Document:

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                                                                   Exhibit 10.20

                                 DAN RIVER INC.
               NONQUALIFIED 401(k) AND DEFERRED COMPENSATION PLAN
                                       FOR
                   HIGHLY COMPENSATED EMPLOYEES AND DIRECTORS
                       AS EFFECTIVE AS OF JANUARY 1, 2001
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ss. 1 EFFECTIVE DATE.........................................................1

ss. 2 PURPOSE................................................................1

         2.1.     General....................................................1
         2.2.     Highly Compensated Employees...............................1
         2.3.     Directors..................................................1

ss. 3 DEFINITIONS............................................................1

         3.1.     Account....................................................1
         3.2.     Affiliate..................................................2
         3.3.     Beneficiary................................................2
         3.4.     Board......................................................2
         3.5.     Bonus......................................................2
         3.6.     Committee..................................................2
         3.7.     Company....................................................2
         3.8.     Compensation...............................................2
         3.9.     Deferred Compensation Account..............................2
         3.10.    Director...................................................2
         3.11.    Distribution Date..........................................2
         3.12.    401(k) Plan................................................2
         3.13.    401(k) Deferral Account....................................2
         3.14.    401(k) Matching Account....................................3
         3.15.    Highly Compensated Employee................................3
         3.16.    Meeting Fees...............................................3
         3.17.    Participant................................................3
         3.18.    Plan.......................................................3
         3.19.    Retainer...................................................3
         3.20.    Salary.....................................................3

ss. 4 ELIGIBILITY............................................................3

ss. 5 DEFERRAL ELECTIONS.....................................................4

         5.1.     Elections..................................................4
         5.2.     Effective Deferral Election................................5
         5.3.     Election Deadlines.........................................5
         5.4.     Irrevocable Election.......................................5
         5.5.     Election Revocation........................................5
         5.6.     Timing of Credits..........................................5
         5.7.     Refunds....................................................5

ss. 6 Matching Contributions.................................................5

                                      -i-
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ss. 7 ADJUSTMENT TO ACCOUNTS.................................................7

         7.1.     401(k) Deferral Account and 401(k) Matching Account........7
         7.2.     Deferred Compensation Account..............................7
         7.3.     Timing.....................................................7

ss. 8 DISTRIBUTION...........................................................7

         8.1.     Lump Sum or Installments...................................7
         8.2.     Death......................................................8
         8.3.     Emergency..................................................8
         8.4.     Claims Procedure...........................................8

ss. 9 ADMINISTRATION.........................................................8

         9.1.     Powers.....................................................8
         9.2.     Expenses and Reliance......................................9
         9.3.     Statements.................................................9
         9.4.     Incompetents...............................................9
         9.5.     Address....................................................9

ss. 10 AMENDMENT AND TERMINATION.............................................9

ss. 11 MISCELLANEOUS........................................................10

         11.1.    General Assets............................................10
         11.2.    No Liability..............................................10
         11.3.    No Assignment; Binding Effect.............................10
         11.4.    Construction..............................................10
         11.5.    No Contract of Employment.................................10

                                      -ii-
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                                 DAN RIVER INC.
               NONQUALIFIED 401(k) AND DEFERRED COMPENSATION PLAN
                                       FOR
                   HIGHLY COMPENSATED EMPLOYEES AND DIRECTORS

                                     ss. 1

                                 EFFECTIVE DATE

         This Plan has been  adopted by the Company  effective  as of January 1,
2001.

                                      ss. 2

                                     PURPOSE

         2.1.  General.  The  purpose of this Plan is to let Highly  Compensated
               -------
Employees and Directors defer compensation.

         2.2.  Highly  Compensated  Employees.  This Plan  will let each  Highly
               ------------------------------
Compensated  Employee elect to make deferrals which exceed the deferrals the tax
law likely will let him or her make under the 401(k) Plan from his or her Salary
or from his or her Bonus and to  receive a match on such  deferrals  under  this
Plan in his or her 401(k)  Matching  Account based on the matching  contribution
rate  under the 401(k)  Plan.  This Plan also will let each  Highly  Compensated
Employee elect to make deferrals to his or her Deferred Compensation Account.

         2.3. Directors.  This Plan will let each Director elect to defer all or
              ---------
a  part  of his  or  her  Retainer  or  Meeting  Fees  to  his  or her  Deferred
Compensation Account.

                                     ss. 3

                                   DEFINITIONS

         3.1.  Account  for  purposes  of this Plan shall  mean the  bookkeeping
               -------
account  maintained  by the Company on its books and records at the  Committee's
direction to show for each Participant as of any date all contributions  made by
or on behalf of such  Participant  under  this  Plan,  any  adjustments  made in
accordance with ss. 7, and any  distributions to such  Participant  under ss. 8,
which Account may include  three  sub-accounts--a  401(k)  Deferral  Account,  a
Deferred Compensation Account and a 401(k) Matching Account.
<PAGE>

         3.2.  Affiliate  for purposes of this Plan shall mean any  organization
               ---------
designated  as  such  by the  Committee  and,  if the  Committee  designates  an
organization as an "Affiliate",  the Committee shall designate the first date as
of which such organization  shall be treated as an Affiliate and,  further,  the
Committee  shall have the right to terminate such  designation at any time after
such date.

         3.3.  Beneficiary  for  purposes  of this  Plan  shall  mean  for  each
               -----------
Participant  the  person  designated  as such  by the  Participant  on the  form
provided for this purpose or, if no such person is so  designated  or if no such
person survives the Participant, the Participant's estate.

         3.4.  Board for purposes of this Plan shall mean the Board of Directors
               -----
of the Company.

         3.5.  Bonus for  purposes of this Plan shall mean a Highly  Compensated
               -----
Employee's total cash bonus as set by the Company or an Affiliate for a calendar
year and as determined  before any  deductions are made for any reason from such
bonus.

         3.6.  Committee  for purposes of this Plan shall mean the  Compensation
               ---------
Committee of the Board or its delegate.

         3.7.  Company for  purposes of this Plan shall mean Dan River Inc.  and
               -------
any successor to Dan River Inc.

         3.8. Compensation for purposes of this Plan shall have the same meaning
              ------------
given such term under the 401(k) Plan.

         3.9. Deferred Compensation Account for purposes of this Plan shall mean
              -----------------------------
the sub-account  maintained under a Participant's Account to show the portion of
his or her  deferrals  elected  under  ss. 5 which  have been  credited  to this
sub-account.

         3.10.  Director  for  purposes of this Plan shall mean for any calendar
                --------
year any individual (other than an individual who is an employee of the Company)
who is a member of the Board for such year.

         3.11.  Distribution  Date for purposes of this Plan shall mean for each
                ------------------
Participant  the date set by the  Committee for the  distribution  of his or her
Account,  which  date  shall  be as  soon as  practicable  after  the  Committee
determines that a Highly Compensated  Employee's  employment with the Company or
an  Affiliate  has  terminated  (or  such  Affiliate's  status  as such has been
terminated) or a Director's status as such has terminated.

         3.12.  401(k)  Plan for  purposes of this Plan shall mean the Dan River
                ------------
Inc. 401(k) Plan, as amended from time to time.

         3.13.  401(k) Deferral Account for purposes of this Plan shall mean the
                -----------------------
sub-account  maintained under a Participant's Account to show the portion of his
or her  deferrals  elected  under  ss.  5  which  have  been  credited  to  this
sub-account.

                                      -2-
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         3.14.  401(k) Matching Account for purposes of this Plan shall mean the
                -----------------------
sub-account  maintained under a Participant's  Account to show the credits which
have been made to such sub-account.

         3.15. Highly Compensated  Employee for purposes of this Plan shall mean
               ----------------------------
for each  calendar  year (1) each employee of the Company or an Affiliate who is
treated  as a  "Highly  Compensated  Employee"  under the  401(k)  Plan for such
current  calendar year as a result of his or her ownership in the Company or his
or her  compensation  from  the  Company  or an  Affiliate  in  the  immediately
preceding  calendar  year and (2)  each  other  employee  of the  Company  or an
Affiliate  (i) who was first  employed  by the Company or an  Affiliate  in such
current  calendar year or in such immediately  preceding  calendar year and (ii)
who would have been treated as a Highly  Compensated  Employee  under the 401(k)
Plan for such current calendar year as a result of his or her compensation  from
the Company or an Affiliate in the immediately preceding calendar year if his or
her compensation in such immediately  preceding  calendar year has been the same
as his or her compensation in the current calendar year.

         3.16.  Meeting Fees for purposes of this Plan shall mean the fees which
                ------------
are payable to a Director  exclusively for attending a meeting of the Board or a
meeting of a committee of the Board.

         3.17.  Participant  for purposes of this Plan shall mean an  individual
                -----------
for whom an Account is maintained under this Plan.

         3.18.  Plan  shall  mean this Dan River  Inc.  Nonqualified  401(k) and
                ----
Deferred  Compensation Plan for Highly Compensated  Employees and Directors,  as
amended from time to time.

         3.19.  Retainer for purposes of this Plan shall mean all fees which are
                --------
payable to a Director for services as a member of the Board except Meeting Fees.

         3.20. Salary for purposes of this Plan shall mean a Participant's total
               ------
base salary and commissions as set by the Company or an Affiliate for a calendar
year as determined  before any  deductions are made for any reason from any such
salary and commissions.

                                     ss. 4

                                   ELIGIBILITY

         Each  employee  of  the  Company  or  an  Affiliate  who  is  a  Highly
Compensated Employee for a calendar year after 2000 and who is designated by the
Committee  as  eligible  to  participate  in this  Plan for  such  year and each
individual  who is a Director for a calendar year after 2000 may  participate in
this Plan for such calendar  year if he or she timely makes a deferral  election
under ss. 5 for such calendar year.

                                      -3-
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                                     ss. 5

                               DEFERRAL ELECTIONS

         5.1. Elections.
              ---------

            (a)   Highly Compensated Employees.
                  ----------------------------

                  (1)   401(k) Deferral Account. A Highly  Compensated  Employee
                        -----------------------
                        who is described  in  ss.  4 may  elect  annually  under
                        thisss. 5 on the form provided for this purpose to defer
                        (in 1%  increments)  for  credit  to  his or her  401(k)
                        Deferral  Account  a  percentage  of his  or her  Salary
                        otherwise  payable to him or to her by the Company  each
                        pay day during any calendar year and a percentage of his
                        or her Bonus  otherwise  payable to him or to her during
                        such  calendar  year.  The  percentage  for each  Highly
                        Compensated Employee's Salary for each calendar year may
                        be set in writing by the Committee  before the beginning
                        of such calendar  year and, if the  Committee  sets such
                        percentage  before  the  beginning  of such  year,  such
                        percentage   shall  remain  in  effect  for  the  entire
                        calendar  year.  If the  Committee  fails  to  set  such
                        percentage in writing before the beginning of a calendar
                        year,  such  percentage  shall  be from  1% to 10%.  The
                        percentage  for a Highly  Compensated  Employee's  Bonus
                        shall be from 1% to 15%.

                  (2)   Deferred  Compensation  Account.  A  Highly  Compensated
                        -------------------------------
                        Employee  who is described  in ss. 4 may elect  annually
                        under this ss. 5 on the form  provided  for this purpose
                        to defer  (in 1%  increments)  for  credit to his or her
                        Deferred  Compensation Account all or any portion of his
                        or her  Salary or Bonus  otherwise  payable to him or to
                        her during  such  calendar  year  which is not  deferred
                        under ss. 5.1(a)(1).

            (b)   Directors.  A  Director  who is  described  in ss. 4 may elect
                  ---------
                  annually  under  this  ss.  5 on the  form  provided  for this
                  purpose to defer (in 1%  increments)  for credit to his or her
                  Deferred Compensation Account all or any portion of his or her
                  Retainer  and  Meeting  Fees,  or  Retainer  or Meeting  Fees,
                  otherwise payable to him by the Company for any calendar year.

                                      -4-
<PAGE>

         5.2.  Effective   Deferral  Election.   Any  annual  deferral  election
               ---------
described in ss.  5.1 shall  become  effective  for a calendar  year only if the
related  election form is completed and filed with the Committee by the deadline
set forth in ss. 5.3.

         5.3. Election Deadlines.
              ------------------

            (a)   General Rule. A deferral  election under  this ss.  5 shall be
                  ------------
                  effective  for a  calendar  year  only  if  delivered  to  the
                  Committee before the beginning of such calendar year.

            (b)   Special  Rule.  If an  individual  first  becomes  eligible to
                  -------------
                  participate  in this Plan during a calendar  year,  his or her
                  deferral  election  under  this ss. 5 for such  calendar  year
                  shall be effective  for such calendar year if delivered to the
                  Committee  before the end of the 30 day period which starts on
                  the date the individual  first becomes eligible to participate
                  in this Plan, but such election shall not apply to any Salary,
                  Bonus,  Retainer  or Meeting  Fee which is  otherwise  payable
                  before the end of such 30 day period.

         5.4. Irrevocable Election.  Any election made under this ss. 5 which is
              --------------------
effective for any calendar year shall be  irrevocable  for the calendar year for
which the election is made.

         5.5.  Election  Revocation.  An election which has become effective for
               --------------------
any calendar year  automatically  shall be revoked effective as of the first day
of the immediately following calendar year.

         5.6. Timing of Credits. The deferrals elected under this ss. 5 shall be
              -----------------
credited to a Participant's  Account as of the date the related  Salary,  Bonus,
Retainer  or  Meeting  Fee would have been  payable  to the  Highly  Compensated
Employee or Director absent an effective deferral election under this ss. 5.

         5.7. Refunds. The Committee shall have the right to let any employee of
              -------
the Company make a deferral  election  under this ss. 5 for any calendar year if
the Committee  reasonably  believes that he or she will be a Highly  Compensated
Employee for such calendar year. However, if the Committee thereafter determines
that he or she is not a Highly  Compensated  Employee,  the  Committee  promptly
shall  revoke such  election  and shall  direct the  Company to refund  (without
interest) any deferrals made for such calendar year to such employee.

                                     ss. 6

                             Matching Contributions

         The Company as of each date in each calendar year that a credit is made
to a Highly  Compensated  Employee's  401(k) Deferral  Account under ss. 5 shall
credit a contribution to his 401(k) Matching Account equal to "A" plus "B" minus
"C", where

                                      -5-
<PAGE>

                  "A"  equals  50% of the  credit  made as of such  date to such
                  Participant's  401(k) Deferral Account to the extent that such
                  credit is based on the first 2% of his or her  Salary  and the
                  first 2% of his or her Bonus, if any,  otherwise payable as of
                  such date,

                  "B"  equals  25% of the  credit  made as of such  date to such
                  Participant's  401(k) Deferral Account to the extent that such
                  credit  is based on the next 4% of his or her  Salary  and the
                  next 4% of his or her Bonus, if any,  otherwise  payable as of
                  such date, and

                  "C" equals the  matching  contribution  which  would have been
                  made to the  Participant's  account  as of such date under the
                  401(k)  Plan  (after   taking  into  account  all  the  terms,
                  conditions and  limitations  under the terms of such plan with
                  respect to making matching  contributions)  if the Participant
                  had elected to contribute the "matching  percentage" of his or
                  her  Compensation  to the 401(k) Plan for such calendar  year.
                  The "matching percentage" for each Highly Compensated Employee
                  for each  calendar year may be set in writing by the Committee
                  before  the  beginning  of  such  calendar  year  and,  if the
                  Committee  sets such  percentage  before the beginning of such
                  year,  such  percentage  shall remain in effect for the entire
                  calendar  year. If the Committee  fails to set such  "matching
                  percentage"  in  writing  before the  beginning  of a calendar
                  year, such percentage shall be 5%.

A Participant's interest in his or her 401(k) Matching Account will be forfeited
or vested to the same extent that his or her  matching  contributions  under the
401(k) Plan are forfeited or vested upon a termination  of his or her employment
with the Company or an Affiliate.

                                     ss. 7

                             ADJUSTMENT TO ACCOUNTS

         7.1. 401(k) Deferral Account and 401(k) Matching  Account.  The credits
              ----------------------------------------------------
made to each  Participant's  401(k) Deferral Account and 401(k) Matching Account
shall be adjusted to reflect the hypothetical  investment of such accounts,  and
the  Committee  in its  discretion  may based  such  adjustments  on the  actual
performance of the investments  elected by the Participant under the 401(k) Plan
or on the  performance of such other  hypothetical  investments as the Committee
decides to make  available for this purpose under this Plan.  The Company at the
direction  of  the  Committee  may  establish  sub-accounts  as a part  of  each
Participant's  401(k) Deferral  Account and 401(k) Matching  Account to show all
such adjustments.

         7.2.  Deferred   Compensation   Account.   The  credits  made  to  each
               ---------------------------------
Participant's Deferred Compensation Account shall be adjusted periodically based
on the  interest  credit  rate  set  from  time to time  by the  Committee.  The

                                      -6-
<PAGE>

Committee from time to time shall advise  Participants  of such interest  credit
rate.

         7.3. Timing. The adjustments to an Account described in thisss. 7 shall
              ------
start as of the date a credit is first made to such Account  underss. 5 or ss. 6
and shall  continue  until the date the  Participant's  Account  has been  fully
distributed pursuant to ss. 8.

                                     ss. 8

                                  DISTRIBUTION

         8.1. Lump Sum or Installments.  The Company shall distribute,  or shall
              ------------------------
begin to distribute, a Participant's Account as of his or her Distribution Date.
A  Participant  shall have the right (on the form  provided for this purpose) to
elect whether the distribution of his or her Account shall be made in a lump sum
or in  installments,  and his or her Account shall be  distributed in accordance
with such election if the election is effective on his or her Distribution Date.
An election  shall be effective  on a  Participant's  Distribution  Date if such
Distribution  Date is on or after the first  anniversary of the date the related
election form is delivered to the Committee and, if such Distribution Date is on
or after the first  anniversary of the date more than one election form has been
delivered to the Committee, the effective election shall be the election made on
the last such election form delivered to the Committee.  If a Participant  fails
to make an election or no election is effective on a Participant's  Distribution
Date, the distribution shall be made in a lump sum. A Participant shall have the
right to elect that his Account be distributed in either:

            (a)   a lump sum; or

            (b)   monthly  installments paid over a period which does not exceed
                  10 years,  where the amount of each such  monthly  installment
                  shall be determined by dividing the balance in a Participant's
                  Account   immediately   before  the  date  as  of  which  such
                  installment is paid by the number of monthly installments then
                  remaining  to be paid  (including  in  such  number  the  then
                  payable monthly installment).

If a Participant's  Account is $10,000 or less on his or her Distribution  Date,
such Account automatically shall be paid in a lump sum.

         8.2. Death. If a Participant  dies before the complete  distribution of
              -----
his  or  her  Account,  any  remaining  balance  shall  be  distributed  to  the
Participant's  Beneficiary  in the  distribution  form then in  effect  for such
Participant's Account if such Beneficiary is an individual.  If such Beneficiary
is not an individual,  then the distribution shall be made in a lump sum as soon
as practicable following the date of the Participant's death.

                                      -7-
<PAGE>

         8.3.  Emergency.   If  a  Participant  incurs  an  emergency  which  is
               ---------
reasonably  unforeseeable,  the  Participant  may make a written  request to the
Committee  for  an  emergency   distribution   from  his  or  her  Account.   An
unforeseeable  emergency  is a  severe  financial  hardship  to the  Participant
resulting from a sudden and unexpected  illness or accident,  the destruction or
loss of the  Participant's  home or  property  due to an act of God or any other
similar  extraordinary and reasonably  unforeseeable  circumstances arising as a
result of events reasonably beyond the control of the Participant, as determined
in the sole discretion of the Committee.  A distribution made under this ss. 8.3
shall be made only to the extent the Committee determines that such distribution
is reasonably needed to satisfy the Participant's emergency.

         8.4.  Claims  Procedure.  If  a  Participant  makes  a  claim  for  the
               -----------------
distribution  of his or her Account  and the  Committee  denies such claim,  the
Committee  shall  effect such  denial in  accordance  with the claims  procedure
regulations set forth under the Employee Retirement Income Security Act of 1974,
as amended, for claims under a deferred  compensation plan and shall provide the
Participant  the  opportunity to appeal any such denial in accordance  with such
regulations.

                                     ss. 9

                                 ADMINISTRATION

         9.1. Powers. This Plan shall be administered by the Committee,  and the
              ------
Committee  shall have the  absolute and  complete  authority,  duty and power to
interpret  and  construe  the  provisions  of this Plan as the  Committee  deems
appropriate, including the final authority to determine eligibility for benefits
under this Plan,  and to take any other action in connection  with the operation
or  administration  of this Plan which the Committee  deems fair and appropriate
under the  circumstances.  The Committee  shall maintain Plan records,  make the
requisite   calculations   and   authorized   distributions.    Interpretations,
determinations,  regulations  and  calculations  made by the Committee  shall be
final and binding on all affected persons.

         9.2. Expenses and Reliance. Any expenses incurred in the administration
              ---------------------
of this Plan shall be paid by the Company.  The  Committee  shall be entitled to
rely  on all  tables,  valuations,  certificates,  opinions,  data  and  reports
furnished  by any  actuary,  accountant,  controller,  counsel  or other  person
employed or retained by the Committee with respect to this Plan.

         9.3.   Statements.   The  Committee  shall  furnish  individual  annual
                ----------
statements of Account  balances to each Participant and each Beneficiary in such
form as determined by the Committee.

         9.4.  Incompetents.  If the Committee  determines that an individual is
               ------------
unable  to manage  his or her  financial  affairs,  the  Committee  may pay such
individual's  Account to a conservator or other person legally charged with such
individual's  care, or to the institution then contributing  toward or providing

                                      -8-
<PAGE>

for the  care  and  maintenance  of such  individual.  Any  such  payment  shall
constitute a complete  discharge of any liability of the Company,  the Committee
and this Plan for such individual.

         9.5. Address. Each Participant shall keep the Committee informed of his
              -------
or her current  address and the current address of his or her  Beneficiary.  The
Committee shall not be obligated to search for any person. If such person is not
located  within  three  (3)  years  after  the  date  on  which  payment  of the
Participant's benefits payable under this Plan may first be made, payment may be
made as though the  Participant or his or her Beneficiary had died at the end of
such three-year period.

                                     ss. 10

                            AMENDMENT AND TERMINATION

         The Company  reserves the right to amend or terminate  this Plan at any
time by action of the Committee. The Committee upon the termination of this Plan
shall  have  the  right in its sole  discretion  to  accelerate  the  timing  of
distributions and make all distributions in the form of a lump sum. No amendment
or termination shall directly or indirectly reduce the balance of any Account as
of  the  effective  date  of  such  amendment  or  termination.   No  additional
contributions  will be made to a  Participant's  Account  under  this Plan after
termination  of this Plan,  but  adjustments  under ss. 7 shall  continue  to be
credited  to the  Account of each  Participant  under this Plan until the entire
Account  has  been  fully  distributed  to  such  Participant  or to  his or her
Beneficiary.

                                     ss. 11

                                  MISCELLANEOUS

         11.1.  General  Assets.  All  distributions  to,  or on  behalf  of,  a
                ---------------
Participant under this Plan shall be made from the Company's general assets, and
any claim by a Participant or by his or her Beneficiary  against the Company for
any  distribution  under this Plan  shall be treated  the same as a claim of any
general and unsecured creditor of the Company.

         11.2. No Liability.  No Participant  and no Beneficiary  shall have the
               ------------
right to look to, or have any claim whatsoever against, any officers,  director,
employee  or agent of the Company or any member of the  Committee  in his or her
individual capacity for the distribution of any Account.

         11.3. No  Assignment;  Binding  Effect.  No  Participant or Beneficiary
               --------------------------------
shall have the right to  alienate,  assign,  commute or  otherwise  encumber  an
Account for any purpose  whatsoever,  whether through a domestic relations order
or otherwise,  and any attempt to do so shall be disregarded as completely  null
and void. The provisions of this Plan shall be binding on each  Participant  and
Beneficiary and on the Company.

         11.4. Construction. This Plan shall be construed in accordance with the
               ------------
laws of the  Commonwealth  of  Virginia  except  to the  extent  such  laws  are

                                      -9-
<PAGE>

preempted by federal  law.  Headings  and  subheadings  have been added only for
convenience of reference and shall have no substantive  effect  whatsoever.  All
references to sections  shall be to sections to this Plan. All references to the
singular shall include the plural and all references to the plural shall include
the singular. All definitions in this Plan shall apply exclusively to this Plan.

         11.5. No Contract of  Employment.  A Director's  or Highly  Compensated
               --------------------------
Employee's  participation  in this  Plan  shall not  constitute  a  contract  of
employment or a right to continue to serve on the Board for any particular  term
or for any particular rate of compensation, and participation in this Plan shall
have  no  bearing  whatsoever  on  such  term or  compensation  or on any  other
conditions of employment or for membership on the Board.

                                 DAN RIVER INC.

                                 BY:
                                    -----------------------------------------

                                 TITLE:
                                       --------------------------------------

                                      -10-<PAGE>

                                                                   Exhibit 10.21

                                 DAN RIVER INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                         EFFECTIVE AS OF JANUARY 1, 2001
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                                TABLE OF CONTENTS

                                                                            Page

ss. 1 EFFECTIVE DATE.........................................................1

ss. 2 PURPOSE................................................................1

ss. 3 DEFINITIONS............................................................1

         3.1.     Affiliate..................................................1
         3.2.     Board......................................................1
         3.3.     Committee..................................................1
         3.4.     Company....................................................1
         3.5.     Compensation...............................................1
         3.6.     Eligible Participant.......................................1
         3.7.     Participant................................................2
         3.8.     Retirement Plan............................................2
         3.9.     SERP.......................................................2

ss. 4 SERP BENEFITS..........................................................2

         4.1.     Annual Post 2000 Accrual...................................2
         4.2.     Annual Pre-2001 Account....................................2
         4.3.     Payment....................................................3
         4.4.     Claims Procedure...........................................3

ss. 5 ADMINISTRATION.........................................................3

         5.1.     Powers.....................................................3
         5.2.     Expenses and Reliance......................................3
         5.3.     Statements.................................................3
         5.4.     Address....................................................4

ss. 6 AMENDMENT AND TERMINATION..............................................4

ss. 7 MISCELLANEOUS..........................................................4

                                      -i-
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                                 DAN RIVER INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                         EFFECTIVE AS OF JANUARY 1, 2001

                                     ss. 1

                                 EFFECTIVE DATE

         The Company has adopted this SERP effective as of January 1, 2001.

                                     ss. 2

                                     PURPOSE

          The  purpose of this SERP is to  supplement  a  Participant's  accrued
benefit under the  Retirement  Plan to compensate  for the fact that the tax law
limits the  benefits  payable  under the  Retirement  Plan and the fact that the
Retirement  Plan fails to take into account a  Participant's  Bonus in computing
his or her accrued benefit under the Plan.

                                     ss. 3

                                   DEFINITIONS

         .1.  Affiliate  for  purposes of this SERP shall mean any  organization
              ---------
designated as such by the Committee.

         .2.  Board for  purposes of this SERP shall mean the Board of Directors
              -----
of the Company.

         .3.  Committee  for  purposes of this SERP shall mean the  Compensation
              ---------
Committee of the Board or its delegate.

         .4. Company for purposes of this SERP shall mean Dan River Inc. and any
             -------
successor to Dan River Inc.

         .5.  Compensation  for purposes of this SERP shall mean a Participant's
              ------------
total base salary,  commissions  and bonus which is payable by the Company or an
Affiliate  after 2000 in each calendar year before any  deductions or reductions
of any kind or description  whatsoever and shall mean a Participant's total base
salary,  commissions  and bonus which was payable by the Company or an Affiliate
to such  Participant in each calendar year before 2001 and before any deductions
or reductions of any kind or description whatsoever.

         .6. Eligible  Participant for purposes of this SERP shall mean for each
             ---------------------
calendar year after 2000 each employee of Dan River Inc. or an Affiliate (i) who
is a "Highly  Compensated  Employee"  for such calendar year under the Dan River
<PAGE>

Inc.  401(k) Plan, as amended,  (ii) who accrues a benefit under the  Retirement
Plan for such calendar year and (iii) who is designated as such by the Committee
for such calendar year.

         .7.  Participant for purposes of this SERP shall mean an individual who
              -----------
has accrued a benefit under this SERP which remains unpaid.

         .8.  Retirement Plan for purposes of this SERP shall mean the Dan River
              ---------------
Inc. Salary Retirement Plan, as amended from time to time.

         .9.  SERP  shall  mean  this  Dan  River  Inc.  Supplemental  Executive
              ----
Retirement Plan, as amended from time to time.

                                     ss. 4

                                  SERP BENEFITS

         .1.  Annual  Post 2000  Accrual.  Each  individual  who is an  Eligible
              --------------------------
Participant  for a calendar  year after 2000 shall  accrue a benefit  under this
SERP for such  calendar  year which shall equal the excess,  if any, of "A" over
"B", where

                  "A" equals  the  benefit,  if any,  which he or she would have
                  accrued  under  the  terms  of the  Retirement  Plan  for such
                  calendar year if 100% of his or her Compensation,  if any, for
                  such calendar year was taken into account under the Retirement
                  Plan, and

                  "B" equals the benefit he or she  actually  accrued  under the
                  Retirement Plan for such calendar year.

         .2.  Annual  Pre-2001  Account.  Each  individual  who  is an  Eligible
              -------------------------
Participant on January 1, 2001 shall have an initial  accrued benefit under this
SERP on such date for each  calendar year before 2001 and after 1987 in which he
or she accrued a benefit under the Retirement Plan which shall equal the excess,
if any, of "A" over "B", where

                  "A" equals  the  benefit,  if any,  which he or she would have
                  accrued  under  the  terms  of the  Retirement  Plan  for each
                  calendar  year  if 100% of his or her  Compensation  for  such
                  calendar year had been taken into account under the Retirement
                  Plan, and

                  "B" equals the benefit he or she  actually  had accrued  under
                  the Retirement Plan for such calendar year.

         .3. Payment.  A Participant's  benefit which is accrued under this SERP
             -------
shall be  payable  only if a  benefit  is  payable  to,  or on  behalf  of,  the
Participant  under the  Retirement  Plan and,  if a benefit is payable to, or on
behalf of a Participant  under the Retirement  Plan, his or her benefit which is
accrued under this SERP shall be paid to the  Participant  by the Company at the

                                      -2-
<PAGE>

direction of the  Committee  under the same rules and as of the same date and in
the same benefit  payment form as the  Participant's  accrued benefit is paid to
the Participant under the Retirement Plan and, in the event of the Participant's
death,  shall be paid by the Company at the direction of the Committee under the
same rules and as of the same date and in the same  benefit  payment form and to
the same person, if any, as the Participant's  accrued benefit is paid under the
Retirement Plan after his or her death.

         .4. Claims Procedure. If a Participant makes a claim for the payment of
             ----------------
his or her accrued benefit under this SERP and the Committee  denies such claim,
the Committee shall effect such denial in accordance  with the claims  procedure
regulations set forth in the Employee Retirement Income Security Act of 1974, as
amended,  for claims under a deferred  compensation  plan and shall  provide the
Participant  the  opportunity to appeal any such denial in accordance  with such
regulations.

                                     ss. 5

                                 ADMINISTRATION

         .1. Powers.  This SERP shall be administered by the Committee,  and the
             ------
Committee  shall have the  absolute and  complete  authority,  duty and power to
interpret  and  construe  the  provisions  of this SERP as the  Committee  deems
appropriate, including the final authority to determine eligibility for benefits
under this SERP,  and to take any other action in connection  with the operation
or  administration  of this Plan which the Committee  deems fair and appropriate
under the  circumstances.  The Committee  shall maintain SERP records,  make the
requisite   calculations   and   authorize    distributions.    Interpretations,
determinations,  regulations  and  calculations  made by the Committee  shall be
final and binding on all affected persons.

         .2. Expenses and Reliance.  Any expenses incurred in the administration
             ---------------------
of this SERP shall be paid by the Company.  The  Committee  shall be entitled to
rely  on all  tables,  valuations,  certificates,  opinions,  data  and  reports
furnished  by any  actuary,  accountant,  controller,  counsel  or other  person
employed or retained by the Committee with respect to this SERP.

         .3.   Statements.   The  Committee  shall  furnish   individual  annual
               ----------
statements of accrued  benefits under this SERP to each Participant in such form
as determined by the Committee.

         .4. Address. The Committee shall have the right to rely under this SERP
             -------
on the  address and other  information  provided  by the  Participant  under the
Retirement Plan.

                                      -3-
<PAGE>

                                     ss. 6

                            AMENDMENT AND TERMINATION

         The Company  reserves the right to amend or terminate  this SERP at any
time by action of the Committee. The Committee upon the termination of this SERP
shall  have  the  right in its sole  discretion  to  accelerate  the  timing  of
distributions and make all distributions in the form of a lump sum. No amendment
or termination shall directly or indirectly reduce a Participant's  then accrued
benefit  under  this  SERP  as of  the  effective  date  of  such  amendment  or
termination.

                                     ss. 7

                                  MISCELLANEOUS

         .1.  General  Assets.   All  distributions  to,  or  on  behalf  of,  a
              ---------------
Participant under this SERP shall be made from the Company's general assets, and
any claim by,  or on  behalf  of, a  Participant  against  the  Company  for any
distribution under this SERP shall be treated the same as a claim of any general
and unsecured creditor of the Company.

         .2. No Liability.  No  Participant  shall have the right to look to, or
             ------------
have any claim whatsoever against, any officers,  director, employee or agent of
the Company or any member of the Committee in his or her individual capacity for
the distribution of his or her accrued benefit under this SERP.

         .3. No Assignment;  Binding Effect. No Participant shall have the right
             ------------------------------
to alienate,  assign,  commute or otherwise  encumber his or her accrued benefit
under this SERP for any purpose whatsoever, whether through a domestic relations
order or otherwise,  and any attempt to do so shall be disregarded as completely
null and void. The provisions of this SERP shall be binding on each Participant,
on any other person who claims a benefit under this SERP and on the Company.

         .4.  Construction.  This SERP shall be construed in accordance with the
              ------------
laws of the  Commonwealth  of  Virginia  except  to the  extent  such  laws  are
preempted by federal  law.  Headings  and  subheadings  have been added only for
convenience of reference and shall have no substantive  effect  whatsoever.  All
references to sections  shall be to sections to this SERP. All references to the
singular shall include the plural and all references to the plural shall include
the singular. All definitions in this SERP shall apply exclusively to this SERP.

                                      -4-
<PAGE>

         .5.  No  Contract  of  Employment.   A  Highly  Compensated  Employee's
              ----------------------------
participation in this SERP shall not constitute a contract of employment for any
particular term or for any particular rate of compensation, and participation in
this SERP shall have no bearing  whatsoever on such term or  compensation  or on
any other conditions of employment.

                                 DAN RIVER INC.

                                 BY:
                                    -----------------------------------------

                                 TITLE:
                                       --------------------------------------

                                      -5-

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