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 permited by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section mark) 240.14a-11(c) or (section
mark) 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:
-----------------------------
<PAGE>
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>
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 Sheraton New York Hotel and
Towers, 811 7th Avenue, New York, New York on March 18, 1998, at 10:30 a.m.,
for the following purposes:
(1) To elect two Class II nominees to the Board of Directors, each
to serve a three-year term until the 2001 Annual Meeting of
Stockholders, and to elect one Class III nominee to the Board
of Directors to serve a one-year term until the 1999 Annual
Meeting of Stockholders;
(2) To consider ratification of the selection of Ernst & Young LLP
as independent auditors for the fiscal year ending October 30,
1998;
(3) 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 19,
1998, 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
Richard C. Hoffman
Secretary
Raleigh, North Carolina
February 6, 1998
<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 Sheraton New York Hotel
and Towers, 811 7th Avenue, New York, New York on March 18, 1998, 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 February 6, 1998.
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 19,
1998 will be entitled to notice of and to vote at the Annual Meeting of
Stockholders. On such date, the Company had 8,859,098 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 that may be deemed
to have beneficial ownership of more than five percent of the Company's
outstanding stock:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
Chadbourne Corporation (1) 2,039,200 (2) 23.0
1430 Broadway, 13th Floor
New York, N. Y. 10018
Polysindo Hong Kong Limited 1,024,928 11.6
1513 Word Finance Centre
North Tower Harbor City
19 Canton Rd, Tsimshatsui
Kowloon Hong Kong
2
<PAGE>
NAME OF AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
Dimensional Funds 445,700 (3) 5.0
Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
(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 and consulting services to companies in
which Chadbourne is invested. Messrs. Remley and Kramer are directors
and executive officers of Mentmore Holdings Corporation.
(2) Ownership as of January 19, 1998, 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, 1997, 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
337,200 shares and sole dispositive power as to 445,700 shares and (iv)
Dimensional disclaims beneficial ownership of all such shares.
3
<PAGE>
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 19, 1998.
</TABLE>
<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 181,471 (2)(3)(4) 2.0
Richard C. Hoffman -0- (2) *
Joel J. Karp -0- (2) *
Michael D. Schenker -0- (2) *
Andrew J. Parise, Jr. 154,191 (5) 1.7
Gerald A. Rubinfeld 9,500 (6) *
Dane L. Vincent 6,596 (7) *
All Directors, Nominees and
Executive Officers as a Group (11 Persons) 386,827 (2)(8) 4.4
*Represents less than 1%.
(1) Unless otherwise indicated, the persons named own all shares of record
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) Does not include any of the shares beneficially owned by Chadbourne
(2,039,200). Messrs. Remley and Kramer are directors and executive
officers of Chadbourne.
(4) Includes 150,000 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) Includes 75,000 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.
(6) Includes 3,500 shares of Common Stock that Mr. Rubinfeld 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.
4
<PAGE>
(7) Includes 2,000 shares of Common Stock that Mr. Vincent 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 (i) 233,500 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 1997 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
(a) Messrs. Parise, Rubinfeld and Vincent, who were granted non-qualified stock
options under the Company's 1987 Stock Option Plan during 1997 and (b) Messrs.
Hoffman, Karp, Kramer, Remley and Schenker, who deferred receipt of shares of
the Company's Common Stock earned as a Director of the Company, did not file
Form 5s reporting these grants with the Securities and Exchange Commission
within 45 days of the end of the Company's fiscal year. In making this
statement, the Company has relied on the written representations of its
directors, officers and 10 percent stockholders and copies of the reports that
they have filed with the Securities and Exchange 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 1998
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
II of the Board of Directors (the "Class II Directors") are to be elected at
this Annual Meeting to serve three-year terms until the annual meeting of
stockholders in 2001. The Board of Directors has nominated Joel J. Karp and
Andrew J. Parise for reelection by the stockholders as the members of Class II
of the Board of Directors.
5
<PAGE>
John D. Mazzuto, a member of Class III of the Board of Directors,
resigned on July 31, 1997 for personal reasons. At a special meeting of the
Board of Directors held on September 16, 1997, the Board elected Michael D.
Schenker to fill the vacancy created by Mr. Mazzuto's resignation. The Board of
Directors seeks stockholder ratification of this action by nominating Michael D.
Schenker for election as a member of Class III of the Board of Directors to
serve until the 1999 Annual Meeting of Stockholders.
A plurality of the shares of Common Stock of the Company voted at the
meeting is required to elect the nominated individuals to Class II and Class III
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 9, 1998.
The following information is furnished with respect to the nominees and
the directors continuing in office:
CLASS II DIRECTORS
-NOMINEES FOR ELECTION FOR THREE-YEAR TERMS EXPIRING WITH THE
ANNUAL MEETING IN 2001
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Occupation Director
Name, Age For Past Five Years Since
- ----------------------------------------------------------------------------------------------------------
Joel J. Karp Senior Tax Partner and President, Karp & Genauer, P.A., 1997
58 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).
Andrew J. Parise, Jr. President and Chief Operating Officer (1994-present); 1995
50 President, Finished Fabrics Division (1992-1994);
Executive Vice President, Texfi Blends Division
(1990-1992).
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
CLASS III DIRECTOR
- CONTINUING IN OFFICE UNTIL THE ANNUAL MEETING IN 1999
<S> <C> <C>
Principal Occupation Director
Name, Age For Past Five Years Since
- -------------------------------------------------------------------------------------------------------
Richard L. Kramer Chairman of the Board (1994-present); Chairman, 1994
48 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); Chairman, Orion Acquisition
Corp. II (acquisition pool) (1995-present);
Chairman, Stellex Industries, Inc. (Aerospace, Defense, and Space systems and
components manufacturer) (1997-present); Chairman, Precise Technology, Inc. (plastic
injection molder) (1990-present).
CLASS III DIRECTOR
-NOMINEE FOR ELECTION FOR A ONE-YEAR TERM EXPIRING WITH THE ANNUAL
MEETING IN 1999
Principal Occupation Director
Name, Age For Past Five Years Since
- -------------------------------------------------------------------------------------------------------
Michael D. Schenker President and shareholder, Michael D. Schenker Co., 1997
44
L.P.A.,(law practice),(1997 to present); Vice President
and General Counsel, Mentmore Holdings Corporation
(1997 to present); Partner and member of the
Executive Committee, Kelley, McCann & Livingstone,
Attorneys-at-Law, Cleveland, Ohio (1996-1997);
Partner, Kelley, McCann & Livingstone,
Attorneys-at-Law, Cleveland, Ohio (1985-1997).
CLASS I DIRECTORS
- CONTINUING IN OFFICE UNTIL THE ANNUAL MEETING IN 2000
Principal Occupation Director
Name, Age For Past Five Years Since
- ----------------------------------------------------------------------------------------------------------
Richard C. Hoffman President and Principal, Richard C. Hoffman, P.C., Attorney 1997
50 at-Law, Dallas, Texas and Greenwich, Connecticut (1988-
present); Vice President Mentmore Holdings
Corporation (1997 to present); President and
Director, InterUrban Management, Inc. (real estate)
(1991-1996); 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 (acquisition pool)(1996-present).
7
<PAGE>
William L. Remley Chief Executive Officer and Vice Chairman of the Board 1994
47 (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); Director Orion Acquisition Corp. II (acquisition pool)
(1995-present); President, CEO and Director,
Stellex Industries, Inc. (Aerospace, Defense, and
Space systems and components manufacturer)
(1997-present); Vice-Chairman, Treasurer and
Director, Precise Technology, Inc. (plastic
injection molder) (1990-present).
Directors Meetings and Committees
During the fiscal year ended October 31, 1997, the Board of Directors
held a total of six 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. John D.
Mazzuto, a member of the Board of Directors, resigned on July 31, 1997 for
personal reasons. At a special meeting of the Board of Directors held on
September 16, 1997, the Board elected Michael D. Schenker to fill the board
vacancy created by Mr. Mazzuto's resignation. In addition, to fill the board
committee vacancies created by Mr. Mazzuto's resignation, the Board of Directors
appointed Mr. Hoffman to serve on the Executive Committee and as chairman of the
Compensation and Stock Option Committee and Mr. Karp was appointed to the
Compensation and Stock Option Committee.
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 seven
times during fiscal 1997. Its members are Messrs.
Remley (Chairman), Hoffman, and Parise.
8
<PAGE>
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 Company personnel, procedures and
methods employed in connection with the Company's management policies relating
to internal controls. The Committee makes reports to the Board from time to
time. The Audit Committee met once during fiscal year 1997. Its members are
Messrs. Karp (Chairman), Kramer and Hoffman.
The Nominating Committee makes recommendations to the Board with respect to candidates for membership on
the Board. Its members are Messrs. Hoffman 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 October 31,
1997 and whose compensation for the fiscal year ended October 31, 1997 exceeded
$100,000. The above-referenced persons are referred to herein as the Named
Executive Officers.
The following information does not reflect any compensation earned by
the Named Executive Officers subsequent to October 31, 1997, unless otherwise
indicated. Any such compensation earned and paid to the Named Executive Officers
during fiscal 1998 will be recorded in the proxy statement for the Company's
1999 Annual Meeting of Stockholders.
Summary Compensation Table
The following table sets forth for the Named Executive Officers for each
of the last three fiscal years annual compensation amounts as indicated by the
applicable table headings. Annual Compensation, columns (c), (d) and (e),
includes base salary and bonus earned during the year covered and, if
applicable, other annual compensation not properly categorized as salary or
bonus.
9
<PAGE>
<S> <C>
Long Term Compensation
- -----------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- --------------------- -------- ----------------------------------- ------------------------ --------- ---------------
- --------------------- -------- ---------- --------- -------------- ----------- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Fiscal Salary Bonus Compensation Award(s) Options/ Payouts Compensation
Principal Position Year ($) ($)(1) ($) ($) SARs ($) ($)(3)
(#)
- --------------------- -------- ---------- --------- -------------- ----------- ------------ --------- ---------------
William L. Remley 1997 $145,833(4) - (5) - - - -
Chief Executive Officer 1996 350,000(6) - 13,297(2) - - -
1995 256,250 262,500 - - 150,000 - -
Andrew J. Parise, Jr. 1997 343,750 - - - 100,000 - 150
President, Chief 1996 300,000 - 11,348(2) - - - 150
Operating Officer 1995 300,000 225,000 - - 75,000 - 150
Dane L. Vincent 1997 107,500 - - - 10,000 - 150
Vice-President, Chief 1996 95,000 - - - 8,000 - 150
Financial Officer, 1995 85,000 51,000 - - - - 150
Treasurer
Gerald A. Rubinfeld 1997 198,067 - 2,868(2) - 15,000 - 150
Division President 1996 180,000 72,000 592(2) - 14,000 - 150
1995 170,000 72,250 - - - - 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.
(3) Represents the Company's matching contributions to the Company's 401(k)
Retirement and Savings Plan.
(4) This amount includes $83,333 that was paid directly to Mentmore Holdings
Corporation as consulting fees for the services rendered by Mr. Remley
for the period from October 31, 1996 through March 31, 1997.
(5) The Company paid $825,135 to Mentmore Holdings Corporation as management
and consulting fees for services rendered primarily by Messrs. Remley
and Kramer in their capacities as officers of Mentmore Holdings
Corporation during the period from March 18, 1997 through October 31,
1997.
(6) This amount includes $200,000 that was paid directly to Mentmore
Holdings Corporation as consulting fees for services rendered by Mr.
Remley.
10
<PAGE>
Stock Options
The following table provides details regarding stock options granted to
the Named Executive Officers during fiscal year 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Assumed Annual Rates of
Stock Appreciation for
Option Term (3)
<S> <C> <C> <C> <C> <C> <C>
-----------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration 5%($) 10%($)
Name Granted Fiscal Year ($/share) Date
- ------------------------------------------------------------------------------------------------------------
Andrew J. Parise, Jr.(1) 100,000 54.05 4.125 4-1-2007 279,000 689,000
Gerald A. Rubinfeld (2) 15,000 8.11 3.875 3-11-2007 16,050 35,400
Dane L Vincent (2) 10,000 5.41 3.875 3-11-2002 10,700 23,600
</TABLE>
(1) Nonqualified stock options granted under the Company's 1987 Stock
Option Plan. One-quarter of the options become exercisable on April 1,
1998, one-quarter will become exercisable on April 1, 1999, one-quarter
will become exercisable on April 1, 2000 and the remainder will become
exercisable on April 1, 2001.
(2) Nonqualified stock options granted under the Company's 1987 Stock
Option Plan. One-quarter of the options become exercisable on March 11,
1998, one-quarter will become exercisable on March 11, 1999,
one-quarter will become exercisable on March 11, 2000 and the remainder
will become exercisable on March 11, 2001.
(3) 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 the option
term. The market price of the Company's Common Stock on March 31, 1997,
the close of business preceding the date of grant for options to Mr.
Parise was $4.00. The market price of the Company's Common Stock on
March 10, 1997, the close of business preceding the date of grant for
options to Messrs. Vincent and Rubinfeld was $3.875. 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 that were exercisable as of fiscal
year-end and those which were not. At the end of fiscal 1997, Mr. Remley had
150,000, Mr. Parise 175,000, Mr. Rubinfeld 29,000 and Mr. Vincent 18,000 of
these options "in-the-money", 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 October 31,1997, the end of the fiscal year, the
closing sales price of the Common Stock was $5 per share. No options were
exercised by the Named Executive Officers during fiscal 1997.
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 150,000 -
Andrew J. Parise, Jr. 75,000 100,000
Gerald A. Rubinfeld 3,500 25,500
Dane L. Vincent 2,000 16,000
</TABLE>
Director Compensation
The Company entered into an informal month-to-month consulting and
management services arrangement with Mentmore Holdings Corporation, under which
the Company paid $112,500 per month plus out of pocket expenses to Mentmore
Holdings Corporation, effective April 1, 1997, for services rendered primarily
by Messrs. Remley and Kramer in their capacities as officers of Mentmore
Holdings Corporation. Under such arrangement, the Company paid Mentmore Holdings
Corporation an additional $37,635 for the period March 18, 1997 through March
31, 1997.
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. Hoffman, Karp, Kramer,
Remley, and Schenker are currently the directors eligible to participate under
the plan and have elected to do so. Allocations in the aggregate of 26,944
shares have been made under the plan. Board members have received aggregate
allocations as follows Mr. Hoffman, 2,913 shares; Mr. Karp, 2,413 shares; Mr.
Kramer, 16,665 shares; Mr. Remley, 4,485 shares; and Mr. Schenker, 468 shares.
12
<PAGE>
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 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 Richard C. Hoffman, Chairman, and Joel J. Karp.
The Committee met six times during fiscal year 1997. Mr. Mazzuto served as
Chairman of the Committee until his resignation from the Company on July 31,
1997.
Overall Compensation Philosophy
In June of 1994, the Committee developed a compensation policy for
executive management below the role of Chief Executive Officer. This policy
would require the Company to attract and retain highly talented and motivated
individuals responsible for developing and pursuing new strategies. 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.
In March 1997, the then members of the Committee, Messrs. Mazzuto and
Hoffman, recognized that the Company over the next five years would be faced
with the task of transforming itself into the premier source of specialty
fabrics. The skills necessary to successfully complete this transformation would
include teamwork focus, customer relations, management, strategic thought
processes, shareholder and investor relations and investment banking. In
evaluating the possible alternatives to the Company to obtain these skills, the
Committee determined that the most advantageous path to take was to turn to
Mentmore Holdings Corporation, and primarily Messrs. Remley and Kramer. The
Company entered into an informal month-to-month consulting and management
services arrangement with Mentmore Holdings Corporation, under which the Company
paid $112,500 per month plus out of pocket expenses to Mentmore Holdings
Corporation, effective April 1, 1997, for services rendered primarily by Messrs.
Remley and Kramer in their capacities as officers of Mentmore Holdings
Corporation. Under such arrangement, the Company paid Mentmore Holdings
Corporation an additional $37,635 for the period March 18, 1997 through March
31, 1997.
13
<PAGE>
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. Under this arrangement which expired
on March 31, 1997, Mr. Remley received $62,500 in salary and Mentmore Holdings
Corporation received $83,333 as consulting fees in 1997.
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. On April 1, 1997 this
employment agreement was replaced with a new three-year employment agreement
which provided for a base salary of $375,000 per year. The base salaries of
other executive officers named in the Summary Compensation Table were
established as recommended by the CEO.
Annual Incentive Compensation.
The Committee emphasizes performance-based elements of executive
compensation. During fiscal 1997, the Company had in place a performance
incentive plan for 13 senior management employees (excluding the offices of
Chief Executive Officer and Chairman), including corporate level executives and
division level executives and for 63 division and corporate level management and
supervisory salaried employees. The performance incentive plan provides
participants with the opportunity to receive bonuses based on operating earnings
for the Company and its divisions. Under the Plan, the bonuses of corporate
level executives and management are based 100% on the performance of the overall
Company and the bonuses of division level executives and management are based
100% on division results. Under the Plan, participants executives were eligible
to receive cash bonuses for fiscal 1997 of up to either 75%, 60%, 45%, 25% or
15% of their base salaries depending on their management level. 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 the Plan during fiscal 1997 were to executives and management and
supervisory salaried employees from the Narrow Fabrics and Commission Dye and
Finish Divisions.
14
<PAGE>
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 185,000 shares of Common Stock
were granted to several key corporate and divisional level management employees
during fiscal 1997. The grants were established in order to provide the
executives with an opportunity to increase their equity stake in the Company
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.
Compensation and Stock Option Committee
Richard C. Hoffman, Chairman
Joel J. Karp
Compensation Committee Interlocks and Insider Participation
Mr. Hoffman is a Vice President of Mentmore Holdings Corporation,
which, during the fiscal year ending October 31, 1997, provided consulting
services to the Company. See "Employment and Other Related Agreements" below.
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.
15
<PAGE>
[The following graph is shown with the following Plot Points:]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Value of Initial $100 Investment Oct-92 Oct-93 Oct-94 Oct-95 Oct-96 Oct-97
- -------------------------------- ------ ------ ------ ------ ------ ------
Texfi Industries, Inc. $100.00 $66.00 $46.00 $40.00 $40.00 $80.00
S & P 500 Index $100.00 $114.95 $119.40 $150.97 $187.35 $247.52
Customized Peer Group $100.00 $109.90 $111.54 $105.07 $108.94 $114.48
- --------------------------------------------------------------------------------------------
Texfi Industries,Inc.
Performance Graph Information as of October 31, 1997
- --------------------------------------------------------------------------------------------
Annual Return Oct-92 Oct-93 Oct-94 Oct-95 Oct-96 Oct-97
- -------------------------------- ------ ------ ------ ------ ------ ------
Texfi Industries, Inc. N/A (34.00%) (30.30%) (13.04%) 0.00% 100.00%
S & P 500 Index N/A 14.95% 3.87% 26.44% 24.10% 32.12%
Customized Peer Group N/A 9.90% 1.49% (5.80%) 3.68% 5.09%
- --------------------------------------------------------------------------------------------
</TABLE>
Media General Index Customized Peer Group Index
Concord Fabrics Inc.
Delta Woodside Industries, Inc.
Johnston Industries, Inc.
Springs Industries, Inc.
Texfi Industries, Inc.
Thomaston Mills, Inc.
*Assumes that the value of the investment in Texfi Industries, Inc. common Stock
and each index was $100 on October 31, 1992 and that all dividends were
reinvested.
<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 served as Vice
Chairman of the Board and Chief Executive Officer and received a base salary
payable at the annual rate of $350,000, $200,000 of which was paid directly to
Mentmore Holdings Corporation as a consulting fee. This agreement expired by its
terms on March 31, 1997.
The Company entered into an informal month-to-month consulting and
management services arrangement with Mentmore Holdings Corporation, under which
the Company paid $112,500 per month plus out of pocket expenses to Mentmore
Holdings Corporation, effective April 1, 1997, for services rendered primarily
by Messrs. Remley and Kramer in their capacities as officers of Mentmore
Holdings Corporation. Under such arrangement, the Company paid Mentmore Holdings
Corporation an additional $37,635 for the period March 18, 1997 through March
31, 1997. The Company anticipates entering into a written agreement with
Mentmore for the continuation of these services, subject to any required
consents by its credit facility lenders. It is expected that such agreement will
provide for a five year term that automatically renews each year and the payment
in cash of an annual fee of $1,350,000 payable in monthly installments of
$112,500, plus the reimbursement of out of pocket expenses and pro-rata
contributions to Mentmore's overhead expenses incurred while rendering such
management services to the Company and other entities. In addition, it is
expected that such agreement will provide, as additional compensation to
Mentmore for its services, for the grant to Mentmore Holdings Corporation of
Stock Appreciation Rights or other similar compensation related to the
appreciation in value of the Company's Common Stock. Messrs. Remley, Kramer,
Schenker and Hoffman are officers of Mentmore.
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. On April 1, 1997 this employment agreement was replaced with a new
three-year employment agreement which provided for a base salary of $375,000 per
year. The employment agreement provides that Mr. Parise is entitled to
participate in the Company's annual incentive bonus plan and other comparable
benefit programs provided to senior executive officers. The agreement may be
terminated by the Company with or without cause or upon Mr. Parise's death or
disability or voluntarily by Mr. Parise upon 60 days notice. If Mr. Parise 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. Parise to
the foregoing payments, all outstanding and unexpired stock options that are
held by him that are not then exercisable become exercisable for a period of 60
days.
16
<PAGE>
Effective January 1, 1997, the Company entered into an employment
agreement with Mr. Rubinfeld. The term of the employment agreement is three
years, and provides for a base salary of $200,000. Pursuant to his agreement,
Mr. Rubinfeld will serve as President of the Company's Blends Division. The
employment agreement provides that Mr. Rubinfeld is entitled to participate in
the Company's annual incentive bonus plan and other comparable benefit programs
provided to senior executive officers. The agreement may be terminated by the
Company with or without cause or upon Mr. Rubinfeld's death or disability or
voluntarily by Mr. Rubinfeld upon 60 days notice. If he 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 to the
foregoing payments, all outstanding and unexpired stock options that are held by
him that are not then exercisable become exercisable for a period of 60 days.
CERTAIN TRANSACTIONS
On December 18, 1997, the Company sold its interest in Rival Sport,
LLC., ("Rival"),a startup joint venture between the Company and NHL Enterprises
organized to market branded hockey-related apparel, to Clarendon Holdings, LLC,
("Clarendon") an affiliate of Messrs. Remley and Kramer. In exchange for the
Company's 50% ownership interest in Rival, the Company received a ten-year
single balloon payment note from Clarendon due December 15, 2007, for
approximately $4.5 million, which bears interest at 5% per annum. The note
provides for mandatory prepayment(s) when Clarendon receives a cash distribution
(s) from Rival pursuant to the terms of the operating agreement governing Rival
or in the event Clarendon declares bankruptcy or fails to make a payment when
due under the note. The face amount of the note represents the Company's net
investment in Rival on the date of sale. The start up of Rival required the
Company to invest approximately $6.1 million from its inception in February 1997
through the date of sale. With the prospects of significant future cash
requirements from the Company until such time as Rival emerges as a positive
generator of cash, the management and Board of Directors felt that it would be
in the Company's best interest to sell its ownership interest in Rival since
Rival did not represent a core business of the Company and did not meet the
Company's objectives of expanding its woven synthetic fabrics business.
Messrs. Remley, Kramer, Hoffman and Schenker are officers of Mentmore
Holdings Corporation, which shares office space in New York with the Company's
President and marketing office. As of October 31, 1997, Mentmore Holdings
Corporation was indebted to the company for $147,860 representing its portion of
office expenses.
17
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors has selected the accounting firm of Ernst &
Young LLP as independent auditors for the Company for the fiscal year ending
October 30, 1998. 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.
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 2, 1998 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
February 6, 1998
18
<PAGE>
TEXFI INDUSTRIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Richard L. Kramer and Richard C.
Hoffman, 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 17, 1998, 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:
(1) ELECTION OF DIRECTORS (CLASS II)
FOR all nominees WITHHOLD AUTHORITY
listed below to vote for all
(except as marked nominees listed
to the contrary below
below)
Joel J. Karp, Andrew J.Parise, Jr.
ELECTION OF DIRECTORS (CLASS III)
FOR the nominee WITHHOLD AUTHORITY
listed below to vote for the
(except as marked nominee listed
to the contrary below
below)
Michael D. Schenker
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
(2) PROPOSAL TO RATIFY SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) With discretionary authority upon such other matters as may come before
the meeting.
(Continued, and to be signed on reverse side)
<PAGE>
Please Sign on Reverse Side and Return in the
Enclosed Postage-Paid Envelope
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 , 1998
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 corporation officers should
show their full titles.
