SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 Section 240.14a-11(c) or
Section 240.14a-12
PREMIUMWEAR, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transactions
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
PREMIUMWEAR, INC.
8000 WEST 78TH STREET
SUITE 400
MINNEAPOLIS, MINNESOTA 55439
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1997
--------------------
To All Holders of Common Stock:
The Annual Meeting of Shareholders of PremiumWear, Inc. ("PremiumWear" or the
"Company") will be held at the Radisson Hotel South, 7800 Normandale Boulevard,
Bloomington, Minnesota 55439, on Wednesday, May 14, 1997 at 11:00 a.m., Central
Daylight Time, for the following purposes:
1. To elect two directors to serve a three-year term.
2. To amend the Company's 1991 Stock Plan to bring the plan into
compliance with Section 162(m) of the Internal Revenue Code of 1986,
as amended.
3. To transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
Shareholders of record at the close of business on March 28, 1997 are entitled
to notice of and to vote at the Annual Meeting. Since it is important that your
shares be represented at the meeting, whether or not you personally plan to
attend, you are requested to sign, date and return your proxy card promptly in
the enclosed envelope. Returning your signed proxy will not prevent you from
voting in person at the meeting, should you desire to do so.
By Order of the Board of Directors
/s/ John R. Houston
John R. Houston, SECRETARY
Minneapolis, Minnesota
April 3, 1997
YOUR PROXY IS IMPORTANT; PLEASE SIGN, DATE AND MAIL IT TODAY.
PREMIUMWEAR, INC.
8000 WEST 78TH STREET
SUITE 400
MINNEAPOLIS, MINNESOTA 55439
-------------------
PROXY STATEMENT
-------------------
This Proxy Statement is furnished in connection with the solicitation on behalf
of the Board of Directors of PremiumWear, Inc. (the "Company" or "PremiumWear")
of proxies for the Annual Meeting of Shareholders of the Company to be held at
the Radisson Hotel South, 7800 Normandale Boulevard, Bloomington, Minnesota
55439 on Wednesday, May 14, 1997 at 11:00 a.m., Central Daylight Time, or any
adjournment or adjournments thereof. This Proxy Statement and the enclosed proxy
card are being mailed to shareholders on or about April 3, 1997.
Proxies may be revoked at any time before they are exercised by the execution
and delivery of a later proxy, and shareholders present at the meeting may
withdraw their proxies and vote in person. Unless revoked, proxies will be voted
and, where a choice is specified with respect to any matter to be voted upon,
the proxies will be voted as specified.
There were outstanding at the close of business on March 28, 1997, the record
date for shareholders entitled to notice of and to vote at the meeting,
2,319,030 shares of Common Stock, and each of such shares is entitled to one
vote at the meeting. Only shareholders of record at the close of business on
March 28, 1997 will be entitled to vote at the Annual Meeting. The presence, in
person or by proxy, of the holders of a majority of the shares of Common Stock
entitled to vote at the Annual Meeting of Shareholders constitutes a quorum for
the transaction of business.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
election inspectors appointed for the meeting. The election inspectors will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purposes of
determining the approval of the matter submitted to the shareholders for a vote.
Consequently, an abstention will have the same effect as a negative vote. If a
broker indicates on the proxy that it does not have discretionary authority as
to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors, each director
serving a three-year term. One-third of the directors belong to each class.
Generally, each year only one class of directors is subject to shareholder vote.
The Board of Directors is seeking shareholder election of two directors whose
term expires this year. Mr. Kevin S. Moore, a director since 1996, is a current
member of the class being reelected this year. However, Mr. Moore has declined
to stand for reelection due to conflicting demands on his time. The term of the
directors elected this year will expire in 2000.
It is intended that proxies will be voted for the following nominees. The
Company believes that the nominees will be able to serve; but should any of the
nominees be unable to serve as a director, the persons named in the proxies have
advised that they will vote for the election of such substitute nominee as the
Board may propose.
The names and ages of the nominees and other directors and their principal
occupations are set forth below, based upon information furnished to the Company
by such persons. Unless otherwise indicated, each of the directors has held
their respective identified positions for more than the past five years.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE
- ------------ -------------------------------------------- -----
<S> <C> <C>
NOMINATED FOR A TERM ENDING IN 2000:
C.D. Anderson (55) Chairman of Anderson Capital Management, Inc. (investment management 1991
firm); Director/Trustee of G.T. Global Mutual Funds; Chairman and
CEO, Plantagenet Holdings, Ltd.; Director of LGT Asset Management,
Inc.; Director of various private companies.
Mark B. Vittert (49) Private Investor; Director of Lee Enterprises, Inc. and Dave & Busters, 1994
Inc.
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING AND
WHOSE TERMS EXPIRE IN 1998:
Gerald E. Magnuson (66) Of Counsel to Lindquist & Vennum PLLP (law firm); Partner of Lindquist 1982
& Vennum PLLP to December 1994; Director of Research, Incorporated,
Sheldahl, Inc. and Washington Scientific Industries, Inc.
William J. Morgan (42) President and director of Pacholder Associates, Inc. (registered 1996
investment advisor), 1984 to present; Director of ICO, Inc., USF&G
Pacholder Fund, Inc., Duckwall-Alco Stores, Inc., Kaiser Ventures,
Inc. and Smith Corona Corp.
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING AND WHOSE TERMS
EXPIRE IN 1999:
Keith A. Benson (53) President of Mall Stores Division of Musicland Stores Corporation 1993
(retail stores); Director of Musicland Stores Corporation.
Thomas D. Gleason (61) Chairman and Chief Executive Officer of the Company; Vice Chairman 1995
of Wolverine World Wide, Inc. (footwear manufacturing and marketing),
1993 through April 17, 1996; Chief Executive Officer of Wolverine
World Wide, Inc. from 1972 to 1993.
Michael A. Raskin (72) Private Investor and Business Adviser; Chairman of ACA Joe International 1991
(apparel manufacturer), 1983 to 1986; Chairman of
Inmar Corporation (marketing and distribution
company), 1981 to 1983; President of Joseph Magnin
(apparel retailer), 1978 to 1980; Director of various
private companies.
</TABLE>
During the last fiscal year the Board of Directors met 17 times. Each director
attended more than 75% of the meetings of the Board of Directors and any
committee on which he served.
The Board of Directors has established three standing committees, the Audit
Committee, the Compensation Committee and the Governance Committee. The Audit
Committee, which met twice during the last fiscal year, is currently comprised
of Messrs. Anderson (Chairman), Benson and Magnuson. Among other duties, the
Audit Committee reviews the internal and external financial reporting of the
Company, reviews the scope of the independent audit and considers comments by
the independent public accountants regarding internal controls and accounting
procedures and management's response to those comments. The Compensation
Committee, which met three times during the last fiscal year, is currently
comprised of Messrs. Benson (Chairman), Magnuson, Raskin and Vittert. The
Compensation Committee approves the compensation arrangements for senior
management. The Board of Directors established a Stock Grant Subcommittee of the
Compensation Committee, currently comprised of Messrs. Benson and Vittert, for
the purpose of granting awards under the 1991 Plan. The Company does not have a
nominating committee. However, in December 1996, the Board of Directors
established a Governance Committee, currently comprised of Messrs. Moore, Morgan
and Gleason, for the purpose of reviewing Board governance and membership
matters. The Governance Committee did not meet in fiscal 1996.
Prior to January 1, 1997, non-employee members of the Board of Directors were
paid an annual fee of $10,000 plus $750 for each regular meeting of the Board,
$500 for each committee meeting held more than 24 hours before or after a
regular Board meeting, $150 for each committee meeting held within 24 hours of a
Board meeting and $150 for each telephonic meeting. Effective January 1, 1997,
the Board of Directors reduced their compensation to $6,000 annual fee plus $750
for each Board meeting attended in person, $150 for each meeting attended by
telephonic conference, $500 for each committee meeting held more than 24 hours
before or after a Board meeting, $150 for each committee meeting held within 24
hours of a Board meeting. Prior to September 9, 1996, Mr. Gleason received a fee
of $41,667 per annum and was reimbursed for ordinary business expenses for
serving as Chairman; such fee totaled $25,958 for fiscal 1996 and was terminated
in connection with Mr. Gleason's assumption of the position of Chief Executive
Officer.
The 1991 Stock Plan provides for the annual, automatic granting of a defined
number of options to directors who are not employees of the Company. Such
options are granted to each director who is not an employee of the Company and
who (i) is elected or re-elected as a director by the shareholders at any annual
or special meeting of the shareholders or (ii) is serving an unexpired term as
director on the date of an annual meeting at which any other director is
elected. Each such person shall, as of the date of such annual meeting,
automatically receive a non-qualified option to purchase 1,000 shares of Common
Stock with the option price equal to the fair market value of the Company's
Common Stock on such date. These options will have five-year terms. In December
1996, the Board reduced the number of options subject to the automatic grant
from 5,000, the amount previously authorized, and provided that the options have
a fixed five-year term without cancellation following service as a director. The
1991 Stock Plan also permits granting of additional or alternative options to
directors at the discretion of the Board.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for fiscal years 1996, 1995 and 1994, the cash
compensation paid by the Company, as well as certain other compensation paid or
accrued for those years, to Lowell M. Fisher, Jr., the Company's Chief Executive
Officer through September 9, 1996, to Thomas D. Gleason, the Chief Executive
Officer subsequent to September 9, 1996, and to each of the other executive
officers of the Company who received more than $100,000 during the last fiscal
year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
AWARDS
------
RESTRICTED ALL OTHER
OTHER ANNUAL STOCK/OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION(1) (#)(5) ($)(2)
- ------------------ ---- ---------- --------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Gleason(3) 1996 66,462 -- -- -- 1,361
Chairman and
Chief Executive Officer
- -------------------------------------------------------------------------------------------------------------------------
Lowell M. Fisher, Jr.(3) 1996 124,135 -- 5,173 3,500 185,493
Chief Executive Officer 1995 175,000 -- 3,039 35,000 3,703
1994 178,798 -- -- -- 644
- -------------------------------------------------------------------------------------------------------------------------
David E. Berg 1996 150,000 -- -- 15,000 4,028
Chief Operating Officer 1995 149,442 -- -- 5,000 3,572
and Executive Vice President 1994 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
James S. Bury 1996 125,000 -- -- 5,000 5,322
Vice President of Finance 1995 116,000 -- -- 3,000 4,882
and Assistant Secretary 1994 116,000 -- -- -- 2,070
- -------------------------------------------------------------------------------------------------------------------------
Robert L. Horwitz(4) 1996 40,390 -- -- -- 79,533
Executive Vice President - 1995 175,000 -- -- -- 3,316
Merchandising 1994 132,000 -- -- 17,500 115,797
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------
(1) Reflects amounts reimbursed during 1996 and 1995 for the payment of taxes.
(2) Includes Company contributions to the Company's retirement plan, premiums
paid for term life insurance and, with respect to Messrs. Fisher and
Horwitz, severance and other payments as described below. For fiscal 1996,
the Company's contributions to the retirement plan for Messrs. Berg and
Bury totaled $3,000 and $3,125, respectively. For fiscal 1995, the
Company's contributions to the retirement plan for Messrs. Fisher, Berg,
Bury and Horwitz totaled $3,001, $2,939, $2,499 and $2,143, respectively.
For fiscal 1996, the Company paid $85,000 to Mr. Fisher as part of his
severance arrangement and reported $99,791 as compensation to Mr. Fisher as
a result of his exercise of stock options. For fiscal 1996, the Company
paid $29,167 to Mr. Horwitz as part of his severance arrangement and
forgave a note payable by Mr. Horwitz in the amount of $50,000. For fiscal
1996, the Company paid director fees and granted stock options to Mr.
Gleason prior to his assumption of the position of Chief Executive Officer,
which fees and stock options are not disclosed in this table and can be
found elsewhere in this document. The balance, if any, for all named
executives reflects term life insurance premiums.
(3) Mr. Gleason was elected Chief Executive Officer on September 9, 1996. On
the same date, Mr. Fisher resigned as a director, President and Chief
Executive Officer of the Company.
(4) The employment of Mr. Horwitz was terminated as of March 22, 1996.
(5) With respect to Mr. Fisher, represents a restricted stock award. Otherwise,
represents an incentive stock option.
In connection with the employment of Mr. Horwitz in 1994, the Company loaned Mr.
Horwitz $89,000 for the purchase of a home in the Twin Cities, and Mr. Horwitz
issued two promissory notes to the Company. One of the notes, in the principal
amount of $50,000, was initially due and payable on or before August 15, 1997,
without interest, and was discharged in connection with Mr. Horwitz's
termination in March 1996. The other promissory note, in the amount of $39,000,
bears interest at the rate of 9% per annum and is due and payable on August 15,
1999.
EMPLOYMENT AGREEMENTS
The Company entered into an Employment Agreement with Mr. Fisher effective as of
May 1, 1995, which was amended effective as of January 30, 1996. Mr. Fisher
resigned from the Board of Directors and as an executive officer of the Company
effective September 9, 1996. Pursuant to the terms of Mr. Fisher's severance
agreement, the Company agreed to pay to Mr. Fisher a monthly payment of $15,000
for 18 months and a one-time payment of $40,000. During fiscal 1996, these
payments totaled $85,000. Mr. Fisher also agreed to provide the Company with
assistance and consulting services until Mid-December 1996. Mr. Fisher is
entitled to continuation of health benefits and is subject to a non-compete
provision during the period of payment of his severance. The severance agreement
contains a mutual release.
The Company entered into an employment agreement with Mr. Bury effective April
24, 1990. This agreement is for an indefinite term and may be terminated by
either party upon 30 days' prior written notice. The agreement provides, among
other things, for a lump sum cash severance payment to Mr. Bury in the event of
a voluntary or involuntary termination of employment in connection with a change
in control of the Company, as defined in the agreements, in an amount equal to
the number of months remaining in the two-year period commencing on the first
Event (as defined therein) in connection with the change in control, multiplied
by one calendar month's base salary, at the highest monthly base salary rate
paid at any time during the term of the agreement. The agreement also
specifies minimum base salaries to be paid during the term of the agreement. If
an Event had occurred at the end of fiscal 1996, Mr. Bury would have received
$250,000 pursuant to his employment agreement.
STOCK OPTIONS
The following table contains information concerning individual grants of stock
options under the 1991 Stock Plan to each of the named individuals during the
last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------- VALUE AT ASSUMED
MARKET ANNUAL RATES OF STOCK
OPTIONS PERCENT OF TOTAL PRICE PRICE FOR OPTION TERM ($)
GRANTED OPTIONS GRANTED TO EXERCISE ON GRANT EXPIRATION -------------------------
NAME (#) EMPLOYEES IN FISCAL YEAR PRICE ($) DATE ($) DATE 5% 10%
- ---- ------- ------------------------ --------- -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas D. Gleason ........ 10,000 N/A (1) $ 7.50 $ 7.50 01/30/01 20,721 45,788
5,000 N/A (1) 10.875 10.875 09/06/01 15,023 33,196
Lowell M. Fisher, Jr.(2) . 0 -- -- -- -- -- --
David E. Berg ............ 15,000 42.9% 7.50 7.50 01/30/01 31,082 68,682
James S. Bury ............ 5,000 14.3% 7.50 7.50 01/30/01 10,361 22,894
Robert L. Horwitz(3) ..... 0 -- -- -- -- -- --
</TABLE>
- -----------------
(1) The options granted to Mr. Gleason in 1996 were granted prior to his
assuming the position of Chief Executive Officer in September 1996.
(2) Mr. Fisher resigned as a director and executive officer of the Company in
September 1996.
(3) The employment of Mr. Horwitz was terminated in March 1996.
The following table sets forth information with respect to the named individuals
concerning the exercise of options during fiscal 1996 and unexercised options
held as of January 4, 1997:
AGGREGATE OPTION EXERCISES
AND JANUARY 4, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT 1/4/97 (#) AT 1/4/97 ($)(1)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Gleason(2) 0 -- 20,000 -- $ 22,500(3) --
Lowell M. Fisher, Jr.(4) 45,200 $150,912.50 93,800 -- $217,475(5) --
David E. Berg 8,610 $ 33,364.00 20,000 -- $ 28,125 --
James S. Bury 8,610 $ 33,364.00 8,000 -- $ 10,875 --
Robert L. Horwitz(6) 17,500 $ 39,375.00 -- -- -- --
</TABLE>
- ---------------------
(1) Based on a market price of $9.00 per share of Common Stock on January 4,
1997.
(2) Mr. Gleason assumed the position of Chief Executive Officer in September
1996. The options reflected in this table for Mr. Gleason were granted prior
to that time in his capacity as a non-employee director.
(3) Reflects value of 15,000 of the 20,000 options. The remaining options have
an exercise price higher than the fair market value of the Common Stock at
fiscal year end.
(4) Mr. Fisher resigned as director and executive officer of the Company in
September 1996.
(5) Reflects value of 89,800 of the 93,800 options. The remaining options have
an exercise price equal to or higher than the fair market value of the
Common Stock at fiscal year end.
(6) The employment of Mr. Horwitz was terminated in March 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives are generally made by the
Compensation Committee of the Board, currently consisting of Messrs. Benson
(Chairman), Magnuson, Raskin and Vittert. All decisions by the Compensation
Committee relating to the compensation of the Company's executive officers were
during fiscal 1996 and will, in fiscal 1997, be reviewed by the full Board.
Pursuant to SEC rules designed to enhance disclosure of companies' policies with
regard to executive compensation, set forth below is a report submitted by the
Compensation Committee addressing the Company's compensation policies for fiscal
1996 as they affected Mr. Fisher, the Company's Chief Executive Officer through
September 9, 1996, and Mr. Gleason, the Company's Chief Executive Officer after
September 9, 1996, and Messrs. Berg and Bury, the executive officers other than
the Chief Executive Officer who, for fiscal 1996, were the Company's most highly
paid executive officers whose compensation exceeded $100,000 (collectively with
Messrs. Fisher and Gleason, the "Named Executives"). The following report shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933 (the "1933 Act") or the Securities Exchange Act of 1934 (the "1934 Act"),
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under the 1933 Act or the
1934 Act.
COMPENSATION PHILOSOPHY. The Compensation Committee's executive compensation
policies are designed to provide competitive levels of compensation that
integrate pay with the Company's annual and long-term performance goals, reward
above-average corporate performance, recognize individual initiative and
achievement, and assist the Company in attracting and retaining qualified
executives. Furthermore, the Company's use of stock options and restricted stock
grants reflects the Compensation Committee's position that stock ownership by
management and stock-based performance compensation arrangements are beneficial
in aligning management's and shareholders' interest and the enhancement of
shareholder value. Compensation payments, to the extent possible, are designed
to qualify for deductibility under the Internal Revenue Code of 1986, as
amended.
The Company has designed its executive compensation plans around these policies
and objectives. The Compensation Committee believes the Company's compensation
arrangements consistently meet these goals. The following is a description of
the Company's current plans and how each relates to the objectives indicated
above.
BASE SALARY. While the Chief Executive Officer determines the annual salary of
each officer of the Company (including the Named Executives) other than himself,
the Compensation Committee generally approves the salary determinations. In
determining or approving appropriate salary levels, the Compensation Committee
considers levels of responsibility, experience, individual performance and
internal equity, as well as external pay practices.
ANNUAL INCENTIVES. During fiscal 1996, the Company did not pay any bonuses to
the Named Executives as incentive compensation. However, in connection with the
Company's sale of its retail and golf businesses, the Company entered into
hold-in-place agreements with certain employees, including the Named Executives
(except Mr. Gleason), which provided for payment in the event of termination of
employment of varying amounts depending on the employee's job responsibility.
The Named Executives were to receive six months base salary if the agreements
were triggered. Following the sale of the businesses, the Compensation Committee
recommended, and the Board approved, the payment of retention bonuses in
substitution for the hold-in-place agreements in amounts equal to 80% of the
hold-in-place obligations, payable in three installments during fiscal 1997.
LONG-TERM INCENTIVES. The Company's overall long-term compensation philosophy is
that long-term incentives should be related to improvement in long-term
shareholder value. In furtherance of this objective, the Company awards to its
executive officers and other key personnel stock options and, on a very selected
basis, restricted stock. Stock options encourage and reward effective management
that results in long-term corporate financial success, as measured by stock
price appreciation. Stock options have value from the date the stock options are
granted. Shareholders also benefit from such stock price appreciation. The 1991
Stock Plan allows the grant of incentive stock options and non-qualified stock
options. Stock options are awarded consistent with the Company's objective to
include in total compensation a long-term equity interest for executive
officers, with greater opportunity for reward if long-term performance is
sustained. To encourage a longer-term perspective, the options are only
exercisable over a multiple year period and grants are made at an option price
equal to the fair market value of the Common Stock on the date of grant.
OTHER COMPENSATION PROGRAMS. The Company maintains certain broad-based employee
benefit plans in which its executive officers, including the Named Executives,
have been permitted to participate, including retirement, life and health
insurance plans. The Company's retirement plan consists of a profit sharing
plan, pursuant to which the Board of Directors may make annual discretionary
contributions, and a 401(k) employee savings plan which allows employees to make
pre-tax contributions and in which the Company matches employee contributions in
an amount equal to one-half of the employee's contribution up to 5% of the
employee's base salary. In March 1997, the Board of Directors approved a
discretionary contribution to the profit sharing plan. Other non-cash
compensation benefits are provided to the Named Executives. None of these plans
are directly or indirectly tied to Company performance.
CEO FISCAL 1996 COMPENSATION. Regulations of the SEC require the Company to
disclose the Compensation Committee's basis for compensation reported for its
Chief Executive Officer in fiscal 1996 and to discuss the relationship between
the Company's performance during the last fiscal year and such Chief Executive
Officer's compensation. Mr. Fisher's base salary for fiscal 1996 was determined
on the same basis as all other executive officers and, as indicated above, no
incentive compensation was paid to any of the Named Executives, including Mr.
Fisher. Mr. Fisher resigned from his positions with the Company and Mr. Gleason
assumed the role of Chief Executive Officer during the Company's third quarter.
Severance payments to Mr. Fisher were pursuant to his Employment Agreement and
severance agreement are described above under "Employment Agreements." Mr.
Gleason was paid the same per annum base salary as Mr. Fisher for the period
subsequent to September 9, 1996. Prior to September 9, 1996, Mr. Gleason was
paid a fee of $47,667 per annum and received options to purchase 10,000 shares
of the Company's Common Stock for serving as Chairman of the Board of Directors.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
Keith A. Benson Gerald E. Magnuson Michael A. Raskin Mark B. Vittert
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Magnuson, a director and member of the Compensation Committee, is currently
Of Counsel to the law firm of Lindquist & Vennum PLLP which was paid for legal
services rendered to the Company during the last fiscal year. Mr. Magnuson
receives no financial benefit on account of amounts paid by the Company to
Lindquist & Vennum PLLP for such services. It is anticipated that Lindquist &
Vennum PLLP will continue to perform legal services for the Company during the
current fiscal year.
PERFORMANCE GRAPH
In accordance with the rules of the Securities and Exchange Commission, the
following performance graph compares performance of the Company's Common Stock
on the New York Stock Exchange to the Russell 3000 Textile Apparel Industry
Index and to the Russell 2000 Index. The graph compares the cumulative total
shareholder return as of the end of each of the Company's last five fiscal years
on $100 invested at the end of fiscal 1991 and assumes reinvestment of all
dividends. The performance graph is not necessarily indicative of future
investment performance.
[GRAPH]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
PremiumWear $100.00 $181.08 $118.92 $156.76 $140.54 $194.60
Russell 2000 100.00 118.41 140.80 138.24 177.55 206.83
Russell 3000 Textile
Apparel 100.00 120.41 96.10 91.23 104.73 130.58
</TABLE>
The performance graph above shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the 1933 Act or under the 1934 Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the 1933 Act or the 1934 Act.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 28, 1997 (unless otherwise
specified), the beneficial ownership of Common Stock of the Company by each
shareholder who is known by the Company to own beneficially 5% or more of the
outstanding Common Stock of the Company, each director, each Named Executive and
by all directors and executive officers as a group. See "Reorganization" for a
description of certain restrictions on transfers of Common Stock by holders of
5% or more of the total fair market value of all outstanding Common Stock.
Except as otherwise indicated, the shareholders listed in the table have full
voting and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED OUTSTANDING SHARES
------------------ ------------------
<S> <C> <C>
Pension Benefit Guaranty Corporation ("PBGC") . 250,000(1) 10.8%
2020 K Street, N.W.
Washington, D.C. 20006
The Clark Estates, Inc ........................ 196,281(2) 8.5%
30 Wall Street
New York, NY 10005
Arnold M. Amster .............................. 117,500(3) 5.1%
767 Fifth Avenue
New York, NY 10153
C. Derek Anderson ............................. 162,932(4)(6) 7.0%
220 Sansome Street, Suite 400
San Francisco, CA 94104
Francisco A. Lorenzo .......................... 184,100(5) 7.9%
333 Clay Street, Suite 4040
Houston, TX 77002
Keith A. Benson ............................... 8,808(6) *
Lowell M. Fisher(7) ........................... 25,594 1.1%
Thomas D. Gleason ............................. 36,000(6) 1.5%
Gerald E. Magnuson ............................ 19,800(6) *
Kevin S. Moore ................................ 201,281(2)(6) 8.7%
William J. Morgan ............................. 5,000(1)(6) *
Michael A. Raskin ............................. 21,100(6) *
Mark B. Vittert .............................. 85,808(6) 3.7%
David E. Berg ................................. 42,220(6) 1.8%
James S. Bury ................................. 33,720(6) 1.5%
Cynthia L. Boeddeker .......................... 9,250(6) *
Billy E. Smith .............................. 1,000(6) *
All Directors and Executive Officers .......... 626,919(6) 26.2%
as a Group (12 persons)
</TABLE>
- ----------------
*Less than 1%
(1) Pacholder Associates, Inc. ("PAI"), a registered investment advisor, has a
contract with PBGC pursuant to which PAI has full and complete investment
discretion with respect to the 250,000 shares of the Company's stock owned
by PBGC, including the power to vote such shares. William J. Morgan is the
president, a director and a shareholder of PAI. William J. Morgan disclaims
beneficial ownership of the 250,000 shares owned by PBGC.
(2) The Clark Estates, Inc. provides administrative assistance to a number of
Clark family accounts which beneficially own an aggregate 196,281 shares of
the Company's Common Stock, including The Clark Foundation, which owns
95,390 shares. The Clark Estates, Inc. has, or in certain instances shares,
voting power and/or dispositive power with respect to such shares. The Clark
Estates, Inc. has no remainder or other economic interest in such trust or
fiduciary accounts. Mr. Moore is Senior Vice President of The Clark Estates,
Inc. and is a Director of the Company on the date hereof. Mr. Moore has
declined to stand for reelection this year due to conflicting demands on his
time.
(3) Based on a Schedule 13D filed with the Company and the Securities Exchange
Commission, which indicates that Mr. Amster has or shares voting and
dispositive power with respect to these shares. Accordingly, Mr. Amster may
be deemed to be the beneficial owner of such shares.
(4) Mr. Anderson shares voting and dispositive power with respect to 121,632
shares acquired by Anderson Capital Management, Inc. ("ACM") as agent for
its investment advisory clients and, accordingly, Mr. Anderson may be deemed
to be the beneficial owner of such shares. Mr. Anderson disclaims beneficial
ownership of those shares and 4,500 of the shares represented as
beneficially owned by him which are owned by his wife.
(5) Based on a Schedule 13D filed with the Securities and Exchange Commission.
Francisco A. Lorenzo shares voting and dispositive power with respect to the
shares of Common Stock owned by two private investment companies and four
trusts for the benefit of family members of Mr. Lorenzo. Accordingly, Mr.
Lorenzo may be deemed to be the beneficial owner of all of the 184,100
shares reported on the Schedule 13D.
(6) Includes 15,000 shares for Mr. Gleason, 9,000 shares for Messrs. Anderson,
Magnuson and Raskin, 5,000 shares for each of Messrs. Benson, Moore, Morgan
and Vittert, 2,250 shares for Ms. Boeddeker, 1,000 shares for Mr. Smith,
5,000 shares for Mr. Berg, 3,000 shares for Mr. Bury and 73,250 shares for
all directors and executive officers as a group which may be acquired within
sixty days of the date hereof upon the exercise of outstanding stock
options.
(7) Mr. Fisher resigned as an officer and director of the Company effective
September 9, 1996. The number of shares owned by Mr. Fisher is based on best
of the Company's knowledge without independent verification.
COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT
Based upon its review of Forms 3, 4 and 5 and any amendments thereto furnished
to the Company pursuant to Section 16 of the 1934 Act, the Company believes all
of such forms were filed on a timely basis by the reporting persons during the
fiscal year ended January 4, 1997, except that Messrs. Berg and Bury filed a
late Form 4 for the exercise of stock options.
REORGANIZATION
On July 3, 1991, the Company filed a Petition for Reorganization under Chapter
11 of the United States Bankruptcy Code, together with a Plan of Reorganization
and a Disclosure Statement, with the United States Bankruptcy Court for the
District of Minnesota. The Plan of Reorganization was confirmed by the
Bankruptcy Court on October 1, 1991 and became effective as of October 29, 1991
(the "Reorganization"). Pursuant to the Reorganization, holders of the Company's
Common Stock received one new share of Common Stock for every 25 shares of their
then existing Common Stock surrendered and the Company issued or committed to
issue in excess of 1,773,000 new shares of Common Stock to creditors in
satisfaction of indebtedness in excess of $53,000,000. Mr. Bury, currently an
executive officer, served as such when the Petition for Reorganization was filed
and throughout the Reorganization.
In connection with the Reorganization, in order to reduce the risk that any
change in the stock ownership of the Company may jeopardize certain Federal
income tax attributes of the Company, the Company's Certificate of Incorporation
was amended to limit the ability of persons beneficially owning, or who, upon
acquisition of any shares, would beneficially own, five percent (5%) or more of
the total fair market value of outstanding shares of Common Stock of the Company
(a "5% Holder"). Until October 29, 1993, no 5% Holder was permitted to sell,
transfer or dispose or contract to sell, transfer or dispose any shares of
Common Stock or options, warrants or other rights to acquire Common Stock,
except in accordance with the procedures described in Article V of the
Certificate of Incorporation. Until October 29, 2001, no 5% Holder may purchase
or acquire or contract to purchase shares of Common Stock, except in accordance
with the procedures described in Article V, and any such purchase, acquisition
or contract not in compliance with Article V shall be null and void.
PROPOSAL NO. 2
AMENDMENT TO THE 1991 STOCK PLAN
GENERAL INFORMATION
On October 21, 1991, the Company's shareholders approved and ratified the
adoption of, the Company's 1991 Stock Plan (the "1991 Plan"). The purpose of the
1991 Plan is to enable the Company and its subsidiaries to retain and attract
key employees, consultants and directors who contribute to the Company's success
by their ability, ingenuity and industry, and to enable such key employees,
consultants and directors to participate in the long-term success and growth of
the Company by giving them a proprietary interest in the Company. The 1991 Plan
authorizes the granting of awards in the form of stock options and restricted
stock.
AMENDMENT TO THE 1991 PLAN
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
limits the Company's deduction for federal income tax purposes of compensation
in excess of $1 million per individual paid to the Company's Chief Executive
Officer and its four highest paid executive officers. Compensation plans which
are performance-based, approved by the Company's shareholders, granted by a
committee consisting solely of two or more outside directors, and have an annual
cap on the number of shares that may be granted to any given individual will not
be subject to the deduction limit. The 1991 Plan currently does not have an
annual cap on the amount of shares subject to an option grant. On September 6,
1996, the Board of Directors amended the 1991 Plan, subject to ratification and
approval of the shareholders, to bring the 1991 Plan into compliance with
Section 162(m) of the Code by providing for an annual cap on the number of
shares granted to an individual of 150,000 shares. By adopting this change, the
Company may deduct any compensation expense resulting from the grant or exercise
of options issued under the Plan without regard to the limitations under Code
Section 162(m), including options to the individuals described above.
SUMMARY OF THE 1991 PLAN
GENERAL. In 1996, the Securities and Exchange Commission adopted new rules under
Section 16 of the 1934 Act which required amendments to the 1991 Plan. The Board
amended the 1991 Plan on September 6, 1996 to bring the 1991 Plan into
compliance with the new rules. Said amendments do not require shareholder
approval.
SHARES AVAILABLE UNDER 1991 PLAN. The maximum number of shares of Common Stock
reserved for awards under the 1991 Plan was 873,500 and there currently are
243,754 shares available for future awards under the 1991 Plan. Shares of Common
Stock covered by expired or terminated stock options and forfeited shares of
restricted stock may be used for subsequent awards under the 1991 Plan.
ELIGIBILITY AND ADMINISTRATION. Officers and other key employees of the Company
and its subsidiaries who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company and its subsidiaries,
as well as selected consultants under contract to the Company and directors are
eligible to be granted awards under the 1991 Plan. The 1991 Plan is administered
by the Board, or in its discretion, by a committee of at least two "non-employee
directors" who are also "outside directors," as defined in the 1991 Plan (the
"Committee"), who shall be appointed by the Board. The Board of Directors has
established a Stock Grant Subcommittee, currently comprised of Messrs. Keith A.
Benson and Mark B. Vittert, for the purpose of granting awards under the 1991
Plan. The term "Board" as used in this section refers to the Company's Board of
Directors or the Committee. The Board has the power to make awards, determine
the number of shares covered by each award and other terms and conditions of
such awards, interpret the 1991 Plan, and adopt rules, regulations and
procedures with respect to the administration of the 1991 Plan. The Board may
delegate its authority to officers of the Company for the purpose of selecting
key employees who are not officers of the Company to be participants in the 1991
Plan.
AWARDS UNDER THE 1991 PLAN
EMPLOYEE STOCK OPTIONS. The Board may grant stock options that either qualify as
"incentive stock options" under the Code or are "non-qualified stock options" in
such form and upon such terms as the Board may approve from time to time. Stock
options granted under the 1991 Plan may be exercised during their respective
terms as determined by the Board. The purchase price may be paid by tendering
cash or, in the Board's discretion, by tendering promissory notes or common
stock. The Committee may, in its sole discretion, permit optionees to pay the
option exercise price by having the Company withhold upon exercise of the option
a number of shares with a fair market value equal to the aggregate option
exercise price. No stock option shall be transferable by the optionee or
exercised by anyone else during the optionee's lifetime.
Stock options may be exercised during varying periods of time after a
participant's termination of employment, depending upon the reason for the
termination. Following a participant's death, the participant's stock options
may be exercised by the legal representative of the estate or the optionee's
legatee for a period of three months or until the expiration of the stated term
of the option, whichever is less. The same time periods apply if the participant
is terminated by reason of disability or retirement. If the participant's
employment is terminated for any reason other than death, disability or
retirement, the participant's stock options immediately terminate. In the event
of termination of employment by reason of disability or retirement, if an
incentive stock option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, the option will thereafter
be treated as a non-qualified stock option.
No incentive stock options shall be granted under the 1991 Plan after October
21, 2001. The term of an incentive stock option may not exceed 10 years (or 5
years if issued to a participant who owns or is deemed to own more than 10% of
the combined voting power of all classes of stock of the Company, any subsidiary
or affiliate). The aggregate fair market value of the Common Stock with respect
to which an incentive stock option is exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. The exercise price
under an incentive stock option may not be less than the fair market value of
the Common Stock on the date the option is granted (or, in the event the
participant owns more than 10% of the combined voting power of all classes of
stock of the Company, any subsidiary or affiliate, the option price shall be not
less than 110% of the fair market value of the stock on the date the option is
granted). The exercise price for non-qualified options granted under the 1991
Plan may be less than 100% of the fair market value of the Common Stock on the
date of grant.
RESTRICTED STOCK. The Board may grant restricted stock awards that result in
shares of Common Stock being issued to a participant subject to restrictions
against disposition during a restricted period established by the Board. The
Board may condition the grant of restricted stock upon the attainment of
specified performance goals or service requirements. The provisions of
restricted stock awards need not be the same with respect to each recipient.
The restricted stock granted under the 1991 Plan will be held in custody by the
Company until the restrictions thereon have lapsed. During the period of the
restrictions, a participant has the right to vote the shares of restricted stock
and to receive dividends. Unless and until any restrictions on the shares shall
have lapsed, participants shall have no right to sell, transfer, pledge or
assign the restricted stock awarded under the 1991 Plan. Notwithstanding the
foregoing, all restrictions with respect to restricted stock lapse ten(10)
business days prior to the occurrence of a dissolution, merger or other
significant corporate change in the Company, as provided in the 1991 Plan.
Except as otherwise provided in the award agreement, upon termination of
employment of a participant voluntarily by the employee or for Cause (as defined
therein), all such shares with respect to which restrictions have not lapsed
will be forfeited by the participant, subject to the right of the Committee to
waive such restrictions in the event of a participant's death, total disability,
retirement or under special circumstances approved by the Committee. If
employment is terminated for any other reason, all remaining restrictions on the
shares shall immediately lapse and complete beneficial ownership of the shares
shall vest in the employee or, if applicable, his or her estate.
If a participant terminates employment during the period of the restrictions,
all shares still subject to restrictions will be forfeited and returned to the
Company, subject to the right of the Board to waive such restrictions in the
event of a participant's death, total disability, retirement or under special
circumstances approved by the Board.
STOCK OPTIONS OF DIRECTORS WHO ARE NOT EMPLOYEES. The 1991 Plan provides for the
annual, automatic granting of a defined number of options to directors who are
not employees of the Company. Such options are granted to each director who is
not an employee of the Company and who (i) is elected or re-elected as a
director by the shareholders at any annual or special meeting of the
shareholders or (ii) is serving an unexpired term as director on the date of an
annual meeting at which any other director is elected. Each such person shall,
as of the date of such annual meeting, automatically receive a non-qualified
option to purchase 1,000 shares of Common Stock with the option price equal to
the fair market value of the Company's Common Stock on such date. These options
will have five-year terms and will be exercisable at any time from the date of
grant. The purchase price, payment terms, transfer restrictions and other
similar provisions of employee stock options apply to these stock options.
Directors who are not employees may also be granted discretionary stock options
and restricted stock awards under the 1991 Plan. In the event that discretionary
stock options or restricted stock awards are granted to members of the
Committee, such awards must be granted by the Board of Directors.
GENERAL PROVISIONS. The Board may, at the time of any grant under the 1991 Plan,
provide that the shares received under the 1991 Plan shall be subject to
repurchase by the Company in the event of termination of employment of the
participant. The repurchase price will be the fair market value of the stock or,
in the case of a termination for Cause (as defined in the 1991 Plan), the amount
of consideration paid for the stock. The Board may also, at the time of grant,
provide the Company with similar repurchase rights, upon terms and conditions
specified by the Board, with respect to any participant who, at any time within
two years after termination of employment with the Company, directly or
indirectly competes with, or is employed by a competitor of, the Company.
FEDERAL INCOME TAX CONSEQUENCES
STOCK OPTIONS. An optionee will not realize taxable compensation income upon the
grant of an incentive stock option. In addition, an optionee generally will not
realize taxable compensation income upon the exercise of an incentive stock
option if he or she exercises it as an employee or within three months after
termination of employment (or within one year after termination if the
termination results from a permanent and total disability). The amount by which
the fair market value of the shares purchased exceeds the aggregate option price
at the time of exercise shall be treated as alternative minimum taxable income
for purposes of the alternative minimum tax.
If stock acquired pursuant to an incentive stock option is not disposed of prior
to the date two years from the option grant date or prior to one year from the
option exercise date, any gain or loss realized upon the sale of such shares
will be characterized as capital gain or loss. If the applicable holding periods
are not satisfied, then any gain realized in connection with the disposition of
such stock will generally be taxable as compensation income in the year in which
the disposition occurred, to the extent of the difference between the fair
market value of such stock on the date of exercise and the option exercise
price. The Company is entitled to a tax deduction to the extent, and at the
time, that the participant realizes compensation income. The balance of any gain
will be characterized as a capital gain. Under current law, net long-term
capital gains are taxed at a maximum federal tax rate of 28% while compensation
and other income may be taxed at a higher federal rate.
An optionee will not realize taxable compensation income upon the grant of a
non-qualified stock option, which includes options granted to non-employee
directors. When an optionee exercises a non-qualified stock option, he or she
will realize taxable compensation income at that time equal to the difference
between the aggregate option price and the fair market value of the stock on the
date of exercise. If, however, an optionee is subject to Section 16(b) of the
1934 Act (i.e., is an executive officer, director or 10% shareholder of the
Company) and the optionee exercises the option within six months after the date
the option was granted, he or she will not realize taxable compensation income
until six months after the grant of the non-qualified stock option. In such
event, the amount of the optionee's compensation income will equal the
difference between the aggregate option price and the fair market value of the
stock on the date immediately preceding the sixth month anniversary of the date
of grant. An optionee who is subject to Section 16(b) may, however, elect under
Section 83(b) of the Code to be taxed at the time of exercise of a non-qualified
stock option in the same manner as an optionee who is not subject to Section
16(b). In any event, the Company is entitled to a tax deduction to the extent,
and at the time, that the optionee realizes compensation income.
Upon the exercise of a non-qualified stock option, the 1991 Plan requires the
optionee to pay to the Company any amount necessary to satisfy applicable
federal, state or local withholding tax requirements. Under the 1991 Plan, the
Board may grant options that permit the optionee to elect to satisfy withholding
tax requirements associated with the exercise of an option by authorizing the
Company to retain from the number of shares that would otherwise be deliverable
to the optionee that number of shares having an aggregate fair market value
equal to the tax required to be withheld. The Company would pay the tax
liability from its own funds.
RESTRICTED STOCK. The grant of restricted stock should not result in immediate
income for the participant or in a deduction for the Company for federal income
tax purposes, assuming the shares are nontransferable and subject to
restrictions which would result in a "substantial risk of forfeiture" as
intended by the Company. If the shares are transferable or there are no such
restrictions, the participant would recognize compensation income when any such
restrictions lapse. The amount of such income will be the value of the Common
Stock on that date less any amount paid for the shares. Dividends paid on the
Common Stock and received by the participant during the restricted period would
also be taxable compensation income to the participant. In any event, the
Company will be entitled to a tax deduction to the extent, and at the time, the
participant realizes compensation income. A participant may elect, under Section
83(b) of the Code, to be taxed on the value of the stock at the time of award.
If this election is made, the fair market value of the stock at the time of the
election is taxable to the participant as compensation income, and the Company
is entitled to a corresponding deduction. Dividends on the stock are then
taxable to the participant and are no longer deductible by the Company.
Participants may be required to pay in cash to the Company any taxes required to
be withheld at the date restrictions lapse with respect to restricted stock. The
participant may elect to satisfy withholding, in whole or in part, by having the
Company withhold shares of Common Stock having an aggregate fair market value
equal to the amount required to be withheld. The Company would pay the tax
liability from its own funds.
VOTE REQUIRED
Shareholder approval of the amendment to the 1991 Plan to impose an annual cap
on the number of shares granted to an individual of 150,000 shares requires the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the meeting in person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1991 STOCK PLAN.
EXPERTS
The financial statements incorporated by reference in this Proxy Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in giving said report.
Arthur Andersen LLP served as the independent public accountants for the Company
for fiscal 1996 and have been selected to act in such capacity for fiscal 1997.
A representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting of Shareholders. Such representative will have an opportunity to make a
statement if such representative desires to do so and will be available to
respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no business other than that described herein
that will be presented for consideration at the Annual Meeting. If, however,
other business shall properly come before the meeting, the persons in the
enclosed form of proxy intend to vote the shares represented by said proxies on
such matters in accordance with their judgment in the best interest of the
Company.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
The rules of the Securities and Exchange Commission permit shareholders of a
company, after timely notice to the Company, to present proposals for
shareholder action in the Company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by Company action in accordance with the
proxy rules. The PremiumWear, Inc. 1998 Annual Meeting of Shareholders is
expected to be held on or about May 13, 1998 and proxy materials in connection
with that meeting are expected to be mailed on or about April 2, 1998.
Shareholder proposals prepared in accordance with the proxy rules must be
received by the Company on or before December 3, 1997.
METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the Notice of
Annual Meeting of Shareholders, this Proxy Statement, the proxy itself, and the
cost of soliciting proxies relating to the meeting will be borne by the Company.
In addition to use of the mails, proxies may be solicited by officers, directors
and other regular employees of the Company by telephone, telegraph or personal
solicitation, and no additional compensation will be paid to such individuals.
The Company will, if requested, reimburse banks, brokerage houses and other
custodians, nominees and certain fiduciaries for their reasonable expenses
incurred in mailing proxy material to their principals.
GENERAL
The Company's Annual Report to Shareholders for the fiscal year ended January 4,
1997 is being mailed to shareholders with this Proxy Statement. Shareholders may
receive without charge a copy of the Company's Annual Report on Form 10-K,
including financial statements and schedules thereto, as filed with the
Securities and Exchange Commission by writing to: PremiumWear, Inc., 8000 West
78th Street, Suite 400, Minneapolis, MN 55439.
By Order of the Board of Directors,
/s/ John R. Houston
John R. Houston, Secretary
PREMIUMWEAR, INC.
1991 STOCK PLAN
SECTION CONTENTS PAGE
1. General Purpose of Plan; Definitions 1
2. Administration 3
3. Stock Subject to Plan 4
4. Eligibility 4
5. Stock Options 4
6. Restricted Stock 8
7. Transfer, Leave of Absence, etc. 10
8. Amendments and Termination 10
9. Unfunded Status of Plan 10
10. General Provisions 11
11. Effective Date of Plan 12
PREMIUMWEAR, INC.
1991 STOCK PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this plan is the PremiumWear, Inc. 1991 Stock Plan (the
"Plan"). The purpose of the Plan is to enable PremiumWear, Inc. (the "Company")
and its Subsidiaries to retain and attract executives, other key employees,
consultants and directors who contribute to the Company's success by their
ability, ingenuity and industry, and to enable such individuals to participate
in the long-term success and growth of the Company by giving them a proprietary
interest in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Board" means the Board of Directors of the Company.
b. "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony,
or a participant's willful misconduct or dishonesty, any of
which is directly and materially harmful to the business or
reputation of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Committee" means the Committee referred to in Section 2 of
the Plan. If at any time no Committee shall be in office, then
the functions of the Committee specified in the Plan shall be
exercised by the Board.
e. "Company" means PremiumWear, Inc., a corporation organized
under the laws of the State of Delaware (or any successor
corporation).
f. "Disability" means permanent and total disability as
determined by the Committee.
g. "Early Retirement" means retirement, with consent of the
Committee at the time of retirement, from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company.
h. "Fair Market Value" means the value of the Stock on a given
date as determined by the Committee in accordance with Section
422 of the Code and any applicable Treasury Department
regulations with respect to "incentive stock options."
i. "Incentive Stock Option" means any Stock Option intended to be
and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
j. "Non-Employee Director" means a "Non-Employee Director" within
the meaning of Rule 16b-3(b)(3) under the Securities Exchange
Act of 1934, as amended, or any successor rule.
k. "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option, and is intended to be and is
designated as a "Non-Qualified Stock Option."
l. "Normal Retirement" means retirement from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company on or after age 65.
m. "Outside Director" means a director who (a) is not a current
employee of the Company or any member of an affiliated group
which includes the Company; (b) is not a former employee of
the Company who receives compensation for prior services
(other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the
Company; (d) does not receive remuneration from the Company,
either directly or indirectly, in any capacity other than as a
director, except as otherwise permitted under Code Section
162(m) and regulations thereunder. For this purpose,
remuneration includes any payment in exchange for goods or
services. This definition shall be further governed by the
provisions of Code Section 162(m) and regulations promulgated
thereunder.
n. "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company if each of the corporations (other than the Company)
owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations
in the chain.
o. "Restricted Stock" means an award of shares of Stock that are
subject to restrictions under Section 6 below.
p. "Retirement" means Normal Retirement or Early Retirement.
q. "Stock" means the Common Stock, $.01 par value per share, of
the Company.
r. "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5 below.
s. "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company
if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one
of the other corporations in the chain.
SECTION 2. Administration.
The Plan shall be administered by the Board or by a Committee appointed
by the Board consisting of at least two directors, all of whom shall be Outside
Directors and Non-Employee Directors, and who shall serve at the pleasure of the
Board. The Committee may be a subcommittee of the Compensation Committee of the
Board
The Committee shall have the power and authority to grant to eligible
employees, consultants and directors pursuant to the terms of the Plan: (i)
Stock Options and (ii) Restricted Stock.
In particular, the Committee shall have the authority:
(i) to select the officers, other key employees, directors and
consultants of the Company and its Subsidiaries to whom Stock
Options and/or Restricted Stock awards may from time to time
be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, or Restricted Stock
awards, or a combination of the foregoing, are to be granted
hereunder;
(iii) to determine the number of shares to be covered by each such
award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder
(including, but not limited to, any restriction on any Stock
Option or other award and/or the shares of Stock relating
thereto); and
(v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to
an award under this Plan shall be deferred either
automatically or at the election of the participant.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 873,500. Such shares may consist, in whole
or in part, of authorized and unissued shares.
If any shares that have been optioned cease to be subject to Stock
Options, or if any shares subject to any Restricted Stock award granted
hereunder are forfeited or such award otherwise terminates without a payment
being made to the participant, such shares shall again be available for
distribution in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Stock Options granted under the Plan, and in the number
of shares subject to Restricted Stock awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
SECTION 4. Eligibility.
Officers, other key employees, consultants and members of the Board of
the Company and Subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and its
Subsidiaries are eligible to be granted Stock Options or Restricted Stock awards
under the Plan. The optionees and participants under the Plan shall be selected
from time to time by the Committee, in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares covered by each award.
Notwithstanding the foregoing, no person shall receive grants of Stock
Options and Restricted Stock awards under this Plan which exceed 150,000 shares
during any fiscal year of the Company.
SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after October 21, 2001.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non- Qualified Stock Options, or both types of options. To the
extent that any option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Stock
Option as an Incentive Stock Option, provided the optionee consents in writing
to the modification or amendment.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option be less than 100% of the Fair Market Value of the Stock on the date
of the grant of the Stock Option. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is
granted to such employee, the option price shall be no less than 110% of the
Fair Market Value of the Stock on the date the option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time, provided, however, that unless the Stock Option has been approved by
the Board, the Committee or the stockholders of the Company, a Stock Option
granted to an officer, director or 10% stockholder of the Company shall not be
exercisable for a period of six (6) months after the date of grant.
Notwithstanding the foregoing, unless the Stock Option Agreement provides
otherwise, any Stock Option granted under this Plan shall be exercisable in
full, without regard to any installment exercise or vesting provisions, for a
period specified by the Committee, but not to exceed sixty (60) days nor be less
than seven (7) days, prior to the occurrence of any of the following events: (i)
dissolution or liquidation of the Company other than in conjunction with a
bankruptcy of the Company or any similar occurrence, (ii) any merger,
consolidation, acquisition, separation, reorganization, or similar occurrence,
where the Company will not be the surviving entity or (iii) the transfer of
substantially all of the assets of the Company or 75% or more of the outstanding
Stock of the Company.
(d) Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or by any other form of legal consideration deemed
sufficient by the Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds
to pay the exercise price. As determined by the Committee, in its sole
discretion, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee or Restricted Stock subject to
an award hereunder (based on the Fair Market Value of the Stock on the date the
option is exercised, as determined by the Committee); provided, however, that in
the event payment is made in the form of shares of Restricted Stock, the
optionee will receive a portion of the option shares in the form of, and in an
amount equal to, the Restricted Stock award tendered as payment by the optionee.
If the terms of an option so permit, an optionee may elect to pay all or part of
the option exercise price by having the Company withhold from the shares of
Stock that would otherwise be issued upon exercise that number of shares of
Stock having a Fair Market Value equal to the aggregate option exercise price
for the shares with respect to which such election is made. No shares of Stock
shall be issued until full payment therefor has been made. An optionee generally
shall have the rights to dividends and other rights of a shareholder with
respect to shares subject to the option when the optionee has given written
notice of exercise, has paid in full for such shares, and, if requested, has
given the representation described in paragraph (a) of Section 10.
(e) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
in the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(f) Termination by Death. If an optionee's employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of death, the
Stock Option may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine at or
after grant), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of three months (or such
shorter period as the Committee shall specify at grant) from the date of such
death or until the expiration of the stated term of the option, whichever period
is shorter.
(g) Termination by Reason of Disability. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after three months (or such shorter period as
the Committee shall specify at grant) from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is shorter. In the event of termination of employment by reason of Disability,
if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, the option will
thereafter be treated as a Non- Qualified Stock Option.
(h) Termination by Reason of Retirement. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be exercised
to the extent it was exercisable at the time of such Retirement, but may not be
exercised after three months (or such shorter period as Committee shall specify
at grant) from the date of such termination of employment or the expiration of
the stated term of the option, whichever period is shorter. In the event of
termination of employment by reason of Retirement, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, the option will thereafter be treated as a
Non- Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if
an optionee's employment by the Company and any Subsidiary or Parent Corporation
terminates for any reason other than death, Disability or Retirement, the Stock
Option shall thereupon terminate.
(j) Annual Limit on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.
(k) Directors Who Are Not Employees. Each person who (i) is not an
employee of the Company or its Subsidiaries, and (ii) is elected or reelected to
the Board at any annual or special meeting of the shareholders of the Company,
or (iii) is serving an unexpired term as Director on the date of an annual
meeting at which any other director is elected, shall as of the date of such
meeting automatically be granted a Stock Option to purchase 1,000 shares of the
Company's Stock at an exercise price per share equal to 100% of the Fair Market
Value of a share of the Company's Stock on the date of the grant of the Stock
Option. In the case of an annual or special meeting, the action of the
shareholders in electing or reelecting a director who is not an employee shall
constitute the granting of Stock Options to all such directors who are not
employees, and the date when the shareholders shall take such action shall be
the date of grant of the Stock Options. All such options shall be designated as
Non-Qualified Stock Options and shall be subject to the same terms and
provisions as are then in effect with respect to the grant of Non-Qualified
Stock Options to officers and key employees of the Company, except that the term
of each such Stock Option shall be equal to five years. In the event
discretionary Stock Options are granted to members of the Committee, such Stock
Options shall be granted by the Board.
SECTION 6. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Company and Subsidiaries to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the time or times within which such awards
may be subject to forfeiture, and all other conditions of the awards. The
Committee may also condition the grant of Restricted Stock upon the attainment
of specified performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.
In the event that Restricted Stock awards are granted to members of the
Committee, such awards shall be granted by the Board.
(b) Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.
(i) Each participant shall be issued a stock certificate in
respect of shares of Restricted Stock awarded under the Plan. Such
certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the PremiumWear, Inc.
1991 Stock Plan and an Agreement entered into between the
registered owner and PremiumWear, Inc. Copies of such Plan
and Agreement are on file in the executive offices of
PremiumWear, Inc.
(ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock
power, endorsed in blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(ii) Except as provided in paragraph (c)(i) of this Section 6,
the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional shares of Restricted Stock (to the
extent shares are available under Section 3 and subject to paragraph
(f) of Section 10). Certificates for shares of Unrestricted Stock shall
be delivered to the grantee promptly after, and only after, the period
of forfeiture shall have expired without forfeiture in respect of such
shares of Restricted Stock.
(iii) Subject to the provisions of the award agreement and
paragraph (c)(iv) of this Section 6, upon termination of employment for
any reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the participant.
(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause),
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to such participant's
shares of Restricted Stock.
(v) All restrictions with respect to any participant's shares
of Restricted Stock shall lapse or be deemed to have lapsed or been
terminated on the tenth (10th) business day prior to the occurrence of
any of the following events: (i) dissolution or liquidation of the
Company, other than in conjunction with a bankruptcy of the Company or
any similar occurrence, (ii) any merger, consolidation, acquisition,
separation, reorganization or similar occurrence, where the Company
will not be the surviving entity or (iii) the transfer of substantially
all of the assets of the Company or 75% or more of the outstanding
Stock of the Company.
SECTION 7. Transfer, Leave of Absence, etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and
(c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.
SECTION 8. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option or Restricted Stock award
theretofore granted, without the optionee's or participant's consent, or (ii)
which without the approval of the stockholders of the Company would cause the
Plan to no longer comply with Rule 16b-3 under the Securities Exchange Act of
1934, Section 422 of the Code or any other regulatory requirements.
The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his consent. The
Committee may also substitute new Stock Options for previously granted options,
including previously granted options having higher option prices.
SECTION 9. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
SECTION 10. General Provisions.
(a) The Committee may require each person purchasing shares pursuant to
a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan pursuant
to any Restricted Stock awards shall be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed, and any applicable
Federal or state securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
(b) Subject to paragraph (d) below, recipients of Restricted Stock
awards under the Plan (not including Stock Options) are not required to make any
payment or provide consideration other than the rendering of services.
(c) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.
(d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includible as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the terms of such award so permit, a participant
may elect by written notice to the Company to satisfy part or all of the
withholding tax requirements associated with the award by (i) authorizing the
Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
participant under this Section 10(d). Any such election shall be in accordance
with, and subject to, applicable tax and securities laws, regulations and
rulings.
(e) At the time of grant, the Committee may provide in connection with
any grant or award made under this Plan that the shares of Stock received as a
result of such grant shall be subject to a repurchase right in favor of the
Company, pursuant to which the participant shall be required to offer to the
Company upon termination of employment for any reason any shares that the
participant acquired under the Plan, with the price being the then Fair Market
Value of the Stock or, in the case of a termination for Cause, an amount equal
to the cash consideration paid for the Stock, subject to such other terms and
conditions as the Committee may specify at the time of grant. The Committee may,
at the time of the grant of an award under the Plan, provide the Company with
the right to repurchase, or require the forfeiture of, shares of Stock acquired
pursuant to the Plan by any participant who, at any time within two years after
termination of employment with the Company, directly or indirectly competes
with, or is employed by a competitor of, the Company.
(f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if the Committee (or the
Company's chief executive or chief financial officer) certifies in writing that
under Section 3 sufficient shares are available for such reinvestment (taking
into account then outstanding Stock Options and other Plan awards).
SECTION 11. Effective Date of Plan.
The Plan became effective on October 21, 1991, and was amended by the
shareholders on May 19, 1994. The Board further amended the Plan on September 6,
1996 and February 19, 1997 to comply with new Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 and with Section 162(m) of the Code.
PREMIUMWEAR, INC.
8000 West 78th Street, Suite 400, Minneapolis, Minnesota 55439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated April 3, 1997, hereby appoints Thomas D. Gleason and Gerald E.
Magnuson as proxies (each with the power to act alone and with the power of
substitution and revocation), to represent the undersigned and to vote as
designated below, all shares of Common Stock of PremiumWear, Inc. held of record
by the undersigned on March 28, 1997, at the Annual Meeting of Shareholders to
be held on May 14, 1997, at the Radisson Hotel South, 7800 Normandale Boulevard,
Bloomington, Minnesota 55439.
THE PREMIUMWEAR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE FOLLOWING
PROPOSALS:
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed below
(except as marked to the contrary)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
C.D. Anderson Mark B. Vittert
(Instruction: To withhold authority to vote for any individual nominee, mark
the FOR box and write that nominee's name in the space provided
below.)
- --------------------------------------------------------------------------------
2. PROPOSAL TO AMEND THE 1991 STOCK PLAN TO IMPOSE AN ANNUAL CAP ON THE NUMBER
OF SHARES GRANTED TO AN INDIVIDUAL OF 150,000 SHARES. FOR AGAINST ABSTAIN
(CONTINUED, AND TO BE COMPLETED AND SIGNED, ON THE REVERSE SIDE)
(CONTINUED FROM THE OTHER SIDE)
3. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1) AND (2) AND, IN THE DISCRETION OF THE PROXIES, ON ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN exactly as name appears on this card. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
Dated: _______________________________, 1997
____________________________________________
Signature(s) of Shareholder(s)
____________________________________________
Signature if held jointly
