SC 13D for Paul K. Frierson

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, URLe9QiJHhsTQ6Fp0ETYL7Wb6tGKQ6wxpI0PpVmjIzYzCZe4YvktD1Er+QhL9c4N a3+wnLBOKJWJ+VZeIoDGOg== 0000931763-03-000053.txt : 20030114 0000931763-03-000053.hdr.sgml : 20030114 20030110134612 ACCESSION NUMBER: 0000931763-03-000053 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20030110 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DIXIE GROUP INC CENTRAL INDEX KEY: 0000029332 STANDARD INDUSTRIAL CLASSIFICATION: CARPETS AND RUGS [2273] IRS NUMBER: 620183370 STATE OF INCORPORATION: TN FISCAL YEAR END: 1225 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-10155 FILM NUMBER: 03510339 BUSINESS ADDRESS: STREET 1: P O BOX 12542 CITY: CALHOUN STATE: GA ZIP: 307037010 BUSINESS PHONE: 7066257980 MAIL ADDRESS: STREET 1: P O BOX 12542 CITY: CALHOUN STATE: GA ZIP: 307037010 FORMER COMPANY: FORMER CONFORMED NAME: DIXIE MERCERIZING CO DATE OF NAME CHANGE: 19670524 FORMER COMPANY: FORMER CONFORMED NAME: DIXIE YARNS INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FRIERSON PAUL K CENTRAL INDEX KEY: 0001196584 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 736 MARKET ST STREET 2: STE 1100 CITY: CHATTANOOGA STATE: TN ZIP: 37402 BUSINESS PHONE: 423 265 8881 MAIL ADDRESS: STREET 1: 185 S INDUSTRIAL BLVD CITY: CALHOUND STATE: GA ZIP: 30701 SC 13D 1 dsc13d.htm SC 13D FOR PAUL K. FRIERSON SC 13D for Paul K. Frierson

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. )*

THE DIXIE GROUP, INC.

(Name of Issuer)

Common Stock, Par Value $3.00 Per Share

(Title of Class of Securities)

255579-10-4

(CUSIP Number)

John F. Henry, Jr.

Shumacker Witt Gaither & Whitaker, P.C.

Suite 1100, 736 Market Street

Chattanooga, TN 37402

423-425-7000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

January 1, 2003

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

SCHEDULE 13D

CUSIP NO. 255579-10-4

PAGE 2 OF 9 PAGES


1.	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY). Paul K. Frierson

2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP	(A) ¨ (B) x

3.	SEC USE ONLY

4.	SOURCE OF FUNDS (See Instructions)

5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)	¨

6.	CITIZENSHIP OR PLACE OF ORGANIZATION United States of America

NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7. SOLE VOTING POWER 127,154 8. SHARED VOTING POWER 449,427 9. SOLE DISPOSITIVE POWER 221,223 10. SHARED DISPOSITIVE POWER 243,956

11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 576,581

12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)	¨

13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.04%

14.	TYPE OF REPORTING PERSON IN

Item 1. Security and Issuer.

This Statement on Schedule 13D (the “Statement”) relates to the Common Stock, par value $3.00 per share (the “Common Stock”), of The Dixie Group, Inc., a Tennessee corporation (the “Issuer”), the principal executive offices of which are located at 345-B Nowlin Lane, Chattanooga, Tennessee 37421.

Item 2. Identity and Background.

(a) Paul K. Frierson.

(b) 185 South Industrial Boulevard, Calhoun, Georgia 30701.

(c) Director and Vice President of The Dixie Group, Inc., a manufacturer and marketer of floorcovering products headquartered at 345-B Nowlin Lane, Chattanooga, Tennessee 37421, and President of The Dixie Group, Inc.’s Candlewick Yarns subsidiary.

(d) Mr. Frierson has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) Mr. Frierson has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws.

(f) Mr. Frierson is a citizen of the United States of America.

Item 3. Source and Amount of Funds or Other Consideration.

Not Applicable.

Item 4. Purpose of Transaction.

On January 1, 2003, options to purchase 14,367 shares of Common Stock, which were issued to Mr. Frierson on May 2, 2002 under the Issuer’s Stock Incentive Plan became exercisable. As a result of such options becoming exercisable, Mr. Frierson’s beneficial ownership of Common Stock crossed the reporting threshold for purposes of Section 13(d) of the Act.

Mr. Frierson does not have any present plans or proposals that relate to or would result in the following: the acquisition of additional securities of the Issuer or the disposition of securities of the Issuer (other than as a participant in the Issuer’s equity

compensation plans for its senior executives in his capacity as Vice President of the Issuer); an extraordinary corporate transaction, such as a merger, reorganization or liquidation involving the Issuer or any of its subsidiaries; a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any vacancies on the board; any material change in the present capitalization or dividend policy of the Issuer; any other material change in the Issuer’s business or corporate structure; changes in the Issuer’s charter or by-laws or other actions that might impede the acquisition of control of the Issuer; causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; causing a class of equity securities of the Issuer to be eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or any other similar action. Notwithstanding the foregoing, any of the preceding actions may be, from time to time, proposed to and acted upon by the board of directors of the Issuer, of which Mr. Frierson is a member, in the normal course of the Issuer’s business. Thus, in the normal course of discharging his duties as a director or as Vice President of the Issuer, and in his capacity as such, Mr. Frierson may be required to consider or review any such plans or proposals.

Item 5. Interest in Securities of the Issuer.

(a) As of the date hereof, Mr. Frierson is deemed to be the beneficial owner (pursuant to Rule 13d-3) of an aggregate of 576,581 shares of Common Stock¹ constituting

¹ Such 576,581 shares of Common Stock consist of: (i) 127,154 shares of Common Stock as to which Mr. Frierson has sole investment and sole voting power, consisting of (A) 48,453 shares of Common Stock owned directly by Mr. Frierson, (B) 43,357 shares of Common Stock for which Mr. Frierson has subscribed pursuant to the Company’s Stock Ownership Plan for Senior Executives, (C) options, which are exercisable within 60 days of the date hereof, to purchase 33,734 shares of Common Stock, and (D) 1,610 shares of Common Stock allocated to Mr. Frierson’s account in The Dixie Group, Inc. 401(k) Retirement Savings Plan (the “401(k) Plan”); (ii) 27,430 shares of Common Stock held by Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson, as co-trustees of charitable remainder trusts formed by Rowena K. Frierson; (iii) 6,080 shares of Common Stock owned by the wife of Mr. Frierson and as to which he shares voting and investment power; (iv) 39,402 shares of Common Stock owned by the children of Mr. Frierson and as to which he shares voting power; (v) 3 shares of Common Stock held by the Estate of Rowena K. Frierson, of which Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson are co-executors; and (vi) the deemed conversion of (A) 94,069 shares of Class B Common Stock, which are convertible on a share-for-share basis into shares of Common Stock, held directly by Mr. Frierson, which shares are subject to the Shareholder Agreement discussed in Item 6 hereof, (B) 72,000 shares of Class B Common Stock owned by the children of Mr.

approximately 5.04% of the 11,426,585 shares of Common Stock² that were outstanding as of December 31, 2002, as reported by the Issuer to Mr. Frierson. Mr. Frierson expressly disclaims beneficial ownership of the 304,512 such shares which may be deemed to result from the conversion of shares of the Issuer’s Class B Common Stock, par value $3.00 per share (the “Class B Common Stock”) held subject to the Shareholder Agreement discussed in Item 6 hereof, because restrictions on transferability and withdrawal imposed by the agreement effectively prohibit such conversion for the duration of the agreement, absent the consent of the parties.

(b) Mr. Frierson has the sole power to vote and dispose of 127,154 of the shares of Common Stock for which beneficial ownership is reported.³

Mr. Frierson has the sole power to dispose of 94,069 shares of Class B Common stock held directly by Mr. Frierson and subject to the Shareholder Agreement discussed in Item 6 hereof.

Frierson and as to which he shares voting power, (C) 40,000 shares of Class B Common Stock held by Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson as co-trustees of the Frierson Family Trusts, which shares are subject to the Shareholder Agreement discussed in Item 6 hereof, (D) 45,304 shares of Class B Common Stock held by Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson as co-trustees of the Special Purpose Trust of J. Burton Frierson, which shares are subject to the Shareholder Agreement discussed in Item 6 hereof, and (E) 125,134 shares of Class B Common Stock held by the Estate of Rowena K. Frierson, of which Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson are co-executors, which shares are subject to the Shareholder Agreement discussed in Item 6 hereof.

² 487,737 shares of Common Stock are added to the 10,972,982 shares of Common Stock reported by the Issuer to Mr. Frierson as outstanding as of December 31, 2002, to reflect (i) the assumed conversion of the 376,512 shares of Class B Common Stock, which are held as described in Footnote 1 hereof, (ii) the assumed exercise of options, which are exercisable within 60 days of the date hereof, to purchase 33,734 shares of Common Stock, and (iii) the assumed settlement of subscriptions covering 43,357 shares of Common Stock. As stated in Item 5(a), Mr. Frierson expressly disclaims beneficial ownership of the 304,512 shares of Common Stock which would result from the conversion of shares of Class B Common Stock held subject to the Shareholder Agreement discussed in Item 6 hereof.

³ Consists of (i) 48,453 shares of Common Stock owned directly by Mr. Frierson, (ii) 43,357 shares of Common Stock for which Mr. Frierson has subscribed pursuant to the Issuer’s Stock Ownership Plan, (iii) options, which are exercisable within 60 days of the date hereof, to purchase 33,734 shares of Common Stock, and (iv) 1,610 shares of Common Stock allocated to Mr. Frierson’s account in the 401(k) Plan.

Mr. Frierson shares the power to vote and dispose of 243,956 of the shares of Common Stock for which beneficial ownership is reported.

Mr. Frierson shares the power to vote and dispose of 27,430 shares of Common Stock held by Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson, as co-trustees of charitable remainder trusts formed by Rowena K. Frierson. Daniel K. Frierson’s address is 345-B Nowlin Lane, Chattanooga, Tennessee 37421. He is Chairman of the Board and Chief Executive Officer of the Issuer. T. Cartter Frierson’s address is 4939 Scenic Highway, Rising Fawn, Georgia 30738. He is President of TCF Consulting Group, LLC, a management consulting firm.

Mr. Frierson also shares the power to vote and dispose of 3 shares of Common Stock and 125,139 shares of Class B Common Stock held by the Estate of Rowena K. Frierson, of which Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson are co-executors. As stated in Item 5(a) hereof, Mr. Frierson expressly disclaims beneficial ownership of the 125,139 shares of Common Stock which would be deemed to result from the conversion of these shares of Class B Common Stock which are subject to the Shareholder Agreement.

Mr. Frierson also shares the power to vote and dispose of 6,080 shares of Common Stock owned by his wife (Maureen K. Frierson). Her address is 141 Brow Lake Road, Lookout Mountain, Georgia 30750.

Mr. Frierson also shares the power to vote and dispose of 40,000 shares of Class B Common Stock held by Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson as co-trustees of the Frierson Family Trusts. As stated in Item 5(a) hereof, Mr. Frierson expressly disclaims beneficial ownership of the 40,000 shares of Common Stock which would result from the conversion of these shares of Class B Common Stock which are subject to the Shareholder Agreement.

Mr. Frierson also shares the power to vote and to dispose of 45,304 shares of Class B Common Stock held by Mr. Frierson, Daniel K. Frierson, and T. Cartter Frierson as co-trustees of the Special Purpose Trust of J. Burton Frierson. As stated in Item 5(a) hereof, Mr. Frierson expressly disclaims beneficial ownership of the 45,304 shares of Common Stock which would result from the conversion of these shares of Class B Common Stock which are subject to the Shareholder Agreement.

Mr. Frierson shares the power to vote 39,402 shares of Common Stock and 72,000 shares of Class B Common Stock owned by his children (C. Kelly Frierson, Paul K. Frierson, Jr., Christina Marie Frierson, and John Sullivan Frierson). Their address for purposes of this filing is 141 Brow Lake Road, Lookout Mountain, Georgia 30750.

Mr. Frierson also shares the power to vote 94,069 shares of Class B Common Stock held directly by Mr. Frierson and subject to the Shareholder Agreement discussed in Item 6 hereof.

None of the aforementioned individuals have, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws. All of the aforementioned individuals are citizens of the United States of America.

(c) On January 1, 2003, options to purchase 14,367 shares of Common Stock, which were issued to Mr. Frierson on May 2, 2002, under the Issuer’s Stock Incentive Plan, became exercisable. Additionally, on November 2, 2002, options to purchase 14,367 shares of Common Stock, which were issued to Mr. Frierson on May 2, 2002, under the Issuer’s Stock Incentive Plan became exercisable.

(d) See Item 5(b).

(e) Not applicable.

Item

6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Of the 376,512 shares of Class B Common Stock beneficially owned by Mr. Frierson, 304,512 are subject to a shareholder agreement (the “Shareholder Agreement”). Pursuant to the terms of the Shareholder Agreement, Daniel K. Frierson has been granted a proxy, which expires October 2005, to vote all such shares. The proxy is terminable under certain limited circumstances prescribed in the Shareholder Agreement. The Shareholder Agreement also places certain restrictions on the transfer or withdrawal of shares of Class B Common Stock held by the parties thereto, effectively preventing the conversion of shares held pursuant to the Shareholder Agreement into shares of Common Stock for the duration of the agreement, absent the consent of the parties. Accordingly, Mr. Frierson has expressly disclaimed beneficial ownership of any shares of Common Stock which would result from the conversion of shares of Class B Common Stock which are currently held subject to the Shareholder Agreement.

The participating parties to the Shareholder Agreement are the trusts created under the Estate of J. Burton Frierson, the Estate of Rowena K. Frierson (the wife of J. Burton Frierson), and three of the sons of J. Burton and Rowena K. Frierson (Daniel K. Frierson; Paul K. Frierson; and T. Cartter Frierson).

Item 7. Material to be Filed as Exhibits.

Dixie Yarns, Inc. Class B Common Stock Shareholders Agreement, as amended to date.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


s/ Paul K. Frierson
Paul K. Frierson

Date: January 9, 2003

EX-99.1 3 dex991.htm COMMON STOCK STOCKHOLDERS AGREEMENT Common Stock Stockholders Agreement

EXHIBIT 99.1

RENEWAL OF DIXIE YARNS, INC.

CLASS B COMMON STOCK STOCKHOLDERS AGREEMENT

WHEREAS, the Undersigned entered into the Dixie Yarns, Inc. Class B Common Stock Shareholders Agreement (the “Shareholders Agreement”) on October 10, 1985; and

WHEREAS, the Shareholders Agreement was effective October 11, 1985; and

WHEREAS, pursuant to Article - III(1) the Shareholders Agreement has a duration of ten (10) years; and

WHEREAS, the Undersigned are of the opinion that it is in their mutual best interest to extend the duration of the Shareholders Agreement; and

WHEREAS, Article - III(2) provides that the Shareholders Agreement may be extended by written consent of the parties;

NOW, THEREFORE, in consideration of the premises and the authority of TCA 48-17-302, the Undersigned, intending to be legally bound, hereby extend the Shareholders Agreement for a period of ten (10) years from October 11, 1995 unless said Shareholders Agreement is otherwise terminated pursuant to its terms. With the exception of extending the duration of the Shareholders Agreement, the Undersigned hereby restate and affirm the Shareholders Agreement in its entirety.

EFFECTIVE this 19th day of June, 1995.

/s/ Rowena K. Frierson

Rowena K. Frierson

/s/ J. Burton Frierson, III

J. Burton Frierson, III

/s/ James W. Frierson

James W. Frierson

/s/ Paul K. Frierson

Paul K. Frierson, Individually and as co-executor

of the Estate of J. Burton Frierson, Jr.

/s/ T. Cartter Frierson

T. Cartter Frierson, Individually and as co-executor

of the Estate of J. Burton Frierson, Jr.

/s/ Daniel K. Frierson

Daniel K. Frierson, Individually and as co-executor

of the Estate of J. Burton Frierson, Jr.

DIXIE YARNS, INC

CLASS B COMMON STOCK SHAREHOLDERS AGREEMENT

(10-11-85)

I. PURPOSE. The economic climate today, particularly in the depressed textile industry, is dominated by corporate takeover potential playing a major role in the corporate environment. Uncertainty as to the future stability of an enterprise is prevalent resulting in a negative impact upon the operations and performance of many publicly held companies.

Participants and Proxies believe that well established relationships among Dixie Yarns, Inc., (Dixie) its key management group, employees, customers, suppliers and financial lenders are founded upon a sense of future continuity and past proven performance. These relationships are unique and valuable especially when the textile industry is threatened by foreign competition and takeover rumors. An ongoing atmosphere of uncertainty would be detrimental to the economic well-being of Dixie and would impair its ability to continue to make progress for the benefit of its shareholders and employees.

To provide continuity in management requires unity of purpose among controlling shareholders. A unified voice growing out of common purposes, will enable management to avoid a defensive posture and to concentrate its efforts on competitive conditions. Plans for long term growth and development of Dixie, including possible diversification, can be given full attention.

This Agreement is designed to accomplish these purposes. Therefore, the Participants, in consideration of their mutual promises and other valuable consideration, do agree to and with each other as follows:

II PROCEDURE. J. Burton Frierson, Rowena K. Frierson and their sons, Burton, Paul, Cartter, Dan and James are the only holders of Class B Common Stock (Class B Stock) initially eligible to participate. Those who agree to participate in the Shareholders’ Agreement (“Agreement”) (“Participants”) shall deposit all of their Class B Common Stock with the Initial Proxies, as hereinafter defined. All Participants will execute a proxy to the Initial Proxies (as hereinafter defined) in the form attached to this Agreement as Exhibit A.

Certificates representing shares of all Class B Stock to be subject to this Agreement shall be deposited with the Initial Proxies for safe keeping and in order to insure that such shares remain subject to the Agreement. The Initial Proxies will issue written receipts to the Participants for certificates received.

Dividends declared and paid on the Class B Stock held subject to this Agreement (other than stock dividends, stock splits, and newly issued shares of Class B Stock) shall be paid directly to the Participants by Dixie. Proxy forms received by Participants from Dixie shall be signed in blank and forwarded to the Initial Proxies then exercising the voting rights of the Class B Stock under this Agreement. Each Participant shall forward to Dixie a letter advising Dixie of

the execution of this Agreement, such letter to be in the form attached hereto as Exhibit B. Participants agree to take any and all necessary steps to allow the Initial Proxies to perform their other duties under this Agreement. The Proxies will be irrevocable for a period of ten years from the date hereof except as provided otherwise herein.

The rights of the Initial Proxies shall be limited specifically as are forth in the Agreement (Article IV).

III. DURATION OF THE AGREEMENT.

(1) This Agreement shall continue for a period of ten (10) years, at which time it and the proxies issued in accordance herewith shall automatically terminate. This Agreement may be terminated, altered or amended at any time by the written consent of three-fourths (3/4) of the original Participants then participating and the legal representative or designee of any deceased Participant with such voting being pursuant to Article X. Any proxies issued pursuant to this Agreement will automatically terminate and become null and void upon the termination of this Agreement.

(2) By written consent, all or any of the Participants and the legal representative or designee of a deceased participant may periodically elect to extend the Agreement with respect to their shares of Class B Stock for such period of time and for such purposes as they deem advisable subject to any legal limitation as to duration. Any such extension shall have no effect upon any Participant who has not elected to extend the trust with respect to their shares.

IV. INITIAL PROXIES – RIGHTS AND DUTIES

(1) The initial Proxies shall be J. Burton Frierson and Daniel K. Frierson (Initial Proxies). They shall have the exclusive right to exercise jointly, either in person or by proxy, all voting rights and powers in respect to all Class B Stock held hereunder and to take part in any corporate or stockholders’ action of any kind whatsoever until they shall cease serving as Initial Proxies or upon termination of this Agreement, whichever shall first occur.

All decisions of the Initial Proxies as to how to vote the Class B Stock held subject to this Agreement must be by unanimous vote. Any disagreement will be resolved by a vote of all the Participants pursuant to Article X.

(2) Upon the death, disability or removal of the Initial Proxies, Burton Frierson, his wife, Rowena K. Frierson, and all of their surviving children shall serve together as alternate Proxies (Alternate Proxies). The Alternate Proxies shall then have the exclusive right to vote jointly all Class B Stock held under this Agreement until its termination. All such decisions of the Alternate Proxies shall be made in the manner set forth in Article X hereof.

In the event of the death of a Participant, the legal representative or sole designee of such decedent shall represent the decedent as an Alternate Proxy who shall participate in any voting required of Alternate Proxies in accordance with the provisions of Article X hereof.

V. SPECIAL CIRCUMSTANCES.

(1) Upon the death, incompetence, resignation or removal of either of the Initial Proxies, Burton and Daniel, the other shall continue to serve as Initial Proxy alone.

(2) Daniel K. Frierson shall serve as Initial Proxy only so long as he shall continue as Chief Executive Officer, or Chairman of the Board of Dixie, or an officer or Director of any parent or successor of Dixie, unless the Participants voting in the manner described in Article X agree to his continuation as Initial Proxy.

(3) Upon the unanimous vote of all original Participants and representatives of deceased original Participants, an Initial Proxy shall be removed. The Initial Proxy being voted upon shall not participate in this decision. The Proxy so involved shall cease to serve as Initial Proxy. Such removal shall not affect either Initial Proxy’s right to serve thereafter as Alternate Proxy hereunder.

(4) It shall be the objective of the Initial Proxies to keep all Participants informed of major events of consequence with respect to Dixie that would materially affect their interests. Their ideas and suggestions may be sought and will be given due consideration in making decisions affecting Dixie. However, the final decision with respect to the vote of the Class B Stock under the Agreement shall reside entirely with the unanimous decision of the Initial Proxies so long as they or either of them continue to serve as such.

VI. TRANSFERABILITY. The Class B Stock held under this Agreement may not be sold, conveyed or transferred except as herein specifically provided for until termination of this Agreement or upon early withdrawal of the Class B Stock as authorized herein. The Class B Stock shall also remain subject to the transferability restrictions set forth in Article Fourth of the Amendment to the Charter of Dixie approved by the Shareholders at its Annual Meeting in April of 1985. Any Class B Stock transferred shall be subject to the transferee executing a document acknowledging and agreeing that the Class B Stock being received shall continue to be held by and be subject to the Agreement. No such transferee or his or her representatives, successors or assigns, other than a fiduciary or sole designee of a deceased Participant, shall be entitled to serve as an Alternate Proxy under this Agreement as a result of the transfer and none of such persons will be entitled to participate in any manner in the decisions respecting the vote of the Class B Stock being held under this Agreement as a result of the transfer unless such designee is then a Participant herein.

When and if Class B Stock held subject to this Agreement is sold or transferred to another Participant such stock shall continue to be held subject to the terms hereof. However, should such stock be transferred to a person not then a Participant in this agreement receipt of

such Stock shall not have the effect of making such person a Participant to this Agreement. Such stock when so acquired shall upon transfer automatically remain subject to the terms of this Agreement.

When and if stock not subject to this Agreement is purchased or otherwise acquired by any Participant such stock shall upon effective transfer become subject to the terms of this Agreement.

When and if upon the death of a Participant Class B Stock is transferred to an executor, trustee or beneficiary of the estate of such Participant, such stock shall continue to be held by the transferee subject to the terms hereof.

A Participant’s interest in the Class B Stock may be pledged as collateral for a loan; however, the pledge of such shares shall be subject to this Agreement, and such right is conditioned upon the lender executing a document acknowledging and agreeing that the stock so pledged shall continue to be held by and be subject to the terms of this Agreement.

VII. EARLY WITHDRAWAL. A Participant may be allowed to withdraw some or all of his Class B Stock held pursuant to the Agreement in the event of personal need or unusual circumstances upon the approval of two-thirds (²/3) in interest of the other Participants. Any withdrawal of Stock held may be conditioned upon the withdrawing Participant agreeing to abide by such terms and conditions as shall be established by the other Participants. The Participants so deciding as provided in Article X may also refuse to allow any withdrawal of Stock, with or without cause.

VIII. EARLY TERMINATION. Upon the death, inability to perform the duties of Initial Proxy, or resignation of both Burton and Daniel this Agreement shall terminate automatically two (2) years thereafter unless it terminates by its terms at an earlier date or sooner termination is approved by a unanimous vote of the Alternate Proxies.

IX. RESIGNATION. Either Initial Proxy may resign at any time upon delivery of a letter of resignation to all the Participants.

X. VOTING BY ALTERNATE PROXIES OR PARTICIPANTS ACTING AS SUCH. All decisions required herein shall be by the majority of the total number of Class B common shares subject to this agreement voting on such decision with each Participant voting the number of shares subject to this Agreement owned by the Participant. Should a gift occur of such shares to a child of a Participant such shares shall continue to be voted by such donor. All voting shall follow the procedure described here in except when specifically provided to the contrary.

XI CAPTIONS. The captions and headings of the paragraphs of this Option Agreement are inserted for convenience only and shall not be considered in construing the provisions of this instrument.

XII. SPECIFIC PERFORMANCE. The parties agree that there is no adequate remedy at law for breach of this contract and acknowledge that each party is entitled to sue for specific performance. However, this shall not be the exclusive remedy of either party, and the remedies to which the parties are entitled shall be deemed cumulative.

XIII. SEVERABILITY. If any term of this Agreement shall be held invalid, illegal or unenforceable in whole or in part, neither the validity of the remaining part of such term nor the validity of any other term of this Agreement shall in any way be affected.

XIII. GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the State of Tennessee,

AGREED TO this 10^th day of October, 1985.

/s/ J. Burton Frierson, Jr.

J. Burton Frierson, Jr.

/s/ Rowena K. Frierson

Rowena K. Frierson

/s/ J. Burton Frierson, III

J. Burton Frierson, III

/s/ Paul K. Frierson

Paul K. Frierson

/s/ T. Cartter Frierson

T. Cartter Frierson

/s/ Daniel K. Frierson

Daniel K. Frierson

/s/ James Frierson

James Frierson

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