<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Texfi Industries, Inc. (Name of Registrant as Specified In Its Charter)
- ------------------------------
Dane L. Vincent, Vice President of Finance, 5400 Glenwood Avenue
Suite 215, Raleigh, North Carolina 27612, (919) 783-4736
----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
----------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
----------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------
5) Total Fee Paid:
----------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------
3) Filing Party:
----------------------------------
4) Date Filed:
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<PAGE>
(Logo appears here)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Texfi
Industries, Inc. (the "Company") will be held at The Cardinal Club, 150
Fayetteville Street, Suite 2800, Raleigh, North Carolina on March 11, 1997, at
10:30 a.m., for the following purposes:
(1) To elect two Class I nominees to the Board of Directors, each
to serve a three-year term until the 2000 Annual Meeting of
Stockholders, and to elect one Class II nominee to the Board
of Directors to serve a one-year term until the 1998 Annual
Meeting of Stockholders;
(2) To consider approval of the Amended and Restated Nonqualified
Stock Option Plan;
(3) To consider approval of an amendment to the Executive Stock
Purchase Plan;
(4) To consider ratification of the selection of Ernst & Young LLP
as independent auditors for the fiscal year ending October 31,
1997;
(5) To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on January 13,
1997, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting.
Your attention is directed to the accompanying Proxy Statement.
By Order of the Board of Directors
(Signature of Braxton Schell)
Braxton Schell
Secretary
Raleigh, North Carolina
January 31, 1997
<PAGE>
TEXFI INDUSTRIES, INC.
5400 GLENWOOD AVENUE, SUITE 215
RALEIGH, NORTH CAROLINA 27612
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Texfi Industries, Inc. (the "Company")
for the Annual Meeting of Stockholders to be held at The Cardinal Club, 150
Fayetteville Street, Suite 2800, Raleigh, North Carolina on March 11, 1997, at
10:30 a.m. The approximate date on which this Proxy Statement and the enclosed
form of proxy were first sent or given to stockholders was January 31, 1997.
Any stockholder who executes and returns the accompanying proxy may
revoke it at any time before it is voted by filing with the Secretary of the
Company a written revocation or a duly executed proxy bearing a later date, or
by attending and voting in person. All shares represented by valid proxies
received pursuant to the solicitation and prior to the meeting and not revoked
before they are exercised will be voted, and, if a choice is specified with
respect to any matter to be acted upon, the shares will be voted in accordance
with such specification.
Only stockholders of record at the close of business as of January 13,
1997 will be entitled to notice of and to vote at the Annual Meeting of
Stockholders. On such date, the Company had 8,735,491 outstanding shares of
Common Stock, par value $1.00 per share; there are no other voting securities.
Each share is entitled to one vote.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
The following table sets forth each person or entity who may be deemed
to have beneficial ownership of more than five percent of the Company's
outstanding stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Chadbourne Corporation (1) 2,043,700 (2) 21.9
1430 Broadway, 13th Floor
New York, N. Y. 10018
L. Terrell Sovey, Jr. 719,855 (3) 8.1
367 South Pine Street
Spartanburg, SC 29302
2
<PAGE>
Name of and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
Dimensional Funds 538,900 (4) 6.2
Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
</TABLE>
(1) According to information supplied to the Company by Chadbourne
Corporation ("Chadbourne"), Halton House Ltd. c/o Coutts & Co. (Bahamas)
Ltd., P. O. Box N7788, West Bay Street, Nassau, Bahamas ("Halton Ltd.")
owns all of the outstanding capital stock of Chadbourne. The Halton
Declaration of Trust ("Halton Trust") owns beneficially ninety percent
(90%) of the outstanding capital stock of Halton Ltd. The trustee of
Halton Trust is Coutts & Co. (Bahamas) Ltd. All powers with respect to
investment or voting of securities beneficially owned by Halton Trust
are exercisable by Bahamas Protectors, Ltd., protector under the
constituent instruments of Halton Trust. The business address of Bahamas
Protectors, Ltd. is Charlotte House, Charlotte Street, P.O. Box N-341,
Nassau, Bahamas. Richard L. Kramer, Chairman of the Board of Directors
of the Company, and William L. Remley, Vice Chairman of the Board of
Directors and Chief Executive Officer of the Company, are directors and
executive officers of Chadbourne and of Halton Ltd. Mentmore Holdings
Corporation provides management services to companies in which
Chadbourne is invested. Messrs. Remley and Kramer are principals in
Mentmore Holdings Corporation.
(2) Ownership as of January 10, 1997, according to information supplied by
Chadbourne, includes 600,000 shares of Common Stock that Chadbourne has
the right to purchase under presently exercisable stock options granted
pursuant to a Stock Option Purchase Agreement dated May 24, 1994 between
Chadbourne and the Company. Chadbourne's beneficial ownership has been
calculated by treating these shares as outstanding shares of the
Company's Common Stock.
(3) Ownership as of December 31, 1996, according to information supplied by
Mr. Sovey, includes (i) 149,476 shares of Common Stock that may be
acquired upon conversion of $1,000,000 principal amount of the 11 1/4%
Senior Subordinated Debentures due 1997 (the "11 1/4% Debentures"),
which are convertible at a price of $6.69 per share; (ii) 18,900 shares
held in retirement plans over which Mr. Sovey has investment authority
but in which he otherwise has no beneficial interest (iii) 41,000 shares
of Common Stock over which Mr. Sovey has control as attorney-in-fact
pursuant to a revocable power of attorney and (iv) 24,000 shares held by
his mother's estate for which he is executor. Mr. Sovey has sole voting
and investment power over all of the shares beneficially owned with the
exception of the 41,000 shares described above over which he has shared
voting and investment power. Mr. Sovey's percentage of beneficial
ownership has been calculated by treating as outstanding the amount of
the Company's Common Stock that Mr. Sovey
3
<PAGE>
indicated that he has the right to acquire through conversion of the
11 1/4% Debentures.
(4) Ownership as of September 30, 1996 according to information supplied to
the Company by Dimensional Fund Advisors Inc. ("Dimensional").
Dimensional has indicated that (i) the shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open-end investment
company, or in series of The DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and the DFA Participating Group
Trust, investment vehicles for qualified employee benefit plans, (ii)
Dimensional serves as investment manager to all of the above entities,
(iii) Dimensional may be deemed to exercise sole voting power as to
362,200 shares and sole dispositive power as to 538,900 shares and (iv)
Dimensional disclaims beneficial ownership of all such shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of January 13, 1997.
<TABLE>
<CAPTION>
Name of Director, Amount and Nature of Percent
Nominee or Executive Officer Beneficial Ownership (1) of Class
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard L. Kramer -0- (2)(3) *
William L. Remley 106,471(2)(3)(4) *
John D. Mazzuto -0- (2) *
William D. Goldston, Jr. 15,000 (2) *
John S. Rainey 53,850 (2)(6) *
Braxton Schell 27,064 (2)(7) *
Andrew J. Parise, Jr. 120,491 (8) 1.4
Gerald A. Rubinfeld 1,400 (5) *
Gene Pease -0- *
Richard C. Hoffman -0- *
Joel J. Karp -0- *
All Directors, Nominees and
Executive Officers as a Group (14 Persons) 360,941 (2)(9) 4.1
*Represents less than 1%.
</TABLE>
(1) Unless otherwise indicated, all shares are owned of record by the
persons named and the beneficial ownership consists of sole voting power
and sole investment power.
(2) Does not include shares allocated pursuant to the Directors' Deferred
Stock Compensation Plan as to which participants have no rights as
stockholders. See "Director Compensation."
(3) Mr. Remley and Mr. Kramer are principals in Mentmore Holdings
Corporation, which
4
<PAGE>
provides management services to companies in which Chadbourne
Corporation is invested. Chadbourne Corporation beneficially owns
2,043,700 shares (21.9%). Messrs. Remley and Kramer are also directors
and executive officers of Chadbourne. See "Security Ownership of Certain
Beneficial Owners."
(4) Includes 75,000 shares of Common Stock that Mr. Remley has the right to
purchase under presently exercisable stock options granted to him by the
Company, which shares may be deemed to be beneficially owned by him.
(5) Does not include shares which Mr. Rubinfeld may have the right to
purchase subsequent to January 13, 1997 pursuant to the Company's
Executive Stock Purchase Plan. See "Executive Compensation --
Compensation and Stock Option Committee Report of Executive
Compensation."
(6) Includes 51,335 shares held in a retirement plan of which Mr. Rainey is
a co-trustee and principal beneficiary.
(7) Includes 10,864 shares of Common Stock that Mr. Schell has the right to
purchase under presently exercisable stock options granted to him by the
Company, which shares may be deemed to be beneficially owned by him.
(8) Includes 41,300 shares of Common Stock that Mr. Parise has the right to
purchase under presently exercisable stock options granted to him by the
Company, which shares may be deemed to be beneficially owned by him.
(9) Includes (i) 127,164 shares that officers and directors have the right
to purchase under presently exercisable stock options granted to them by
the Company, which shares may be deemed to be beneficially owned by said
persons. The percentage of beneficial ownership treats as outstanding
the amount of the Company's Common Stock that directors and officers
have a right to acquire through the presently exercisable stock options.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors, its executive
officers, and any persons holding more than 10 percent of the Company's stock
are required to report their ownership of the Company's stock, as well any
changes in that ownership, to the Securities and Exchange Commission. Specific
due dates for these reports have been established, and the Company is required
to report in this proxy statement any failure during fiscal year 1996 to file
such reports in a timely fashion. All of these filing requirements were
satisfied by its directors, officers and 10 percent stockholders, except that
John Rainey inadvertently failed to report a transaction in November in which a
trust of which he is trustee sold 4,000 shares of stock. In making this
statement, the Company has relied on the written representations of its
directors,
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<PAGE>
officers and 10 percent stockholders and copies of the reports that they have
filed with the Commission.
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company currently provides that
the number of directors shall be not less than six nor more than fifteen, as
established from time to time by the Board of Directors of the Company. The
Board of Directors has determined that, effective as of the time of the 1997
Annual Meeting of Stockholders, the number of directors will be six. The
Certificate of Incorporation also provides for a classified Board of Directors
of three classes, as nearly equal in number as possible, with one class of
directors to be elected at each annual meeting for a term of three years.
In accordance with the classification of the Board, the members of Class
I of the Board of Directors (the "Class I Directors") are to be elected at this
Annual Meeting to serve three-year terms until the annual meeting of
stockholders in 2000. The Board of Directors has nominated William L. Remley for
reelection and Richard C. Hoffman for election by the stockholders as the
members of Class I of the Board of Directors. Braxton Schell, who will complete
a three-year term at the 1997 Annual Meeting of Stockholders, is retiring from
the Board.
William D. Goldston, Jr. and John S. Rainey, members of Class II of the
Board of Directors, have resigned as directors, effective as of the time of the
1997 Annual Meeting of Stockholders. The Board of Directors has nominated Joel
J. Karp for election by the stockholders to fill one of the vacancies in Class
II so created and to serve until the 1998 Annual Meeting of Stockholders. The
remaining vacancy will be eliminated by a reduction in the number of directors
from seven to six.
A plurality of the shares of Common Stock of the Company voted at the
meeting is required to elect the nominated individuals to Class I and Class II
of the Board of Directors. Broker nonvotes do not have the effect of a vote
against the nominees.
The persons named in the accompanying proxy intend to vote the shares
represented by the proxy for the election of the three nominees named below,
except as otherwise specified by the proxy. In the event that any of the
nominees should not be available to serve for any reason, the proxy holders may
vote for a substitute nominee designated by the Board of Directors. The Board of
Directors has no reason to believe that any of the nominees named below will be
unavailable to serve as a member of the Board of Directors.
The Board of Directors will consider qualified candidates recommended
by stockholders for nomination to the Board. In order for a candidate
recommended by a stockholder to be considered as a nominee at the next annual
meeting, the name of such candidate, together with a written description of the
candidate's qualifications, must be received at the Company's principal
executive offices on or before October 3, 1997.
6
<PAGE>
The following information is furnished with respect to the nominees and
the directors continuing in office:
CLASS I DIRECTORS
- NOMINEES FOR ELECTION FOR THREE-YEAR TERMS EXPIRING WITH THE
ANNUAL MEETING IN 2000
<TABLE>
<CAPTION>
Principal Occupation Director
Name, Age For Past Five Years Since
<S> <C> <C>
William L. Remley Chief Executive Officer and Vice Chairman of the Board 1994
46 (1994-present); President, Mentmore Holdings Corporation
(corporate acquisitions and management) (1989-present);
President, CPT Holdings, Inc. (steel manufacturing) (1992-
present); President, Sunderland Industrial Holdings Corp.
(plastics manufacturing) (1989-present); Director, Republic
Properties Corporation (real estate development) (1992-present);
President, Weldotron Corporation (machinery manufacturing)
(1994-present).
Richard C. Hoffman President and Principal, Richard C. Hoffman, P.C., Attorney- -------
49 at-Law, Dallas, Texas and Greenwich, Connecticut (1993-
present); President and Director, InterUrban Management, Inc.
(real estate) (1991-present); Partner and Member of the
Management Committee, Rubinstein & Perry, Attorneys-at-
Law, Dallas, Texas (1988-1993); Director, Weldotron Corporation
(machinery manufacturing) (1994-present); Director, Orion
Acquisition Corp. II (1996-present).
CLASS II DIRECTOR
-NOMINEE FOR ELECTION FOR A ONE-YEAR TERM EXPIRING WITH THE
ANNUAL MEETING IN 1998
Principal Occupation Director
Name, Age For Past Five Years Since
Joel J. Karp Senior Tax Partner and President, Karp & Genauer, P.A., -------
57 Attorneys-at-Law, Coral Gables, Florida (1994-present);
Senior Tax Partner and Director, Paul, Landy,
Beiley & Harper, P.A., Attorneys-at-Law, Miami,
Florida (1987-1994).
7
<PAGE>
CLASS II DIRECTOR
-CONTINUING IN OFFICE UNTIL THE ANNUAL MEETING IN 1998
Principal Occupation Director
Name, Age For Past Five Years Since
Andrew J. Parise, Jr. President and Chief Operating Officer (1994-present); 1995
49 President, Finished Fabrics Division (1992-1994);
Executive Vice President, Texfi Blends Division
(1990-1992).
CLASS III DIRECTORS
- CONTINUING IN OFFICE UNTIL THE ANNUAL MEETING IN 1999
Principal Occupation Director
Name, Age For Past Five Years Since
Richard L. Kramer Chairman of the Board (1994-present); Chairman, 1994
47 Mentmore Holdings Corporation (corporate acquisitions
and management) (1989-present); Chairman, Sunderland
Industrial Holdings Corp. (plastics manufacturing) (1989-
present); Chairman, Republic Properties Corporation (real
estate development) (1989-present); Chairman, CPT Holdings,
Inc. (steel manufacturing) (1992-present); Chairman,
Weldotron Corporation (machinery manufacturing)
(1994-present).
John D. Mazzuto Private Investor and Consultant (1991-present); Director, 1994
48 Weldotron Corporation (machinery manufacturing) (1994-
present); Director, CPT Holdings (steel manufacturing) (1993-
present); Director of First Chesapeake Financial Corporation
(1996-present).
</TABLE>
Directors Meetings and Committees
During the fiscal year ended November 1, 1996, the Board of Directors
held a total of nine regular and special meetings, including telephone
conference meetings. Each director attended 75% or more of the total number of
meetings of the Board and of the committees of the Board on which he served. The
Board of Directors of the Company has a standing Executive Committee, Audit
Committee, Compensation and Stock Option Committee and Nominating Committee.
The Audit Committee confers with the Company's independent auditors and
reviews both the scope of the auditing of the Company's books and accounts and
the reports submitted by the auditors thereafter. The Committee also reviews,
with the independent auditors and appropriate
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<PAGE>
Company personnel, procedures and methods employed in connection with the
Company's management policies relating to internal controls. Reports are made by
the Committee to the Board from time to time. The Audit Committee met four times
during fiscal year 1996. Its members are Messrs. Rainey (Chairman), Kramer and
Goldston.
The Executive Committee may exercise the authority of the Board of
Directors in the management and business affairs of the Company in the interim
periods between regular and special meetings of the full Board; except that the
Executive Committee may not amend the Company's Certificate of Incorporation;
adopt an agreement of merger or consolidation; recommend to stockholders the
sale, lease or exchange of all or substantially all of the Company's property or
assets; recommend to stockholders a dissolution of the Company or a revocation
of a dissolution; amend the bylaws of the Company; declare a dividend; authorize
the issuance of stock; fill vacancies on the Board of Directors or any of its
committees; authorize or approve the reacquisition of shares of capital stock of
the Company, except according to a formula or method prescribed by the Board of
Directors; approve or propose to stockholders action that the General
Corporation Law of Delaware requires be approved by stockholders; change the
principal corporate office of the Company; appoint or remove officers of the
Company; or fix the compensation of directors. The Executive Committee met five
times during fiscal 1996. Its members are Messrs. Remley (Chairman), Mazzuto,
and Goldston.
The Nominating Committee makes recommendations to the Board with
respect to candidates for membership on the Board. Its members are Messrs.
Mazzuto and Parise.
For information about the Compensation and Stock Option Committee see
"Compensation and Stock Option Committee Report on Executive Compensation."
EXECUTIVE COMPENSATION
The following information relates to all compensation awarded to,
earned by or paid pursuant to a plan or otherwise, to (i) the Chief Executive
Officer of the Company (the "CEO"), and (ii) all executive officers, other than
the CEO, who were serving as executive officers of the Company on November 1,
1996 and whose compensation for the fiscal year ended November 1, 1996 exceeded
$100,000. The above-referenced persons are referred to herein as the Named
Executive Officers.
The following information does not reflect any compensation earned by
the Named Executive Officers subsequent to November 1, 1996, unless otherwise
indicated. Any such compensation earned and paid to the Named Executive Officers
during fiscal 1997 will be recorded in the proxy statement for the Company's
1998 Annual Meeting of Stockholders, unless such compensation is required to be
reported previously.
9
<PAGE>
Summary Compensation Table
The following table sets forth for the Named Executive Officers for each
of the last three fiscal years annual compensation amounts as indicated by the
applicable table headings. Annual Compensation, columns (c), (d) and (e),
includes base salary and bonus earned during the year covered and, if
applicable, other annual compensation not properly categorized as salary or
bonus.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
- -------------------- --------- ---------------------------------------- --------------------------- ----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Other Restricted Underlying All
Annual Stock Options/ LTIP Other
Name and Fiscal Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position Year ($) ($)(1) ($)(2) ($) (#) ($) ($)(3)
- -------------------- --------- ----------- ---------- --------------- ------------ -------------- ---------- ---------------
<S> <C> <C> <C>
William L. Remley 1996 $350,000 - 13,297 - - - -
Chief Executive Officer 1995 256,250 262,500 - - 150,000 - -
1994 - - - - - - -
Andrew J. Parise, Jr. 1996 300,000 - 11,348 - - - 150
President, Chief 1995 300,000 225,000 - - 75,000 - 150
Operating Officer 1994 195,000 28,412 - - - - 150
Gene A. Pease 1996 130,001 - - - 10,000 - -
Division President 1995 - - - - - - -
1994 - - - - - - -
Gerald A. Rubinfeld 1996 180,000 72,000 592 - 14,000 - 150
Division President 1995 170,000 72,250 - - - - 150
1994 140,000 29,750 - - - - 150
</TABLE>
(1) Annual incentive compensation paid pursuant to the Company's Performance
Incentive Plan. See "Compensation and Stock Option Committee Report of
Executive Compensation."
(2) Represents the dollar value of the difference between the price paid for
Common Stock of the Company pursuant to the Company's Executive Stock
Purchase Plan and the fair market value of the Common Stock on the date
of purchase. See "Proposal to Approve Amendment to 1990 Executive Stock
Purchase Plan."
(3) Represents the Company's matching contributions to the Company's 401(k)
Retirement and Savings Plan.
Stock Options
The following table provides details regarding stock options granted to
the Named Executive Officers during fiscal year 1996.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Appreciation for
Option Term (2)
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration 5%($) 10%($)
Name Granted Fiscal Year ($/share) Date
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald A. Rubinfeld 14,000 23.33 3.25 6-5-2001 10,360 26,670
Gene A. Pease 10,000 16.67 3.25 6-5-2001 7,400 19,050
</TABLE>
(1) Nonqualified stock options granted under the Company's 1987 Stock
Option Plan. One-quarter of the options become exercisable on June 5,
1997, one-quarter will become exercisable on June 5, 1998, one-quarter
will become exercisable on June 5, 1999 and the remainder will become
exercisable on June 5, 2000.
(2) As required by Securities and Exchange Commission, the amounts shown
assume a 5% and 10% annual rate of appreciation on the market price of
the Company's Common Stock from the date of grant throughout a five-year
option term. The market price of the Company's Common Stock on June 5,
1996, the date of grant for all options shown, was $3.125. There can be
no assurance that the rate of appreciation assumed for purposes of this
table will be achieved. The actual value of the stock options to the
Named Executive Officers and all optionees as a group will depend on the
future price of the Company's Common Stock.
The following table shows the number of shares subject to unexercised
options held by the Named Executive Officers as of fiscal year-end. The table
divides such unexercised options into those which were exercisable as of fiscal
year-end and those which were not. At the end of fiscal 1996, none of these
options were "in-the-money" options, which are options with a positive spread
between the fiscal year-end market price of the underlying Common Stock and the
exercise price of such stock options. On November 1, 1996, the end of the fiscal
year, the closing sales price of the Common Stock was $2.625 per share. No
options were exercised by the Named Executive Officers during fiscal 1996.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE TABLE
Number of Securities Underlying
Unexercised Options at Fiscal Year-End (#)
<TABLE>
<CAPTION>
Name Exercisable Unexercisable
<S> <C> <C>
William L. Remley 75,000 75,000
Andrew J. Parise, Jr. 52,350 38,450
Gerald A. Rubinfeld 0 14,000
Gene A. Pease 0 10,000
</TABLE>
Director Compensation
Each director who is not also a full-time employee of the Company
receives an annual director's fee of $15,000. In addition, each such director
receives a meeting fee of $500 for each meeting of the Board of Directors and of
any committee thereof that he attends. Directors who are full-time employees
receive no additional compensation for serving as directors or as committee
members.
Effective July 14, 1989, the Company adopted the Directors' Deferred
Stock Compensation Plan, which permits directors of the Company who are not
full-time employees to defer receipt of directors' fees and to receive such fees
in the form of Common Stock after termination of their service as directors. On
the first business day of each quarter, directors' fees for the previous quarter
are credited to each participant's account as shares of Common Stock based upon
the market value of the Common Stock on that day. A distribution of the Common
Stock based on the number of shares credited to the participant's account will
be made to the participant or his beneficiary upon his ceasing to be a director.
Until such distribution, a participant has no rights as a stockholder with
respect to shares credited to his account. Messrs. Goldston, Kramer, Mazzuto,
Rainey and Schell are currently the directors eligible to participate under the
plan and have elected to do so. Allocations in the aggregate of 106,792 shares
have been made under the plan. Board members have received aggregate allocations
as follows: Mr. Goldston, 26,965 shares; Mr. Kramer, 11,818 shares; Mr. Mazzuto,
12,305 shares; Mr. Rainey, 28,131 shares, Mr. Remley, 1,989 shares and Mr.
Schell, 25,584 shares.
Compensation and Stock Option Committee Report of Executive Compensation
The Compensation and Stock Option Committee of the Board of Directors
(the "Committee") is comprised of nonemployee directors. The Committee's purpose
is to review and make recommendations to the Board concerning the base salary of
the Chief Executive Officer
12
<PAGE>
and to review and approve the recommendations of the Chief Executive Officer
concerning the salaries of other corporate and divisional executives. The
Committee also reviews and recommends Board action on all forms of nonsalary
executive compensation and administers the Company's stock-based incentive plans
pursuant to the terms of the respective plans. It is the responsibility of the
Committee to review continuously the general compensation philosophy of the
Company, the elements of its compensation program, the specifics of each
element, the goals and measurements used in the program and the results of the
program as compared to the philosophy.
The members of the Committee are John D. Mazzuto, Chairman, and William
D. Goldston, Jr. The Committee met three times during fiscal year 1996.
Overall Compensation Philosophy.
In June 1994, the Board appointed a compensation committee of Messrs.
Mazzuto and Goldston. The Committee recognized that management would be
responsible for developing and pursuing new strategies that would improve the
operating performance and financial condition of the Company in fiscal 1995 and
thereafter. When considering the steps necessary to return the Company to
profitability, the Committee paid particular attention to the difficulties
anticipated in growing the Company's core business while at the same time
disposing of those assets it no longer considered desirable. The Company adopted
and pursued a strategic program the successful execution of which required
highly talented and motivated individuals. Accordingly, the Committee began
reanalyzing the Company's compensation policies with its ultimate objectives
being to attract and retain the best possible executive talent and to motivate
each executive to achieve both the goals inherent in the Company's business
strategy and results that the Company's stockholders view as positive.
Base Salaries.
The Committee authorized an employment contract with Mr. Remley,
effective as of April 1, 1995, pursuant to which Mr. Remley agreed to serve as
CEO for a term of two years at a base salary of $350,000, $200,000 of which
would be paid directly to Mentmore Holdings Corporation as consulting fees.
Based upon the advice of a consultant, Mr. Remley's base salary was set at
approximately the 50th percentile of a marketplace of over 400 public companies
(the "Marketplace") using an evaluation system that gave consideration to the
revenue differences among such companies.
Following an evaluation of Mr. Parise in 1994 and in view of his new
responsibilities as President and Chief Operating Officer ("COO") in developing
and implementing new strategies for the Company, the Committee approved a
three-year employment agreement with Mr. Parise commencing on November 1, 1994
that provided for a base salary of $300,000 per year. The base salaries of other
executive officers named in the Summary Compensation Table were established as
recommended by the CEO.
13
<PAGE>
Annual Incentive Compensation. The Committee emphasizes
performance-based elements of executive compensation. During fiscal 1996, the
Company had in place a performance incentive plan for 16 senior management
employees, including corporate level executives and division level executives
(the "Senior Management Plan"). The Company also had for fiscal 1996 a
performance incentive plan for 69 division level management and supervisory
salaried employees who are not covered by the Senior Management Plan (the "Key
Employee Plan"). The performance incentive plans provide participants with the
opportunity to receive bonuses based on operating earnings and sales goals for
the Company and its divisions. Under the Senior Management Plan, the bonuses of
corporate level executives are based 100% on the performance of the overall
Company and the bonuses of division level executives are based 33% on overall
Company results and 67% on division results. The bonuses of all other
participants in either performance incentive plan are based 100% on the
performance of their division. Under the Senior Management Plan, corporate level
executives were eligible to receive cash bonuses for fiscal 1996 of up to 75% of
their base salaries and division level executives were eligible to receive cash
bonuses of up to 60% of their base salaries. The size of the potential bonuses
was set to provide the executives with the opportunity, if the Company achieved
its highest targeted increase in operating earnings, to earn total annual cash
compensation of approximately the 75th percentile of the compensation of
comparable executives in the Marketplace. The only bonuses paid under either the
Senior Management Plan or the Key Employee Plan during fiscal 1996 were to
executives and management and supervisory salaried employees from the Company's
Blends Division.
Long-Term Incentive Compensation. A principal long-term goal of the
Company is to increase the market value of its common stock. To this end, the
Committee strives to establish effective ways to provide long-term incentive
compensation for executives and link the interests of key employees with those
of stockholders through stock-based incentives.
Stock options covering an aggregate of 60,000 shares of Common Stock
were granted to several key corporate and divisional level management employees
during fiscal 1996. The grants were established in order to provide the
executives with an opportunity to increase their equity stake in the Company.
These options were granted at prices significantly higher than the then current
fair market value of the Common Stock. The structure of these options was
established to emphasize the importance of increasing the market value of the
stock, inasmuch as the options will have value only to the extent the market
value of the Common Stock increases over the exercise price granted.
The Company also maintains an Executive Stock Purchase Plan under which
an employee, who receives a cash bonus under the Company's annual performance
incentive plans, has the option to invest up to 50% of his bonus in the Common
Stock of the Company for a price equal to 85% of the fair market value of the
stock. This plan is designed to encourage employees to use their annual
incentive compensation payments to increase their long-term incentives through
additional equity ownership in the Company.
14
<PAGE>
Compensation and Stock Option Committee
John D. Mazzuto, Chairman
W. D. Goldston, Jr.
Performance Graph.
The following graph compares the percentage change in the cumulative
total stockholder return on the Company's Common Stock with the cumulative
return of the Standard & Poor's 500 Stock Index and with a peer group index
developed by Ernst & Young LLP, assuming reinvestment of dividends.
The Peer Group index has been constructed by calculating the cumulative
total return of the common stock of the following companies: Concord Fabrics
Inc., Delta Woodside Industries Inc., Johnston Industries Inc., Springs
Industries Inc., Texfi Industries, Inc. and Thomaston Mills Inc. United
Merchants and Manufacturers Inc. filed for Chapter 11 and was delisted from the
New York Stock Exchange effective February 28, 1996. As a result, it was not
included in the Peer Group Index as it had been in prior years.
Comparison of Five Year Cumulative Total Return* for Texfi Industries, Inc.,
S&P 500 and Customized Peer Indices
(Performance Graph appears here with the following plot points.)
Oct-91 Oct-92 Oct-93 Oct-94 Oct-95 Oct-96
Texfi Industries, Inc. $100.00 $128.10 $ 84.62 $ 58.97 $ 51.28 $ 51.28
S&P 500 Index $100.00 $109.97 $126.42 $131.31 $166.03 $206.04
Customized Peer Group $100.00 $ 96.23 $107.45 $109.08 $103.24 $107.48
*Assumes that the value of the investment in Texfi Industries, Inc. common
stock and each index was $100 on October 31, 1991 and that all dividends were
reinvested.
15
<PAGE>
Employment and Other Related Agreements
Effective April 1, 1995, the Company and Mr. Remley entered into an
employment agreement with a two-year term under which Mr. Remley serves as Vice
Chairman of the Board and Chief Executive Officer and receives a base salary
payable at the annual rate of $350,000, $200,000 of which is paid directly to
Mentmore Holdings Corporation as a consulting fee. Effective November 1, 1994,
the Company and Mr. Parise entered into an employment agreement with a term of
three years under which Mr. Parise serves as President and Chief Operating
Officer and receives a base salary of $300,000 per year. Each of the employment
agreements provides that the officer is entitled to participate in the Company's
annual incentive bonus plan and other comparable benefit programs provided to
senior executive officers. Each agreement may be terminated by the Company with
or without cause or upon the employee's death or disability or voluntarily by
the employee upon 60 days notice. If the employee is terminated without cause,
then he is entitled to (i) his base salary for the greater of a six-month period
from termination or the remaining term of his employment agreement and (ii) any
amounts due under the Company's annual incentive plans. Mr. Parise also is
entitled to such payments in the event he voluntarily terminates his employment
due to a substantial change in duties. In addition, following any termination of
employment that entitles Mr. Remley or Mr. Parise to the foregoing payments, all
outstanding and unexpired stock options that are held by the terminated officer
that are not then exercisable become exercisable for a period of 60 days.
Effective January 1, 1997, the Company entered into employment
agreements with two additional executive officers, Mr. Rubinfeld and Mr. Pease.
The term of each such employment agreement is three years, and each provides for
a base salary of $200,000. Pursuant to their respective agreements, Mr.
Rubinfeld will serve as President of the Company's Blends Division and Mr. Pease
will serve as President of the Company's Kingstree Marketing Division. Each of
the employment agreements provides that the officer is entitled to participate
in the Company's annual incentive bonus plan and other comparable benefit
programs provided to senior executive officers. Each agreement may be terminated
by the Company with or without cause or upon the employee's death or disability
or voluntarily by the employee upon 60 days notice. If the employee is
terminated without cause, then he is entitled to (i) his base salary for the
greater of a six-month period from termination or the remaining term of his
employment agreement and (ii) any amounts due under the Company's annual
incentive plans. In addition, following any termination of employment that
entitles Mr. Rubinfeld or Mr. Pease to the foregoing payments, all outstanding
and unexpired stock options that are held by the terminated officer that are not
then exercisable become exercisable for a period of 60 days.
16
<PAGE>
PROPOSAL TO APPROVE
AMENDED AND RESTATED NONQUALIFIED STOCK OPTION PLAN
On December 16, 1987, the Board of Directors of the Company adopted the
1987 Nonqualified Stock Option Plan for certain key employees, including
officers, of the Company (the "Nonqualified Stock Option Plan" or the "Plan").
On March 3, 1988, the stockholders approved the Plan. The Plan was amended in
1991 and 1993 to increase the number of shares available for the grant of
options thereunder. On January 16, 1997, the Board of Directors approved,
subject to stockholder approval, the Amended and Restated Nonqualified Stock
Option Plan (the "Amended Nonqualified Stock Option Plan" or the "Amended
Plan").
DESCRIPTION OF AMENDED PLAN
The purpose of the Amended Nonqualified Stock Option Plan is to provide
an opportunity for key employees of the Company or any majority-owned subsidiary
thereof to purchase Common Stock of the Company, thereby advancing the interests
of the Company by providing key employees to whom options are granted with
additional incentive to contribute to the success of the Company and to continue
in the employ of the Company or a majority-owned subsidiary thereof.
The Amended Nonqualified Stock Option Plan authorizes the grant of
options to purchase up to 1,100,000 shares of Common Stock of the Company, of
which 311,664 shares are currently subject to outstanding options, 244,901
shares have already been purchased pursuant to the exercise of options and
543,435 shares remain available to be optioned. Under the Amended Plan, no
single person may receive grants that, in the aggregate, exceed 275,000 shares
of Common Stock over the 15-year life of the Amended Plan. The Amended Plan
expires on December 15, 2002.
The Amended Nonqualified Stock Option Plan is administered by the
Compensation and Stock Option Committee (the "Committee"). The Committee
consists of two or more members appointed by the Board of Directors, each of
whom must qualify as an "outside director" within the meaning of Section 162(m)
of the Internal Revenue Code of 1996, as amended (the "Code"), and as a
"Non-Employee Director" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934. The members of the Committee are John D.
Mazzuto, Chairman, and William D. Goldston, Jr. The Committee has the power to
grant options, interpret the Amended Plan, and make regulations for carrying out
its purposes. The decisions of the Committee on such matters are final and
conclusive.
The exercise price for each option granted under the Amended
Nonqualified Stock Option Plan is determined by the Committee, but in no event
shall such price be less than 100% of the fair market value of the Common Stock
of the Company on the date the option is granted. As of January 23, 1997, the
closing price of the Common Stock on the New York Stock
17
<PAGE>
Exchange was $3.125 per share. Payment for shares purchased under the Amended
Plan may be in cash, by certified check or by surrender of shares of Common
Stock of the Company. The number of shares subject to options and the option
exercise price may be adjusted by the Committee in the event of a stock
dividend, stock split-up or combination of shares, a recapitalization or merger
in which the Company is the surviving corporation or some other similar capital
change. In the case of a consolidation or merger in which the Company is not the
surviving corporation, or a merger in which the stockholders exchange their
stock in the Company for stock of another corporation or upon liquidation of the
Company or upon approval of a tender offer by the Board of Directors, all
options will terminate, but the Committee may in its discretion permit
outstanding options to be exercised prior to the effective date of such
transaction or may arrange to have the surviving corporation grant new options
to option holders.
Unless otherwise provided in the applicable option agreement, an option
granted under the Amended Nonqualified Stock Option Plan may be exercised
beginning one year after the date of grant in an amount up to 25% of the total
number of shares subject to the option and an additional 25% shall become
exercisable on each anniversary of the date of grant thereafter until all shares
subject to the option shall be exercisable. Unless otherwise provided in an
applicable option agreement, all options granted under the Nonqualified Stock
Option Plan expire upon termination of the employment of the option holder for
any reason other than death or retirement with the consent of the Company,
except that if termination occurs more than four years after grant of the
option, the option may be exercised within thirty days after termination unless
termination was for cause (as defined in the Amended Plan). Options may be
exercised within 12 months after the death of an option holder and within 90
days after the retirement of the option holder, if such retirement is with the
consent of the Company. All options shall expire as provided in the applicable
option agreement, but in no event shall such date be later than the tenth
anniversary of the date of grant.
The Amended Nonqualified Stock Option Plan may be amended by the Board
of Directors, except that no amendment shall become effective without the
approval of the stockholders of the Company if the amendment would (i) increase
the maximum number of shares subject to options granted under the Amended Plan,
(ii) reduce the minimum exercise price of options, (iii) extend the time within
which options may be exercised, or (iv) change the designation of the persons
eligible to be granted options.
PLAN PARTICIPATION
Those persons eligible to participate in the Amended Nonqualified Stock
Option Plan are key employees, including officers who are key employees, of the
Company. There are approximately fifteen key employees of the Company and its
subsidiaries who are eligible to participate in the Amended Plan. The number of
options to be granted under the Amended Plan during fiscal 1997 is within the
discretion of the Committee and is not determinable as of the date hereof.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
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Options granted under the Amended Nonqualified Stock Option Plan do not
qualify as incentive stock options under the Code. Subject to stockholder
approval of the Amended Plan, such options are intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code
such that any federal income tax deduction available to the Company upon the
exercise of such options will not be limited by Section 162(m).
An optionee does not receive taxable income, and the Company does not
receive a deduction, by reason of grant of an option. Generally, on the date an
option is exercised, the optionee will be deemed to receive ordinary income
equal to the amount by which the fair market value of the Common Stock of the
Company on the exercise date exceeds the option exercise price. At that time,
the Company should receive a deduction in the same amount.
PURPOSE OF AMENDMENTS; EFFECT OF NONAPPROVAL
The Amended Nonqualified Stock Option Plan amends the Nonqualified
Stock Option Plan in the following ways. First, the Amended Plan extends the
expiration date of the Plan by five years, from December 15, 1997 to December
15, 2002. Second, the economic benefit realized upon exercise of options granted
under the Amended Plan is intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code. Section 162(m) limits to
$1,000,000 per year the amount that may be deducted by the Company for
compensation, other than performance-based compensation, paid to any covered
employee, as defined therein. The amendments made to comply with Section 162(m)
of the Code vest all discretion in the interpretation of the Amended Plan in the
Committee and establish the maximum number of shares of Common Stock of the
Company which may be purchased by any person pursuant to options granted under
the Amended Plan. The amendments change neither the criteria for determining
whether options may be granted nor the specific terms of individual options,
which determinations are in the discretion of the Committee.
The stockholders are being asked to approve the Amended Nonqualified
Stock Option Plan in order to extend the expiration date of the existing Plan
and to qualify compensation paid thereunder as performance-based compensation
within the meaning of Section 162(m) of the Code. If approved by the
stockholders, the Amended Plan will be effective through December 15, 2002, and
it is intended that the economic benefit realized upon exercise of options
granted pursuant to the Amended Plan will qualify as performance-based
compensation within the meaning of Section 162(m) of the Code such that any
federal income tax deduction available to the Company upon the exercise of such
options will not be limited by Section 162(m). If the stockholders do not
approve the Amended Plan, the existing Plan will expire on December 15, 1997,
and the economic benefit realized upon exercise of options granted after the
meeting date will not qualify as performance-based compensation within the
meaning of Section 162(m) of the Code.
VOTE REQUIRED
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<PAGE>
Approval of the Amended Nonqualified Stock Option Plan will require
approval by the affirmative vote of a majority of the shares of the Company's
Common Stock, present in person or by proxy, voted at the meeting. Abstentions
and broker nonvotes will be counted as votes against approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE
THE AMENDED AND RESTATED NONQUALIFIED STOCK OPTION PLAN.
PROPOSAL TO APPROVE AMENDMENT TO
1990 EXECUTIVE STOCK PURCHASE PLAN
On January 9, 1990, the Board of Directors of the Company adopted, and
on March 13, 1990 the stockholders approved, the 1990 Executive Stock Purchase
Plan (the "Executive Stock Purchase Plan" or the "Plan"), which Plan authorized
the issuance of 300,000 shares thereunder. Currently, 198,236 shares have been
issued under the Plan. On January 16, 1997, the Board of Directors approved,
subject to stockholder approval, an amendment to the Plan to authorize the
issuance of an additional 200,000 shares thereunder.
DESCRIPTION OF PLAN
The purpose of the Executive Stock Purchase Plan is to encourage
eligible employees of the Company and its subsidiaries to acquire or increase a
proprietary interest in the Company, thereby providing an incentive for such
employees to continue their employment with, and to contribute to the success
of, the Company.
The Company has established the Senior Management Plan and the Key
Employee Plan for certain of its officers and employees (the "Performance
Incentive Plans"), pursuant to which participants are entitled to receive cash
payments if various objectives relating to cash flow or earnings are met. See
"Compensation and Stock Option Committee Report of Executive Compensation." The
Executive Stock Purchase Plan provides that on February 1 of each year, the
Company will grant to each participant therein an option to purchase the number
of whole shares of Common Stock determined by dividing an amount equal to 50% of
his or her bonus paid under the Performance Incentive Plans with respect to the
most recently ended fiscal year of the Company by the option price established
pursuant to the Executive Stock Purchase Plan. The option price is 85% of the
fair market value, as that term is defined in the Plan, of the Common Stock on
the January 31 immediately preceding the date of grant of the option or, if
January 31 is not a business day, on the first business day preceding January
31.
During the period beginning the February 1 next following the date on
which the option price is fixed and ending on the 20th day of such February
(except that such period has been extended to end on the fifth day of March,
1997 for bonuses paid under the Performance Incentive Plans for fiscal 1996),
each participant may subscribe for all or any portion of his or her option
shares by execution and delivery of a subscription agreement together with
payment in full for the shares for which he or she subscribed. As soon as
practicable following such subscription period, the Company will deliver a
stock certificate
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<PAGE>
evidencing the shares purchased. The Executive Stock Purchase Plan provides that
each participant covenants and agrees that he or she will not sell, transfer,
pledge or otherwise dispose of such shares for a period of at least six months
following the date of issuance.
The Executive Stock Purchase Plan is administered by the Compensation
and Stock Option Committee (the "Committee"). The Committee consists of two or
more members appointed by the Board of Directors, each of whom must be a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934. The members of the Committee are Messrs. Mazzuto
(Chairman) and Goldston. The Committee has the power to interpret the Plan, and
decisions of the Committee on matters relating thereto are final.
The Executive Stock Purchase Plan may be amended or terminated by the
Board of Directors of the Company at any time and in any way that will not
adversely affect the rights of participants under subscription agreements
already in effect pursuant to the Executive Stock Purchase Plan, except that no
such amendment that requires stockholder approval under Rule 16b-3 of the
Securities and Exchange Commission as it exists at the time of such amendment
will be effective until such approval is received and that no such amendment
may, without stockholder approval, reduce the option price.
PLAN PARTICIPATION
Those persons eligible to participate in the Executive Stock Purchase
Plan are senior management and certain other officers, key executive employees,
and managerial and supervisory salaried employees who participate in the Senior
Management Plan or the Key Employee Plan. There are approximately 85 officers
and employees of the Company who are eligible to participate in the Executive
Stock Purchase Plan. For the fiscal year 1996, Gerald A. Rubinfeld was the only
executive officer to receive a bonus with which he is entitled to purchase stock
under the Plan. Mr. Rubinfeld's bonus was $72,000. The fair market value, as
that term is defined in the Plan, of the Common Stock as of January 31, 1997 was
not determinable as of the date of printing. However, as of January 23, the fair
market value was $3.1875. At that price, the maximum number of shares that Mr.
Rubinfeld would be able to purchase would be 13,287. Fifty-three employees in
the Company's Blends Division (including Mr. Rubinfeld), eligible to participate
in the Executive Stock Purchase Plan, received bonuses in an aggregate amount of
$567,550. At the price of January 23, the maximum number of shares that these
employees would be able to purchase, in the aggregate, would be 104,738.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Options granted under the Executive Stock Purchase Plan do not qualify
as incentive stock options under the Internal Revenue Code of 1986, as amended
(the "Code"). Options granted under the Plan do not qualify as performance-based
compensation within the meaning of Section 162(m) of the Code, because the
exercise price is less than fair market value on the date of grant. However,
because of the short period of time during which such options are exercisable
and in light of current compensation levels, the Board of Directors believes
that it is unlikely that
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<PAGE>
the benefit derived by any one participant from the exercise of such options
will be of sufficient magnitude such that Section 162(m) of the Code would
affect the deductibility by the Company of the resulting compensation expense.
An optionee does not receive taxable income, and the Company does not
receive a deduction, by reason of grant of an option. Generally, on the date an
option is exercised, the optionee will be deemed to receive ordinary income
equal to the amount by which the fair market value of the Common Stock of the
Company on the exercise date exceeds the option exercise price. At that time,
the Company should receive a deduction in the same amount.
PURPOSE OF AMENDMENT; EFFECT OF NONAPPROVAL
The purpose of the amendment to the Executive Stock Purchase Plan is to
authorize an additional 200,000 shares for issuance thereunder. If the
stockholders do not approve the amendment to the Executive Stock Purchase Plan,
the Plan will expire upon the receipt of subscriptions for the remaining 101,764
shares currently available thereunder.
VOTE REQUIRED
Approval of the amendment Executive Stock Purchase Plan will require
the affirmative vote of a majority of the shares of the Company's Common Stock,
present in person or by proxy, voted at the meeting. Abstentions and broker
nonvotes will be counted as votes against approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE 1990 EXECUTIVE STOCK PURCHASE PLAN.
CERTAIN TRANSACTIONS
Mr. Schell is a partner of Schell Bray Aycock Abel & Livingston
P.L.L.C., a law firm that serves as General Counsel to the Company. Mr. Hoffman
is a principal of Richard C. Hoffman, P.C., a professional corporation engaged
in the practice of law that provided legal services to the Company during fiscal
1996. Mr. Mazzuto has provided certain financial credit services to the Company.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP has been selected by the Board
of Directors as independent auditors for the Company for the fiscal year ending
October 31, 1997. This selection is being presented to the stockholders for
their ratification at the Annual Meeting. The Board of Directors recommends a
vote FOR ratification of the selection of Ernst & Young LLP as independent
auditors.
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<PAGE>
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting of Stockholders, will be given the opportunity to make a
statement if he desires to do so and will be available to respond to appropriate
questions.
PROPOSALS OF SECURITY HOLDERS
A proposal of a security holder of the Company intended to be presented
at the next Annual Meeting of Stockholders must be received at the Company's
principal executive offices on or before October 3, 1997 in order to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting.
OTHER MATTERS
Management is not aware of any matters to be brought before the Annual
Meeting other than those matters described in this Proxy Statement. However, if
other matters do come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote said proxy in accordance with their
judgment on such matters.
The cost of this solicitation will be borne by the Company. In addition
to the use of the mails, proxies may be solicited personally, or by telephone or
telegram, by directors, officers and employees of the Company or by D. F. King &
Co., Inc. of New York, New York, which will assist in the solicitation of
proxies. D. F. King & Co., Inc. is being paid a fee of $6,000 for these
services.
By Order of the Board of Directors
January 31, 1997
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*******************************************************************************
APPENDIX
TEXFI INDUSTRIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Richard L. Kramer and Andrew J. Parise, Jr.,
or either of them, with power of substitution, attorneys and proxies to
represent the undersigned at the Annual Meeting of Stockholders of TEXFI
INDUSTRIES, INC. to be held on March 11, 1997, and at any adjournment or
adjournments thereof, with all power that the undersigned would possess if
personally present, and to vote all shares of stock that the undersigned may be
entitled to vote at said meeting, as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(1) ELECTION OF FOR all nominees listed below (except as marked to the WITHHOLD AUTHORITY to vote for all
DIRECTORS contrary below) ( ) nominees listed below ( )
(CLASS I)
William L. Remley, Richard C. Hoffman
ELECTION OF FOR the nominee listed below (except as marked WITHHOLD AUTHORITY to vote for
DIRECTORS to the contrary below) ( ) the nominee listed below ( )
(CLASS II)
</TABLE>
Joel J. Karp
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
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(Continued, and to be signed on reverse side)
PLEASE SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE>
(2) PROPOSAL TO RATIFY SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
FOR ( ) AGAINST ( ) ABSTAIN ( )
(3) PROPOSAL TO APPROVE THE AMENDED AND RESTATED NONQUALIFIED STOCK OPTION PLAN
FOR ( ) AGAINST ( ) ABSTAIN ( )
(4) PROPOSAL TO APPROVE THE 1990 EXECUTIVE STOCK PURCHASE PLAN
FOR ( ) AGAINST ( ) ABSTAIN ( )
(5) With discretionary authority upon such other matters as may come before the
meeting.
Your Proxy May be Rescinded at Any Time Before it is Exercised and Will be
Returned to You on Request.
IF NO SPECIFICATION IS MADE ABOVE, SHARES WILL BE VOTED FOR PROPOSALS 1, 2, 3
AND 4 ABOVE.
PLEASE SIGN HERE AND RETURN PROMPTLY
Dated , 1997
Please sign exactly as your name
appears at left. If the stock is
registered in the names of two or more
persons, each should sign. Executors,
administrators, trustees, guardians,
attorneys and corporate officers should
show their full titles.
