Agreement dated December 29, 1993
between Registrant and Barclays Commercial Corporation,
filed as Exhibit 10b)(11) to the Registrant's Form 10-K
Annual Report for the fiscal year ended October 29,
1993.
*10(b)(12) Amendment to Term Loan Agreement dated May 25, 1994
between Registrant and The CIT Group/BCC, Inc. (formerly
Barclays Commercial Corporation), filed as Exhibit
10(b)(12) to the Registrant's Form 10-Q Quarterly
Report for the fiscal quarter ended April 29, 1994.
*10(b)(13) Amendment to Term Loan Agreement dated October 28, 1994
between Registrant and The CIT Group/BCC, Inc. (formerly
Barclays Commercial Corporation), filed as Exhibit
10(b)(13) to the Registrant's Form 10-K Annual Report
for the fiscal year ended October 28, 1994.
*10(b)(14) Amendment to Term Loan Agreement dated January 27, 1995
between Registrant and The CIT Group/BCC, Inc. (formerly
Barclays Commercial Corporation) filed as Exhibit
10(b)(14) to the Registrant's Form 10-Q Quarterly Report
for the fiscal quarter ended January 27, 1995.
8
<PAGE>
10(b)(15) Amendment to term Loan Agreement dated April 28, 1995
between Registrant and The CIT Group/BCC, Inc. (formerly
Barclays Commercial Corporation).
*10(b)(16) Inventory Security Agreement dated February 1, 1995
between Registrant and The CIT Group/Commercial
Services, Inc. (formerly Barclays Commercial
Corporation) filed as Exhibit 10(b)(15) to the
Registrant's Form 10-Q Quarterly Report for the fiscal
quarter ended January 27, 1995.
10(b)(17) Inventory Security Agreement dated March 31, 1995
between Registrant and the CIT Group/Commercial
Services, Inc. (formerly Barclays Commercial
Corporation).
*10(b)(18) Security Agreement dated October 30, 1992 between the
Registrant and Barclays Commercial Corporation, filed as
Exhibit 10(c)(11) to the Registrant's Form 10-K Annual
Report for the fiscal year ended October 30, 1992.
*10(b)(19) First Supplement to Deed of Trust and Security Agreement
dated October 30, 1992 between the Registrant and
Barclays Commercial Corporation, filed as Exhibit
10(c)(12) to the Registrant's Form 10-K Annual Report
for the fiscal year ended October 30, 1992.
*10(b)(20) Second Supplement to Deed of Trust and Security
Agreement dated October 30, 1992 between the Registrant
and Barclays Commercial Corporation, filed as Exhibit
10(c)(13) to the Registrant's Form 10-K Annual Report
for the fiscal year ended October 30, 1992.
*10(b)(21) Modification of Deed to secure Debt dated October 30,
1992 between the Registrant and Barclays Commercial
Corporation, filed as Exhibit 10(c)(14) to the
Registrant's Form 10-K Annual Report for the fiscal year
ended October 30, 1992.
*10(b)(22) Master Loan and Security Agreement dated June 1, 1993
between the Registrant and BOT Financial Corporation and
related Promissory Note dated June 4, 1993 between the
Registrant and BOT Financial Corporation, filed as
Exhibit 19(h) to the Registrant's Form 10-Q Quarterly
Report for the fiscal quarter ended April 30, 1993.
9
<PAGE>
*10(b)(23) Loan Schedule No. 2 to Master Loan and Security
Agreement and related Promissory Note and Supplemental
Security Agreement dated July 30, 1993 between the
Registrant and BOT Financial Corporation, filed as
Exhibit 10(b)(19) to the Registrant's Form 10-K Annual
Report for the fiscal year ended October 29, 1993.
*10(b)(24) Loan Schedule No. 3 to Master Loan and Security
Agreement and Related Promissory Note and Supplemental
Security Agreement dated October 29, 1993 between the
Registrant and BOT Financial Corporation, filed as
Exhibit 10(b)(20) to the Registrant's Form 10-K Annual
Report for the fiscal year ended October 29, 1993.
*10(b)(25) Master Loan and Security Agreement dated June 1, 1993
between the Registrant and KeyCorp. Leasing Ltd. and
related Promissory Note dated June 4, 1993 between the
Registrant and KeyCorp. Leasing Ltd., filed as Exhibit
19(i) to the Registrant's Form 10-Q Quarterly Report for
the fiscal quarter ended April 30, 1993.
10(c)(1) Loan Agreement dated October 29, 1990 and Amendments
thereto between the Registrant and NCNB National Bank of
North Carolina, incorporated by reference as Exhibits
4(f)(1) through 4(f)(14) hereto.
*10(c)(2) Future Advance Deed of Trust and Security Agreement
(Fayetteville, NC, property) dated October 29, 1990
between Registrant and NCNB National Bank of North
Carolina, filed as Exhibit 2(b) to the Registrant's Form
8-K Current Form dated November 12, 1990.
*10(c)(3) Future Advance Deed of Trust and Security Agreement
(Rocky Mount, NC property) dated October 29, 1990
between Registrant and NCNB National Bank of North
Carolina, filed as Exhibit 2(c) to the Registrant's Form
8-K Current Form dated November 12, 1990.
*10(c)(4) Amended and Restated Security Agreement dated May 29,
1991 between the Registrant and NCNB National Bank of
North Carolina, filed as Exhibit 10(c)(5) to the
Registrant's Form 10-K Annual Report for the fiscal
year ended October 29, 1993.
*10(d)(1) Stock and Option Purchase Agreement dated May 24, 1994
between Registrant and Chadbourne Corporation, filed as
Exhibit 10(d)(1) to the Registrant's Form 10-Q Quarterly
Report for the fiscal quarter ended April 29, 1994.
10
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11 Computation of Earnings Per Share
27 Financial Data Schedule
__________________________________
*Incorporated by reference to previous filing.
11
<PAGE>
EXHIBIT 4(f)(14)
THIRTEENTH AMENDMENT TO LOAN AGREEMENT
THIS THIRTEENTH AMENDMENT TO LOAN AGREEMENT, dated as of April
28, 1995, (the "Amendment") is made to the Loan Agreement dated as of
October 29, 1990, as amended by a First Amendment to Loan Agreement,
dated March 14, 1991, as amended by a Second Amendment to Loan
Agreement, dated March 28, 1991, as amended by a Third Amendment to Loan
Agreement, dated May 29, 1991, as amended by a Fourth Amendment to Loan
Agreement, dated as of June 14, 1991, as amended by a Fifth Amendment to
Loan Agreement, dated as of January 28, 1992, as amended by a Sixth
Amendment to Loan Agreement, dated as of November 4, 1992, as amended by
a Seventh Amendment to Loan Agreement, dated as of December 22, 1992, as
amended by an Eighth Amendment to Loan Agreement, dated as of August 24,
1993, as amended by a Ninth Amendment to Loan Agreement, dated as of
October 29, 1993, as amended by a Tenth Amendment to Loan Agreement,
dated as of April 28, 1994, as amended by an Eleventh Amendment to Loan
Agreement dated as of October 28, 1994, as amended by a Twelfth
Amendment to Loan Agreement dated as of January 27, 1995, between TEXFI
INDUSTRIES, INC., a Delaware corporation (the "Borrower"), and
NATIONSBANK, N.A. (CAROLINAS), (formerly known as NationsBank of North
Carolina, N.A.) a national association, acting as agent for the Lenders
(as described in the Loan Agreement, as defined below) (the "Agent") and
the Lenders.
RECITALS
A. The Borrower and the Agent entered into a Loan Agreement
dated as of October 29, 1990, pursuant to which the lenders, as defined
in the Loan Agreement, extended a $25,000,000 Term loan and a
$15,000,000 Revolving Line of Credit to the Borrower, which agreement
was amended by the First Amendment to Loan Agreement, dated March 14,
1991, by a Second Amendment to Loan Agreement, dated March 28, 1991, by
a Third Amendment to Loan Agreement, dated May 29, 1991, by a Fourth
Amendment to Loan Agreement , dated as of June 14, 1991, by a Fifth
Amendment to Loan Agreement, dated as of January 28, 1992, by Sixth
Amendment to Loan Agreement, dated as of November 4, 1992, by a Seventh
Amendment to Loan Agreement, dated as of December 22, 1992, by an Eighth
Amendment to Loan Agreement, dated as of August 24, 1993, by a Ninth
Amendment to Loan Agreement, dated as of October 29, 1993, by a Tenth
Amendment to
<PAGE>
Loan Agreement, dated as of April 28, 1994, by an Eleventh
Amendment to Loan Agreement, dated as of October 28, 1994, and by a
Twelfth Amendment to Loan Agreement dated as of January 27, 1995, (as
further amended, modified, restated or supplemented from time to time,
the "Loan Agreement"). All capitalized terms not otherwise defined in
this Amendment shall have the meaning assigned to them in the Loan
Agreement.
B. In connection with the Second Amendment, the Subsidiary
Equipment security Agreements were executed and delivered. In
connection with the Third Amendment, the Assignments of Factor
Receivables and the Subsidiary Security Agreements were terminated and
two of the Deeds of Trust and Assignments of Leases, Rents and Profits
were executed and delivered. Pursuant to the Seventh Amendment, the
schedule for repayment of the Term Loans were revised and the schedule
for repayment of the Revolving Credit Notes were revised to convert the
Revolving Line of Credit into a term loan payable in installments
commencing on July 31, 1993 and ending on October 31, 1997. Pursuant to
the Tenth Amendment and Twelfth Amendment, the schedule for repayment of
the loans and certain financial covenants contained in Article IX of the
Loan Agreement were revised. The other amendments to the Loan Agreement
revised certain financial covenants contained in Article IX of the Loan
Agreement.
C. The Borrower, the Lenders and the Agent desire to amend the
Loan Agreement further in accordance with the terms hereof, in order to
revise the repayment schedule for the principal of the Term Loans and to
revise certain definitions and certain financial covenants contained in
the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower,
the Lenders and the Agent, for themselves, their successors and assigns,
agree as follows:
2
<PAGE>
ARTICLE 1
AMENDMENTS
The Loan Agreement is hereby amended as follows:
1.1 Additional Definitions. Section 1.1 of the Loan Agreement
by adding the following definitions of "Net Income" and "Quarterly
Coverage Ratio" to Section 1.1:
"Net Income" shall mean, for any period, the consolidated
net income (loss) of the Borrower and its Subsidiaries for such
period, as determined in accordance with Generally Accepted
Accounting Principals.
"Quarterly Coverage Ratio" for any fiscal quarter of the
Borrower and its Subsidiaries, on a consolidated basis, shall
mean the ratio of Earnings Before Depreciation Interest and
Taxes with respect to such fiscal quarter less Capital
Expenditures during such fiscal quarter, to the sum of (i)
Interest Expense during such fiscal quarter plus (ii) dividends
paid by the Borrower during such fiscal quarter, plus (iii)
one-fourth of the current maturities of Indebtedness at the end
of such fiscal quarter, all calculated in accordance with
Generally Accepted Accounting Principles.
1.2 Revision of Definitions. Section 1.1 of the Loan
Agreement by deleting the definitions of "Coverage Ratio" and "Working
Capital" in their entirety and substituting the following definitions
therefor:
"Four Quarter Coverage Ratio" for the Borrower and its
Subsidiaries, on a consolidated basis, shall mean the ratio of
Earnings Before Depreciation Interest and Taxes less Capital
Expenditures, to the sum of (i) Interest Expense plus (ii)
dividends paid by the Borrower during such period, plus (iii)
current maturities of Indebtedness, all calculated in
accordance with Generally Accepted Accounting Principles, and
determined at the end of each fiscal quarter for the four
consecutive quarters immediately prior to such date.
3
<PAGE>
"Working Capital" shall mean at any time (i) Current
Assets minus (ii) Current Liabilities less current maturities of
Indebtedness.
1.3 Repayment of Term Loan. Section 2.3(a) of the Loan
Agreement is hereby amended by deleting it in its entirety and
substituting the following therefor:
2.3 Repayment of Term Loans. (a) Subject to Section 2.5
below and in accordance with Section 4.15, the aggregate
principal amount of the Term Loans shall be due and payable and
shall be repaid by the Borrower in monthly installments as
follows commencing with February 28, 1995:
Payment Date Payment
March 31, 1995 $ 0
April 30, 1995 $ 750,000
May 31, 1995 $ 350,000
June 30, 1995 $ 350,000
July 31, 1995 $ 350,000
August 31, 1995 $ 350,000
September 30, 1995 $ 350,000
October 31, 1995 $ 350,000
November 30, 1995 $ 600,000
December 31, 1995 $ 600,000
January 31, 1996 $ 600,000
February 28, 1996 $ 600,000
March 31, 1996 $ 600,000
April 30, 1996 $ 600,000
May 31, 1996 $ 600,000
June 30, 1996 $ 600,000
July 31, 1996 $ 600,000
August 31, 1996 $ 600,000
September 30, 1996 $ 600,000
October 31, 1996 $ 600,000
November 30, 1996 $ 600,000
December 31, 1996 $ 600,000
January 31, 1997 $ 750,000
4
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February 28, 1997 $ 750,000
March 31, 1997 $ 750,000
April 30, 1997 $ 750,000
May 31, 1997 $ 750,000
June 30, 1997 $ 750,000
July 31, 1997 $ 750,000
August 31, 1997 $ 750,000
September 30, 1997 $ 750,000
October 31, 1997 $2,848,000
1.4 Revised Covenants. Section IX of the Loan Agreement is
amended by deleting subparagraphs 9.4, 9.9, 9.10, 9.11, 9.13 and 9.14 in
their entirety and substituting the following new subparagraphs
therefor:
9.4 Disposition of Assets. Sell, lease, transfer, convey
or otherwise dispose of any of its assets or property,
including without limitation the Stock of any Subsidiary,
Collateral or the Realty, except for (a) sales in the ordinary
course of business, (b) the trade-in or sales of personal
property that is (i) no longer useful or no longer used in the
business, (ii) physically or economically obsolete, or (iii)
replaced by property having an equal or greater value; and (c)
other sales which, in the aggregate, based on the dispositions
of proceeds received, do not exceed during any fiscal year
$5,000,000. The proceeds from the sale, lease, transfer or
other disposition of Collateral by the Borrower prior to
November 30, 1995 permitted by the Agent pursuant to this
Agreement ("Sale Proceeds") shall be applied to repayment of
the Term Loan by the Agent as follows: (i) Sale Proceeds of
more than $100,000 up to an aggregate amount of $1,200,000
shall be applied in $100,000 increments to the extent of such
Sale Proceeds to reduce the installments of principal due under
Section 2.3 hereof from November 30, 1995 through October 31,
1996 from $600,000 to $500,000 each beginning with the
installment due on November 30, 1995 and (ii) Sale Proceeds in
increments of less than $100,000 or in excess of an aggregate
of $1,200,000 shall be applied to the final payment of
principal due under Section 2.3 hereof on October 31, 1997.
5
<PAGE>
9.9 Net Worth. Permit Tangible Net Worth to be less than
the following amounts for the date indicated (such compliance
to be calculated as of the end of the each fiscal quarter of
the Borrower):
Applicable Date or Period Tangible Net Worth
At the end of the second quarter
of Borrower's 1995 fiscal year $2,200,000
At the end of the third quarter
of Borrower's 1995 fiscal year $2,400,000
At the end of the fourth quarter
of Borrower's 1995 fiscal year $4,000,000
At the end of the first
quarter of Borrower's 1996
fiscal year The greater of (i)
$4,000,000 or (ii),
$4,000,000 plus 50% of
Net Income for the first
quarter of Borrower's
1996 fiscal year
At the end of the second quarter
of Borrower's 1996 fiscal year The greater of (i) $4,000,000 or
(ii), $4,000,000 plus 50% of Net
Income for the first and second
quarters of Borrower's 1996
fiscal year
At the end of the third quarter
of Borrower's 1996 fiscal year The greater of (i)
$4,000,000 or (ii),
$4,000,000 plus 50% of Net
Income for the first, second
and third
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<PAGE>
quarters of
Borrower's 1996 fiscal
year
At the end of the fourth quarter
of Borrower's 1996 fiscal year The greater of (i) $8,000,000
or (ii), $4,000,000 plus 50%
of Net Income for Borrower's
1996 fiscal year
At the end of the first quarter
of Borrower's 1997 fiscal year The greater of (i) $8,000,000
or (ii), $8,000,000 plus 50%
of NetIncome for the first
quarter of Borrower's 1997
fiscal year
At the end of the second quarter
of Borrower's 1997 fiscal year The greater of (i) $8,000,000
or (ii), $8,000,000 plus 50%
of Net Income for the first
and second quarters of
Borrower's 1997 fiscal year
At the end of the third quarter
of Borrower's 1997 fiscal year The greater of (i) $8,000,000
or (ii), $8,000,000 plus 50%
of Net Income for the first,
second and third quarters of
Borrower's 1997 fiscal year
At the end of fourth quarter
of Borrower's 1997 fiscal year The greater of (i)
7
<PAGE>
$8,000,000 or (ii),
$8,000,000 plus 50% of Net
Income for Borrower's 1997
fiscal year
9.10 Debt to Equity Ratio. Permit the ratio of Senior
Liabilities to Tangible Net Worth plus Subordinated Debt and
Preferred Stock at the end of any fiscal quarter of the
Borrower to be greater than 1.50 during the term of this
Agreement.
9.11 Coverage Ratio. Permit (a) the Quarterly Coverage
Ratio to be less than (i) 1.0 to 1 at the end the third quarter
of the Borrower's 1995 fiscal year, (ii) 1.0 to 1 at the end
the fourth quarter of the Borrower's 1995 fiscal year, (iii)
0.7 to 1 at the end the first quarter of the Borrower's 1996
fiscal year and (iv) 1.0 to 1 at the end the second quarter of
the Borrower's 1996 fiscal year and (b) the Four Quarter
Coverage Ratio the be less than (i) 1.0 to 1 at the end the
third quarter of the Borrower's 1996 fiscal year, (ii) 0.9 to 1
at the end the fourth quarter of the Borrower's 1996 fiscal
year and (iii) 1.0 to 1 at the end of any fiscal quarter of the
Borrower thereafter.
9.13 Working Capital. Permit Working Capital to be less
than the following amounts for the date or period indicated
(such compliance to be calculated as of the end of the each
fiscal quarter of the Borrower):
Applicable Date or Period Working Capital
At the end of the second quarter
of Borrower's 1995 fiscal year $10,800,000
At the end of the third quarter
of Borrower's 1995 fiscal year $11,000,000
At the end of the fourth quarter
of Borrower's 1995 fiscal year $12,000,000
8
<PAGE>
At the end of the first quarter
of Borrower's 1996 fiscal year
and at the end of each fiscal
quarter thereafter $13,000,000
9.14 Current Ratio. Permit the ratio of Current Assets
(including factor receivables) to the sum of Current
Liabilities and Factor Advances (to the extent not already
included in Current Liabilities) at the end of any fiscal
quarter of the Borrower to be less than: (i) 1.0 to 1 at the
end of the second quarter of the Borrower's 1995 fiscal year
and thereafter through and including the end of the fourth
quarter of the Borrower's 1996 fiscal year, and (ii) 1.05 to 1
at the end of each fiscal quarter thereafter.
ARTICLE 2
GENERAL
2.1 Full Force and Effect. Except as expressly amended
hereby, the Loan Agreement shall continue in full force and effect in
accordance with the provisions thereof on the date hereof. As used in
the Loan Agreement, "hereinafter," "hereto," "hereof" and words of
similar import shall, unless the context otherwise requires, mean the
Loan Agreement as amended by this Amendment.
2.2 Applicable Law. This Amendment shall be governed by and
construed in accordance with the laws and judicial decisions of the
State of North Carolina.
2.3 Counterparts, Terms. This Amendment may be executed in
two or more counterparts, each of which shall constitute an original,
but all of which when taken together shall constitute but one
instrument.
2.4 Fees and Expenses. The Borrower agrees to pay to the
Agent upon the execution hereof an amendment fee in the amount of
$25,000 and all reasonable out-of-pocket expenses incurred by the
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<PAGE>
Agent in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, all fees and disbursements of
Agent's counsel.
2.5 Headings. The headings of this Amendment are for the
purposes of reference only and shall not effect the construction of the
Amendment.
2.6 Valid Agreement. The parties acknowledge that this
Amendment complies in all respects with Section 15.7 of the Loan
Agreement, which sets forth the requirements for amendments thereto.
IN WITNESS WHEREOF, the Borrower and the Agent have caused this
Amendment to be executed by their duly authorized officers all as of the
day and year first above written.
TEXFI INDUSTRIES, INC.
[CORPORATE SEAL] By:
ATTEST: Dane L. Vincent
Vice President Finance and
Treasurer
Assistant Secretary
NATIONSBANK, N.A. (CAROLINAS),
as Agent
By:
Title:
10
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<PAGE>
EXHIBIT 10(a)(7)
TEXFI INDUSTRIES, INC.
BOARD OF DIRECTORS
RESOLUTIONS CONCERNING
DIRECTORS' DEFERRED STOCK COMPENSATION PLAN
Adopted November 30, 1994
WHEREAS, the corporation's Directors' Deferred Stock Compensation Plan (the
"Plan"), provides that the maximum number of shares of the Common Stock, par
value $1.00 per share, (the "Common Stock") that may be distributed pursuant
to the Plan is 100,000 shares; and
WHEREAS, 94,005 shares of Common Stock have previously been issued or credited
to Plan participants, pursuant to the Plan, and as a result only 5,995 shares
of Common Stock are currently available for distribution under the Plan; and
WHEREAS, the Board believes it to be in the best interests of the corporation
to continue this Plan so that the corporation can attract and retain the
services of nonemployee directors by permitting them to defer receipt of fees
and receive such fees in the form of stock in the corporation after
termination of their service as directors and thereby acquire a greater stake
in the long term growth and earnings of the corporation; and
WHEREAS, the Board desires to appoint a new committee to administer the Plan
in accordance with the provisions of the Plan, now therefore, it is
RESOLVED, that, subject to stockholder approval thereof, the Plan be and
hereby is amended to increase, by a total of 100,000 shares, the aggregate
number of shares of Common Stock that may be distributed pursuant to the Plan.
FURTHER RESOLVED, that this amendment to the Plan shall be submitted to the
stockholders of the corporation at the next annual meeting of the
corporation's stockholders, with the recommendation of the Board of Directors
that it be approved.
FURTHER RESOLVED, that, subject to stockholder approval of the amendment to
the Plan, Section 10 of the Plan shall be deleted in
<PAGE>
its entirety and the
following new Section 10 shall be inserted in lieu thereof:
10. Shares Subject to Plan. The maximum aggregate
number of shares of Stock available pursuant to the Plan,
subject to adjustment as provided in paragraph 8 above,
shall be 200,000 shares of Stock. Shares distributed
pursuant to the Plan may be authorized and unissued shares
or treasury shares, or both.
FURTHER RESOLVED, that, subject to stockholder approval of the amendment to
the Plan, 100,000 additional shares of the corporation's Common Stock be and
hereby are reserved for distribution pursuant to the terms and conditions of
the Plan, so that a total of 200,000 shares of the corporation's Common Stock
are reserved for distribution pursuant to the terms and conditions of the
Plan.
FURTHER RESOLVED, that, subject to stockholders approval of the amendment to
the Plan, the corporation be and hereby is authorized and directed to register
the additional shares that may be purchased pursuant to the Plan by filing a
Registration Statement on Form S-8 with the Securities and Exchange
Commission, and the proper officers of the corporation be and hereby are
authorized and directed to take such action as they deem necessary or
desirable in connection with such registration.
FURTHER RESOLVED, that, subject to stockholder approval of the amendment to
the Plan, the additional shares of Common Stock of the corporation which are
issuable pursuant to the Plan shall be listed on the New York Stock Exchange
and the proper officers of the corporation are hereby authorized and directed
to make application to the New York Stock Exchange for the listing of such
shares.
FURTHER RESOLVED, that, subject to stockholder approval of the amendment to
the Plan, the proper officers of the corporation are hereby authorized and
directed to take all necessary action to perfect a listing application with
the New York Stock Exchange and to execute any application, agreement or
document required under the rules of the New York Stock Exchange and to
deliver any and all instruments and documents and do any and all such acts or
things as they or any of them deem necessary or advisable to carry out fully
the purposes of the foregoing resolution.
<PAGE>
FURTHER RESOLVED, that Dane L. Vincent and Marie Gaster are hereby appointed
as the members of the Committee, provided for in the Plan, which Committee has
the responsibility for interpretation and construction of the Plan.
<PAGE>
<PAGE>
EXHIBIT 10(a)(7)
TEXFI INDUSTRIES, INC.
RESOLUTIONS ADOPTED BY STOCKHOLDERS
March 14, 1995
RESOLVED, that the Amendment of the Directors' Deferred Stock
Compensation Plan of Texfi Industries, Inc., as heretofore adopted by
the Board of Directors of the corporation, increasing the aggregate
number of shares of Common Stock that may be allocated under the Plan
by 100,000 shares, be and hereby is approved and adopted.
RESOLVED FURTHER, that the appropriate officers of the
corporation be and hereby are authorized and directed to take such
action as they deem necessary or appropriate in order to implement the
Amendment.
<PAGE>
EXHIBIT 10(a)(17)
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into, and effective as of April 1,
1995 (the "Agreement"), by and between TEXFI INDUSTRIES, INC., a
Delaware corporation with offices at 5400 Glenwood Avenue, Raleigh,
North Carolina ("Texfi" or the "Company"), and William L. Remley,
("Remley").
W I T N E S S E T H:
WHEREAS, Texfi desires to employ Remley and to enter into the
Agreement embodying the terms of such employment; and
WHEREAS, Remley desires to accept such employment and to enter
into the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the parties agree that the following provisions shall
constitute the Agreement:
1. Employment. Texfi hereby employs Remley and Remley hereby
accepts employment with Texfi for the term set forth in Section 2
<PAGE>
below, in the position and with the duties and responsibilities set
forth in Section 3 below, and upon the other terms and conditions
hereinafter stated.
2. Term. Unless otherwise terminated as hereinafter provided,
the term of the Agreement shall commence as of April 1, 1995, and shall
continue through March 31, 1997.
3. Position, Duties, Responsibilities, Extent of Services.
3.1. Position. It is intended that, at all times during
the term of the Agreement, Remley shall serve as Vice Chairman of the
Board of Directors and Chief Executive Officer of the Company. In
accordance with such position, he is hereby granted appropriate
responsibilities, duties, and authorities, subject to the direction of
the Board of Directors of the Company.
3.2. Extent of Services. During his employment under this
Agreement, Remley shall devote substantially his full time and attention
to the business and affairs of Texfi; provided, however, that nothing in
this Agreement shall preclude Remley from engaging in charitable and
civic activities or from managing his investments
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<PAGE>
in other businesses so long as such outside activities do not
unreasonably interfere with the performance of his duties and
responsibilities under this Agreement.
4. Salary. For services rendered by him under this Agreement,
Remley shall receive a base salary at the annual rate of $350,000 (the
"Base Salary"), payable at least in equal monthly installments. The
Base Salary will be reviewed by the Compensation Committee and the Board
of Directors following completion of the 1995 fiscal year of the
Company.
5. Annual Incentive Plan. Remley will be entitled to participate
in the Annual Incentive Plan dated as of April 1, 1995, a copy of which
is attached to and made a part of this Agreement.
6. Employee Benefit Plans. Remley will be provided employee
benefit programs comparable to those being provided by Texfi to senior
executive officers during the term of the Agreement.
7. Reimbursable Expenses.
7.1 Business Expenses. During the term of his employment
hereunder, Remley shall be entitled to receive proper reimbursement for
all reasonable out-of-pocket expenses incurred by
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<PAGE>
him (in accordance with the policies and procedures established by Texfi
for its senior executive officers) in performing services hereunder,
provided Remley properly accounts therefor.
7.2 Automobile. During the term of his employment hereunder,
Texfi will pay to Remley $500.00 per month as an allowance for
automobile expenses incurred in performing his duties on behalf of
Texfi.
8. Termination of Employment.
8.1. Death. In the event of the death of Remley during the
term of this Agreement, the following payments shall be made to his
designated beneficiary or, in the absence of such designation, to his
estate: (a) his Base Salary, as provided in Section 4, through the end
of the month in which death occurs, and (b) any amounts due under the
Annual Incentive Plan in accordance with the terms of such plan.
8.2 Long-Term Disability. In the event that Remley shall
suffer an illness or mental or physical disability or incapacity of such
a nature, degree or effect that he is unable to perform his duties
hereunder for a continuous period of six months or for
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<PAGE>
shorter periods aggregating six months within any 12-month period, the
Company, at its sole option, may terminate his employment and this
Agreement. Upon such termination, Remley shall be entitled to payment
of (a) his Base Salary, as provided in Section 4, through the end of the
pay period in which the termination occurs, and (b) any amounts due
under Annual Incentive Plan in accordance with the terms of such plan.
8.3. For Cause. The Company shall have the right to
terminate the employment of Remley and this Agreement for "cause." For
purposes of this Agreement, "cause" shall mean: (i) Remley's willful
and continued failure to perform substantially his duties under this
Agreement (other than by reason of illness or mental or physical
disability or incapacity) for more than 60 days after a written demand
for substantial performance is delivered to him by the Board of
Directors of the Company, which demand specifically identifies the
manner in which Remley has not substantially performed his duties; (ii)
theft or misappropriation by Remley of assets of the Company; or (iii)
actions by Remley which constitute an act of moral turpitude or that
materially injure the Company.
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<PAGE>
If Remley's employment is terminated for cause, he shall be entitled to
his Base Salary, as provided in Section 4, through the end of the pay
period in which the termination occurs.
8.4 Without Cause. Notwithstanding any other term or
provision of this Agreement, the Company may terminate Remley's
employment and this Agreement at any time and for whatever reason it
deems appropriate. In the event such termination by the Company occurs
and is not due to disability pursuant to Section 8.2 or for cause
pursuant to Section 8.3, Remley shall be entitled to payment of (a) his
Base Salary, as provided in Section 4, for the greater of six (6) months
from the date of termination or the remaining term of this Agreement,
and (b) any amounts due under the Annual Incentive Plan in accordance
with the terms of such plan.
8.5. Voluntary Termination. Remley may voluntarily terminate
his employment with the Company on at least 60 days' prior written
notice. Upon such termination, Remley shall be entitled to his Base
Salary, as provided in Section 4, through the end of the pay period in
which the termination occurs.
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<PAGE>
9. Acceleration of Stock Options. All outstanding and unexpired
stock options held by Remley that are not then exercisable shall become
exercisable, in whole or in part, for a period of sixty (60) days
following termination of employment pursuant to Section 8.4.
10. Covenants Not to Compete.
10.1. Competition; Soliciting Customers. Remley
promises and agrees that, until the later of (a) the termination of the
Agreement or (b) the expiration of any salary payments made to Remley
pursuant to Section 8.4, he will not, directly or indirectly:
(i) own, manage, operate, control, be employed by,
render advisory services to, participate in or be connected in any
management or control of any business in the United States that is
engaged in competition with Texfi or any of its subsidiaries or
affiliates in the commission dyeing and finishing of
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<PAGE>
textile products or the manufacture and/or sale of textile
products of the same or a like nature to the products of Texfi and its
subsidiaries, or
(ii) influence or attempt to influence any customer
of Texfi or any of its subsidiaries or affiliates to divert its
purchases of woven or knit fabrics or other products to any individual,
partnership, firm, corporation or other entity then in competition with
Texfi or any of its subsidiaries or affiliates.
For purposes of this Section 10.1, "competition with Texfi or any of its
subsidiaries or affiliates" shall mean direct competition for customers
of textile products or services in any geographic area in which Texfi or
any of its subsidiaries or affiliates is engaged, directly or
indirectly, in selling or attempting to sell such products or services.
10.2. Soliciting Employees; Interference. Remley
promises and agrees that, for a period of one year after the later
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<PAGE>
of (a) the termination of the Agreement, or (b) the expiration of any
salary payments made to Remley pursuant to Section 8.4, he will not,
directly or indirectly:
(i) solicit any employee of Texfi or any sub-
sidiary or affiliate of Texfi, who earned annually $25,000 or
more as an employee during the last six months of Remley's
employment by Texfi, to work for any business, individual,
partnership, firm, corporation or other entity then in
competition with the business of Texfi or any of its
subsidiaries or affiliates; or
(ii) wrongfully interfere with, disrupt or
attempt to disrupt the relationship, contractual or otherwise,
between Texfi and any other party, including without limitation
any supplier, distributor, lessor or lessee, licensor or
licensee.
10.3. Scope. Remley acknowledges and agrees that the
covenants set forth in Sections 10.1 and 10.2 shall be enforceable in
accordance with their terms notwithstanding any
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<PAGE>
termination of the Agreement or his employment by Texfi, for any reason
whatsoever, including without limitation, the termination of his
employment under the circumstances described in Sections 8.3, 8.4, and
8.5; and the obligations set forth in Sections 10.1 and 10.2 shall
continue as therein provided irrespective of whether payments are
required by Texfi to Remley under the Agreement except that Remley shall
not be bound by said covenants if Texfi fails to make any payments
which, under the terms of the Agreement, it has agreed to make to Remley
after the termination of his employment.
10.4. Savings Clause. It is the desire and intent of
the parties that the provisions of Sections 10.1 and 10.2 shall be
enforced to the fullest extent permitted under the laws and public
policies of each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of Sections 10.1 and 10.2 shall
be adjudicated to be invalid or unenforceable, such adjudication shall
apply only with respect to the operation of that portion in the
particular jurisdiction in which such adjudication is made, and all
other portions shall continue in full force and effect.
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<PAGE>
11. Confidential Information; Rights to Materials.
11.1. Confidential Information. Remley agrees not to
disclose, either while in Texfi's employ or at any time thereafter, to
any person not employed by Texfi, or not engaged to render services to
Texfi, any confidential and proprietary information of Texfi obtained by
him while in the employ of Texfi, including, without limitation, any of
Texfi's methods, processes, techniques, shop practices, formulae,
research data, marketing and sales information, personnel data, customer
lists, financial data, plans, and all other know-how, trade secrets and
proprietary information of Texfi; provided, however, that this provision
shall not preclude Remley from use or disclosure of information known
generally to the public (other than information known generally to the
public as a result of a violation of this Section 11.1 by Remley), from
use or disclosure of information acquired by Remley outside of his
affiliation with Texfi, from disclosure required by law or court order,
or from disclosure appropriate and in the ordinary course of carrying
out his duties and authorities hereunder (e.g., disclosure
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<PAGE>
to Texfi's outside accountants, bankers or trade creditors of financial
data properly requested by such persons).
11.2 Rights to Materials. Remley also agrees that, upon
termination of his employment for whatever reason, he will not take with
him, without the prior written consent of an officer authorized to act
in the matter by the Board of Directors, any records, files, memoranda,
reports, price lists, customer lists, drawings, plans, sketches,
documents, specifications, and the like (or any copies thereof) relating
to the business of Texfi.
12. Assignment by Texfi. This Agreement shall be binding upon and
shall inure to the benefit of Texfi or any corporation or other entity
to which Texfi may transfer all or substantially all of its assets and
business (by operation of law or otherwise) and to which Texfi may
assign this Agreement, in which case "Texfi," as used herein, shall mean
such transferee corporation or other entity.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws and judicial decisions of the
State of North Carolina.
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<PAGE>
14. Entire Agreement. This Agreement contains all of the
understandings and agreements of the parties hereto with respect to the
employment of Remley by the Company and supersedes all prior
understandings and agreements between the parties, whether oral or in
writing.
15. Amendment; Waiver. No provision of this Agreement may be
amended, modified or waived unless such amendment, modification or
waiver is agreed to in writing and signed by Remley and by an officer of
the Company duly authorized to sign by the Board of Directors of the
Company. No waiver by either party hereto of any breach by the other of
any provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision at the
same time or at any prior or subsequent time.
16. Severability. If any one or more of the provisions contained
in this Agreement shall be invalid, illegal, or unenforceable in any
respect under applicable law, the validity, legality or enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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<PAGE>
17. Withholding. Anything herein to the contrary notwithstanding,
all payments made by the Company hereunder shall be subject to the
withholding of such amounts relating to taxes as the Company may
reasonably determine it should withhold pursuant to any applicable law
or regulation.
IN WITNESS WHEREOF, the parties have executed this
Agreement.
TEXFI INDUSTRIES, INC.
By: /S/ Andrews J. Parise
Andrews J. Parise, President
/S/ William L. Remley
William L. Remley
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<PAGE>
<PAGE>
TEXFI Industries, Inc.
Awards Determination Sheet
Fiscal Year 1995 Formulas and Measures
For
Chief Executive Officer
I. Annual Incentive for Cash Flow*
The Participant will be paid an annual incentive as a percent of the
Participant's Base Salary for attainment of the Company's budgeted Cash
Flow* as follows:
If Actual Cash Flow* The Bonus as a Percent Of
Achieved is.. Base Salary is...
Less than or equal to
$16.1 Million 0.0%
Equal to $19.4 Million 50.0%
Equal to $22.0 Million 75.05
For actual Cash Flow* attainments between the categories listed above,
the bonus percentage will be calculated on a pro-rata basis. For
example:
Cash Flow* attainment of $18.0 Million would equal a bonus
percentage of 28.8%.
Cash Flow* attainment of $21.0 Million would equal a bonus
percentage of 65.4%.
*Cash Flow shall mean the Earnings Before Interest Taxes
Depreciation and amortization (EBITDA) plus Net Changes in
Working Capital Accounts (Inventory, Accounts Receivable, and
Accounts Payable) for the Company.
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<PAGE>
II. Bonus Payments
Bonus payments will be awarded 50% in cash and 50% in Stock pursuant to
an appropriate plan established and designated by the Compensation Plan.
It is the intention of the Board to have such plan designate that stock
purchases will be made at 85% of the market value of the average closing
stock price for the preceding 20-day period.
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<PAGE>
EXHIBIT 10(b)(15)
AMENDMENT TO TERM LOAN AGREEMENT
THIS AMENDMENT TO TERM LOAN AGREEMENT made as of the
day of June, 1995, to that Term Loan Agreement (the "Agreement")
dated October 30, 1992, by and between TEXFI INDUSTRIES, INC., a
Delaware corporation (herein called "Borrower"), and THE CIT
GROUP/COMMERCIAL SERVICES, INC. (formerly known as The CIT
Group/BCC, Inc., formerly known as Barclays Commercial
Corporation and hereinafter called the "Lender") is effective as
of April 28, 1995. The Agreement is hereby amended as follows:
Paragraph 7.1 of the Agreement is hereby deleted in its
entirety and the following paragraph is substituted therefor:
7.1 Tangible Net Worth. Permit Tangible Net Worth to
be less than the following amounts for the date indicated
(such compliance to be calculated as of the end of the each
fiscal quarter of the Borrower):
Applicable Date or Period Tangible Net Worth
At the end of the second quarter
of Borrower's 1995 fiscal year $2,200,000
At the end of the third quarter
of Borrower's 1995 fiscal year $2,400,000
At the end of the fourth quarter
of Borrower's 1995 fiscal year $4,000,000
At the end of the first quarter
of Borrower's 1996 fiscal year The greater of (i)
$4,000,000 or (ii),
$4,000,000 plus 50%
of Net Income for
the first quarter of
Borrower's 1996
fiscal year
At the end of the second quarter
of Borrower's 1996 fiscal year The greater of (i)
$4,000,000 or (ii),
$4,000,000 plus 50%
of Net Income for
the first and second
quarters of
Borrower's 1996
fiscal year
<PAGE>
At the end of the third quarter
of Borrower's 1996 fiscal year The greater of (i)
$4,000,000 or (ii),
$4,000,000 plus 50%
of Net Income for
the first, second
and third quarters
of Borrower's 1996
fiscal year
At the end of the fourth quarter
of Borrower's 1996 fiscal year The greater of (i)
$8,000,000 or (ii),
$4,000,000 plus 50%
of Net Income for
Borrower's 1996
fiscal year
At the end of the first quarter
of Borrower's 1997 fiscal year The greater of (i)
$8,000,000 or (ii),
$8,000,000 plus 50%
of Net Income for
the first quarter of
Borrower's 1997
fiscal year
At the end of the second quarter
of Borrower's 1997 fiscal year The greater of (i)
$8,000,000 or (ii),
$8,000,000 plus 50%
of Net Income for
the first and second
quarters of
Borrower's 1997
fiscal year
At the end of the third quarter
of Borrower's 1997 fiscal year The greater of (i)
$8,000,000 or (ii),
$8,000,000 plus 50%
of Net Income for
the first, second
and third quarters
of Borrower's 1997
fiscal year
At the end of fourth quarter
of Borrower's 1997 fiscal year The greater of (i)
$8,000,000 or (ii),
$8,000,000 plus 50%
of Net Income for
Borrower's 1997
fiscal year
<PAGE>
Paragraph 7.2 of the Agreement is hereby deleted in its
entirety and the following paragraph is substituted therefor:
7.2 Working Capital. Permit Working Capital to be
less than the following amounts for the date or period
indicated (such compliance to be calculated as of the end of
the each fiscal quarter of the Borrower):
Applicable Date or Period Working Capital
At the end of the second quarter
of Borrower's 1995 fiscal year $10,800,000
At the end of the third quarter
of Borrower's 1995 fiscal year $11,000,000
At the end of the fourth quarter
of Borrower's 1995 fiscal year $12,000,000
At the end of the first quarter
of Borrower's 1996 fiscal year
and at the end of each fiscal
quarter thereafter $13,000,000
Paragraph 7.3 of the Agreement is hereby deleted in its
entirety and the following paragraph is substituted therefor:
7.3 Current Ratio. Permit the ratio of Current Assets
(including any monies due and owing Borrower pursuant to the
terms and conditions of the Factoring Agreement or any other
agreement by and between the Borrower and any other factor
which has been been approved by Lender) to the sum of
Current Liabilities and Factor Advances (to the extent not
already included in Current Liabilities) at the end of any
fiscal quarter of the Borrower to be less than: (i) 1.0 to 1
at the end of the second quarter of the Borrower's 1995
fiscal year and thereafter through and including the end of
the fourth quarter of the Borrower's 1996 fiscal year, and
(ii) 1.05 to 1 at the end of each fiscal quarter thereafter.
For the purposes of this paragraph, the term "Factor
Advance" shall mean an advance to the Borrower or any
Subsidiary by any Person pursuant to an agreement between
the Borrower or such Subsidiary and such Person for the
purchase, assignment or transfer by such Person of any of
the Borrower's or such Subsidiary's accounts receivable.
Paragraph 7.4 of the Agreement is hereby deleted in its
entirety and the following paragraph is substituted therefor:
7.4 Debt to Equity Ratio. Permit the ratio of Senior
Liabilities to Tangible Net Worth plus Subordinated Debt and
<PAGE>
Preferred Stock at the end of any fiscal quarter of the
Borrower to be greater than 1.50 during the term of this
Term Loan Agreement or the Factoring Agreement. For the
purposes of this paragraph, the following terms shall have
the following definitions: (i) "Senior Liabilities" shall
mean Total Liabilities less all Subordinated Debt and
Preferred Stock (to the extent included in Total
Liabilities; (ii) "Subordinated Debt" shall mean any
Indebtedness which expressly contains in the instruments
evidencing such Indebtedness, or in the indenture or other
similar instrument pursuant to which such Indebtedness is
issued, subordination provisions substantially to the effect
that the holder agrees that the Indebtedness evidenced by
such instrument, and any renewals or extensions thereof,
shall at all times and in all respects be subordinate and
junior in right of payment to the obligations evidenced by
the Lending Documents; and (iii) "Preferred Stock" shall
mean any of the Borrower's stock which gives the holder
thereof a preference over the holders of the Borrower's
common stock with respect to the payment of dividends or
liquidation proceeds, or otherwise designated by the
Borrower as "preferred stock," including without limitation
the Borrower's Cumulative Preferred Stock, 1987 Series,
Cumulative Preferred Stock, 1988B Series and Series A Junior
Participating Preferred Stock.
The Agreement is hereby amended by deleting the definition
of "Working Capital" from Section 1.28 of the Agreement and
substituting the following definition therefor:
1.28 "Working Capital" shall mean at any time (i)
Current Assets minus (ii) Current Liabilities less current
maturities of Indebtedness.
The Agreement is hereby amended by adding the following
definitions to Section 1 of the Agreement:
1.31 "Indebtedness" shall mean all liabilities,
obligations and indebtedness of the Borrower and all of its
Subsidiaries of any and every kind and nature, including,
without limitation, the Factoring Agreement and the Term
Loan and all obligations to trade creditors, whether
heretofore, now or hereafter owing, arising, due or payable
from any of the Borrower and its Subsidiaries to any Person
and howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed
or otherwise and whether matured or unmatured. Without in
any way limiting the generality of the foregoing,
Indebtedness specifically includes the following:
(a) all obligations or liabilities of any Person
that are secured by any lien, claim, encumbrance or
security interest upon property owned by the Borrower
or its Subsidiaries, even though the Borrower or its
<PAGE>
Subsidiary has not assumed or become liable for the
payment thereof;
(b) all obligations or liabilities created or
arising under any lease (including but not limited to
Capital Leases) of real or personal property, or
conditional sale or other title retention agreement
with respect to property used or acquired by the
Borrower or a Subsidiary, even though the rights and
remedies of the lessor, seller or lender thereunder are
limited to repossession of such property;
(c) all unfunded employee benefit plan
obligations and liabilities; and
(d) deferred taxes.
1.32 "Net Income" shall mean, for any period, the
consolidated net income (loss) of the Borrower and its
Subsidiaries for such period, as determined in accordance
with Generally Accepted Accounting Principals.
1.33 "Subsidiary" shall mean any corporation, more
than fifty percent (50%) of the outstanding stock of which
is at the time, directly or indirectly, owned by any
Borrower or one or more Subsidiaries.
IN WITNESS WHEREOF, Borrower and the Lender have caused this
Amendment to Term Loan Agreement to be duly executed by their
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
respective duly authorized officers, all as of the day and year
first above written.
ATTEST: TEXFI INDUSTRIES, INC.
By:
Assistant Secretary Dane L. Vincent
Vice President Finance
and Treasurer
[CORPORATE SEAL]
ATTEST: THE CIT GROUP/COMMERCIAL
SERVICES, INC.
By:
Assistant Secretary Title:
[CORPORATE SEAL]
March 30, 1995
Texfi Industries, Inc.
5400 Glenwood Avenue
Raleigh, North Carolina 27612
INVENTORY SECURITY AGREEMENT
Gentlemen:
1. As security for the prompt payment in full of all loans and
advances made and to be made to you from time to time by us, in
conjunction with the factoring or accounts receivable financing
agreement between us, as amended from time to time (herein the
"Agreement"), as well as to secure the payment in full of the other
Obligations (hereinafter defined), you hereby pledge and grant to
us a continuing general lien upon and security interest in (herein
"Security Interest") the following described "Collateral":
All present and hereafter acquired merchandise, inventory and
goods, and all additions, substitutions and replacements thereof,
wherever located, together with all goods and materials used or
usable in manufacturing, processing, packaging or shipping same; in
all stages of production -- from raw materials through
work-in-process to finished goods -- and all proceeds of whatever
sort.
2. This agreement is being executed by you to induce us to make
loans or advances to you or otherwise to extend credit or financial
accommodations to you, or to induce us to enter into or continue a
factoring or financing arrangement with you, and is executed in
consideration of our doing or having done any of the foregoing.
You agree that any of the foregoing shall be done or extended by us
in our sole discretion, and shall be deemed to have been done or
extended by us in consideration of and in reliance upon the
execution of this agreement, but that nothing herein shall obligate
us to do any of the foregoing.
3. The amount of the loans and advances made or to be made by us
to you, and the period of time during which they are to remain
outstanding shall at all times be in our sole discretion. The
ratio of Collateral to such loans and advances and to the other
Obligations referred to herein must be satisfactory to us at all
times, and the valuation of the Collateral is to be determined
exclusively by us. We are to be at liberty, from time to time,
without responsibility or liability to you, to revise any limit
placed by us on loans and advances or other Obligations.
<PAGE>
4. In addition to the loans and advances made or to be made by us
to you or to others for your account, "Obligations" shall include
any and all indebtedness which may at any time be owing by you to
us howsoever arising. Obligations shall include, without
limitation, all indebtedness whether now in existence or incurred
by you from time to time hereafter; whether secured by pledge, lien
upon or security interest in any of your assets or property other
than the Collateral herein described, or by pledge, lien upon or
security interest in the assets or property of any other person,
firm, entity or corporation (herein "person"); whether such
indebtedness is absolute or contingent, joint or several, matured
or unmatured, direct or indirect and whether you are liable to us
for such indebtedness as principal, surety, endorser, guarantor or
otherwise. Obligations shall also include, without limitation,
your liability to us for any balances owing in any account
maintained on our books under the Agreement or under any other
agreement or arrangement now or hereafter entered into between us;
indebtedness for goods or services purchased by you from any
concern whose accounts receivable are factored or financed by us;
your liability to us as maker or endorser on any promissory note or
other instrument for the payment of money; your liability to us
under any instrument of guaranty or indemnity, or arising under any
guaranty, endorsement or undertaking which we may make or issue to
others for your account, including any accommodation extended with
respect to applications for letters of credit, our acceptance of
drafts or our endorsement of notes or other instruments for your
account and benefit. Obligations shall also include, without
limitation, all interest, commissions, financing and service
charges, and expenses and fees chargeable to and due from you under
this agreement, the Agreement or any other agreement or arrangement
which may be now or hereafter entered into between us.
5. The Security Interest in the Collateral, unless expressly
limited by the provisions of paragraph 1 above, shall extend and
attach to:
(a) The entire Collateral which is presently in existence and
which is owned by you or in which you have any interest, and all
Collateral which you may purchase or in which you may acquire any
interest at any time and from time to time in the future, whether
such Collateral is in transit or in your or our constructive,
actual or exclusive occupancy or possession or otherwise, or is
held by you or others for your account; and
(b) The entire Collateral wherever located, including without
limitation, all Collateral which may be located on your premises,
or upon the premises of any carriers, forwarding agents, truckers,
warehousemen, vendors, selling agents, finishers, converters,
processors, or other third persons who may have possession of the
Collateral; and
(c) The entire Collateral and any portion thereof which may be
returned, rejected, reclaimed or repossessed by either of us from
your customers, as well as to all supplies, goods, incidentals,
packaging materials, and any other items which contribute to the
finished goods or products manufactured or processed by you, or to
the sale, promotion or shipment thereof.
2
<PAGE>
6. You agree to safeguard, protect and hold all Collateral for
our account and make no disposition thereof except in the regular
course of your business as herein provided. Until we have given
you notice to the contrary, any Collateral which we may from time
to time permit to remain in your or another person's possession or
control, may be sold and shipped by you to your customers in the
ordinary course of your business, on open account and on terms not
exceeding the terms currently being extended by you to your
customers, provided that all proceeds of all sales (including cash,
accounts receivable, checks, notes, instruments for the payment of
money and similar proceeds) are forthwith transferred, assigned,
endorsed, and turned over and delivered to us in accordance with
the provisions of the Agreement. We shall have the right to
withdraw this permission at any time, in which event no further
disposition shall be made of the Collateral without our prior
written approval. Invoices covering sales of Collateral are to be
assigned to us in accordance with the provisions of the Agreement,
and the proceeds thereof (if collected by you) are to be turned
over to us in accordance with the provisions of the Agreement.
Cash sales of the Collateral, or sales in which a lien upon or
security interest in the Collateral is retained by you shall only
be made by you with our written approval, and all proceeds of such
sales shall not be commingled with your other property, but shall
be segregated, held by you in trust for us as our exclusive
property, and shall be delivered immediately by you to us in the
identical form received by you. Upon the sale, exchange, or other
disposition of the Collateral, as herein provided, the Security
Interest provided for herein shall without break in continuity and
without further formality or act, continue in, and attach to, all
proceeds, including any instruments for the payment of money,
accounts receivable, contract rights, documents of title, shipping
documents, chattel paper and all other cash and non-cash proceeds
of such sale, exchange or disposition. As to any such sale,
exchange or other disposition, we shall have all of the rights of
an unpaid seller, including stopping in transit, replevin,
rescission and reclamation.
7. You hereby warrant and represent that you are solvent; that
this Security Interest constitutes and shall at all times
constitute a first and only lien on the Collateral; that you are,
or will be at the time additional Collateral is acquired by you,
the absolute owner of the Collateral with full right to pledge,
sell, consign, transfer and create a Security Interest therein,
free and clear of any and all claims or liens in favor of others;
that you will at your expense forever warrant and, at our request,
defend the same from any and all claims and demands of any other
person; and that you will not grant, create or permit to exist, any
lien upon or security interest in the Collateral, or any proceeds,
in favor of any other person.
3
<PAGE>
8. You agree to maintain books and records pertaining to the
Collateral in such detail, form and scope as we shall require. You
agree that we or our agents may enter upon your premises at any
time, and from time to time for the purpose of inspecting the
Collateral and any and all records pertaining thereto. Some or all
of such Collateral will be kept at Texfi Industries, Inc., d/b/a
Texfi-Blends, 400 English Road, Rocky Mount, North Carolina 27804;
Texfi Industries, Inc., d/b/a Texfi-Blends, 601 Hoffer Drive,
Fayetteville, North Carolina 28601; Warehouse, #1 Richard Drive,
Rocky Mount, North Carolina 27804 (owned by D.W. Wilson
Warehousing, P.O. Box 7233, Rocky Mount, North Carolina 27804); E.
B. Grain Warehouse, Inc. (Contact Person: Mike Everette, Hwy. 301
N. Battleboro, North Carolina 27809), Hwy. 301 N., Battleboro,
North Carolina 27809; Texfi Industries, Inc., d/b/a Texfi-Blends
(Southworth Plant) Cobb Street, P.O. Box 526, Jefferson, Georgia
30549 (Jackson County); Texfi Industries, Inc., d/b/a Kingstree
Knits, 105 Stone Street, P.O. Box 819, Haw River (Alamance County)
North Carolina 27258; Texfi Industries, Inc., d/b/a Kingstree
Knits, Lane Highway, P.O. Box 438, Andrews, South Carolina; Texfi
Industries, Inc., d/b/a Kingstree Knits, 9 Industrial Boulevard,
Midway (Liberty County), Georgia 31320 (Landlord: Liberty County
Industrial Authority, P.O. Box 1160, Hinesville, Georgia 31313;
Texfi Industries, Inc., d/b/a Kingstree Knits, Distribution Center,
Highway 41 South, Andrews, South Carolina 29510; Texfi Industries,
Inc., d/b/a Texfi Elastics, 328 West Central Avenue, Asheboro,
North Carolina (Randolph County); Texfi Industries, Inc., d/b/a
Texfi Elastics Warehouse, 422-B Bailey Street, Asheboro, North
Carolina 27203 (Randolph County) (Landlord: Powell Associates
Realtors, 731 S. Fayetteville Street, Asheboro, North Carolina
27203; Texfi Industries, Inc., d/b/a Texfi Elastics, 327 East Elm
Street, Graham, North Carolina 27253 (Alamance County); Texfi
Industries, Inc., d/b/a Texfi Elastics, 6900 Washington Boulevard,
Montebello, California 90640 (Los Angeles County), Landlord:
Apparel Manufacturing Company. You agree to notify us promptly of
any additional Collateral locations, of any change in your name,
mailing address, principal place of business or the location of the
Collateral; but your lien and security interest will be maintained
despite the location of the Collateral. You are also to advise us
promptly, in sufficient detail, of any substantial change relating
to the type, quantity or quality of the Collateral, or any event
which would have a material effect on the value of the Collateral
or on the Security Interest granted to us herein.
9. You agree to: execute and deliver to us, from time to time,
solely for our convenience in maintaining a record of the
Collateral, such consignments or separate written statements as we
may require, designating, identifying or describing the Collateral
pledged to us hereunder. Your failure, however, to promptly give
us such consignments, or other statements shall not affect,
diminish, modify or otherwise limit our Security Interest in the
Collateral.
10. You agree to comply with the requirements of all state and
federal laws in order to grant to us a valid and perfected first
Security Interest in the Collateral. We are hereby authorized by
you to file any financing statements covering the Collateral
whether or not your signature appears thereon. You agree to do
whatever we may request, from time to time, by way of; leasing
warehouses; filing notices of lien, financing statements,
amendments,
4
<PAGE>
renewals and continuations thereof; cooperating with
our custodians; keeping stock records; transferring Collateral to
our possession; obtaining waivers from landlords and mortgagees;
and performing such further acts as we may require in order to
effect the purposes of this agreement.
11. You agree to maintain insurance on the Collateral under such
policies of insurance, with such insurance companies, in such
amounts and covering such risks as are at all times satisfactory to
us. All policies covering the Collateral are to be made payable to
us, in case of loss, under a standard non-contributory "mortgagee",
"lender" or "secured party" clause and are to contain such other
provisions as we may require to fully protect our interest in the
Collateral and to any payments to be made under such policies. All
original policies are to be delivered to us, premium prepaid, with
the loss payable endorsement in our favor, and shall provide for
not less than ten days prior written notice to us of the exercise
of any right of cancellation. At your request, or if you fail to
maintain such insurance, we shall arrange for such insurance, but
at your expense and without any responsibility on our part for:
obtaining the insurance, the solvency of the insurance companies,
the adequacy of the coverage, or the collection of claims. Unless
we shall otherwise agree with you in writing, we shall have the
sole right, in our name or yours, to file claims under any
insurance policies, to receive, receipt and give acquittance for
any payments that may be payable thereunder, and to execute any and
all endorsements, receipts, releases, assignments, reassignments or
other documents that may be necessary to effect the collection,
compromise or settlement of any claims under any such insurance
policies.
12. You agree to pay, when due, all taxes, assessments, claims and
other charges (herein "taxes") lawfully levied or assessed upon the
Collateral and if such taxes remain unpaid after the date fixed for
the payment thereof, or if any lien shall be claimed thereunder
which in our opinion might create a valid obligation having
priority over the rights granted to us herein, we may, without
notice to you, but on your behalf, pay such taxes, and the amount
thereof shall be an Obligation secured hereby and due to us on
demand. Any and all fees, costs and expenses, of whatever kind and
nature, (including any taxes, attorneys' fees or costs for
insurance of any kind), which we may incur in filing public
notices; in preparing or filing documents, making title
examinations or rendering opinions; in protecting, maintaining, or
preserving the Collateral; in enforcing or foreclosing the Security
Interest hereunder, whether through judicial procedures or
otherwise; or in defending or prosecuting any actions or
proceedings arising out of or related to our transactions with you
under this arrangement, shall be borne and paid by you. If same
are not promptly paid by you, we may pay same on your behalf, and
the amount thereof shall be an Obligation secured hereby and due to
us on demand.
13. You agree to comply with all acts, rules, regulations, and
orders of any legislative, administrative or judicial body or
official, applicable to the Collateral or any part thereof, or to
the operation of your business; provided that you may contest any
acts, rules, regulations, orders and directions of such bodies or
officials in any reasonable manner which will not, in our opinion,
adversely affect our rights or priority in the Collateral
hereunder.
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<PAGE>
14. On a breach by you of any of the terms or provisions of this
agreement, the Agreement or any other agreement or arrangement now
or hereafter entered into between us; or on the effective date of a
termination of the Agreement; or on the nonpayment when due of any
Obligation owing to us, whether or not the Agreement shall
continue; or upon your committing an act of bankruptcy, making a
general assignment for the benefit of creditors; or there is filed
by or against you a petition in bankruptcy or for the appointment
of a receiver; or there is commenced under any bankruptcy or
insolvency law, any proceeding for your relief or for the
composition, extension, arrangement or adjustment of any of your
obligations; or your business is discontinued as a going concern;
then we shall have the right, with or without notice to you, to
foreclose the Security Interest created herein by any available
judicial procedure, or to take possession of the Collateral without
judicial process, and to enter any premises where the Collateral
may be located for the purpose of taking possession of or removing
the Collateral. We shall have the right without notice or
advertisement, to sell, lease, or otherwise dispose of all or any
part of the Collateral, whether in its then condition or after
further preparation or processing, in your name or in ours, or in
the name of such party as we may designate, either at public or
private sale or at any broker's board, in lots or in bulk, for cash
or for credit, with or without warranties or representations, and
upon such other terms and conditions as we in our sole discretion
may deem advisable, and we shall have the right to purchase at any
such sale. If notice of intended disposition of any said
Collateral is required by law, five (5) days notice shall
constitute reasonable notification. If any Collateral shall
require maintenance, preparation, or is in process or other
unfinished state, we shall have the right, at our option, to do
such preparation, processing or completion of manufacturing, for
the purpose of putting the Collateral in such saleable form as we
shall deem appropriate. You agree, at our request, to assemble the
Collateral and to make it available to us at places which we shall
select, whether at your premises or elsewhere, and to make
available to us your premises and facilities for the purpose of our
taking possession of, removing or putting the Collateral in
saleable form. The proceeds of any such sale, lease or other
disposition of the Collateral shall be applied first, to the
expenses of retaking, holding, storing, processing, preparing for
sale, selling, and the like, and then to the satisfaction of your
Obligations to us, application as to particular Obligations or as
to principal or interest to be in our sole discretion. You shall
be liable to us for, and shall pay to us on demand, any deficiency
which may remain after such sale, lease or other disposition, and
we in turn agree to remit to you, or your successors or assigns,
any surplus resulting therefrom. The enumeration of the foregoing
rights is not intended to be exhaustive and the exercise of any
right shall not preclude the exercise of any other rights, all of
which shall be cumulative.
15. The rights and Security Interest granted to us hereunder are
to continue in full force and effect, notwithstanding the
termination of the Agreement or the fact that the principal account
maintained in your name on our books may from time to time be
temporarily in a
6
<PAGE>
credit position, until the final payment to us in
full of all Obligations due to us by you. Our delay, or omission
to exercise any right hereunder, shall not be deemed a waiver
thereof, or be deemed a waiver of any other right, unless such
waiver be in writing and signed by us. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right
or remedy on any future occasion.
16. To the extent that your Obligations are now or hereafter
secured by any assets or property other than the Collateral, or by
the guarantee, endorsement, assets or property of any other person,
then we shall have the right in our sole discretion to determine
which rights, security, liens, security interests or remedies we
shall at any time pursue, foreclose upon, relinquish, subordinate,
modify or take any other action with respect to, without in any way
modifying or affecting any of them, or of any of our rights
hereunder.
17. This agreement, which is subject to modification only in
writing signed by us, is supplementary to and is to be considered
as part of the Agreement. No course of dealing between us shall
change or modify this agreement. The validity, interpretation and
enforcement of this agreement shall be governed by the laws of the
State of North Carolina.
18. If the foregoing is in accordance with your understanding,
please so indicate by signing and returning to us the original and
one copy of this agreement. The agreement shall take effect as of
the date set forth above, after being accepted below by one of our
officers in North Carolina State, after which, we shall forward a
copy to you with signatures completed for your files.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: ______________________________________
Name: _________________________________
Title: __________________________________
Read and Agreed to:
TEXFI INDUSTRIES, INC.
By:____________________________
Name: _______________________
Title: ________________________
(Signatures Continued on Page 8)
7
<PAGE>
Accepted at Charlotte, North Carolina, this the
____ day of ________________, 1995.
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: ________________________________
Name: ___________________________
Title: ____________________________
A989(a)
8
<PAGE>
EXHIBIT 11
TEXFI INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
[CAPTION]
<TABLE>
Thirteen Weeks Ended Twenty-six Weeks Ended
April 28, April 29, April 28, April 29,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:
Balance at beginning of period ................. 8,650,621 7,696,416 8,652,621 7,696,416
Stock options exercised......................... -- 1,381 -- 1,381
Deferred compensation....................... ... 3,069 15,584 3,069 15,584
Restricted Stock Forfeitures.................... (3,000) (6,385) (5,000) (6,385)
Balance at end of period ..................... 8,650,690 7,706,996 8,650,690 7,706,996
PRIMARY:
Net income (loss) from continuing operations.... $ 72,000 $(1,569,000) $ (875,000) $(4,423,000)
Net loss from discontinued operations........... (7,382,000) (1,837,000) (15,369,000) (2,538,000)
Net loss applicable to common
stockholders ................................. $(7,310,000) $(3,406,000) $(16,244,000) (6,961,000)
Weighted average number of shares outstanding:
Common stock outstanding for the period
based on a daily weighted average ........... 8,652,767 7,698,549 8,652,683 7,697,483
Common stock equivalents - outstanding stock
options computed on the treasury stock
method using average market price ........... -- -- -- --
Weighted average number of common and common
equivalent shares outstanding ............... 8,652,767 7,698,549 8,652,683 7,697,483
Per common share amounts:
Net income (loss) from continuing operations $ .01 $(.20) $ (.10) $ (.57)
Net loss from discontinued operations..... (.85) (.24) (1.78) (.33)
Net loss.................................. $( .84) $(.44) $(1.88) $ (.90)
FULLY DILUTED:
Net income(loss) from continuing operations.....$ 72,000 $(1,569,000) $ (875,000) $(4,423,000)
Net loss from discontinued operations........... (7,382,000) (1,837,000) (15,369,000) (2,538,000)
Net loss applicable to common
stockholders .................................$(7,310,000) $(3,406,000) $(16,244,000) $(6,961,000)
Weighted average number of shares outstanding:
Common stock outstanding for the period based
on a daily weighted average .................. 8,652,767 7,698,549 8,652,683 7,697,483
Common stock equivalents - outstanding stock
options computed on the treasury stock method
by using end-of-period market prices in lieu
of average market prices .................... -- -- -- --
8,652,767 7,698,549 8,652,683 7,697,483
Increase in common shares assuming conversion
of the 11-1/4% Convertible Senior Subordinated
Debentures .................................. -- -- -- --
Weighted average number of common and common
equivalent shares outstanding ................... 8,652,767 7,698,549 8,652,683 7,697,483
Per common share amounts:
Excluding convertible debenture shares:
Net income (loss) from continuing operations $ .01 $(.20) $ (.10) $ (.57)
Net loss from discontinued operations....... (.85) (.24) (1.78) (.33)
Net loss.................................. $( .84) $(.44) $(1.88) $ (.90)
Including Convertible Debenture Shares:
Net income (loss) from continuing operations $ .01 $(.24) $ (.10) $ (.57)
Net loss from discontinued operations....... (.85) (.20) (1.78) (.33)
Net loss.................................. $ (.84) $(.44) $(1.88) $ (.90)
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-03-1995
<PERIOD-START> JAN-28-1995
<PERIOD-END> APR-28-1995
<CASH> 230
<SECURITIES> 0
<RECEIVABLES> 9,148
<ALLOWANCES> (2,733)
<INVENTORY> 32,885
<CURRENT-ASSETS> 42,396
<PP&E> 119,654
<DEPRECIATION> (60,108)
<TOTAL-ASSETS> 106,233
<CURRENT-LIABILITIES> 39,913
<BONDS> 40,729
<COMMON> 33,720
0
0
<OTHER-SE> (29,813)
<TOTAL-LIABILITY-AND-EQUITY> 106,233
<SALES> 126,899
<TOTAL-REVENUES> 126,899
<CGS> 113,083
<TOTAL-COSTS> 121,587
<OTHER-EXPENSES> 6,187
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,191
<INCOME-PRETAX> (875)
<INCOME-TAX> 0
<INCOME-CONTINUING> (875)
<DISCONTINUED> (15,369)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,244)
<EPS-PRIMARY> (1.88)
<EPS-DILUTED> (1.88)
</TABLE>
