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
[X]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
[ ]Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
GALEY & LORD, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
[ ] Fee paid previously with preliminary materials: N/A
[ ]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
GALEY & LORD, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 11, 1997
TO THE STOCKHOLDERS OF
GALEY & LORD, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Meeting") of Galey & Lord, Inc., a Delaware
corporation (the "Company"), will be held at the offices of the
Company, 980 Avenue of the Americas, New York, New York 10018, on
Tuesday, February 11, 1997 at 10:30 A.M., Local Time, to consider
and act upon the following:
1. To elect eight directors of the Company to serve as
the Board of Directors until the next annual meeting
of stockholders and until their successors have been
duly elected and qualified;
2. To consider and vote upon the adoption of the
proposed 1996 Restricted Stock Plan for non-employee
directors;
3. To consider and vote upon proposed amendments to the
Company's Amended and Restated 1989 Stock Option
Plan;
4. To ratify the selection of Ernst & Young LLP as
independent auditors of the Company for the 1997
fiscal year; and
5. To consider and act upon such other matters as may
properly come before the Meeting or any adjournment
thereof.
Only stockholders of record of the Company's Common Stock at
the close of business on December 20, 1996 shall be entitled to
receive notice of, and to vote at, the Meeting, and at any
adjournment or adjournments thereof. A list of the stockholders of
the Company as of the close of business on December 20, 1996 will
be available for inspection during business hours for ten days
prior to the Meeting at the Company's principal executive offices
located at 980 Avenue of the Americas, New York, New York 10018. A
Proxy and a Proxy Statement for the Meeting are enclosed herewith.
All stockholders are cordially invited to attend the Meeting.
Whether or not you plan to attend the Meeting, please complete,
date and sign the enclosed Proxy, which is solicited by the Board
of Directors of the Company, and mail it promptly in the enclosed
envelope to make sure that your shares are represented at the
Meeting. In the event you decide to attend the Meeting in person,
you may, if you desire, revoke your Proxy and vote your shares in
person.
By Order of the Board of Directors
(Signature of Michael R. Harmon Appears Here)
MICHAEL R. HARMON
SECRETARY
Dated: January 7, 1997
IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
GALEY & LORD, INC.
980 Avenue of the Americas
New York, New York 10018
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 11, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Galey & Lord, Inc., a Delaware corporation
(the "Company"), to be voted at the Annual Meeting of Stockholders (the
"Meeting") of the Company which will be held at the offices of the Company, 980
Avenue of the Americas, New York, New York 10018, on Tuesday, February 11, 1997
at 10:30 A.M., Local Time, and any adjournment or adjournments thereof for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders
and in this Proxy Statement.
The principal executive offices of the Company are located at 980 Avenue of
the Americas, New York, New York 10018. The approximate date on which this Proxy
Statement and accompanying Proxy will first be sent or given to stockholders is
January 7, 1997.
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked, will be voted in accordance with the
instructions contained therein and, in the absence of specific instructions,
will be voted (i) FOR the election as directors of persons who have been
nominated by the Board of Directors, (ii) FOR the adoption of the proposed 1996
Restricted Stock Plan for non-employee directors, (iii) FOR the adoption of each
of three proposed amendments to the Company's Amended and Restated 1989 Stock
Option Plan, (iv) FOR the ratification of the selection of Ernst & Young LLP as
independent auditors to audit and report upon the consolidated financial
statements of the Company for the 1997 fiscal year, and (v) in accordance with
the judgment of the person or persons voting the proxies on any other matter
that may be properly brought before the Meeting. Each such Proxy granted may be
revoked at any time thereafter by writing to the Secretary of the Company prior
to the Meeting, or by execution and delivery of a subsequent Proxy or by
attendance and voting in person at the Meeting, except as to any matter or
matters upon which, prior to such revocation, a vote shall have been cast
pursuant to the authority conferred by such Proxy.
VOTING SECURITIES
Stockholders of record as of the close of business on December 20, 1996
(the "Record Date") will be entitled to notice of, and to vote at, the Meeting
or any adjournments thereof. On the Record Date there were outstanding
11,576,841 shares of the Company's Common Stock, $.01 par value (the "Common
Stock"), which figure does not include an additional 377,003 treasury shares
held by the Company. There was no other class of voting securities outstanding
at the Record Date. Each holder of Common Stock is entitled to one vote for each
share held by such holder. The presence, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting.
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Meeting, eight directors are to be elected to serve until the next
annual meeting of stockholders and until their successors shall be duly elected
and shall qualify. Unless otherwise specified, all proxies received will be
voted in favor of the election of the eight nominees of the Board of Directors
named below as directors of the Company. All of the eight nominees are presently
directors of the Company. The term of the current directors expires at the
Meeting. Should any of the nominees not remain a candidate for election at the
date of the Meeting (which contingency is not now contemplated or foreseen by
the Board of Directors), proxies solicited thereunder will be voted in favor of
those nominees who do remain candidates and may be voted for substitute nominees
selected by the Board of Directors.
Assuming a quorum is present, a vote of a majority of the votes cast at the
Meeting, in person or by proxy, is required to elect each of the nominees as a
director. Abstentions and broker non-votes are not counted as votes cast.
The following table sets forth the names of the nominees, their ages, and
their current positions with the Company:
<TABLE>
<CAPTION>
NAME AGE TITLE
<S> <C> <C>
Arthur C. Wiener 59 Chairman of the Board,
President and Chief
Executive Officer
Lee Abraham 69 Director
Paul G. Gillease 64 Director
William deR. Holt 68 Director
Howard S. Jacobs 53 Director
William M.R. Mapel 65 Director
Stephen C. Sherrill 43 Director
David F. Thomas 47 Director
</TABLE>
Mr. Wiener has been Chairman of the Board of the Company since February
1992 and President and Chief Executive Officer of the Company since February
1988. He was Group Vice President of Burlington Industries, Inc. ("Burlington")
and President of Burlington's Blended Division, the Company's predecessor, from
October 1984 to February 1988. Mr. Wiener was President of the Apparel Fabrics
Marketing Division of Dan River Inc., a textile manufacturer, from 1975 to
October 1984. He was employed by the Menswear Division of Burlington in various
capacities from 1966 to October 1975, including as President from 1973 to
October 1975.
Mr. Abraham has been a director of the Company since February 1993. Mr.
Abraham served as Chairman and Chief Executive Officer of Associated
Merchandising Corporation, a retail merchandising and sourcing company, from
1977 until his retirement in January 1993. Mr. Abraham is a director of Liz
Claiborne, Inc., a sportswear apparel company; Smith Barney Shearson Income &
Equity Funds, a registered investment company; R.G. Barry Corporation, a
manufacturer of slippers; and Signet Group, plc, an owner and operator of retail
jewelry stores in the United States and the United Kingdom.
Mr. Gillease has been a director of the Company since November 1993. He has
been a consultant for Guilford Mills, Inc., a manufacturer of knitted textiles,
since November 1993. Mr. Gillease was employed by E.I. Du Pont de Nemours &
Company Incorporated in various executive capacities from 1961 to his retirement
in October 1993, including most recently as Vice President and General Manager
responsible for textile fiber operations from October 1990 to October 1993. Mr.
Gillease is a director of Pillowtex, Inc., a home furnishings manufacturer, and
Guilford Mills, Inc.
Mr. Holt has been a director of the Company since April 1988. He was
employed for 37 years by Burlington in various capacities, including most
recently as a Group Vice President until his retirement in March 1988.
Mr. Jacobs has been a director of the Company since February 1989. He has
been a member of the law firm of Rosenman & Colin LLP, New York, New York,
counsel to the Company, since March 1994. For more than five years prior to
March 1994, Mr. Jacobs was a member of two other law firms located in New York
City, each of which was former counsel to the Company.
Mr. Mapel has been a director of the Company since February 1989. Mr. Mapel
was employed by Citibank, N.A. in various executive capacities from 1969 to his
retirement in October 1988, including most recently as a Senior
2
<PAGE>
Vice President and Chairman of the Policy Committee of the North American
Finance Group from 1986 to September 1988. He has been the Chairman of the Board
of Mercantile & General Reinsurance Company of America, a reinsurance company,
and a director of Mercantile & General Life Reassurance Company of America, a
reinsurance company, since 1982. Mr. Mapel is a director of NSC Corporation, an
environmental service company; Brundage, Story & Rose Investment Trust, a
registered investment company; Churchill Capital Partners, a registered
investment company; and USLIFE Income Fund, Inc., a closed-end mutual fund.
Mr. Sherrill has been a director of the Company since May 1993. Mr.
Sherrill was formerly a director of the Company from February 1988 to February
1992. Mr. Sherrill has been a principal of Bruckman, Rosser, Sherrill & Co.,
Inc., a private equity investment firm, since February 1995. For more than five
years prior to February 1995, Mr. Sherrill was a Managing Director or Vice
President of Citicorp Venture Capital, Ltd. ("CVC"), a venture capital and
leveraged buyout company which is a subsidiary of Citibank N.A. Mr. Sherrill is
a director of Jitney Jungle Stores of America Inc., a regional chain of grocery
stores.
Mr. Thomas has been a director of the Company since March 1996. Mr. Thomas
has been a Managing Director of CVC for more than five years and has been the
President of 399 Venture Partners, Inc., a venture capital and leveraged buyout
company which is a subsidiary of Citibank N.A. and an affiliate of CVC, since
December 1994. Mr. Thomas is a director of Furnishings International Inc., a
manufacturer of residential furniture and decorative home furnishings fabrics.
There were seven meetings of the Board of Directors of the Company during
the last fiscal year and action was taken by the directors by unanimous written
consent in lieu of a meeting on one occasion during the last fiscal year. All
directors attended 75% or more of the meetings of the Board. In addition, all
directors who served on committees of the Board of Directors attended 75% or
more of the aggregate of the total number of meetings of the Board of Directors
and the total number of meetings held by such committees on which he served
during the periods that he served. The Board of Directors has designated from
among its members an Audit Committee, which consists of Messrs. Jacobs, Mapel
and Thomas. The Audit Committee, which reviews the Company's financial and
accounting practices and controls, held two meetings during the 1996 fiscal
year. The Company has a Compensation Committee of the Board of Directors, which
reviews the compensation of the Company's executive officers. The Compensation
Committee consists of Messrs. Abraham, Gillease and Holt. The Compensation
Committee held four meetings during the 1996 fiscal year. The Company does not
have a standing nominating committee. There are no family relationships between
any of the directors or executive officers of the Company.
In May 1992, the Company, CVC and Mr. Wiener entered into an agreement,
under which, if requested by CVC, the Company will use its best efforts to cause
a designee of CVC to be nominated as a director of the Company. Mr. Wiener has
agreed to vote all shares owned by him in favor of CVC's designee. Such
agreement will terminate on the earlier of its tenth anniversary or the date on
which CVC beneficially owns fewer than 20% of the outstanding shares of Common
Stock and nonvoting common stock of the Company. Pursuant to the agreement, CVC
also has the right to appoint an observer who will be permitted to attend all
meetings of the Board of Directors and its committees. Mr. Thomas is serving as
the designee of CVC under such agreement and Mr. Wiener will vote all shares of
Common Stock owned by him for the election of Mr. Thomas as a director.
EXECUTIVE OFFICERS
Set forth below is certain information regarding the executive officers of
the Company:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
<S> <C> <C>
Arthur C. Wiener 59 Chairman of the Board, President and Chief Executive Officer
Robert McCormack 47 Executive Vice President and President -- Woven Division, Apparel Marketing Group
Charles A. Blalock 49 Executive Vice President of Manufacturing
Michael R. Harmon 49 Executive Vice President, Chief Financial Officer, Treasurer and Secretary
</TABLE>
Officers serve at the discretion of the Board of Directors.
Information regarding Mr. Wiener is included herein in the section entitled
"PROPOSAL 1 -- ELECTION OF DIRECTORS."
3
<PAGE>
Mr. McCormack has been Executive Vice President of the Company since May
1992 and President of the Apparel Marketing Group of the Company's Woven
Division since April 1994. Mr. McCormack was Executive Vice President of the
Apparel Marketing Group of the Company's Woven Division from February 1988 to
April 1994. He was employed by Burlington as a merchandise manager from April
1986 to February 1988 and as a sales manager for finished goods from January
1985 to April 1986.
Mr. Blalock has been Executive Vice President of Manufacturing of the
Company since March 1990. He was Plant Manager of the Company's dyeing and
finishing plant located in Society Hill, South Carolina from February 1988 to
March 1990. Mr. Blalock was employed by Burlington in various line and staff
positions from September 1972 to February 1988, including most recently as Plant
Manager of the dyeing and finishing plant located in Society Hill from February
1987 to February 1988.
Mr. Harmon has been Executive Vice President and Chief Financial Officer of
the Company since March 1991 and Secretary and Treasurer of the Company since
February 1988. He was Vice President of Finance of the Company from February
1988 to March 1991. Mr. Harmon was employed by Burlington in various accounting
and financial capacities from May 1970 to February 1988, most recently as
Administrative Vice President and Controller from November 1987 to February
1988.
SECURITY OWNERSHIP
The following table sets forth certain information as of December 20, 1996
regarding the ownership of Common Stock of the Company by (i) each person who is
known to the management of the Company to have been the beneficial owner of more
than 5% of the outstanding shares of the Company's Common Stock, (ii) each
director and nominee for director, (iii) each executive officer named in the
Summary Compensation Table contained herein, and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF POSITION WITH AMOUNT AND NATURE OF % OF
BENEFICIAL OWNER THE COMPANY BENEFICIAL OWNERSHIP CLASS
<S> <C> <C> <C>
Citicorp Venture Capital, Ltd. None 4,629,500(1) 40.0 %
399 Park Avenue
New York, New York 10043
Pioneering Management Corporation None 1,172,800(2) 10.1 %
60 State Street
Boston, Massachusetts 02109
Dimensional Fund Advisors, Inc. None 648,500(3) 5.6 %
1099 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Arthur C. Wiener Chairman of the Board, 875,700(4) 7.4 %
980 Avenue of the Americas President and Chief
New York, New York 10018 Executive Officer
Lee Abraham Director 7,500(4) *
35 Old Forge Road
Wilton, Connecticut 06897
Paul G. Gillease Director 7,000(4) *
15 McMullen Farm Lane
West Chester, Pennsylvania 19382
William deR. Holt Director 28,000(4) *
206 Meadowbrook Terrace
Greensboro, North Carolina 27408
Howard S. Jacobs Director 23,000(4) *
575 Madison Avenue
New York, New York 10022
William M. R. Mapel Director 20,530(4) *
18 Stephanie Lane
Darien, Connecticut 06820
Stephen C. Sherrill Director 201,112(4) 1.7 %
126 East 56th Street
New York, New York 10022
David F. Thomas Director 45,708(4) *
399 Park Avenue
New York, New York 10043
Charles A. Blalock Executive Vice President 51,525(5) *
7736 McCloud Road, Suite 300 of Manufacturing
Greensboro, North Carolina 27409
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF POSITION WITH AMOUNT AND NATURE OF % OF
BENEFICIAL OWNER THE COMPANY BENEFICIAL OWNERSHIP CLASS
Michael R. Harmon Executive Vice President, 87,030(6) *
7736 McCloud Road, Suite 300 Chief Financial Officer,
Greensboro, North Carolina 27409 Treasurer and Secretary
<S> <C> <C> <C>
Robert McCormack Executive Vice President and 82,072(7) *
980 Avenue of the Americas President -- Woven Division,
New York, New York 10018 Apparel Marketing Group
All directors and executive officers 1,429,177(4) 11.9 %
as a group (11 persons)
</TABLE>
* Less than one percent (1%).
(1) Excludes shares of Common Stock owned by employees of CVC, as to which CVC
disclaims beneficial ownership.
(2) Based upon information contained in a Form 13F filed with the Securities and
Exchange Commission (the "SEC") on November 19, 1996 (the "Form 13F") by
Pioneering Management Corporation on behalf of itself and other
institutional investment managers (collectively, "Pioneering") for the
quarter ended September 30, 1996. The Form 13F indicates that Pioneering has
shared investment discretion and sole voting authority with respect to the
shares.
(3) Based upon information contained in a Form 13F-E filed with the SEC on
November 15, 1996 (the "Form 13 F-E") by Dimensional Fund Advisors, Inc.
("Dimensional") for the quarter ended September 30, 1996. The Form 13F-E
indicates that Dimensional has sole investment discretion with respect to
all of the shares, sole voting authority with respect to 441,800 of the
shares, and no voting authority with respect to 206,700 of the shares.
(4) Includes shares subject to currently exercisable stock options as follows:
Mr. Wiener -- 275,700; Mr. Abraham -- 6,000; Mr. Gillease -- 6,000; Mr.
Holt -- 28,000; Mr. Jacobs -- 23,000; Mr. Mapel -- 8,000; Mr.
Sherrill -- 11,000; Mr. Thomas -- 2,500; and all directors and executive
officers of the Company as a group -- 428,000.
(5) Includes (i) 16,025 shares held by Mr. Blalock's wife, (ii) 100 shares held
by Mr. Blalock's daughter, and (iii) 35,400 shares subject to currently
exercisable stock options.
(6) Includes (i) 21,919 shares held by Mr. Harmon's wife, (ii) 17,000 shares
held in a self-directed individual retirement account, (iii) 500 shares held
in trust for the benefit of Mr. Harmon's daughter, with Mr. Blalock as
trustee, and (iv) 28,200 shares subject to currently exercisable stock
options.
(7) Includes 4,200 shares subject to currently exercisable stock options.
Excludes 3,000 shares subject to currently exercisable stock options held by
Mr. McCormack's wife, as to which Mr. McCormack disclaims beneficial
ownership.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
greater than 10% of a registered class of the Company's equity securities to
file certain reports ("Section 16 Reports") with the Securities and Exchange
Commission with respect to ownership and changes in ownership of the Common
Stock and other equity securities of the Company. Based solely on the Company's
review of the Section 16 Reports furnished to the Company and written
representations from certain reporting persons, all Section 16(a) requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with, except that (i) Mr. Gillease failed to file a Form 4 for the
month of January 1996 to report the open market purchase of 1,000 shares of
Common Stock during such month, but such transaction was reported on a timely
filed Form 5 for fiscal 1996, and (ii) Mr. Thomas failed to file a Form 3 upon
becoming a director of the Company in March 1996, but reported his Form 3
holdings on a timely filed Form 5 for fiscal 1996.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes compensation paid by the Company during
fiscal 1994, 1995 and 1996 to the Company's Chairman of the Board, President and
Chief Executive Officer and its other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
AWARDS
ANNUAL COMPENSATION RESTRICTED SECURITIES PAYOUTS
OTHER ANNUAL STOCK UNDERLYING LTIP
FISCAL COMPENSATION AWARD(S) OPTIONS/ PAYOUTS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) ($) SARS(#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Arthur C. Wiener 1996 $ 500,000 $ 233,789 $ 70,137 -- 250,000(4) --
Chairman of the Board, 1995 500,000 -- -- -- 15,000(5) --
President and Chief 1994 475,000 319,583 93,752 -- 15,000(6) --
Executive Officer
Robert McCormack 1996 $ 232,502 $ 63,480 $ 19,044 -- 75,000(4) --
Executive Vice President 1995 215,000 -- -- -- 8,500(5) --
and President -- Woven 1994 202,500 75,750 22,222 -- 7,000(6) --
Division, Apparel
Marketing Group
Charles A. Blalock 1996 $ 181,671 $ 63,480 $ 19,044 -- 75,000(4) --
Executive Vice President 1995 161,667 -- -- -- 7,000(5) --
of Manufacturing 1994 150,000 75,750 22,222 -- 7,000(6) --
Michael R. Harmon 1996 $ 181,671 $ 63,480 $ 19,044 -- 75,000(4) --
Executive Vice President, 1995 158,333 -- -- -- 7,000(5) --
Chief Financial Officer, 1994 143,333 75,750 22,222 -- 7,000(6) --
Treasurer and Secretary
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(3)
<S> <C>
Arthur C. Wiener $2,977
Chairman of the Board, 624
President and Chief 6,356
Executive Officer
Robert McCormack $3,529
Executive Vice President 337
and President -- Woven 5,212
Division, Apparel
Marketing Group
Charles A. Blalock $2,325
Executive Vice President 253
of Manufacturing 3,861
Michael R. Harmon $3,450
Executive Vice President, 248
Chief Financial Officer, 3,689
Treasurer and Secretary
</TABLE>
(1) Reflects cash bonuses accrued under the Company's Incentive Bonus Plan.
(2) Reflects deferred compensation incentive awards granted for fiscal 1996 and
fiscal 1994 under the Company's Deferred Compensation Program, a
non-qualified, unfunded plan established in fiscal 1994 by the Company under
which certain key executives are awarded deferred compensation. The plan
participants will only be vested in the current year award upon the
completion of five years of service after the date of the award, upon normal
retirement, upon involuntary termination for reasons other than violations
of Company policies, theft or misappropriation of the Company's assets or
performance of any act which harms the Company, or upon permanent and total
disability or death, whichever occurs first. In the event of retirement,
involuntary termination for reasons other than as described above, or
disability, any unpaid deferred awards will be vested and paid upon the
completion of five years after the date of the award. Upon the death of a
participant, the Company has the option to either immediately pay the award
to the participant's estate or pay the award upon the completion of five
years after the date of the award.
(3) Includes the Company's contributions to its Savings and Profit Sharing Plan,
a qualified defined contribution plan which covers all full time employees
who have completed a certain minimum amount of service. For fiscal 1996,
such contributions were as follows: Mr. Wiener -- $2,353; Mr.
McCormack -- $3,165; Mr. Blalock -- $2,040; and Mr. Harmon -- $3,165. There
were no such contributions made in fiscal 1995. Includes life insurance
premiums paid by the Company with respect to term life insurance on the life
of the named persons, which for fiscal 1996 were as follows: Mr.
Wiener -- $624; Mr. McCormack -- $364; Mr. Blalock -- $285; and Mr.
Harmon -- $285.
(4) Reflects options to purchase shares of Common Stock granted to such persons
under the Company's Amended and Restated 1989 Stock Option Plan (the "Stock
Option Plan") in July 1996 at an exercise price of $10.375 per
6
<PAGE>
share. Such options vest at the rate of 20% of such options when the market
price per share of the Common Stock equals or exceeds $15.00, $17.50,
$20.00, $22.50 and $25.00.
(5) Reflects options to purchase shares of Common Stock granted to such persons
under the Company's Stock Option Plan in November 1994 at an exercise price
of $15.00 per share. Such options vest over a five-year period beginning
November 2, 1995 at the rate of 20% per year. All of such options were
cancelled and terminated in July 1996.
(6) Reflects options to purchase shares of Common Stock granted to such persons
under the Company's Stock Option Plan in December 1993 at an exercise price
of $11.50 per share. Such options vest over a five-year period beginning
December 2, 1994 at the rate of 20% per year.
The following table sets forth information for each of the persons named in
the Summary Compensation Table with respect to stock options granted to such
executive officers during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
NUMBER PERCENT OF
OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE GRANT DATE
GRANTED(1) IN FISCAL PRICE EXPIRATION VALUE(3)
NAME (#) YEAR ($/SH) DATE ($)
<S> <C> <C> <C> <C> <C>
Arthur C. Wiener 250,000 51.87% $ 10.375 (2) $763,000
Robert McCormack 75,000 15.32% 10.375 (2) 228,000
Charles A. Blalock 75,000 15.32% 10.375 (2) 228,000
Michael R. Harmon 75,000 15.32% 10.375 (2) 228,000
</TABLE>
(1) Reflects options to purchase shares of Common Stock granted to such persons
under the Company's Stock Option Plan in July 1996. Such options vest at the
rate of 20% of such options when the market price per share of the Common
Stock equals or exceeds $15.00, $17.50, $20.00, $22.50 and $25.00.
(2) Such options expire on July 10, 2006; provided that, to the extent any
portion of such options is not vested on July 10, 2001, such non-vested
portion expires on such date.
(3) The grant date value was estimated using a modified Black-Scholes
option-pricing model, which in addition to the traditional inputs, takes
into consideration the target stock price (or barrier) which must be
attained. The following assumptions were incorporated into the model:
weighted average risk-free interest rate of 6.57%; expected dividend yield
of 0%; expected lives ranging from 2 to 5.5 years; and volatility of 34%.
The following table sets forth information for each of the persons named in
the Summary Compensation Table with respect to the aggregate stock options
exercised during the fiscal year ended September 28, 1996, and stock options
held as of September 28, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Arthur C. Wiener -- $ -- 275,700/256,000 $1,226,025/$537,250
Robert McCormack -- -- 4,200/77,800 4,200/162,175
Charles A. Blalock 10,100 86,632 35,400/77,800 365,184/162,175
Michael R. Harmon -- -- 28,200/77,800 281,880/162,175
</TABLE>
(1) Based upon the closing price of the Common Stock of $12.50 on September 28,
1996, less the exercise price.
7
<PAGE>
RETIREMENT PLAN
The Company's Retirement Plan (the "Retirement Plan") covers all full-time
employees who have completed at least 1,000 hours of service during a period of
12 consecutive months beginning on such employees' employment commencement date
(or the anniversary thereof). The Retirement Plan recognizes credited service
with Burlington for membership eligibility and vesting purposes only. Under the
terms of the Retirement Plan (prior to its amendment effective April 1, 1992),
employees contributed at the rate of 1.5% of the first $6,600 of compensation in
a plan year and 3% of compensation in excess of $6,600, up to a compensation
limit which was adjusted annually. The Company's contributions, if any, were
determined annually on an actuarial basis. An employee's annual pension benefit
payable at normal retirement date (the first day of the month following the
month in which the employee's 65th birthday occurs) was equal to one-half of the
employee's total contribution while a member of the Retirement Plan. Such
benefit is payable in equal monthly installments for the life of the employee.
A reduced pension benefit is payable upon (i) early retirement at or after
age 55, (ii) death, (iii) disability, (iv) termination of employment after
completing five years of vesting service, or (v) termination due to lack of
work. Employees are always vested in their contributions. The normal form of
benefit payment is a straight life annuity for unmarried employees and a
(reduced) joint and survivor annuity for those who are married. Benefits may
also be received at the employee's election in the form of a lump sum payment
which is the present value of the employee's accrued benefit.
Effective as of April 1, 1992, the Retirement Plan was amended to provide
that employee contributions are neither required nor permitted. Under the
revised plan, the amount of a participant's annual retirement benefits (to be
paid in monthly installments) equals the sum of (i) the accrued benefit
determined under the formula described above as of March 31, 1992, and (ii) (a)
1% of a participant's average annual compensation paid on and after April 1,
1992, plus (b) 0.5% of a participant's average annual compensation in excess of
his or her social security covered compensation, multiplied by his or her years
of service completed after March 31, 1992 (not in excess of 35 years). The
compensation described in (ii) above was limited to $150,000 in fiscal 1996.
The estimated annual benefits payable upon retirement at normal retirement
age (assuming no increase in present salary levels) to the persons named in the
Summary Compensation Table are as follows: Arthur C. Wiener -- $39,668; Robert
McCormack -- $52,391; Charles A. Blalock -- $45,871; and Michael R. Harmon --
$44,941.
8
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective for fiscal 1994, the Company established a non-qualified,
unfunded supplementary retirement plan under which the Company will pay
supplemental pension benefits to key executives. The plan is intended to
supplement retirement benefits received under the Retirement Plan and from
Social Security. The amounts set forth in the table below represent total annual
pension benefits received under the Supplemental Executive Retirement Plan, the
Retirement Plan and Social Security which are payable monthly upon retirement at
age 65 or older for the participant's lifetime. The pension benefits payable
under the Supplemental Executive Retirement Plan are based on a straight life
annuity and are reduced for both Social Security benefits and the annual benefit
payable from the Retirement Plan. A discount of five percent per year is applied
for retirement before age 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE OF FINAL FIVE CONSECUTIVE YEARS OF SERVICE
YEARS OF COMPENSATION 5 10 15 20 25 30
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $17,500 $ 35,000 $ 52,500 $ 70,000 $ 87,500 $105,000
250,000 21,875 43,750 65,625 87,500 109,375 131,250
300,000 26,250 52,500 78,750 105,000 131,250 157,500
350,000 30,625 61,250 91,875 122,500 153,125 183,750
400,000 35,000 70,000 105,000 140,000 175,000 210,000
450,000 39,375 78,750 118,125 157,500 196,875 236,250
500,000 43,750 87,500 131,250 175,000 218,750 262,500
550,000 48,125 96,250 144,375 192,500 240,625 288,750
600,000 52,500 105,000 157,500 210,000 262,500 315,000
650,000 56,875 113,750 170,625 227,500 284,375 341,250
700,000 61,250 122,500 183,750 245,000 306,250 367,500
750,000 65,625 131,250 196,875 262,500 328,125 393,750
800,000 70,000 140,000 210,000 280,000 350,000 420,000
850,000 74,375 148,750 223,125 297,500 371,875 446,250
900,000 78,750 157,500 236,250 315,000 393,750 472,500
950,000 83,125 166,250 249,375 332,500 415,625 498,750
</TABLE>
The average of the final five consecutive years of compensation includes
the participant's salary and bonus. The persons named in the Summary
Compensation Table have each been credited with approximately nine years of
service. The net pension cost for fiscal 1996 was $179,500 for approximately
thirty employees currently participating in the Supplemental Executive
Retirement Plan.
SEVERANCE PLAN
Under the Company's Severance Plan, the Company makes payroll severance
payments and vacation severance payments to eligible full-time salaried
employees who are involuntarily terminated from the Company. The right to
receive payroll severance benefits does not vest until termination of
employment, as determined by eligibility and benefit schedules in effect on the
date of termination, which may be changed by the Company at any time. Vacation
severance payments are based upon a person's length of continuous employment
with the Company, less vacation taken during the calendar year. If a Company
facility is sold as an ongoing business, an employee of such facility remaining
employed by the Company until the effective date of such sale is eligible for
severance benefits if such employee (i) is not offered employment by the
purchaser or successor employer or (ii) refuses an offer of employment in a less
than comparable position or for less than a substantially equivalent base
salary. Employees who continue to be employed by the successor entity are not
eligible for severance benefits.
As of September 28, 1996, the persons named in the Summary Compensation
Table were eligible to receive the following amounts in the event of involuntary
termination: Arthur C. Wiener -- $208,333; Robert McCormack -- $81,668; Charles
A. Blalock -- $95,004; and Michael R. Harmon -- $110,838.
9
<PAGE>
COMPENSATION OF DIRECTORS
Currently, each of the Company's directors who is not an employee of the
Company receives a fee of $20,000 per year for serving as a director, plus
$1,000 for each Board committee meeting attended (other than for a Board
committee meeting held on the same date as a meeting of the Board of Directors),
and will be granted annually and at the time such person becomes a director
options to purchase 2,000 shares of Common Stock under the Company's Stock
Option Plan. Currently, under the Company's Stock Option Plan, each non-employee
director of the Company may make an irrevocable election to receive all of such
director's annual director's fee in cash, or in lieu of cash, in the form of
stock options granted under the Stock Option Plan to purchase up to 2,500 shares
of Common Stock. Mr. Thomas made such election for 1996 and on March 18, 1996,
Mr. Thomas was granted options to purchase 2,500 shares of Common Stock at an
exercise price of $9.625 per share.
The Company has adopted, subject to stockholder approval, the 1996
Restricted Stock Plan (the "Restricted Stock Plan") and certain amendments to
the Company's Stock Option Plan whereby each non-employee director of the
Company makes an irrevocable election (i) to receive annually and at the time
such person becomes a director
either (a) options to purchase up to 2,000 shares of Common Stock granted under
the Company's Stock Option Plan or (b) 1,200 shares of Common Stock issued
pursuant to the Company's Restricted Stock Plan, and (ii) on or prior to
December 1 of each calendar year or at the time such person becomes a director,
to receive all of his or her annual director's fee, beginning for the 1997
calendar year, (a) in cash in the amount of $20,000, or (b) in the form of a
grant of stock options to purchase up to 2,500 shares of Common Stock under the
Company's Stock Option Plan, or (c) in the form of a combination of $10,000 in
cash plus an amount of shares of Common Stock issued under the Restricted Stock
Plan having an aggregate fair market value on the date of issuance equal to
$15,000; PROVIDED, HOWEVER, that in the event any person makes such election at
the time he or she becomes a director, such non-employee director shall receive
a PRO RATA portion of his or her annual director's fee (whether in cash, stock
options granted under the Stock Option Plan or a combination of cash and shares
of Common Stock issued under the Restricted Stock Plan) based upon the remaining
portion of the calendar year in which such person becomes a director. In
contemplation of the adoption by the Company of the Restricted Stock Plan and
the foregoing amendments to the Stock Option Plan, each of Messrs. Abraham,
Gillease, Holt, Jacobs, Mapel and Sherrill agreed to waive their right to
receive options granted under the Stock Option Plan to purchase 2,000 shares of
Common Stock on March 18, 1996, and were each issued on December 30, 1996,
subject to stockholder approval, 1,200 shares of Common Stock under the
Restricted Stock Plan. On March 18, 1996, Mr. Thomas was granted options under
the Stock Option Plan to purchase 2,000 shares of Common Stock at an exercise
price of $9.625 per share.
Additional information regarding the proposed Restricted Stock Plan and the
proposed amendments to the Stock Option Plan is included herein in the sections
entitled "PROPOSAL 2 -- APPROVAL OF 1996 RESTRICTED STOCK PLAN" and "PROPOSAL
3 -- APPROVAL OF AMENDMENTS TO THE AMENDED AND RESTATED 1989 STOCK OPTION PLAN."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three non-employee directors and has general oversight, review and
approval responsibilities with respect to the compensation of the Company's
executive officers. The Committee has on occasion engaged an independent
consultant to assist it in carrying out its duties, particularly as such duties
relate to the structure and competitive positioning of the Company's
compensation program.
The Company's executive compensation program is designed to attract and
retain qualified executives with competitive levels of compensation that are
related to performance goals and which recognize individual initiative and
accomplishments. The principal components of the Company's executive
compensation program are fixed compensation in the form of base salary, variable
compensation in the form of annual cash incentive bonuses, stock options and
awards under the Company's Deferred Compensation Program. The Company does not
have employment agreements with any of its executive officers or other
employees.
BASE SALARY. Mr. Wiener, the Company's Chairman of the Board, President and
Chief Executive Officer, makes recommendations to the Committee regarding the
base salaries of all executive officers. Following the Committee's discussion,
review and, if necessary, modification of such recommendations, the base
salaries of all executive officers are approved by the Committee. The Committee
considers various factors in its review, including the executive officer's job
responsibilities and performance, experience and years of service with the
Company, the business outlook for the Company and a comparison of base salaries
for comparable positions at other textile manufacturing and general industrial
companies of approximately the same size based on revenues. The Committee
believes that base salaries of executive officers are competitive with respect
to such group of companies. Salary adjustments are based
10
<PAGE>
on an annual evaluation of the performance of the Company and each executive
officer, and take into account any new responsibilities of the executive.
ANNUAL INCENTIVE BONUS. The Company has an Incentive Bonus Plan (the
"Incentive Plan"), pursuant to which incentive cash bonuses are payable annually
to executive officers and certain other key employees based upon the amount by
which the Company's earnings before interest, taxes, depreciation and
amortization ("EBITDA") for each fiscal year exceed established targets and, in
some cases, certain specific performance criteria for individual participants.
The performance criteria are based upon the Company achieving measurable
performance goals in a participant's principal area of responsibility, such as
marketing and manufacturing goals. Under the Incentive Plan, a significant
portion of each participant's total compensation is at risk and is dependent
upon the Company's overall financial performance and such participant's
individual accomplishments.
The Incentive Plan is reviewed annually by the Committee and is thereafter
presented, with the Committee's recommendations, to the Company's Board of
Directors for its approval. The initial recommendation of targeted EBITDA levels
is made at the beginning of each fiscal year by the Chairman of the Board,
President and Chief Executive Officer of the Company and, following discussion,
review and, at times, modification, is approved by the Committee and the Board
of Directors. In addition, the aggregate amount available to be paid under the
Incentive Plan is approved by the Committee and the Board of Directors and is
increased by specified percentages as the amount the Company's actual EBITDA
exceeds the established target level up to a certain prescribed maximum. The
Chairman of the Board, President and Chief Executive Officer designates, at the
beginning of each fiscal year, the maximum percentage (the "incentive
percentage") of the bonus that each participant may receive if the Company's
EBITDA equals or exceeds the established target level. In addition, with respect
to certain participants, their right to receive a portion of such incentive
percentage is dependent upon achieving the performance criteria established for
such participants, as described above. Such incentive percentages are reviewed
and approved by the Committee. In the event the Company does not achieve the
threshold level of EBITDA for the fiscal year, the executive officers of the
Company and the other participants in the Incentive Plan, with the exception of
the Chairman of the Board, President and Chief Executive Officer, may be awarded
a cash amount based on specific performance criteria, as recommended by the
Chairman of the Board, President and Chief Executive Officer and approved by the
Committee.
In addition, the Company has a Deferred Compensation Program (the "Deferred
Plan"), a non-qualified, unfunded plan under which executive officers and other
key executives receive annually a deferred compensation award. Under the
Deferred Plan, which was approved by the Company's Board of Directors upon the
Committee's recommendations, an aggregate amount available to be awarded
annually under the Deferred Plan was established (the "deferred pool"). Each
executive is entitled to receive an annual deferred compensation award in an
amount equal to 30% of the amount of such executive's incentive cash bonus award
under the Incentive Plan for such year. In the event that the aggregate amount
of all deferred compensation awards as calculated in accordance with such
formula exceeds the amount of the deferred pool, the amount of each executive's
deferred compensation award will be reduced PRO RATA so that all such awards do
not exceed the amount of the deferred pool. Participants in the Deferred Plan
will only be vested in the current year award upon the completion of five years
of service after the date of the award, upon normal retirement, upon involuntary
termination for reasons other than violations of Company policies, theft or
misappropriation of the Company's assets or performance of any act which harms
the Company, or upon permanent and total disability or death, whichever occurs
first. In the event of retirement, involuntary termination for reasons other
than as described above, or disability, any unpaid deferred awards will be
vested and paid upon the completion of five years after the date of the award.
Upon the death of a participant, the Company has the option to either
immediately pay the award to the participant's estate or pay the award upon the
completion of five years after the date of the award.
STOCK OPTIONS. The Committee believes that the significant equity interests
in the Company held by the Company's executive officers have served to link the
interests of the executives with those of the stockholders. Under the Company's
Stock Option Plan, options to purchase shares of Common Stock may be granted to
the executive officers of the Company. The Committee believes that the grant of
stock options will continue as an important component of the Company's executive
compensation program. For a discussion of the stock options granted to executive
officers during fiscal 1996, see the section entitled "Report on Repricing of
Options" contained in this Compensation Committee Report.
11
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION. Compensation for Mr. Wiener, the
Company's Chairman of the Board, President and Chief Executive Officer, is
generally established in accordance with the principles described above. The
Committee reviews Mr. Wiener's performance and establishes his base salary
considering the various factors described above for executive officers. The
amount of Mr. Wiener's annual incentive cash bonus under the Incentive Plan is
based upon whether the Company's overall performance meets or exceeds targets
established in the Company's business plan which is approved by the Board of
Directors at the beginning of each fiscal year. Mr. Wiener's base salary
remained the same for fiscal 1996 as compared to fiscal 1995 and increased for
fiscal 1995 as compared to fiscal 1994. The amount of his annual incentive cash
bonus has fluctuated depending upon the EBITDA levels achieved by the Company.
REPORT ON REPRICING OF OPTIONS. In July 1996, the Committee approved a new
stock option program designed to focus the efforts of the Company's management
team and other key employees towards enhancing stockholder value. The intent of
this special program is to signal to the Company's executive officers, other
members of the
management team and other key employees that, while they had performed
exceptionally well in the past, the benefits to be derived from the receipt of
stock options in the future should be tied to the market price of the Company's
Common Stock in order to promote the creation of stockholder value. As a result,
the decision was made to grant stock options under the Stock Option Plan,
pursuant to the new program, to the executive officers and other members of the
Company's management team and its key employees which would vest upon the market
price per share of the Company's Common Stock achieving certain levels. The
Company's option grants in the past provided for vesting over time. The
Committee believes that the grant of stock options under the new program will
continue in future years.
During fiscal 1996, each of the executive officers named in the Summary
Compensation Table were granted an amount of stock options under the Stock
Option Plan, pursuant to the new program, as provided in the table set forth
herein entitled "Option Grants in Last Fiscal Year." Such options were granted
in July 1996 at an exercise price of $10.375 per share. Such options vest at the
rate of 20% of such options when the market price per share of the Common Stock
equals or exceeds $15.00, $17.50, $20.00, $22.50 and $25.00. All such options
expire on July 10, 2006; provided that, to the extent any portion of such
options is not vested on July 10, 2001, such non-vested portion expires on such
date. In determining the size of such grants to executive officers, the
Committee recognized that the full benefits to the executive's compensation
package could not be realized unless the market price of the Company's Common
Stock reached, within five years, levels which were high compared to the price
levels at which the Company's Common Stock has traditionally traded. Individual
performance was also a factor in determining the size of the grant, while the
stockholdings of an executive were not a factor. As a result, the size of the
grants made to each executive officer were larger than the grants made to such
executive officers in recent years. In light of their size, such grants were
made subject to and conditioned upon each executive officer agreeing to the
cancellation and termination of stock options granted to such executive officers
in November 1994. As a result, stock options to purchase the following amounts
of shares, granted in November 1994 at an exercise price of $15.00 per share,
were cancelled and terminated simultaneously with the granting of the new stock
options to such executives: Mr. Wiener -- 15,000 shares; Mr. McCormack -- 8,500
shares; Mr. Blalock -- 7,000 shares; and Mr. Harmon -- 7,000 shares.
12
<PAGE>
The following table sets forth certain information, since April 30, 1992
(the date on which the Common Stock was registered under Section 12 of the
Securities Exchange Act of 1934, as amended), concerning the repricing of
options, replacement grants of options or cancellation of options in connection
with the grant of new options:
OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER
OF
SECURITIES LENGTH OF
UNDERLYING ORIGINAL
OPTIONS MARKET PRICE OF EXERCISE PRICE OPTION
REPRICED STOCK AT TIME OF AT TIME OF NEW TERM REMAINING
OR REPRICING OR REPRICING OR EXERCISE AT DATE OF
AMENDED AMENDMENT AMENDMENT PRICE REPRICING OR
NAME AND PRINCIPAL POSITION DATE (#) ($) ($) ($) AMENDMENT
<S> <C> <C> <C> <C> <C> <C>
Arthur C. Wiener 7/10/96 15,000 $ 10.375 $15.00 $ 10.375 8 yrs 3 mos.
Chairman of the Board, President and
Chief Executive Officer
Robert McCormack 7/10/96 8,500 10.375 15.00 10.375 8 yrs 3 mos.
Executive Vice President and
President -- Woven Division, Apparel
Marketing Group
Charles A. Blalock 7/10/96 7,000 10.375 15.00 10.375 8 yrs 3 mos.
Executive Vice President of
Manufacturing
Michael R. Harmon 7/10/96 7,000 10.375 15.00 10.375 8 yrs 3 mos.
Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
</TABLE>
The Compensation Committee of the Board of
Directors
Lee Abraham
Paul G. Gillease
William deR. Holt
13
<PAGE>
PERFORMANCE COMPARISON
The following graph compares, from April 30, 1992 (the date on which the
Common Stock was registered under Section 12 of the Securities Exchange Act of
1934, as amended), the cumulative total stockholder return on the Common Stock
with the cumulative total returns of the S&P 500 Index and a peer group. The
graph assumes that the value of the investment in the Common Stock and each
index was $100 on April 30, 1992 and that all dividends were reinvested.
The peer group is comprised of the following domestic textile
manufacturers: Burlington Industries, Inc.; Cone Mills Corporation, Inc.; Delta
Woodside Industries, Inc.; Dyersburg Corporation; Forstmann & Company, Inc.;
Guilford Mills, Inc.; Lida Inc. (which is included in the peer group until
August 31, 1995, the date the securities of Lida Inc. ceased trading); Springs
Industries, Inc.; and Texfi Industries, Inc. The return of each Company in the
peer group has been weighted according to its respective stock market
capitalization. Data for the graph were provided by Standard & Poor's Compustat
Services, Inc.
(COMPARISON OF CUMULATIVE TOTAL RETURN GRAPH APPEARS HERE)
(Plot Points Are Below)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
APRIL 30, 1992 SEPT. 1992 SEPT. 1993 SEPT. 1994 SEPT. 1995 SETP. 1996
GALEY & LORD $100.00 $115.00 $111.25 $205.00 $137.50 $128.75
S & P 500 $100.00 $102.12 $115.39 $119.65 $155.24 $186.81
PEER GROUP $100.00 $93.43 $91.17 $81.79 $86.36 $77.86
</TABLE>
RELATED TRANSACTIONS
The law firm of Rosenman & Colin LLP, New York, New York, of which Howard
S. Jacobs, a director of the Company, is a member, has acted as counsel to the
Company since March 1994. Legal fees for services rendered by Rosenman & Colin
LLP to the Company during the fiscal year ended September 28, 1996 did not
exceed 5% of the revenues of such firm for its most recent fiscal year.
14
<PAGE>
PROPOSAL 2 -- APPROVAL OF 1996 RESTRICTED STOCK PLAN
On November 12, 1996, the Board of Directors of the Company adopted,
subject to the approval of the stockholders of the Company, the Galey & Lord,
Inc. 1996 Restricted Stock Plan under which a total of 150,000 shares of Common
Stock will be reserved for issuance to non-employee directors of the Company.
The purpose of the Restricted Stock Plan is to induce non-employee
directors to serve as directors of the Company, to encourage ownership of shares
in the Company by non-employee directors and to provide additional incentives
for non-employee directors to promote the success of the Company's business by
aligning their interests with those of the stockholders.
The stockholders are required to vote on and approve the adoption of the
Restricted Stock Plan. The Board of Directors believes that it is in the best
interests of the Company and its stockholders to approve the adoption of the
Restricted Stock Plan. Assuming a quorum is present, a vote of a majority of the
votes cast at the Meeting, in person or by proxy, is required to approve the
adoption of the Restricted Stock Plan. Abstentions and broker non-votes are not
counted as votes cast. Adoption by the Company of the Restricted Stock Plan is
subject to and contingent upon the approval by the stockholders of certain
amendments to the Company's Stock Option Plan set forth herein in (b) and (c) of
the section entitled "PROPOSAL 3 -- APPROVAL OF AMENDMENTS TO THE AMENDED AND
RESTATED 1989 STOCK OPTION PLAN." In the event that such amendments to the Stock
Option Plan are not approved by the stockholders, the Restricted Stock Plan will
not be adopted by the Company.
DESCRIPTION OF THE RESTRICTED STOCK PLAN
A total of 150,000 shares of Common Stock will be reserved for issuance
under the Restricted Stock Plan. The number of shares so reserved for issuance
under the Restricted Stock Plan may from time to time be reduced to the extent
that a corresponding number of issued and outstanding shares of Common Stock are
purchased by the Company and set aside for issuance under the Restricted Stock
Plan. In addition, if any shares of Common Stock issued under the Restricted
Stock Plan are reacquired by the Company, such shares shall again be available
for issuance under the Restricted Stock Plan.
The Restricted Stock Plan will be administered by a committee (the
"Committee") of the Board of Directors of the Company consisting of two or more
members of the Board of Directors. The Chief Executive Officer of the Company
will also be a member of the Committee, ex officio. The Committee will be
appointed annually by the Board of Directors, which may at any time remove any
members of the Committee, with or without cause, appoint additional members to
the Committee and fill vacancies, however caused, in the Committee. In the event
that no Committee is appointed, the Board of Directors shall act as the
Committee. The Committee will have the authority to interpret the Restricted
Stock Plan and to prescribe, amend and rescind rules and regulations relating to
the Restricted Stock Plan.
The Restricted Stock Plan provides that each non-employee director of the
Company who has not made an irrevocable election in writing under the Stock
Option Plan to receive annually and at the time such person becomes a director
options to purchase 2,000 shares of Common Stock, granted under the Company's
Stock Option Plan, will automatically be allocated, beginning on December 30,
1996, and on the third trading day following each annual meeting of stockholders
thereafter or the date on which such person becomes a director, 1,200 shares of
Common Stock under the Restricted Stock Plan, subject to availability
thereunder. In contemplation of the adoption by the Company of the Restricted
Stock Plan and the amendments to the Stock Option Plan, each of Messrs. Abraham,
Gillease, Holt, Jacobs, Mapel and Sherrill agreed to waive their right to
receive options granted under the Stock Option Plan on March 18, 1996, and each
elected to receive and were each issued on December 30, 1996, subject to
stockholder approval of the Restricted Stock Plan, 1,200 shares of Common Stock
under the Restricted Stock Plan. In addition, prior to December 1, 1996, each
non-employee director of the Company was given the opportunity to make such an
irrevocable election with respect to the grant of options under the Stock Option
Plan or the issuance of Common Stock under the Restricted Stock Plan after the
Meeting for 1997. Messrs. Abraham, Gillease, Holt, Jacobs, Mapel and Sherrill
each elected to receive, after the Meeting, 1,200 shares of Common Stock issued
pursuant to the Restricted Stock Plan and Mr. Thomas elected to receive, after
the Meeting, options to purchase 2,000 shares of Common Stock granted pursuant
to the Company's Stock Option Plan.
The Restricted Stock Plan also provides that each non-employee director of
the Company who has not made an irrevocable election in writing to receive all
of his or her annual director's fee for such calendar year (i) in cash in the
15
<PAGE>
amount of $20,000, or (ii) in the form of a grant, subject to availability under
the Stock Option Plan, of stock options to purchase 2,500 shares of Common
Stock, will receive his or her annual director's fee in the form of a
combination of $10,000 in cash plus he or she will automatically be allocated,
on the third trading day following January 1 of each calendar year or at the
time such person becomes a director, an amount of shares of Common Stock having
an aggregate fair market value on the date of issuance equal to $15,000, subject
to availability under the Restricted Stock Plan; PROVIDED, HOWEVER, that in the
event that any person makes such election at the time he or she becomes a
director, such non-employee director shall receive a PRO RATA portion of his
or her annual director's fee (whether in cash, stock options granted under the
Stock Option Plan or a combination of cash and shares of Common Stock issued
under the Restricted Stock Plan) based upon the remaining portion of the
calendar year in which such person becomes a director. Prior to
December 1, 1996, each non-employee director of the Company was given the
opportunity to make such an irrevocable election with respect to
receipt by each such director of his director's fee for the 1997 calendar year.
Messrs. Abraham, Holt, Jacobs and Mapel each elected to receive his director's
fee in cash in the amount of $20,000, Messrs. Gillease and Sherrill each elected
to receive his director's fee in the form of a combination of $10,000 cash plus
the issuance of an amount of shares of Common Stock under the Restricted Stock
Plan having an aggregate fair market value on the date of issuance equal to
$15,000, and Mr. Thomas elected to receive his director's fee in the form of a
grant under the Stock Option Plan of stock options to purchase 2,500 shares of
Common Stock.
Each non-employee director of the Company who is allocated shares of Common
Stock under the Restricted Stock Plan (the "Restricted Shares"), shall purchase
such Restricted Shares from the Company for a purchase price of $.01 per share.
Upon issuance of the certificate or certificates for Restricted Shares to a
participant, such participant shall thereupon be a stockholder of the Company
and shall have the rights of a stockholder with respect to such Restricted
Shares, including the right to vote and to receive all dividends and other
distributions paid with respect to such Restricted Shares.
A non-employee director who has been issued Restricted Shares will realize
taxable income at the time of such issuance in an amount equal to the fair
market value of the shares at that time, less the amount paid for such shares.
The Company generally will be entitled to a deduction for Federal income tax
purposes in an amount equal to the amount included in income by the participant.
Each participant receiving Restricted Shares shall enter into a restricted
stock agreement pursuant to which, among other things, such participant shall
(i) agree that such Restricted Shares shall be subject to, and shall be held by,
such participant in accordance with the Restricted Stock Plan (for at least
three years, as discussed below), (ii) represent and warrant to the Company that
such participant is acquiring such Restricted Shares for investment purposes for
his or her own account (unless there is then current a prospectus relating to
the Restricted Shares under Section 10(a) of the Securities Act of 1933, as
amended (the "Securities Act") and, in any event, that such participant will not
sell or otherwise dispose of such Restricted Shares except in compliance with
the Securities Act, and (iii) agree that the Company may place on the
certificates representing Restricted Shares such legend or legends as the
Company may deem appropriate and that the Company may place a stop transfer
order with respect to such Restricted Shares with the Company's transfer agent
for the Common Stock.
Restricted Shares allocated to a non-employee director of the Company under
the Restricted Stock Plan may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of for a period of three years from the date
of the restricted stock agreement entered into with respect thereto. In
addition, if the participant to whom Restricted Shares have been allocated
leaves the service of the Company by reason of such participant's discharge for
cause (as defined in the Restricted Stock Plan) prior to the end of such
three-year period, such participant shall be obligated to redeliver such
Restricted Shares to the Company immediately and the Company shall pay to such
participant, in redemption of such Restricted Shares, an amount equal to the
price paid by the participant for such Restricted Shares. If such participant
leaves the service of the Company for any reason other than such participant's
discharge for cause prior to the termination of such three-year period, such
participant (or, in the event of such participant's death, the executors or
administrators of his or her estate) shall retain the Restricted Shares and all
of his or her rights with respect thereto. The Committee may, in its discretion,
cause any of the foregoing restrictions with respect to Restricted Shares to
terminate, in whole or in part, prior to the time when they would otherwise
terminate.
The Restricted Stock Plan provides for adjustment to the Restricted Shares
then subject to any restricted stock agreement and the number of shares of
Common Stock reserved for issuance, but not yet issued, under the
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<PAGE>
Restricted Stock Plan upon the occurrence of certain events, including stock
dividends, stock splits, reorganizations, recapitalizations, combinations, sale
of assets, merger or consolidation or similar changes or transactions of or by
the Company. No such adjustment shall require the Company to deliver a
fractional share under the Restricted Stock Plan.
The Restricted Stock Plan expires on November 11, 2006, unless terminated
earlier by the Board of Directors; PROVIDED, HOWEVER, that any such termination
shall not, without the consent of the participants to whom any Restricted Shares
shall have been allocated, adversely affect the rights or obligations of such
participants with respect to such Restricted Shares. The Restricted Stock Plan
may be amended from time to time by the Board of Directors, except that no
amendment of the Restricted Stock Plan may, without the consent of the
participants to whom any Restricted Shares shall have been allocated, adversely
affect the rights or obligations of such participants with respect to such
Restricted Shares.
On December 30, 1996, the closing price of a share of Common Stock on the
New York Stock Exchange was $15.00.
The following table indicates the number of shares of Common Stock that
could be received in fiscal 1997 under the Restricted Stock Plan:
NEW PLAN BENEFITS
1996 RESTRICTED STOCK PLAN
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF SHARES
<S> <C>
Executive Officers 0
Named in Summary
Compensation Table
Executive Group 0
Non-Executive Director Group 14,400 (1)(2)(3)
Non-Executive Officer 0
Employee Group
</TABLE>
(1) On December 30, 1996, Messrs. Abraham, Gillease, Holt, Jacobs, Mapel and
Sherrill each received, subject to stockholder approval of the Restricted
Stock Plan, 1,200 shares of Common Stock under the Restricted Stock Plan.
The closing price of a share of Common Stock on the New York Stock Exchange
on December 30, 1996 was $15.00.
(2) On January 6, 1997, Messrs. Gillease and Sherrill each received, subject to
stockholder approval of the Restricted Stock Plan, an amount of shares of
Common Stock under the Restricted Stock Plan having a market value on such
date equal to $15,000. The amount of such shares was not determinable as of
the date of the printing of this Proxy Statement.
(3) Following the Meeting, Messrs. Abraham, Gillease, Holt, Jacobs, Mapel and
Sherrill will each receive, subject to stockholder approval of the
Restricted Stock Plan, 1,200 shares of Common Stock under the Restricted
Stock Plan.
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PROPOSAL 3 -- APPROVAL OF AMENDMENTS TO THE AMENDED
AND RESTATED 1989 STOCK OPTION PLAN
AMENDMENTS
In November 1996, the Board of Directors of the Company adopted, subject to
the approval of the stockholders, the following three amendments to the
Company's Amended and Restated 1989 Stock Option Plan:
(a) An increase in the number of shares of Common Stock available
under the Stock Option Plan by an aggregate of 250,000 shares of Common
Stock;
(b) To provide that each non-employee director of the Company make, on
or prior to December 1 for the subsequent year, an irrevocable election in
writing to receive annually and at the time such person becomes a director
either (i) options to purchase 2,000 shares of Common Stock, or (ii) 1,200
shares of Common Stock issued pursuant to the Company's Restricted Stock
Plan. Such options will become exercisable one year after the date of the
grant at an exercise price per share equal to the fair market value of a
share of Common Stock on the date of the grant. Prior to December 1996,
each non-employee director of the Company was given the opportunity to make
such an irrevocable election. Messrs. Abraham, Gillease, Holt, Jacobs,
Mapel and Sherrill each elected to receive, after the Meeting, 1,200
shares of Common Stock issued pursuant to the Company's Restricted Stock
Plan and Mr. Thomas elected to receive, after the Meeting, options to
purchase 2,000 shares of Common Stock; and
(c) To provide that each non-employee director of the Company make, on
or prior to December 1 for the subsequent calendar year or at the time such
person becomes a director, an irrevocable election in writing to receive
all of his or her annual director's fee for such calendar year (i) in cash
in the amount of $20,000, or (ii) in the form of a grant, subject to
availability under the Stock Option Plan, of stock options to purchase
2,500 shares of Common Stock, or (iii) in the form of a combination of
$10,000 in cash plus the issuance of an amount of shares of Common Stock
under the Restricted Stock Plan having an aggregate fair market value on
the date of issuance equal to $15,000; PROVIDED, HOWEVER, that in the event
that any person makes such election at the time he or she becomes a
director, such non-employee director shall receive a PRO RATA portion of
his or her annual director's fee (whether in cash, stock options granted
under the Stock Option Plan or a combination of cash and shares of Common
Stock issued under the Restricted Stock Plan) based upon the remaining
portion of the calendar year in which such person becomes a director. All
such options will become exercisable one year after the date of the grant
at an exercise price per share equal to the fair market value of a share of
Common Stock on the date of the grant. Prior to December 1996, each
non-employee director of the Company was given the opportunity to make such
an irrevocable election with respect to receipt by each such director of
his director's fee for the 1997 calendar year. Messrs. Abraham, Holt,
Jacobs and Mapel each elected to receive his director's fee in cash in the
amount of $20,000, Messrs. Gillease and Sherrill each elected to receive
his director's fee in the form of a combination of $10,000 cash plus the
issuance of an amount of shares of Common Stock under the Restricted Stock
Plan having an aggregate fair market value on the date of issuance equal to
$15,000, and Mr. Thomas elected to receive his director's fee in the form
of a grant of stock options to purchase 2,500 shares of Common Stock.
The Stock Option Plan provides for the grant of stock options and stock
appreciation rights and currently covers up to an aggregate of 1,600,000 shares
of Common Stock. As of December 20, 1996, options to purchase 1,131,640 shares
of Common Stock were outstanding under the Stock Option Plan. Under the Stock
Option Plan as currently in effect, there are no shares of Common Stock
available for future grant of stock options and, as of December 20, 1996,
options to purchase an additional 66,170 shares of Common Stock have been
issued, subject to stockholder approval of the amendment to the Stock Option
Plan increasing the number of shares of Common Stock available thereunder. As of
such date, 58 persons participated in the Stock Option Plan.
The principal purposes of the proposed amendments to the Stock Option Plan
are to enable the Company to continue to attract and retain the services of
directors, officers, key employees and consultants for the benefit of the
Company, thereby providing increased incentive for such directors, officers, key
employees and consultants to render services to the Company in the future and to
exert maximum effort for the success of the Company. In addition, under the
Stock Option Plan as currently in effect, there are no shares of Common Stock
available for future grant of stock options.
18
<PAGE>
The stockholders are required to vote on and approve each of the proposed
amendments to the Stock Option Plan separately. Approval of any one of the
proposed amendments is not required for the adoption of any of the other
proposed amendments, although adoption of the proposed amendments set forth in
(b) and (c) above are subject to and contingent upon the approval by the
stockholders of the Restricted Stock Plan. In the event that the Restricted
Stock Plan is not approved by the stockholders, the proposed amendments to the
Stock Option Plan set forth in (b) and (c) above will not be adopted by the
Company. Additional information regarding the proposed Restricted Stock Plan is
included herein in the section entitled "PROPOSAL 2 -- APPROVAL OF 1996
RESTRICTED STOCK PLAN."
The Board of Directors believes that it is in the best interest of the
Company and its stockholders to approve each of the proposed amendments to the
Stock Option Plan. Assuming a quorum is present, a vote of a majority of the
votes cast at the Meeting, in person or by proxy, is required to approve each of
the proposed amendments to the Stock Option Plan. With respect to each proposed
amendment, abstentions and broker non-votes are not counted as votes cast.
DESCRIPTION OF THE STOCK OPTION PLAN
In April 1989, the Company's Board of Directors adopted the 1989 Stock
Option Plan, which was approved by the Company's stockholders. In February 1992,
the Board of Directors adopted the Amended and Restated 1989 Stock Option Plan
which was approved by the Company's stockholders and in February 1994 and
February 1995 the Stock Option Plan was further amended by the Board of
Directors and approved by the stockholders. The purpose of the Stock Option Plan
is to secure for the Company and its stockholders the benefits arising from
stock ownership by elected officers, directors, consultants and key employees of
the Company and its subsidiaries. The Stock Option Plan is administered by the
non-employee members of the Board of Directors. Under the Stock Option Plan,
options to purchase shares of Common Stock may be granted to officers,
consultants and key employees of the Company and its subsidiaries at the
discretion of such members of the Board of Directors. In addition, such members
of the Board of Directors determine the number of options to be granted to such
persons, the exercise price applicable to each such option, the times when such
options shall become exercisable and the duration of the exercise periods. The
non-employee members of the Board of Directors also have the authority to
generally interpret the Stock Option Plan. Stock options granted under the Stock
Option Plan may be either incentive stock options or nonqualified stock options,
except that incentive stock options may not be granted to consultants or
directors who are not also employees.
As currently in effect, the Stock Option Plan provides that each director
of the Company (other than those who are employees of the Company) shall be
automatically granted annually and at the time such person becomes a director
options to purchase 2,000 shares of Common Stock. Such options become
exercisable one year after the date of the grant at an exercise price per share
equal to the fair market value of a share of Common Stock on the date of the
grant. As proposed to be amended, the Stock Option Plan would provide that each
non-employee director of the Company make, on or prior to December 1 for the
subsequent year, an irrevocable election in writing to receive annually and at
the time such person becomes a director either (i) options to purchase 2,000
shares of Common Stock, or (ii) 1,200 shares of Common Stock issued pursuant to
the Company's Restricted Stock Plan. Such options would become exercisable one
year after the date of the grant at an exercise price per share equal to the
fair market value of a share of Common Stock on the date of the grant.
In addition, as currently in effect, the Stock Option Plan provides that
each non-employee director of the Company may make, on each July 1 for the
subsequent calendar year, an irrevocable election in writing to receive all of
his or her annual director's fee for such calendar year in cash, or in lieu of
cash, in the form of a grant, subject to availability under the Stock Option
Plan, of stock options to purchase 2,500 shares of Common Stock. Such options
become exercisable one year after the date of the grant at an exercise price per
share equal to the fair market value of a share of Common Stock on the date of
the grant. As proposed to be amended, the Stock Option Plan would provide that
each non-employee director of the Company make, on or prior to December 1 for
the subsequent calendar year or at the time such person becomes a director, an
irrevocable election in writing to receive all of his or her annual director's
fee for such calendar year (i) in cash in the amount of $20,000, or (ii) in the
form of a grant, subject to availability under the Stock Option Plan, of stock
options to purchase 2,500 shares of Common Stock, or (iii) in the form of a
combination of $10,000 in cash plus the issuance of an amount of shares of
Common Stock under the Restricted Stock Plan having an aggregate fair market
value on the date of issuance equal to $15,000; PROVIDED, HOWEVER, that in the
event that any person makes such election at the time he or she becomes a
director,
19
<PAGE>
such non-employee director shall receive a PRO RATA portion of his or
her annual director's fee (whether in cash, stock options granted under the
Stock Option Plan or a combination of cash and shares of Common Stock issued
under the Restricted Stock Plan) based upon the remaining portion of the
calendar year in which such person becomes a director. All such options would
become exercisable one year after the date of the grant at an exercise price per
share equal to the fair market value of a share of Common Stock on the date of
the grant.
Options granted under the Stock Option Plan are nontransferable other than
by will or the laws of descent and distribution, and may be exercised during the
optionholder's lifetime only by such optionholder while an employee, a
consultant or a director, subject to certain rights of exercise after
termination or discharge. Each option granted will have a term specified in the
option agreement, but all options will expire no later than ten years from the
date of grant (five years in the case of options granted to an employee who is a
greater than 10% beneficial owner of the Company's shares). As currently in
effect, the Stock Option Plan provides that if an optionholder ceases to be an
employee, a consultant or a director (for any reason other than death), the
optionholder may exercise his option within a period of three months to five
years following termination or discharge to the extent the option was
exercisable at the time of termination or discharge. In addition, an option may
be exercisable for a period of three months to three years after the
optionholder's death (to the extent the option was exercisable on said date).
Options are exercisable (other than options automatically granted to
non-employee directors) at such time or times or in such installments on a
cumulative basis and upon such conditions as the non-employee members of the
Board of Directors determine at the time of the grant. The number of options
that may be granted to an executive officer during any three-year period may
not exceed options to purchase an aggregate of 400,000 shares of Common Stock.
In the case of incentive stock options, the exercise price must be at least
equal to the fair market value of the Common Stock on the date the option is
granted (110% of fair market value in the case of an employee who is a greater
than 10% beneficial owner of the Company's shares). The exercise price of a
nonqualified option may not be less than the fair market value of the Common
Stock on the date the option is granted. Upon exercise of any option, the
purchase price must be paid in full in cash. The aggregate fair market value
(determined at the time the options are granted) of the shares covered by
incentive stock options granted to any employee under the Stock Option Plan
which may become exercisable for the first time in any one calendar year may not
exceed $100,000. If provided under an option agreement, an optionee may, in
addition to exercising his option to purchase shares of Common Stock, exercise a
stock appreciation right and receive a cash amount equal to the excess of the
fair market value per share of Common Stock at the time of the exercise over the
exercise price per share, multiplied by the number of shares of Common Stock
with respect to which the stock appreciation right is exercised. An
optionholder's right to purchase shares of Common Stock is reduced, share for
share, by the number of shares with respect to which the stock appreciation
right is exercised.
The Stock Option Plan expires in February 1999, unless terminated earlier
by the Board of Directors; PROVIDED, HOWEVER, that any such termination shall
not affect any options then outstanding under the Stock Option Plan. The Stock
Option Plan may be amended from time to time by the Board of Directors, except
that (i) the Board of Directors may not, without the approval of the
stockholders, increase the total number of shares covered by the Stock Option
Plan, and (ii) the provisions of the Stock Option Plan relating to the automatic
grant of options to non-employee directors may not be amended more than one time
in any six-month period, other than to comply with changes in certain laws and
regulations.
The Stock Option Plan provides for adjustment to the shares available for
issuance thereunder upon the occurrence of certain events, including stock
dividends, stock splits, reorganizations, recapitalizations or similar changes
or transactions of or by the Company.
Approximately 45 employees (including the four executive officers named in
the Summary Compensation Table) and seven non-employee directors are currently
eligible to receive options or stock appreciation rights under the Stock Option
Plan. During the 1996 fiscal year (i) options to purchase an aggregate of
475,000 shares of Common Stock were granted under the Stock Option Plan to the
Company's executive officers named in the Summary Compensation Table in the
amounts as set forth in the table herein entitled "Option Grants in Last Fiscal
Year," (ii) each of Messrs. Abraham, Gillease, Holt, Jacobs, Mapel and Sherrill
agreed to waive the right to receive an automatic grant of options under the
Stock Option Plan to purchase 2,000 shares of Common Stock, (iii) Mr. Thomas was
automatically granted options under the Stock Option Plan to purchase 2,000
shares of Common Stock at an exercise price of $9.625 per share, (iv) Mr. Thomas
was automatically granted options under the Stock Option Plan to purchase 2,500
shares of Common Stock at an exercise price of $9.625 per share, and
20
<PAGE>
(v) options to purchase an aggregate of 10,000 shares of Common Stock at an
average exercise price of $10.31 per share were granted under the Stock Option
Plan to all employees as a group (other than executive officers).
FEDERAL INCOME TAX CONSEQUENCES
There are no federal income tax consequences to the optionholder by reason
of the grant of incentive stock options under the Stock Option Plan. With
respect to nonqualified stock options, under Treasury Department regulations, an
optionholder will recognize no income at the time an option is granted under the
Stock Option Plan since, under such regulations, the options have no readily
ascertainable fair market value at the time of their issue. The exercise of
incentive stock options is not a taxable event for regular federal income tax
purposes. However, such exercise may give rise to an alternative minimum tax
liability. Except in the case of a disqualifying disposition (see below), the
subsequent sale of shares following the exercise of an incentive stock option
will generally result in capital gain or loss.
Upon the exercise of a nonqualified option, the optionholder will generally
recognize ordinary income in an amount equal to the excess of the fair market
value of the shares of Common Stock at the time of exercise over the
amount paid as the exercise price. The ordinary income in connection with the
exercise by an optionee who is an employee of a nonqualified option will be
subject to both wage and employment tax withholding.
The optionholder's tax basis in the shares acquired pursuant to the
exercise of the nonqualified option will be the amount paid upon exercise plus
the amount of ordinary income recognized by the optionholder as a result of the
exercise of the nonqualified option. Any gain or loss on a subsequent sale of
the Common Stock will generally be either long- or short-term capital gain or
loss, depending upon the optionholder's holding period for the stock.
A disqualifying disposition occurs if the optionholder disposes of shares
of Common Stock acquired upon exercise of an incentive stock option (other than
in certain tax-free transactions) within two years from the date on which the
option is granted or within one year after the transfer of the shares to the
optionholder upon his exercise. At the time of disposition the optionholder will
generally recognize ordinary income equal to the excess of such shares' fair
market value either on the date of exercise or the date of disposition,
whichever is lower, over the optionholder's adjusted basis in such shares, with
additional gain, if any, taxed as capital gain.
There are no federal income tax consequences to the Company by reason of
the grant of incentive options or nonqualified options or the exercise of
incentive options.
Subject to the usual rules as to reasonableness of compensation, at the
time the optionholder recognizes ordinary income from the exercise of a
nonqualified option, the Company will be entitled to a federal income tax
deduction in the amount of the ordinary income so recognized. To the extent the
optionholder recognizes ordinary income by reason of a disqualifying disposition
of the Common Stock acquired upon exercise of incentive options, the Company
will be entitled to a corresponding deduction in the year in which the
disposition occurs.
The Company will be required to report to the Internal Revenue Service any
ordinary income recognized by an optionee by reason of the exercise of a
nonqualified option or a disqualifying disposition of stock acquired upon
exercise of an incentive option, if such information is available to the
Company. The Company, in the case of nonqualified options granted to employees,
will be required to withhold income and employment taxes (and pay the employer's
shares of employment taxes) with respect to such ordinary income. On the
ordinary income realized on a disqualifying disposition, withholding of income
and payroll taxes by the Company will not be required.
The foregoing discussion is not a complete description for all persons in
all situations of the federal income tax aspects with respect to the grant and
exercise of options under the Stock Option Plan. In addition, administrative and
judicial interpretations of the application of the federal income tax laws are
subject to change. Furthermore, the foregoing discussion does not address state
or local tax consequences.
21
<PAGE>
PROPOSAL 4 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee, has
selected Ernst & Young LLP as independent auditors to audit and report upon the
consolidated financial statements of the Company for the 1997 fiscal year and is
submitting this matter to the stockholders for their ratification. Ernst & Young
LLP served as the Company's independent auditors in fiscal 1996 and in prior
years. Assuming a quorum is present, a vote of a majority of the votes cast at
the Meeting, in person or by proxy, is required for the ratification of the
selection of Ernst & Young LLP. Abstentions and broker non-votes are not
counted as votes cast. If stockholders do not ratify the selection of Ernst
& Young LLP, the Board of Directors will consider other independent auditors.
Representatives of the firm of Ernst & Young LLP will be present at the Meeting
to make a statement if they desire to do so and to be available to respond
to appropriate questions that may be asked by stockholders.
ANNUAL REPORT
All stockholders of record as of December 20, 1996 are concurrently being
sent a copy of the Company's Annual Report for the fiscal year ended September
28, 1996 which contains audited financial statements of the Company for the
fiscal years ended October 1, 1994, September 30, 1995 and September 28, 1996.
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by September 9, 1997 in order to be
considered for inclusion in proxy materials distributed in connection with the
next annual meeting of stockholders.
MISCELLANEOUS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matter to be brought before the Meeting.
However, if any other matters not mentioned in the Proxy Statement are brought
before the Meeting or any adjournments thereof, the persons named in the
enclosed Proxy or their substitutes will have discretionary authority to vote
proxies given in said form or otherwise act, in respect of such matters, in
accordance with their best judgment.
All of the costs and expenses in connection with the solicitation of
proxies with respect to the matters described herein will be borne by the
Company. In addition to solicitation of proxies by use of the mails, directors,
officers and employees (who will receive no compensation therefor in addition to
their regular remuneration) of the Company may solicit the return of proxies by
telephone, telegram or personal interview. The Company will request banks,
brokerage houses and other custodians, nominees and fiduciaries to forward
copies of the proxy materials to their principals and to request instructions
for voting the proxies. The Company may reimburse such banks, brokerage houses
and other custodians, nominees and fiduciaries for their expenses in connection
therewith.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL OWNER OF COMMON
STOCK ON THE RECORD DATE, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 28,
1996 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST
SHOULD BE MADE IN WRITING TO MICHAEL R. HARMON, SECRETARY, GALEY & LORD, INC.,
P.O. BOX 35528, GREENSBORO, NORTH CAROLINA 27425.
It is important that proxies be returned promptly. Stockholders are,
therefore, urged to fill in, date, sign and return the Proxy immediately. No
postage need be affixed if mailed in the enclosed envelope in the United States.
By order of the Board of Directors
(Signature of Michael R. Harmon Appears Here)
MICHAEL R. HARMON
SECRETARY
January 7, 1997
22
<PAGE>
GALEY & LORD, INC.
1996 RESTRICTED STOCK PLAN
(As Adopted Effective as of November 12, 1996)
1. Purpose. The purpose of the Galey & Lord, Inc., 1996 Restricted
Stock Plan (the "Plan") is to induce certain non-employee directors to continue
to serve as directors of Galey & Lord, Inc. (the "Corporation"), to encourage
ownership of shares in the Corporation by such non-employee directors and to
provide additional incentive for such directors to promote the success of the
Corporation's business.
2. Effective Date of the Plan. The Plan became effective
on November 12, 1996, by action of the Board of Directors (the
"Board") subject to approval by the stockholders of the
Corporation.
3. Stock Subject to Plan. 150,000 of the authorized but unissued shares
of the common stock, $.01 par value, of the Corporation (the "Common Stock") are
hereby reserved for issuance under the Plan; provided, however, that the number
of shares so reserved may from time to time be reduced to the extent that a
corresponding number of issued and outstanding shares of the Common Stock are
purchased by the Corporation and set aside for issuance under the Plan. If any
shares of the Common Stock issued under the Plan ("Restricted Shares") are
reacquired by the Corporation as provided in Section 9, such shares shall again
be available for the purposes of the Plan.
<PAGE>
4. Committee. The committee (the "Committee") shall consist of two or
more members of the Board. The Chief Executive Officer of the Corporation shall
also be a member of the Committee, ex-officio, whether or not he or she is
otherwise a member of the Committee. The Committee shall be appointed annually
by the Board, which may at any time and from time to time remove any members of
the Committee, with or without cause, appoint additional members to the
Committee and fill vacancies, however caused, in the Committee. In the event
that no Committee shall have been appointed, the Board shall act as the
Committee. A majority of the members of the Committee shall constitute a quorum.
All determinations of the Committee shall be made by a majority of its members
present at a meeting duly called and held. Any decision or determination of the
Committee reduced to writing and signed by all of the members of the Committee
shall be fully effective as if it had been made at a meeting duly called and
held.
5. Administration. Subject to the provisions of the Plan, the Committee
shall have authority to interpret the Plan and to prescribe, amend and rescind
rules and regulations relating to it. Any determination by the Committee in
carrying out, administering or construing the Plan shall be final and binding
for all purposes and upon all interested persons and their heirs, successors and
personal representatives.
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<PAGE>
6. Eligibility. An allocation of Restricted Shares may
only be made to persons who are directors of the Corporation and
who are not common law employees of the Corporation.
7. Grants of Restricted Shares. A. On December 30, 1996 and continuing
annually thereafter on the third Trading Day after the date of the Annual
Meeting of stockholders of the Corporation, through and including the Annual
Meeting of stockholders of the Corporation held in 2005, and on the third
Trading Day after the date on which each person described below first becomes a
director (if such date is a date other than the Annual Meeting of Stockholders
of the Corporation), each person who (a) is serving as a director of the
Corporation on the date of grant, (b) is not a common law employee of the
Corporation and (c) has filed an election with the Corporation (at such time and
in such manner as may be prescribed by the Corporation) to receive an allocation
of Restricted Shares for the current year in lieu of an option under the Amended
and Restated 1989 Stock Option Plan of Galey & Lord, Inc. (or any other stock
option plan subsequently adopted by the Corporation), shall automatically be
allocated 1,200 Restricted Shares, subject to availability under the Plan.
B. On the third Trading Day after January 1, 1997 and on the third
Trading Day after each January 1 thereafter, through and including January 1,
2006, and at the time each person described below first becomes a director, each
person who (a) is serving as a director of the Corporation on such date, (b) is
not
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a common law employee of the Corporation on such date and (c) filed an election
with the Corporation on or prior to the preceding December 1, or at the time a
person first became a director (at such time and in such manner as may be
prescribed by the Corporation) to receive all of his or her annual director's
fee for the subsequent calendar year (or, for the remainder of the current
calendar year, in the case of a person who first becomes a director during such
calendar year) in the form of a combination of cash and Restricted Shares in
lieu of (i) cash or (ii) a grant of options under the Amended and Restated 1989
Stock Option Plan of Galey & Lord, Inc. (or any other stock option plan
subsequently adopted by the Corporation), shall be paid for such subsequent
calendar year (or, for the remainder of the current calendar year, in the case
of a person who first becomes a director during such calendar year) in the form
of a combination of ten thousand dollars ($10,000) of cash and an allocation,
subject to availability under the Plan, of the number of Restricted Shares
derived by dividing fifteen thousand (15,000) by the Fair Market Value per Share
of the Common Stock on the third Trading Day after January 1 of such subsequent
calendar year (or the third Trading Day after the date on which such person
first becomes a director, as the case may be), rounded to the next highest
share. Notwithstanding the foregoing provisions of this Section 7B, the amount
of the annual directors' fee to be paid (whether in the form of cash, stock
options or a combination of cash and Restricted Shares) with respect to a
calendar year to a director who first becomes a director during such calendar
year
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shall be reduced to an amount calculated by multiplying the amount to which a
director otherwise would be payable pursuant to the foregoing provisions of this
Section 7B (whether in the form of cash, stock options or a combination of cash
and Restricted Shares) by a fraction, the numerator of which is the number of
calendar days remaining in such calendar year measured from the date on which
such person first becomes a director and the denominator of which is three
hundred sixty-five (365).
8. Purchase Price. Each person who shall be allocated Restricted Shares
hereunder shall purchase the same from the Corporation at and for a purchase
price of $.01 a share. Failure by a Participant to purchase and pay for all of
the Restricted Shares allocated to him or her within thirty days after he or she
shall have been given written notice of such allocation shall result in a
cancellation of such allocation and he or she shall no longer have the right to
purchase the same hereunder.
9. Restricted Shares. A. Except as otherwise provided in this Section,
the Restricted Shares allocated to a Participant may not be sold, assigned,
transferred or otherwise disposed of, and may not be pledged or hypothecated.
The Stock Restrictions shall terminate on the third anniversary of the date of
his or her Restricted Stock Agreement (as such term is defined in paragraph E.
of this Section 9).
B. In addition, if the Participant to whom Restricted
Shares have been allocated as of any Allocation Date leaves the
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service of the Corporation and its subsidiaries by reason of his or her
Discharge for Cause prior to the termination of the Stock Restrictions with
respect to the Restricted Shares allocated to such Participant as of such
Allocation Date, he or she shall be obligated to redeliver such Restricted
Shares to the Corporation immediately and the Corporation shall pay to him or
her, in redemption of such shares, an amount equal to the price paid by the
Participant for such Restricted Shares.
C. If the Participant to whom Restricted Shares have been allocated as
of any Allocation Date leaves the service of the Corporation and its
subsidiaries for any reason other than his or her Discharge for Cause prior to
the termination of the Stock Restrictions with respect to the Restricted Shares
allocated to such Participant as of such Allocation Date, such Participant (or,
in the event of his or her death, the executors or administrators of his or her
estate) shall retain all of his or her rights with respect to such Restricted
Shares; provided, however, that such Restricted Shares shall remain subject to
the terms of the Plan and of such Participant's Restricted Stock Agreement.
D. Upon issuance of the certificate or certificates for the Restricted
Shares in the name of a Participant, the Participant shall thereupon be a
stockholder with respect to all the Restricted Shares represented by such
certificate or certificates and shall have the rights of a stockholder with
respect to such Restricted Shares, including the right to vote
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such Restricted Shares and to receive all dividends and other distributions paid
with respect to such Restricted Shares.
E. Each Participant receiving Restricted Shares shall (a) agree that
such Restricted Shares shall be subject to, and shall be held by him or her in
accordance with all of the applicable terms and provisions of, the Plan, (b)
represent and warrant to the Corporation that he or she is acquiring such
Restricted Shares for investment for his or her own account (unless there is
then current a prospectus relating to the Restricted Shares under Section 10(a)
of the Securities Act of 1933, as amended) and, in any event, that he or she
will not sell or otherwise dispose of said shares except in compliance with the
Securities Act of 1933, as amended, and (c) agree that the Corporation may place
on the certificates representing the Restricted Shares or new or additional or
different shares or securities distributed with respect to the Restricted Shares
such legend or legends as the Corporation may deem appropriate and that the
Corporation may place a stop transfer order with respect to such Restricted
Shares with the Transfer Agent(s) for the Common Stock. The foregoing agreement,
representation and warranty shall be contained in an agreement in writing
("Restricted Stock Agreement") which shall be delivered by the Participant to
the Corporation. The Committee shall adopt, from time to time, such rules with
respect to the return of executed Restricted Stock Agreements as it deems
appropriate and failure by a Participant
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to comply with such rules shall terminate the allocation of such Restricted
Shares to such Participant.
10. Adjustment of Number of Shares. A. In the event that a dividend
shall be declared upon the Common Stock payable in shares of the Common Stock,
the number of shares of the Common Stock then subject to any Restricted Stock
Agreement and the number of shares of the Common Stock reserved for issuance in
accordance with the provisions of the Plan but not yet issued shall be adjusted
by adding to each such share the number of shares which would be distributable
thereon if such shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of the Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the
Corporation or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, sale of assets, merger
or consolidation in which the Corporation is the surviving corporation, then,
there shall be substituted for each share of the Common Stock then subject to a
Restricted Stock Agreement and for each share of the Common Stock reserved for
issuance in accordance with the provisions of the Plan but not yet issued, the
number and kind of shares of stock or other securities into which each
outstanding share of the Common Stock shall be so changed or for which each such
share shall be exchanged.
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B. In the event that there shall be any change, other than as specified
in this Section 10, in the number or kind of outstanding shares of the Common
Stock, or of any stock or other securities into which the Common Stock shall
have been changed, or for which it shall have been exchanged, then, if the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in the number or kind of shares then subject to a
Restricted Stock Agreement and the number or kind of shares reserved for
issuance in accordance with the provisions of the Plan but not yet issued, such
adjustment shall be made by the Committee and shall be effective and binding for
all purposes of the Plan and of each Restricted Stock Agreement entered into in
accordance with the provisions of the Plan.
C. No adjustment or substitution provided for in this
Section 10 shall require the Corporation to deliver a fractional
share under the Plan or any Restricted Stock Agreement.
11. Withholding and Waivers. In the event of the death of a
Participant, an additional condition to the Corporation's obligation to release
Restricted Shares to the executors or administrators of such Participant's
estate and to release the Stock Restrictions provided hereunder on any
Restricted Shares owned by such Participant as provided in Section 9 shall be
the delivery to the Corporation of such tax waivers, letters testamentary and
other documents as the Committee may reasonably determine.
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12. Definitions. For the purposes hereof:
A. The term "Allocation Date" shall mean the date as of which a
Participant shall have received a grant of Restricted Shares.
B. The term "Discharge for Cause" shall mean the termination of a
Participant's service as a director of the Corporation by reason of (i) the
commission by such Participant of any act or omission that would constitute a
crime under federal, state or equivalent foreign law, (ii) the commission by
such Participant of any act of moral turpitude, (iii) fraud, dishonesty or other
acts or omissions that result in a breach of any fiduciary or other material
duty to the Corporation or (iv) continued alcohol or other substance abuse that
renders such Participant incapable of performing his or her material duties to
the satisfaction of the Corporation.
C. The term "Fair Market Value per Share " shall mean the last reported
sale price for Common Stock (regular way) or, in case no such reported sale
takes place on such Trading Day, the average of the closing bid and asked prices
(regular way) for the Common Stock for such Trading Day, in either case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or if the Common Stock is not listed or admitted to trading
on any national securities exchange, but is traded in the over-
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the-counter market, the closing sale price of the Common Stock or, if no sale is
publicly reported, the average of the closing bid and asked quotations for the
Common Stock, as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") or any comparable system or, if the Common
Stock is not listed on Nasdaq or a comparable system, the closing sale price of
the Common Stock, or, if no sale is publicly reported, the average of the
closing bid and asked prices, as furnished by two members of the National
Association of Securities Dealers, Inc. who make a market in the Common Stock
selected from time to time by the Corporation for that purpose. In addition, for
purposes of this definition and as otherwise used in the Plan, "Trading Day"
shall mean, if the Common Stock is listed on any national securities exchange, a
business day during which such exchange was open for trading and at least one
trade of Common Stock was effected on such exchange on such business day, or, if
the Common Stock is not listed on any national securities exchange but is traded
in the over-the-counter market, a business day during which the over-the-counter
market was open for trading and at least one "eligible dealer" quoted both a bid
and asked price for the Common Stock. An "eligible dealer" for any day shall
include any broker-dealer who quoted both a bid and asked price for such day,
but shall not include any broker-dealer who quoted only a bid or only an asked
price for such day.
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D. The term "Stock Restrictions" shall mean the restrictions on
the ability of a Participant to transfer Restricted Shares issued to such
Participant hereunder referred to in Section 9 and embodied in a Restricted
Stock Agreement between the Corporation and such Participant.
13. Expenses of Administration. All costs and expenses incurred in the
operation and administration of the Plan shall be borne by the Corporation.
14. No Employment Right. Neither the existence of the Plan nor the
grant of any Restricted Shares hereunder shall require the Corporation or any
subsidiary to continue any Participant as a director of the Corporation or any
subsidiary.
15. Amendment of Plan. The Board may, at any time and from time to
time, by a resolution appropriately adopted, make such modifications of the Plan
as it shall deem advisable. No amendment of the Plan may, without the consent of
the Participants to whom any Restricted Shares shall theretofore have been
allocated, adversely affect the rights or obligations of such Participants with
respect to such Restricted Shares. The Committee may, in its discretion, cause
the restrictions imposed in accordance with the provisions of Section 9 hereof
with respect to any Restricted Shares to terminate, in whole or in part, prior
to the time when they would otherwise terminate.
16. Expiration and Termination of the Plan. The Plan shall
terminate on November 11, 2006 or at such earlier time as the
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Board may determine; provided, however, that such termination shall not, without
the consent of the Participants to whom any Restricted Shares shall theretofore
have been allocated, adversely affect the rights or obligations of such
Participants with respect to such Restricted Shares.
17. Governing Law. The Plan shall be governed by the laws of the State
of New York.
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APPENDIX
<PAGE>
PROXY
GALEY & LORD, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 11, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Arthur C. Wiener and
Michael R. Harmon, or either of them acting singly in the absence of
the other, with the power of substitution in either of them, the proxies of
the undersigned to vote with the same force and effect as the undersigned
all shares of Common Stock of Galey & Lord, Inc. (the "Company") held of
record by the undersigned on December 20, 1996 at the Annual Meeting of
Stockholders to be held at the offices of the Company, 980 Avenue of the
Americas, New York, New York 10018, on February 11, 1997,
at 10:30 A.M., Local Time, and at any adjournment or adjournments thereof,
hereby revoking any proxy or proxies heretofore given and ratifying and
confirming all that said proxies may do or cause to be done by virtue thereof
with respect to the following matters:
1. The election of eight directors nominated by the Board of Directors:
<TABLE>
<S> <C>
FOR all nominees listed below (except as indicated below) WITHHOLD AUTHORITY to vote for the nominees listed below
</TABLE>
ARTHUR C. WIENER, LEE ABRAHAM, PAUL G. GILLEASE, WILLIAM deR. HOLT,
HOWARD S. JACOBS, WILLIAM M.R. MAPEL, STEPHEN C. SHERRILL AND DAVID
F. THOMAS
(INSTRUCTION: To withhold authority to vote for any individual nominee
or nominees write such nominee's or nominees' names in the space
provided below.)
2. The adoption of the proposed 1996 Restricted Stock Plan (the "Restricted
Stock Plan") for non-employee directors.
FOR AGAINST ABSTAIN
3. The adoption of the proposed amendments to the Company's Amended and
Restated 1989 Stock Option Plan (the "Stock Option Plan").
(a) To increase the number of shares of Common Stock available under
the Stock Option Plan by an aggregate of 250,000 shares.
FOR AGAINST ABSTAIN
(b) To provide that each non-employee director of the Company make
an election to receive annually and at the time such person
becomes a director either (i) stock options granted under
the Stock Option Plan, or (ii) shares of Common Stock issued
under the Restricted Stock Plan.
FOR AGAINST ABSTAIN
(c) To provide that each non-employee director of the
Company make an election to receive all of his annual
director's fee (i) in cash, or (ii) in the form of a
grant of stock options under the Stock Option Plan, or
(iii) in the form of a combination of cash plus shares
of Common Stock issued under the Restricted Stock Plan.
FOR AGAINST ABSTAIN
<PAGE>
<PAGE>
4. The ratification of the selection of Ernst &
Young LLP as independent auditors of the
Company for the 1997 fiscal year.
FOR AGAINST ABSTAIN
5. Upon such other business as may properly
come before the Meeting or any adjournment
thereof.
This proxy, when properly executed, will be
voted as directed. If no direction is indicated, the proxy will be voted (i) FOR
the election of the eight named individuals as directors, (ii) FOR the adoption
of the proposed 1996 Restricted Stock Plan for non-employee directors, (iii) FOR
the adoption of each of three proposed amendments to the Company's Amended and
Restated 1989 Stock Option Plan, and (iv) FOR the ratification of the selection
of Ernst & Young LLP as independent auditors of the Company for the 1997 fiscal
year.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders to be held on February 11, 1997 and the Proxy Statement, dated
January 7, 1997, prior to the signing of this proxy.
Dated: , 1997
(L.S.)
Please sign your name exactly as it
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title as it appears hereon. When
signing as joint tenants, all parties
in the joint tenancy must sign. When a
proxy is given by a corporation, it
should be signed by an authorized
officer and the corporate seal affixed.
No postage is required if returned in
the enclosed envelope and mailed in the
United States.
PLEASE SIGN, DATE AND MAIL THIS PROXY
IMMEDIATELY IN THE ENCLOSED ENVELOPE.
