<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THOMASTON MILLS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
P.O. Box 311, 115 E. Main Street Thomaston, GA 30286
- --------------------------------------------------------------------------------
(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)(1) 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 paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
THOMASTON MILLS, INC.
[THOMASTON MILLS, INC. LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 2, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Thomaston
Mills, Inc. (the "Company") will be held in the Employee Relations Office of the
Company, 207 East Gordon Street, Thomaston, Georgia 30286 on October 2,1997 at
11:00 A.M., Eastern Daylight Saving Time, for the following purposes:
(1) To elect a Board of eleven Directors;
(2) To approve the Thomaston Mills, Inc. 1997 Stock Option Plan;
(3) To approve the selection of Ernst & Young LLP, certified public
accountants, as independent auditors for the Company for the fiscal year
1998; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof;
all as set forth in the Proxy Statement accompanying this notice.
The stock transfer books of the Company will not be closed. Only
shareholders of record of Class B Common Stock at the close of business on
August 21, 1997 will be entitled to notice of, and to vote at, the meeting or
any adjournment thereof.
By Order of the Board of Directors,
NEIL H. HIGHTOWER
President and Chief
Executive Officer
Dated: August 27, 1997
SHAREHOLDERS ARE URGED TO FILL IN AND EXECUTE THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR ATTENDANCE AT THE MEETING IS URGED. IF YOU ATTEND THE
MEETING AND DECIDE YOU WANT TO VOTE IN PERSON YOU MAY, IF YOU WISH, WITHDRAW
YOUR PROXY.
<PAGE> 3
THOMASTON MILLS, INC.
------------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 2, 1997
This statement is furnished in connection with the solicitation by the
Board of Directors of Thomaston Mills, Inc. (the "Company") of proxies to be
used at the Annual Meeting of Shareholders to be held in the Employee Relations
Office of the Company, 207 East Gordon Street, Thomaston, Georgia 30286 on
October 2, 1997 at 11:00 A.M., Eastern Daylight Saving Time. A form of proxy is
enclosed herewith. Any shareholder who executes and delivers a proxy may revoke
it at any time before it is voted by (i) giving written notice to the Secretary
of the Company, 115 E. Main Street, P.O. Box 311, Thomaston, Georgia 30286; (ii)
delivering a duly executed proxy bearing a later date to the Secretary of the
Company at said address; or (iii) appearing at the meeting and voting in person.
As of the date hereof, the only business that management intends to present
or knows that others will present at the annual meeting is the election of
eleven directors; a proposal to approve the 1997 stock option plan; and a
proposal to approve the selection of Ernst & Young LLP, certified public
accountants, as independent auditors of the Company for the fiscal year ending
June 27, 1998.
All shares of the Company's Class B Common Stock represented by effective
proxies will be voted as specified in connection with each of the matters to be
voted upon at the Annual Meeting. Unless otherwise specified, proxies will be
voted in favor of the slate of eleven nominees for director; in favor of the
1997 stock option plan; and in favor of the selection of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending June 27, 1998.
The cost of soliciting proxies will be borne by the Company. Officers,
directors and employees of the Company may solicit proxies by telephone,
telegram or personal interview. Only holders of issued and outstanding shares of
Class B Common Stock of the Company of record at the close of business on August
21, 1997 are entitled to notice of, and to vote at, the meeting. Each
shareholder is entitled to one vote per share of Class B Common Stock held on
such record date. At the close of business on August 21, 1997, there were
1,630,366 shares of Class B Common Stock issued, outstanding and entitled to be
voted, and 4,909,630 shares of Class A Common Stock issued and outstanding,
which have no voting rights other than those provided by law. Unless the context
indicates otherwise, all amounts set forth herein have been adjusted to reflect
all stock dividends previously distributed.
The Company's officers and directors, and certain of their affiliates, own
in the aggregate a sufficient number of shares of the Company's Class B Common
Stock to approve each of the matters to be presented at the Annual Meeting of
Shareholders (see "Principal Holders of Class A and Class B Common Stock") and
it is anticipated that such persons will vote their shares in favor of each of
the proposals.
It is anticipated that this proxy statement and the accompanying form of
proxy will be mailed to shareholders on or about August 27, 1997.
<PAGE> 4
PRINCIPAL HOLDERS OF CLASS A AND CLASS B COMMON STOCK
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Class A Common Stock and Class B Common
Stock as of August 27, 1997 by (i) each director of the Company, (ii) each
executive officer of the Company named in the Summary Compensation Table on page
8, (iii) all directors and executive officers of the Company as a group and (iv)
each person known by the Company to own beneficially more than 5% of the
outstanding Class A Common Stock or Class B Common Stock. The numbers and
percentages set forth below include shares which are not presently outstanding,
but which are subject to presently exercisable options and thus may be deemed
outstanding by virtue of Rule 13d-3(d)(1) under the Securities Exchange Act of
1934. Pursuant to Rule 13d-3(d)(1), shares subject to presently exercisable
options held by each director and executive officer are deemed outstanding for
purposes of calculating the percentage of total outstanding shares held by such
person or by the group, but are not deemed to be outstanding for purposes of
calculating the percentage of total outstanding shares held by any other
individual.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- --------------------------
SHARES PERCENT SHARES PERCENT
NAME OF BENEFICIALLY OF CLASS BENEFICIALLY OF CLASS
BENEFICIAL OWNER OWNED OUTSTANDING OWNED OUTSTANDING
---------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Thomas D. Adams, Jr.(1)............................ 44,168 0.85 116,610 6.64
C. Ronald Barfield(2).............................. 28,494 0.55 13,952 0.79
John R. Carson(3)(11).............................. 15,514 * 2,110 *
Archie H. Davis.................................... 900 * 100 *
J. Stewart Davis(3)(4)............................. 93,367 1.89 264,781 15.83
George H. Hightower(3)(5).......................... 333,132 6.45 128,667 7.32
George H. Hightower, Jr.(3)(6)..................... 173,908 3.51 232,276 13.89
Neil H. Hightower(3)(7)............................ 406,779 8.22 292,171 17.47
William H. Hightower, Jr.(3)(8).................... 359,142 6.95 96,192 5.48
Rosser R. Raines(3)(9)............................. 13,200 * 2,276 *
Dr. Jerry M. Williamson............................ 1,100 * 200 *
Dom H. Wyant....................................... 600 * 200 *
All directors and executive officers as a group
(21 persons)(1).................................. 1,186,774 22.96 1,081,893 61.58
Mount Vernon Mills, Inc.(12)....................... 758,234 15.44 157,718 9.67
Quest Advisory Corporation and Quest Management
Company(13)...................................... 492,100 10.02 0 *
</TABLE>
- ---------------
* Less than 1/2 of 1% of class
(1) Mr. Adams' business address is 614 N. Church Street, Thomaston, Georgia
30286. Includes 44,168 shares of Class A Common Stock and 30,990 shares of
Class B Common Stock owned of record by Mr. Adams. He is an income
beneficiary of a trust holding 190,188 shares of Class A Common Stock and
90,198 shares of Class B Common Stock. Mr. Adams holds voting rights from
family members for 85,620 shares of Class B Common Stock.
(2) Includes 660 shares of Class A Common Stock and 320 shares of Class B
Common Stock owned of record by Mr. Barfield and 27,834 shares of Class A
Common Stock and 13,632 shares of Class B Common Stock owned by Upson
County Hospital Trust Fund, a charitable trust (the "Upson Trust"). Mr.
Barfield serves as a trustee of the Upson Trust, the shares of which are
voted in accordance with the
2
<PAGE> 5
wishes of the majority of the trustees. Mr. Barfield disclaims beneficial
ownership with respect to shares owned by the Upson Trust.
(3) The business address of this beneficial shareholder is c/o Thomaston Mills,
Inc., 115 East Main Street, P.O. Box 311, Thomaston, Georgia 30286.
(4) Includes 53,167 shares of Class A Common Stock and 96,603 shares of Class B
Common Stock owned of record by Mr. Davis. In addition, includes 126,338
shares of Class B Common Stock as to which Mr. Davis holds voting rights
from family members for 126,338 shares of Class B Common Stock. Also
includes 40,200 shares of Class A Common Stock and 41,840 shares of Class B
Common Stock which Mr. Davis could acquire upon the exercise of options
within 60 days of August 27, 1997.
(5) Includes 74,250 shares of Class A Common Stock and 38,019 shares of Class B
Common Stock owned of record by Mr. George H. Hightower; 231,048 shares of
Class A Common Stock and 77,016 shares of Class B Common Stock owned by
Community Enterprises, Inc., a charitable foundation (the "Community
Foundation"); and 27,834 shares of Class A Common Stock and 13,632 shares
of Class B Common Stock owned by the Upson Trust. Mr. Hightower serves as a
trustee of the Community Foundation and the Upson Trust, the shares of
which are voted in accordance with the wishes of the majority of the
trustees. Mr. Hightower disclaims beneficial ownership with respect to
shares owned by the Community Foundation and the Upson Trust.
(6) Includes 133,708 shares of Class A Common Stock and 190,436 shares of Class
B Common Stock owned of record by Mr. George H. Hightower, Jr. Also
includes 40,200 shares of Class A Common Stock and 41,840 shares of Class B
Common Stock that Mr. Hightower could acquire upon the exercise of options
within 60 days of August 27, 1997.
(7) Includes 100,449 shares of Class A Common Stock and 159,083 shares of Class
B Common Stock owned of record by Mr. Neil H. Hightower; 7,248 shares of
Class A Common Stock and 600 shares of Class B Common Stock owned of record
by Mr. Hightower's wife; 231,048 shares of Class A Common Stock and 77,016
shares of Class B Common Stock owned of record by the Community Foundation
and 27,834 shares of Class A Common Stock and 13,632 shares of Class B
Common Stock owned of record by the Upson Trust. Mr. Hightower serves as a
trustee of the Community Foundation and the Upson Trust, the shares of
which are voted in accordance with the wishes of the majority of the
trustees. Mr. Hightower disclaims beneficial ownership with respect to
shares owned by his wife, the Community Foundation and the Upson Trust.
Also includes 40,200 shares of Class A Common Stock and 41,840 shares of
Class B Common Stock that Mr. Hightower could acquire upon the exercise of
options within 60 days of August 27, 1997.
(8) Includes 128,094 shares of Class A Common Stock and 19,176 shares of Class
B Common Stock owned of record by Mr. William H. Hightower, Jr. and 231,048
shares of Class A Common Stock and 77,016 shares of Class B Common Stock
owned of record by the Community Foundation. Mr. Hightower serves as a
trustee of the Community Foundation, the shares of which are voted in
accordance with the wishes of the majority of the trustees. Mr. Hightower
disclaims beneficial ownership with respect to shares owned by the
Community Foundation.
(9) Includes 2,276 shares of Class B Common Stock owned of record by Mr. Rosser
R. Raines. Also includes 13,200 shares of Class A Common Stock which Mr.
Raines could acquire upon the exercise of options within 60 days of August
27, 1997.
(10) Includes 138,600 shares of Class A Common Stock and 1,000 shares of Class B
Common Stock that officers, other than Mr. Neil Hightower, Mr. Stewart
Davis and Mr. George Hightower, Jr. could acquire upon the exercise of
options within 60 days of August 27, 1997, in addition to the shares listed
3
<PAGE> 6
above as beneficially owned by Mr. Neil H. Hightower, Mr. H. Stewart Davis
and Mr. George H. Hightower, Jr.
(11) Includes 5,914 shares of Class A Common Stock and 2,110 shares of Class B
Common Stock owned of record by Mr. John R. Carson. Also includes 9,600
shares of Class A Common Stock which Mr. Carson could acquire upon the
exercise of options within 60 days of August 27, 1997.
(12) The business address of this beneficial shareholder is 1 Insignia Financial
Plaza, Suite 700, Greenville, South Carolina 29601. Includes 435,839 shares
of Class A Common Stock and 151,656 shares of Class B Common Stock owned of
record by Mount Vernon Mills, Inc., which has sole voting and investment
power with respect to such shares, 49,000 shares of Class A Common Stock
owned of record by Pamplin Foundation, 172,350 shares of Class A Common
Stock and 6,062 shares of Class B Common Stock owned of record by Robert B.
Pamplin, and 101,045 shares of Class A Common Stock owned of record by
Christ Community Church for which Robert Pamplin, Jr. has sole voting and
investment power. R. B. Pamplin Corporation, a private family-owned
corporation of which Mr. Robert B. Pamplin is chairman, owns Mount Vernon
Mills, Inc., a textile company based in Greenville, South Carolina.
(13) The business address of this beneficial shareholder is 1414 Avenue of the
Americas, New York, New York, 10019. Based solely on a Schedule 13G filed
with the Commission as of February 4, 1997, on behalf of Quest Advisory
Corporation, Quest Management Company and Charles M. Royce, these reporting
persons have sole voting and investment power with respect to 492,100
shares of Class A Common Stock.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Commission and to provide copies of
such reports to the Company. Based solely on the Company's review of the copies
of such reports provided to the Company or written representations from certain
reporting persons that no annual reports were required for such persons, these
filing requirements were satisfied for the year ended June 28, 1997. The Company
has no knowledge of any reports filed under Section 16 on behalf of Mount Vernon
Mills, Inc. or any affiliates thereof during the most recent fiscal year.
ELECTION OF DIRECTORS (PROXY ITEM 1)
Proxies in the accompanying form will be voted as indicated for the
election of the eleven nominees for director listed below to serve for one year
or until their successors are elected and shall have qualified. In the event
that any such nominee is unable to serve, an event which is not anticipated,
such proxies will be voted for the remaining nominees and for such other person
or persons, if any, as the present Board of Directors may designate.
<TABLE>
<CAPTION>
COMMON STOCK OWNED BENEFICIALLY
-----------------------------------------------------
YEAR CLASS A NON-VOTING CLASS B VOTING
FIRST COMMON STOCK COMMON STOCK
ELECTED ------------------------ -------------------------
PROPOSED DIRECTORS, 5 YEAR A DIRECTOR
EMPLOYMENT HISTORIES AND OF THE NUMBER PERCENT NUMBER PERCENT
CERTAIN OTHER DIRECTORSHIPS AGE COMPANY OF SHARES OF CLASS OF SHARES OF CLASS
- --------------------------- --- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Adams, Jr. 53 1976 44,168(1) 0.85 116,610(1) 6.64
President, Adams Realty
Company,
Thomaston, Georgia
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK OWNED BENEFICIALLY
-----------------------------------------------------
YEAR CLASS A NON-VOTING CLASS B VOTING
FIRST COMMON STOCK COMMON STOCK
ELECTED ------------------------ -------------------------
PROPOSED DIRECTORS, 5 YEAR A DIRECTOR
EMPLOYMENT HISTORIES AND OF THE NUMBER PERCENT NUMBER PERCENT
CERTAIN OTHER DIRECTORSHIPS AGE COMPANY OF SHARES OF CLASS OF SHARES OF CLASS
- --------------------------- --- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
C. Ronald Barfield 60 1989 28,494(1) 0.55 13,952(1) 0.79
Partner, Adams, Barfield,
Dunaway & Hankinson
Thomaston, Georgia
Archie H. Davis 55 1993 900 * 100 *
President, CEO and Director
The Savannah Bank, N.A.,
Savannah, Georgia
Formerly Senior Vice
President
of Interstate/Johnson Lane,
also serves as a Director of
the Savannah Bancorp,
Savannah, Georgia and
Savannah Electric and
Power Co., Inc., a
division of the Southern Co.
H. Stewart Davis 54 1981 93,367(1)(2) 1.89 264,781(1)(2) 15.83
Executive Vice President of
the Company, Thomaston,
Georgia
George H. Hightower 81 1945 333,132(1)(2) 6.45 128,667(1)(2) 7.32
Retired; formerly Chairman of
the Board of the Company,
Thomaston, Georgia
George H. Hightower, Jr. 48 1981 173,908(1)(2) 3.51 232,276(1)(2) 13.89
Executive Vice President of
the Company, Thomaston,
Georgia also serves as a
Director of Thomaston Federal
Savings and Loan Association,
Thomaston, Georgia
Neil H. Hightower 56 1980 406,779(1)(2) 8.22 292,171(1)(2) 17.47
President and CEO of the
Company,
Thomaston, Georgia
William H. Hightower, Jr. 85 1939 359,142(1)(2) 6.95 96,192(1)(2) 5.48
Retired, formerly Chairman of
the Board of the Company,
Thomaston, Georgia
Rosser R. Raines 59 1993 13,200(1) * 2,276(1) *
Treasurer of the Company
Thomaston, Georgia
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
COMMON STOCK OWNED BENEFICIALLY
-----------------------------------------------------
YEAR CLASS A NON-VOTING CLASS B VOTING
FIRST COMMON STOCK COMMON STOCK
ELECTED ------------------------ -------------------------
PROPOSED DIRECTORS, 5 YEAR A DIRECTOR
EMPLOYMENT HISTORIES AND OF THE NUMBER PERCENT NUMBER PERCENT
CERTAIN OTHER DIRECTORSHIPS AGE COMPANY OF SHARES OF CLASS OF SHARES OF CLASS
- --------------------------- --- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Dr. Jerry M. Williamson 61 1981 1,100 * 200 *
President, Gordon College,
University System of Georgia,
Barnesville, Georgia
Dom H. Wyant 70 1983 600 * 200 *
Of Counsel, Formerly Partner
Jones, Day, Reavis & Pogue
Atlanta, Georgia;
also serves as a Director of
Atlantic American Corporation
</TABLE>
- ---------------
* Less than 1/2 of 1% of class.
(1) See footnotes to "Principal Holders of Class A and Class B Common Stock," on
Pages 2 through 4 for detailed listing of shares beneficially owned.
(2) The family relationships existing among certain of the nominees are as
follows: William H. Hightower, Jr. and George H. Hightower are brothers.
Neil H. Hightower is the son of William H. Hightower, Jr.; George H.
Hightower, Jr. is the son of George H. Hightower; H. Stewart Davis is the
nephew of William H. Hightower, Jr. and George H. Hightower.
DIRECTORS COMMITTEES AND MEETINGS
The Board of Directors held six meetings during fiscal 1997. The following
table sets forth information regarding certain Committees of the Board of
Directors:
<TABLE>
<CAPTION>
COMMITTEE NUMBER OF
DESCRIPTION OF COMMITTEE MEMBERS MEETINGS HELD
------------------------ --------- -------------
<S> <C> <C>
Executive -- purpose of which is to act on behalf of Board G. H. Hightower 11
during the intervals between formal meetings of the full N. H. Hightower
Board, in accordance with the policies of the Company W. H. Hightower, Jr.
and its Articles of Incorporation and Bylaws.
Audit -- purpose of which is to recommend the selection of T. D. Adams, Jr. 2
an independent public accounting firm to audit the books C. R. Barfield
and records of the Company; consult with both the A. H. Davis
independent and internal accountants concerning the J. M. Williamson
scope of their work and review with them their findings; D. H. Wyant
and to monitor the internal controls of the Company.
Stock Option -- purpose of which is to administer the T. D. Adams, Jr. 1
stock option plans of the Company. C. R. Barfield
A. H. Davis
J. M. Williamson
D. H. Wyant
</TABLE>
6
<PAGE> 9
During fiscal 1997, the Board of Directors and its committees held a total
of 19 meetings. Overall attendance at Board and Committee meetings was over 99%.
The standard arrangement for Directors fees is as follows:
<TABLE>
<S> <C>
Annual Directors Retainer Fee............................... $8,000
Directors Fee Per Meeting................................... 600
Monthly Executive Committee Fee............................. 300
Audit Committee Per Meeting................................. 600
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation paid
by the Company for services in all capacities to the Company's Chief Executive
Officer and four most highly compensated other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
FISCAL ANNUAL COMPENSATION SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS(#) COMPENSATION(4)
--------------------------- ------ ------------------- ---------------------- ---------------
<S> <C> <C> <C> <C>
Neil H. Hightower 1997 $301,455 -0- $15,200
President, CEO 1996 292,750 22,000(1) 15,200
and Director 1995 282,758 80,000(2) 13,200
H. Steward Davis 1997 273,035 -0- 11,600
Executive Vice-President 1996 265,000 22,000(1) 11,600
and Director 1995 255,933 80,000(2) 9,600
George H. Hightower, Jr. 1997 273,035 -0- 11,600
Executive Vice-President 1996 265,000 22,000(1) 11,600
and Director 1995 255,933 80,000(2) 9,600
John Carson 1997 177,625 -0- -0-
Vice President 1996 172,500 8,000(3) -0-
1995 169,699 8,000(3) -0-
Rosser R. Raines 1997 140,091 -0- 11,600
Treasurer 1996 137,015 8,000(3) 11,000
and Director 1995 139,115 8,000(3) 9,600
</TABLE>
- ---------------
(1) Consists of 11,000 shares of Class A Common Stock and 11,000 shares of Class
B Common Stock.
(2) Consists of 40,000 shares of Class A Common Stock and 40,000 shares of Class
B Common Stock.
(3) Class A Common Stock.
(4) Amounts shown are for services as Directors, paid in accordance with the fee
schedule on Page 7.
7
<PAGE> 10
The table below sets forth information as of June 28, 1997 with respect to
exercised and unexercised stock options by the executive officers of the Company
named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END(#) AT FISCAL YEAR END*($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Neil H. Hightower
Class A 0 0 40,200 0 1,800 0
Class B 0 0 41,840 0 0 0
H. Stewart Davis
Class A 0 0 40,200 0 1,800 0
Class B 0 0 41,840 0 0 0
George H. Hightower, Jr.
Class A 0 0 40,200 0 1,800 0
Class B 0 0 41,840 0 0 0
John R. Carson
Class A 0 0 9,600 0 1,800 0
Class B 0 0 -- -- -- --
Rosser R. Raines
Class A 0 0 13,200 0 2,250 0
Class B 0 0 -- -- -- --
</TABLE>
- ---------------
* Based on the closing price reported on NASDAQ at fiscal year end less the
exercise price.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------
REMUNERATION(1) 15 20 25 30 35 AND OVER
- --------------- ------ ------ ------- ------- -----------
<C> <C> <C> <C> <C> <C>
75,000 10,520 14,027 17,533 21,040 24,546
100,000 14,832 19,777 24,721 29,665 34,609
125,000 19,145 25,527 31,908 38,290 44,671
150,000 23,457 31,277 39,096 46,915 54,734
175,000 27,770 37,027 46,283 55,540 64,796
200,000 32,082 42,777 53,471 64,165 74,859
225,000 36,395 48,527 60,658 72,790 84,921
250,000 40,707 54,277 67,846 81,415 94,984
275,000 45,020 60,027 75,033 90,040 105,046
300,000 49,332 65,777 82,221 98,665 115,109
400,000 66,582 88,777 110,971 113,165 155,359
</TABLE>
- ---------------
(1) Five-Year Average Annual Compensation
The table above sets forth the estimated annual benefit payable upon
retirement at normal retirement age 65 and under (i) the Company's
noncontributory retirement plan covering salaried employees (the "Retire-
8
<PAGE> 11
ment Plan") and (ii) with respect to four executive officers whose benefits
under the Retirement Plan are subject to certain restrictions which apply to
tax-qualified plans, Executive Compensation Continuation Agreements (the
"Supplemental Agreements") entered into between the Company and such executives.
The estimated annual benefits payable set forth above are based on the indicated
assumptions as to average annual compensation and years of service as a plan
member, and the maximum Covered Compensation amount applicable in 1997 of
$29,304. The Retirement Plan provides a retirement benefit at normal retirement
for full career employees (35 years of service) of 40.25% of earnings in excess
of Covered Compensation and 21.00% of earnings under Covered Compensation.
Covered Compensation is the average of the Social Security Wage Bases for the 35
years ending in the year of attainment of the Social Security Retirement Age.
Annual employer's contributions fund to the Retirement Plan are determined by
actuarial computations to fund the Retirement Plan. Amounts contributed are not
allocated to individual participants. The term compensation is defined in the
Retirement Plan as all salaries paid. The credited years of service under the
Retirement Plan for the officers named in the foregoing compensation table as of
August 27, 1997, were: Mr. Neil H. Hightower (age 56)-32 years; Mr. H. Stewart
Davis (age 54)-33 years; Mr. George H. Hightower, Jr. (age 48)-23 years; Mr.
John R. Carson (age 62)-36 years; Mr. Rosser R. Raines (age 59)-35 years.
The Supplemental Agreements obligate the Company to provide pension and/or
death benefits to certain executives that will supplement those benefits paid
under the Retirement Plan, and will be equal to the difference between the
benefit which the executive or his beneficiary would receive from the Retirement
Plan in the absence of federally-imposed limitations on the amount of
compensation which may be considered for purposes of the Retirement Plan and on
the maximum amount of benefits payable from tax-qualified plans, and the amount
which the executive or beneficiary in fact receives from the Retirement Plan.
For purposes of these agreements, the definition of compensation does not
include any gain which might result from exercise of any stock options granted
to the executive by the Company. This benefit is unfunded and may be forfeited
by the executive in certain circumstances.
JOINT EXECUTIVE COMMITTEE AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Executive Committee recommends compensation for each of the Company's
executive officers to the Board of Directors. While the profitability of the
Company is generally considered with respect to executive compensation, no
specific thresholds or formulas are used. Factors considered by the Executive
Committee are typically subjective, including any planned changes in functional
responsibilities and the Executive Committee's perception of the individual's
performance. The compensation of the Chief Executive Officer is determined in
the same manner as the compensation of other executive officers.
The Company has granted stock options to its executive officers in the past
to strengthen the mutuality of interest between the Company's senior management
and shareholders. Executive officers are encouraged to accumulate stock of the
Company over time. Stock options help to retain and motivate executives, but
reward executives only for overall performance which improves returns for
shareholders. Each of the Company's executive officers has been granted stock
options in previous years pursuant to the Company's stock option plans. No stock
options were granted to executives during Fiscal Year 1997.
Federal tax legislation enacted in 1993 would preclude public companies
from taking a tax deduction for compensation over $1 million which is not
"performance-based" and is paid, or otherwise taxable to persons named in the
Summary Compensation Table and employed by the Company at the end of the
applicable tax
9
<PAGE> 12
year. No named executive officer is likely to earn over $1 million in the near
future. The Company intends to monitor executive compensation with respect to
federal tax law.
The Executive Committee has approved the Supplemental Agreements with
executive officers whose benefits under the Retirement Plan would be subject to
certain restrictions which apply to tax-qualified plans. The purpose of the
Supplemental Agreements is to ensure that each executive officer's total
retirement income benefit will equal the amounts that would have been payable
under the Retirement Plan to him absent such limitations.
Submitted by the Executive Committee and the Stock Option Committee of the
Board of Directors.
<TABLE>
<CAPTION>
Executive Committee Stock Option Committee
- ------------------- ----------------------
<S> <C>
Neil H. Hightower Thomas D. Adams, Jr.
William H. Hightower, Jr. C. Ronald Barfield
George H. Hightower Archie H. Davis
Jerry M. Williamson
Dom H. Wyant
</TABLE>
EXECUTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee consists of Neil H. Hightower, George H. Hightower
and William H. Hightower, Jr. Neil H. Hightower is an executive officer of the
Company. George H. Hightower and William H. Hightower, Jr. are former executive
officers of the Company.
10
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following graph compares, for a five-year period ending June 28, 1997,
the Company's total return to Class A shareholders (stock price increase plus
dividends, divided by beginning stock price) with that of (i) Standard & Poor's
500 Composite Index and (ii) a peer group comprised of the following publicly
traded textile companies:
Burlington Industries, Inc.
Cone Mills Corp.
Delta Woodside Industries, Inc.
Dixie Yarns, Inc.
Fieldcrest Cannon, Inc.
Galey & Lord, Inc.
Springs Industries, Inc. (Class A)
Texfi Industries, Inc.
<TABLE>
<CAPTION>
Measurement Period Thomaston Mills,
(Fiscal Year Covered) Class A S & P 500 Peer Group
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 112.52 113.63 111.17
1994 99.91 115.23 104.49
1995 72.78 145.27 95.39
1996 62.65 183.04 105.77
1997 62.16 246.32 108.74
</TABLE>
- ASSUMES INITIAL INVESTMENT OF $100
- USES AVERAGE BEGINNING OF PERIOD MARKET CAPITALIZATION
- PEER GROUP EXCLUDES THOMASTON MILLS, INC. PERFORMANCE
11
<PAGE> 14
TRANSACTIONS BETWEEN COMPANY
AND DIRECTORS, OFFICERS AND OWNERS
In the ordinary course of its business, the Company purchases cloth and
other textile products at prevailing market prices from a variety of suppliers,
including Mount Vernon Mills, Inc., which is the beneficial owner of more than
5% of the outstanding Class B Common Stock. During the last fiscal year, Company
purchases from Mount Vernon Mills, Inc. amounted to approximately $5.7 million,
at prices determined on the basis of arm's-length negotiations. Except as set
forth above, in the last fiscal year there have been no transactions or series
of similar transactions, nor are there any currently proposed transactions or
series of similar transactions, exceeding $60,000, to which the Company or any
of its subsidiaries was or is to be a party, with any director, director
nominee, executive officer, beneficial or record shareholder owning more than 5%
of the outstanding Class B Common Stock, or any member of the immediate family
of any of the foregoing persons. Director nominee Dom H. Wyant is Of Counsel to
the law firm of Jones, Day, Reavis & Pogue, which was retained for legal
services. Director nominee C. Ronald Barfield is a partner of the law firm
Adams, Barfield, Dunaway & Hankinson, which was also retained for legal
services.
APPROVAL OF THOMASTON MILLS, INC. 1997 STOCK OPTIONS PLAN
(PROXY ITEM 2)
On August 12, 1997, the Board of Directors adopted the Thomaston Mills,
Inc. 1997 Stock Option Plan (the "1997 Plan"), subject to approval by the
holders of the Class B Common Stock of the Company. The purpose of the 1997 Plan
is to advance the interests of the Company and its shareholders by affording
selected employees an opportunity to acquire or increase their proprietary
interests in the Company through the grant of stock options. A summary of the
1997 Plan is set forth below and the full text of the 1997 Plan is annexed to
this proxy statement as Annex A and the summary is qualified in its entirety by
reference thereto.
The 1997 Plan is administered by a committee of the Board of Directors (the
"Committee"). The Committee has complete authority to interpret the 1997 Plan,
subject to the express terms of the 1997 Plan. Employees of the Company or any
subsidiary of the Company (approximately 2,400 as of August 27, 1997), are
eligible to be selected by the Committee to receive options, which may be either
"incentive stock options" intended to comply with particular provisions of the
Internal Revenue Code or nonstatutory stock options. Options awarded under the
1997 Plan entitle the optionees to purchase shares of Class A and/or Class B
Common Stock of the Company at 100% of the fair market value of such stock on
the date the option is granted. The terms and conditions of each option are
specified in a written stock option agreement between the employee and the
Company.
The maximum number of shares of Class A Common Stock and Class B Common
Stock that may be issued under the 1997 Plan are 263,988 and 79,420,
respectively. The number of shares that may be issued under the 1997 Plan, the
number of shares covered by outstanding options, and the prices per share
applicable thereto, are subject to adjustment by the Committee in the event of
any merger, consolidation, recapitalization, stock split, stock dividend or
similar event. In the event of any such transaction or event, the Committee may
provide in substitution for any and all outstanding options such alternative
consideration as it in good faith determines to be equitable under the
circumstances. In the event of the dissolution or liquidation of the Company or
a merger or combination in which the Company is not a surviving corporation
(other than a merger or combination with a wholly owned subsidiary), unless the
Committee has exercised its discretion to provide alternative consideration to
optionees, each option granted under the 1997 Plan will terminate but the
12
<PAGE> 15
optionee will have the right immediately prior thereto to exercise his options
to the extent it has not been exercised, without regard to any installment
vesting or exercise provisions.
The Board may at any time, upon recommendation of the Committee, terminate
the 1997 Plan. The Board may also amend the 1997 Plan, provided however, that
without approval of the holders of the Class B Common Stock, the Board may not
adopt any amendment which would (i) increase the number of shares issuable
pursuant to the 1997 Plan (except as contemplated above); (ii) materially
increase the benefits accruing to participants in the 1997 Plan; or (iii)
materially modify the requirements as to eligibility to participate in the 1997
Plan. Notwithstanding the foregoing, the Board may not terminate, amend or
modify the 1997 Plan in any manner so as to affect the price of shares subject
to an option without the consent of the optionee.
Options are exercisable at such time or times and subject to such terms and
conditions as determined by the Committee and reflected in the stock option
agreement; provided that in no instance shall the exercise period for an
incentive stock option exceed ten years from the date of grant of the option.
The Committee has the right to accelerate the right to exercise any option
granted under the plan.
Options are exercisable upon notice of exercise and payment in full of the
option exercise price in cash. In addition, to the extent provided in the stock
option agreement, in lieu of cash, the optionee may deliver previously owned
shares of stock having a fair market value equal to the option exercise price or
a combination of cash and shares. The holder of an option does not have any of
the rights of a shareholder of the Company until the exercise of the option.
If an optionee dies or becomes disabled while employed by the Company, an
option may be exercised, to the extent exercisable at the time of death or
disability, by the optionee or his legatees or personal representatives within
12 months following such event. In all other events of termination of
employment, the option may be exercised after such termination only to the
extent provided in the stock option agreement, but in no event beyond the
earlier of the expiration date of the option or twelve months from the date of
termination.
No option is transferable otherwise than by will or the laws of descent and
distribution. During the lifetime of an optionee, an option is exercisable only
by the optionee.
The following is a brief summary of certain of the Federal income tax
consequences of certain transactions under the 1997 Plan based on Federal income
tax laws in effect on January 1, 1997. This summary is not intended to be
exhaustive and does not describe state or local tax consequences.
In general, (i) no income will be recognized by an optionee at the time a
non-qualified stock option is granted; (ii) at exercise, ordinary income will be
recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares on the
date of exercise; and (iii) at sale, appreciation (or depreciation) after the
date of exercise will be treated as either short-term or long-term capital gain
(or loss) depending on how long the shares have been held.
No income generally will be recognized by an optionee upon the grant or
exercise of an incentive stock option. If stock is issued to the optionee
pursuant to the exercise of an incentive stock option, and if no disqualifying
disposition of such shares is made by such optionee within two years after the
date of grant or within one year after the transfer of such shares to the
optionee, then upon sale of such shares, any amount realized in excess of the
option price will be taxed to the optionee as a long-term capital gain and any
loss sustained will be a long-term capital loss.
13
<PAGE> 16
If stock acquired upon the exercise of an incentive stock option is
disposed of prior to the expiration of either holding period described above,
the optionee generally will recognize ordinary income in the year of disposition
in an amount equal to the excess (if any) of the fair market value of such
shares at the time of exercise (or, if less, the amount realized on the
disposition of such shares if a sale or exchange) over the option price paid for
such shares. Any further gain (or loss) realized by the participant generally
will be taxed as short-term or long-term capital gain (or loss) depending on the
holding period.
To the extent that an optionee recognizes ordinary income in the
circumstances described above, the Company will be entitled to a corresponding
deduction, provided, among other things, that such income meets the test of
reasonableness, is an ordinary and necessary business expense, is not disallowed
under the $1 million limitation on certain executive compensation, and is not an
"excess parachute payment" under the Internal Revenue Code.
The Board of Directors recommends that the holders of Class B Common Stock
approve the following resolution:
WHEREAS, the Board of Directors has, on August 25, 1997, adopted the
Thomaston Mills, Inc. 1997 Stock Option Plan, IT IS HEREBY RESOLVED, that the
action of said Board and the adoption of the Thomaston Mills, Inc. 1997 Stock
Option Plan is hereby approved, ratified and confirmed.
Approval of the Plan requires the affirmative vote of the holders of at
least a majority of the shares of Class B Common Stock represented at the
meeting.
APPROVAL OF SELECTION OF INDEPENDENT AUDITORS (PROXY ITEM 3)
The Board of Directors of the Company has selected Ernst & Young LLP,
certified public accountants, to serve as independent auditors for the ensuing
fiscal year, subject to ratification by the Company's shareholders.
A representative of Ernst & Young LLP is expected to be present at the
shareholders' meeting and have the opportunity to make a statement if he so
desires. Such representative will be available to respond to appropriate
questions.
Except in its capacity as independent auditors, Ernst & Young LLP has no
direct or indirect financial interest in the Company and has not had any such
interest during the past three years.
The Audit Committee of the Board of Directors approved all of the non-audit
services provided by Ernst & Young LLP and believes they have no effect on audit
independence.
SHAREHOLDERS ENTITLED TO VOTE AND VOTE REQUIRED FOR ACTION
Only shareholders of record of Class B Common Stock at the close of
business on August 21,1997 will be entitled to vote at the meeting. Each
shareholder of record on the record date is entitled to one vote for each share
of Class B Common Stock of the Company held by him. With respect to each of the
proposals to be presented at the Annual Meeting of Shareholders and with respect
to the election of the eleven nominees for director, a majority of the votes
represented at the meeting will be required for approval. Under the Company's
Bylaws, properly executed proxies either marked "abstain" or held in "street
name" by brokers that are not voted on one or more particular matters (if
otherwise voted on at least one matter) will be counted for purposes of
determining whether a quorum has been achieved at the Annual Meeting but will
not be
14
<PAGE> 17
treated as either a vote for or a vote against any of the matters to which such
abstention or broker non-vote applies.
The Company has 4,909,630 shares of Class A Common Stock outstanding as of
August 21, 1997. The Class A Common Stock has no voting rights except as may
otherwise be required by law. No action involving such voting rights is expected
to be proposed at the Annual Meeting to be held on October 2, 1997.
SHAREHOLDERS' PROPOSALS
Shareholders' proposals intended for inclusion in next year's proxy
statement should be sent to the Secretary of the Company, P.O. Box 311,
Thomaston, Georgia 30286 and must be received by April 28, 1998.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The management does not know of any matter other than those referred to in
the accompanying notice of the Annual Meeting of Shareholders which is to come
before the meeting. As to any other matters or proposals that may legally come
before the meeting, it is the intention of the persons named as attorneys in the
proxy to vote said proxy in accordance with their best judgment.
THE DIRECTORS AND MANAGEMENT RECOMMEND A VOTE FOR THE ELECTION OF THE
ELEVEN NOMINEES AS DIRECTORS; FOR APPROVAL OF THE 1997 STOCK OPTION PLAN; AND
FOR RATIFYING THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE
COMPANY.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY.
15
<PAGE> 18
ANNEX A
THOMASTON MILLS, INC.
1997 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the following terms have the meanings
hereinafter set forth unless the contract clearly indicates to the contrary:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a Committee designated by the Board, each
member of which shall be a "disinterested person" within the meaning of
Rule 16b-3 (or any successor rule or regulation) promulgated under the
Securities Exchange Act of 1934, as amended.
(d) "Common Stock" shall mean either the Class "A" common stock of the
Company, par value $1.00, the Class "B" common stock of the Company, par
value $1.00, or both, as the context may require.
(e) "Company" shall mean Thomaston Mills, Inc., a Georgia corporation.
(f) "Disabled Person" shall mean an employee of the Company who, as
determined by a licensed physician acceptable to the Committee and
evidenced by a certificate to the Company, is completely unable to engage
in his regular occupation or service to the Company; provided, however,
that the determination of the Committee in its sole discretion as to the
classification of an employee as a Disabled Person shall be final.
(g) "Fair Market Value" shall mean the fair market value of the Stock
as determined by the Committee for the date in question. If at the date any
such Option is granted, a public market shall exist for the Shares but such
Shares are not trading on a national securities exchange in the United
States, then, if the Shares are listed on the National Market List by the
National Association of Securities Dealers, Inc. (the "NASD"), the fair
market value per Share shall not be less than the last sale price for such
Shares reflected on said market list for the date of the granting of such
Option, and if the Shares are not listed on the National Market List of the
NASD, then the fair market value per Share shall be not less than one
hundred percent (100%) of the mean between the bid and asked quotations in
the over-the-counter market for such Shares on the date of the granting of
such Option. If there is no bid and asked quotation for such Shares on the
date of the granting of such Option, the fair market value per Share shall
be not less than one hundred percent (100%) of the mean between the bid and
asked quotations in the over-the-counter market for such Shares on the
closest date preceding said date. If the Shares are trading on a national
securities exchange in the United States on the date of the granting of
such Option, the fair market value per Share shall be not less than one
hundred percent (100%) of the mean between the high and low prices at which
the Shares shall have been sold on such national securities exchange on the
date of the granting of such Option. If the Shares are trading on a
national securities exchange in the United States on the date of the
granting of the Option but no sales of Shares occurred thereon on the date
of the granting of the Option, the fair market value per Share shall be not
less than one hundred percent (100%) of the mean between the high and low
prices for such Shares on the closest date preceding the said date
A-1
<PAGE> 19
of the granting of the Option. If the Shares are traded on more than one
national securities exchange in the United States on the date of the
granting of such Option, the Committee shall determine the principal
national securities exchange for the purpose of determining the fair market
value per Share.
(h) "Incentive Stock Option" shall mean an option to purchase any
stock of the Company or any of its Subsidiaries which complies with and is
subject to the terms, limitations, and conditions of Section 422 of the
Code and any regulations promulgated with respect thereto.
(i) "Nonstatutory Stock Option" shall mean an option to purchase any
stock of the Company or any of its Subsidiaries which does not qualify for
treatment as an Incentive Stock Option under Section 422 of the Code.
(j) "Option" shall mean either an Incentive Stock Option or a
Nonstatutory Stock Option, granted pursuant to the provisions of Article VI
hereof.
(k) "Optionee" shall mean a person to whom an Option has been granted
hereunder.
(l) "Plan" shall mean the Thomaston Mills, Inc. 1997 Stock Option
Plan, the terms of which are set forth herein.
(m) "Predecessor" shall mean any corporation coming within the
definition of the term "predecessor corporation" contained in Treasury
Regulations promulgated under Section 422 of the Code.
(n) "Stock" or "Shares" shall mean the Common Stock of the Company or,
in the event that the outstanding shares are of a different stock or
securities of the Company or some other corporation, such other stock or
securities.
(o) "Stock Option Agreement" shall mean a written document evidencing
a Stock Option grant by the Company to the Optionee under which the
Optionee may purchase Stock under the Plan.
(p) "Subsidiary" shall mean any corporation coming within the
definition of the term "subsidiary corporation" contained in Section 424(f)
of the Code.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "Thomaston Mills, Inc. 1997
Stock Option Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its Subsidiaries and its shareholders by affording selected employees
of the Company and its subsidiaries an opportunity to acquire or increase their
proprietary interests in the Company by granting such persons Options to
purchase Stock in the Company, so that Optionees will be provided with an
incentive to achieve the Company's objectives through participation in its
success and growth, and so that Optionees will be encouraged to continue their
employment with or service to the Company or its Subsidiaries.
2.3 Effective Date. The Plan shall become effective on August 25, 1997,
provided, however, that if the Plan is not approved by the holders of a majority
of the shares of Stock of the Company represented at a meeting and entitled to
vote thereon within twelve (12) months before or after the date on which the
Plan is adopted by the Board, the Plan and any Options granted thereunder shall
terminate and become null and void.
A-2
<PAGE> 20
2.4 Termination Date. Subject to Section 2.3, the Plan shall terminate and
no further Options shall be granted hereunder upon the tenth (10th) anniversary
of the date on which the Plan is adopted by the Board or the date on which the
Plan is approved by the Company's shareholders, whichever first occurs.
ARTICLE III
PARTICIPANTS
Employees, including, without limitation, executive personnel and other
officers (including, without limitation, officers who are also directors) of the
Company or its Subsidiaries, shall be eligible for selection as participants in
the Plan. Directors who are not employees shall not be eligible for selection as
participants in the Plan. The Committee may grant Options to any eligible
employee as it may determine from time to time, subject to the approved of the
Board.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be administered by
the Committee. The Committee shall keep minutes of its meetings and shall make
such rules and regulations for the conduct of its business as it may deem
necessary. Subject to the express provisions of the Plan, the Committee shall
have the discretion and authority to determine to whom from among the eligible
employees an Option will be granted, the time or times at which each Option may
be exercised, the number of shares of Stock subject to each Option and the terms
and conditions of each Stock Option Agreement. Subject to the express provisions
of the Plan, the grant of an Option by the Committee shall be final, and shall
not be the subject of approval by any other party. Subject to the express
provisions of the Plan, the Committee shall also have complete authority to
interpret the Plan, to prescribe, amend and rescind rules and requirements
relating to it, to determine the details and provisions of each Stock Option
Agreement, and to make all other determinations necessary or advisable in the
administration of the Plan, including, without limitation, the amending or
altering of the Plan and any Options granted hereunder as may be required to
comply or conform to any federal, state, or local laws or regulations. No member
of the Committee shall be liable to any person for any action or determination
made in good faith with respect to the Plan or any Option granted hereunder. The
determination of the Committee on the matters referred to in this Section shall
be conclusive.
4.2 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present or any action taken without a meeting evidenced by a writing
executed by all members of the Committee shall constitute the action of the
Committee.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to adjustments pursuant to the provisions of
Section 5.2 hereof, the maximum number of shares of Class "A" Stock which may be
issued and sold hereunder shall not exceed 263,988 shares and the maximum number
of shares of Class "B" Stock which may be issued and sold hereunder shall not
exceed 79,420 shares. Shares subject to an Option may be either authorized but
unissued shares or shares issued and reacquired by the Company; provided,
however, that shares of Stock with respect to which an
A-3
<PAGE> 21
Option has been exercised shall not again be available for option hereunder. If
outstanding Options granted hereunder shall terminate or expire for any reason
without being wholly exercised, the shares of Stock allocable to any unexercised
portion of such Option may be again subjected to an Option granted under the
Plan.
5.2 Antidilution. In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of merger,
consolidation, reorganization, recapitalization, reclassification, combination
of shares, stock split and reverse split, stock dividend, split-up, split-off,
spin-off, exchange of shares, issuance of rights to subscribe or change in
capital structure:
(a) The aggregate number and kind of shares of Stock on which Options
may be granted hereunder shall be adjusted appropriately; and
(b) The rights under outstanding Options granted hereunder, both as to
the manner of subject shares and the Option price, shall be adjusted
appropriately acting in good faith.
The foregoing adjustments and the manner of application thereof shall be
determined solely by the Committee acting in good faith, and any such adjustment
may provide for the elimination of fractional share interests. Moreover, in the
event of any such transaction or event, the Committee may provide in
substitution for any and all outstanding Options such alternative consideration
as it may in good faith determine to be equitable under the circumstances and
may require in connection therewith the surrender of all Options so replaced.
The adjustments required under this Article shall apply to any successor or
successors of the Company and shall be made regardless of the number or type of
successive events requiring adjustments hereunder.
In the event of dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving corporation (except a merger
or combination with a corporation wholly owned or controlled by the Company or
its stockholders), if the Committee does not exercise its discretion to provide
alternative consideration to Optionees pursuant to the preceding paragraph of
this Section 5.2, each outstanding Option granted hereunder shall terminate, but
the Optionee shall have the right, immediately prior to such dissolution,
liquidation, merger or combination to exercise his Option, in whole or in part,
to the extent that it shall not have been exercised, without regard to any
installment vesting or exercise provisions.
ARTICLE VI
OPTIONS
6.1 Option Grant. Each Option granted hereunder shall be evidenced by
minutes of a meeting or the written consent of the Committee, and by a written
document evidencing such Stock Option grant dated as of the date of grant and
executed by the Company. As to each grant hereunder, the terms of the Option,
including the Option's duration, time or times of exercise, and exercise price
shall be stated in such document (hereinafter referred to as the "Stock Option
Agreement"). The Stock Option Agreement shall clearly identify whether the
Options granted are Incentive Stock Options or Nonstatutory Stock Options. If an
Incentive Stock Option and a Nonstatutory Stock Option are issued together, the
right of the Optionee to exercise or surrender one such Option shall not be
conditioned on his or her surrender of, or failure to exercise, the other
Option. The terms and conditions of the Option shall be consistent with the
Plan. Options may be either for shares of Class A Common Stock or Class B Common
Stock or for shares of both classes.
A-4
<PAGE> 22
6.2 Optionee Limitation. The Committee shall not grant an Incentive Stock
Option to any person if at the time the Incentive Stock Option would be granted,
such person is not an employee of the Company or any of its Subsidiaries.
6.3 Additional Limitations. (a) The Committee shall not grant an Incentive
Stock Option to any person who, at the time the Option would be granted, owns or
is considered to own stock representing ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any of its Subsidiaries;
provided, however, that this limitation shall not apply if at the time an Option
would be granted, the Option price is at least one hundred ten percent (110%) of
the Fair Market Value of the Stock subject to the Option and such Option by its
terms would not be exercisable after five (5) years from the date on which the
Option is granted. For purposes of the immediately preceding sentence, a person
shall be considered to own (i) the stock owned directly or indirectly, by or for
his brothers and sisters (whether by the whole or half blood), spouse, ancestors
and lineal descendents; and (ii) the stock owned, directly or indirectly, by or
for a corporation, partnership, estate, or trust in proportion to such person's
stock interest, partnership interest or beneficial interest therein.
(b) To the extent that the aggregate Fair Market Value of Stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company) exceeds $100,000, such
options shall be treated as Nonstatutory Stock Options. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 6.3(b), the Fair
Market Value of Stock shall be determined as of the time the Option with respect
to such Stock is granted.
(c) Notwithstanding any other provision of the Plan, the maximum number of
Shares for which Options may be granted in the aggregate to any one Optionee
under the Plan in any calendar year shall not exceed 88,000 shares of Class "A"
Common Stock and 27,000 shares of Class "B" Common Stock.
6.4 Option Price. The per share Option Price of the Stock subject to each
Incentive Stock Option shall be equal to the Fair Market Value of the Stock on
the date the Option is granted. The per share Option Price of the Stock subject
to each Nonstatutory Stock Option shall be equal to the Fair Market Value of the
Stock on the date the Option is granted.
6.5 Exercise Period. The period of the exercise of such Option shall be
determined by the Committee, but in no instance shall the exercise period for an
Incentive Stock Option exceed ten (10) years from the date of the grant of the
Option. The Committee shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, rights to exercise any
Option granted hereunder.
6.6 Option Exercise. Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Committee
and reflected in the Stock Option Agreement. The Committee shall have the
authority in its sole discretion to prescribe in any Stock Option Agreement that
the Option may be exercised in installments during the term of the Option.
(a) An Option may be exercised at any time or from time to time during
the term of the Option as to any or all full shares which have become
purchasable under the provisions of the Option, but not at any time as to
fewer than twenty-five (25) shares. The Option price is to be paid in full
in cash upon the exercise of the Option and the Company shall not be
required to deliver certificates for such shares until such payment has
been made; provided, however, that in lieu of cash, an Optionee may, to the
extent permitted by the Stock Option Agreement at the date of grant,
exercise his Option in whole or in part, by
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tendering to the Company shares of Stock owned by him and having a Fair
Market Value equal to the Option price applicable to his Option, or a
combination of cash and said shares. The holder of an Option shall not have
any of the rights of a stockholder with respect to the shares of Stock
subject to the Option until such shares have been issued or transferred to
him upon the exercise of his Option.
(b) An Option shall be exercised by written notice of exercise of the
Option with respect to a specified number of shares of Stock delivered to
the Company at its principal office, together with payment in full to the
Company in accordance with Section 6.6(a) at its principal office of the
amount of the Option price for the number of shares of Stock with respect
to which the Option is then being exercised. In addition to and at the time
of payment of the Option price, the Optionee shall pay to the Company in
cash the full amount of any federal and state withholding or other
employment taxes required by any government to be withheld or otherwise
deducted and paid by the Company in respect of such exercise or
disposition. In lieu thereof, at the discretion of the Company, the Company
shall have the right to withhold the amount of such taxes from any other
sums due or to become due from the Company to the Optionee, upon such terms
and conditions as the Committee shall prescribe.
6.7 Nontransferability of Option. No Option shall be transferred by an
Optionee otherwise than by will or the laws of descent and distribution. During
the lifetime of an Optionee, his Option shall be exercisable only by him.
6.8 Termination of Service. Except as otherwise provided in Section 6.9
hereof, in the event of termination of the employment of an Optionee by the
Company (or, if applicable, a Subsidiary of the Company) for any reason,
including retirement, any Option held by him to the extent not theretofore
exercised, shall forthwith terminate unless the Committee, in its sole
discretion, provides in the Stock Option Agreement that the Option shall be
exercisable after such termination (but only to the extent of the number of
shares with respect to which the Option may be exercised at the date of his
termination of employment), and, provided further, that in no event shall any
Stock Option Agreement provide for the extension of the period during which the
Option may be exercised beyond earlier of (i) the expiration of the period of
exercisability of such Option as specified in the Stock Option Agreement, or
(ii) twelve (12) months from the date of termination.
A termination of employment shall not be deemed to occur by reason of (i)
transfer of an employee from employment by the Company to employment by a
Subsidiary or (ii) transfer of an employee by a Subsidiary of the Company to
employment by the Company or another Subsidiary of the Company. Nothing in the
Plan or in any Option shall confer on any person any right to continue in the
employ of the Company or any of its Subsidiaries, or the right to continue to
serve as a director of the Company, or shall interfere in any way with any right
the Company or any of its Subsidiaries may have to terminate his employment or
his service as a director at any time.
6.9 Death or Disability of Holder of Option. In the event any person dies
or becomes a Disabled Person while he is an employee of the Company, any Option
granted pursuant to the Plan held by him may be exercised (but only to the
extent of the number of shares with respect to which the Option may be exercised
at the time of his disability or death) by him or his legatee or legatees under
his will, or by his personal representative or distributees, within twelve (12)
months following the date of his termination of employment due to his disability
or death, or such shorter period as may be specified in the Stock Option
Agreement, but in no such event after the expiration of the period of
exercisability of such Option as specified in the Stock Option Agreement.
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<PAGE> 24
If an Option granted hereunder shall be exercised by the legal
representative of a deceased, disabled or former employee or by a person who
acquired an Option granted hereunder by bequest or inheritance or by reason of
the death or disability of any employee or former employee, written notice of
such exercise shall be accompanied by a certified copy of letters testamentary
or equivalent proof of the right of such legal representative or other person to
exercise such Option.
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, prior to fulfillment of all of the foregoing conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any federal or state law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall in its discretion deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance from any federal
or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable.
ARTICLE VIII
PURCHASE FOR INVESTMENT
Except as hereafter provided, the Board may require as a condition of
issuance of any Shares pursuant to this Plan that the holder of an Option
granted hereunder shall, upon any exercise thereof, execute and deliver to the
Company a written statement, in form satisfactory to the Company, in which such
holder represents and warrants that such holder is purchasing or acquiring the
Shares acquired thereunder for such holder's own account, for investment only
and not with a view to the resale or distribution thereof, and agrees that any
subsequent resale or distribution of any such Shares shall be made only pursuant
to either (a) a Registration Statement on the appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), which Registration
Statement has become effective and is current with regard to the Shares being
sold, or (b) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption the holder shall, prior to any
sale or offer of sale of such Shares, if required by the Company, obtain a prior
favorable written opinion, in form and substance satisfactory to the Company,
from counsel for or approved by the Company, as to the application of such
exemption thereto. The foregoing restriction shall not apply to issuances by the
Company so long as the Shares being issued are registered under the Securities
Act and a prospectus in respect thereof is current.
ARTICLE IX
LEGENDS
The Company may endorse such legend or legends upon the certificates for
Shares issued upon exercise of an Option granted hereunder, and the Committee
may issue such "stop transfer" instructions to its transfer
A-7
<PAGE> 25
agent in respect of such Shares, as the Committee, in its discretion, determines
to be necessary or appropriate to (i) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, (ii)
implement the provisions of any agreement between the Company and the Optionee
or grantee with respect to such Shares, or (iii) permit the Company to determine
the occurrence of a disqualifying disposition, as described in Section 421(b) of
the Code, of Shares transferred upon the exercise of an Incentive Stock Option
granted under the Plan.
ARTICLE X
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the Committee and
notwithstanding Section 2.4 hereof, terminate the Plan, and may at any time and
from time to time and in any respect amend or modify the Plan; provided, however
that the Board, without approval of the shareholders of the Company, may not
adopt any amendment to the Plan if the amendment would:
(a) Increase the total number of shares of Stock which may be issued
pursuant to the Plan except as contemplated in Section 5.2 hereof;
(b) Materially increase the benefits accruing to participants in the
Plan; or
(c) Materially modify the requirements as to the eligibility for
participation in the Plan.
Except as set forth in Section 5.2, the Board shall not terminate, amend or
modify the Plan in any manner so as to affect the price of the shares of Stock
purchasable pursuant to any Option theretofore granted under the Plan without
the consent of the Optionee or transferee of the Option.
ARTICLE XI
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option, incentive
or other compensation plans in effect for the Company or any of its
Subsidiaries, nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other forms of incentive or other
compensation for employees of such corporations.
ARTICLE XII
MISCELLANEOUS
12.1 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
12.2 Number and Gender. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the female gender.
12.3 Headings. Headings of articles and paragraphs hereof are inserted for
convenience and reference only and constitute no part of the Plan.
12.4 Applicable Law. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Georgia.
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<PAGE> 26
APPENDIX
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
----------------------------------------
THOMASTON MILLS, INC.
----------------------------------------
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
-----------------------
Shareholder sign here Co-owner sign here
------------------- --------------
DETACH CARD
<TABLE>
<S> <C> <C> <C> <C>
For All With- For All
1. Election of Directors. Nominees hold Except
THOMAS D. ADAMS, JR. ROSSER R. RAINES / / / / / /
C. RONALD BARFIELD NEIL H. HIGHTOWER
H. STEWART DAVIS GEORGE H. HIGHTOWER, JR.
WILLIAM H. HIGHTOWER, JR. DR. JERRY M. WILLIAMSON
GEORGE H. HIGHTOWER DOM H. WYANT
ARCHIE H. DAVIS
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s')
name(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. To approve the 1997 Stock Option Plan. / / / / / /
3. To approve the selection of Ernst & Young LLP as the
independent auditors of the corporation. / / / / / /
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Mark box at right if an address change or comment has been noted on the
reverse side of this card. / /
DETACH CARD
</TABLE>
<PAGE> 27
THOMASTON MILLS, INC.
115 EAST MAIN STREET
P.O. BOX 311, THOMASTON, GEORGIA 30286
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Neil H. Hightower and George H. Hightower, Sr.
as Proxies, or either of them, each with full power of substitution, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Class B Stock of Thomaston Mills, Inc. held of record by the undersigned on
August 21, 1997 at the annual meeting of shareholders to be held on October 2,
1997 or any adjournment thereof, at the Employee Relations Office, 207 East
Gordon Street, Thomaston, Georgia 30286.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH PROPOSAL.
MANAGEMENT RECOMMENDS A VOTE FOR ALL PROPOSALS.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the reverse side of this card.
When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, admnistrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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