THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Dixie Group, Inc. (The) (DXYN)

3/16/2006 Proxy Information

D. Kennedy Frierson, Jr., the son of Daniel K. Frierson, the Company’s Chief Executive Officer and Chairman of the Board, and the nephew of director Paul K. Frierson, was employed as the Company’s Executive Vice President – Dixie Home until his appointment as President of Masland Residential in December, 2005 and as Vice President of the Company in February 2006. Mr. Frierson received an annual base salary of $136,875 and a relocation allowance of $15,833 in 2005. Mr. Frierson participates in the Company’s incentive compensation program and has the opportunity to earn a cash Incentive Award, a Long-Term Incentive Award, and Career Shares under the Company’s 2006 Incentive Plan. The Board believes that Mr. Frierson’s compensation is comparable to that available to other executives of the Company serving at his level of responsibility and experience.

Daniel K. Frierson and Paul K. Frierson are brothers. D. Kennedy Frierson, Jr. is the son of Daniel K. Frierson and the nephew of Paul K. Frierson.

3/23/2005 Proxy Information

Daniel K. Frierson and Paul K. Frierson are brothers.

The Company adopted a Stock Ownership Plan in 1996 for its most senior executive officers, to encourage such officers to own a number of shares of Common Stock with a fair market value equal to twice such participant’s base salary. All subscriptions were entered into at the prevailing market price on the relevant subscription date and were payable either in cash or through a combination of cash and/or the surrender to the Company of either (i) shares of Common Stock already owned by the participant, or (ii) a portion of the shares of Common Stock otherwise covered by the subscription. On August 16, 2004, Daniel K. Frierson settled outstanding subscriptions for 104,653 shares of Common Stock under the Stock Ownership Plan. On February 24, 2004, W. Derek Davis settled outstanding subscriptions under the Stock Ownership Plan for 20,000 shares. The Company terminated the Stock Ownership Plan in 2004, after all outstanding subscriptions had been settled or terminated.

The Company acquired the stock of Fabrica International pursuant to a Stock Purchase Agreement, dated as of July 1, 2000, that provided for the payment of additional, contingent consideration including consideration of up to $2,500,000 to be paid to the selling stockholders in April 2005 if Fabrica’s cumulative earnings before interest and taxes for the five-year period beginning January 1, 2000 exceed specified levels. As of the date hereof, Fabrica’s cumulative earnings exceeded the level specified to require a payment of $2,000,000 to the selling shareholders, of which Mr. Renfroe will receive $200,000.

Kennedy Frierson, the son of Daniel K. Frierson, the Company’s Chief Executive Officer and Chairman of the Board, is employed by the Company as Vice-President of Dixie Home. In such capacity, he receives annual compensation in excess of $60,000. The Company believes that his compensation is comparable to that paid to other company employees at his level of responsibility and experience.

4/2/2004 Proxy Information

Daniel K. Frierson and Paul K. Frierson are brothers.

Paul K. Frierson served as Vice President of The Dixie Group, Inc. and President of their Candlewick Yarns subsidiary from 1989 to 2003.

Peter L. Smith is a managing director of Lazard FrŹres & Co., LLC, an investment banking firm that performs certain investment banking functions for the Company from time to time.

The Company adopted a Stock Ownership Plan in 1996 for its most senior executive officers, to encourage such officers to own a number of shares of Common Stock with a fair market value equal to twice such participant’s base salary. In addition, the Company has adopted a Core Leadership Team Stock Subscription Plan to encourage ownership of Common Stock by members of the core leadership team of the Company. All subscriptions were entered into at the prevailing market price on the relevant subscription date and are payable either in cash or through a combination of cash and/or the surrender to the Company of either (i) shares of Common Stock already owned by the participant, or (ii) a portion of the shares of Common Stock otherwise covered by the subscription.

As of March 12, 2004, Daniel K. Frierson had outstanding subscriptions for 104,653 shares of Common Stock under the Stock Ownership Plan. During 2003, the following executive officers settled outstanding subscriptions under the Stock Ownership Plan: Gary A. Harmon—45,714 shares and Royce R. Renfroe—103,225 shares. In addition, on February 24, 2004, W. Derek Davis settled outstanding subscriptions under the Stock Ownership Plan for 20,000 shares. During 2003, the Company cancelled outstanding subscriptions for the following executive officers under the Stock Ownership Plan: W. Derek Davis—18,174 shares and Kenneth L. Dempsey—55,436 shares.

Additionally, on July 31, 2003, outstanding subscriptions covering 43,357 shares under the Stock Ownership Plan were cancelled in connection with Paul K. Frierson’s retirement as Vice President of the Company. During 2003, the following executive officers settled outstanding subscriptions under the Core Leadership Team Stock Ownership Plan: Gary A. Harmon—5,490 shares; Starr T. Klein—2,300 shares; and D. Eugene Lasater—2,433 shares.

The Company acquired the stock of Fabrica International pursuant to a Stock Purchase Agreement, dated as of July 1, 2000, that provided for the payment of additional, contingent consideration of $50,000,000 on April 1, 2003 if Fabrica’s cumulative gross sales for the period of April 1, 2000 through June 30, 2003 exceeded certain levels. During the second quarter 2002, Fabrica’s sales reached the levels that required payment of the contingent consideration. On March 14, 2003, the Company paid $4,978,400 to Royce Renfroe as his pro rata portion of the contingent consideration. The Stock Purchase Agreement also provides for an additional contingent amount of up to $2,500,000 to be paid to the selling stockholders in April 2005 if Fabrica’s cumulative earnings before interest and taxes for the five-year period beginning January 1, 2000 exceed specified levels.

On July 1, 2000, the Company also acquired a 50% ownership interest in the dyeing and finishing operations of Chroma Systems Partners. Consideration paid for the Company’s interest in Chroma was subject to an adjustment generally equal to the Company’s share of Chroma’s income or loss for the three years ending June 30, 2003, less $1,800,000. On June 25, 2003, the Company paid $362,703 to Royce Renfroe as his pro rata portion of the purchase price adjustment.

3/31/2003 Proxy Information

Daniel K. Frierson and Paul K. Frierson are brothers.

Mr. Smith is a managing director of Lazard FrŹres & Co., LLC, an investment banking firm that performs certain investment banking functions for the Company from time to time.

The Company acquired the stock of Fabrica International pursuant to a Stock Purchase Agreement, dated as of July 1, 2000, that provided for the payment of additional, contingent consideration of $50,000,000 on April 1, 2003 if Fabrica’s cumulative gross sales for the period of April 1, 2000 through June 30, 2003 exceeded certain levels. During the second quarter 2002, Fabrica’s sales reached the levels that required payment of the contingent consideration. On March 14, 2003, the Company paid $4,978,400 to Royce Renfroe as his pro rata portion of the contingent consideration. The Stock Purchase Agreement also provides for an additional contingent amount of up to $2,500,000 to be paid to the selling stockholders in April 2005 if Fabrica’s cumulative earnings before interest and taxes for the five-year period beginning January 1, 2000 exceed specified levels.