<PAGE>
SCHEDULE 14A
(RULE 14a-101)
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:
[_] Confidential, for Use of the
[_] Preliminary Proxy Statement Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DAN RIVER INC.
(Name of Registrant as Specified In 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee previously paid with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO 0F DAN RIVER INC.]
March 16, 2000
To our shareholders:
We cordially invite you to attend our annual meeting of shareholders, which
is to be held on Thursday, April 20, 2000 at the Riverview Inn in Danville,
Virginia. The meeting will start at 10 a.m., EDT.
On the ballet at this year's annual meeting are our proposals to elect two
directors to our board of directors, to approve the performance goals
contained in our management incentive plan, to adopt and approve a new
employee incentive plan, and to ratify the appointment of Ernst & Young LLP as
our independent auditors for our fiscal year ending December 30, 2000.
As a shareholder, your vote is important. We hope that you will attend the
annual meeting. In the meantime, please complete, sign and return your proxy
card in the enclosed envelope as soon as possible to ensure that your shares
will be represented and voted at the meeting. If you attend the annual
meeting, you may vote your shares in person even though you have previously
signed and returned your proxy.
On behalf of your board of directors, thank you for your support of and
interest in Dan River.
Sincerely,
/s/ Joseph L. Lanier, Jr.
Joseph L. Lanier, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE>
[LOGO OF DAN RIVER INC.]
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 20, 2000
----------------
TIME: 10:00 a.m., EDT on Thursday, April 20, 2000
PLACE: Riverview Inn
Danville, Virginia
ITEMS OF BUSINESS: (1) To elect two directors.
(2) To approve the performance goals contained
in our management incentive plan.
(3) To adopt and approve a long-term incentive
plan which will, among other things, make
available up to 2,000,000 shares of our Class
A Common Stock for issuance under the plan.
(4) To ratify the appointment of Ernst & Young
LLP as our independent auditors to serve for
our fiscal year 2000.
(5) To transact any other business that
properly comes before the meeting or any
adjournment of the meeting.
WHO MAY VOTE: You can vote if you were a holder of Class A
Common Stock or Class B Common Stock of record
on February 25, 2000.
ANNUAL REPORT: A copy of our Annual Report is enclosed.
DATE OF NOTICE: March 16, 2000.
DATE OF MAILING: This notice and the proxy statement are first
being mailed to shareholders on or about March
16, 2000.
<PAGE>
DAN RIVER INC.
2291 Memorial Drive
Danville, Virginia 24541
----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 20, 2000
----------------
ABOUT THE MEETING
Who is furnishing this proxy statement?
This proxy statement is being furnished to our shareholders by our board of
directors in connection with the solicitation of proxies by the board of
directors. The proxies will be used at our annual meeting of shareholders to
be held on April 20, 2000.
What am I voting on?
You will be voting on the following:
. To elect two directors,
. To approve the performance goals contained in our management incentive
plan,
. To adopt and approve a long-term incentive plan, which will, among other
things, make available up to 2,000,000 shares of our Class A Common Stock
for issuance under the plan,
. To ratify the appointment of Ernst & Young LLP as our independent
auditors for our fiscal year 2000, and
. Any other business that properly comes before the annual meeting.
You may not cumulate your votes for any matter being voted on at the annual
meeting and you are not entitled to appraisal or dissenters rights.
Who can vote?
You may vote if you owned Class A Common Stock or Class B Common Stock as of
the close of business on February 25, 2000. As of February 25, 2000, there
were 20,574,020 shares of Class A Common Stock and 2,062,070 shares of Class B
Common Stock outstanding.
How do I vote?
You may vote by:
. completing, signing and returning the enclosed proxy card, or
. attending the meeting and voting in person.
Can I vote at the meeting?
You may vote your shares at the meeting if you attend in person. Even if you
plan to be present at the meeting, we encourage you to vote your shares by
proxy. You may vote your proxy by mail.
1
<PAGE>
What if my shares are registered in more than one person's name?
If you own shares that are registered in the name of more than one person,
each person should sign the enclosed proxy. If the proxy is signed by an
attorney, executor, administrator, trustee, guardian or by any other person in
a representative capacity, the full title of the person signing the proxy
should be given and a certificate should be furnished showing evidence of
appointment. person in a representative capacity, the full title of the person
signing the proxy should be given and a certificate should be furnished
showing evidence of appointment.
What does it mean if I receive more than one proxy card?
It means you have multiple accounts with brokers and/or our transfer agent.
Please vote all of these shares. We recommend that you contact your broker
and/or our transfer agent to consolidate as many accounts as possible under
the same name and address. Our transfer agent is Boston EquiServe, L.P., Blue
Hills Office Park, 150 Royale Street, Canton, MA 02021 and may be reached at
(800) 633-4236.
What if I return my proxy card but do not provide voting instructions?
If you sign and return your proxy but do not include instructions, your
proxy will be voted:
. FOR the election of the two nominee directors named on page 4 of this
proxy statement,
. FOR the approval of the performance goals contained in our management
incentive plan,
. FOR the adoption and approval of the long-term incentive plan, and
. FOR the ratification of Ernst & Young LLP's appointment as our
independent auditors for our fiscal year 2000.
Can I change my mind after I vote?
You may change your vote at any time before the polls close at the meeting.
You may do this by:
. giving written notice to the Secretary of our company,
. delivering a later-dated proxy, or
. voting in person at the annual meeting.
How many votes am I entitled to?
If you own Class A Common Stock, you are entitled to one vote for each share
you own. If you own Class B Common Stock, you are entitled to 4.39 votes for
each share you own. Holders of Class A Common Stock and Class B Common Stock
will vote together as a single voting group for all matters to be voted on at
the annual meeting. Sometimes in this proxy statement we refer to the Class A
Common Stock and the Class B Common Stock collectively as the Common Stock.
How many votes must be present to hold the meeting?
In order for us to conduct the annual meeting the holders of a majority of
the votes of the Common Stock outstanding as of February 25, 2000 must be
present at the annual meeting. This is referred to as a quorum. Your shares
will be counted as present at the meeting if you:
. return a properly executed proxy (even if you do not provide voting
instructions), or
. attend the annual meeting and vote in person.
2
<PAGE>
How many votes are needed to elect directors?
The two nominees receiving the highest number of "yes" votes will be elected
directors. This number is called a plurality. If you do not vote in person or
sign and return a proxy that contains voting instructions, your shares will
not be counted as "yes" votes or "no" votes at the annual meeting.
How many votes are needed to approve the performance goals contained in the
management incentive plan?
To approve the performance goals contained in the management incentive plan,
the "yes" votes cast at the annual meeting must exceed the "no" votes cast at
the annual meeting, provided that the "yes" votes represent over 50% of the
votes of the Common Stock outstanding as of February 25, 2000. If you do not
vote in person or sign and return a proxy that contains voting instructions,
your shares will not be counted as "yes" votes or "no" votes at the annual
meeting.
How many votes are needed to adopt and approve the long-term incentive plan?
To adopt and approve the long-term incentive plan, the "yes" votes cast at
the annual meeting must exceed the "no" votes cast at the annual meeting,
provided that the "yes" votes represent over 50% of the votes of the Common
Stock outstanding as of February 25, 2000. If you do not vote in person or
sign and return a proxy that contains voting instructions, your shares will
not be counted as "yes" votes or "no" votes at the annual meeting.
How many votes are needed to ratify the appointment of Ernst & Young LLP?
To ratify the appointment of Ernst & Young LLP as our independent auditors
for our fiscal year 2000, the "yes" votes cast at the annual meeting must
exceed the "no" votes cast at the annual meeting. If you do not vote in person
or sign and return a proxy that contains voting instructions, your shares will
not be counted as "yes" votes or "no" votes at the annual meeting.
How many votes are needed for other matters?
To approve any other matter that properly comes before the annual meeting,
the "yes" votes cast in favor of the matter must exceed the "no" votes cast
against the matter.
Will my shares be voted if I do not provide my proxy?
Your shares may be voted under certain circumstances if they are held in the
name of a brokerage firm. Brokerage firms have the authority under the New
York Stock Exchange rules to vote customers' unvoted shares on certain
"routine" matters, including the election of directors and the ratification of
independent auditors. The adoption and approval of the long-term incentive
plan is not considered a "routine matter" under the New York Stock Exchange
rules. Accordingly, if a brokerage firm votes your shares in accordance with
these rules, your shares will be counted as present at the annual meeting for
purposes of establishing a quorum and will be counted as "yes" votes or "no"
votes, as the case may be, in all matters voted on at the annual meeting, with
the exception of the adoption and approval of the long-term incentive plan. If
you hold your shares directly in your own name, they will not be voted if you
do not provide a proxy. If a brokerage firm signs and returns a proxy on your
behalf that does not contain voting instructions, your shares will be counted
as present at the meeting for quorum purposes, but will not be counted as
"yes" votes or "no" votes on any matter voted on at the annual meeting. These
are referred to as broker non-votes.
3
<PAGE>
ELECTION OF DIRECTORS
(Item 1)
How many directors serve on the board of directors?
Our board of directors currently has 5 members. The directors are divided
into three classes with the directors in each class serving a term of three
years. Directors for each class are elected at the annual meeting of
shareholders held in the year in which the term for their class expires. At
the annual meeting on April 20, 2000, two nominees for director are to be
elected to serve until the annual meeting in 2003, or until their successors
are elected and qualified.
Who are the nominees this year?
The nominees are Messrs. Edward J. Lill and John F. Maypole. Their current
term expires at the annual meeting.
What if a nominee is unwilling to serve?
We do not believe that either of the nominees for director will be unwilling
or unable to serve as director. However, if at the time of the annual meeting
either of the nominees should be unwilling or unable to serve, proxies will be
voted as recommended by the board of directors either:
. to elect substitute nominees recommended by the board,
. to allow the vacancy created to remain open until filled by the board, or
. to reduce the number of directors for the ensuing year.
In no event, however, can a proxy be voted to elect more than two directors.
What is the recommendation of the board of directors?
The board of directors recommends a vote FOR Edward J. Lill and John F.
Maypole to hold office until the annual meeting of shareholders in 2003, or
until their successors are elected and qualified. Proxies returned without
instructions will be voted for these nominees.
What is the background of this year's nominees?
Edward J. Lill, 67, has been a director of our company since 1997. Mr. Lill
is presently a consultant to Metropolitan Life Insurance Company with respect
to accounting and other related matters. Mr. Lill was a senior partner and
vice chairman of the accounting firm, Deloitte & Touche, from 1988 until his
retirement in 1995.
John F. Maypole, 60, has been a director of our company since 1992. Mr.
Maypole is a consultant to Metropolitan Life Insurance Company and has over
the past five years served as a consultant to and/or director of various other
corporations and providers of financial services. Mr. Maypole also serves as a
director of Bell Atlantic Corporation, a telecommunications company,
Massachusetts Mutual Life Insurance Company, and Church and Dwight Co., Inc.,
a household consumer product and specialty chemical company.
Who are the directors continuing in office until 2001?
Donald J. Keller, 68, has been a director of our company since 1998. Mr.
Keller has served as chairman of Vlasic Foods, International since 1998. From
1993 until 1998 he was chairman of B. Manischewitz Company, a food
manufacturer, and was co-chief executive officer of B. Manischewitz Company
from 1992 until 1993. From 1995 until 1997 he was chairman of the board of
Prestone Products Corporation, an automotive chemicals manufacturer.
4
<PAGE>
Joseph L. Lanier, Jr., 68, has been chairman of the board of directors and
chief executive officer of our company or our predecessor since 1989. Mr.
Lanier is also a director of SunTrust Bank, Inc., a bank holding company,
Flowers Industries, Inc., a food company, Torchmark Corporation, an insurance
company, Dimon Incorporated, a tobacco products company and Waddell & Reed
Financial Inc., a mutual fund company.
Who are the directors continuing in office until 2002?
Richard L. Williams, 66, has been a director and president and chief
operating officer of our company or our predecessor since 1989.
How often did the board of directors meet during fiscal 1999?
The board of directors met five times during fiscal 1999. Each director
attended at least 75% of all meetings of the board of directors and committees
on which he served in fiscal 1999.
What committees has the board of directors established?
The board of directors has established a compensation committee and an audit
committee. The full board of directors acts as a nominating committee.
Compensation Committee. Messrs. Maypole and Keller serve as members of the
compensation committee, and Mr. Maypole is the chairman. Mr. Lill serves as an
alternate member of the committee in the event one of the regular members
cannot attend a meeting. The compensation committee is responsible for:
. reviewing annually and approving our compensation strategy to ensure that
our executive compensation strategy supports our business objectives as
well as shareholder interests,
. approving salary, bonuses and other compensation of our executive
officers and key management personnel,
. administering our option and benefit plans, and
. considering issues pertaining to succession planning upon retirement or
termination of the employment of senior managers.
This committee held two meetings in fiscal 1999.
Audit Committee. Messrs. Lill and Maypole serve as members of the audit
committee, and Mr. Lill is Chairman. Mr. Keller serves as an alternate member
of the audit committee. The audit committee is responsible for:
. recommending independent auditors,
. reviewing with the independent auditors the scope and results of the
audit engagement,
. monitoring our financial policies and control procedures, and
. reviewing and monitoring the provision of non-audit services by our
auditors.
The audit committee held two meetings in fiscal 1999.
5
<PAGE>
How are directors compensated?
Cash Compensation. Directors who are not employees of our company receive an
annual retainer of $20,000 and $1,000 per board and committee meeting
attended. Directors who are also employees of our company are not separately
compensated for their service as directors.
Options. In 1999 the board of directors granted to each of Messrs. Keller,
Lill and Maypole non-qualified options to purchase 5,000 shares of Class A
Common Stock pursuant to the 1997 Stock Plan for Outside Directors, which we
refer to as the Directors Plan. Those options vest and become exercisable in
three equal increments on December 31, 1999, 2000 and 2001 (or 100% upon a
change of control), have an exercise price of $5.3125 per share and have a
term expiring October 29, 2009.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below shows, as of February 25, 2000, how many shares of each
class of our Common Stock were beneficially owned by our directors, named
executive officers, owners of 5% or more of our Common Stock and our directors
and executive officers as a group. Under the rules of the SEC, a person
"beneficially owns" securities if that person has or shares the power to vote
or dispose of the securities. The person also "beneficially owns" securities
which that person has the right to purchase within 60 days. Under these rules,
more than one person may be deemed to beneficially own the same securities,
and a person may be deemed to beneficially own securities in which he or she
has no financial interest. Except as shown in the table, the shareholders
named below have the sole power to vote or dispose of the shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Beneficial Ownership
Beneficial Ownership of of Class B Common Percentage
Class A Common Stock(1) Stock of
------------------------------------- -------------------------- Combined
Number of Percent of Number of Percent of Voting
Shares Class(2) Shares Class Power(2)
-------------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Donald J. Keller........ 26,667(11) * -- -- *
Joseph L. Lanier,
Jr.(3)(4).............. 2,230,253(7)(8)(11) 9.5 2,062,070(8)(9) 100.0% 30.3
Edward J. Lill.......... 10,333(11) * -- -- *
John F. Maypole......... 54,708(11) * -- -- *
Richard L.
Williams(3)(5)......... 600,564(11) 2.6 465,981(9) 22.6 7.2
Barry F. Shea(3)(6)..... 215,537(11) * 174,912(9) 8.5 2.7
Gregory R. Boozer....... 59,583(11) * -- -- *
Harry L. Goodrich....... 46,708(11) * -- -- *
Mezzanine Investment
Limited Partnership-
BDR(10)................ 6,708,723 28.6 -- -- 22.0
Dimensional Fund
Advisors, Inc.(12)..... 1,588,200 7.7 -- -- 5.2
T. Rowe Price
Associates, Inc.(13)... 2,088,900 8.9 -- -- 6.9
Wellington Management
Company, LLP(14)....... 1,507,800 6.4 -- -- 5.0
All executive officers
and Directors as a
group (14 Persons)..... 2,670,462(7)(11) 11.4 2,062,070(8)(9) 100.0 31.7
</TABLE>
- --------
*Less than 1%.
(1) Under our articles of incorporation, shares of Class B Common Stock are
convertible into shares of Class A Common Stock on a share-for-share
basis at any time subject to compliance with certain first offer rights.
As a result, shares of Class A Common Stock shown in the table as
beneficially owned by any individual include shares of Class A Common
Stock issuable upon conversion of Class B Common Stock beneficially owned
by such individual.
(2) Based on an aggregate of 20,574,020 shares of Class A Common Stock issued
and outstanding as of February 25, 2000 plus, for each individual,
. the number of shares of Class A Common Stock issuable upon conversion
of shares of Class B Common Stock beneficially owned by such
individual, and
. the number of shares of Class A Common Stock issuable upon exercise of
outstanding stock options which are or will become exercisable prior to
April 25, 2000.
(3) The business address of Messrs. Lanier, Williams and Shea is 2291
Memorial Drive, Danville, Virginia 24541.
7
<PAGE>
(4) Mr. Lanier disclaims beneficial ownership of 96,553 shares that are held
by his wife, Mrs. Ann M. Lanier.
(5) Mr. Williams disclaims beneficial ownership of 96,250 shares that are
held by his wife, Mrs. Suzanne S. Williams.
(6) Mr. Shea disclaims beneficial ownership of 50,000 shares that are held by
his wife, Mrs. Nellie C. Shea.
(7)Includes:
. 840,180 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mr. Joseph L.
Lanier, Jr.,
. 65,553 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mrs. Ann M.
Lanier,
. 257,722 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mr. Joseph Lanier,
III,
. 257,722 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mrs. Ann L.
Jackson,
. 96,250 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mrs. Suzanne S.
Williams,
. 369,731 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mr. Richard L.
Williams,
. 124,912 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mr. Barry F. Shea,
and
. 50,000 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mrs. Nellie C.
Shea.
We refer to the beneficial owners listed in the preceding bullets as the
Senior Management Group. With respect to the shares described above Mr.
Lanier has sole voting power pursuant to the terms of a Voting Agreement
dated November 20, 1997 between the Company and the members of the Senior
Management Group, as amended, which we refer to as the Voting Agreement.
(8) Includes shares of Class B Common Stock beneficially owned by the members
of the Senior Management Group with respect to which Mr. Joseph L.
Lanier, Jr. has sole voting power pursuant to the Voting Agreement. See
Footnote 7 above.
(9) Joseph L. Lanier, Jr. has sole voting power with respect to these shares
pursuant to the terms of the Voting Agreement.
(10) Reflects shares of Class A Common Stock beneficially owned by Mezzanine
Investment Limited Partnership--BDR, which we refer to as MILP, whose
address is One Madison Avenue, New York, New York 10010. According to
Schedule 13D filed on behalf of Metropolitan Life Insurance Company,
which we refer to as MetLife, the general partner of MILP is 23rd Street
Investments, Inc., a wholly-owned subsidiary of MetLife. 23rd Street
Investments has sole voting and investment power with respect to the
Class A Common Stock beneficially owned by MILP. As a result, 23rd Street
Investments is deemed to beneficially own the shares of Class A Common
Stock beneficially owned by MILP.
(11) Includes options exercisable within 60 days.
(12) Based solely on Schedule 13G filed with the SEC on February 2, 2000. The
address of Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, CA 90401.
(13) Based solely on Schedule 13G/A filed with the SEC on February 4, 2000.
The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street,
Baltimore, Maryland 21202.
(14) Based solely on Schedule 13G/A filed with the SEC on February 11, 2000.
The address of Wellington Management Company, LLP is 75 State Street,
Boston, Massachusetts 02109.
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Registration Rights Agreement
General. We, certain members of senior management, which we refer to as the
Management Shareholders, MILP, and all other holders of our common stock prior
to the initial public offering of our common stock in November 1997, are
parties to a registration rights agreement, dated September 3, 1991, as
amended. All provisions of the registration rights agreement described below
terminate on the earlier of:
. September 3, 2006 or
. the date when shares of Class A Common Stock which are held by the
above-described holders other than Management Shareholders constitute
less than 10% of the outstanding Common Stock, subject to limited
exceptions.
The registration rights agreement is applicable only with respect to shares of
Common Stock held prior to the initial public offering. It contains, among
others, the following provisions:
Dan River's and Mr. Lanier's Call Rights. Joseph L. Lanier, Jr. has the
right to purchase the Class A Common Stock beneficially owned by certain
specified shareholders, which we refer to as the Lanier Call. We have a
similar call right, which we refer to as the Company Call. In the case of a
Company Call, the call price is the fair market value (as defined) of the
Common Stock. In the case of a Lanier Call, the call price is 105% of the fair
market value of the Common Stock. Under certain circumstances, the Company
Call may be assigned to or preempted by Mr. Lanier. In addition, Mr. Lanier
has a first offer right to purchase any Class A Common Stock offered for sale
by certain of our shareholders. Our rights and the rights of Mr. Lanier under
the call provisions of the registration rights agreement terminate on
September 3, 2001 or, in the case of a Lanier Call, if earlier, Mr. Lanier's
death or total disability or termination of employment for Good Cause (as
defined in Mr. Lanier's employment agreement).
Demand and Piggyback Registration Rights. The holders (not including the
Management Shareholders) of at least 20% of the Class A Common Stock held by
such holders immediately prior to the initial public offering may, on seven
occasions, demand that we prepare and file a registration statement under the
Securities Act. These demand registration rights are applicable to such number
of shares of Class A Common Stock held by such holders prior to the initial
public offering as are designated by the holders of a majority of such shares
of Class A Common Stock after consultation with the book running lead
underwriter of any such offering and the demanding holders. Once every 12
months, we may delay the filing of any such registration statement for up to
60 days if we would be required in the opinion of counsel to disclose
information in the registration statement that it would not otherwise be
required to publicly disclose and the board of directors determines that such
disclosure is not in our best interests. In addition, such holders of Class A
Common Stock are entitled to offer and sell their Class A Common Stock in any
underwritten public offering involving the offering of any securities by us or
by any of our subsidiaries, subject to certain limitations. We may also offer
and sell our Class A Common Stock in any underwritten public offering effected
at the request of such holders of Class A Common Stock, subject to certain
limitations.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the compensation earned during fiscal 1999, fiscal
1998 and fiscal 1997 by our chief executive officer and our four other most
highly compensated executive officers. These individuals are called the named
executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation Awards(3)
-------------------------------------------
Annual Compensation(1)
----------------------- Securities
Name and Principal Fiscal Other Annual Underlying All Other
Position Year Salary Bonus(2) Compensation(4) Options (#) Compensation(5)
- ------------------ ------ ------- -------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph L. Lanier, Jr. .. 1999 513,139 94,830 -- 65,000 1,600
Chairman and Chief 1998
Executive 485,385 413,350 -- 65,000 1,600
Officer 1997 442,410 442,410 -- 100,000 1,600
Richard L. Williams..... 1999 402,462 74,370 -- 45,000 1,600
President and Chief 1998
Operating 397,693 338,680 61,950 45,000 1,600
Officer 1997 366,306 366,310 -- 70,000 1,600
Barry F. Shea........... 1999 241,477 44,620 -- 17,500 1,600
Executive Vice 1998
President--Chief 235,962 200,950 -- 17,500 1,600
Financial Officer 1997 215,447 215,450 -- 30,000 1,600
Gregory R. Boozer....... 1999 201,231 37,190 48,923 15,000 1,600
Executive Vice 1998
President-- 187,500 159,680 142,740 12,500 1,600
Manufacturing 1997 160,770 160,770 -- 25,000 1,600
Harry L. Goodrich....... 1999 179,308 33,140 108,726 10,000 1,600
Vice President, 1998
Secretary and 157,692 134,290 81,655 10,000 1,577
General Counsel 1997 132,689 132,690 -- 10,000 1,327
</TABLE>
- --------
(1) The aggregate amount of perquisites and other personal benefits, if any,
did not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for each named executive officer and has therefore been
omitted.
(2) Bonuses are based on operating income targets approved by the board of
directors at the beginning of each fiscal year. Based upon operating
income targets established at the beginning of the 1999 fiscal year, each
of the named executive officers was paid a bonus equal to approximately
18% of his base salary for the 1999 fiscal year.
(3) No restricted stock or SARs have been granted.
(4) Represents the difference between:
. the fair market value of Class A Common Stock purchased upon exercise of
non-qualified stock options during the applicable fiscal year (based
upon the closing price of the Class A Common Stock in trading on the New
York Stock Exchange on the date of exercise) and
. the exercise price of the option.
(5) Represents amounts accrued during applicable fiscal years to each named
executive officer pursuant to the Dan River Salary Retirement Plan.
10
<PAGE>
Option Grants Table
The following table below shows certain information relating to the options
granted to each of the named executive officers during fiscal 1999.
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value
of Assumed Annual
Rates of Stock
Price
Appreciation for
Individual Grants Option Term Option Term
----------------------------------- -------------------- -----------------
% of Total Exercise
Number of Securities Options or Base
Underlying Granted to Price Per
Options/SARs Granted Employees Share Expiration
Name (#)(1)(2) in Fiscal Year ($/Sh) Date 5% 10%
- ---- -------------------- -------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Joseph L. Lanier, Jr.... 65,000 13% $5.31 10/29/09 $217,165 $550,339
Richard L. Williams..... 45,000 9% $5.31 10/29/09 150,345 381,004
Barry F. Shea........... 17,500 3% $5.31 10/29/09 58,468 148,168
Gregory R. Boozer....... 15,000 3% $5.31 10/29/09 50,115 127,001
Harry L. Goodrich....... 10,000 2% $5.31 10/29/09 33,410 84,668
</TABLE>
- --------
(1) We have not granted any SARs.
(2) All options granted are options to purchase Class A Common Stock. The
options vest and become exercisable in four equal increments on December
31, 2000, 2001, 2002 and 2003. However, the options vest and become
exercisable immediately in the event of a Change of Control as defined in
the indenture governing our 10 1/8% senior subordinated notes due 2003.
The options are automatically revoked to the extent they are not vested at
the time of an optionee's death, disability, retirement, or termination of
employment. The optionee or his estate will be entitled to exercise such
options within six months after the date of the event resulting in
termination of employment.
Aggregated Options Table
The following table shows certain information with respect to options
exercised during fiscal 1999 and options held at the end of fiscal 1999 by
each named executive officers. There were no stock appreciation rights
outstanding at the end of fiscal 1999.
Aggregated Option/SAR Exercises In Last Fiscal Year And
Fiscal Year End Option/SAR Values Table
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options at Fiscal
Shares Year-End (#)(2)
Acquired on Value -------------------------
Name Exercise (#) Realized(1)($) Exercisable Unexercisable
- ---- ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
Joseph L. Lanier, Jr...... -- -- 137,083 180,417
Richard L. Williams....... -- -- 76,583 125,417
Barry F. Shea............. -- -- 40,625 50,625
Gregory R. Boozer......... 8,250 48,923 33,333 41,042
Harry L. Goodrich......... 17,750 108,726 18,958 24,167
</TABLE>
- --------
(1) Represents the difference between:
. fair market value of Class A Common Stock purchased upon exercise of
non-qualified stock options during fiscal year 1999 (based upon the
closing price of the Class A Common Stock in trading on the New York
Stock Exchange on the date of exercise) and
. the exercise price of the option.
(2) There were no unexercised in the money stock options outstanding at fiscal
year end based on the closing price on the New York Stock Exchange of our
Class A Common Stock on December 31, 1999 of $5.125 per share and the
respective option exercise price.
11
<PAGE>
Retirement Plan
The Dan River Inc. Salary Retirement Plan provides noncontributory defined
benefits based on both years of service and the employee's career average
monthly earnings, which we refer to as average compensation. Average
compensation includes salary and commissions but excludes bonuses. Estimated
annual benefits payable upon retirement at age 65 for each of the named
executive officers are as follows, based upon a single life annuity:
. Joseph L. Lanier, Jr.--$16,369;
. Richard L. Williams--$16,292;
. Barry F. Shea--$36,713;
. Gregory R. Boozer--$43,890; and
. Harry L. Goodrich--$36,355.
Employment Agreements
Executive Employment Agreements. We have employment agreements with Joseph
L. Lanier, Jr., Richard L. Williams and Barry F. Shea, each of which became
effective on November 20, 1997, and terminate five years thereafter, unless
earlier terminated as described below. Each employment agreement provides for
the employee to be retained in certain specified capacities by us and to
devote his full business time and attention to our business. Each of the
employment agreements provides that we shall pay the employee a bonus under
the Dan River Inc. Management Incentive Plan, which we refer to as the Bonus
Plan, and reimburse certain business related expenses. The Bonus Plan provides
for the payment of an annual cash bonus to our executive officers and key
employees based upon our achievement of operating income and working capital
management goals established at the beginning of each fiscal year and approved
by the board of directors. Participation in the Bonus Plan, as well as award
levels and performance criteria, are recommended by the chief executive
officer and approved by the compensation committee of the board of directors.
Mr. Lanier's employment agreement provides that he will serve as the chief
executive officer and chairman of the board of directors at a base salary of
$460,000 per year, which may be increased at the discretion of the board of
directors, subject to certain cost of living adjustments.
The employment agreements with Messrs. Williams and Shea provide for their
employment as president and chief operating officer and chief financial
officer, respectively. Each employment agreement provides that the employee
shall receive a base salary determined by the chief executive officer, subject
to approval by the compensation committee of the board of directors.
The employment agreements are terminable upon the death or disability of the
employee, by us for "good cause," as defined in the employment agreements, by
us without cause, by the employee for "good reason," as defined in the
employment agreements, by the employee without good reason or upon the
occurrence of a "change in control," as defined in the employment agreements.
Each employment agreement provides that, in the event the employee's
employment is terminated for no cause, a change in control, or for good
reason, such employee will be paid an amount equal to two times his annual
base salary in effect at the time of termination, plus any incentive bonus
prorated to the date on which employment is terminated. The employee would
also be entitled to participate for a period of up to twenty-four months after
termination of his employment in various welfare, pension and savings plans
and programs offered by us.
Post-Employment Agreements. We have entered into agreements with Messrs.
Boozer and Goodrich, as well as certain other executive officers and key
employees. These agreements provide certain assurances to the employee in the
event Mr. Lanier ceases for any reason to be chief executive officer, which we
refer to as an Employment Event, including an agreement not to arbitrarily
reduce the salary of or relocate the employee, and to allow the employee to
participate in certain incentive and other benefit plans at a level
commensurate with his
12
<PAGE>
level of participation at the time the Employment Event occurred. In the event
employment of the employee is terminated by us without "good cause," as
defined in the post-employment agreements, or by the employee upon breach of
the agreement by us, the employee is entitled to a severance payment of up to
two years salary, plus any bonus otherwise earned for the year in which the
termination occurs. The employee would also be entitled to continue to
participate for a period of up to twenty-four months in various welfare,
pension and savings plans and programs offered by us.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Our compensation package for all of our executive officers in fiscal 1999
consisted of:
.base salary,
.cash bonus, and
.stock options.
The compensation committee expects that compensation for executive officers in
fiscal 2000 will include these same elements.
Base Salary. Mr. Lanier's base salary is determined in accordance with his
employment agreement, with increases in excess of cost of living increases to
be recommended by the compensation committee and subject to the approval of
the full board of directors. In fiscal 1999, Mr. Lanier's salary was increased
approximately 5.8% from fiscal 1998.
Executive officers' salaries are established in line with merit budget
guidelines applicable to all salaried employees and approved by the board of
directors. The merit budget is established annually by the board of directors
and is generally intended to adjust for inflation and competitive factors
relating to pay levels in the textile industry. Adjustments may be approved by
the compensation committee to take account of changes in the executive
officer's responsibilities and his or her overall performance.
Cash Bonuses. Each executive officer, including Mr. Lanier, is eligible to
receive an annual cash bonus pursuant to the terms of our management incentive
plan. The established objectives of the management incentive plan are:
.to maximize operating income while encouraging prudent management of
working capital, and
.to enhance our ability to attract and retain talented management.
Operating income targets are recommended at the beginning of each fiscal year
by the compensation committee and approved by the board of directors. The
compensation committee determines the target award level category to which
each executive officer is assigned. In establishing operating income targets
and other financial criteria for awards under the management incentive plan,
the compensation committee has focused specifically on our performance in
comparison to certain other textile companies. For example, achieving a target
award under the management incentive plan generally requires performance above
the level of such other textile companies at the time the bonus targets were
established. With respect to fiscal 1999, Mr. Lanier and the other named
executive officers were paid cash bonuses equal to approximately 18% of their
respective base salaries in accordance with targets and award levels approved
by the board of directors at the beginning of fiscal 1999.
13
<PAGE>
Stock Options. Our stock option plans are intended to align the interests
between our shareholders and our directors, officers and key employees through
the grant of stock options which vest over a period of time. Options granted
in fiscal 1999 had an exercise price equal to the closing price of our Class A
Common Stock on the New York Stock Exchange on the date of grant and, in the
compensation committee's view, provide a strong incentive to management to
build shareholder value over time.
John F. Maypole, Chairman
Donald J. Keller
The foregoing report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Act of 1934, as amended ,which we refer to together as the Acts, except to the
extent we specifically incorporate this information by reference, and shall
not otherwise be deemed filed under such Acts.
14
<PAGE>
Stock Price Performance Graph
The graph below reflects cumulative shareholder return (assuming the
reinvestment of dividends) on our Class A Common Stock compared to the return
on the S&P 500 Index and a peer group of textile companies which, in our
opinion, are engaged in lines of business similar to those in which we are
engaged. Trading in our Class A Common Stock commenced on November 21, 1997 in
connection with our initial public offering. The graph reflects the investment
of $100.00 on November 21, 1997 in our Class A Common Stock, the S&P 500 Index
and in the peer group and the reinvestment of dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Dan River Inc. S&P 500 Peer Group(2)
-------------- ------- -------------
<S> <C> <C> <C>
11/21/97.............................. 100.00 100.00 100.00
12/31/97.............................. 109.58 106.43 106.75
12/31/98.............................. 78.33 136.84 101.21
12/31/99.............................. 34.17 165.64 57.35
</TABLE>
(1) Assumes initial investment of $100; total return assumes reinvestment of
dividends; total returns based on market capitalization.
(2) Peer group consists of Burlington Industries Inc., Cone Mills Corporation,
Crown Crafts, Inc., Delta Woodside Industries Inc., Galey & Lord Inc.,
Pillowtex Corp., Springs Industries, Inc., Thomaston Mills, Inc., and
WestPoint Stevens Inc.
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Acts, except to the extent we specifically
incorporate this information by reference, and shall not otherwise be deemed
filed under such Acts.
15
<PAGE>
APPROVAL OF MANAGEMENT INCENTIVE PLAN
(Item 2)
The following information regarding the management incentive plan is being
provided to you in connection with the solicitation of proxies for approval of
the performance goals contained in our management incentive plan. Shareholder
approval is required if payments under the management incentive plan are to be
tax deductible as performanced-based compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended, which we refer to as the Code. The
following description of the management incentive plan is a summary only and
does not purport to be complete. The summary is qualified in its entirety by
reference to the management incentive plan, which is attached to this proxy
statement as Exhibit A. You are urged to read the management incentive plan.
The board of directors approved the management incentive plan and directed
that the performance goals contained in our management incentive plan be
submitted to our shareholders at this year's annual meeting in order to
protect our company's deduction for payments under the plan in the event that
these payments to "covered executives" (plus salary and other non-performance-
based compensation) in any year exceed $1 million.
The management incentive plan is a cash-based incentive bonus program
intended to provide rewards each year for the maximization of the operating
income of our company and our divisions and the prudent management of working
capital. The plan is also intended to increase our ability to attract and
retain management talent.
Material Features of the Management Incentive Plan
Determination of Awards. The plan provides for the determination of a
maximum aggregate bonus amount to be awarded to individual participants each
year if operating income and working capital management goals recommended by
the compensation committee and approved by our board of directors at the
beginning of each fiscal year are achieved. The compensation committee
determines each position that will participate in the management incentive
plan, based on job level and potential impact on company or division results,
and assigns each such position to one of three levels of participation. The
maximum aggregate bonus pool is calculated on certain percentages, based on
the level of participation assigned, of all participants' base salaries.
Division level award targets are determined by the compensation committee at
the beginning of the fiscal year based upon a division's performance against
operating income and working capital management goals established by the
compensation committee and approved by the board of directors. Corporate level
award targets are determined by the compensation committee at the beginning of
the fiscal year based upon the performance of our company against the combined
division goals. An individual participant's maximum award is either 50%, 75%
or 100% of his or her base salary, depending on the level of participation to
which such position has been assigned by the compensation committee.
Our chief executive officer may recommend adjustments to individual awards
to reward extraordinary performance, to balance awards for individual
participants or to address other unique circumstances. Compensation
adjustments recommended by our chief executive will not be treated as
performance-based compensation under Section 162(m) of the Code.
Administration. The management incentive plan is administered by our vice
president--human resources, subject to the approval of our chief executive
officer and our compensation committee, which has the final authority to
interpret and administer the plan. The compensation committee has final
authority with respect to the selection of positions for participation and all
compensation which is subject to Section 162(m) of the Code.
Eligibility. Executives whose positions are approved for participation by
the compensation committee upon the recommendation of our chief executive
officer are eligible to be participants under the management
16
<PAGE>
incentive plan (approximately 80 persons as of February 25, 2000).
Participants who terminate their employment for reasons other than retirement
or death are not eligible for an award in the year of termination, except upon
the recommendation of the chief executive officer and approval of the
compensation committee. Awards may not be made to executives who participate
less than three months in any fiscal year. Awards to executives who retire or
die during a fiscal year will be prorated for such year, assuming
participation by such executive for at least three months during such fiscal
year. Awards to executives who are transferred from one division to another or
from one position to another will be prorated based on the number of months
assigned to each division or position.
Amendment and Termination. Our board of directors may amend, alter or
terminate the management incentive plan at any time.
Code Section 162(m) Performance-Based Compensation Goals. The management
incentive plan provides for performance-based awards that are based on the
achievement of annual operating income goals established by the compensation
committee, adjusted downward in the event that predetermined inventory turns
and accounts receivable levels are not met. Goals and adjustment criteria are
set by the compensation committee and approved by the board of directors at
the beginning of each fiscal year.
The management incentive plan provides that with respect to any individual
participant the maximum amount of any award payable in fiscal year 2000 is
100% of such participant's base salary. Thus the maximum award payable in
fiscal year 2000 is approximately $535,000.
Estimate of Benefits
The following table shows the approximate range of awards payable under the
management incentive plan for fiscal 2000 to (1) named executive officers, (2)
all current executive officer participants and (3) all non-executive officer
participants.
<TABLE>
<CAPTION>
Dollar Value ($)
Name and Position Minimum-Maximum
----------------- ----------------
<S> <C>
Joseph L. Lanier, Jr. .................................. $0-$535,000
Chairman and Chief Executive Officer
Richard L. Williams..................................... $0-$420,000
President and Chief Operating Officer
Barry F. Shea........................................... $0-$250,000
Executive Vice President and Chief Financial Officer
Gregory R. Boozer....................................... $0-$210,000
Executive Vice President--Manufacturing
Harry L. Goodrich....................................... $0-$185,000
Vice President, Secretary and General Counsel
Executive officers as a group........................... $0-$2,400,000
Current directors who are not executive officers as a
group.................................................. $0-$0
All employees, including all current officers who are
not executive officers, as a group(1).................. $0-$8,300,000
</TABLE>
- --------
(1) Based on goals established by the compensation committee and approved by
the board of directors for fiscal 2000, the maximum amount that would be
paid to all participants (approximately 80 individuals) if operating
income and working capital targets were achieved would be approximately
$3.3 million. The maximum amount payable to all participants under the
plan based on extraordinary performance in fiscal 2000 would be
approximately $8.3 million.
17
<PAGE>
Federal Income Tax Consequences
Awards paid under the management incentive plan will constitute ordinary
income to the executives, and we or the subsidiary for which the participant
performs services should be entitled to a corresponding income tax deduction,
provided that, among other things, the income meets the test of
reasonableness, is an ordinary and necessary business expense, is not an
"excess parachute payment" within the meaning of Section 280G of the Code and
is not disallowed by the $1 million limitation on certain executive
compensation under Section 162(m) of the Code. An executive who recognizes
ordinary income normally will be subject to both wage withholding and other
employment taxes. The federal income tax law and regulations are frequently
amended, and each participant should rely on his or her own tax counsel for
advice regarding federal income tax treatment under the management incentive
plan.
What is the recommendation of the board of directors?
The board of directors recommends a vote FOR the approval of the performance
goals contained in our management incentive plan. Proxies returned without
instructions will be voted for the approval of such performance goals.
APPROVAL OF LONG-TERM INCENTIVE PLAN
(Item 3)
The following information regarding the long-term incentive plan is being
provided to you in connection with the solicitation of proxies for adoption
and approval of the plan and the related performance goals for the payment of
performanced-based compensation under Section 162(m) of the Code. The
following description of the long-term incentive plan is a summary only and
does not purport to be complete. The summary is qualified in its entirety by
reference to the long-term incentive plan, which is attached hereto as Exhibit
B. You are urged to read the long-term incentive plan.
On February 29, 2000, our board of directors approved the long-term
incentive plan and directed that the long-term incentive plan be submitted to
our shareholders at this year's annual meeting.
The long-term incentive plan is intended to allow us to attract and retain
key employees and certain directors and to provide such persons with
incentives and rewards for superior performance and increased shareholder
value.
No awards will be made under our 1997 Stock Incentive Plan and the 1997
Stock Plan for Outside Directors if the long-term incentive plan is approved
by our shareholders.
Material Features of the Long-Term Incentive Plan
Types of Awards. The long-term incentive plan would permit the granting of
any or all of the following types of incentive awards: (1) stock options,
including incentive stock options intended to qualify for special tax
treatment under Section 422 of the Code, (2) stock appreciation rights, or
SARs, in tandem with stock options or freestanding, (3) restricted stock, (4)
deferred shares, (5) performance shares and performance units conditioned upon
meeting performance criteria, and (6) other awards of stock or awards
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, stock or securities convertible into stock,
which we refer to as other stock-based awards.
Administration and Eligibility. The long-term incentive plan shall be
administered by our compensation committee, composed of two or more members
each of whom must be a "non-employee director" within the meaning of Rule 16b-
3 under the Securities Exchange Act of 1934, as amended, and, to the extent an
award is intended to qualify as "performance-based compensation" under Section
162(m) of the Code, an "outside director" within the meaning of Section
162(m). The compensation committee has the authority to select participants to
whom awards are granted, to determine the type of awards and the number of
shares covered and to set the terms, conditions and provisions of such awards.
The compensation committee shall be authorized to interpret the long-term
incentive plan and to establish, amend and rescind any rules and regulations
relating to the long-term incentive plan, to determine the terms and
provisions of any agreements entered into under the long-term incentive plan
and to make all other determinations which may be necessary or advisable for
the administration of the long-term incentive plan. Although under the plan
the compensation committee may select
18
<PAGE>
participants from all of our employees, (approximately 7,400 persons as of
February 25, 2000) we expect that there will be approximately 60 participants
in fiscal 2000.
Shares Subject to Plan. Subject to adjustment as described below, 2,000,000
shares of our Class A Common Stock initially shall be available for awards
granted under the long-term incentive plan during the term of the plan. All
shares available in any year that are not awarded under the long-term
incentive plan shall be available for awards in subsequent years. No more than
1,000,000 shares may be used for awards of performance units.
If we acquire another company or another company combines with us, any of
our shares covered by or issued as a result of the assumption or substitution
of outstanding grants of the acquired company would not be deemed issued under
the long-term incentive plan and would not be subtracted from the shares
available for grant under the long-term incentive plan. If any shares subject
to any award under the long-term incentive plan are forfeited, or such award
is settled for cash, or expires or is otherwise terminated without issuance of
shares, the shares subject to such award shall again be available for grant
pursuant to the long-term incentive plan. If shares are withheld by or
tendered to us in connection with the payment of the exercise price of an
option or other award under the long-term incentive plan or the satisfaction
of tax withholding obligations, such shares shall then be available for awards
under the long-term incentive plan. The shares of stock deliverable under the
long-term incentive plan may be authorized and unissued shares, treasury
shares or shares that have been reacquired by us.
Stock Options. Stock options granted under the long-term incentive plan may
be options that are intended to qualify as "incentive stock options" within
the meaning of Section 422 of the Code or "nonqualified stock options" that
are not intended to so qualify. The price per share of stock purchasable under
any stock option will be determined by the compensation committee, but may not
be less than 100% of the fair market value of the stock on the date of the
grant of such option (or 110% of the fair market value in the case of
incentive stock options granted to participants holding 10% or more of our
voting stock). The term of each option shall be fixed by the compensation
committee. Options shall be exercisable at such time or times as determined by
the compensation committee, but no option may be exercised more than ten years
from the date the option is granted (or 5 years from the date of grant in the
case of incentive stock options granted to participants holding 10% or more of
our voting stock).
Each grant may specify the terms and conditions, including the achievement
of performance objectives determined by the compensation committee and the
continuous employment of the participant during a specified period, that are
necessary for the stock options to become exercisable and such grant may also
provide for the early exercise of the options in the event of a change in
control of our company or similar event.
Stock Appreciation Rights. A SAR may be granted freestanding or in tandem
with an option granted under the long-term incentive plan. Upon exercise of a
SAR, the participant is entitled to receive the excess of the fair market
value of the shares for which the right is exercised (calculated on the
exercise date) over either the option price under the related option in the
case of tandem SARs or a specified "base price" determined by the compensation
committee at the time of grant in the case of freestanding SARs. The grant
price and other terms of the SAR shall be determined by the compensation
committee, but the grant price may not be less than the fair market value of
the shares on the date of grant and no SAR may be exercisable more than ten
years from the grant date. Payment by us upon such exercise may be in cash,
stock or a combination of cash and stock, and the compensation committee may
grant to the participant or reserve to the compensation committee the right to
elect among those alternatives. Unless otherwise determined by the
compensation committee, any related option shall no longer be exercisable to
the extent the SAR has been exercised and the exercise of an option shall
cancel the related SAR to the extent of such exercise.
Restricted Stock. An award of restricted stock involves the immediate
transfer by us of stock in consideration of the rendering of services.
Restricted stock must be subject to a "substantial risk of forfeiture" within
the meaning of Section 83 of the Code for a period determined by the
compensation committee, and
19
<PAGE>
during such period, such restricted stock may not be transferred or otherwise
disposed of by the recipient. Subject to such restrictions, the participant is
immediately entitled to voting, dividend and other ownership rights in such
restricted stock, although the compensation committee may provide that
dividends paid on such stock during the restricted period be subject to
certain restrictions. The compensation committee may specify performance
objectives which, if achieved, will result in termination or early termination
of the restrictions applicable to such restricted stock. The compensation
committee may also provide for early termination of such restrictions in the
event of a change in control of our company or similar event.
Deferred Shares. An award of deferred shares granted under the long-term
incentive plan represents the right to receive stock in consideration for the
performance of services at the end of a specified deferral period as
determined by the compensation committee on the date of grant. Any grant of
deferred shares may be subject to such conditions, including the attainment of
performance objectives and the continuous employment of the participant during
the deferral period, as the compensation committee specifies. The grant may
provide for the early termination of the deferral period in the event of a
change in control of our company or similar event. During the deferral period,
the participant is not entitled to transfer, vote or receive dividends on the
shares subject to the award, but the compensation committee may provide for
the payment of dividend equivalents on a current or deferred basis.
Performance Awards. Performance awards are any kind of awards made by the
compensation committee. From time to time, the compensation committee may set
a period during which performance criteria determined by the compensation
committee are measured for the purpose of determining the extent to which a
performance award has been earned. If by the end of such performance period
the participant has achieved the specified performance objectives, the
participant will be deemed to have fully earned the performance shares or
performance units granted. Performance share awards are payable in the form of
shares, and performance unit awards are payable in the form of stock, cash or
a combination thereof. The performance period set by the compensation
committee may be long or short and may be subject to early termination in the
event of a change in control of our company or a similar event.
Other Stock-Based Awards. The compensation committee may also grant other
stock-based awards, consistent with the purposes of the long-term incentive
plan, which shall be any award of stock or other award that is valued in whole
or in part by reference to, or is otherwise based on, stock or securities
convertible into stock. Subject to the terms of the long-term incentive plan,
the compensation committee may determine the terms and conditions of any such
other stock-based award.
Nonassignability of Awards. Unless the compensation committee determines
otherwise at the time of an award or thereafter, no award granted under the
long-term incentive plan may be transferred by a participant other than by
will or the laws of descent and distribution, and stock options and SARs may
be exercised during the participant's lifetime only by the participant or, in
the event of the participant's legal incapacity, the guardian or legal
representative acting on behalf of the participant if permitted by applicable
law. The compensation committee may expressly provide in a nonqualified stock
option agreement that the participant may transfer such option to a spouse or
lineal descendant, a trust for the exclusive benefit of such family members, a
partnership or other entity in which all the beneficial owners are such family
members, or any other entity affiliated with the participant that the
compensation committee may approve.
Adjustments. In the event of any change affecting the shares of common stock
by reason of any stock dividend or split, recapitalization, reorganization,
merger, consolidation, spin-off, combination, exchange of shares or other
corporate change or event, the compensation committee may make substitutions
or adjustments in the aggregate number or class of shares which may be
distributed under the long-term incentive plan and in the number, class and
price of shares subject to the outstanding awards granted under the long-term
incentive plan as it deems appropriate to maintain the purpose of the original
grant.
The compensation committee is authorized to make adjustments in performance
award criteria or in the terms and conditions of other awards in recognition
of unusual or nonrecurring events affecting us or our financial statements or
changes in applicable laws, regulations or accounting principles.
20
<PAGE>
Amendment and Termination. Our board of directors may amend, alter or
discontinue the long-term incentive plan or any portion thereof at any time,
provided that no such amendment or alteration may be made without shareholder
approval to increase (1) the aggregate number of shares available under the
long-term incentive plan, (2) the aggregate number of performance units that
may be granted, or (3) the number of shares (including options) or performance
units that may be granted to any participant in any calendar year. The
compensation committee may amend the terms of any award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights
of any participant without his or her consent. However, the compensation
committee may not amend the terms of any option to reduce the option price or
to cancel any option and grant a new option with a lower option price such
that the effect would be the same as reducing the option price. The long-term
incentive plan will terminate 10 years from the date on which it was approved
by our board of directors.
Code Section 162(m) Performance-Based Compensation. The compensation
committee may grant to a participant who is, or is likely to be, as of the end
of the tax year in which we would claim a tax deduction in connection with
such award, a "covered employee" under Code Section 162(m), performance-based
awards that vest or become exercisable upon the achievement of one or more
objective performance goals established by the compensation committee, which
shall be based on the achievement of specified levels of one or any
combination of the following: market share, sales, costs, return on equity,
earnings per share, EBITDA, earnings growth, return on capital, return on
assets, total shareholder return or increase in the market value per share.
Such performance goals may be expressed on an absolute or a relative basis,
may be based on or otherwise employ comparisons based on internal targets, our
past performance and/or the past or current performance of other companies,
and, in the case of earnings-based measures, may use or employ comparisons
relating to capital, shareholders' equity and/or shares outstanding, or to
assets or net assets. Such performance goals shall be set by the compensation
committee within the time period prescribed by, and shall otherwise comply
with the requirements of, Section 162(m) of the Code, or any successor
provision to the Code, and the regulations under the Code.
The long-term incentive plan provides that with respect to any such
participant, the maximum number of shares of which all performance-based
restricted stock, deferred shares, performance shares, performance units
and/or other stock-based awards may be granted under the long-term incentive
plan in any calendar year is 250,000 shares and that the maximum amount of any
such award which is payable in cash in any calendar year is $2,500,000.
Estimate of Benefits
Because the long-term incentive plan is discretionary and may be based on
our financial performance, it is not possible to determine or to estimate the
benefits or amounts that will be received in the future by individual
employees or groups of employees under the plan. If the long-term incentive
plan had been in effect during fiscal 1999, the stock option awards received
by our executive officers would have been the same as the stock option awards
actually received by such persons during fiscal 1999 under our 1997 Stock
Incentive Plan. The Option/SAR Grants in Last Fiscal Year table on page 11
lists the stock option awards during fiscal 1999 for our chief executive
officer and the four other highest-paid executive officers.
Federal Income Tax Consequences
The following discussion outlines generally the federal income tax
consequences of participation under the long-term incentive plan. Individual
circumstances may vary these results. The federal income tax law and
regulations are frequently amended, and each participant should rely on his or
her own tax counsel for advice regarding federal income tax treatment under
the long-term incentive plan.
Nonqualified Stock Options. The recipient of a nonqualified stock option
under the long-term incentive plan is not subject to any federal income tax
upon the grant of such option nor does the grant of the option result in an
income tax deduction for us. As a result of the exercise of an option, the
recipient will recognize ordinary
21
<PAGE>
income in an amount equal to the excess, if any, of the fair market value of
the shares transferred to the recipient upon exercise over the exercise price.
Such fair market value generally will be determined on the date the shares are
transferred pursuant to the exercise. However, if the recipient is subject to
Section 16(b) of the Exchange Act, the date on which the fair market value of
the shares transferred will be determined is delayed under Section 83(c) of
the Code until the earlier of the last day of the six-month period beginning
on the date the "property" is "purchased" or the first day on which a sale of
the "property purchased" will not subject the recipient to suit under Section
16(b) of the Exchange Act. Alternatively, if the recipient is subject to
Section 16(b) of the Exchange Act and makes a timely election under Section
83(b) of the Code, such fair market value will be determined on the date the
shares are transferred pursuant to the exercise without regard to the effect
of Section 16(b) of the Exchange Act. The recipient will recognize ordinary
income in the year in which the fair market value of the shares transferred is
determined under Section 83 of the Code. We generally will be entitled to a
federal income tax deduction equal to the amount of ordinary income recognized
by the recipient when such ordinary income is recognized by the recipient.
Depending on the period the shares are held after exercise, the sale or
other taxable disposition of shares acquired through the exercise of a non-
qualified stock option generally will result in a short- or a long-term
capital gain or loss equal to the difference between the amount realized on
such disposition and the fair market value of such shares when the non-
qualified stock option was exercised.
Special rules apply to a recipient who exercises a non-qualified stock
option by paying the exercise price, in whole or in part, by the transfer of
shares to us.
Incentive Stock Options. An employee is not subject to any federal income
tax upon the grant of an incentive stock option pursuant to the long-term
incentive plan, nor does the grant of an incentive stock option result in an
income tax deduction for us. Further, an employee will not recognize income
for federal income tax purposes and we normally will not be entitled to any
federal income tax deduction as a result of the exercise of an incentive stock
option and the related transfer of shares to the employee. However, the excess
of the fair market value of the shares transferred upon the exercise of the
incentive stock option over the exercise price for such shares generally will
constitute an item of alternative minimum tax adjustment to the employee for
the year in which the option is exercised. Thus, certain employees may
increase their federal income tax liability as a result of the exercise of an
incentive stock option under the alternative minimum tax rules of the Code.
If the shares transferred pursuant to the exercise of an incentive stock
option are disposed of within two years from the date the option is granted or
within one year from the date the option is exercised, the employee generally
will recognize ordinary income equal to the lesser of (1) the gain recognized
(i.e., the excess of the amount realized on the disposition over the exercise
price) or (2) the excess of the fair market value of the shares transferred
upon exercise over the exercise price for such shares. If the employee is
subject to Section 16(b) of the Exchange Act, special rules may apply to
determine the amount of ordinary income recognized upon the disposition. The
balance, if any, of the employee's gain over the amount treated as ordinary
income on disposition generally will be treated as long- or short-term capital
gain depending upon whether the holding period applicable to long-term capital
assets is satisfied. We normally would be entitled to a federal income tax
deduction equal to any ordinary income recognized by the employee.
If the shares transferred upon the exercise of an incentive stock option are
disposed of after the holding periods have been satisfied, such disposition
generally will result in a long-term capital gain or loss treatment with
respect to the difference between the amount realized on the disposition and
the exercise price. We will not be entitled to a federal income tax deduction
as a result of a disposition of such shares after these holding periods have
been satisfied.
Other Awards. A recipient of restricted shares generally will be subject to
tax at ordinary income rates on the fair market value of the restricted shares
(reduced by any amount paid by the recipient) at such time as the shares are
no longer subject to a substantial risk of forfeiture or restrictions on
transfer for purposes of Section 83 of the Code. However, a recipient who so
elects under Section 83(b) of the Code within 30 days of the date of
22
<PAGE>
transfer of the restricted shares will recognize ordinary income on the date
of transfer of the shares equal to the excess of the fair market value of the
restricted shares on such date (determined without regard to the risk of
forfeiture or restrictions on transfer) over any purchase price paid for the
shares. If a Section 83(b) election has not been made, any dividends received
with respect to restricted shares that are subject at that time to a risk of
forfeiture or restrictions on transfer generally will be treated as
compensation that is taxable as ordinary income to the recipient.
A recipient of deferred shares generally will not recognize income until
shares are transferred to the recipient at the end of the deferral period and
are no longer subject to a substantial risk of forfeiture or restrictions on
transfer for purposes of Section 83 of the Code. At that time, the participant
will recognize ordinary income equal to the fair market value of the shares,
reduced by any amount paid by the recipient.
A participant generally will not recognize income upon the grant of
performance shares or performance units. Upon payment in respect of
performance shares or performance units, the participant generally will
recognize as ordinary income an amount equal to the amount of cash received
and the fair market value of any unrestricted shares received.
In limited circumstances where the sale of shares received under the long-
term incentive plan could subject an officer or director to suit under Section
16(b) of the Exchange Act, the federal income tax consequences to the officer
or director may differ from the federal income tax consequences described
above. In these circumstances, absent a Section 83(b) election (as described
above), the principal difference usually will be to postpone valuation and
taxation of the shares received so long as the sale of the stock received
could subject the officer or director to suit under Section 16(b) of the
Exchange Act, but not longer than six months.
To the extent that a participant recognizes ordinary income on the payment
of an award, we or the subsidiary for which the participant performs services
should be entitled to a corresponding deduction, provided that, among other
things, the income meets the test of reasonableness, is an ordinary and
necessary business expense, is not an "excess parachute payment" within the
meaning of Section 280G of the Code and is not disallowed by the $1 million
limitation on certain executive compensation under Section 162(m). An employee
who recognizes ordinary income ordinarily will be subject to both wage
withholding and other employment taxes.
What is the recommendation of the board of directors?
The board of directors recommends a vote FOR the approval of the long-term
incentive plan. Proxies returned without instructions will be voted for the
approval of the long-term incentive plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Item 4)
The board of directors of our company, upon the recommendation of the audit
committee, has appointed the firm of Ernst & Young LLP, upon the
recommendation of the audit committee, to serve as independent auditors of our
company for the 2000 fiscal year, subject to ratification of this appointment
by the shareholders of our company. We have been advised by Ernst & Young LLP
that neither it nor any member thereof has any direct or material indirect
financial interest in our company or any of our subsidiaries in any capacity.
One or more representatives of Ernst & Young LLP will be present at the annual
meeting, will have an opportunity to make a statement if he or she desires to
do so and will be available to respond to appropriate questions.
What is the recommendation of the board of directors?
The board of directors recommends a vote FOR the proposal to ratify the
appointment of Ernst & Young LLP as independent auditors of our company for
fiscal 2000. Proxies returned without instructions will be voted for the
ratification of the appointment of Ernst & Young LLP.
23
<PAGE>
Annual Report on Form 10-K
We will provide without charge, at the written request of any shareholder of
record or beneficial owner of our stock as of February 25, 2000, a copy of the
our Annual Report on Form 10-K, including the financial statements and
financial statement schedule, as filed with the SEC, excluding exhibits. We
will provide exhibits if they are requested by eligible shareholders. We may
impose a reasonable fee for providing the exhibits. Requests for copies of our
Annual Report on Form 10-K should be mailed to:
Dan River Inc.
P.O. Box 261
Danville, Virginia 24543
Attention: Denise Laussade,
Vice President--Finance
Shareholder Nominations for Election of Directors
Under our bylaws, only persons nominated in accordance with certain
procedures will be eligible for election as directors. Shareholders are
entitled to nominate persons for election to the board of directors only if:
. the shareholder is otherwise entitled to vote generally in the election
of directors, and
. timely notice in writing is sent to our Secretary.
To be timely, a shareholder's notice must be received at our principal
executive offices not less than 130 days prior to the meeting.
If less than 60 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, notice by the shareholder
must be received no later than the close of business on the 10th day following
the day on which such notice of the date the meeting was mailed or such public
disclosure was made, whichever occurs first.
The shareholder's notice must set forth for each person to be nominated for
election as a director:
. the name, age, business address and residence address of the person,
. the principal occupation or employment of the person,
. the number of shares of each class of Common Stock beneficially owned by
the person, and
. other information that would be required to be disclosed in connection
with the solicitation of proxies for the election of directors pursuant
to Regulation 14(a) under the Exchange Act.
The shareholder's notice must also set forth, with respect to the shareholder
giving such notice:
. the name and address of the shareholder, and
. the number of shares of each class of Common Stock beneficially owned by
the shareholder.
We may require any proposed nominee to furnish such other information as may
reasonably be required by us to determine the eligibility of such proposed
nominee to serve as a director.
Shareholder Proposals
Any shareholder proposals intended to be presented at our 2001 annual
meeting of shareholders pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934 must be received no later than November 16, 2000 in order to be
considered for inclusion in the proxy materials to be distributed by the board
of directors in connection with the meeting. Any shareholder proposals
intended to be presented at our 2001 annual meeting of shareholders but not to
be included in the board's proxy materials under Rule 14a-8 must be received
no later
24
<PAGE>
than December 11, 2000 in order to be considered at the 2001 annual meeting.
However, if we give less than 60 days' notice of our 2001 annual meeting of
shareholders, then shareholder proposals intended to be presented at the
meeting but not to be included in the board's proxy materials under Rule 14a-8
must be received no later than ten days after notice of the 2001 annual
meeting is mailed or a press release or other public communication announcing
the meeting date is made.
Expenses of Solicitation
We will bear the cost of solicitation of proxies by the board of directors
in connection with the annual meeting. No specific fee was allocated to
services provided in connection with the solicitation of proxies. We will
reimburse brokers, fiduciaries and custodians for reasonable expenses incurred
by them in forwarding proxy materials to beneficial owners of Common Stock
held in their names.
By Order of the Board of Directors
/s/ Harry L. Goodrich
Harry L. Goodrich
Secretary
Our annual report on Form 10-K for fiscal 1999, which includes audited
financial statements, accompanies this proxy statement. The annual report does
not form any part of the material for the solicitation of proxies.
----------------
25
<PAGE>
EXHIBIT A
DAN RIVER INC.
MANAGEMENT INCENTIVE PLAN
Revised Effective January 1, 1998
A-1
<PAGE>
OBJECTIVES OF THE PLAN
To provide a compensation element which will act as a powerful stimulus to
maximize operating income for Dan River Inc. (the "Company") and its divisions
while encouraging prudent management of working capital.
To promote the interest of the Company by increasing its ability to attract
and retain management talent.
ELIGIBILITY FOR PARTICIPATION
Participation in the Management Incentive Plan will be restricted to
executives in key positions having a continuing and substantial influence on
financial results.
The following factors will serve as criteria for selecting performance award
participants:
Latitude to act--The degree of freedom to exercise initiative and
judgment in making independent decisions and taking action.
Impact--The degree to which decisions and actions have a direct bearing
on Company or division results.
Magnitude--The size or amount of a position's contribution to Company or
division results.
Positions shall be approved for participation by the Compensation Committee
(the "Committee") of the Board of Directors. The Committee will further
approve the assignment of each position to one of three levels of
participation as described below.
As changes in organization occur in the future, revisions to the list may be
required, and will be subject to approval of the Committee. The Committee has
final authority regarding participation.
PERFORMANCE AWARD LEVELS
Positions approved for participation will be assigned to one of three levels
for which target awards are as follows:
<TABLE>
<CAPTION>
Target Award As
Level % of Base Salary
----- ----------------
<S> <C>
A........................................................ 40%
B........................................................ 30%
C........................................................ 20%
</TABLE>
The target award shall be applied to individual participant base salaries
for the fiscal year to determine the total target award funds available to
corporate and division levels. For corporate participants, the actual award
fund available will be based on consolidated results for the fiscal year. For
division participants, the division award funds will be based on division
performance for the fiscal year.
Individual participants will be eligible for maximum awards as follows:
<TABLE>
<CAPTION>
Maximum Awards As
% of Base Salary
-----------------
<S> <C>
A 40% target award)..................................... 100%
B (30% target award).................................... 75%
C (20% target award).................................... 50%
</TABLE>
A-2
<PAGE>
DIVISION PERFORMANCE AWARDS
Division participants' awards will be determined at year-end and will be
based upon the division's operating income, (before the Amortization of
Acquisition Asset and after pay out under this plan), subject to reduction
based upon failure to meet certain working capital management goals. Awards
will be determined based upon a schedule to be recommended by the Committee
and approved by the Board of Directors. The schedule shall denote:
. the target operating income level required for target award funding for
the year (40%--30%--20%)
. the operating income level required for maximum award funding for the
year (100%--75%--50%)
. operating income levels which will result in awards based upon a
percentage (above or below) the target award level
. criteria for reduction of awards based upon failure to meet working
capital management goals
CORPORATE PERFORMANCE AWARDS
Performance awards for corporate participants will be determined at year-
end and will be based on the operating income of the divisions of the Company
(before the Amortization of Acquisition Asset and after pay out under this
plan), subject to reduction based upon failure to meet consolidated working
capital management goals. Awards will be determined based upon a schedule to
be recommended by the Committee and approved by the Board of Directors. The
schedule shall denote:
. the target operating income level required for target award funding for
the year (40%--30%--20%)
. the operating income level required for maximum award funding for the
year (100%--75%--50%)
. operating income levels which will result in awards based upon a
percentage (above or below) the target award level
. criteria for reduction of awards based upon failure to meet working
capital management goals
CEO'S DISCRETIONARY FUND
The Committee may establish a fund during each fiscal year, to be utilized
at the discretion of the Chief Executive Officer of the Company to further
reward extraordinary performance, to balance awards to individual participants
whose contributions cross divisional/corporate lines, or to address other
unique circumstances.
ADMINISTRATIVE PROVISIONS
1. Performance awards are limited to executives whose positions are approved
for participation by the Committee upon recommendation of the Chief Executive
Officer of the Company.
2. Participants who terminate their employment for any reason other than
retirement or death, prior to the end of a fiscal year, shall not be eligible
for an award for the year of termination, except upon recommendation of the
Chief Executive Officer and approval of the Committee.
3. No awards shall be made to anyone who has less than three months'
participation during the fiscal year.
4. Participants who retire (i.e., normal, early, delayed or disability
retirement under a Company pension plan) during a fiscal year and have
completed at least three months' participation in the same year shall be
eligible for an award based upon base salary during the period of active
employment.
A-3
<PAGE>
5. In the event of the death of a participant, if participation has equaled
at least three months during the fiscal year in which death occurred, an award
shall be permitted based upon base salary during the period of participation.
Any such award shall be payable to the estate of the participant.
6. Participants transferred from one division to another, from a divisional
to a corporate position (or vice versa), or who are promoted or transferred
from one position to another, will be eligible for awards pro-rated on the
basis of the number of months assigned during the fiscal year to each
position.
7. Awards will be paid in cash, except for any portion properly deferred
under any deferred compensation plan then in effect.
8. The overall administration of this plan will be the responsibility of the
Vice President-Industrial Relations.
9. All awards under this plan are subject to compliance with pertinent
federal regulations, notwithstanding any provision of this plan to the
contrary.
10. Each participant shall be provided with a copy of this plan and any
amendments thereto.
11. All determinations of the Committee relating to interpretation,
administration or participation in this Plan shall be final and binding on all
participants, their heirs, executors and administrators. Participants' rights
under this plan are non-assignable and non-transferable.
NO CONTRACT OF EMPLOYMENT
This plan does not and shall not be construed to create a contract of
employment between any participant and the Company and confers no rights
whatsoever, except as expressly set forth herein.
RESTRICTION OF PAYMENTS
1. No individual performance award may exceed the maximum percentage award
for the applicable award level (i.e., 100%, 75% or 50%) to which the
participant is assigned.
2. No provision of this plan is intended to alter or amend existing
discretionary powers and authorities of the Committee, which may authorize
payments in amounts and form in addition to the specific text of this plan.
AMENDMENTS AND TERMINATION
This plan may be amended, altered, or terminated at any time by action of
the Board of Directors.
A-4
<PAGE>
EXHIBIT B
DAN RIVER INC.
2000 LONG-TERM INCENTIVE PLAN
February 29, 2000
B-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1.PURPOSE................................................................. 3
2.DEFINITIONS............................................................. 3
3.SHARES AVAILABLE UNDER THE PLAN......................................... 7
4.ADJUSTMENTS............................................................. 7
5.ADMINISTRATION OF THE PLAN.............................................. 7
6.ELIGIBILITY............................................................. 8
7.OPTIONS................................................................. 8
8.STOCK APPRECIATION RIGHTS............................................... 10
9.RESTRICTED SHARES....................................................... 11
10.DEFERRED SHARES........................................................ 12
11.PERFORMANCE SHARES AND PERFORMANCE UNITS............................... 12
12.OTHER STOCK-BASED AWARDS............................................... 13
13.AWARDS TO NON-EMPLOYEE DIRECTORS....................................... 13
16. PROVISIONS APPLICABLE TO COVERED OFFICERS AND PERFORMANCE-BASED
AWARDS................................................................ 13
15.TRANSFERABILITY........................................................ 14
16.FRACTIONAL SHARES...................................................... 14
17.WITHHOLDING TAXES...................................................... 15
18. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF
ABSENCE............................................................... 15
19.FOREIGN EMPLOYEES...................................................... 15
20.AMENDMENTS AND OTHER MATTERS........................................... 15
21.GOVERNING LAW.......................................................... 16
22.NO RIGHTS TO AWARDS.................................................... 16
23.SHARE CERTIFICATES..................................................... 16
24.AWARD AGREEMENTS....................................................... 16
25.NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS............................ 16
26.SEVERABILITY........................................................... 17
27.OTHER LAWS............................................................. 17
28.NO TRUST OR FUND CREATED............................................... 17
29.HEADINGS............................................................... 17
30.EFFECTIVE DATE AND STOCKHOLDER APPROVAL................................ 17
31.TERMINATION............................................................ 17
</TABLE>
B-2
<PAGE>
DAN RIVER INC.
2000 LONG-TERM INCENTIVE PLAN
1. PURPOSE.
The purpose of this Plan is to attract and retain Key Employees and Non-
Employee Directors for Dan River and to provide such persons with incentives
and rewards for superior performance and increased shareholder value. This
Plan will authorize the Committee to grant Incentive Stock Options, Non-
Qualified Stock Options, Restricted Stock, Stock Appreciation Rights, Deferred
Shares, Performance Shares, Performance Units and Other Stock-Based Awards to
those officers, Key Employees and Non-Employee Directors who are selected to
participate in the Plan.
2. DEFINITIONS.
As used in this Plan, the following terms shall be defined as set forth
below:
"AFFILIATE" means (i) any entity that, directly or indirectly, is
controlled by the Company, (ii) any entity in which the Company has a
significant equity interest, (iii) an affiliate of the Company, as defined
in Rule 12b-2 promulgated under Section 12 of the Exchange Act, and (iv)
any entity in which the Company has at least twenty percent (20%) of the
combined voting power of the entity's outstanding voting securities, in
each case as designated by the Board as being a participating employer in
the Plan.
"AWARD" means any Option, Stock Appreciation Right, Restricted Shares,
Deferred Shares, Performance Shares, Performance Units or Other Stock-Based
Awards granted under the Plan, whether singly, in combination, or in
tandem, to a Participant by the Committee pursuant to such terms,
conditions, restrictions and/or limitations, if any, as the Committee may
establish.
"AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"BASE PRICE" means the price to be used as the basis for determining the
Spread upon the exercise of a Stock Appreciation Right.
"BOARD" means the Board of Directors of Dan River Inc.
"CHANGE IN CONTROL" means (a) the acquisition of the power to direct, or
cause the direction, of the management and policies of Dan River by a
Person (not previously possessing such power), acting alone or in
conjunction with others, whether through the ownership of Stock, by
contract or otherwise, (b) the acquisition, directly or indirectly, of the
power to vote 35% or more of the outstanding Stock by a Person or Persons
(other than a person possessing such power on the date this Plan becomes
effective or Dan River or an employee benefit plan established and
maintained by Dan River), where, for purposes of this definition, customary
agreements with or between underwriters and selling group members with
respect to a bona fide public offering of Stock shall be disregarded, (c)
the approval by stockholders of the Company and consummation of a merger,
consolidation or reorganization involving the Company, and as a result of
such merger, consolidation or reorganization less than a majority of the
combined voting power of the then outstanding securities of such
corporation, person or entity immediately after such transaction are held
in the aggregate by the holders of voting stock of the Company immediately
prior to such transaction, (d) the Company sells or otherwise transfers all
or substantially all of its assets to any other corporation, person or
entity, and less than a majority of the combined voting power of the then-
outstanding securities of such corporation, person or entity immediately
after such sale or transfer is held in the aggregate by the holders of
voting stock of the Company immediately prior to such sale or transfer or
(e) a complete liquidation or dissolution of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
B-3
<PAGE>
"COMMITTEE" means a Committee of the Board which shall have a least 2
members, each of whom shall be appointed by and shall serve at the pleasure
of the Board and all of whom shall be "disinterested persons" with respect
to the Plan within the meaning of Section 16 of the Exchange Act.
"COMPANY" means Dan River Inc. or any successor corporation.
"COVERED OFFICER" means at any date (i) any individual who, with respect
to the previous taxable year of the Company, was a "covered employee" of
the company within the meaning of Section 162(m) of the Code; provided,
however, that the term "Covered Officer" shall not include any such
individual who is designated by the Committee, in its discretion, at the
time of any Award or at any subsequent time, as reasonably expected not to
be such a "covered employee" with respect to the current taxable year of
the Company and (ii) any individual who is designated by the Committee, in
its discretion, at the time of any Award or at any subsequent time, as
reasonably expected to be such a "covered employee" with respect to the
current taxable year of the Company or with respect to the taxable year of
the Company in which any applicable Award will be paid.
"DAN RIVER" means Dan River Inc., or any successor to such corporation.
"DEFERRAL PERIOD" means the period of time during which Deferred Shares
are subject to deferral limitations enumerated in Section 10 of this Plan.
"DEFERRED SHARES" means an Award pursuant to Section 10 of this Plan
providing the right to receive Shares at the end of a specified Deferral
Period.
"DISABILITY" means, unless otherwise defined in the applicable Award
Agreement, a disability that would qualify as a total and permanent
disability under the Company's then current long-term disability plan.
"DIVIDEND EQUIVALENTS" means amounts equivalent to the dividends paid on
Shares of common stock. They may be granted in connection with Awards
denominated in notional Shares, or they may be granted on a freestanding
basis.
"EARLY RETIREMENT" means, unless otherwise defined in the applicable
Award Agreement, retirement of a Participant from the employ or service of
the Company or any of its Subsidiaries or Affiliates in accordance with the
terms of the applicable Company retirement plan on or after attainment of
age 55.
"EMPLOYEE" means any person, including an officer, employed by Dan River,
a Subsidiary, Affiliate or a Parent Corporation.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time.
"FAIR MARKET VALUE" with respect to the Stock means (1) the closing price
on any date for a share of Stock as reported by The Wall Street Journal (a)
under the New York Stock Exchange Composite Transactions if Stock is traded
on the New York Stock Exchange or, (b) if Stock is otherwise publicly
traded, under the quotation system under which such closing price is
reported or, (2) if The Wall Street Journal no longer reports such closing
price, such closing price as reported by a newspaper or trade journal
selected by the Committee or, (3) if no such closing price is available on
such date, such closing price as so reported for the immediately preceding
business day, or, (4) if no newspaper or trade journal reports such closing
price or if no such price quotation is available, or if Stock is not
publicly traded, the price which the Committee acting in good faith
determines through any reasonable valuation method that a share of Stock
might change hands between a willing buyer and a willing seller, neither
being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.
"GRANT DATE" means the date specified by the Committee on which a grant
of an Award shall become effective, which shall not be earlier than the
date on which the Committee takes action with respect thereto.
"GRANTEE" means the person so designated in an agreement as the recipient
of an Award granted by the Company.
B-4
<PAGE>
"HARDSHIP" means an unanticipated emergency that is caused by an event
beyond the control of the Participant that would result in severe financial
hardship to the Participant resulting from (i) a sudden and unexpected
illness or accident of the Participant or a dependent of the Participant,
(ii) a loss of the Participant's property due to casualty, or (iii) such
other extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the sole
discretion of the Committee.
"INCENTIVE STOCK OPTION (ISO)" means any Option that is intended to
qualify as an "Incentive Stock Option" under Section 422 of the Code or any
successor provision.
"KEY EMPLOYEE" means an Employee who, in the judgment of the Committee
acting in its absolute discretion, is key to the business performance and
success of Dan River.
"NON-EMPLOYEE DIRECTOR" means a member of the Board who is not an
Employee.
"NONQUALIFIED STOCK OPTION" or "NQSO" means an Option that is not
intended to qualify as an Incentive Stock Option.
"NORMAL RETIREMENT" means, unless otherwise defined in the applicable
Award Agreement, retirement of a Participant from the employ or service of
the Company or any of its Subsidiaries or Affiliates in accordance with the
terms of the applicable Company retirement plan at or after attainment of
age 65, or if a Participant is not covered by any such plan, retirement on
or after attainment of age 65.
"OPTION" means any Option (ISO or NQSO) to purchase Shares granted under
this Plan.
"OPTION PRICE" means the purchase price payable to purchase one share
upon the exercise of an Option or other Award.
"OPTIONEE" means the person so designated in an agreement evidencing an
outstanding Option or other Award.
"OTHER STOCK-BASED AWARD" means any Award granted under Section 12 of the
Plan.
"PARENT CORPORATION" means any corporation which is a parent of Dan River
within the meaning of Section 424(e) of the Code.
"PARTICIPANT" means a Non-Employee Director or an Employee who is
selected by the Committee to receive benefits under this Plan, provided
that Non-Employee Directors shall not be eligible to receive grants of
Incentive Stock Options.
"PERFORMANCE OBJECTIVES" means performance goals or targets established
pursuant to this Plan for Participants who have received grants of
Performance Shares or Performance Units or, when so determined by the
Committee, Deferred Shares, Options, Restricted Shares or Other Stock-Based
Awards. Performance Objectives may be described in terms of Company-wide
objectives or objectives that are related to the performance of the
individual Participant or the Subsidiary, division, department or function
within the Company or Subsidiary in which the Participant is employed. Any
Performance Objectives applicable to Awards intended to qualify as
"performance-based compensation" under Section 162(m) of the Code shall be
limited to specified levels of, or increases in, the Company's or
Subsidiary's market share, sales, costs, return on equity, earnings per
share, earnings before interest, taxes, depreciation, and amortization
(EBITDA), earnings growth, return on capital, return on assets, total
shareholder return and/or increase in the Fair Market Value of the Shares.
Except in the case of Performance Objectives related to an Award intended
to qualify under Section 162(m) of the Code, if the Committee determines
that a change in the business, operations, corporate structure or capital
structure of the Company, or the manner in which it conducts its business,
or other events or circumstances render the Performance Objectives
unsuitable, the Committee, after the date of grant, may modify such
Performance Objectives, in whole or in part, as the Committee deems
appropriate and equitable.
B-5
<PAGE>
"PERFORMANCE PERIOD" means a period of time established under Section 11
of this Plan within which the Performance Objectives relating to a
Performance Share, Performance Unit, Option, Deferred Share or Restricted
Share are to be achieved.
"PERFORMANCE SHARE" means an Award pursuant to Section 11 of this Plan
that provides the Participant the opportunity to earn one or more Shares
contingent upon the achievement of one or more Performance Objectives
during a Performance Period.
"PERFORMANCE UNIT" means an Award pursuant to Section 11 of this Plan
that provides the Participant the opportunity to earn one or more units,
denominated in Shares or cash or a combination thereof, contingent upon
achieving one or more Performance Objectives during a Performance Period.
"PERSON" means any individual, corporation, partnership, associate,
joint- stock company, trust, unincorporated organization, government or
instrumentality of a government or other entity.
"PLAN" means this Dan River Inc. 2000 Long-Term Incentive Plan as
effective as of the date adopted by the Board in 2000 and as amended from
time to time thereafter.
"RESTRICTED SHARES" means Shares granted under Section 9 of this Plan
subject to such restrictions, including, but not limited to, service
requirements and/or Performance Objectives, as may be determined by the
Committee at the time of grant.
"RULE 16B-3" means Rule 16B-3 of the Exchange Act and any successor
provision thereto as in effect from time to time.
"SHARES" or "STOCK" means shares of the Class A Common Stock of Dan River
Inc., $0.01 par value, or any security into which Shares may be converted
by reason of any transaction or event of the type referred to in Section 4
of this Plan.
"SPREAD" means, in the case of a Stock Appreciation Right, the amount by
which the Fair Market Value on the date when any such right is exercised
exceeds the Base Price specified in such right or, in the case of a Tandem
Stock Appreciation Right, the amount by which the Fair Market Value on the
date when any such right is exercised exceeds the Option Price specified in
the related Option.
"STOCK APPRECIATION RIGHT" means a right granted under Section 8 of this
Plan, including a Stock Appreciation Right or a Tandem Stock Appreciation
Right.
"SUBSIDIARY" means a corporation or other entity (i) more than 50 percent
of whose outstanding Shares or securities (representing the right to vote
for the election of directors or other managing authority) are, or (ii)
which does not have outstanding Shares or securities (as may be the case in
a partnership, joint venture or unincorporated association), but more than
50 percent of whose ownership interest (representing the right generally to
make decisions for such other entity) is, as of the date this Plan is
approved by the Board and thereafter owned or controlled directly or
indirectly by the Company, provided that for purposes of determining
whether any person may be a Participant for purposes of any grant of
Incentive Stock Options, "Subsidiary" means any corporation in which the
Company owns or controls directly or indirectly more than 50 percent of the
total combined voting power represented by all classes of stock issued by
such corporation at the time of such grant.
"SUBSTITUTE AWARDS" means Awards granted solely in assumption of, or in
substitution for, outstanding awards previously granted by a company
acquired by the Company or with which the Company combines.
"TANDEM STOCK APPRECIATION RIGHT" means a Stock Appreciation Right
granted pursuant to Section 8 of this Plan that is granted in tandem with
an Option or any similar right granted under any other Plan of the Company
such that the exercise of one results in the cancellation of the other.
"TEN PERCENT SHAREHOLDER" means a person who owns, at the time of an
Award and after taking into account the attribution rules of Section 424(d)
of the Code, more than ten percent (10%) of the total combined voting power
of all classes of stock of either Dan River, a Subsidiary or a Parent
Corporation.
B-6
<PAGE>
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 4 of this Plan, the number
of Shares that may be (i) issued or transferred upon the exercise of Options
or Stock Appreciation Rights, (ii) Awarded as Restricted Shares and released
from substantial risk of forfeiture, or (iii) issued or transferred in payment
of Deferred Shares, Performance Shares, Performance Units, or Other Stock
Based Awards, shall not in the aggregate exceed 2,000,000 Shares not
previously authorized for issuance under any plan of the Company. Such Shares
may be Shares of original issuance, Shares held in treasury, or Shares that
have been reacquired by the Company. The number of Performance Units granted
under this Plan may not in the aggregate exceed 1,000,000.
(b) Upon the payment of any Option Price by the transfer to the Company of
Shares or upon satisfaction of tax withholding obligations under the Plan by
the transfer or relinquishment of Shares, there shall be deemed to have been
issued or transferred only the number of Shares actually issued or transferred
by the Company, less the number of Shares so transferred or relinquished. In
any event, the number of Shares actually issued or transferred by the Company
upon the exercise of Incentive Stock Options may not exceed 2,000,000, subject
to adjustment as provided in Section 4 of the Plan. Upon the payment in cash
of a benefit provided by any Award under this Plan, any Shares that were
subject to such Award shall again be available for issuance or transfer under
this Plan. Performance Units that are paid in Shares or are not earned by a
Participant at the end of a Performance Period are available for future grants
of Performance Units.
(c) If an Award expires or terminates for any reason without being exercised
in full or is satisfied without the distribution of Stock, or Stock
distributed pursuant to an Award is forfeited or reacquired by the Company, or
is surrendered upon exercise of an Award, the Stock subject to such Award or
so forfeited, reacquired or surrendered shall again be available for
distribution for purposes of the Plan.
(d) No Participant may receive Awards, including Options, during any one
calendar year representing more than 250,000 Shares or more than 250,000
Performance Units.
(e) Any shares issued by the Company as Substitute Awards in connection with
the assumption or substitution of outstanding grants from any acquired
corporation shall not reduce the Shares available for Awards under the Plan.
4. ADJUSTMENTS.
In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, issuance of warrants or
other rights to purchase Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such that an
adjustment is determined in good faith by the Committee, in its sole
discretion, to be appropriate in order to prevent dilution or enlargement of
the rights of Optionees or Grantees, then the Committee shall, in such manner
as it may deem equitable: (i) adjust any or all of (1) the aggregate number of
Shares or other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be granted under the
Plan; (2) the number of Shares or other securities of the Company (or number
and kind of other securities or property) subject to outstanding Awards under
the Plan; and (3) the grant or exercise price with respect to any Award under
the Plan, provided that in each case, the number of shares subject to any
Award shall always be a whole number; (ii) if deemed appropriate, provide for
an equivalent award in respect of securities of the surviving entity of any
merger, consolidation or other transaction or event having a similar effect;
or (iii) if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award.
5. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by one or more Committees appointed by
the Board. Any grants of Awards to officers who are subject to Section 16 of
the Exchange Act shall be made by a Committee composed of not less than two
members of the Board, each of whom shall be a "Non-Employee Director" within
the meaning of Rule 16B-3. Any grant of an Award that is intended to qualify
as "performance-based compensation"
B-7
<PAGE>
under Section 162(m) of the Code shall be made by a Committee composed of not
less than two members of the Board, each of whom shall be an "outside
director" within the meaning of the regulations under Section 162(m) of the
Code. For purposes of grants of Awards to Non-Employee Directors, the entire
Board shall serve as the Committee.
(b) The Committee, or Committees, shall have the power and authority to
grant Awards consistent with the terms of the Plan, including the power and
authority: (i) to select the officers and other Key Employees of the Company,
its Subsidiaries and Affiliates to whom Awards may from time to time be
granted; (ii) to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Deferred Stock Awards, Performance Share
Awards, Performance Unit Awards, or any combination of the foregoing, granted
to any one or more Participants; (iii) to determine the number of Shares to be
covered by any Award; (iv) to establish the terms and conditions of any Award,
including, but not limited to: (A) the Share price; (B) any restriction or
limitation on the grant, vesting or exercise of any Award (including but not
limited to, the attainment (and certification of the attainment) of one or
more Performance Objectives (or any combination thereof) that may apply to the
individual Participant, a Company business unit, including a Subsidiary or an
Affiliate, or the Company as a whole); and (C) any waiver of vesting,
acceleration or forfeiture provisions regarding any Stock Option or other
Award and the Stock relating thereto, based on such factors as the Committee
shall determine; and to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an Award shall
be deferred either automatically or at the election of the Participant, and
whether and to what extent the Company shall pay or credit amounts equal to
interest (at rates determined by the Committee), dividends or deemed dividends
on such deferrals.
(c) Subject to the provisions of the Plan, the Committee shall have full and
conclusive authority to interpret and administer the Plan and any instrument
or agreement relating, to or Award made under, the Plan; to amend or modify
the terms of any Award at or after grant with the consent of the holder of the
Award, except to the extent prohibited by Section 7(b); to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the respective Award agreements and to make all other
determinations necessary or advisable for the proper administration of the
Plan. The Committee's determinations under the Plan need not be uniform and
may be made by it selectively among persons who receive, or are eligible to
receive, Awards under the Plan (whether or not such person are similarly
situated). No member of the Committee shall be liable to any person or entity
for any action taken or determination made in good faith with respect to the
Plan or any Awards granted hereunder.
(d) Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive and binding upon all
Persons, including the Company, any subsidiary and Affiliate, and Participant,
any holder or beneficiary of any Award, any Employee and any Non-Employee
Director.
6. ELIGIBILITY.
Any officer, Key Employee (including any employee-director of the Company or
of any Subsidiary or Affiliate who is not a member of the Committee) or Non-
Employee Director shall be eligible to be designated a Participant.
7. OPTIONS.
The Committee may from time to time authorize grants to Participants of
Options to purchase Shares upon such terms and conditions as the Committee may
determine in accordance with the following provisions:
(a) Each grant shall specify the number of Shares to which it pertains.
B-8
<PAGE>
(b) Each grant shall specify an Option Price per Share. Except in the
case of Substitute Awards, the Option Price of an Option may not be less
than 100% of the Fair Market Value of the Shares with respect to which the
Option is granted on the Grant Date. If an officer or Key Employee owns or
is deemed to own (by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined voting power of
all classes of stock of the Company or any Subsidiary or Parent Corporation
(within the meaning of Section 424(e) of the Code), and an Incentive Stock
Option is granted to such officer or Key Employee, the Option Price shall
be no less than 110% of the Fair Market Value on the Grant Date.
Notwithstanding the foregoing and except as permitted by the provisions of
Sections 4 and 20(c) hereof, the Committee shall not have the power to (i)
amend the terms of previously granted Options to reduce the Option Price of
such Options, or (ii) cancel such Options and grant substitute Options with
a lower Option Price than the cancelled Options.
(c) Each Option may be exercised in whole or in part at any time, with
respect to whole shares only, within the period permitted for the exercise
thereof and shall be exercised by written notice of intent to exercise the
Option, delivered to the Company at its principal office, and payment in
full to the Company at said office of the amount of the Option Price for
the number of Shares with respect to which the Option is then being
exercised. Each grant shall specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check
or other cash equivalent acceptable to the Company, (ii) nonforfeitable,
unrestricted Shares that have been owned by the Optionee for at least six
months and have a value at the time of exercise that is equal to the Option
Price, together with any applicable withholding taxes, (iii) any other
legal consideration that the Committee may deem appropriate, including
without limitation any form of consideration authorized under Section 7(d)
below, on such basis as the Committee may determine in accordance with this
Plan, or (iv) any combination of the foregoing.
(d) On or after the Grant Date of any Option other than the Incentive
Stock Option, the Committee may determine that payment of the Option Price
may also be made in whole or in part in the form of Restricted Shares or
other Shares that are subject to risk of forfeiture or restrictions on
transfer. Unless otherwise determined by the Committee, whenever any Option
Price is paid in whole or in part by means of any of the forms of
consideration specified in this Section 7(d), the Shares received by the
Optionee upon the exercise of the Options shall be subject to the same
risks of forfeiture or restrictions on transfer as those that applied to
the consideration surrendered by the Optionee, provided that such risks of
forfeiture and restrictions on transfer apply only to the same number of
Shares received by the Optionee as applied to the forfeitable or Restricted
Shares surrendered by the Optionee.
(e) Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a bank or broker on the date of exercise of
some or all of the Shares to which the exercise relates.
(f) On or, in the case of Nonqualified Stock Options, after the Grant
Date, the Committee may provide for the automatic grant to the Optionee of
a "reload" Option in the event the Optionee surrenders Shares in
satisfaction of the Option Price upon the exercise of an Option as
authorized under Sections 7(c) and (d) above. Each reload Option shall
pertain to a number of Shares equal to the number of Shares utilized by the
Optionee to exercise the original Option. Each reload Option shall have an
exercise price equal to the Fair Market Value on the date the reload is
granted and shall expire on the stated expiration date of the original
Option.
(g) Each Option grant may specify a period of continuous employment of
the Optionee by the Company or any Subsidiary (or, in the case of a Non-
Employee Director, service on the Board) or other terms and conditions,
such as achievement of Performance Objectives, that may be determined by
the Committee that is necessary before the Options or installments thereof
shall become exercisable, and any grant may provide for the earlier
exercise of such rights in the event of a Change in Control of the Company
or other similar transaction or event.
B-9
<PAGE>
(h) Options granted under this Plan may be Incentive Stock Options,
Nonqualified Stock Options or a combination of the foregoing, provided that
only Nonqualified Stock Options may be granted to Non-Employee Directors.
Each grant shall specify whether (or the extent to which) the Option is an
Incentive Stock Option or a Nonqualified Stock Option. Notwithstanding any
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Options designated as Incentive Stock Options
or Tandem Stock Appreciation Rights related to such Incentive Stock Options
are exercisable for the first time by an Optionee during any calendar year
(under all Plans of the Company) exceeds $100,000 such Options shall be
treated as Nonqualified Stock Options.
(i) No Option granted under this Plan may be exercised more than 10 years
from the Grant Date; provided, however, that if an Incentive Stock Option
is granted to an employee who owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
Subsidiary or Parent Corporation (within the meaning of Section 424(e) of
the Code), the term of such Incentive Stock Option shall be no more than
five years from the date of grant.
(j) Each grant shall be evidenced by an agreement executed on behalf of
the Company by any officer thereof and delivered to and accepted by the
Optionee and containing such terms and provisions as the Committee may
determine consistent with this Plan.
8. STOCK APPRECIATION RIGHTS.
The Committee may also authorize grants to Participants of Stock
Appreciation Rights. A Stock Appreciation Right provides a Participant the
right to receive from the Company an amount, which shall be determined by the
Committee and shall be expressed as a percentage (not exceeding 100 percent)
of the Spread at the time of the exercise of such right. Any grant of Stock
Appreciation Rights under this Plan shall be upon such terms and conditions as
the Committee may determine in accordance with the following provisions:
(a) Any grant may specify that the amount payable upon the exercise of a
Stock Appreciation Right may be paid by the Company in cash, Shares or any
combination thereof and may (i) either grant to the Participant or reserve
to the Committee the right to elect among those alternatives or (ii)
preclude the right of the Participant to receive and the Company to issue
Shares or other equity securities in lieu of cash;
(b) Any grant may specify that the amount payable upon the exercise of a
Stock Appreciation Right shall not exceed a maximum specified by the
Committee on the Grant Date;
(c) Any grant may specify (i) a waiting period or periods before Stock
Appreciation Rights shall become exercisable and (ii) permissible dates or
periods on or during which Stock Appreciation Rights shall be exercisable;
(d) Any grant may specify that a Stock Appreciation Right may be
exercised only in the event of a Change in Control of the Company or other
similar transaction or event,
(e) On or after the Grant Date of any Stock Appreciation Rights, the
Committee may provide for the payment to the Participant of Dividend
Equivalents thereon in cash or Shares on a current, deferred or contingent
basis,
(f) Each grant shall be evidenced by an agreement executed on behalf of
the Company by any officer thereof and delivered to and accepted by the
Optionee, which shall describe the subject Stock Appreciation Rights,
identify any related Options, state that the Stock Appreciation Rights are
subject to all of the terms and conditions of this Plan and contain such
other terms and provisions as the Committee may determine consistent with
this Plan,
(g) Each grant of a Tandem Stock Appreciation Right shall provide that
such Tandem Stock Appreciation Right may be exercised only (i) at a time
when the related Option (or any similar right granted under this or any
other Plan of the Company) is also exercisable and the Spread is positive;
and (ii) by surrender of the related Option (or such other right) for
cancellation;
B-10
<PAGE>
(h) Each grant of a Stock Appreciation Right shall specify in respect of
each Stock Appreciation Right a Base Price per Share, which shall be equal
to or greater than the Fair Market Value of the Shares on the Grant Date.
Successive grants of Stock Appreciation Rights may be made to the same
Participant regardless of whether any Stock Appreciation Rights previously
granted to such Participant remain unexercised. Each grant shall specify
the period or periods of continuous employment of the Participant by the
Company or any Subsidiary that are necessary before the Stock Appreciation
Rights or installments thereof shall become exercisable, and any grant may
provide for the earlier exercise of such rights in the event of a Change in
Control of the Company or other similar transaction or event. No Stock
Appreciation Right granted under this Plan may be exercised more than 10
years from the Grant Date.
9. RESTRICTED SHARES.
The Committee may also authorize grants to Participants of Restricted Shares
upon such terms and conditions as the Committee may determine in accordance
with the following provisions:
(a) Each grant shall constitute an immediate transfer of the ownership of
Shares to the Participant in consideration of the performance of services,
entitling such Participant to dividend, voting and other ownership rights,
subject to the substantial risk of forfeiture and restrictions on transfer
hereinafter described.
(b) Each grant may be made without additional consideration from the
Participant or in consideration of a payment by the Participant that is
less than the Fair Market Value on the Grant Date.
(c) Each grant shall provide that the Restricted Shares covered thereby
shall be subject to a "substantial risk of forfeiture" within the meaning
of Section 83 of the Code for a period to be determined by the Committee on
the Grant Date, and any grant or sale may provide for the earlier
termination of such risk of forfeiture in the event of a Change in Control
of the Company or other similar transaction or event.
(d) Each grant shall provide that, during the period for which such
substantial risk of forfeiture is to continue, the transferability of the
Restricted Shares shall be prohibited or restricted in the manner and to
the extent prescribed by the Committee on the Grant Date. Such restrictions
may include, without limitation, rights of repurchase or first refusal by
the Company or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee.
(e) Any grant or the vesting thereof may be further conditioned upon the
attainment of Performance Objectives established by the Committee in
accordance with the applicable provisions of Section 11 of this Plan
regarding Performance Shares and Performance Units.
(f) Any grant may require that any or all dividends or other
distributions paid on the Restricted Shares during the period of such
restrictions be automatically sequestered and reinvested on an immediate or
deferred basis in the form of cash or additional Shares, which may be
subject to the same restrictions as the underlying Award or such other
restrictions as the Committee may determine.
(g) Each grant shall be evidenced by an agreement executed on behalf of
the Company by any officer thereof and delivered to and accepted by the
Participant and containing such terms and provisions as the Committee may
determine consistent with this Plan. Unless otherwise directed by the
Committee, all certificates representing Restricted Shares, together with a
stock power that shall be endorsed in blank by the Participant with respect
to such Shares, shall be held in custody by the Company until all
restrictions thereon lapse.
(h) At the end of the restricted period and provided that any other
restrictive conditions of the Restricted Shares Award are met, or at such
earlier time as otherwise determined by the Committee, all restrictions set
forth in the Award Agreement relating to the Restricted Share Award or in
the Plan shall lapse as to the restricted Shares subject thereto, and a
stock certificate for the appropriate number of Shares, free of the
restrictions and restricted stock legend, shall be delivered to the
Participant or the Participant's beneficiary or estate, as the case may be.
B-11
<PAGE>
10. DEFERRED SHARES.
The Committee may authorize grants of Deferred Shares to Participants upon
such terms and conditions as the Committee may determine in accordance with
the following provisions:
(a) Each grant shall constitute the agreement by the Company to issue or
transfer Shares to the Participant in the future in consideration of the
performance of services, subject to the fulfillment during the Deferral
Period of such conditions as the Committee may specify.
(b) Each grant may be made without additional consideration from the
Participant or in consideration of a payment by the Participant that is
less than the Fair Market Value on the Grant Date.
(c) Each grant shall provide that the Deferred Shares covered thereby
shall be subject to a Deferral Period, which shall be fixed by the
Committee on the Grant Date, and any grant or sale may provide for the
earlier termination of such period in the event of a Change in Control of
the Company or other similar transaction or event.
(d) During the Deferral Period, the Participant shall not have any right
to transfer any rights under the subject Award, shall not have any rights
of ownership in the Deferred Shares and shall not have any right to vote
such Shares, but the Committee may on or after the Grant Date authorize the
payment of Dividend Equivalents on such Shares in cash or additional Shares
on a current, deferred or contingent basis.
(e) Any grant or the vesting thereof may be further conditioned upon the
attainment of Performance Objectives established by the Committee in
accordance with the applicable provisions of Section 11 of this Plan
regarding Performance Shares and Performance Units. Except as otherwise
determined by the Committee, all Deferred Shares and all rights of the
grantee to such Deferred Shares shall terminate, without further obligation
on the part of the Company, unless the Grantee remains in continuous
employment of the Company for the entire Deferral Period in relation to
which such Deferred Shares were granted and unless any other restrictive
conditions relating to the Deferred Shares are met.
(f) Each grant shall be evidenced by an agreement executed on behalf of
the Company by any officer thereof and delivered to and accepted by the
Participant and containing such terms and provisions as the Committee may
determine consistent with this Plan.
11. PERFORMANCE SHARES AND PERFORMANCE UNITS.
The Committee also may authorize grants of Performance Shares and
Performance Units, which shall become payable to the Participant upon the
achievement of specified Performance Objectives, upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
(a) Each grant shall specify the number of Performance Shares or
Performance Units to which it pertains, which may be subject to adjustment
to reflect changes in compensation or other factors.
(b) The Performance Period with respect to each Performance Share or
Performance Unit shall commence on a date specified by the Committee at the
time of grant and may be subject to earlier termination in the event of a
Change in Control of the Company or other similar transaction or event.
(c) Each Award shall specify the Performance Objectives that are to be
achieved by the Participant with respect to the grant or the vesting
thereof.
(d) Each grant may specify in respect of the specified Performance
Objectives a minimum acceptable level of achievement below which no payment
will be made and shall set forth a formula or other procedure for
determining the amount of any payment to be made if performance is at or
above such minimum acceptable level but falls short of the maximum
achievement of the specified Performance Objectives.
B-12
<PAGE>
(e) Each grant shall specify the time and manner of payment of
Performance Shares or Performance Units that shall have been earned, and
any grant may specify that any such amount may be paid by the Company in
cash, Shares or any combination thereof and may either grant to the
Participant or reserve to the Committee the right to elect among those
alternatives.
(f) Any grant of Performance Shares or Performance Units may specify that
the amount payable, or the number of Shares issued, with respect thereto
may not exceed a maximum specified by the Committee on the Grant Date.
(g) Any grant of Performance Shares may provide for the payment to the
Participant of Dividend Equivalents thereon in cash or additional Shares on
a current, deferred or contingent basis.
(h) If provided in the terms of the grant, the Committee may adjust
Performance Objectives and the related minimum acceptable level of
achievement if, in the sole judgment of the Committee, events or
transactions have occurred after the Grant Date that are unrelated to the
performance of the Participant and result in distortion of the Performance
Objectives or the related minimum acceptable level of achievement.
(i) Each grant shall be evidenced by an agreement executed on behalf of
the Company by any officer thereof and delivered to and accepted by the
Participant, which shall state that the Performance Shares or Performance
Units are subject to all of the terms and conditions of this Plan and such
other terms and provisions as the Committee may determine consistent with
this Plan.
12. OTHER STOCK-BASED AWARDS.
The Committee shall have the authority to grant to Participants an "Other
Stock-Based Award," which shall consist of any right that is (a) not an Award
described in Sections 7 through 11 above and (b) an Award of Shares or an
Award denominated or payable in, valued in whole or in part by reference to,
or otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as deemed by the Committee to be
consistent with the purposes of the Plan. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine the terms and
conditions of any such Other Stock-Based Award.
13. AWARDS TO NON-EMPLOYEE DIRECTORS.
The Board may provide that all or a portion of a Non-Employee Director's
annual retainer and/or meeting fees be payable (either automatically or at the
election of a Non-Employee Director) in the form of Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Shares, Deferred Shares and/or
Other Stock Based Awards, including unrestricted Shares. The Board shall
determine the terms and conditions of any such Awards, including the terms and
conditions which shall apply upon a termination of the Non-Employee Director's
service as a member of the Board, and shall have full power and authority in
its discretion to administer such Awards, subject to the terms of the Plan and
applicable law.
14. PROVISIONS APPLICABLE TO COVERED OFFICERS AND PERFORMANCE-BASED AWARDS.
Notwithstanding anything in the Plan to the contrary, unless the Committee
determines otherwise, all performance-based Awards granted hereunder shall be
subject to the terms and provisions of this Section 14:
(a) The Committee may grant to Covered Officers performance-based Awards
that vest or become exercisable upon the attainment of performance targets
related to one or more Performance Objectives selected by the Committee
from among the list of Performance Objectives contained herein. For the
purposes of this Section 14, performance goals shall be limited to one or
more of the Performance Objectives or any combination thereof. Each
Performance Objective may be expressed on an absolute and/or relative
basis, may be based on or otherwise employ comparisons based on internal
targets, the past performance of the Company and/or the past or current
performance of other companies, and in the case of earnings-based measures,
may use or employ comparisons relating to capital, shareholders' equity
and/or Shares outstanding, or to assets or net assets.
B-13
<PAGE>
(b) With respect to any Covered Officer, the maximum number of Shares in
respect of which all performance-based Restricted Shares, Deferred Shares,
Performance Shares, Performance Units and Other Stock-Based Awards may be
granted under the Plan during any one calendar year is 250,000 and the
maximum amount of any Award which shall be payable in cash during any one
calendar year is $2,500,000.
(c) To the extent necessary to comply with Section 162(m) of the Code,
with respect to Restricted Share Awards, Deferred Share Awards, Performance
Share Awards, Performance Unit Awards and Other Stock-Based Awards, no
later than 90 days following the commencement of each Performance Period
(or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) select the Performance
Objective or Objectives applicable to the Performance Period, (ii)
establish the various targets and bonus amounts which may be earned for
such Performance Period, and (iii) specify the relationship between
Performance Objectives and targets and the amounts to be earned by each
Covered Officer for such Performance Period. Following the completion of
each Performance Period, the Committee shall certify in writing whether the
applicable performance targets have been achieved and the amounts, if any,
payable to Covered Officers for such Performance Period. In determining the
amount earned by a Covered Officer for a given Performance Period, subject
to any applicable Award Agreement, the Committee shall have the right to
reduce (but not increase) the amount payable at a given level of
performance to take into account additional factors that the Committee may
deem relevant to the assessment of individual or corporate performance for
the Performance Period.
15. TRANSFERABILITY.
(a) Except as provided in Section 15(b), no Award granted under this Plan
may be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered or disposed of by a Participant other than by will or the laws of
descent and distribution, and Options and Stock Appreciation Rights shall be
exercisable during a Participant's lifetime only by the Participant or, in the
event of the Participant's legal incapacity, by his guardian or legal
representative acting in a fiduciary capacity on behalf of the Participant
under state law and court supervision.
(b) The Committee may expressly provide in a Nonqualified Stock Option
agreement (or an amendment to such an agreement) that a Participant may
transfer such Nonqualified Stock Option to a spouse or lineal descendant (a
"Family Member"), a trust for the exclusive benefit of Family Members, a
partnership or other entity in which all the beneficial owners are Family
Members, or any other entity affiliated with the Participant that may be
approved by the Committee. Subsequent transfers of any such Nonqualified Stock
Option shall be prohibited except in accordance with this Section 15(b). All
terms and conditions of any such Nonqualified Stock Option, including
provisions relating to the termination of the Participant's employment or
service with the Company or a Subsidiary, shall continue to apply following a
transfer made in accordance with this Section 15(b).
(c) Any Award made under this Plan may provide that all or any part of the
Shares that are (i) to be issued or transferred by the Company upon the
exercise of Options or Stock Appreciation Rights, upon the termination of the
Deferral Period applicable to Deferred Shares or upon payment under any grant
of Performance Shares or Performance Units, or (ii) no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred to in
Section 9 of this Plan, shall be subject to further restrictions upon
transfer.
16. FRACTIONAL SHARES.
No fractional Shares shall be issued or delivered pursuant to the Plan or
any Award, and the Committee shall determine whether cash, other securities,
or other property shall be paid or transferred in lieu of any fractional
Shares or whether such fractional Shares or any rights thereto shall be
canceled, terminated or otherwise eliminated.
B-14
<PAGE>
17. WITHHOLDING TAXES.
To the extent that the Company is required to withhold federal, state, local
or foreign taxes in connection with any payment made or benefit realized by a
Participant or other person under this Plan, it shall be a condition to the
receipt of such payment or the realization of such benefit that the
Participant or such other person make arrangements satisfactory to the Company
for payment of all such taxes required to be withheld. At the discretion of
the Committee, such arrangements may include relinquishment of a portion of
such benefit. The Committee may provide, at its discretion, for additional
cash payments to holders of Awards to defray or offset any tax arising from
the grant, vesting, exercise or payments of any Award other than ISO's.
18. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF
ABSENCE.
Notwithstanding any other provision of this Plan to the contrary, in the
event of termination of employment by reason of death, Disability, Normal
Retirement, Early Retirement with the consent of the Company or leave of
absence approved by the Company, or in the event of Hardship or other special
circumstances, of a Participant who holds an Option or Stock Appreciation
Right that is not immediately and fully exercisable, any Restricted Shares as
to which the substantial risk of forfeiture or the prohibition or restriction
on transfer has not lapsed, any Deferred Shares as to which the Deferral
Period is not complete, any Performance Shares or Performance Units that have
not been fully earned, or any Shares that are subject to any transfer
restriction pursuant to Section 15(b) of this Plan, the Committee may in its
sole discretion take any action that it deems to be equitable under the
circumstances or in the best interests of the Company, including without
limitation waiving or modifying any limitation or requirement with respect to
any Award under this Plan.
19. FOREIGN EMPLOYEES.
In order to facilitate the making of any grant or combination of grants
under this Plan, the Committee may provide for such special terms for Awards
to Participants who are foreign nationals, or who are employed by the Company
or any Subsidiary outside of the United States of America, as the Committee
may consider necessary or appropriate to accommodate differences in local law,
tax policy or custom. Moreover, the Committee may approve such supplements to,
or amendments, restatements or alternative versions of this Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of this Plan as in effect for any other purpose, provided that no
such supplements, amendments, restatements or alternative versions shall
include any provisions that are inconsistent with the terms of this Plan, as
then in effect, unless this Plan could have been amended to eliminate such
inconsistency without further approval by the stockholders of the Company.
20. AMENDMENTS AND OTHER MATTERS.
(a) The Board may amend, alter, suspend, discontinue or terminate the Plan
or any portion thereof at any time; provided that no such amendment,
alteration, suspension, discontinuation or termination shall increase any of
the limitations specified in Sections 3 or 14(b) of this Plan, other than to
reflect an adjustment made in accordance with Section 4, without the further
approval of the stockholders of the Company.
(b) Subject to the restrictions of Section 7(b) hereof, the Committee may
waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, any Award theretofore granted, prospectively
or retroactively; provided that any such waiver, amendment, alteration,
suspension, discontinuance, cancellation or termination that would adversely
affect the rights of any Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective without the consent
of the affected Participant, holder or beneficiary.
(c) The Committee is hereby authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual
or nonrecurring events (including, without limitation, the events described in
Section 4 hereof) affecting the Company, any Subsidiary or Affiliate, or the
financial statements of
B-15
<PAGE>
the Company or any Subsidiary or Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan; provided that no such adjustment shall be authorized to the extent that
such authority would be inconsistent with a performance based award's meeting
the requirements of Section 162(m) of the Code.
(d) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Company or any
Subsidiary and shall not interfere in any way with any right that the Company
or any Subsidiary would otherwise have to terminate any Participant's
employment or other service at any time.
(e) To the extent that any provision of this Plan would prevent any Option
that was intended to qualify under particular provisions of the Code from so
qualifying, such provision of this Plan shall be null and void with respect to
such Option, provided that such provision shall remain in effect with respect
to other Options, and there shall be no further effect on any provision of
this Plan.
21. GOVERNING LAW.
The validity, construction and effect of this Plan and any Award hereunder
shall be determined in accordance with the laws (including those governing
contracts) of the State of Georgia, without giving effect to the conflict of
law principles thereof.
22. NO RIGHTS TO AWARDS.
No Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Employees, Non-Employee Directors,
or holders or beneficiaries of Awards. The terms and conditions of Awards need
not be the same with respect to each recipient.
23. SHARE CERTIFICATES.
All certificates for Shares or other securities of the Company or any
Subsidiary or Affiliate delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the SEC, any stock exchange upon which
such Shares or other securities are then listed, and any applicable Federal or
state laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
24. AWARD AGREEMENTS.
Each Award hereunder shall be evidenced by an Award Agreement that shall be
delivered to the Participant and shall specify the terms and conditions of the
Award and any rules applicable thereto. In the event of a conflict between the
terms of the Plan and any Award Agreement, the terms of the Plan shall
prevail.
25. NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS.
Nothing contained in the Plan shall prevent the Company or any Subsidiary or
Affiliate from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of Options,
Restricted Stock, Shares and other types of Awards provided for hereunder
(subject to stockholder approval as such approval is required), and such
arrangements may be either generally applicable or applicable only in specific
cases.
B-16
<PAGE>
26. SEVERABILITY.
If any provision of the Plan or any Award is, or becomes, or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.
27. OTHER LAWS.
The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines
that the issuance or transfer of such Shares or such other consideration might
violate any applicable law or regulation (including applicable non-U.S. laws
or regulations) or entitle the Company to recover the same under Section 16(b)
of the Exchange Act, and any payment tendered to the Company by a Participant,
other holder or beneficiary in connection with the exercise of such Award
shall be promptly refunded to the relevant Participant, holder, or
beneficiary. Without limiting the generality of the foregoing, no Award
granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the
Committee in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. federal or
non-U.S. securities laws and any other laws to which such offer, if made,
would be subject.
28. NO TRUST OR FUND CREATED.
Neither the Plan nor any Award shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company or any Subsidiary or Affiliate and a Participant or any other Person.
To the extent that any Person acquires a right to receive payments from the
Company or any Subsidiary or Affiliate pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the Company
or any Subsidiary or Affiliate.
29. HEADINGS.
Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of the Plan or
any provision thereof.
30. EFFECTIVE DATE AND STOCKHOLDER APPROVAL.
This Plan shall become effective upon its approval by the Board subject to
approval by the stockholders of the Company at the next Annual Meeting of
Stockholders. The Committee may grant Awards subject to the condition that
this Plan shall have been approved by the stockholders of the Company.
31. TERMINATION.
This Plan shall terminate ten years from the date on which this Plan is
first approved by the Board, and no Award shall be granted after that date.
Unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award granted hereunder may, and the authority of the Committee
to amend, alter, adjust, suspend, discontinue or terminate any such Award or
to waive any conditions or rights under any such Award shall, continue after
the authority for grant of new Awards hereunder has been exhausted.
B-17
<PAGE>
CLASS A DAN RIVER CLASS A
PROXY FOR CLASS A COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON APRIL 20, 2000
The undersigned hereby appoints Joseph L. Lanier, Jr. and Donald J. Keller and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of Class A Common Stock
of Dan River, Inc. that the undersigned would be entitled to vote if personally
present at the annual meeting of shareholders to be held on April 20, 2000, at
10:00 a.m., EDT, at the Riverview Inn, Danville, Virginia or at any adjournment
thereof, upon the matters described in the accompanying Notice of Annual Meeting
of Shareholders and Proxy Statement, receipt of which is hereby acknowledged,
and upon any other business that may properly come before the annual meeting or
any adjournment thereof. Said proxies are directed to vote on the matters
described in the Notice of Annual Meeting of Shareholders and Proxy Statement as
follows, and otherwise in their discretion upon such other business as may
properly come before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR ITEMS 1,2,3 AND 4.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please sign exactly as your name or names appear hereon. For more than one
owner as shown above, each should sign. When signing in a fiduciary or
representative capacity, please give full title. If this proxy is submitted
by a corporation, it should be executed in the full corporate name by a duly
authorized officer; if a partnership, please sign in partnership name by
authorized person.
- -------------------------------------------------------------------------------
PLEASE RECORD ADDRESS CHANGE OR ANY COMMENTS HERE:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C>
- ----------------------------------
DAN RIVER INC.
- ---------------------------------- 1. To elect two (2) directors:
CLASS A COMMON STOCK For With- For All
Nominee hold Except
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN (01) Edward J. Lill [ ] [ ] [ ]
IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT (02) John F. Maypole [ ] [ ] [ ]
YOU PLAN TO ATTEND THE ANNUAL MEETING ON APRIL 20,
2000. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN (Instructions: To withhold authority to vote for any individual
PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY nominee, mark the "For All Except" box and strike a line through
RETURNED YOUR PROXY. the nominee's name in the list above).
CONTROL NUMBER:
RECORD DATE SHARES: For Against Abstain
2. To approve the performance goals [ ] [ ] [ ]
contained in our management
incentive plan.
3. To adopt and approve a long-term [ ] [ ] [ ]
incentive plan, which will, among
other things, make available up to
2,000,000 shares of our Class A
Common Stock for issuance under the
plan.
4. To ratify the appointment of Ernst [ ] [ ] [ ]
& Young LLP as independent auditors.
Please be sure to sign and date this Proxy. Date
____________________________________________________ Mark box at right if an address change or comment [ ]
has been noted on the reverse side of this card.
Shareholder sign here Co-owner sign here
____________________________________________________
</TABLE>
DETACH CARD DETACH CARD
DAN RIVER INC.
Dear Shareholder,
Please mark the boxes on this proxy card to indicate how your shares
will be voted. Then sign the card, detach it and return your proxy vote
in the enclosed postage paid envelope.
Sincerely,
Dan River Inc.
<PAGE>
CLASS B DAN RIVER CLASS B
PROXY FOR CLASS B COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON APRIL 20, 2000
The undersigned hereby appoints Joseph L. Lanier, Jr. and Donald J. Keller and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of Class B Common Stock
of Dan River, Inc. that the undersigned would be entitled to vote if personally
present at the annual meeting of shareholders to be held on April 20, 2000, at
10:00 a.m., EDT, at the Riverview Inn, Danville, Virginia or at any adjournment
thereof, upon the matters described in the accompanying Notice of Annual Meeting
of Shareholders and Proxy Statement, receipt of which is hereby acknowledged,
and upon any other business that may properly come before the annual meeting or
any adjournment thereof. Said proxies are directed to vote on the matters
described in the Notice of Annual Meeting of Shareholders and Proxy Statement as
follows, and otherwise in their discretion upon such other business as may
properly come before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR ITEMS 1,2,3 AND 4.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please sign exactly as your name or names appear hereon. For more than one
owner as shown above, each should sign. When signing in a fiduciary or
representative capacity, please give full title. If this proxy is submitted
by a corporation, it should be executed in the full corporate name by a duly
authorized officer; if a partnership, please sign in partnership name by
authorized person.
- -------------------------------------------------------------------------------
PLEASE RECORD ADDRESS CHANGE OR ANY COMMENTS HERE:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C>
- ----------------------------------
DAN RIVER INC.
- ---------------------------------- 1. To elect two (2) directors:
CLASS B COMMON STOCK For With- For All
Nominee hold Except
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN (01) Edward J. Lill [ ] [ ] [ ]
IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT (02) John F. Maypole [ ] [ ] [ ]
YOU PLAN TO ATTEND THE ANNUAL MEETING ON APRIL 20,
2000. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN (Instructions: To withhold authority to vote for any individual
PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY nominee, mark the "For All Except" box and strike a line through
RETURNED YOUR PROXY. the nominee's name in the list above).
CONTROL NUMBER:
RECORD DATE SHARES: For Against Abstain
2. To approve the performance goals [ ] [ ] [ ]
contained in our management
incentive plan.
3. To adopt and approve a long-term [ ] [ ] [ ]
incentive plan, which will, among
other things, make available up to
2,000,000 shares of our Class A
Common Stock for issuance under the
plan.
4. To ratify the appointment of Ernst [ ] [ ] [ ]
& Young LLP as independent auditors.
Please be sure to sign and date this Proxy. Date
___________________________________________________ Mark box at right if an address change or comment [ ]
has been noted on the reverse side of this card.
Shareholder sign here Co-owner sign here
___________________________________________________
DETACH CARD DETACH CARD
</TABLE>
DAN RIVER INC.
Dear Shareholder,
Please mark the boxes on this proxy card to indicate how your shares
will be voted. Then sign the card, detach it and return your proxy vote
in the enclosed postage paid envelope.
Sincerely,
Dan River Inc.
