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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
Pulaski Furniture Corporation
(Name of Subject Company)
Pine Holdings, Inc.
Pine Acquisition Corp.
Quad-C Partners V, L.P.
Pulaski Furniture Corporation
Randolph V. Chrisley
Ira S. Crawford
Jack E. Dawson
James S. Dawson
James H. Kelly
Paul T. Purcell
James W. Stout
John G. Wampler
Raymond E. Winters, Jr.
Carl W. Hoffman
(Names of Filing Persons)
Common Stock
(Title of Class of Securities)
745553107
(CUSIP Number of Class of Securities)
Anthony R. Ignaczak John G. Wampler
Harry H. Warner Pine Holdings, Inc. Pulaski Furniture
Pulaski Furniture c/o Quad-C Management, Corporation
Corporation Inc. One Pulaski Square
One Pulaski Square 230 East High Street Pulaski, VA 24301
Pulaski, VA 24301 Charlottesville, VA 22902
(804) 979-2070
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
Copy to:
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C. Porter Vaughan, III, Esq. John M. Reiss, Esq. William R. Waddell, Esq.
Hunton & Williams Gregory Pryor, Esq. McGuire, Woods, Battle & Boothe LLP
Riverfront Plaza White & Case LLP World Trade Center
951 East Byrd Street 1155 Avenue of the Americas Suite 9000
Richmond, VA 23219 New York, New York 10036 101 West Main Street
(212) 819-8200 Norfolk, VA 23510
</TABLE>
CALCULATION OF FILING FEE
<TABLE>
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Transaction Valuation* Amount of Filing Fee
$65,507,062.50 $13,101.41
</TABLE>
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* Based on the offer to purchase all of the outstanding shares of Common Stock
of the Subject Company at $22.50 cash per share and 2,911,425 shares of
Common Stock outstanding or represented by stock options, as of March 28,
2000.
[_Check]the box if any part of the fee is offset as provided by Rule 0-11 (a)
(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party: Not Applicable.
Form or Registration No.: Not applicable.Date Filed: Not applicable.
[_] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[_] issuer tender offer subject to Rule 13e-4.
[X] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [_]
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This Tender Offer Statement on Schedule TO ("Schedule TO") relates to the
offer by Pine Acquisition Corp. (the "Purchaser"), a Virginia corporation and
a direct wholly owned subsidiary of Pine Holdings, Inc. ("Parent"), a Virginia
corporation, to purchase all of the issued and outstanding shares of common
stock of Pulaski Furniture Corporation (the "Company"), including the
associated preferred stock purchase rights issued pursuant to the Amended and
Restated Rights Agreement, dated as of December 15, 1997 and amended as of
March 29, 2000, by and between the Company and First Union National Bank, as
Rights Agent (such common stock and preferred stock purchase rights are
referred to herein together as the "Common Stock"), at a price of $22.50 per
share of Common Stock, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated April 7, 2000 (the "Offer to Purchase"), a copy of which is
attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a
copy of which is attached hereto as Exhibit (a)(2) (which, as they may be
amended and supplemented from time to time, together constitute the "Offer").
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Schedule TO, except as otherwise set forth
below.
Item 10. Financial Statements.
(a) Financial information. Not applicable.
(b) Pro forma information. Not applicable.
Item 11. Additional Information.
(b) Other material information. The information set forth in the Letter of
Transmittal attached hereto as Exhibit (a)(2) is incorporated herein by
reference.
Item 12. Exhibits.
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Exhibit No. Description
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Exhibit (a)(1) Offer to Purchase, dated April 7, 2000.
Exhibit (a)(2) Letter of Transmittal.
Exhibit (a)(3) Notice of Guaranteed Delivery.
Exhibit (a)(4) Guidelines for Substitute Form W-9.
Exhibit (a)(5) Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees.
Exhibit (a)(6) Form of letter to be used by brokers, dealers, commercial
banks, trust companies and other nominees to their clients.
Exhibit (a)(7) Summary newspaper advertisement, dated April 7, 2000, published
in The Wall Street Journal.
Exhibit (b)(1) Commitment Letter, dated February 18, 2000, by and between
Bankers Trust Company and Quad-C Management, Inc.
Exhibit (c)(1) Fairness Opinion, dated March 29, 2000 by BB&T Capital Markets,
a division of Scott & Stringfellow, Inc.
Exhibit (d)(1) Agreement and Plan of Merger, dated as of March 29, 2000, by
and among Pine Holdings, Inc., Pine Acquisition Corp. and
Pulaski Furniture Corporation.
Exhibit (d)(2) Amendment to the Rights Agreement, dated as of March 29, 2000,
by and between Pulaski Furniture Corporation and First Union
National Bank, as Rights Agent.
</TABLE>
2
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Exhibit No. Description
----------- -----------
<C> <S>
Exhibit (d)(3) Stock Voting and Non-Tender Agreement, dated as of March 29,
2000, by and among Pine Holdings, Inc., Pine Acquisition Corp.
and the Individuals Named Therein.
Exhibit (d)(4) Management Transaction Agreement, dated as of March 29, 2000,
by and among Pine Holdings, Inc. and the Management (as defined
therein).
Exhibit (f) Section 13.1-730 of the Virginia Stock Corporation Act
regarding Dissenters' Rights.
Exhibit (g) None.
Exhibit (h) None.
</TABLE>
Item 13. Information Required by Schedule 13E-3.
Item 4.
(j) Eligibility for listing or trading. Not applicable.
3
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SIGNATURES
After due 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.
Dated: April 7, 2000 Pine Holdings, Inc.
By: /s/ Anthony R. Ignaczak
----------------------------------
Name: Anthony R. Ignaczak
Title: President
Dated: April 7, 2000 Pine Acquisition Corp.
By: /s/ Anthony R. Ignaczak
----------------------------------
Name: Anthony R. Ignaczak
Title: President
Dated: April 7, 2000 Quad-C Partners V, LP
By Quad-C Advisors V, L.L.C., its
General Partner
By: /s/ Anthony R. Ignaczak
----------------------------------
Name: Anthony R. Ignaczak
Title: Vice President
Dated: April 7, 2000 Pulaski Furniture Corp.
By: /s/ Harry H. Warner
----------------------------------
Name: Harry H. Warner
Title: Chairman of the Board
Dated: April 7, 2000 /s/ Randolph V. Chrisley
----------------------------------
Randolph V. Chrisley
Dated: April 7, 2000 /s/ Ira S. Crawford
----------------------------------
Ira S. Crawford
Dated: April 7, 2000 /s/ Jack E. Dawson
----------------------------------
Jack E. Dawson
Dated: April 7, 2000 /s/ James S. Dawson
----------------------------------
James S. Dawson
4
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Dated: April 7, 2000 /s/ James H. Kelly
----------------------------------
James H. Kelly
Dated: April 7, 2000 /s/ Paul T. Purcell
----------------------------------
Paul T. Purcell
Dated: April 7, 2000 /s/ James W. Stout
----------------------------------
James W. Stout
Dated: April 7, 2000 /s/ John G. Wampler
----------------------------------
John G. Wampler
Dated: April 7, 2000 /s/ Raymond E. Winters, Jr.
----------------------------------
Raymond E. Winters, Jr.
Dated: April 7, 2000 /s/ Carl W. Hoffman
----------------------------------
Carl W. Hoffman
5
<PAGE>
Exhibit A(1)
OFFER TO PURCHASE FOR CASH
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pulaski Furniture Corporation
at
$22.50 Net Per Share of Common Stock
by
Pine Acquisition Corp.
A Direct Wholly Owned Subsidiary of
Pine Holdings, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 5, 2000 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES OF COMMON STOCK (THE "COMMON STOCK") OF PULASKI FURNITURE
CORPORATION (THE "COMPANY"), INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE
RIGHTS, WHICH, WHEN ADDED TO THE SHARES OF COMMON STOCK, IF ANY, PREVIOUSLY
ACQUIRED BY PINE ACQUISITION CORP. CONSTITUTES MORE THAN TWO-THIRDS OF THE
OUTSTANDING SHARES OF COMMON STOCK ON A FULLY DILUTED BASIS (EXCLUDING THE
EFFECT OF THE RIGHTS (AS DEFINED BELOW)) AND (II) THE RECEIPT BY PINE
ACQUISITION CORP. OF THE FINANCING CONTEMPLATED BY A BANK COMMITMENT LETTER.
SEE SPECIAL FACTORS--FINANCING OF THE OFFER. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS DESCRIBED IN "THE TENDER OFFER--CONDITIONS OF THE
OFFER".
THE BOARD OF DIRECTORS OF THE COMPANY, BASED ON THE UNANIMOUS
RECOMMENDATION OF A SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), THE OFFER
AND THE MERGER OF PINE ACQUISITION CORP. WITH AND INTO THE COMPANY, HAS
DETERMINED THAT THE OFFER AND MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE HOLDERS OF SHARES OF COMMON STOCK (OTHER THAN THE MANAGEMENT
SHAREHOLDERS IDENTIFIED IN THIS OFFER TO PURCHASE), AND RECOMMENDS THAT THE
HOLDERS OF SHARES OF COMMON STOCK ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
----------------
(continued on next page)
April 7, 2000
<PAGE>
(continued from previous page)
IMPORTANT
Any holder of shares of Common Stock (a "Holder") desiring to tender all or
any portion of the shares of Common Stock owned by such Holder should either
(i) complete and sign the Letter of Transmittal or a copy thereof in
accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) evidencing tendered shares of
Common Stock, and any other required documents, to the Depositary (as defined
below), (ii) tender such shares of Common Stock pursuant to the procedures for
book-entry transfer set forth in "THE TENDER OFFER--Procedures for Tendering
Shares of Common Stock" or (iii) request such Holder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such Holder. Any Holder whose shares of Common Stock are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee
if such Holder desires to tender such shares of Common Stock.
Unless the context indicates otherwise, references to shares of Common
Stock include references to the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Amended and Restated Rights Agreement,
dated as of December 15, 1997, between the Company and First Union National
Bank, as Rights Agent (as amended to the date hereof, the "Rights Agreement").
In order to validly tender shares of Common Stock, a Holder must tender the
associated Rights. Unless a Distribution Date (as defined in the Rights
Agreement) has occurred, the tender of a share of Common Stock will constitute
the tender of the associated Rights. See "THE TENDER OFFER--Procedures for
Tendering Shares of Common Stock".
Any Holder who desires to tender shares of Common Stock and whose
certificate(s) evidencing such shares of Common Stock are not immediately
available, or who cannot comply with the procedures for book-entry transfer
described in this Offer to Purchase on a timely basis, may tender such shares
of Common Stock by following the procedures for guaranteed delivery set forth
in "THE TENDER OFFER--Procedures for Tendering Shares of Common Stock".
Copies of this Offer to Purchase, the Letter of Transmittal or any related
documents must not be mailed to or otherwise distributed or sent in, into or
from any country where such distribution or offering would require any
additional measures to be taken or would be in conflict with any law or
regulation of such a country or any political subdivision thereof. Persons
into whose possession this document comes are required to inform themselves
about and to observe any such laws or regulations. This Offer to Purchase may
not be used for, or in connection with, any offer to, or solicitation by,
anyone in any jurisdiction or under any circumstances in which such offer or
solicitation is not authorized or is unlawful.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal or other related tender offer materials may be obtained at no cost
from the Information Agent or from brokers, dealers, commercial banks or trust
companies.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
i
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TABLE OF CONTENTS
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Page
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SUMMARY TERM SHEET........................................................ 1
INTRODUCTION.............................................................. 6
SPECIAL FACTORS........................................................... 9
Background of the Offer................................................. 9
Recommendation of the Special Committee and the Board of Directors;
Fairness of the Offer and the Merger................................... 12
Opinion of the Financial Advisor........................................ 16
Purpose of the Offer; Plans for the Company............................. 18
Interests of Certain Persons in the Offer and the Merger................ 20
Merger Agreement........................................................ 23
Dissenters' Rights...................................................... 32
Certain United States Federal Income Tax Consequences................... 32
Financing of the Offer.................................................. 33
Transactions and Arrangements Concerning the Common Stock............... 35
Certain Effects of the Offer and the Merger............................. 36
THE TENDER OFFER.......................................................... 38
Terms of the Offer...................................................... 38
Acceptance for Payment and Payment for Shares of Common Stock........... 40
Procedures for Tendering Shares of Common Stock......................... 41
Withdrawal Rights....................................................... 45
Price Range of Shares of Common Stock; Dividends........................ 46
Effect of the Offer on the Market for the Shares of Common Stock;
Exchange Act Registration.............................................. 47
Certain Information Concerning the Company.............................. 47
Certain Information Concerning Quad-C, Parent, the Purchaser and the
Management Shareholders................................................ 52
Conditions of the Offer................................................. 54
Certain Legal Matters................................................... 56
Fees and Expenses....................................................... 58
Miscellaneous........................................................... 59
</TABLE>
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<PAGE>
SUMMARY TERM SHEET
Pine Acquisition Corp. is offering to purchase all of the outstanding shares
of common stock (the "Common Stock") of Pulaski Furniture Corporation (the
"Company"), for $22.50 net per share in cash, without any interest. The
following are some of the questions you, as a shareholder of the Company, may
have and answers to those questions.
We urge you to read carefully the remainder of this Offer to Purchase and
the Letter of Transmittal because the information in this summary term sheet is
not complete. Additional important information is contained in the remainder of
this Offer to Purchase and the Letter of Transmittal.
.WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Pine Acquisition Corp. We are a Virginia corporation formed for
the purpose of making the offer. We are a direct wholly owned subsidiary of
Pine Holdings, Inc., a Virginia Corporation. We and Pine Holdings are both
newly-formed Virginia corporations and have not conducted any business other
than in connection with the offer and the merger agreement described below. All
of the outstanding capital stock of Pine Holdings is currently owned by Quad-C
Partners V, L.P. ("Quad-C"). Following the completion of the offer and at the
time of the merger of Pine Acquisition Corp. with the Company, the members of
the Company's senior management identified below will become owners of
approximately 14% of the outstanding equity capital of Pine Holdings
(approximately 24% of the equity capital of Pine Holdings calculated by
including shares of Pine Holdings that will be subject to stock options). These
individuals will not tender their shares in the offer but instead, at the time
of the merger, will invest their current equity interests in the Company and/or
cash in exchange for equity interests and subordinated debt of Pine Holdings.
Quad-C and its affiliates are a private investment group based in
Charlottesville, Virginia, focused on the acquisition of companies in
partnership with management. The members of management that will become
shareholders of Pine Holdings (the "Management Shareholders") are Randolph V.
Chrisley, Ira S. Crawford, Jack E. Dawson, James S. Dawson, Carl W. Hoffman,
James H. Kelly, Paul T. Purcell, James W. Stout, John G. Wampler and Raymond E.
Winters, Jr., and they currently collectively own approximately 7.5% of the
outstanding Common Stock of the Company. See the "Introduction" to this Offer
to Purchase.
We are making the offer pursuant to a merger agreement dated March 29, 2000,
to which we, Pine Holdings and the Company each are parties. The offer is the
first step in our plan to acquire the Company. The Management Shareholders have
agreed not to tender their shares and to vote their shares in the offer in
favor of the merger agreement and the transactions contemplated thereby and
against any competing offer pursuant to a Stock Voting and Non-Tender
Agreement, dated as of March 29, 2000, by and among us, Pine Holdings and the
Management Shareholders.
.WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding shares of Common Stock of
the Company. See the "Introduction" to this Offer to Purchase.
. HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I
HAVE TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $22.50 per share, net to you, in cash, without any
interest. If you are the record owner of your shares and you tender your shares
to us in the offer, you will not have to pay brokerage fees or similar
expenses. If you own your shares through a broker or other nominee, and your
broker tenders your shares on your behalf, your broker or nominee may charge
you a fee for doing so. You should consult your broker or nominee to determine
whether any charges will apply. See the "Introduction" to this Offer to
Purchase.
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.DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
All of the funds that we will need to acquire all of the outstanding shares
of Common Stock, refinance the Company's debt and pay related fees and expenses
will be provided from two sources. Bankers Trust Company has committed to
provide us with $82.5 million of bank financing that we may use to acquire
shares of Common Stock; Pine Holdings will provide us with the remainder of the
funds that we need to acquire all of the shares of Common Stock. Bankers Trust
Company's obligation to provide financing, however, is subject to certain
conditions. See "SPECIAL FACTORS--Financing of the Offer" in this Offer to
Purchase.
. IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not believe that our financial condition is relevant to your decision
to tender in the offer because the form of payment that you will receive
consists solely of cash and if you tender into the offer and receive payment in
full for your shares, you will have no continuing equity interest in the
Company. Additionally, both we and Pine Holdings have been formed solely for
the purpose of acquiring shares of Common Stock and there is no relevant
historical financial information available with respect to either us or Pine
Holdings.
Tendering your shares in the offer will end your ownership interest in the
Company, including the chance to receive any possible future dividends or other
payments in respect of the Common Stock. Therefore, the Company's financial
condition may be relevant to your decision whether to tender your shares of
Common Stock in the offer. We have provided certain historical financial
information concerning the Company later in this Offer to Purchase. See "THE
TENDER OFFER--Certain Information Concerning the Company".
.HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have until 12:00 midnight, New York City time, on Friday, May 5,
2000, to decide whether to tender your shares in the offer, unless the offer is
extended pursuant to the terms of the merger agreement. Further, if you cannot
deliver everything that is required in order to make a valid tender by that
time, you may be able to use a guaranteed delivery procedure, which is
described later in this Offer to Purchase. See "THE TENDER OFFER--Terms of the
Offer" in this Offer to Purchase. See "THE TENDER OFFER--Procedures for
Tendering Shares of Common Stock" in this Offer to Purchase.
.CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that we may extend the offer from time to
time until July 29, 2000 if certain conditions to the offer have not been
satisfied. In particular, we may extend the offer for up to ten business days
if there shall not have been tendered a number of shares of Common Stock that,
when added to the shares of Common Stock subject to the Stock Voting and Non-
Tender Agreement, constitutes at least 90% of the outstanding shares of Common
Stock (calculated by including shares of Common Stock that are subject to stock
options). See "THE TENDER OFFER--Terms of the Offer."
.WILL THERE BE A SUBSEQUENT OFFERING PERIOD?
We do not currently intend to include a subsequent offering period for the
offer, although we may ultimately decide to do so. A subsequent offering
period, if one is included, will be an additional period of time beginning
after we have purchased shares tendered during the offer, during which
shareholders may tender their shares and receive the offer consideration.
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. HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED OR IF THERE IS A SUBSEQUENT
OFFERING PERIOD?
If we extend the offer or provide for a subsequent offering period, we will
inform First Union National Bank, which is the depositary for the offer, of
that fact. We also will make a public announcement of the extension, not later
than 9:00 a.m., New York City time, on the next business day after the day on
which the offer was scheduled to expire. See "THE TENDER OFFER--Terms of the
Offer" in this Offer to Purchase.
.WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any shares which are validly tendered
unless the number of shares validly tendered and not properly withdrawn before
the expiration of the offer, when added to the shares of Common Stock, if any,
previously acquired by us represents more than two-thirds of the outstanding
shares of the Company (calculated by including shares of Common Stock that are
subject to stock options). We may, however, decide to purchase all shares
tendered, even though such number may be two-thirds or less of the outstanding
shares, with the prior written consent of the Company.
We are not obligated to purchase any shares which are validly tendered
unless we receive the financing for the offer contemplated by a commitment
letter with Bankers Trust Company. The offer is subject to other conditions, as
well. See the "Introduction" and "THE TENDER OFFER--Conditions of the Offer" in
this Offer to Purchase.
.HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal, to First Union
National Bank, the depositary for the offer, not later than the time the tender
offer expires. If your shares are held in "street name," the shares can be
tendered by your nominee through The Depository Trust Company. If you cannot
get any document or instrument that is required to be delivered to the
depositary by the expiration of the tender offer, you may get a little extra
time to do so by having a broker, a bank or other fiduciary which is a member
of the Securities Transfer Agents Medallion Program or other eligible
institution guarantee that the missing items will be received by the depositary
within three Nasdaq trading days. For the tender to be valid, however, the
depositary must receive the missing items within that three trading day period.
See "THE TENDER OFFER--Procedures for Tendering Shares of Common Stock" in this
Offer to Purchase.
.UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not by Friday, May 5, 2000 agreed to accept your shares for payment, you
can withdraw them at any time after such time until we accept shares for
payment. See "THE TENDER OFFER--Terms of the Offer" and "THE TENDER OFFER--
Withdrawal Rights" in this Offer to Purchase.
.HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
copy of one, with the required information to First Union National Bank, the
depositary for the offer, while you still have the right to withdraw the
shares. See "THE TENDER OFFER--Withdrawal Rights" in this Offer to Purchase.
.WHAT DOES THE COMPANY'S BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to a merger agreement among us, Pine
Holdings and the Company. The board of directors of the Company, based on the
unanimous recommendation of a special committee of
3
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independent directors, has unanimously approved the merger agreement, our
tender offer and the proposed merger of us with and into the Company,
determined that our tender offer and the proposed merger are fair to, and in
the best interest of, the Company's shareholders (other than the Management
Shareholders) and recommended that the Company's shareholders accept our tender
offer. Following the proposed merger, our separate corporate existence will
cease and the Company will continue as the surviving corporation and a direct
wholly owned subsidiary of Pine Holdings. See the "Introduction" to this Offer
to Purchase.
. WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE COMPANY'S SHARES
ARE NOT TENDERED IN THE OFFER?
The offer is the first step in our plan to acquire all of the Company's
Common Stock and for the Company to become a private company. If we accept for
payment and pay for more than two-thirds of the outstanding shares of the
Company, we expect to be merged with and into the Company. If that merger takes
place, Pine Holdings will own directly all of the shares of the Company and all
remaining shareholders of the Company (other than Pine Holdings or its
subsidiaries, including us, and the Management Shareholders) will receive
$22.50 per share in cash. See the "Introduction" to this Offer to Purchase.
.WILL THE COMPANY CONTINUE AS A PUBLIC COMPANY?
No. If the merger takes place, the Company will no longer be publicly owned.
Even if the merger does not take place, if we purchase all of the tendered
shares, there may be so few remaining shareholders and publicly held shares
that
. the Company shares will no longer meet the published guidelines of the
Nasdaq Stock Market for continued listing and may be delisted from
Nasdaq;
. there may not be a public trading market for the Company's shares; and
. the Company may cease making filings with the Securities and Exchange
Commission or otherwise cease being required to comply with the SEC
rules relating to publicly held companies.
See "SPECIAL FACTORS--Certain Effects of the Offer and the Merger" in this
Offer to Purchase.
.WHAT WILL HAPPEN IN THE MERGER?
Following the merger, (i) the shares of Common Stock which are held by any
wholly owned subsidiary of the Company, or which are held by us or Pine
Holdings will be canceled without payment and (ii) the shares owned by the
Management Shareholders will be converted into the right to receive 5.625
shares of common stock of Pine Holdings and $11.25 in principal amount of
subordinated notes of Pine Holdings. All remaining shares of Common Stock
issued and outstanding immediately prior to the effective time of the merger
will be converted into and represent the right to receive $22.50 per share. The
merger agreement is more fully described in "SPECIAL FACTORS--Purpose of the
Offer; Plans for the Company".
.WHO WILL OWN THE COMPANY AFTER THE MERGER?
After the merger, the Company will be a privately held company owned by Pine
Holdings. Quad-C (along with its affiliates) and the Management Shareholders
will own approximately 86% and 14%, respectively, of the outstanding equity
capital of Pine Holdings (approximately 76% and 24%, respectively, of the
equity capital of Pine Holdings calculated by including shares of Pine Holdings
that will be subject to stock options).
.IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, shareholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer. Therefore, if
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the merger takes place, the only difference to you between tendering your
shares and not tendering your shares is that you will be paid earlier if you
tender your shares. However, if the merger does not take place, the number of
the Company's shareholders and of shares of the Company which are still in the
hands of the public may be so small that there may no longer be an active
public trading market (or, possibly, there may not be any public trading
market) for the shares. Also, as described above, the Company may stop making
filings with the Securities and Exchange Commission and/or may not be required
to comply with the Securities and Exchange Commission rules relating to
publicly held companies. See the "Introduction" and "SPECIAL FACTORS--Certain
Effects of the Offer and the Merger" of this Offer to Purchase.
.WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On March 29, 2000, the last trading day before the day the Company announced
the tender offer and the possible subsequent merger, the closing price of the
shares of Common Stock reported on Nasdaq was $16.75 per share. We advise you
to obtain a recent quotation for shares of the Company in deciding whether to
tender your shares. See "THE TENDER OFFER--Price Range of Shares of Common
Stock; Dividends" in this Offer to Purchase.
.WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Morrow & Co., Inc. at (800) 566-9061 (toll free). Morrow & Co.,
Inc. is acting as the information agent for our tender offer. See the back
cover of this Offer to Purchase.
5
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To the Holders of Shares of Common Stock of
Pulaski Furniture Corporation:
INTRODUCTION
Pine Acquisition Corp. (the "Purchaser"), a Virginia corporation and a
direct wholly owned subsidiary of Pine Holdings, Inc. ("Parent"), a Virginia
corporation, hereby offers to purchase all of the issued and outstanding
shares of common stock (the "Common Stock") of Pulaski Furniture Corporation
(the "Company"), a Virginia corporation, including the associated Rights (as
defined below), at a price of $22.50 per share of Common Stock, net to the
seller in cash, without interest thereon (the "Offer Price"), on the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, as they may be amended and supplemented
from time to time, together constitute the "Offer"). The Offer is being made
pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as
of March 29, 2000, by and among Parent, the Purchaser and the Company,
pursuant to which the Purchaser will be merged into the Company (the
"Merger").
Unless the context indicates otherwise, all references to shares of Common
Stock shall include the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Amended and Restated Rights Agreement, dated
as of December 15, 1997, between the Company and First Union National Bank, as
Rights Agent (as amended to the date hereof, the "Rights Agreement"). In order
to validly tender shares of Common Stock, a holder of shares of Common Stock
(a "Holder") must tender the Rights. Unless a Distribution Date has occurred
(as defined in the Rights Agreement) the tender of shares of Common Stock will
constitute the tender of the associated Rights.
Tendering Holders whose shares of Common Stock are registered in their own
name and who tender directly to First Union National Bank, as Depositary (the
"Depositary"), will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of shares of Common Stock pursuant to the
Offer. The Purchaser will pay all charges and expenses of the Depositary and
Morrow & Co., as Information Agent (the "Information Agent"), in each case
incurred in connection with the Offer. See "THE TENDER OFFER--Fees and
Expenses".
In connection with the Merger Agreement, the following members of the
Company's senior management will become owners of approximately 14% of the
outstanding equity capital of Parent (approximately 24% of the fully diluted
equity capital of Parent) by investing their current equity interests and/or
cash in exchange for equity interests and subordinated debt of Parent as part
of the Merger: Randolph V. Chrisley, Ira S. Crawford, Jack E. Dawson, James S.
Dawson, Carl W. Hoffman, James H. Kelly, Paul T. Purcell, James W. Stout, John
G. Wampler and Raymond E. Winters, Jr. These persons are collectively referred
to herein as the "Management Shareholders".
The Offer is conditioned on, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of shares of Common Stock which, when added to the shares of Common
Stock, if any, previously acquired by the Purchaser, constitutes more than
two-thirds of the outstanding shares of Common Stock on a fully diluted basis
(excluding the effect of the Rights) (the "Minimum Condition") and (ii) the
receipt by the Purchaser of the financing for the Offer contemplated by
Bankers Trust Company's commitment letter (the "Financing Condition"). See
"SPECIAL FACTORS--Financing of the Offer". The Offer is also subject to other
terms and conditions described in "THE TENDER OFFER--Conditions of the Offer".
The Board of Directors of the Company, based upon the unanimous
recommendation of a special committee of independent directors, has
unanimously approved the Merger Agreement, the Offer and the Merger,
determined that the Offer and the Merger are fair to, and in the best
interests of, the Holders (other than the Management Shareholders), and
recommends that the Holders accept the Offer and tender their shares pursuant
to the Offer.
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The Company has advised Parent that BB&T Capital Markets, a division of
Scott & Stringfellow, Inc., the financial advisor to the Company ("BBTCM"),
has delivered to the special committee of the Board of Directors of the
Company its opinion, dated March 29, 2000, that the consideration to be
received by the Holders (other than the Management Shareholders), pursuant to
the Offer and the Merger, is fair from a financial point of view to such
Holders, subject to the assumptions and qualifications set forth therein. See
"SPECIAL FACTORS--Opinion of the Financial Advisor."
The Merger Agreement provides that, as soon as practicable after
consummation of the Offer and on the terms and subject to the conditions of
the Merger Agreement and in accordance with Virginia law, the Purchaser will
be merged with and into the Company. Following the effective time of the
Merger (the "Effective Time"), the Company will continue as the surviving
corporation and become a wholly owned subsidiary of Parent and the separate
corporate existence of the Purchaser will cease. At the Effective Time of the
Merger (except for (i) shares of Common Stock which are held by any wholly
owned subsidiary of the Company, or which are held by Parent or the Purchaser
or any of their subsidiaries, all of which will be canceled and none of which
will receive any payment with respect thereto and (ii) shares of Common Stock
held by the Management Shareholders, all of which will be converted into the
right to receive 5.625 shares of common stock of Parent and $11.25 in
principal amount of subordinated notes of Parent and none of which will
continue to be outstanding), each share of Common Stock issued and outstanding
immediately prior to the Effective Time and all rights in respect thereof
shall, by virtue of the Merger and without any action on the part of the
Holder thereof, forthwith cease to exist and be converted into and represent
the right to receive an amount in cash, without interest thereon, equal to
$22.50 (the "Merger Consideration"). The Merger Agreement is more fully
described in "SPECIAL FACTORS--Merger Agreement". Under the Virginia Stock
Corporation Act (the "VSCA"), if the Purchaser acquires, pursuant to the Offer
or otherwise, at least 90% of the issued and outstanding shares of Common
Stock, the Purchaser will be able to approve and effect the Merger without a
vote of the Company's shareholders pursuant to Section 13.1-719 of the VSCA.
If, however, the Purchaser does not acquire at least 90% of the issued and
outstanding shares of Common Stock, pursuant to the Offer or otherwise, a vote
of more than two-thirds of the Company's shareholders to effect the Merger is
required under the VSCA and a longer period of time will be required to effect
the Merger. See "SPECIAL FACTORS--Purpose of the Offer; Plans for the
Company".
Both the Purchaser and Parent are newly formed Virginia corporations that
have not conducted any business other than in connection with the Offer and
the Merger Agreement. All of the outstanding capital stock of Parent is
currently owned by Quad-C Partners V, L.P. ("Quad-C") but at the Effective
Time, the Management Shareholders will become owners of approximately 14% of
the outstanding equity capital of Parent (approximately 24% of the fully
diluted equity capital of Parent) by investing their current equity interests
in the Company and/or cash in exchange for equity interests and subordinated
debt of Parent. Pursuant to the Merger, each share of Common Stock owned by
the Management Shareholders will be converted into the right to receive 5.625
shares of common stock of Parent and $11.25 in principal amount of
subordinated notes of Parent. Additionally, Messrs. Jack E. Dawson, James S.
Dawson, Paul T. Purcell and Raymond E. Winters, Jr. have committed to purchase
$211,770.00, $693,765.00, $43,537.50 and $100,012.50, respectively, of equity
interests and subordinated debt of Parent simultaneous with the Effective Time
of the Merger.
The Management Shareholders have agreed not to tender their shares of
Common Stock in the Offer and to vote their shares in favor of the Merger
Agreement and the transactions contemplated thereby and against any competing
offer pursuant to a Stock Voting and Non-Tender Agreement, dated as of March
29, 2000, by and among the Purchaser, Parent and such Management Shareholders
(the "Voting Agreement"). A copy of the Voting Agreement is filed as an
exhibit to the Tender Offer Statement on Schedule TO (together with any
exhibits, annexes, amendments or supplements thereto, the "Schedule TO") filed
by the Purchaser with the Securities and Exchange Commission (the
"Commission"). In addition, pursuant to the Voting Agreement, the Management
Shareholders have agreed to vote all shares of Common Stock held by the
Management Shareholders (whether now owned or hereafter acquired) in favor of
the Merger Agreement and the transactions contemplated thereby and against any
competing offer.
7
<PAGE>
The Company has informed the Purchaser that, as of March 28, 2000, there
were (i) 2,896,425 shares of Common Stock issued and outstanding and (ii)
options issued and outstanding, representing in the aggregate the right to
purchase 15,000 shares of Common Stock. As a result, as of such date, the
Minimum Condition would be satisfied if at least 1,939,010 shares of Common
Stock are validly tendered and not properly withdrawn prior to the Expiration
Date (as defined herein). The Company has been advised, and has informed
Parent, that each of its directors and executive officers (other than the
Management Shareholders) intends to tender pursuant to the Offer all shares of
Common Stock owned of record and beneficially by him or her, except to the
extent that such tender would violate applicable securities laws.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase and in the attached schedules and
annexes, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. None of Parent, the
Purchaser, Quad-C or the Management Shareholders assumes any responsibility
for the accuracy or completeness of the information concerning the Company
furnished by the Company or contained in such documents and records or for any
failure by the Company to disclose events that may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
the Purchaser. Similarly, the Company does not assume any responsibility for
the accuracy or completeness of the information concerning Quad-C, Parent, the
Purchaser, the Management Shareholders or any of their respective affiliates
contained in this Offer to Purchase or the Schedule TO or for any failure by
Quad-C, the Parent, the Purchaser, the Management Shareholders or any of their
respective affiliates to disclose events that may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
the Company.
The Offer to Purchase includes information required to be disclosed
pursuant to Rule 13e-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which Rule governs so-called "going private"
transactions by certain issuers or their affiliates. None of Parent, the
Purchaser, the Company or Quad-C concedes as a result of providing such
information or otherwise complying with Rule 13e-3 that it (or any of its
affiliates) are affiliates of the Company or subject to the requirements of
such Rule.
This Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
8
<PAGE>
SPECIAL FACTORS
Background of the Offer.
The Company's management and Board of Directors have from time to time
discussed strategies to maximize shareholder value as a regular part of the
Company's strategic planning activities.
By mid-1999 the Company's management and Board of Directors had become
concerned that the Company's strong operating performance was not
appropriately reflected in the Company's share price. One or more members of
the Company's Board of Directors discussed this situation from time to time
with one or more members of the Company's senior management.
These concerns were discussed during internal management meetings during
the summer of 1999 and resulted in a determination by the Management
Shareholders that they should consider seeking out a financial partner with
whom they could make a joint proposal to acquire the Company and take it
private.
On August 30, 1999, John Wampler and Ira Crawford met with representatives
of Mann, Armistead & Epperson in Richmond, Virginia and discussed a potential
acquisition of the Company by the Management Shareholders.
In early September, 1999 certain of the Management Shareholders, including
Mr. Wampler, had very preliminary and general discussions with members of the
Company's Board of Directors regarding the possibility of a management-led
acquisition of the Company to determine whether the Company's Board of
Directors would entertain such a proposal. After these preliminary
discussions, at a meeting of the Board of Directors of the Company on
September 27, 1999, certain of the Management Shareholders, including Mr.
Wampler, sought permission from the Board of Directors of the Company to
search for an equity partner with which to pursue a management-led acquisition
of the Company. At this Board meeting, the Board of Directors of the Company,
although recognizing that the Company was not for sale at that time, indicated
its willingness to entertain such a proposal. Mr. Wampler indicated that he,
together with other members of senior management of the Company, would explore
the feasability of accomplishing and obtaining financing for such a
transaction.
Through October and November of 1999, Mann, Armistead & Epperson, as
financial advisor to the Management Shareholders, contacted four potential
equity partners to judge their interest in participating in a management-led
acquisition of the Company. These meetings were only preliminary in nature and
did not result in any proposal or agreement to make a proposal for an
acquisition of the Company. Additionally, in early December 1999, Mr. Wampler,
Mr. Crawford and an independent sales representative for the Company had
discussions with another potential equity partner which also were preliminary
in nature and did not result in any proposal or agreement to make a proposal
for an acquisition of the Company. This potential equity partner, however,
arranged for the Management Shareholders to make contact with Quad-C.
On December 17, 1999, the independent sales representative telephoned
Anthony Ignaczak, a representative of Quad-C, to arrange a meeting with Mr.
Wampler in Charlottesville, Virginia on December 27, 1999, to discuss the
possibility that Quad-C participate in a management-led acquisition of the
Company. Mr. Ignaczak and two other representatives of Quad-C, Terry Daniels
and Frank Winslow, met with Messrs. Wampler and Crawford, on December 27,
1999. At that meeting, Messrs. Wampler and Crawford discussed with Messrs.
Ignaczak, Daniels and Winslow general information about the Company and its
business and strategies and delivered to them certain publicly available
financial information. Quad-C Management, Inc. executed a confidentiality
agreement with the Company on January 4, 2000. On January 7, 2000, Messrs.
Ignaczak, Daniels and Winslow again met with Messrs. Wampler and Crawford as
well as representatives of Mann, Armistead & Epperson, Ltd. At that meeting,
the parties discussed and reviewed financial and business information about
the Company that had been provided by the Management Shareholders to Quad-C.
As a result of the two meetings with Messrs. Wampler and Crawford, as well as
Quad-C's review of information concerning the Company, Mr. Ignaczak telephoned
Mr. Wampler on January 10, 2000 to inform him that Quad-C would be interested
in participating in a possible management-led acquisition of the Company.
On January 17, 2000 Messrs. Ignaczak, Winslow and Edward Harvey of Quad-C
and Mr. Wampler and Mr. Crawford discussed by telephone conference call,
together with White & Case LLP and McGuire, Woods, Battle
9
<PAGE>
& Boothe LLP, legal advisors for Quad-C and the Management Shareholders,
respectively, and Mann, Armistead & Epperson, the background to Mr. Wampler's
discussions with the Board of Directors regarding a possible management-led
acquisition of the Company. The participants also discussed certain strategic
issues with respect to a possible proposal to acquire the Company.
During late January, 2000, Mr. Wampler reported to the members of the
Company's Board of Directors that he believed a proposal might be developed,
under which the Company would be acquired by the Management Shareholders and
Quad-C. The members of the Company's Board of Directors encouraged Mr. Wampler
to proceed with the development of such a proposal.
During the week of January 24, 2000, Quad-C and their legal and other
advisors (including financing sources) conducted a due diligence review of the
Company at the Company.
Between February 2, 2000, and February 18, 2000, Messrs. Wampler, Ignaczak
and Winslow engaged in numerous telephone calls to discuss various aspects of
the structure, terms and conditions of a possible joint management and Quad-C
proposal to acquire the Company as well as the terms and conditions of the
participation of the Management Shareholders in the ownership of the Company
following any acquisition. These telephone calls often included the
participation of representatives of Quad-C's legal advisors and/or
representatives of the legal and or financial advisors for the Management
Shareholders. Additionally, the legal advisors for the Management Shareholders
and Quad-C frequently had independent telephone conversations with each other
discussing the same issues. During these conversations, the participants
discussed numerous matters relating to a possible proposal including legal
structure, scope of representations and warranties, "break-up" fees and
expense reimbursement, exclusivity provisions, tender offer conditions as well
as other matters. Quad-C, however, did not discuss the possible pricing of an
offer with the Management Shareholders or their representatives during this
period. During this same period, these parties reviewed and commented on
several drafts of a proposed merger agreement that could be submitted for the
consideration of the Company's Board of Directors. Quad-C and its legal and
other advisors also continued their due diligence reviews of the Company which
included conversations about various business, accounting and legal issues
with several of the Management Shareholders. During this period, Mr. Wampler
periodically and informally updated members of the Company's Board of
Directors regarding the progress being made by Quad-C, the Management
Shareholders and their respective advisors and financing sources.
On February 7, 2000, Mr. Wampler spoke to certain members of the Board of
Directors of the Company and the Company's legal advisor to inform them that
it was possible that there would soon be a proposal delivered to the Company's
Board of Directors for a management-led acquisition of the Company, perhaps as
soon as the following week. In the first two weeks of February, 2000, members
of the Company's Board of Directors (other than Mr. Wampler) interviewed
investment banking firms to serve as financial advisor in evaluating the terms
of any proposed transaction involving the Management Shareholders, Quad-C and
the Company.
At a regularly scheduled meeting on February 11, 2000, the Company's Board
of Directors received a report from Mr. Wampler that the Management
Shareholders were continuing to develop a proposal for the acquisition of the
Company and anticipated being able to present a proposal shortly thereafter.
Based on this report, the Board of Directors appointed a special committee
consisting of independent directors Robert C. Greening, Jr., Harry J.G. van
Beek, Harry H. Warner and Hugh V. White, Jr., (the "Special Committee"), to
evaluate the merits, and negotiate the terms, of any proposed transaction with
the Management Shareholders and Quad-C. The Special Committee subsequently
retained BBTCM as its financial advisor on February 14, 2000 and, subsequently
executed an engagement letter with the BBTCM on March 3, 2000.
10
<PAGE>
On February 18, 2000, Quad-C delivered to the Board of Directors of the
Company a written proposal for a management-led acquisition of the Company at
$21.00 per share. The proposal attached a form of merger agreement setting
forth the terms and conditions of the proposed acquisition. The proposal
included a provision requiring the payment of a break-up fee of $3,625,000 and
the reimbursement of Parent's and Purchaser's expenses if the merger agreement
was terminated in certain circumstances.
Mr. Wampler called Mr. Warner on February 21, 2000 to inquire about the
reaction of the Board of Directors of the Company to the February 18th
proposal. Mr. Warner indicated at that time that there would be a Special
Committee meeting on February 24, 2000 at which the Special Committee would
discuss the proposal.
On February 24, 2000, the Special Committee met to discuss the proposal
with the Company's legal and financial advisors. After the meeting, Mr. Warner
called Mr. Wampler to report that the Special Committee was not prepared to
respond to the proposal because BBTCM and the Special Committee needed
additional time to evaluate the proposal.
On March 3, 2000, the Special Committee met again with its financial and
legal advisors to consider the proposal and concluded that the price offered
and certain other principal terms of the initial proposal were not acceptable.
After the meeting, BBTCM contacted Quad-C and Mr. Wampler to report that the
Special Committee did not consider the price that had been proposed to be
sufficient to induce the Special Committee to approve an agreement on the
basis proposed, particularly with respect to the proposed provisions regarding
exclusive dealing, termination, break-up fee and expense reimbursement (the
"Related Provisions").
Between March 3, 2000 and March 20, 2000 Messrs. Ignaczak and Winslow had
several conversations with representatives of BBTCM to discuss primarily the
pricing of the proposed acquisition and the break-up fee and expense
reimbursement that might be payable in the event the acquisition was not
consummated in certain circumstances. Messrs. Ignaczak and Winslow kept Mr.
Wampler informed of these discussions and BBTCM kept the Special Committee
informed of the progress of these discussions. On March 20, Messrs. Ignaczak
and Winslow called a representative of BBTCM to inform them that the
Management Shareholders and Quad-C would be willing to accept the Special
Committee's latest proposal of a price of $22.50 per share with a break-up fee
of $2.9 million and a limit of $1.2 million on expense reimbursement payments,
subject to agreement being reached on the Related Provisions and the other
terms and conditions of the proposed merger agreement.
From March 20, 2000 to March 29, 2000, the Company's legal advisors
negotiated the specific terms and conditions of a merger agreement, including
the Related Provisions, with the legal advisors for Quad-C and the Management
Shareholders. Mr. Wampler, Quad-C and the Special Committee were kept informed
of the progress of the negotiations throughout this period. Additionally,
during this period, the Management Shareholders, Quad-C and their respective
legal advisors negotiated the Voting Agreement and the terms of the Management
Shareholders' participation in the ownership of Parent.
On March 28, 2000, the Special Committee met with its legal advisor and
BBTCM to receive an update on the status of the negotiations with Quad-C and
the Management Shareholders. Later that day Messrs. Daniels and Ignaczak of
Quad-C met with Messrs. Warner and van Beek of the Special Committee to
attempt to resolve outstanding issues of the merger agreement.
On March 29, 2000, the Special Committee held a meeting to discuss the
proposed Merger Agreement with its legal advisor and BBTCM. The Special
Committee determined to recommend to the full Board of Directors that the
Board of Directors approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger. Thereafter the full
Board of Directors met to approve the Merger Agreement and the transactions
contemplated thereby. Subsequently, on March 29, 2000, the negotiations on the
Merger Agreement were concluded and the Merger Agreement was signed. The
Company issued a press release that evening announcing the transaction.
11
<PAGE>
Recommendation of the Special Committee and the Board of Directors;
Fairness of the Offer and the Merger.
Special Committee
The Special Committee determined that the Offer and the Merger, taken
together, are fair to, and in the best interests of, the Company and the
Holders (other then the Management Shareholders). In making such determination
and its recommendation that the Company's Board approve the Merger Agreement
and the transactions contemplated thereby, the Special Committee considered a
number of factors, including, but not limited to, the following:
(1) the terms and conditions of the Merger Agreement, including the
parties' representations, warranties and covenants, the conditions to their
respective obligations, the circumstances under which Parent and the
Purchaser may terminate the Offer or the Merger Agreement and the provision
for payment of all cash subject to a reasonable financing condition;
(2) the financial condition, results of operations, cash flows and
prospects of the Company;
(3) the prospects of the Company if the Company were to remain
independent and the risks inherent in remaining independent, including
competitive risks;
(4) the extensive arms-length negotiations between the Special
Committee, none of whose members were employed by or affiliated with the
Company (except in their capacities as directors) and Quad-C, Parent and
the Purchaser that resulted in the $22.50 per share price;
(5) the historical market prices, price to earnings ratios, EBIT and
EBITDA multiples, recent trading activity and trading range of the shares
of Common Stock, including the fact that the $22.50 per share to be paid in
the Offer and the Merger represents a premium of approximately 34% over the
$16.75 closing sale price for the Common Stock on Nasdaq on March 29, 2000
(the last trading day prior to announcement of the Offer);
(6) the views expressed by the Special Committee's financial advisors
regarding, among other things: (a) the financial condition, results of
operations, cash flows, business and prospects of the Company, including
the prospects of, and uncertainties facing, the Company if it remains
independent; (b) the continued viability of the Company's current
strategies; (c) the likelihood of achieving maximum long-term value as a
public company; (d) the strategic alternatives available to the Company and
the associated advantages and disadvantages; and (e) the likelihood that
any other party would propose an acquisition or strategic business
combination that would be more favorable to the Company and its
shareholders than the Offer and the Merger;
(7) the presentations of BBTCM made to the Special Committee on February
24, 2000, March 3, 2000 and March 29, 2000 and the Fairness Opinion
delivered to the Special Committee and the Company's Board at the March 29,
2000 meeting of the Special Committee and the Company's Board (without
expressly adopting the analyses reflected in the presentations) to the
effect that, as of such date and based upon the terms and conditions of the
Merger Agreement and subject to certain matters stated in such opinion, the
cash consideration of $22.50 per share to be received by Holders of shares
of the common stock in the Offer and the Merger was fair, from a financial
point of view, to Holders. SHAREHOLDERS ARE URGED TO READ THE FAIRNESS
OPINION IN ITS ENTIRETY;
(8) the Special Committee's belief that the Offer and the Merger provide
for a prompt cash tender offer for all outstanding shares of Common Stock
to be followed by a Merger for the same consideration, thereby enabling the
Holders (other than the Management Shareholders) to obtain the benefits of
the transaction in exchange for their shares at the earliest possible time;
(9) the current status of the furniture industry and the financial
resources available to the Company's competitors;
12
<PAGE>
(10) the likelihood of continued consolidation in the furniture industry
and the possibility that changes in that industry, including the rapid
evolution of technology applications and international production
developments, could adversely affect the Company and its shareholders;
(11) the fact that, although the Merger Agreement does not permit the
Company to solicit competing proposals, the Merger Agreement permits the
Company's Board of Directors, in the exercise of its fiduciary duties, and
subject to certain other conditions, to take a variety of actions to
respond to competing proposals, including withdraw its recommendation of
the Merger, and to terminate the Merger Agreement in favor of a superior
proposal, provided, that following such termination, the Company must pay
Parent a fee of $2.9 million (representing approximately 2.3% of the sum of
(i) the total value of the consideration to be paid to Holders in the Offer
and the Merger and (ii) the Company's indebtedness), plus Parent's actual
and documented out-of pocket expenses not in excess of $1.2 million;
(12) the relatively thin trading market and the lack of liquidity of the
shares and the lack of success, due to the relatively small market
capitalization, in attracting institutional investors to invest in, or
research analysts to report on, the Company;
(13) the possibility that if a transaction with the Management
Shareholders, Parent and the Purchaser were not negotiated and the Company
remained a publicly owned corporation, a decline in the market price of the
shares or the stock market in general could occur and the price ultimately
received by the Holders of the shares in the open market or in a future
transaction might be less than the $22.50 per share included in the Offer
and the Merger; and
(14) the business reputation of Quad-C and the affiliated investment
fund that controls Parent and the Purchaser and their management, and their
financial strength, including their ability to finance the Offer.
As part of its analysis the Special Committee also considered the
alternative of causing the Company to remain as a public company. The Special
Committee considered the Company's limitations as a public company as
discussed above, including its limited financial resources. The Special
Committee believed that an improvement in these factors affecting the
Company's prospects was not likely in the immediate future. Although the
Merger will allow only the Management Shareholders to participate in the
Company's future growth, if any, the Special Committee concluded that this
potential benefit of remaining public was outweighed by the risks and
uncertainties associated with the Company's future prospects. The Special
Committee also concluded that obtaining a substantial cash premium for the
Shares now was preferable to preserving for the Holders (other than the
Management Shareholders) of such shares an opportunity to have a speculative
future return.
The Special Committee recognizes that, although the consummation of the
Offer gives the Holders (other than the Management Shareholders) the
opportunity to realize a substantial premium over the price at which the
shares were traded before the public announcement of the Offer, tendering in
the Offer would eliminate the opportunity for such Holders to participate in
the future growth and profits of the Company. The Special Committee believes
that the loss of the opportunity to participate in the growth and profits of
the Company was reflected in the Offer Price of $22.50 per Share. The Special
Committee also recognizes that there can be no assurance as to the level of
growth or profits to be attained by the Company in the future.
The Company's Board of Directors
In reaching its determination referred to above, the Company's Board of
Directors considered and relied upon the conclusions and unanimous
recommendation of the Special Committee that the full Company's Board of
Directors approve the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and the considerations referred
to above as having been taken into account by the Special Committee, as well
as the Board of Directors' own familiarity with the Company's business,
financial condition, results of operations and prospects and the nature of the
industry in which the Company operates.
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In light of the number and variety of factors that the Special Committee
and the Company's Board of Directors considered in connection with their
evaluation of the Offer and the Merger, neither the Special Committee nor the
Company's Board of Directors found it practicable to quantify or otherwise
assign relative weights to the foregoing factors, and, accordingly, neither
the Special Committee nor the Company's Board of Directors did so. In
addition, individual members of the Special Committee and the Company's Board
of Directors may have given different weights to different factors. Rather,
the Special Committee and the Company's Board of Directors viewed their
positions and recommendations as being based on the totality of the
information presented to and considered by it.
The Company's Board of Directors believes that the Offer and the Merger are
procedurally fair because, among other things:
-- the Special Committee consisted of independent directors appointed by
the Company's Board of Directors to represent solely the interests of the
Company's Holders (other than the Management Shareholders);
-- the Special Committee retained and was advised by its own independent
legal counsel and financial advisors who negotiated on behalf of the
Special Committee;
-- the Special Committee's financial advisor, BBTCM, assisted it in
evaluating the proposed transaction and provided other financial advice;
-- the Special Committee evaluated and negotiated the terms of the Offer
and the Merger; and
-- the $22.50 per Share cash purchase price and the other terms and
conditions of the Merger Agreement resulted from active arm's-length
bargaining between the Special Committee and the Management Shareholders
and Parent and their respective advisors.
The Company's Board of Directors believes that sufficient procedural
safeguards to ensure fairness of the transaction and to permit the Special
Committee to represent the interests of the Holders (other than the Management
Shareholders) effectively were present, and therefore there was no need to
retain any additional unaffiliated representative to act on behalf of the
Holders of the shares in view of:
-- the unaffiliated status of the members of the Special Committee, whose
sole purpose was to represent the interests of the Holders (other than
the Management Shareholders) and retention by the Special Committee of
its own independent legal counsel and financial advisor, and
-- the fact that the Special Committee, even though consisting of directors
of the Company (none of whom will hold any position as an officer,
director or employee of Purchaser, Parent or any of their affiliates
after the Merger), is a mechanism well recognized under established
corporate law to ensure fairness in transactions of this type.
Purchaser, Parent, and Quad-C.
Neither Parent, the Purchaser, nor any of the Management Shareholders as
the parties proposing to gain control of the Company, participated in the
deliberations of the Special Committee or the Board of Directors regarding the
fairness of the Offer and the Merger to the Holders (other than the Management
Shareholders). The rules of the Commission require each of Parent, the
Purchaser, Quad-C and the Management Shareholders to express its belief as to
the fairness of the Offer and the Merger to the unaffiliated Holders. Each of
Parent, the Purchaser and Quad-C regards the acquisition of the Company as an
attractive investment opportunity because the Company's future business
prospects, with Quad-C as an equity investor and the Company's new capital
structure, appear strong with significant growth opportunities. Although the
investment will involve a substantial risk to holders of Parent's common
stock, each of Parent, the Purchaser and Quad-C believes that the long-term
value of the equity investment could appreciate significantly. Each of Parent,
the Purchaser and Quad-C have considered the factors considered by the Special
Committee and the Company's Board of Directors referred to
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above, based only on the more limited information available to it pursuant to
the sale process described above. Additionally, each of Parent, the Purchaser
and Quad-C considered the following material factors:
. recent and historical trading prices for the Common Stock, particularly,
the fact that the Offer price represents a 34% premium to the closing
sale price of the Common Stock ($16.75 per share) on the last trading
day prior to public announcement of the Offer;
. the arm's length nature of the negotiations with the Company's Special
Committee with respect to the Merger Agreement;
. the terms and conditions of the Merger Agreement, including the amount
and form of consideration to be paid, the parties' mutual
representations, warranties and covenants and the conditions to their
respective obligations and the absence of any future obligations on the
unaffiliated shareholders of the Company;
. Parent, the Purchaser and Quad-C considered, without adopting, the
opinion of the Financial Advisor that the consideration to be paid to
the Holders (other than the Management Shareholders) in the Offer and
the Merger is fair to the Holders (other than the Management
Shareholders) from a financial point of view.
After considering the foregoing, each of Parent, the Purchaser and Quad-C has
determined that it reasonably believes the consideration to be paid in the
Offer and the Merger to the Holders (other than the Management Shareholders)
is fair to such Holders from a financial point of view. In reaching this
determination as to fairness, none of Parent, the Purchaser or Quad-C assigned
specific weights to particular factors, but rather considered all factors as a
whole. Its conclusion as to the fairness of the Offer and the Merger to the
unaffiliated Holders also is supported by the fact that the terms of the
transactions were negotiated with the Special Committee and its advisors at a
time when each of Parent, the Purchaser and Quad-C did not own any shares of
Common Stock. In reaching this determination, Parent, the Purchaser and Quad-C
recognized that the Offer Price approximates the Company's net book value on a
per share basis. None of Parent, the Purchaser or Quad-C undertook a
liquidation valuation or going concern valuation of the Company. None of
Parent, the Purchaser or Quad-C relied on any report, opinion or appraisal in
determining the fairness of the transaction to Holders, but they do not
disagree with the conclusions expressed by the Financial Advisor in its
opinion to the Board of Directors.
Parent, the Purchaser and Quad-C believe that the Offer and the Merger are
procedurally fair because, among other things: (i) the Board of Directors
appointed the Special Committee consisting only of directors that are not
officers or employees of the Company; (ii) the Special Committee retained on
behalf of the Company and was advised by its own independent legal counsel who
negotiated the Merger Agreement on an arm's length basis on behalf of the
Special Committee; (iii) the Special Committee retained on behalf of the
Company and was advised by its own independent financial advisor to assist in
evaluating the proposal and provide a fairness opinion with respect to the
fairness, from a financial point of view, of the consideration to the Holders,
other than the Management Shareholders; (iv) the $22.50 Offer Price and the
other terms and conditions of the Merger Agreement resulted from active, arm's
length bargaining between the Special Committee and Quad-C and their
respective advisors. The Special Committee's legal advisor and financial
advisor reported directly to the Special Committee and took direction from the
Special Committee and not the Management Shareholders. The Management
Shareholders engaged their own separate legal and financial advisors. The
Board of Directors of the Company acted upon the recommendation of the Special
Committee, the entire Board of Directors was comprised of a majority of
persons not interested in the Offer and the Merger, and at all relevant times
the Special Committee was aware of the interests of the Management
Shareholders in the proposed transaction.
Management Shareholders.
Each of the Management Shareholders adopts the analysis and findings of the
Special Committee and the Board of Directors and of Parent, the Purchaser and
Quad-C with respect to the fairness of the Offer and the Merger, and believes
the Offer and the Merger are procedurally and substantively fair to, and in
the best interests of the unaffiliated Holders.
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Parent, the Purchaser, Quad-C and the Management Shareholders recognize the
Offer and the Merger are not structured specifically to require the approval
of a majority of disinterested Holders, although in order to satisfy the
Minimum Condition (which cannot be waived without the consent of the Company)
a majority of such shares would have to be tendered into the Offer.
Additionally, Parent, the Purchaser, Quad-C and the Management Shareholders
recognize that if the Purchaser purchases all shares of Common Stock tendered
in the Offer, the Purchaser will be able to approve the Merger even if all
remaining Holders vote against the Merger. Consummation of the Offer, however,
is conditioned upon, among other things, the Minimum Condition, which may not
be waived without the written consent of the Company. Pursuant to the Merger
Agreement, consummation of the Offer is a condition to the Merger.
None of the Company, Parent, the Purchaser, Quad-C or any of the Management
Shareholders has made any provisions in connection with the Offer and the
Merger to grant unaffiliated Holders access to the Company's corporate
records, or to obtain counsel or appraisal services at the expense of the
Company, Parent, the Purchaser, Quad-C or any of the Management Shareholders.
Opinion of the Financial Advisor.
On March 29, 2000, BBTCM rendered its opinion to the Special Committee that
as of such date, the consideration to be received by the Holders (other than
the Management Shareholders) in the proposed offer and subsequent merger (the
"Transaction") was fair from a financial point of view to the Holders (other
than the Management Shareholders). No limitations were imposed by the Special
Committee upon BBTCM with respect to the investigations made or procedures
followed by it in rendering its opinion.
The full text of the written opinion of BBTCM, dated March 29, 2000, which
sets forth the assumptions made and matters considered is attached as Annex A
to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 which
has been mailed to shareholder together with this Offer to Purchase. The
Holders are urged to read the opinion in its entirety. BBTCM's opinion is
addressed to the Special Committee and does not constitute a recommendation to
any Holder as to whether such Holder should tender its shares of Common Stock
in the Offer or how such Holder should vote at any shareholder meeting in
connection with the Merger. The summary of the opinion of BBTCM set forth in
this Offer to Purchase is qualified in its entirety by reference to the full
text of such opinion.
In arriving at its opinion, among other actions, BBTCM reviewed the
information and took the related actions described below: the final Merger
Agreement and Voting Agreement and discussed with management and
representatives of the Company and Parent the proposed material terms of the
Transaction; among other public information, the Company's Annual Reports,
Forms 10-K and related financial statements and certain other relevant
financial and operating information for the fiscal years ended October 31,
1999, November 1, 1998 and November 2, 1997; the Company's quarterly report on
Form 10-Q and related financial statements and certain other relevant
financial and operating information for the quarter ended January 23, 2000;
certain information, including financial forecasts provided to BBTCM by the
management of the Company relating to the business, earnings, cash flow,
assets and prospects of the Company and conducted discussions with members of
senior management of the Company concerning the Company's businesses,
prospects, and the forecasts provided to BBTCM by the management of the
Company; the historical market prices and trading activity for the Common
Stock and compared such prices and trading activity with those of certain
publicly traded companies which BBTCM deemed to be relevant; the financial
position and results of operation of the Company and compared them with those
of certain publicly traded companies which BBTCM deemed to be relevant; the
proposed financial terms of the Transaction and compared them with the
financial terms of certain other business combinations which BBTCM deemed to
be relevant; the premiums paid by the purchaser in other business combinations
relative to the closing price one day prior to the announcement, one week
prior to the announcement and four weeks prior to the announcement; and
reviewed other such financial studies and analyses, performed such other
investigations and took into account all other matters as BBTCM deemed to be
material or otherwise necessary to render its opinion, including its
assessment of regulatory, economic, market, and monetary conditions.
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<PAGE>
BBTCM relied upon and assumed, without independent verification, the
accuracy and completeness of information that was publicly available or that
was furnished to BBTCM by or on behalf of the Company or the Management
Shareholders, and BBTCM has not assumed any responsibility or liability
therefor. BBTCM conducted only a limited physical inspection of the Company's
facilities. BBTCM did not prepare or obtain any independent evaluation or
appraisal of any of the assets or liabilities of the Company, nor were any
valuations or appraisals provided to BBTCM. BBTCM further assumed that the
financial forecasts provided to it by the Company were reasonably prepared on
a basis reflecting the best judgment and currently available estimates of
management and that such forecasts will be realized in the amounts and at the
times contemplated. BBTCM took into account its assessment of general
economic, financial, market and industry conditions as they existed and could
be evaluated as of the date of such opinion, as well as their experience in
business valuations in general. BBTCM also assumed that, in the course of
obtaining regulatory and third party consents for the Transaction, no
restriction will be imposed that will have a material adverse effect on the
future results of operations or financial condition of the Company.
BBTCM's opinion is based on economic, market and other considerations as in
effect on, and the information made available to BBTCM as of, the date of such
opinion. Subsequent developments may affect the written opinion dated as of
March 29, 2000, and BBTCM does not have any obligation to update, revise, or
reaffirm such opinion.
In accordance with customary investment banking practice, BBTCM employed
generally accepted valuation methods in reaching its opinion. The following is
a summary of the material financial analyses utilized by BBTCM in connection
with providing its opinion:
Public Trading Multiples. Using publicly available information, BBTCM
compared selected financial data of the Company with similar data for selected
publicly traded companies engaged in businesses which BBTCM judged to be
analogous to the Company. The companies selected by BBTCM were Bassett
Furniture, Inc., Bush Industries, Inc., Chromcraft Revington Inc., Furniture
Brands International, Inc., La-Z-Boy Inc., Rowe Companies and Stanley
Furniture Company, Inc. These companies were selected, among other reasons,
because they are in the same line of business as the Company. For each
comparable company, BBTCM calculated multiples based on publicly available
financial data for the latest twelve months ("LTM"), specifically multiples of
firm value to LTM revenues, firm value to LTM earnings before interest, taxes,
depreciation and amortization ("EBITDA"), firm value to LTM earnings before
interest and taxes ("EBIT") and price of common stock to 2000 and 2001
projected earnings per share ("P/E"). These multiples were then applied to
Pulaski's LTM revenues, LTM EBITDA, LTM EBIT and projected 2000 and 2001
earnings per share, respectively, yielding a range of implied equity values
for the shares of Common Stock of approximately $13.54 to $23.47.
Selected Transaction Analysis. Using publicly available information, BBTCM
examined selected transactions with respect to precedent furniture industry
acquisitions, as well as selected going-private transactions. For each of
these transactions with disclosed consideration and publicly available
financial results of the company acquired, BBTCM calculated firm value as a
multiple of LTM revenues, as a multiple of LTM EBITDA and as a multiple of LTM
EBIT. BBTCM also calculated equity value as a multiple of LTM net income and
as a multiple of book value. These multiples were then applied to the
Company's LTM revenues, LTM EBITDA, LTM EBIT, LTM net income and book value,
respectively, yielding a range of implied equity values for the shares of
Common Stock of approximately $22.19 to $43.50. BBTCM also calculated
multiples for a subset of these acquisitions, consisting of recent going-
private furniture industry transactions that BBTCM believed to be comparable.
These going-private furniture company acquisition multiples yielded a range of
implied equity values for the shares of Common Stock of approximately $22.19
to $35.07.
Premiums Analysis. Using publicly available information, BBTCM reviewed
purchase price premiums paid for the stock of selected publicly held furniture
companies. This analysis measured the purchase price premium paid by acquirors
over the prevailing stock market prices of targets one day prior to the
announcement
of an offer, one week prior to the announcement of an offer and four weeks
prior to the announcement of an offer. These premiums were then applied to the
Company's closing stock price one day, one week and four weeks prior to the
announcement of the Offer, yielding a range of implied equity values for the
shares of Common Stock of approximately $18.75 to $30.73.
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<PAGE>
The summary set forth above does not purport to be a complete description
of the analyses or data presented by BBTCM, but accurately summarizes the
procedures, findings and recommendations of BBTCM. The preparation of a
fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. BBTCM believes that the summary set
forth above and its analyses must be considered as a whole and that selecting
portions thereof, without considering all of its analyses, could create an
incomplete view of the processes underlying its analyses and opinion. BBTCM
based its analyses on assumptions that it deemed reasonable, including
assumptions concerning general business and economic conditions and industry-
specific factors. The other principal assumptions upon which BBTCM based its
analyses are set forth above under the description of each such analysis.
BBTCM's analyses are not necessarily indicative of actual values or actual
future results that might be achieved, which values may be higher or lower
than those indicated. Moreover, BBTCM's analyses are not and do not purport to
be appraisals or otherwise reflective of the prices at which businesses
actually could be bought or sold.
As a part of its investment banking business, BBTCM is regularly engaged in
the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. The Purchaser has been
advised that, BBTCM was selected to advise the Special Committee and deliver a
fairness opinion with respect to the Offer and the Merger on the basis of such
experience and its particular knowledge of and experience with companies in
the furniture industry.
Purpose of the Offer; Plans for the Company.
Purpose of the Offer. The purpose of the Offer is to enable Parent to
acquire as many outstanding shares of Common Stock as possible as a first step
in acquiring the entire equity interest of the Company. The purpose of the
Merger is for Parent to acquire all shares of Common Stock not purchased
pursuant to the Offer. Upon consummation of the Merger, the Company will
become a direct wholly owned subsidiary of Parent. The Offer is being made
pursuant to the Merger Agreement.
Under the VSCA, the approval of the Company's Board of Directors and the
affirmative vote of the holders of more than two-thirds of the outstanding
shares of Common Stock is required to approve and adopt the Merger Agreement
and the transactions contemplated thereby, including the Merger. The Company's
Board of Directors, based upon the unanimous recommendation of the Special
Committee, has unanimously approved the Merger Agreement, the Offer and the
Merger, determined that the Offer and Merger are fair to, and in the best
interests of the Holders (other than the Management Shareholders) and
recommends that the Holders accept the Offer and tender their shares pursuant
to the Offer. Unless the Merger is consummated pursuant to the "short-form"
merger provisions under Section 13.1-719 of the VSCA described below (in which
case no vote of the Holders is required), the only remaining required
corporate action of the Company is the approval and adoption of the Merger
Agreement and the transactions contemplated thereby by the affirmative vote of
the holders of more than two-thirds of the shares of Common Stock.
In the Merger Agreement, the Company has agreed to take all action
necessary to convene a meeting of its shareholders as soon as practicable
after the consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby if
such action is required by the VSCA. However, under the VSCA, if the Purchaser
acquires, pursuant to the Offer or otherwise, at least 90% of the outstanding
shares of Common Stock, the Purchaser will be able to approve the Merger
without a vote of the Company's shareholders. Accordingly, if Purchaser
acquires at least 90% of the outstanding shares of Common Stock, it will have
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without a vote of the
Company's shareholders. In such event, Parent, the Purchaser and the Company
have agreed in the Merger Agreement to take, at the request of the Purchaser,
all necessary and appropriate action to cause the Merger to become effective
without a meeting of the Company's shareholders. If, however, the Purchaser
does not acquire at least 90% of the outstanding shares pursuant to the Offer
or otherwise and a vote of the Company's shareholders is required under the
VSCA, a significantly longer period of time would be required to effect the
Merger.
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If Purchaser purchases shares of Common Stock pursuant to the Offer, the
Merger Agreement provides that the Purchaser will be entitled to designate
representatives to serve on the Board of Directors of the Company in
proportion to the Purchaser's ownership of shares of Common Stock following
such purchase. The Purchaser expects that such representation would permit the
Purchaser to exert substantial influence over the Company's conduct of its
business and operations.
Plans for the Company. Subject to certain matters described below, Parent
expects that, initially following the Merger, the business and operations of
the Company will generally continue as they are currently being conducted.
Parent currently intends to cause the Company's operations to continue to be
run and managed by, among others, the Company's existing executive officers.
Parent will continue to evaluate all aspects of the business, operations,
capitalization and management of the Company during the pendency of the Offer
and after the consummation of the Offer and the Merger and will take such
further actions as it deems appropriate under the circumstances then existing.
Parent intends to seek additional information about the Company during this
period. Thereafter, Parent intends to review such information as part of a
comprehensive review of the Company's business, operations, capitalization and
management. Parent expects that Quad-C Management, Inc. will enter into a
consulting agreement with the Company pursuant to which the Company will pay
to Quad-C Management, Inc. an annual management and consulting fee of $300,000
and a one-time transaction fee upon consummation of the Merger of
approximately $1.3 million. See "SPECIAL FACTORS--Interests of Certain Persons
in the Offer and the Merger". The Offer and the Merger are being undertaken at
this time for the reasons set forth in "SPECIAL FACTORS--Background of the
Offer". Parent determined that an acquisition of the Company on the terms
described in this Offer to Purchase represented an attractive opportunity and
Parent and the Purchaser negotiated and executed a Merger Agreement for the
acquisition of the Company. As a result of the Offer and the Merger and the
related financing, the Company will be substantially leveraged. Parent has
received no assurance that, following the consummation of the Offer and the
Merger, the Company will be able to service its indebtedness or refinance its
indebtedness on satisfactory terms.
As a result of the Offer, the interest of Parent in the Company's net book
value and net earnings will be in proportion to the number of shares of Common
Stock acquired in the Offer. If the Merger is consummated, Parent's interest
in such items and in the Company's equity generally will equal 100% and Parent
and its subsidiaries will be entitled to all benefits resulting from such
interest, including all income generated by the Company's operations and any
future increase in the Company's value. Similarly, Parent will also bear the
risk of losses generated by the Company's operations and any future decrease
in the value of the Company after the Merger. Subsequent to the Merger,
current Holders (other than the Management Shareholders) will cease to have
any equity interest in the Company, will not have the opportunity to
participate in the earnings and growth of the Company after the Merger and
will not have any right to vote on corporate matters. Similarly, such Holders
will not face the risk of losses generated by the Company's operations or
decline in the value of the Company after the Merger.
The shares of Common Stock are currently traded on Nasdaq. Following the
consummation of the Merger, the shares of Common Stock will no longer be
quoted on Nasdaq and the registration of the shares of Common Stock under the
Exchange Act will be terminated. Accordingly, after the Merger there will be
no publicly-traded equity securities of the Company outstanding and the
Company will no longer be required to file periodic reports with the
Commission. See "SPECIAL FACTORS--Certain Effects of the Offer and the
Merger". It is expected that, if shares of Common Stock are not accepted for
payment by the Purchaser pursuant to the Offer and the Merger is not
consummated, the Company's current management, under the general direction of
the Board of Directors, will continue to manage the Company as an ongoing
business.
Except as otherwise discussed in this Offer to Purchase, none of Parent,
the Purchaser, Quad-C, any of their respective directors, executive officers,
general partners or controlling affiliates and none of the Management
Shareholders has any present plans or proposals that would result in any
extraordinary corporate transaction, such as a merger, reorganization,
liquidation involving the Company or any of its subsidiaries, or sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries or in any other material changes to the Company's capitalization,
dividend policy, corporate structure, business or composition of the Board of
Directors
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or the management of the Company except that Parent intends to review the
composition of the boards of directors (or similar governing bodies) of the
Company and its subsidiaries and to cause the election to such boards of
directors (or similar governing bodies) of certain of its representatives.
Interests of Certain Persons in the Offer and the Merger.
In considering the determination of the Parent, Purchaser, Quad-C and the
Management Shareholders that the consideration paid in the Offer and the Merger
to the Holders (other than the Management Shareholders) is fair to such Holders
from a financial point of view, Holders should be aware that, in addition to
the matters discussed above, the Management Shareholders have various interests
in the Merger described in this section that are in addition to and different
from the interests of the Holders generally and create potential conflicts of
interest. Both the Purchaser and Parent are newly formed Virginia corporations
that have not conducted any business other than in connection with the Offer
and the Merger Agreement. All of the outstanding capital stock of Parent is
currently owned by Quad-C but at the Effective Time of the Merger, the
Management Shareholders will become owners of approximately 14% of the
outstanding equity capital of Parent (approximately 24% of the fully diluted
equity capital of Parent) by investing their current equity interests in the
Company and/or cash in exchange for equity interests and subordinated debt of
Parent. Pursuant to the Merger, each share of Common Stock owned by the
Management Shareholders will be converted into the right to receive 5.625
shares of common stock of Parent and $11.25 in principal amount of subordinated
notes of Parent. Additionally, Messrs. Jack E. Dawson, James S. Dawson, Paul T.
Purcell and Raymond E. Winters, Jr. have committed to purchase $211,770.00,
$693,765.00, $43,537.50, and $100,012.50, respectively, of equity interests and
subordinated debt of Parent simultaneous with the Effective Time of the Merger.
The Management Shareholders have agreed not to tender their shares of Common
Stock in the Offer and to vote their shares in favor of the Merger Agreement
and the transactions contemplated thereby and against any competing offer
pursuant to the Voting Agreement.
The Voting Agreement.
The following is a summary of the Voting Agreement. The summary is qualified
in its entirety by reference to the Voting Agreement, a copy of which has been
filed with the Commission as an exhibit to the Schedule TO. The Voting
Agreement can be inspected at, and copies may be obtained from, the same places
and in the manner set forth in "THE TENDER OFFER--Certain Information
Concerning the Company".
Concurrently with the execution of the Merger Agreement, Parent, the
Purchaser and each of the Management Shareholders have entered into the Voting
Agreement pertaining to shares of Common Stock held by each of the Management
Shareholders. Currently, the Management Shareholders own collectively
approximately 7.5% of the outstanding shares of Common Stock of the Company.
Pursuant to the Voting Agreement, each Management Shareholder has agreed not
to tender for acceptance by the Purchaser in the Offer any shares of Common
Stock owned by such Management Shareholder as of the date of the Voting
Agreement and any shares of Common Stock thereafter acquired (all such shares
of Common Stock owned as of the date of the Voting Agreement or acquired after
the date of the Voting Agreement, the "Management Shares"). Additionally, each
Management Shareholder has agreed that during the period commencing on the date
of the Voting Agreement and continuing until the Effective Time, at any meeting
of the holders of any class or classes of the capital stock of the Company,
however called, or in connection with any written consent of the holders of any
class or classes of the capital stock of the Company, such Management
Shareholder will vote (or cause to be voted) such Holder's Management Shares
(x) in favor of the Merger, and the Merger Agreement and each of the other
transactions contemplated by the Merger Agreement and the Voting Agreement, (y)
against any action that would result in a breach of any covenant,
representation or warranty of the Company under the Merger Agreement or of such
Management Shareholder under the Voting Agreement, and (z) against actions or
agreements that could impede, interfere with, delay, postpone, or materially
adversely affect the Merger and the transactions contemplated by the Voting
Agreement or the Merger Agreement. Pursuant to the Voting Agreement, each
Management Shareholder has agreed that such Management Shareholder shall
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not enter into any agreement or understanding with any person the effect of
which would be to violate the provisions and agreements contained in the Voting
Agreement.
Pursuant to the Voting Agreement, each Management Shareholder has appointed
Parent, the Purchaser and any designee of Parent or the Purchaser, as such
Management Shareholder's proxy to vote or act by written consent with respect
to the Management Shares in accordance with the Voting Agreement.
In the Voting Agreement, each Management Shareholder has also agreed that it
will not, in its capacity as a Holder, directly or indirectly (i) solicit,
facilitate, initiate or encourage any inquiries the making of any proposal with
respect to an Acquisition Transaction (as such term is defined in the Merger
Agreement), (ii) enter into an agreement, arrangement or understanding with
respect to any Acquisition Transaction or enter into any agreement, arrangement
or understanding requiring such Management Shareholder to abandon, terminate or
fail to consummate the Voting Agreement or any other transaction contemplated
thereby or (iii) negotiate, explore or otherwise engage in discussions, or
furnish to any person (other than Parent or the Purchaser) any information with
respect to, any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Transaction.
Management Transaction Agreement
The following is a summary of the Management Transaction Agreement, dated as
of March 29, 2000, between Parent, the Purchaser and the Management
Shareholders (the "Transaction Agreement"). The summary is qualified in its
entirety by reference to the Transaction Agreement, a copy of which has been
filed with the Commission as an exhibit to the Schedule TO. The Transaction
Agreement can be inspected at, and copies may be obtained from, the same places
and in the manner set forth in "THE TENDER OFFER--Certain Information
Concerning the Company".
Pursuant to the Transaction Agreement, the Management Shareholders have
committed to exchange their respective shares of Common Stock for shares of
common stock and subordinated notes of Parent in accordance with the Merger
Agreement, and to execute and deliver, prior to the consummation of the Merger,
a Shareholders Agreement (the "Shareholders Agreement") and a Registration
Rights Agreement (the "Registration Rights Agreement") to govern the
relationship of Quad-C and the Management Shareholders as shareholders of
Parent from and after the effective time of the Merger. Furthermore, promptly
following consummation of the Merger, the Company, as the surviving corporation
in the Merger will implement a Management Performance Stock Option Plan (the
"Management Performance Stock Option Plan") and an Annual Incentive
Compensation Plan (the "Annual Incentive Compensation Plan") and Parent will
execute and deliver the Shareholder Agreement and Registration Rights
Agreement.
The Shareholders Agreement will provide for customary restrictions on
transfer, preemptive rights, "rights of first refusal," "tag-along" rights and
"drag-along" rights. It is expected that the Shareholders Agreement will also
provide for a call option that grants Parent the right to acquire shares of
common stock of Parent held by the Management Shareholders under certain
circumstances and certain put rights will be granted to the Management
Shareholders in certain circumstances. The Registration Rights Agreement is
expected to provide for certain rights for Quad-C to require Parent to register
shares of common stock of Parent held by them under the Securities Act. In
addition, the Management Shareholders and other holders of shares of common
stock of Parent will have certain rights to participate in publicly registered
offerings of shares of common stock of Parent initiated by Parent or third
parties. The Management Performance Stock Option Plan will offer the Management
Shareholders and other key management of the Company the right to earn, through
the achievement of specified financial performance levels, additional shares of
Common Stock of Parent. Additionally, Parent will implement the Annual
Incentive Compensation Plan providing for annual cash awards to certain members
of management of the Company should the Company exceed certain annual financial
targets set by the Board of Directors of the Company. The Transaction Agreement
provides that the Management Shareholders' commitments as set forth in this
paragraph are subject to the consummation of the Merger.
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Agreement With Respect to Severance
On December 8, 1999, the Board of Directors of the Company adopted a program
for the assurance of continued employment and the provision of severance
benefits (the "Continuity Program") with respect to the following Management
Shareholders: Randolf V. Chrisley, Ira S. Crawford, James H. Kelly, James W.
Stout and John G. Wampler. In connection with the Continuity Program, each of
such Management Shareholders entered into the Pulaski Furniture Corporation
Employment Continuity Agreements, dated as of March 29, 2000 (the "Continuity
Agreements"), which will entitle such Management Shareholders, upon a "change
of control" of the Company, to an assurance of continued employment for at
least three years (or receipt of continued salary for at least three years
should such Management Shareholder terminate his employment for good reason or
be terminated without cause), accelerated vesting of all outstanding restricted
stock awards and, should such Management Shareholder terminate his employment
for good reason or employment be terminated without cause, full vesting on an
enhanced, pro rata basis, of such Management Shareholder's entitlement under
the Company's Executive Supplemental Retirement Plan. The Continuity Program
and the Continuity Agreements limit the aggregate amount of such payments and
benefits, in the case of each executive named above, to the largest amount that
will result in no portion of any such payment being subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended.
Pursuant to the Transaction Agreement, Messrs. Chrisley, Crawford, Kelly, Stout
and Wampler have agreed that the Offer and the Merger will not result in a
"change of control" under the Continuity Program or the Continuity Agreements,
and, therefore, will not result in the benefits to such individuals that
otherwise would have resulted. The Continuity Program and Continuity Agreements
would, however, apply to other "change of control" transactions. Additionally,
in the Merger Agreement, the Company has agreed that neither it nor any of its
subsidiaries will enter into or become bound by any severance, retention,
compensation or employee benefit plan, policy, program or arrangement under the
Continuity Program and pursuant to which execution of the Merger Agreement and
consummation of the transactions contemplated thereby constitutes or would
constitute a "change in control" of the Company within the meaning of the
Proposed Program.
Indemnification and Insurance
The Merger Agreement provides that the provisions of the articles of
incorporation and the bylaws of the Company as the surviving corporation in the
merger relating to indemnification and exculpation from liability cannot be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights of
individuals who on or prior to the Effective Time were directors, officers,
employees or agents of the Company (the "Indemnified Parties"), unless such
modification is required by law.
The Merger Agreement further provides that, for a period of six years from
the Effective Time, the Surviving Corporation will either (x) maintain in
effect the Company's current directors' and officers' liability insurance
covering the Indemnified Parties; provided, that in no event will Surviving
Corporation be required to pay more than 125% of the annual premiums currently
paid by the Company for such insurance; provided, that if the annual premiums
of such insurance coverage exceed such amount, the Surviving Corporation will
be obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount; provided, further, that the Surviving Corporation
may substitute for such Company policies, policies providing at least the same
coverage and containing terms and conditions which are no less advantageous
provided that said substitution does not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time or (y)
cause the Parent's directors' and officers' liability insurance then in effect
to cover the Indemnified Parties with respect to those matters covered by the
Company's directors' and officers' liability policy.
Stock Options
Pursuant to the Merger Agreement, in the Merger all outstanding employee
stock options, whether or not then fully exercisable or vested, to purchase
shares of Common Stock (a "Stock Option") and all outstanding
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stock appreciation rights, granted under any plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its subsidiaries (collectively, "Stock
Incentive Plans") whether or not then fully exercisable or vested, will become
fully exercisable and vested, and the Stock Options and stock appreciation
rights shall be canceled by the Company, and the holders thereof will receive a
cash payment (the "Cash Payment") from the Company in an amount (if any), equal
to the product of (i) the number of shares subject to such Stock Option or, in
the case of a stock appreciation right, the number of shares to which such
stock appreciation right relates, and (ii) the difference (if positive) between
$22.50 and the exercise price per share of Common Stock covered by the Stock
Option or the stock appreciation right. Each of the Management Shareholders has
indicated that such individual will agree with Parent to waive such
individual's entitlement to a Cash Payment and, instead, will exchange their
Stock Options for options to acquire shares in Parent. Such options to acquire
shares in Parent will have a value equal to the cash value of the Management
Shareholder's Stock Options in the Offer.
In addition, pursuant to the Merger Agreement, at the Effective Time, each
restricted stock award under the Stock Incentive Plans (an "Award") will become
fully and immediately vested and transferable and the restrictions thereon will
lapse. At the Effective Time, each holder of an Award will be paid in full
satisfaction of such Award a cash payment in an amount in respect thereof equal
to the product of (i) $22.50 and (ii) the number of shares of Common Stock
subject to such Award. The number of shares of restricted stock of the Company
to be awarded to certain officers and employees of the Company pursuant to
stock incentive award agreements for fiscal year 2000, will, for each such
officer or employee, be equal to the product of (i) the number of shares of
restricted stock of the Company that would be awarded under each such stock
incentive award agreement, assuming the Company has achieved the $3.03 EPS goal
set forth in such award and (ii) a fraction where the numerator is the actual
number of days such participant is employed by the Company prior to the
Effective Time during the Company's fiscal year ending in 2000 and the
denominator is 365, and all restrictions on such restricted stock will lapse
immediately prior to the Effective Time. Each of the Management Shareholders
has indicated that such individual will agree with Parent to waive such
individual's entitlement to a cash payment and, instead, will exchange his
Award for shares in Parent with a value equal to the cash value of the Award in
the Offer.
Merger Agreement.
The following is a summary of the material terms of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement,
a copy of which has been filed with the Commission as an exhibit to the
Schedule TO. The Merger Agreement may be inspected at, and copies may be
obtained from, the same places and in the manner set forth in "THE TENDER
OFFER--Certain Information Concerning the Company."
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that the obligation of the Purchaser to consummate the Offer and
to accept for payment and to pay for any shares of Common Stock tendered
pursuant to the Offer shall be subject to only those conditions set forth
therein. Subject to the terms of the Merger Agreement, Parent and the Purchaser
may modify the terms of the Offer, including, without limitation, to extend the
Offer beyond the Expiration Date or waive any of the conditions set forth in
"THE TENDER OFFER--Conditions of the Offer" in their sole discretion; provided,
that, without the prior written consent of the Company, Parent and the
Purchaser will not (i) waive the Minimum Condition, (ii) reduce the number of
shares of Common Stock subject to the Offer, (iii) reduce the Offer Price, (iv)
change the form of consideration payable in the Offer, (v) amend any term or
add any condition of the Offer, in each case, in any manner that would
adversely affect the holders of Common Stock in any material respect or (vi)
extend the Expiration Date (as defined below) beyond twenty (20) business days
after commencement of the Offer, except as required by law and except that
Parent and the Purchaser shall have the right, in their sole discretion, (A) to
extend the Expiration Date for up to ten (10) business days after the
Expiration Date if as of that date there shall not have been tendered a number
of shares of Common Stock that, when added to the number of shares of Common
Stock subject to the Voting Agreement, constitute at least 90% of the
outstanding shares of Common
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Stock, (B) to elect to provide a subsequent offering period for the Offer in
accordance with Rule 14d-11 under the Exchange Act or (C) to extend the
Expiration Date of the Offer from time to time for periods of up to twenty (20)
business days each, but in no event later than the Termination Date (as defined
below), if the conditions set forth in "THE TENDER OFFER--Conditions of the
Offer" have not been met. The Merger Agreement further provides that if, on any
Expiration Date of the Offer, the Offer would have expired without any shares
of Common Stock being purchased because the conditions set forth in "THE TENDER
OFFER--Conditions of the Offer" have not been met, Parent and the Purchaser
shall, at the request of the Company, extend the expiration date of the Offer
for one or more periods not exceeding, in each case, twenty (20) business days
(but in no event later than the Termination Date (as defined below)) unless
Parent reasonably believes at such time that such conditions are not capable of
being satisfied. Subject to the terms and conditions of the Offer set forth in
"THE TENDER OFFER--Conditions of the Offer", the Purchaser shall pay for all
shares of Common Stock validly tendered and not withdrawn pursuant to the Offer
as soon after the expiration of the Offer as it is legally permitted to do so
under applicable law.
Pursuant to the terms of the Merger Agreement, the Company has approved of
and consented to the Offer and has represented that its Board of Directors has
unanimously (i) adopted resolutions approving the Merger Agreement, the Offer
and the Merger, (ii) determined that the Offer and the Merger are fair to, and
in the best interests of, the Holders (other than the Management Shareholders),
(iii) recommended that the Holders accept the Offer and approve and adopt the
Merger Agreement and approve the Merger, and (iv) taken all action necessary to
render Section 13.1-725 through 13.1-727.1 and 13.1-728.1 through 13.1-728.9 of
the VSCA and the Rights Agreement inapplicable, in each case, to the Offer and
the Merger.
Composition of the Board Following Consummation of the Offer. The Merger
Agreement provides that, promptly upon consummation of the Offer, the Purchaser
shall be entitled to designate such number of directors (the "Designees"),
rounded up to the next whole number, on the Board of Directors of the Company
as is equal to the product of the total number of directors on the Board of
Directors of the Company (determined after giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the number
of shares of Common Stock beneficially owned by the Purchaser or its affiliates
at such time bears to the total number of shares of Common Stock then
outstanding. At such time and subject to applicable law, the Company agrees to
take all action requested by Parent which is reasonably necessary to effect any
such election, including, without limitation, increasing the size of the Board
of Directors of the Company and/or using its reasonable best efforts to secure
the resignation of directors.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with the VSCA, the Purchaser shall be
merged with and into the Company at the Effective Time. Following the Merger,
the separate corporate existence of the Purchaser will cease and the Company
will continue as the surviving corporation (the "Surviving Corporation").
As of the Effective Time, by virtue of the Merger and without any action on
the part of any shareholder of the Company, (a) all shares of Common Stock that
are held by any wholly owned subsidiary of the Company and any shares of Common
Stock owned by Parent or the Purchaser or any of their subsidiaries shall be
canceled and no consideration shall be delivered in exchange therefor, (b) each
share of Common Stock owned by any Management Shareholder shall be exchanged as
of the Effective Time for 5.625 shares of common stock of Parent and $11.25 in
principal amount of subordinated notes of Parent (all such shares of Common
Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate or
certificates representing any such shares of Common Stock shall cease to have
any rights with respect thereto, except the right to receive the consideration
specified in this clause (b)) and (c) each share of Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to be
canceled in accordance with clause (a) or converted in accordance with clause
(b)) shall be converted as of the Effective Time into the right to receive
$22.50 per share from the Surviving Corporation in cash, without interest
thereon (the "Merger Consideration") (all such shares of Common Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and each holder of a certificate or certificates representing any
such shares of Common Stock shall cease to have any rights with respect
thereto, except the
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right to receive the Merger Consideration). At the Effective Time, each issued
and outstanding share of the capital stock of the Purchaser shall be converted
into one fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
The Merger Agreement provides that in the event that the Purchaser shall
acquire at least 90% of the outstanding shares of Common Stock, the Company,
Parent and the Purchaser will take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a meeting of the shareholders of the Company,
in accordance with Section 13.1-719 of the VSCA.
The Merger Agreement provides that the respective obligations of Parent and
the Purchaser, on the one hand, and the Company, on the other hand, to effect
the Merger are subject to the fulfillment, at or prior to the Effective Time,
of each of the following conditions: (i) if approval of the Merger by the
Holders is required by applicable law, the Merger shall have been approved by
the requisite vote of such Holders; (ii) no domestic (federal, state or local),
foreign or supranational court, commission, governmental body, regulatory or
administrative agency, authority or tribunal (each a "Governmental Entity") or
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree or
injunction which prohibits or has the effect of prohibiting the consummation of
the Merger; provided, however, that the party asserting this condition shall
have used its reasonable best efforts to have any such order, decree or
injunction vacated; (iii) the Purchaser shall have accepted for payment and
paid for all shares of Common Stock properly tendered pursuant to the Offer in
an amount sufficient to satisfy the Minimum Condition; provided, however, that
this condition will be deemed to have been satisfied with respect to the
obligations of the Purchaser to effect the Merger if the Purchaser fails to
accept for payment and pay for any shares of Common Stock validly tendered
pursuant to the Offer in violation of the terms of the Merger Agreement or the
Offer; and (iv) the applicable waiting period (and any extension thereof) under
the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR
Act") shall have expired or been terminated.
Options. Pursuant to the Merger Agreement, the Company will (i) terminate
the Pulaski Furniture Corporation 1991 Stock Option Plan (the "Stock Option
Plan"), the Company's 1996 Salaried Employees' Stock Purchase Plan (the "Stock
Purchase Plan"), and any other Stock Incentive Plans, immediately prior to the
Effective Time, (ii) grant no additional Stock Options, restricted stock
awards, stock appreciation rights or other interests in respect of any shares
of Common Stock under the Stock Incentive Plans and (iii) amend, immediately
prior to the Effective Time, the provisions of any other employee benefit plan,
program, arrangement or agreement providing for the issuance, transfer or grant
of any shares of Common Stock, or any interest in respect of any shares of
Common Stock, to provide no continuing rights to acquire, hold, transfer, or
grant any shares of Common Stock or any interest in any shares of Common Stock.
In addition, the Merger Agreement provides that, immediately prior to the
Effective Time, the Company will have taken all necessary actions, including
obtaining any required consents, such that all outstanding employee Stock
Options, whether or not then fully exercisable or vested, and all outstanding
stock appreciation rights, granted prior to the date of the Merger Agreement
under the Stock Incentive Plans whether or not then fully exercisable or
vested, will become fully exercisable and vested, and the Stock Options and
stock appreciation rights will be canceled by the Company, and the holders
thereof will receive a Cash Payment from the Company in an amount (if any),
equal to the product of (i) and (ii), where (i) is the number of shares of
Common Stock subject to such Stock Option or, in the case of a stock
appreciation right, the number of shares of Common Stock to which such stock
appreciation right relates, and (ii) is the difference (if positive) between
the Merger Consideration and the exercise price per Share covered by the Stock
Option or the stock appreciation right. Prior to the Effective Time, the
Company will have taken all actions necessary, including obtaining all required
consents, such that all amounts, if any, deducted by the Company prior to the
Effective Time from the payroll of a participant under the Stock Purchase Plan
shall be paid to such participant immediately prior to the Effective Time.
Further, all Company contributions, if any, attributable to such amounts and
accrued under the Stock Purchase Plan will also be paid to such participant
immediately prior to the Effective Time.
The Merger Agreement further provides, that immediately prior to the
Effective Time, the Company will have taken all necessary actions, including
obtaining all required consents, such that each Award will become
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fully and immediately vested and transferable and the restrictions thereon will
lapse. At the Effective Time, each holder of an Award will be paid in full
satisfaction of such Award a cash payment in an amount in respect thereof equal
to the product of (i) and (ii), where (i) is the Merger Consideration and (ii)
is the number of shares of Common Stock subject to such Award. The number of
shares of restricted stock of the Company to be awarded to certain officers and
employees of the Company pursuant to stock incentive award agreements for
fiscal year 2000, each dated as of December 15, 2000, will, for each such
officer or employee, be equal to the product of (i) and (ii), where (i) is the
number of shares of restricted stock of the Company that would be awarded under
each such stock incentive award agreement, assuming the Company has achieved
the $3.03 EPS goal set forth in such award and (ii) is a fraction where the
numerator is the actual number of days such participant is employed by the
Company prior to the Effective Time during the Company's fiscal year ending in
2000 and the denominator is 365, and all restrictions on such restricted stock
will lapse immediately prior to the Effective Time.
Notwithstanding the foregoing, the Purchaser and any employee of the Company
may agree in writing that all or a portion of the Stock Options held by such
employee will, in lieu of being canceled in consideration for the Cash Payment
pursuant to the Merger Agreement, be converted into options to acquire shares
of Parent common stock or other securities of Parent. In such event, the
Company will not make the Cash Payment in respect of any such converted Stock
Options. See "SPECIAL FACTORS--Interests of Certain Persons in the Offer and
the Merger."
Directors and Officers of the Surviving Corporation. The Merger Agreement
provides that, at the Effective Time, the directors of the Purchaser
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation.
Company Shareholders' Meeting. Pursuant to the Merger Agreement, promptly
following the purchase of shares of Common Stock pursuant to the Offer if
approval of the Merger by the shareholders of the Company is required by
applicable law, the Company will call a meeting of its shareholders (the
"Shareholder Meeting") for the purpose of voting on the Merger and will take
all action necessary or advisable to obtain shareholder approval of the Merger
and the Company has agreed that this Merger Agreement and the Merger will be
submitted at such meeting. The Shareholder Meeting will be held as soon as
practicable following the purchase of shares of Common Stock pursuant to the
Offer and the Company will, through its Board of Directors, subject to the
Merger Agreement, recommend to its shareholders the approval of the Merger.
Pursuant to the Merger Agreement, the Company has agreed that it will include
in the proxy statement (the "Proxy Statement") required in connection with the
Shareholder Meeting the recommendation of its Board of Directors to the
shareholders of the Company to approve and adopt the Merger Agreement and
approve the Merger. The record date for the Shareholder Meeting will be a date
subsequent to the date the Purchaser becomes a record holder of shares of
Common Stock purchased pursuant to the Offer.
The Company has agreed that, if shareholder approval of the Merger is
required by applicable law, the Company will, as soon as practicable following
the expiration of the Offer, prepare and file a preliminary Proxy Statement
with the Commission and will use its reasonable best efforts to respond to any
comments of the Commission or its staff and to cause the Proxy Statement to be
cleared by the Commission. The Company has agreed to use its commercially
reasonable efforts to obtain the necessary approvals by its shareholders of the
Merger, the Merger Agreement and the transactions contemplated thereby. The
Purchaser has agreed to cause all shares of Common Stock purchased pursuant to
the Offer and all other shares of Common Stock owned by the Purchaser to be
voted in favor of the approval of the Merger.
Interim Operations. The Merger Agreement provides that except as otherwise
expressly permitted or required by the Merger Agreement or as disclosed by the
Company, during the period from the date of the Merger Agreement through the
Effective Time, the Company will, and will cause its subsidiaries to, in all
material respects carry on their respective businesses in, and not enter into
any material transaction other than in accordance with, the regular and
ordinary course and, to the extent consistent therewith, use its reasonable
best efforts to preserve intact their current business organizations, keep
available the services of their current officers
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and employees and preserve their relationships with customers, suppliers and
others having business dealings with them. Without limiting the generality of
the foregoing, and, except as otherwise expressly permitted or required by the
Merger Agreement or as disclosed by the Company, the Company will not, and will
not permit any of its subsidiaries to, without the prior written consent of
Parent: (a)(x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to shareholders of the Company in their
capacity as such, other than dividends payable to the Company declared by any
of the Company's subsidiaries and regular quarterly cash dividends consistent
with past practice in an amount not to exceed $0.17 per share of Common Stock,
(y) split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of its capital stock or (z) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities; (b) issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of its capital stock, any
voting debt or other voting securities or equity equivalent or any securities
convertible into or exchangeable or exercisable for, or any rights, warrants or
options to acquire, any such shares, voting debt or voting securities or
convertible securities or equity equivalent or any phantom stock or stock
appreciation rights (other than, in the case of the Company, the issuance of
shares of Common Stock during the period from March 29, 2000 through the
Effective Time upon the exercise of Stock Options outstanding on March 29,
2000), in accordance with their current terms or enter into any agreement or
contract with respect to the sale or issuance of any of its securities; (c)
amend its charter or bylaws or the Rights Agreement or equivalent governing
documents; (d) acquire or agree to acquire by merging with, or by purchasing a
material amount of assets of or equity in, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets other than
inventory in the ordinary course of business; (e) sell, lease or otherwise
dispose of or agree to sell, lease or otherwise dispose of, any of its assets
that are material, individually or in the aggregate, to the Company, other than
sales of inventory and excess or obsolete assets in the ordinary course of
business consistent with past practice, or allow any properties or assets to
become subject to any lien other than liens permitted in accordance with the
Merger Agreement; (f) incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or guarantee any
debt securities of others, or make any loans, advances or capital contributions
to, or investments in, any other person other than a wholly owned subsidiary,
enter into any "keep-well" or other agreement to maintain any financial state
and condition of another person or enter into any arrangement having the
economic effect of any of the foregoing; (g) grant any severance or termination
pay not currently required to be paid under existing severance plans, or enter
into or adopt, or amend any existing, severance plan, agreement or arrangement
or enter into or amend any employee benefit plan (including, without
limitation, the Stock Option Plan and the Proposed Program for the Assurance of
Continued Employment and Severance Benefit), except as required by applicable
law, or enter into or amend any employment or consulting agreement; (h) enter
into any contract or commitment with respect to capital expenditures with a
value in excess of, or requiring expenditures by the Company and its
subsidiaries in excess of, $250,000, individually, or enter into contracts or
commitments with respect to capital expenditures with a value in excess of, or
requiring expenditures by the Company and its subsidiaries in excess of,
$300,000, in the aggregate; (i) except to the extent required under existing
employee and director benefit plans, agreements or arrangements as in effect on
March 29, 2000, materially increase the compensation or fringe benefits of any
of its directors, officers or employees; (j) agree to the settlement of any
material claim or litigation; (k) make or rescind any material tax election or
settle or compromise any material tax liability; (l) except as required by
applicable law or generally accepted accounting principles, make any change in
its method of accounting or accounting polices or procedures; (m) except as
required under the Stock Option Plan and as otherwise permitted or required by
the Merger Agreement, accelerate the payment, right to payment or vesting of
any bonus, severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits; (n) pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction (A) of any such claims, liabilities or obligations in the ordinary
course of business and consistent with past practice or (B) of claims,
liabilities or obligations reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto) contained in
documents filed with the Commission by the Company, in each case, that are not
in excess of $100,000; (o) enter into any
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agreement, understanding or commitment that restrains, limits or impedes the
Company's or any of its subsidiaries' ability to compete with or conduct any
business or line of business, including, but not limited to, geographic
limitations on the Company's or any of its subsidiaries' activities; (p)
materially modify, amend or terminate any material contract or waive any of its
rights or claims thereunder or enter into any contract, agreement, commitment
or arrangement that, if in existence on March 29, 2000, would be a material
contract; (q) establish, adopt, enter into or amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, defined compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officers or employees; or (r)
agree, in writing or otherwise, to take any of the foregoing actions.
No Solicitation. The Merger Agreement provides as follows:
(a) The Company will and shall cause its subsidiaries and affiliates and
each of their directors, officers, employees, agents, advisors and
representatives to immediately cease any discussions or negotiations with third
parties with respect to any Acquisition Transaction (as hereinafter defined).
Prior to the Effective Time, the Company agrees that it shall not, and shall
not authorize or permit any of its subsidiaries or affiliates or any of their
directors, officers, employees, agents, advisors or representatives to,
directly or indirectly:
(i) solicit, initiate, facilitate or encourage (including without
limitation by furnishing information to a third party or by taking any
action which would make the Rights Agreement or Sections 13.1-725 through
13.1-727.1 and 13.1-728.1 through 13.1-728.9 of the VSCA inapplicable to
any Acquisition Transaction (other than the Offer or the Merger)) any
inquiries or the making of any proposal with respect to any tender offer or
exchange offer involving the Company or any proposal with respect to any
merger, consolidation or other business combination involving the Company
or any subsidiary of the Company, the acquisition of all or any significant
part of the assets of the Company or any subsidiary of the Company or more
than 10% of the capital stock of the Company or any subsidiary of the
Company (each, an "Acquisition Transaction");
(ii) except for agreements with respect to a Superior Proposal (as
hereinafter defined) entered into in accordance with the termination
provisions of the Merger Agreement described below and except for a
confidentiality agreement entered into in connection with actions permitted
in accordance with clause (a)(iii) below, enter into any agreement,
arrangement or understanding with respect to any Acquisition Transaction or
enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Offer, the Merger or any other
transaction contemplated by the Merger Agreement; or
(iii) negotiate, explore or otherwise engage in discussions with any
person (other than Parent and its representatives) with respect to any
Acquisition Transaction, or any inquiry that may reasonably be expected to
lead to a proposal for an Acquisition Transaction; provided, however, that
the Company may (A) participate in discussions with or request
clarifications from or furnish information (pursuant to a confidentiality
agreement with terms not more favorable to such third party than the terms
of the existing confidentiality agreement between the Company and Quad-C,
Inc. to any third party which makes an unsolicited written proposal to
effect an Acquisition Transaction that did not result from the breach of
paragraphs (a), (b) and (c) of this subsection entitled "No Solicitation"
and subject to compliance with its obligations under paragraph (b) below,
in each case solely for the purpose of obtaining information reasonably
necessary to ascertain whether such Acquisition Transaction is, or could
reasonably likely lead to, a Superior Proposal and (B) in response to an
unsolicited written proposal from a third party making a Superior Proposal
that did not result from the breach of paragraphs (a), (b) and (c) of this
subsection entitled "No Solicitation" and subject to compliance with its
obligations under paragraph (b) below, furnish information (pursuant to a
confidentiality agreement with terms not more favorable to such third party
than the terms of the existing confidentiality agreement) and engage in
discussions and negotiations with such third party, but only, in the case
of each of clauses (A) and (B), if the Board of Directors of the Company
determines in good faith (after receiving written advice from its financial
advisors and after receiving advice from outside independent counsel) that
taking such action is in the best interests of the Company and its
shareholders and such action is required by its fiduciary duties under
applicable law.
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Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in this paragraph (a) by any director, officer,
employee, agent, advisor or representative of the Company, whether or not such
person is purporting to act on behalf of the Company, shall constitute a breach
of this paragraph (a) by the Company.
(b) The Company has agreed to advise Parent in writing within 24 hours of the
receipt thereof of the existence of:
(i) any inquiries or proposals (or desire to make a proposal) received
by (or indicated to), any such information requested from, or any
negotiations or discussions sought to be initiated with, the Company, its
affiliates, or any of the respective directors, offices, employees, agents
or representatives of the foregoing, in each case from a person (other than
Parent and its representatives) with respect to an Acquisition Transaction;
and
(ii) the terms thereof, including the identity of such third party and
the terms of any financing arrangement or commitment in connection with
such Acquisition Transaction, and update on an ongoing basis or upon
Parent's reasonable request, the status thereof.
The Company will simultaneously provide to Parent any non-public information
concerning the Company provided to any other person or group in connection with
any Acquisition Transaction which was not previously provided to Parent.
(c) "Superior Proposal" means a bona fide written and unsolicited proposal
or offer made by any person (or group) (other than Parent or any of its
subsidiaries) to acquire all or substantially all of the capital stock of the
Company pursuant to a tender offer, exchange offer, merger or other business
combination or to purchase all or substantially all of the assets of the
Company (i) on terms that, as determined by the Board of Directors of the
Company in good faith (based on written advice of its independent financial
advisors), are more favorable from a financial point of view to the Company and
its shareholders than the transactions contemplated by the Merger Agreement and
any alternative proposed by Parent or the Purchaser and (ii) that is not
conditioned upon obtaining additional financing the likelihood of closing of
which is less certain than the satisfaction of the condition set forth in
paragraph (i) of "THE TENDER OFFER--Conditions of the Offer".
Directors' and Officers' Insurance and Indemnification. The Merger Agreement
provides that the articles of incorporation and the bylaws of the Surviving
Corporation will contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's article of incorporation
and bylaws on March 29, 2000, which provisions will not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who on
or prior to the Effective Time were directors, officers, employees or agents of
the Company (the "Indemnified Parties"), unless such modification is required
by law.
The Merger Agreement further provides that, for a period of six years from
the Effective Time, the Surviving Corporation will either (x) maintain in
effect the Company's current directors' and officers' liability insurance
covering the Indemnified Parties; provided, that in no event shall Surviving
Corporation be required to expend in any one year an amount in excess of 125%
of the annual premiums currently paid by the Company for such insurance;
provided, further, that if the annual premiums of such insurance coverage
exceed such amount, the Surviving Corporation will be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount; provided, further, that the Surviving Corporation may substitute for
such Company policies, policies providing at least the same coverage and
containing terms and conditions which are no less advantageous provided that
said substitution does not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time or (y) cause the
Parent's directors' and officers' liability insurance then in effect to cover
the Indemnified Parties with respect to those matters covered by the Company's
directors' and officers' liability policy.
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Agreement to Use Commercially Reasonable Efforts. Pursuant to the Merger
Agreement and subject to the conditions thereof, each of the Company, Parent
and the Purchaser has agreed to use its commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger, and the other transactions contemplated by the
Merger Agreement, including (a) obtaining all necessary actions or non-actions,
waivers, consents and approvals from all Governmental Entities and the making
of all necessary registrations and filings (including filings with Governmental
Entities, including without limitation, all filings under the HSR Act), and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from or to avoid an action or proceeding by any Governmental Entity, (b)
obtaining all necessary consents, approvals or waivers from third parties, (c)
defending any lawsuits or other legal proceedings, whether judicial or
administrative, challenging the Merger Agreement or the consummation of the
transactions contemplated thereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (d) executing and delivering any additional
instruments necessary to consummate the transactions contemplated by the Merger
Agreement.
Representations and Warranties. In the Merger Agreement, (i) the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, corporate authority, capital
structure, financial statements, public filings, litigation, compliance with
applicable laws, employee benefit plans, brokers' and finders' fees, state
takeover statutes, voting requirements, taxes, intellectual property and the
absence of any material adverse changes in the Company since October 31, 1999
and (ii) Parent and the Purchaser have made customary representations and
warranties to the Company with respect to, among other things, their respective
organization, corporate authority, non-contravention, financing and broker's
and finder's fees.
In addition, the Company has represented that the Company and its Board of
Directors have taken all necessary action to amend the Rights Agreement to
render the Rights Agreement inapplicable with respect to the Offer, the Merger
and the other transactions contemplated by the Merger Agreement.
Termination. The Merger Agreement may be terminated and the transactions
contemplated by the Merger Agreement may be abandoned at any time prior to the
closing of the transactions contemplated thereby (whether before or after the
approval of the Merger Agreement by the shareholders of the Company) as
follows:
(a) by mutual written agreement of Parent and the Company; or
(b) (i) By either the Company or Parent if the Offer shall have expired
without any shares of Common Stock being accepted for purchase under the
Merger Agreement by the Purchaser and without the Purchaser having had an
obligation pursuant to the Merger Agreement to extend the Offer; provided,
however, that none of the parties shall is entitled to terminate the Merger
Agreement pursuant to this clause (b)(i) if, at the time of such proposed
termination, it is in material breach of its representations and
warranties, covenants or other agreements under the Merger Agreement; or
(ii) by the Company;
(A) if the Offer has not commenced within seven business days of the
execution of the Merger Agreement; or
(B) if prior to the acceptance for purchase of shares of Common
Stock pursuant to the Offer, there has been a material breach by either
Parent or the Purchaser of any representation, warranty, covenant or
agreement set forth in the Merger Agreement (and such breach is not
reasonably capable of being cured within thirty (30) days of notice
thereof); provided, however, that the Company is not entitled to
terminate the Merger Agreement in accordance with this section (b) if
it is in material breach of its representations and warranties,
covenants or other agreements under the Merger Agreement; or
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(c) (i) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or filing or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement;
(ii) by Parent, if prior to the acceptance for purchase of shares of
Common Stock pursuant to the Offer, there has been a material breach by the
Company of any representation, warranty, covenant or agreement set forth in
the Merger Agreement, which breach shall result in any condition set forth
in "THE TENDER OFFER--Conditions of the Offer" not being satisfied (and
such breach is not reasonably capable of being cured and such condition
satisfied within thirty (30) days after the receipt of notice thereof);
provided, however, that Parent shall not be entitled to terminate the
Merger Agreement pursuant to this clause (c)(ii) if it or the Purchaser is
in material breach of its representations and warranties, covenants or
other agreements under the Merger Agreement; or
(iii) by either Parent or the Company if by July 29, 2000, the Purchaser
has not purchased any shares of Common Stock pursuant to the Offer;
provided, however, that the right to terminate the Merger Agreement
pursuant to this clause (c) (iii) shall not be available to any party whose
failure to fulfill any material obligation under the Merger Agreement has
been the cause of, or resulted in, the Purchaser's failure to make such
purchases; or
(d) by the Company to allow the Company to enter into one or more
related agreements in accordance with the applicable provisions of the
Merger Agreement with respect to a Superior Proposal if the Company's Board
of Directors has determined in good faith (after receiving advice from
independent outside counsel) that a failure to terminate the Merger
Agreement and enter into an agreement to effect the Superior Proposal would
constitute a breach of its fiduciary duties; provided, however, that:
(i) the Company has complied with all provisions of the Merger
Agreement relating to Acquisition Transactions; and
(ii) Parent does not make, within five business days of receipt of
the Company's written notification of its intention to enter into a
binding agreement for a Superior Proposal, an offer to enter into an
amendment to the Merger Agreement containing terms such that the Board
of Directors of the Company determines in good faith, after receiving
advice from its financial advisors, that the Merger Agreement as so
amended is at least as favorable, from a financial point of view, to
the shareholders of the Company as the Superior Proposal; and
(iii) the Company makes simultaneous payment of the Termination Fee
(as hereinafter defined), plus any amounts then due as a reimbursement
of expenses; and
(iv) substantially contemporaneously with such termination, the
Company enters into a definitive agreement to effect the Superior
Proposal.
(e) by Parent, at any time prior to the acceptance for purchase of the
shares of Common Stock pursuant to the Offer, if:
(i) the Company's Board of Directors, or any committee thereof,
shall have withdrawn, modified, or changed its recommendation in
respect of the Merger Agreement or the Offer in a manner adverse to the
Purchaser;
(ii) the Company's Board of Directors, or any committee shall have
recommended any proposal other than by Parent or the Purchaser in
respect of an Acquisition Transaction;
(iii) the Company has received a proposal regarding an Acquisition
Transaction and the Company shall not have rejected such proposal
within ten business days of its receipt or, if sooner, the date its
existence first becomes publicly disclosed.
Payment of Certain Fees and Expenses Upon Termination. Except as provided in
the immediately succeeding sentence, all costs and expenses incurred in
connection with the Merger Agreement and the consummation of the transactions
contemplated thereby are paid by the party incurring such costs and expenses.
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If the Merger Agreement is terminated by (i) Parent in accordance with
paragraph (e) under the subsection "Termination" hereof, (ii) Parent in
accordance with paragraph (c)(ii) and prior to or within two months of the date
of a termination (x) the Company shall have received a proposal with respect to
an Acquisition Transaction that the Company has not rejected prior to such
termination and (y) within twelve (12) months of the date of such termination,
the Company shall enter into a definitive agreement with respect to such
Acquisition Transaction, or (iii) the Company in accordance with paragraph (d)
under the subsection "Termination" hereof , then the Company will (A) in the
case of clause (i), promptly, but in no event later than two (2) business days
after the date of such termination, (B) in the case of clause (ii), on the
business day next succeeding the execution of a definitive agreement with
respect to such Acquisition Transaction under the circumstances described in
clause (ii) and (C) in the case of clause (iii), simultaneously with such
termination, (I) pay to Parent a termination fee (the "Termination Fee") of
$2,900,000, plus (II) an amount, not in excess of $1,200,000, equal to the
Parent's actual and documented out-of-pocket expenses incurred or paid by
Parent and the Purchaser in connection with the Offer, the Merger, the Merger
Agreement and the consummation of the transactions contemplated thereby.
Dissenters' Rights.
No dissenters' or appraisal rights are available in connection with the
Offer. No Holder is entitled to dissenters' rights, rights of appraisal or
other similar rights in connection with the Merger pursuant to the VSCA unless
(i) in the event the vote of the shareholders is required to approve the Merger
pursuant to the VSCA, on the record date fixed by the Company's Board of
Directors to determine the shareholders of the Company entitled to receive
notice of and to vote at a meeting to approve the Merger, or (ii) in the event
no shareholder vote is required to approve the Merger pursuant to the VSCA,
immediately prior to the effective time of the Merger, the shares of Common
Stock are not (A) listed on a national securities exchange or on the NASDAQ or
(B) held by at least 2,000 record shareholders. In the event dissenters' rights
become available, Article 15 of the VSCA provides that shareholders of the
Company will be entitled to receive the "fair value" of their shares of Common
Stock, provided that the procedures set forth in Article 15 of the VSCA are
followed. Holders should be aware that the "fair value" as determined under
Article 15 of the VSCA could be more than, the same as or less than the Offer
Price and that failure to follow the steps required by Article 15 of the VSCA
for perfecting dissenters' rights may result in the loss of such rights. The
preceding discussion is only a summary for general information on the
dissenters' rights provisions of the VSCA which are filed as an exhibit to
Schedule TO.
The foregoing summary of the rights of objecting Holders does not purport to
be a complete statement of the procedures to be followed by Holders desiring to
exercise any available appraisal rights.
Certain United States Federal Income Tax Consequences.
The receipt of cash for shares of Common Stock pursuant to the Offer or the
Merger by a U.S. Holder (as hereinafter defined) will be a taxable transaction
for United States federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. For purposes of
this discussion, a "U.S. Holder" is a beneficial owner of shares of Common
Stock who for United States federal income tax purposes is (i) a citizen or
resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any State thereof (including the
District of Columbia), (iii) an estate the income of which is subject to United
States federal income taxation regardless of its source or (iv) a trust if such
trust has validly elected to be treated as a United States person for United
States federal income tax purposes or a trust (a) the administration over which
a United States court can exercise primary supervision and (b) all of the
substantial decisions of which one or more United States persons have the
authority to control.
In general, a U.S. Holder will recognize a gain or loss for United States
federal income tax purposes equal to the difference, if any, between the amount
realized from the sale of shares of Common Stock and such U.S. Holder's
adjusted tax basis in such shares of Common Stock. Assuming that the shares of
Common Stock constitute a capital asset in the hands of the U.S. Holder, such
gain or loss will be capital gain or loss. In the case of a noncorporate U.S.
Holder, the maximum marginal United States federal income tax rate applicable
to
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such gain will be lower than the maximum marginal United States federal income
tax rate applicable to ordinary income, if such U.S. Holder's holding period
for such shares of Common Stock exceeds one year.
The foregoing discussion may not be applicable to certain types of Holders,
including Holders who acquired shares of Common Stock pursuant to the exercise
of stock options or otherwise as compensation, Holders that are not U.S.
Holders and Holders that are otherwise subject to special tax rules, such as
financial institutions, insurance companies, dealers or traders in securities
or currencies, tax-exempt entities, persons that hold shares of Common Stock as
a position in a "straddle" or as part of a "hedging" or "conversion"
transaction for tax purposes and persons that have a "functional currency"
other than the United States dollar.
Backup Withholding Tax. As noted in "THE TENDER OFFER--Procedures for
Tendering Shares of Common Stock", a Holder (other than an "exempt recipient",
including a corporation, a non-U.S. Holder that provides appropriate
certification and certain other persons (if the payor does not have actual
knowledge that such certificate is false)) that receives cash in exchange for
shares of Common Stock may be subject to United States federal backup
withholding tax at a rate equal to 31%, unless such Holder provides its
taxpayer identification number and certifies that such Holder is not subject to
backup withholding tax by submitting a completed Substitute Form W-9 to the
Depositary. Accordingly, each U.S. Holder should complete, sign and submit the
Substitute Form W-9 included as part of the Letter of Transmittal in order to
avoid the imposition of such backup withholding tax.
The United States federal income tax discussion set forth above is included
for general information and is based upon income tax laws, regulations, rulings
and decisions now in effect, all of which are subject to change (possibly
retroactively). Holders are urged to consult their tax advisors with respect to
the specific tax consequences of the Offer or the Merger to them, including the
application and effect of the alternative minimum tax and state, local and
foreign tax laws.
Financing of the Offer.
The Purchaser expects the amount of funds required by the Purchaser to
purchase all of the outstanding shares of Common Stock pursuant to the Offer,
retire existing debt of the Company and to pay related fees and expenses to be
approximately $128.0 million. The Purchaser currently intends to obtain all
such funds from (i) borrowings under the senior credit facilities described
below, (ii) equity investments totaling approximately $24.0 million in Parent
by Quad-C and the Management Shareholders and (iii) an investment of
approximately $24.0 million in senior subordinated notes of parent by Quad-C
and the Management Shareholders. The Purchaser currently intends to obtain a
Senior Credit Facility (the "Credit Facility") to be provided by Bankers Trust
Company (the "Agent").
The Agent has provided a Commitment Letter to the Purchaser pursuant to
which it has agreed to lend to Purchaser up to $82.5 million of the Credit
Facility for the purpose of acquiring Common Stock in the Offer and the Merger,
retiring existing debt of the Company and paying related expenses which, along
with the equity and subordinated debt investments in Parent (the proceeds of
which will be contributed to Purchaser), will be sufficient to consummate the
Offer and the Merger and to pay related fees and expenses. The Purchaser
currently expects that the Agent will syndicate some or all of the Credit
Facility to other banks or financial institutions.
Based upon the Commitment Letter, the Purchaser expects that the Credit
Facility will be a senior secured credit facility consisting of (i) a $85
million 6-year revolving credit facility (the "Revolving Credit Facility") and
(ii) a $35 million 6-year amortizing term loan facility (the "Term Loan").
Loans under the Credit Facility will bear interest at a rate per annum equal
to, at the Borrower's election, (i) the applicable eurodollar rate, plus a
margin equal to 3.25% or (ii) the higher of (a) the Agent's publicly announced
prime lending rate, and (b) the reported federal certificate of deposit rate
plus 1/2 of 1%, plus a margin of 2.25%. The Purchaser further expects that the
Credit Facility will mature six years after the acceptance of the shares of the
Common Stock for payment.
The commitment of the Agent is subject to, among other things, the
negotiation and execution of definitive financing agreements on terms
satisfactory to Parent and the Agent. The definitive documentation relating to
the
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Credit Facility will contain representations and warranties, covenants, events
of default and conditions (including, without limitation, a condition precedent
that the structure and terms of the Offer and the Merger are acceptable to the
Agent) customary for transactions of this size and type. Parent has agreed to
pay certain expenses of, and provide customary indemnities for, the Agent.
The initial borrowing under the Credit Facility is subject to various terms
and conditions including, among other conditions:
. the lenders have not become aware of any facts or circumstances that
they reasonably determine is materially adverse to Parent, the
Purchaser, the Company and their respective subsidiaries;
. no event shall have occurred which is materially adverse to Parent, the
Purchaser, the Company and their respective subsidiaries;
. the lenders are satisfied with the material terms and conditions of each
agreement entered into in connection with such loans, the Offer and the
Merger and all of the conditions in the Offer shall have been satisfied
and the Offer shall have been consummated in accordance with its terms;
. Parent shall have received gross cash proceeds from the issuance of
equity interest (the terms of which shall be satisfactory to the
lenders) of at least $20 million and gross cash proceeds from the
issuance of subordinated notes (the terms of which shall be satisfactory
to the lenders) of at least $20 million;
. the lenders have received a solvency opinion to the effect that, after
giving effect to the Merger and the related financing, we will not be
insolvent;
. the lenders shall have received and be satisfied with a pro forma
balance sheet of Parent and its subsidiaries;
. after giving effect to the merger and the related financing, Parent, the
Purchaser and their respective subsidiaries shall have no outstanding
indebtedness for borrowed money or liens other than indebtedness or
liens permitted under the Credit Facility;
. no material adverse change in banking or capital market conditions shall
have occurred which would have, in the reasonable judgment of the
lenders, a material adverse effect on the syndication of leveraged bank
credit facilities similar to the Credit Facility;
. all necessary governmental and third party approvals of the Offer, the
Merger and the financing thereof shall have been obtained; and
. no litigation which could reasonably be expected to have a material
adverse effect on the Offer, Merger or the financing thereof shall be
pending or threatened, and no litigation shall be pending or threatened
which the lenders determine could reasonably be expected to have a
material adverse effect on Parent, the Purchaser, the Company and their
subsidiaries taken as a whole;
The foregoing summary of the source and amount of funds is subject to
preparation and completion of a definitive credit agreement for the Credit
Facility. If and when definitive agreements relating to the Credit Facility are
executed, copies will be filed as exhibits to an amendment to the Tender Offer
Statement on Schedule TO relating to the Offer which the Purchaser has filed
with the Commission. There are currently no alternative financing arrangements
in the event the primary financing becomes unavailable.
The margin regulations promulgated by the Federal Reserve Board place
restrictions on the amount of credit that may be extended for the purposes of
purchasing margin stock (including the shares of Common Stock) if such credit
is secured directly or indirectly by margin stock.
Based on currently available information, Parent estimates that
approximately $56.0 million may be necessary to repay or purchase existing
long-term and short-term indebtedness of the Company which may be
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required to be repaid or purchased by reason of the consummation of the Offer.
The Purchaser currently intends to provide the Company, through a combination
of loans and capital contributions, with the necessary funds to repay or
purchase such indebtedness from the incurrence of debt by the Purchaser under
the Credit Facility.
The Purchaser has further entered into the Transaction Agreement, as
described under "SPECIAL FACTORS--Interests of Certain Persons in the Offer and
the Merger" above, providing for an equity contribution from the Management
Shareholders, in the aggregate, equal to approximately $6.4 million. The
Purchaser expects that, of this amount, $5.4 million will come in the form of
an exchange of the Management Shares for shares of common stock of Parent as
set forth in the Merger Agreement and $1.0 million will be in the form of a
cash contribution by four of the Management Shareholders.
The Management Shareholders will be holders of subordinated debt of Parent
(the "Subordinated Notes"). The Subordinated Notes will mature seven years
after their initial issuance date. The interest will accrue on the unpaid
principal amount of each Subordinated Note at a rate of 12% per annum (the
"Interest Rate"); provided, that interest on the Subordinated Notes will be
payable solely in kind in the form of additional Subordinated Notes (except
that, so long as a default or event of default does not exist under the Credit
Agreement, cash interest may be paid in respect of the Subordinated Notes (i)
in an amount sufficient to allow the holders of the Subordinated Notes to pay
cash taxes in respect of income on the Subordinated Notes or (ii) if the
"senior leverage ratio" (as defined in the Credit Agreement) of Parent and its
subsidiaries is less than 2.5:1). If Parent defaults on the payment when due of
principal or interest, Parent shall, on demand from time to time pay interest,
to the extent permitted by law, on such defaulted amount up to but not
including the date of actual payment at a rate per annum equal to the Interest
Rate. Any payments made to any holder of any outstanding Subordinated Notes
(whether for principal, interest or otherwise) will be made pro rata among all
holders of outstanding Subordinated Notes.
On not less than thirty (30) days written notice to the holder of any
Subordinated Note, Parent may, at any time and from time to time without
premium or penalty, prepay all or a portion of the unpaid principal amount of
any Subordinated Note together with the unpaid interest accrued on such portion
of the principal amount of such Subordinated Note; provided, that no prepayment
may be made if such prepayment is then prohibited by the terms of any senior
indebtedness. All such prepayments will be made pro rata among the holders of
all outstanding Subordinated Notes.
Payment of the principal of, interest on and all other amounts owing in
respect of the Subordinated Notes will be expressly and fully subordinated to
the payment in full in cash of all indebtedness of Parent other than (i)
indebtedness which is expressly pari passu with or junior to the Subordinated
Notes, (ii) trade payables in the ordinary course of business and (iii) taxes.
An event of default ("Event of Default") will be deemed to have occurred
upon (i) Parent's failure to pay on the maturity date any portion of the unpaid
principal amount of the Subordinated Notes, (ii) Parent's failure to pay on any
interest payment date any portion of the unpaid interest on the Subordinated
Notes and (iii) the commencement of bankruptcy, reorganization, insolvency or
liquidation proceedings involving Parent (other than an involuntary proceeding
which is dismissed or terminated within 90 days of commencement).
Upon the occurrence and during the continuance of an Event of Default (but
subject to the subordination provisions of the Subordinated Notes), the holders
of a majority of the outstanding Subordinated Notes may declare all or any
portion of the outstanding principal amount of the Subordinated Notes due and
payable and demand immediate payment of such amount.
Transactions and Arrangements Concerning the Common Stock.
To the Parent's, Purchaser's, Quad-C's, and each of the Management
Shareholder's knowledge, no transactions in the shares of Common Stock, other
than ordinary course purchases under the Company's 401(k) savings plan, have
been effected during the past 60 days by the Company or its executive officers,
directors,
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affiliates or subsidiaries, or by Parent, the Purchaser, Quad-C, the Management
Shareholders or any of their executive officers, directors, affiliates or
subsidiaries.
Since the commencement of the Company's second full fiscal year preceding
the date of this Offer to Purchase, no purchases of shares of Common Stock were
made by the Company or Parent, the Purchaser, Quad-C or any of the Management
Shareholders.
Except as set forth in this Offer to Purchase, neither the Company nor, to
Company's knowledge, any of its affiliates, directors or executive officers or
any person controlling the Company, is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to, or in connection with, the Offer with respect to any securities
of the Company (including, without limitation, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations). Except as described in this Offer to
Purchase, since the second full fiscal year preceding the date of this Offer to
Purchase, no contacts or negotiations concerning a merger, consolidation, or
acquisition, a tender offer for or other acquisition of any securities of the
Company, an election of directors of the Company, or a sale or other transfer
of a material amount of assets of the Company, has been entered into or has
occurred between any affiliates of the Company or between the Company or any of
its affiliates and any unaffiliated person. Except as described in this Offer
to Purchase, since the third full fiscal year preceding the date of this Offer
to Purchase, the Company has not made any underwritten public offering of the
shares of Common Stock that was (i) registered under the Securities Act of 1933
or (ii) exempt from registration under the Securities Act of 1933 pursuant to
Regulation A thereunder.
The Purchaser has been advised that, to the knowledge of the Company, all of
its executive officers, directors (other than the Management Shareholders),
affiliates and subsidiaries currently intend to tender pursuant to the Offer
all shares of Common Stock held of record or beneficially owned by such persons
(other than shares of Common Stock issuable upon the exercise of Stock Options
and shares of Common Stock, if any, which if tendered could cause such persons
to incur liability under the provisions of Section 16(b) of the Exchange Act),
subject to and consistent with any fiduciary obligations of such persons.
Certain Effects of the Offer and the Merger.
Market for Shares of Common Stock. The purchase of shares of Common Stock
pursuant to the Offer will reduce the number of shares of Common Stock that
might otherwise trade publicly and could adversely affect the liquidity and
market value of the remaining shares of Common Stock held by the public.
Depending upon the aggregate market value and per share price of any shares
of Common Stock not purchased pursuant to the Offer, the Common Stock may no
longer meet the standards of the National Association of Securities Dealers,
Inc. (the "NASD") for continued inclusion on Nasdaq, which require, among other
things, that an issuer have at least 750,000 publicly held shares with a market
value of $5 million held by at least 400 holders holding round lots, and have
net tangible assets of at least $4 million. If these standards are not met, the
Common Stock might nevertheless continue to be included in the Nasdaq Stock
Market with quotations published in the Nasdaq "additional list" or in one of
the "local lists". However, if the number of holders of Common Stock falls
below 300, or if the number of shares of publicly held Common Stock falls below
500,000, or if there are not at least two market makers for such Common Stock,
NASD rules provide that the Common Stock would no longer be "qualified" for
Nasdaq Stock Market reporting, and the Nasdaq Stock Market would cease to
provide any quotations. Common Stock held directly or indirectly by an officer
or director of the Company, or by any beneficial owner of more than 10% of the
shares of Common Stock, ordinarily will not be considered as being publicly
held for this purpose. If, as a result of the purchase of Common Stock pursuant
to the Offer or otherwise, the Common Stock no longer meets the NASD
requirements for continued inclusion in any tier of Nasdaq, and the Common
Stock is no longer included in any tier of the Nasdaq Stock Market, the market
for such Common Stock could be adversely affected.
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In the event the Common Stock no longer meets the requirements of the NASD
for inclusion in any tier of the Nasdaq Stock Market, quotations might still be
available from other sources. The extent of the public market for Common Stock
and availability of such quotations would, however, depend upon the number of
holders of Common Stock remaining at such time, the interest in maintaining a
market in the Common Stock on the part of securities firms, the possible
termination of registration under the Exchange Act, as described below, and
other factors.
Exchange Act Registration. The Common Stock is currently registered under
the Exchange Act. Registration of the Common Stock under the Exchange Act may
be terminated upon application of the Company to the Commission if the Common
Stock is neither listed on a national securities exchange nor held by 300 or
more holders of record. Termination of registration of the Common Stock under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b) of
the Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with shareholders' meetings and
the related requirement of furnishing an annual report to shareholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Common
Stock under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If registration of the Common Stock is not terminated prior to the Merger,
then the Common Stock will be delisted from all stock exchanges and the
registration of the Common Stock under the Exchange Act will be terminated
following the consummation of the Merger.
Margin Regulations. The shares of Common Stock are currently "margin
securities," as such term is defined under the regulations of the Federal
Reserve Board, which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Common Stock. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, shares of the Common Stock would no longer
constitute "margin securities" for the purposes of the margin regulations of
the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers. In any event, the shares of Common Stock will cease
to be "margin securities" if registration of the Common Stock under the
Exchange Act is terminated.
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THE TENDER OFFER
Terms of the Offer.
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all shares of
Common Stock validly tendered prior to the Expiration Date (as hereinafter
defined) and not withdrawn in accordance with "THE TENDER OFFER--Withdrawal
Rights". The term "Expiration Date" means 12:00 midnight, New York City time,
on Friday, May 5, 2000, unless and until the Purchaser, in its sole discretion
(but subject to the terms of the Merger Agreement), shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
The Offer is conditioned on, among other things, satisfaction of the Minimum
Condition and the Financing Condition. The Offer is also subject to certain
other conditions set forth in "THE TENDER OFFER--Conditions of the Offer". If
these or any of the other conditions referred to in "THE TENDER OFFER--
Conditions of the Offer" are not satisfied or any of the events specified in
"THE TENDER OFFER--Conditions of the Offer" have occurred or are determined by
the Purchaser to have occurred prior to the Expiration Date, the Purchaser,
subject to the terms of the Merger Agreement, expressly reserves the right (but
is not obligated) to (i) decline to purchase any of the shares of Common Stock
tendered in the Offer and terminate the Offer, and return all tendered shares
of Common Stock to the tendering Holders, (ii) waive or amend any or all
conditions to the Offer and, to the extent permitted by the Merger Agreement or
applicable law and applicable rules and regulations of the Commission purchase
all shares of Common Stock validly tendered or (iii) subject to the limitations
described below, extend the Offer and, subject to the right of a tendering
Holder to withdraw its shares of Common Stock until the Expiration Date, retain
the shares of Common Stock which have been tendered during the period or
periods for which the Offer is extended, provided, however, that, the Minimum
Condition may not be waived by the Purchaser without the prior written consent
of the Company.
The Rights are currently evidenced by the certificates for the Common Stock
and the tender by a Holder of such Holder's shares of Common Stock will also
constitute a tender of the associated Rights. Pursuant to the Offer, no
separate payment will be made by the Purchaser for the Rights.
Subject to the terms of the Merger Agreement, the applicable rules and
regulations of the Commission and to applicable law, the Purchaser expressly
reserves the right, in its sole discretion, at any time and from time to time,
to extend for any reason the period of time during which the Offer is open,
including upon the occurrence of any of the events specified in "THE TENDER
OFFER--Conditions of the Offer", by giving notice of such extension to the
Depositary and by making a public announcement thereof, not later than 9:00
a.m. New York City time, on the next business day after the day on which the
offer was scheduled to expire.
Except as otherwise provided in the Merger Agreement, there can be no
assurance that the Purchaser will exercise its right to extend the Offer.
During any such extension, all shares of Common Stock previously tendered and
not withdrawn will remain subject to the Offer, subject to the rights of a
tendering Holder to withdraw its shares of Common Stock. See "THE TENDER
OFFER--Withdrawal Rights".
Subject to the terms of the Merger Agreement, the applicable rules and
regulations of the Commission and to applicable law, the Purchaser also
expressly reserves the right, in its sole discretion, at any time and from time
to time (i) to delay acceptance for payment of, or, regardless of whether such
shares of Common Stock were theretofore accepted for payment, payment for, any
shares of Common Stock (a) if any applicable waiting period under the HSR Act
has not expired or been terminated or (b) in order to comply in whole or in
part with any other applicable law, (ii) to terminate the Offer on any
scheduled expiration date and not accept for payment any shares of Common Stock
if any of the conditions referred to in "THE TENDER OFFER--Conditions of the
Offer" are not satisfied or any of the events specified in "THE TENDER OFFER--
Conditions of the Offer" have occurred, (iii) to waive any condition or
otherwise amend the Offer in any respect by giving oral or written
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notice of such delay, termination, waiver or amendment to the Depositary and by
making a public announcement thereof.
The Purchaser reserves the right to modify the terms of the Offer provided
that, without the prior written consent of the Company, the Purchaser will not
(i) waive the Minimum Condition, (ii) reduce the number of shares of Common
Stock subject to the Offer, (iii) reduce the Offer Price, (iv) change the form
of consideration payable in the Offer, (v) amend any term or add any condition
of the Offer in any manner that would adversely affect the Holders in any
material respect or (vi) extend the expiration date of the Offer beyond May 5,
2000, except as required by law and except that Parent and the Purchaser shall
have the right, in their sole discretion, (A) to extend the expiration date of
the Offer for up to ten (10) Business Days after the initial Expiration Date if
as of that date there shall not have been tendered a number of shares of Common
Stock that, when added to the number of shares of Common Stock subject to the
Voting Agreement (as defined herein), constitute at least ninety percent (90%)
of the outstanding shares of Common Stock on a fully diluted basis, (B) to
elect to provide a subsequent offering period for the Offer in accordance with
Rule 14d-11 under the Exchange Act or (C) to extend the expiration date of the
Offer from time to time for successive periods of up to 20 days, but in no
event later than the Termination Date, if the conditions set forth in "THE
TENDER OFFER--Conditions of the Offer" are not satisfied.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act,
requires the Purchaser to pay the consideration offered or return the shares of
Common Stock tendered promptly after the termination or withdrawal of the Offer
and (ii) the Purchaser may not delay acceptance for payment of, or payment for
(except as provided in clause (i) of the second preceding paragraph), any
shares of Common Stock upon the occurrence of any of the conditions specified
in "THE TENDER OFFER--Conditions of the Offer" without extending the period of
time during which the Offer is open.
During any such extension, all shares of Common Stock previously tendered
and not withdrawn will remain subject to the Offer, subject to the right of a
tendering Holder to withdraw its shares of Common Stock. Any such extension,
delay, termination, waiver or amendment will be followed, as promptly as
practicable, by public announcement thereof, with such announcement in the case
of an extension to be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date. Subject to
applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act, which require that material changes be promptly disseminated to Holders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a
press release to the Dow Jones News Service or as otherwise may be required by
applicable law.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will extend the Offer to the extent required by Rules 14d-
4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer or information concerning the Offer, other than a change in price or a
change in the percentage of shares of Common Stock sought, will depend upon the
facts and circumstances then existing, including the relative materiality of
the changed terms or information. With respect to a change in price or a change
in the percentage of shares of Common Stock sought, a minimum period of ten
business days is generally required to allow for adequate dissemination to
Holders and investor response.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, provide a subsequent offering period of from three business
days to twenty business days in length following the expiration of the Offer on
the Expiration Date ("Subsequent Offering Period"). A Subsequent Offering
Period would be an additional period of time, following the expiration of the
Offer and the purchase of shares of Common Stock in the Offer, during which
shareholders may tender shares of Common Stock not tendered into the Offer. A
Subsequent Offering Period, if one is included, is not an extension of the
Offer which already will have been completed.
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During a Subsequent Offering Period, tendering shareholders will not have
withdrawal rights and Purchaser will promptly purchase and pay for any shares
of Common Stock tendered at the same price paid in the Offer. Rule 14d-11
provides that Purchaser may provide a Subsequent offering Period so long as,
among other things, (i) the initial twenty business days period of the Offer
has expired; (ii) the Purchaser offers the same form and amount of
consideration for shares of Common Stock in the Subsequent Offering Period as
in the Offer; (iii) the Purchaser accepts and promptly pays for all securities
tendered during the Offer prior to its expiration; (iv) the Purchaser announces
the results of the Offer, including the approximate number and percentage of
shares of Common Stock deposited in the Offer, no later than 9:00 a.m. New York
City time on the next business day after the Expiration Date and immediately
begins the Subsequent Offering Period; and (v) the Purchaser immediately
accepts and promptly pays for shares of Common Stock as they are tendered
during the Subsequent Offering Period. In a public release, the Commission has
expressed the view that the inclusion of a Subsequent Offering Period would
constitute a material change to the terms of the Offer requiring the Purchaser
to disseminate new information to shareholders in a manner reasonably
calculated to inform them of such change sufficiently in advance of the
Expiration Date (generally five business days). In the event the Purchaser
elects to include a Subsequent Offering Period, it will notify shareholders of
the Company consistent with the requirements of the Commission.
THE PURCHASER DOES NOT CURRENTLY INTEND TO INCLUDE A SUBSEQUENT OFFERING
PERIOD IN THE OFFER, ALTHOUGH IT RESERVES THE RIGHT TO DO SO IN ITS SOLE
DISCRETION. PURSUANT TO RULE 14D-7 UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS
APPLY TO SHARES TENDERED DURING A SUBSEQUENT OFFERING PERIOD WITH RESPECT TO
SHARES OF COMMON STOCK TENDERED IN THE OFFER AND ACCEPTED FOR PAYMENT. THE SAME
CONSIDERATION, THE OFFER PRICE, WILL BE PAID TO SHAREHOLDERS TENDERING SHARES
OF COMMON STOCK IN THE OFFER OR IN A SUBSEQUENT OFFERING PERIOD, IF ONE IS
INCLUDED.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings in respect of the shares of Common Stock for the
purpose of disseminating the Offer to Purchase, the Letter of Transmittal and
other relevant materials to Holders. This Offer to Purchase, the Letter of
Transmittal and other relevant materials will be mailed to holders of record of
shares of Common Stock whose names appear on the Company's list of holders of
shares of Common Stock and will be furnished, for subsequent transmittal to
beneficial owners of shares of Common Stock, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's list of holders of the shares of Common Stock
or, where applicable, who are listed as participants in the security position
listing of The Depository Trust Company ("DTC").
Acceptance for Payment and Payment for Shares of Common Stock
On the terms and subject to the conditions of the Offer, the Merger
Agreement and applicable law, (including, if the Offer is extended or amended,
the terms and conditions of any such extension or amendment), the Purchaser
will purchase, by accepting for payment, and will pay for, all shares of Common
Stock validly tendered prior to the Expiration Date (and not properly withdrawn
in accordance with "THE TENDER OFFER--Withdrawal Rights") promptly after the
later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver
of the conditions set forth in "THE TENDER OFFER--Conditions of the Offer",
including, but not limited to, the regulatory conditions specified in "THE
TENDER OFFER--Certain Legal Matters". Subject to applicable rules of the
Commission and the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of,
or payment for, shares of Common Stock in order to comply, in whole or in part,
with any applicable law or satisfaction or waiver of the Minimum Condition. If,
following acceptance for payment of shares of Common Stock, the Purchaser
asserts such regulatory approvals as a condition and does not promptly pay for
shares of Common Stock tendered, the Purchaser will promptly return such shares
of Common Stock.
In all cases, payment for shares of Common Stock purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such shares of Common Stock (the
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"Certificates") or timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such shares of Common Stock into the Depositary's account at
DTC (the "Book-Entry Transfer Facility"), pursuant to the procedures set forth
in "THE TENDER OFFER--Procedures for Tendering Shares of Common Stock", (ii)
the Letter of Transmittal (or a copy thereof), properly completed and duly
executed with any required signature guarantees, or an Agent's Message (as
hereinafter defined) in connection with a book-entry transfer and (iii) any
other documents required to be included with the Letter of Transmittal under
the terms and subject to the conditions thereof and to this Offer to Purchase.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary forming a part of a Book-
Entry Confirmation system, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from a participant in the Book-Entry
Transfer Facility tendering the shares of Common Stock that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and that the Purchaser may enforce such agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) shares of Common Stock validly tendered and not
properly withdrawn if, as and when the Purchaser gives oral or written notice
to the Depositary of the Purchaser's acceptance for payment of such shares of
Common Stock. On the terms and subject to the conditions of the Offer, payment
for shares of Common Stock accepted pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering Holders for the purpose of receiving payments from the
Purchaser and transmitting payments to such tendering Holders whose shares of
Common Stock have been accepted for payment. UNDER NO CIRCUMSTANCES WILL
INTEREST ON THE PURCHASE PRICE FOR SHARES OF COMMON STOCK BE PAID BY THE
PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT OR EXTENSION OF THE
EXPIRATION DATE. Upon the deposit of funds with the Depositary for the purpose
of making payments to tendering Holders, the Purchaser's obligation to make
such payment shall be satisfied, and tendering Holders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of shares of Common Stock pursuant to the Offer.
If any tendered shares of Common Stock are not accepted for payment for any
reason pursuant to the terms and conditions of the Offer, or if Certificates
are submitted evidencing more shares of Common Stock than are tendered,
Certificates evidencing shares of Common Stock not purchased will be returned,
without expense to the tendering Holder (or, in the case of shares of Common
Stock tendered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedure set forth in "THE TENDER
OFFER--Procedures for Tendering Shares of Common Stock", such shares of Common
Stock will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable following the expiration or termination
of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per share of Common Stock pursuant to the Offer, the Purchaser will
pay such increased consideration for all such shares of Common Stock purchased
pursuant to the Offer, whether or not such shares of Common Stock were tendered
prior to such increase in consideration.
The Purchaser reserves the right to assign to Parent, or to any other direct
or indirect wholly owned subsidiary of Parent, the right to purchase all or any
portion of the shares of Common Stock tendered pursuant to the Offer, but any
such assignment will not relieve the Purchaser of its obligations under the
Offer and the Merger Agreement and will in no way prejudice the rights of
tendering Holders to receive payment for shares of Common Stock validly
tendered and accepted for payment pursuant to the Offer.
Procedures for Tendering Shares of Common Stock.
Valid Tender of Shares of Common Stock. In order for shares of Common Stock
to be validly tendered pursuant to the Offer, a Holder must, prior to the
Expiration Date, either (i) deliver to the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase (a) a properly completed
and duly executed
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Letter of Transmittal (or a copy thereof) with any required signature
guarantees, (b) the Certificates for shares of Common Stock to be tendered and
(c) any other documents required to be included with the Letter of Transmittal
under the terms and subject to the conditions thereof and of this Offer to
Purchase, (ii) cause such Holder's broker, dealer, commercial bank, trust
company or custodian to tender applicable shares of Common Stock pursuant to
the procedures for book-entry transfer described below or (iii) comply with the
guaranteed delivery procedures described below.
Pursuant to the Rights Agreement, until the close of business on the
Distribution Date (as defined in the Rights Agreement), the Rights will be
transferred with and only with the certificates for Common Stock and the
surrender for transfer of any certificates for Common Stock will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. Pursuant to an amendment to the Rights
Agreement, dated as of March 29, 2000, no Distribution Date will occur by
reason of the commencement of the Offer, the acceptance for payment of, or the
payment for, shares of Common Stock pursuant to the Offer or the consummation
of the Merger or the other transactions contemplated by the Merger Agreement.
If separate certificates representing the Rights are issued to Holders prior
to the time a Holder's shares of Common Stock are tendered pursuant to the
Offer, certificates representing the number of Rights equal to the number of
shares of Common Stock tendered must be delivered to the Depositary, or, if
available, a Book-Entry Confirmation received by the Depositary with respect
thereto, in order for such shares of Common Stock to be validly tendered. If
the Distribution Date occurs and separate certificates representing the Rights
are not distributed prior to the time shares of Common Stock are tendered
pursuant to the Offer, Rights may be tendered prior to a Holder receiving the
certificates for Rights by use of the guaranteed delivery procedures described
below. A tender of shares of Common Stock constitutes an agreement by the
tendering Holder to deliver certificates representing all Rights formerly
associated with the number of shares of Common Stock tendered pursuant to the
Offer to the Depositary prior to expiration of the period permitted by such
guaranteed delivery procedures for delivery of certificates for, or a Book-
Entry Confirmation with respect to, Rights (the "Rights Delivery Period").
However, after expiration of the Rights Delivery Period, the Purchaser may
elect to reject as invalid a tender of shares of Common Stock with respect to
which certificates for, or a Book-Entry Confirmation with respect to, the
number of Rights required to be tendered with such shares of Common Stock have
not been received by the Depositary. Nevertheless, the Purchaser will be
entitled to accept for payment shares of Common Stock tendered by a Holder
prior to receipt of the certificates for the Rights required to be tendered
with such shares of Common Stock, or a Book-Entry Confirmation with respect to
such Rights, and either (i) subject to complying with applicable rules and
regulations of the Commission, withhold payment for such shares of Common Stock
pending receipt of the certificates for, or a Book-Entry Confirmation with
respect to, such Rights or (ii) make payment for shares of Common Stock
accepted for payment pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights in reliance upon the agreement of a
tendering Holder to deliver Rights and such guaranteed delivery procedures. Any
determination by the Purchaser to make payment for shares of Common Stock in
reliance upon such agreement and such guaranteed delivery procedures or, after
expiration of the Rights Delivery Period, to reject a tender as invalid will be
made in the sole and absolute discretion of the Purchaser.
The method of delivery of the shares of Common Stock, Rights, Certificates,
the Letter of Transmittal and all other required documents, including delivery
through the Book-Entry Transfer Facility, is at the option and risk of the
tendering Holder, and the delivery will be deemed made only when actually
received by the Depositary (including in the case of book-entry transfer, by
Book-Entry Confirmation). If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. In all cases, sufficient
time should be allowed to ensure timely delivery.
Book-Entry Transfer. The Depositary will establish an account with respect
to the shares of Common Stock at the Book-Entry Transfer Facility for purposes
of the Offer within two business days after the date of this Offer to Purchase.
Any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of shares of Common Stock by (i)
causing such securities to be transferred in accordance with the Book-Entry
Transfer Facility's procedures into the Depositary's account and (ii) causing
the
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Letter of Transmittal to be delivered to the Depositary by means of an Agent's
Message. Although delivery of shares of Common Stock may be effected through
book-entry transfer, either the Letter of Transmittal (or manually signed copy
thereof), properly completed and duly executed, together with any required
signature guarantees, or any Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Depositary prior to the Expiration Date at
one of its addresses set forth on the back cover of this Offer to Purchase, or
the tendering Holder must comply with the guaranteed delivery procedures
described below. Delivery of the Letter of Transmittal and other required
documents or instructions to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Signature Guarantee. All signatures on a Letter of Transmittal must be
guaranteed by a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each an
"Eligible Institution"), unless the shares of Common Stock tendered thereby are
tendered (i) by the registered holder(s) (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of shares of
Common Stock) of shares of Common Stock who has not completed the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
If a Certificate is registered in the name of a person other than the signer
of the Letter of Transmittal, or if payment is to be made, or a Certificate not
accepted for payment or not tendered is to be returned to a person other than
the registered holder(s), then the Certificate must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of
the registered holder(s) appear(s) on the Certificate, with the signature(s) on
such Certificate or stock powers guaranteed as described above. See
Instructions 1, 5 and 7 to the Letter of Transmittal.
Guaranteed Delivery. If a Holder desires to tender shares of Common Stock
pursuant to the Offer and such Holder's Certificates are not immediately
available (including because certificates for Rights have not yet been
distributed by the Rights Agent) or time will not permit all required documents
to reach the Depositary prior to the Expiration Date or the procedure for book-
entry transfer cannot be completed on a timely basis, such shares of Common
Stock may nevertheless be tendered if all the following conditions are
satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary as provided below prior to the Expiration Date; and
(iii) the Certificates for all tendered shares of Common Stock in proper
form for transfer, together with a properly completed and duly executed
Letter of Transmittal (or a copy thereof) with any required signature
guarantee (or, in the case of a book-entry transfer, a Book-Entry
Confirmation along with an Agent's Message) and any other documents
required by such Letter of Transmittal, are received by the Depositary
within three Nasdaq Stock Market ("Nasdaq") trading days after the date of
execution of the Notice of Guaranteed Delivery, or in the case certificates
for the Rights have been issued, three Nasdaq trading days after the date
certificates for Rights are distributed to Holders by the Rights Agent. A
trading day is when the Nasdaq is open for business.
Any Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by facsimile transmission, or by mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery. In the case of shares of Common Stock held
through the Book-Entry Transfer Facility, the Notice of Guaranteed Delivery
must be delivered to the Depositary by a participant by means of the
confirmation system of the Book-Entry Transfer Facility.
43
<PAGE>
Other Requirements. Notwithstanding any other provision hereof, payment for
shares of Common Stock accepted for payment pursuant to the Offer will, in all
cases, be made only after timely receipt by the Depositary of (i) Certificates
evidencing such shares of Common Stock or a Book-Entry Confirmation of the
delivery of such shares of Common Stock, and if certificates evidencing Rights
have been issued, such certificates or a Book-Entry Confirmation, if available,
with respect to such certificates (unless the Purchaser elects, in its sole
discretion, to make payment for the shares of Common Stock pending receipt of
such certificates or a Book-Entry Confirmation, if available, with respect to
such certificates), (ii) a properly completed and duly executed Letter of
Transmittal or a copy thereof with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, tendering Holders
may be paid at different times depending upon when Certificates for shares of
Common Stock (or certificates for Rights) or Book-Entry Confirmations with
respect to shares of Common Stock (or Rights, if applicable) are actually
received by the Depositary. Under no circumstances will interest be paid on the
purchase price of the shares of Common Stock to be paid by the Purchaser,
regardless of any extension of the Offer or any delay in making such payment.
Determination of Validity. All questions as to the validity, form,
eligibility (including, but not limited to, time of receipt) and acceptance for
payment of any tendered shares of Common Stock pursuant to any of the
procedures described above will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders of any
shares of Common Stock determined by it not to be in proper form or if the
acceptance for payment of, or payment for, such shares of Common Stock may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right, in its sole discretion, (subject to the terms of
the Merger Agreement) to waive any of the conditions of the Offer or any defect
or irregularity in any tender with respect to shares of Common Stock of any
particular Holder, whether or not similar defects or irregularities are waived
in the case of other Holders. No tender of shares of Common Stock will be
deemed to have been validly made until all defects and irregularities have been
cured or waived.
Subject to the terms of the Merger Agreement, the Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
Appointment as Proxy. By executing a Letter of Transmittal (or delivering an
Agent's Message) as set forth above, a tendering Holder irrevocably appoints
each designee of the Purchaser as attorney-in-fact and proxy of such Holder,
with full power of substitution, to vote the shares of Common Stock as
described below in such manner as each such attorney-in-fact and proxy (or any
substitute thereof) shall deem proper in its sole discretion, and to otherwise
act (including pursuant to written consent) to the full extent of such Holder's
rights with respect to the shares of Common Stock (and any and all dividends,
distributions, rights or other securities issued or issuable in respect of such
shares of Common Stock on or after April 3, 2000 (collectively, the
"Distributions")) tendered by such Holder and accepted for payment by the
Purchaser prior to the time of such vote or action. All such proxies shall be
considered coupled with an interest in the tendered shares of Common Stock and
shall be irrevocable and are granted in consideration of, and are effective
upon, the acceptance for payment of such shares of Common Stock and all
Distributions in accordance with the terms of the Offer. Such acceptance for
payment by the Purchaser shall revoke, without further action, any other proxy
or power of attorney granted by such Holder at any time with respect to such
shares of Common Stock and all Distributions and no subsequent proxies or
powers of attorney will be given (or, if given, will not be deemed effective)
with respect thereto by such Holder. The designees of the Purchaser will, with
respect to the shares of Common Stock for which the appointment is effective,
be empowered to exercise all voting and other rights as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's shareholders, by written consent or otherwise, and the
Purchaser reserves the right to require that, in order for shares of Common
Stock or any Distributions to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such shares of Common Stock, the
Purchaser must be able to exercise all rights (including, without limitation,
all voting rights and rights of conversion) with respect to such shares of
Common Stock and receive all Distributions.
44
<PAGE>
Backup Withholding. Under United States federal income tax law, the amount
of any cash payments made by the Depositary to Holders (other than corporate
and certain other exempt Holders) pursuant to the Offer may be subject to
backup withholding tax at a rate of 31%. To avoid such backup withholding tax
with respect to payments pursuant to the Offer, a non-exempt, tendering "U.S.
Holder" (as defined in "SPECIAL FACTORS--Certain United States Federal Income
Tax Consequences") must provide the Depositary with such Holder's correct
taxpayer identification number and certify under penalty of perjury that (i)
the taxpayer identification number ("TIN") provided is correct (or that such
Holder is awaiting a TIN) and (ii) such Holder is not subject to backup
withholding tax by completing the Substitute Form W-9 included as part of the
Letter of Transmittal. If backup withholding applies with respect to a Holder
or if a Holder fails to deliver a completed Substitute Form W-9 to the
Depositary or otherwise establish an exemption, the Depositary is required to
withhold 31% of any payments made to such Holder. See "SPECIAL FACTORS--Certain
United States Federal Income Tax Consequences" of this Offer to Purchase and
the information set forth under the heading "Important Tax Information"
contained in the Letter of Transmittal.
The Purchaser's acceptance for payment of the Common Stock tendered pursuant
to the Offer will constitute a binding agreement between the tendering Holder
and the Purchaser upon the terms and subject to the conditions of the Offer.
Withdrawal Rights.
Tenders of shares of Common Stock made pursuant to the Offer are irrevocable
except that such shares of Common Stock may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after June
5, 2000, or at such later time as may apply if the Offer is extended.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of shares of Common Stock or is unable to accept shares of Common Stock for
payment pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf
of the Purchaser, retain tendered shares of Common Stock, and such shares of
Common Stock may not be withdrawn except to the extent that tendering Holders
are entitled to withdrawal rights as described in this Section. Any such delay
will be an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the shares of
Common Stock to be withdrawn, the number of shares of Common Stock to be
withdrawn and the name of the registered holder of the shares of Common Stock,
if different from that of the person who tendered such shares of Common Stock.
If Certificates evidencing shares of Common Stock to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Certificates, the serial numbers shown on such
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
shares of Common Stock have been tendered for the account of an Eligible
Institution. Shares of Common Stock tendered pursuant to the procedure for
book-entry transfer as set forth in "THE TENDER OFFER--Procedures for Tendering
Shares of Common Stock", may be withdrawn only by means of the withdrawal
procedures made available by the Book-Entry Transfer Facility, must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn shares of Common Stock and must otherwise comply
with the Book-Entry Transfer Facility's procedures.
Withdrawals of tendered shares of Common Stock may not be rescinded without
the Purchaser's consent and any shares of Common Stock properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. None of Parent, the Purchaser, the
Depositary, the Information Agent or any other person will be under any duty to
give
45
<PAGE>
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
However, any shares of Common Stock properly withdrawn may be re-tendered at
any time prior to the Expiration Date by following any of the procedures
described in "THE TENDER OFFER--Procedures for Tendering Shares of Common
Stock".
Price Range of Shares of Common Stock; Dividends.
The shares of Common Stock are listed and traded on Nasdaq under the symbol
"PLFC". The table below sets forth, for the periods indicated, the quarterly
high and low daily sales prices of the shares of Common Stock on Nasdaq:
<TABLE>
<CAPTION>
High Low
------- ------
<S> <C> <C>
Fiscal Year Ended November 1, 1998
First Quarter........................................... $ 19.75 $17.75
Second Quarter.......................................... 26.00 18.75
Third Quarter........................................... 27.00 24.00
Fourth Quarter.......................................... 25.50 19.50
Fiscal Year Ended October 31, 1999
First Quarter........................................... $ 26.00 $19.50
Second Quarter.......................................... 23.06 18.63
Third Quarter........................................... 22.00 19.00
Fourth Quarter.......................................... 21.50 14.00
Fiscal Year Ending October 31, 2000
First Quarter........................................... $19.875 $14.00
Second Quarter (through April 6, 2000).................. 23.125 14.00
</TABLE>
- --------
Source: Company's Annual Report on Form 10-K filed with the Commission on
January 27, 2000 other than fiscal year 2000 data; fiscal year 2000 data from
Dow Jones.
On March 29, 2000, the last full trading day prior to the public
announcement of the Offer, the reported closing price of the shares of Common
Stock on Nasdaq was $16.75 per share of Common Stock. On April 6, 2000, the
last full trading day prior to the date of this Offer to Purchase, the last
reported closing price of the shares of Common Stock on Nasdaq was $21.875 per
share of Common Stock. Holders are urged to obtain current market quotations
for the shares of Common Stock.
The Company has paid regular quarterly cash dividends in the amount of $0.17
per share of Common Stock during the fiscal years of 1998, 1999 and 2000. The
Merger Agreement prohibits the Company from declaring or paying any dividends
until the Effective Date of the Merger without the prior written consent of
Parent other than regular quarterly cash dividends consistent with past
practice in an amount not to exceed $0.17 per share of Common Stock.
As described above, the Merger Agreement provides that, subject to certain
exceptions, the Company will not, and will not permit any of its subsidiaries
to, without the prior written consent of Parent, (i) declare, set aside or pay
any dividends on, or make any other actual, constructive or deemed
distributions in respect of, any of its capital stock, or otherwise make any
payments to shareholders of the Company in their capacity as such, other than
dividends payable to the Company declared by any of the Company's subsidiaries
and regular quarterly cash dividends consistent with past practice in an amount
not to exceed $0.17 per share of Common Stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or
46
<PAGE>
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities.
Effect of the Offer on the Market for the Shares of Common Stock; Exchange Act
Registration.
The purchase of the shares of Common Stock pursuant to the Offer will reduce
the number of shares of Common Stock that might otherwise trade publicly and
the number of holders of the shares of Common Stock, could adversely affect the
liquidity and market value of the remaining shares of Common Stock held by the
public and have other consequences with respect to Nasdaq listing, Exchange
Acts registration and availability of margin credit. See "SPECIAL FACTORS--
Certain Effects of the Offer and the Merger".
Certain Information Concerning the Company.
The Company. Except as otherwise stated in this Offer to Purchase, the
information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or is based upon publicly
available documents and records on file with the Commission and other public
sources. None of Parent, the Purchaser or Quad-C assumes any responsibility for
the accuracy or completeness of the information concerning the Company
contained in such documents and records or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to Parent or the
Purchaser.
The Company estimates that it is one of the 25 largest furniture
manufacturers in the United States, based on its 1999 fiscal year net sales.
The Company produces and sells furniture products such as wooden bedroom,
dining room and occasional furniture, and grandfather, mantel and wall clocks.
The Company also imports case goods, specialized furniture items and furniture
parts. Through a sales force of approximately 100 independent contractors,
including 55 regular commission salesmen, the Company serves approximately
8,000 retail customs in all 50 states of the United States, the District of
Columbia, Puerto Rico, Canada, Mexico, several South American Countries,
Australia, New Zealand, the European Common Market, several Middle East
Countries and parts of the Far East. The Company is a Virginia corporation. The
address of the Company's principal executive offices is One Pulaski Square,
P.O. Box 1371, Pulaski, Virginia 24301. The telephone number of the Company at
such offices is (540) 980-7330.
Capital Structure. The authorized capital of the Company consists of (a)
10,000,000 shares of Common Stock and (b) 1,000,000 shares of preferred stock
without par value. As of March 28, 2000, no shares of preferred stock were
outstanding, but 500,000 of such preferred shares were designated as Series A
Cumulative Preferred Stock (the "Series A Preferred Stock"), without par value,
of the Company, in accordance with the terms of the Rights Agreement.
(a) Common Stock
As of March 28, 2000, the Company had 2,896,425 shares of Common Stock
outstanding. As of March 29, 2000, no other shares of any class of the capital
stock of the Company were outstanding.
(b) Rights
On December 15, 1997, the Board of Directors of the Company authorized and
declared a dividend distribution of one Right for each share of Common Stock
outstanding at the close of business on December 19, 1997, and issued one Right
for each share of Common Stock of the Company issued between December 19, 1997
and the Distribution Date (as hereinafter defined). Each Right entitles the
holder to purchase from the Company one one-hundredth of a share of Series A
Preferred Stock at a price of $80.00 per one one-hundredth of a share of Series
A Preferred Stock, subject to adjustment.
Currently, the Rights are evidenced by the certificates for shares of Common
Stock registered in the names of the holders of Common Stock (which
certificates shall be deemed also to be certificates for Rights) and not
47
<PAGE>
by Rights certificates, and the Rights are transferable only in connection with
the transfer of the underlying shares of Common Stock of the Company (including
a transfer to the Company).
The Rights become exercisable after the earlier to occur of (i) the tenth
day following a public announcement by the Company or an Acquiring Person (as
hereinafter defined) that an Acquiring Person has become such and (ii) the
tenth business day after the commencement by any person (other than the
Company, any subsidiary of the Company, any employee benefit plan of the
Company or of a subsidiary of the Company or any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any
such plan, hereinafter collectively referred to as the "Exempt Persons") of, or
the first public announcement of the intention of any person (other than any of
the Exempt Persons) to commence a tender or exchange offer the consummation of
which would result in any person acquiring 15% or more of the then outstanding
shares of Common Stock (such person, an "Acquiring Person") or otherwise would
result in any other person being deemed an Acquiring Person (the earlier of
such dates being hereinafter referred to as the "Distribution Date"). The
Purchaser has been advised by the Company that the Company and its Board of
Directors have taken all necessary action to render the Rights Agreement
inapplicable with respect to the Offer and the Merger pursuant to the terms of
the Merger Agreement and the Merger.
At any time prior to the Distribution Date, the Company may redeem the
Rights, in whole but not in part, for $0.01 per Right. The Rights will expire
at the close of business on December 15, 2007, if not redeemed or exchanged by
the Company at an earlier date.
No holder, as such, of any Rights certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
shares of Series A Preferred Stock or any other securities of the Company which
may at any time be issuable on the exercise of the Rights represented thereby,
nor shall anything contained in the Rights Agreement or in any Rights
certificate be construed to confer upon the holder of any Rights certificate,
as such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting shareholders, or to
receive dividends of subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights certificate shall have been exercised in
accordance with the provisions of the Rights Agreement.
(c) Options
The Company has issued options or other rights to acquire shares of Common
Stock pursuant to a stock option plan, a stock purchase plan and other stock
incentive plans. As of March 28, 2000, these options and other rights were
exercisable into 15,000 shares of Common Stock.
48
<PAGE>
PULASKI FURNITURE CORPORATION
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
Set forth below is certain selected consolidated financial information
relating to the Company and its subsidiaries which has been derived from the
financial statements contained in the Company's Annual Report on Form 10-K for
the fiscal year ended November 1, 1998, its Annual Report on Form 10-K for the
fiscal year ended October 31, 1999 and its Quarterly Report on Form 10-Q for
the quarterly period ended January 23, 2000 and January 24, 1999. More
comprehensive financial information is included in these reports and other
documents filed by the Company with the Commission. The financial information
that follows is qualified in its entirety by reference to these reports and
other documents, including the financial statements and related notes contained
therein. These reports and other documents may be inspected at, and copies may
be obtained from, the same places and in the manner set forth under "Available
Information".
<TABLE>
<CAPTION>
Fiscal Year Ended Three Months Ended
-------------------------------------- ----------------------------
October 31, November 1, November 2, January 23, January 24,
1999 (1) 1998 1997 2000 1999
------------ ------------ ------------ ------------ -----------
Statements of Operations
Data (2):
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $198,230,681 $172,359,659 $158,942,459 $ 51,160,000 $40,942,000
Cost of products sold
(3).................... 155,602,646 135,341,805 134,318,909 40,209,000 32,997,000
Selling, general and
administrative
expenses............... 28,926,727 25,244,182 25,676,853 7,716,000 5,690,000
Other Income
Interest............... 118,536 56,423 21,887 0 14,000
Miscellaneous.......... 1,122,536 13,146 38,485 53,000 198,000
Other Deductions
Interest expense....... 2,661,604 1,804,694 2,346,434 850,000 471,000
Miscellaneous.......... 269,081 148,050 427,669 -- --
Income taxes............ 4,079,524 3,493,100 (1,344,190) 868,000 705,000
Net income (loss)....... $ 7,932,171 $ 6,397,397 $ (2,422,844) $ 1,570,000 $ 1,291,000
============ ============ ============ ============ ===========
Ratio of earnings to
fixed charges.......... 2.23 2.77 .82 2.20 2.86
Per Share Data:
Basic earnings (loss)
per share.............. $ 2.78 $ 2.27 $ (0.87) $ 0.54 .45
Diluted earnings (loss)
per share.............. $ 2.76 $ 2.25 $ (0.87) $ 0.54 .45
Book value per share.... 22.34 20.46 19.10 22.98 20.72
Balance Sheet Data (at
end of period):
Total current assets.... $106,592,511 $ 80,342,783 $ 74,397,266 $104,145,000 72,756,000
Property, plant and
equipment, net (4)..... 38,760,989 35,224,853 35,247,677 38,078,000 34,718,000
Other assets............ 7,512,900 2,060,135 1,234,507 7,407,000 2,064,000
Total assets (5)........ 152,866,400 117,627,771 110,879,450 149,630,000 109,538,000
Total current
liabilities (6)........ 46,134,844 28,837,834 25,412,672 41,695,000 19,930,000
Long-term debt.......... 36,379,227 23,764,884 25,774,173 35,943,000 23,330,000
Deferred Compensation... 3,063,168 2,875,084 2,680,686 2,991,000 2,792,000
Deferred income taxes... 3,331,787 3,532,191 3,742,437 3,332,000 3,509,000
Total shareholders'
equity................. 63,957,374 58,617,778 53,269,482 65,669,000 59,977,000
</TABLE>
- --------
(1) In connection with the acquisition of Dawson Heritage Furniture Company,
Inc. ("DHFC") by Dawson Furniture Company, Inc. ("Dawson"), a wholly owned
subsidiary of the Company, Dawson acquired assets with a fair value of
approximately $9.0 million and assumed liabilities of approximately $1.4
million. All preliminary allocations of the purchase price have been made
and Dawson has recorded goodwill of approximately $6.9 million for the
excess purchase price (including assumed liabilities) over the fair value
of assets acquired. The consolidated financial statements reflect the
operations of the acquired business from the date of acquisition. The
purchase price was allocated to the assets acquired and liabilities assumed
based on their fair values at the date of acquisition as follows:
<TABLE>
<CAPTION>
In thousands
------------
<S> <C>
Accounts receivable............................................. $ 1,486
Inventories..................................................... 2,486
Property, plant and equipment................................... 4,992
Goodwill........................................................ 6,894
Accounts payable................................................ (1,246)
Other current liabilities....................................... (116)
-------
Cash paid....................................................... $14,496
</TABLE>
49
<PAGE>
Prior to the completion of the acquisition, the Company had entered into a
short-term agreement with DHFC, which compensated the Company for marketing
related services. Under the terms of this agreement, the Company has
recognized miscellaneous other income in the amount of $484,183 in the
current fiscal year.
(2) The Corporation operates on a 52-53 week fiscal year. All fiscal years
presented are 52-week fiscal years.
(3) In 1997, the Company recorded pre-tax charges totaling approximately $9.2
million ($5.9 million after taxes, or $2.10 per share). These charges
relate to the elimination of the Company's domestic seating line and
related inventories, the divestiture of Craftique, Inc. and the
discontinuance of certain other product lines. Of the charges,
approximately $9.0 million was included in cost of sales for inventory
write-downs, with the remaining charges related to assets no longer being
used included in miscellaneous expense.
(4) Property, plant and equipment are stated at cost. Depreciation has been
computed on a straight-line basis over the estimated useful lives of the
related assets.
(5) Excess purchase price over fair value of assets acquired related to the
asset purchase of DHFC amounted to approximately $6,894,000 and this amount
is being amortized over a 15 year period. Accumulated amortization at
October 31, 1999 was approximately $287,000.
(6) Total current liabilities include notes payable, the current portion of the
long-term debt and federal and state income taxes.
50
<PAGE>
CERTAIN PROJECTED FINANCIAL DATA FOR THE COMPANY
Prior to entering into the Merger Agreement, Parent received from management
of the Company certain information concerning the Company which Parent, the
Purchaser and the Management Shareholders believe was not and is not publicly
available, including certain projected financial data (the "Projections") for
the fiscal years 2000 through 2002. The Company does not publicly disclose
projections, and the Projections were not prepared with a view to public
disclosure. Such information is set forth below in this Offer to Purchase for
the limited purpose of giving the Holders access to financial projections
prepared by the Company's management that were made available to Parent and the
Purchaser in connection with the Merger Agreement and the Offer.
<TABLE>
<CAPTION>
Fiscal year ending
October 31,
--------------------
2000P 2001P 2002P
------ ------ ------
($ in millions)
<S> <C> <C> <C>
Net sales............................................ $218.3 $239.8 $264.3
Gross profit......................................... $ 45.2 $ 50.2 $ 54.2
Operating profit..................................... $ 15.7 $ 18.0 $ 19.6
Net income........................................... $ 8.7 $ 10.2 $ 11.1
</TABLE>
Assumptions to projections
The Projections assume 10% net sales growth each year. Additionally, gross
margin is projected to be slightly lower than in the past and remain stable
throughout the projections.
CAUTIONARY STATEMENTS CONCERNING THE PROJECTIONS
AND FORWARD-LOOKING STATEMENTS
The Projections were not prepared with a view to public disclosure or
compliance with published guidelines of the Commission, the guidelines
established by the American Institute of Certified Public Accountants for
Prospective Financial Information or generally accepted accounting principles.
The projections were not prepared with the approval of the Company's Board of
Directors. Neither Parent's nor the Company's certified public accountants have
examined or compiled any of the Projections or expressed any conclusion or
provided any form of assurance with respect to the Projections and,
accordingly, assume no responsibility for the Projections. The Projections are
included herein to give the Holders access to information which was provided to
Parent and which is believed by Parent, the Purchaser and the Management
Shareholders to be not publicly available.
Certain matters discussed herein (including, but not limited to, the
Projections) are forward-looking statements that are subject to certain risks
and uncertainties that could cause actual results to differ materially from the
statements included herein (including the Projections) and should be read with
caution. The Projections are subjective in many respects and thus susceptible
to interpretations and periodic revisions based on actual experience and recent
developments. While presented with numerical specificity, the Projections were
not prepared in the ordinary course and are based upon a variety of estimates
and hypothetical assumptions made by management of the Company with respect to,
among other things, industry performance, general economic, market, interest
rate and financial conditions, sales, cost of goods sold, operating and other
revenues and expenses, capital expenditures and working capital of the Company,
and other matters which may not be accurate, may not be realized, and are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, all of which are difficult to predict and many
of which are beyond the Company's control. Accordingly, there can be no
assurance that the assumptions made in preparing the Projections will prove
accurate, and actual results may be materially greater or less than those
contained in the Projections. In addition, the Projections do not take into
account any of the transactions contemplated by the Merger Agreement, including
the Offer and the Merger.
51
<PAGE>
For these reasons, as well as the bases and assumptions on which the
Projections were compiled, the inclusion of such Projections herein should not
be regarded as an indication that the Company, Parent, the Purchaser or the
Management Shareholders or any of their respective affiliates or
representatives considers such information to be an accurate prediction of
future events, and the Projections should not be relied on as such. None of
such persons assumes any responsibility for the reasonableness, completeness,
accuracy or reliability of such Projections. No party nor any of their
respective affiliates or representatives has made, or makes, any representation
to any person regarding the information contained in the Projections and,
except to the extent required by applicable law, none of them intends to update
or otherwise revise the Projections to reflect circumstances existing after the
date when made or to reflect the occurrence of future events even in the event
that any or all of the assumptions are shown to be in error.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, stock options granted
to them, the principal holders of the Company's securities, any material
interests of such persons in transactions with the Company and other matters is
required to be disclosed in proxy statements filed with the Commission. These
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission located in
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also
should be available for inspection and copying at prescribed rates at regional
offices of the Commission located at Seven World Trade Center, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. Electronic filings filed through
the Commission's Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"), including those made by or in respect of the Company, are publicly
available through the Commission's home page on the Internet at
http://www.sec.gov.
Certain Information Concerning Quad-C, Parent, the Purchaser and the Management
Shareholders.
Quad-C. Quad-C is a private investment fund organized as a limited
partnership under the laws of the State of Delaware, which makes investments
identified by its affiliates. Quad-C has $300 million of committed capital of
which approximately $120 million is currently invested. Upon consummation of
the Merger, it is expected that Quad-C Management, Inc., an affiliate of Quad-
C, will enter into a consulting agreement with the Company, pursuant to which
the Company will agree to pay Quad-C Management, Inc. an annual fee for
management and consulting services to be rendered to the Company following the
Merger in an amount of $300,000 per year. In addition, Quad-C Management, Inc.
will receive a one-time transaction fee of approximately $1.3 million upon
consummation of the Merger.
The principal executive offices of Quad-C are located at 230 East High
Street, Charlottesville, Virginia 22902 and their telephone numbers are (804)
979-2070. Information concerning the general partner of Quad-C is set forth on
Schedule I of this Offer to Purchase.
Pine Holdings, Inc. and Pine Acquisition Corp. Parent and the Purchaser, a
wholly owned subsidiary of Parent, have been formed solely for the purpose of
the Offer and Merger and neither conduct any unrelated business activities.
Parent currently is an affiliate of Quad-C which currently owns all of the
outstanding stock of Parent. At the effective time of the Merger, Quad-C and
its affiliates are expected to own common stock representing approximately 86%
of the equity of Parent (approximately 76% of the fully diluted equity of
Parent) and the Management Shareholders are expected to own common stock
representing an aggregate of approximately 14% of the outstanding equity
capital of Parent (approximately 24% of the fully diluted equity capital of
Parent). In addition, Parent, Quad-C and the Management Shareholders are
expected to enter into a Shareholders Agreement contemporaneously with the
effective time of the Merger which will contain terms relating to the voting
and transfer of the securities of Parent. Except as set forth herein, neither
Quad-C nor any of its executive officers, directors, general partners or
controlling affiliates currently has any other relationship with Parent or
Purchaser. The principal executive offices of Parent and the Purchaser are
located at the offices of
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Quad-C and their telephone numbers are (804) 979-2070. Information concerning
the directors and executive officers of Parent and the Purchaser is set forth
on Schedule I of this Offer to Purchase.
Management Shareholders. At the Effective Time of the Merger, the Management
Shareholders will become owners of approximately 14% of the outstanding equity
capital of Parent (approximately 24% of the fully-diluted equity capital of
Parent) by investing their current equity interests in the Company and/or cash
in exchange for equity interests in and subordinated debt of Parent. Pursuant
to the Merger, each share of Common Stock owned by the Management Shareholders
will be converted into the right to receive 5.625 shares of common stock of
Parent and $11.25 in principal amount of subordinated notes of Parent.
Additionally, Messrs. Jack E. Dawson, James S. Dawson, Paul T. Purcell and
Raymond E. Winters, Jr. have committed to purchase $211,770.00, $693,765.00,
$43,537.50, and $100,012.50, respectively, of equity interests and subordinated
debt of Parent simultaneous with the Effective Time of the Merger. For
additional information regarding the Management Shareholders' interest in the
Merger--See "SPECIAL FACTORS--Interests of Certain Persons In The Offer and the
Merger."
During the last five years, none of Parent, the Purchaser, Quad-C, or, to
the best of their knowledge, any of their respective directors, executive
officers, general partners or controlling affiliates and none of the Management
Shareholders (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
Except as described in this Offer to Purchase (i) none of Parent, the
Purchaser, Quad-C, or, to the best of their knowledge, any associate or
majority-owned subsidiary of Parent, the Purchaser, Quad-C or, to the best of
their knowledge, any associate or majority-owned subsidiary of any of their
respective directors, executive officers, general partners or controlling
affiliates and none of the Management Shareholders beneficially owns or has any
right to acquire, directly or indirectly, any equity securities of the Company
and (ii) none of Parent, the Purchaser, Quad-C or, to the best of their
knowledge, any of their respective directors, executive officers, general
partners or controlling affiliates and none of the Management Shareholders has
effected any transaction in such equity securities during the past 60 days. The
Purchaser, Parent and Quad-C disclaim beneficial ownership of any shares of
Common Stock owned by any pension plans of Parent, the Purchaser or Quad-C or
any pension plans of any associate or majority-owned subsidiary of Parent, the
Purchaser or Quad-C.
Except as described in this Offer to Purchase, none of Parent, the
Purchaser, Quad-C or, to the best of their knowledge, any of their respective
directors, executive officers, general partners or controlling affiliates and
none of the Management Shareholders has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, during the past two
years, none of Parent, the Purchaser, Quad-C or, to the best of their
knowledge, any of their respective directors, executive officers, general
partners or controlling affiliates and none of the Management Shareholders has
had any business relationship or transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, during the past two years, there
have been no contacts, negotiations or transactions between any of Parent, the
Purchaser, Quad-C, or any of their subsidiaries or, to the best knowledge of
Parent, the Purchaser or Quad-C any of their respective directors, executive
officers, general partners or controlling affiliates and none of the Management
Shareholders, on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
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Available Information. Parent, the Purchaser and Quad-C are privately-held
companies and are generally not subject to the information filing requirements
of the Exchange Act, and are generally not required to file reports, proxy
statements and other information with the Commission relating to their
respective businesses, financial condition and other matters. However,
pursuant to Rule 14d-3 under the Exchange Act, the Purchaser filed with the
Commission a Schedule TO, together with exhibits, including this Offer to
Purchase and the Merger Agreement, which provides certain additional
information with respect to the Offer. The Schedule TO and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such information
should also be obtainable (i) by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661
and (ii) by accessing the commission's website on the Internet at
http://www.sec.gov.
Conditions of the Offer.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser is not required to accept for payment, purchase or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c) of
the Exchange Act, pay for, any tendered shares of Common Stock and may
postpone the acceptance for payment or, subject to the restrictions referred
to above, the payment for, any tendered shares of Common Stock, if (i) any
applicable waiting period under the HSR Act has not expired or been terminated
prior to the expiration of the Offer or (ii) the Minimum Condition shall not
have been satisfied. In addition to and not limiting the foregoing,
notwithstanding any other provision of the Offer, the Purchaser is not
required to accept for payment or, subject to the applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
pay for any tendered shares of Common Stock and may terminate, subject to the
terms of the Merger Agreement, or amend the Offer and may postpone the
acceptance of and payment for, tendered shares of Common Stock at any time on
or after March 29, 2000 and at or before the time of acceptance of tendered
shares of Common Stock for payment pursuant to the Offer or payment therefor
(whether or not any tendered shares of Common Stock have been accepted for
payment or paid for) if any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding by any governmental entity, or by any other person, domestic or
foreign, before any court of competent jurisdiction or governmental entity,
which could reasonably be expected to: (i) make illegal, impede or otherwise
directly or indirectly restrain, prohibit the Offer or the Merger or seeking
to obtain material damages in connection therewith; (ii) prohibit or
materially limit the ownership or operation by Parent or the Purchaser of all
or any material portion of the business or assets of the Company and its
subsidiaries taken as a whole or compel Parent or the Purchaser or their
affiliates to dispose of or hold separately all or any material portion of the
business or assets of Parent, the Purchaser or the Company and its
subsidiaries taken as a whole, or seeking to impose any limitation on the
ability of Parent or the Purchaser or their affiliates to conduct their
business or own such assets; (iii) impose limitations on the ability of Parent
or the Purchaser effectively to exercise full rights of ownership of the
shares of Common Stock, including, without limitation, the right to vote any
shares of Common Stock acquired or owned by Parent or the Purchaser on all
matters properly presented to the Company's shareholders; (iv) require
divestiture by Parent or the Purchaser of any shares of Common Stock; or (v)
otherwise directly or indirectly relating to the Offer or the Merger and which
would reasonably be expected to have a Material Adverse Effect on the Company,
Parent or the Purchaser;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, enacted, enforced, promulgated,
amended or issued and applicable to (i) Parent, the Purchaser, the Company or
any of its subsidiaries or (ii) the Offer or the Merger, by any legislative
body or other governmental entity other than the routine application of the
waiting period provisions of the HSR Act to the Offer or to the Merger, which
could reasonably be expected to directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
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(c) there shall have occurred any event, change, circumstance or occurrence
that has had or that would reasonably be expected to have a Material Adverse
Effect on the Company;
(d) any of the representations or warranties made by the Company in the
Merger Agreement shall be untrue or incorrect in any respect that when taken
together with all such other representations and warranties that are not true
and correct would reasonably be expected to have a Material Adverse Effect, in
each case as of the date of the Merger Agreement or the date of consummation of
the Offer, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date;
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under the Merger
Agreement on or prior to the date of consummation of the Offer;
(f) the Company's Board of Directors or any committee thereof shall have
withdrawn, or shall have modified or amended in a manner adverse to Parent or
the Purchaser, the approval, adoption or recommendation, as the case may be, of
the Offer, the Merger or the Merger Agreement, or approved or recommended any
Acquisition Transaction other than the Offer and the Merger or shall have
announced a neutral position with respect to any Acquisition Transaction and
not rejected such Acquisition Transaction within ten (10) business days after
the announcement of such neutral position or after request by Parent, shall
fail to reaffirm its approval and recommendation of the Offer, the Merger or
the Merger Agreement within three (3) business days after Parent's request for
such reaffirmation or shall have resolved to do any of the foregoing;
(g) it shall have been publicly disclosed, or Parent or the Purchaser shall
have otherwise learned, that beneficial ownership (determined for the purposes
of this paragraph (g) as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 15% or more of the shares of Common Stock has been acquired by any
person or group (as defined in Section 13(d)(3) under the Exchange Act);
(h) there shall have occurred, and be continuing, (i) any general suspension
of, or limitation on prices for, trading in securities on The New York Stock
Exchange or through the Nasdaq Stock Market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) a commencement of a war, armed hostilities or other national or
international crisis directly or indirectly involving the United States or (iv)
in the case of any of the foregoing clauses (i) through (iii) existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof;
(i) Parent and the Purchaser shall not have obtained the financing set forth
in the Commitment Letter; or
(j) the Merger Agreement shall have been terminated in accordance with its
terms.
"Material Adverse Effect" shall mean, (i) when used with respect to the
Company, any materially adverse change in or effect on the business, assets,
liabilities, properties, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a whole, other than (A)
changes or effects that are or result from occurrences relating to the economy
in general or the furniture industry in general and not specifically relating
to the Company, (B) set forth or described in the reports filed by the Company
with the Commission prior to March 29, 2000, (C) changes or effects that result
from the loss of customers or delay or cancellation or cessation of orders for
the Company's products directly attributable to the announcement of the Merger
Agreement or (D) changes or effects arising solely as a result of any decline
in the market price of the shares of Common Stock or (ii) when used with
respect to Parent, the Purchaser or the Company, as the case may be, any
materially adverse change in or effect on the ability of Parent, the Purchaser
or the Company, as the case may be, to perform their respective obligations
under the Merger Agreement and/or under the Voting Agreement.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser or may be waived by
Parent or the Purchaser, in whole or part, at any time and from time to time,
in the reasonable discretion of Parent or the Purchaser (subject to the terms
of the Merger Agreement). The
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<PAGE>
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right and each right will be deemed
an ongoing right which may be asserted at any time and from time to time.
Certain Legal Matters.
General. Except as otherwise disclosed herein, neither Parent nor the
Purchaser is aware of (i) any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a whole,
that might be adversely affected by the acquisition of shares of Common Stock
by the Purchaser pursuant to the Offer, Merger or otherwise or (ii) any
approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required for the
acquisition or ownership of shares of Common Stock by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser currently contemplates that it would seek such approval or action.
The Purchaser's obligation under the Offer to accept for payment and pay for
shares of Common Stock is subject to certain conditions. See "THE TENDER
OFFER--Conditions of the Offer". While, except as described in this Offer to
Purchase, the Purchaser does not currently intend to delay the acceptance for
payment of shares of Common Stock tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
action, if needed, would be obtained or would be obtained without substantial
conditions or that adverse consequences might not result to the business of the
Company, Parent or the Purchaser or that certain parts of the businesses of the
Company, Parent or the Purchaser might not have to be disposed of in the event
that such approvals were not obtained or any other actions were not taken.
Virginia Affiliated Transactions Statute. The Company is also subject to
Article 14 (the "Affiliated Transactions Statute") of the VSCA. The Affiliated
Transactions Statute generally prohibits a publicly held Virginia corporation
from engaging in an "affiliated transaction" with an "interested shareholder"
for a period of three years after the date of the transaction in which the
person became an interested shareholder, unless (i) a majority of disinterested
directors approved in advance the transaction in which the interested
shareholder became an interested shareholder, or (ii) the affiliated
transaction is approved by the affirmative vote of a majority of the
disinterested directors and by the affirmative vote of the holders of two-
thirds of the voting shares other than the shares beneficially owned by the
interested shareholder. A corporation may engage in an affiliated transaction
with an interested shareholder beginning three years after the date of the
transaction in which the person became an interested shareholder if (A) the
transaction is approved by a majority of the disinterested directors or by the
affirmative vote of the holders of two-thirds of the voting shares other than
the shares beneficially owned by the interested shareholder, or (B) the
transaction complies with certain statutory fair price provisions.
Subject to certain exceptions, under the VSCA an "interested shareholder" is
a person who beneficially owns more than 10% or more of any class of the
corporation's outstanding voting securities or an affiliate or associate of the
corporation that was an interested shareholder at any time within the preceding
three years. In general terms, an "affiliated transaction" includes: (i) any
merger or share exchange with an interested shareholder; (ii) the transfer to
any interested shareholder of corporate assets with a fair market value greater
than 5% of the corporation's consolidated net worth; (iii) the issuance to any
interested shareholder of voting shares with a fair market value greater than
5% of the aggregate fair market value of all outstanding voting shares of the
corporation; (iv) any reclassification of securities or corporate
reorganization that will have the effect of increasing by more than 5% or more
the percentage of the corporation's outstanding voting shares beneficially
owned by any interested shareholder; and (v) the dissolution of the corporation
if proposed by or on behalf of any interested shareholder.
As a part of the Board of Directors' approval of the Merger Agreement and
the transactions contemplated thereby, the Company's Board of Directors also
took action to make the provisions of the Affiliated Transactions Statute not
applicable to the acquisition of the shares of Common Stock pursuant to the
Offer and the Merger.
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Control Share Acquisition Statute. The Company is also subject to Article
14.1 of the VSCA (the "Control Share Acquisition Statute"). The Control Share
Acquisition Statute provides that shares of a publicly held Virginia
corporation that are acquired in a "control share acquisition" generally will
have no voting rights unless such rights are conferred on those shares by the
vote of the holders of a majority of all the outstanding shares other than
interested shares. A control share acquisition is defined, with certain
exceptions, as the acquisition of the beneficial ownership of voting shares
which would cause the acquirer to have voting power within the following ranges
or to move upward from one range into another: (i) 20% to 33 1/3 %; (ii) 33
1/3% to 50%; or (iii) more than 50%, of such votes.
The Control Share Acquisition Statute does not apply to an acquisition of
shares of a publicly held Virginia corporation (i) pursuant to a merger or
share exchange effected in compliance with the VSCA if the issuing public
corporation is a party to the merger or share exchange agreement, (ii) pursuant
to a tender or exchange offer that is made pursuant to an agreement to which
the issuing public corporation is a party, or (iii) directly from the issuing
public corporation.
On March 29, 2000, the Company's Board of Directors amended the Bylaws of
the Company to provide that the Control Share Acquisition Statute shall not
apply to any acquisition of the capital stock of the Company. Therefore, the
provisions of the Control Share Acquisition Statute are not applicable to the
Offer and the Merger and the other transactions contemplated by the Merger
Agreement.
State Takeover Laws. In addition to Virginia, a number of other states have
adopted laws and regulations applicable to attempts to acquire securities of
corporations which are incorporated, or have substantial assets, shareholders,
principal executive offices or principal places of business, or whose business
operations otherwise have substantial economic effects, in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States invalidated on
constitutional grounds the Illinois Business Takeover Statute, which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court held that the State of Indiana may, as a matter of
corporate law and, in particular, with respect to those aspects of corporate
law concerning corporate governance, constitutionally disqualify a potential
acquiror of "Control Shares" (ones representing ownership in excess of a
certain voting power threshold, e.g., 20%, 33% or 50%) from voting on the
affairs of a target corporation without the prior approval of the remaining
shareholders. The state law before the Supreme Court was by its terms
applicable only to corporations that had a substantial number of holders in the
state and were incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Based on representations made by the Company in the Merger Agreement, the
Purchaser does not believe that any state takeover statutes apply to the Offer.
Neither Parent nor the Purchaser has currently complied with any state takeover
statute or regulation. The Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer or the Merger, the Purchaser
might be required to file certain information with, or receive approvals from,
the relevant state authorities. In addition, if enjoined, the Purchaser might
be unable to accept for payment any shares of Common Stock tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer and the
Merger. In such case, the Purchaser may not be obligated to accept for payment
any shares of Common Stock tendered. See "THE TENDER OFFER--Conditions of the
Offer".
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going private" transactions. Rule 13e-3 will be applicable to the
Offer. Rule 13e-3 requires, among other things, that certain financial
information regarding the Company and certain information regarding the
fairness of the Merger and the consideration offered to shareholders of the
Company therein be filed with the Commission and disclosed to shareholders of
the Company prior to consummation of the Merger. See "SPECIAL FACTORS--
Background of the Offer".
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Regulatory Approvals.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain mergers and
acquisitions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of shares of Common Stock by the Purchaser
pursuant to the Offer is subject to the HSR Act requirements.
Under the provisions of the HSR Act applicable to the purchase of shares of
Common Stock pursuant to the Offer, such purchase may not be made until the
expiration of a fifteen calendar day waiting period following the required
filing of a Notification and Report Form under the HSR Act by Parent, which
Parent submitted on April 3, 2000. Accordingly, the waiting period under the
HSR Act will expire at 11:59 P.M., New York City time, on April 18, 2000, which
is the fifteenth calendar day following filing of the Notification and Report
Form by Parent, unless early termination of the waiting period is granted or
Parent receives a request for additional information or documentary material
prior thereto. If either the FTC or the Antitrust Division were to request
additional information or documentary material from Parent prior to the
expiration of the fifteen day waiting period, the waiting period would be
extended and would expire at 11:59 P.M., New York City time, on the tenth
calendar day after the date of substantial compliance by Parent with such
request. Thereafter, the waiting period could be extended only by court order
or by consent of Parent. If the acquisition of shares of Common Stock is
delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
purchase of and payment for shares of Common Stock pursuant to the Offer will
be deferred until ten days after the request is substantially complied with
unless the waiting period is terminated sooner by the FTC or the Antitrust
Division (and assuming all of the other Offer conditions have been satisfied or
waived). See "THE TENDER OFFER--Acceptance for Payment and Payment for Shares
of Common Stock". Only one extension of such waiting period pursuant to a
request for additional information or documentary material is authorized by the
rules promulgated under the HSR Act, except by court order or by consent.
Although the Company is required to file certain information and documentary
material with the Antitrust Division and the FTC in connection with the Offer,
neither the Company's failure to make such filings nor a request to the Company
from the Antitrust Division or the FTC for additional information or
documentary material will extend the waiting period. However, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing these issues and
may agree to delay consummation of the transaction while such negotiations
continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of shares
of Common Stock by the Purchaser pursuant to the Offer. At any time before or
after the Purchaser's purchase of shares of Common Stock, either the Antitrust
Division or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition of shares of Common Stock pursuant to the Offer or seeking
divestiture of shares of Common Stock acquired by the Purchaser or divestiture
of substantial assets of Parent, the Company or any of their respective
subsidiaries. State attorneys general may also bring legal action under the
antitrust laws, and private parties may bring such action under certain
circumstances. Parent and the Purchaser believe that the acquisition of shares
of Common Stock by the Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if a challenge is made, what the result
will be. See "THE TENDER OFFER--Conditions of the Offer" for certain conditions
to the Offer, including conditions with respect to litigation and certain
governmental actions.
Fees and Expenses.
Except as set forth below, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of shares of Common Stock pursuant to the Offer.
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The Purchaser and Parent have retained First Union National Bank as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the United States federal securities laws.
In addition, the Purchaser and Parent have retained Morrow & Co., Inc. to
act as the Information Agent in connection with the Offer. The Information
Agent will receive reasonable and customary compensation for its services,
will be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the United States federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed
by the Purchaser for customary mailing and handling expenses incurred by them
in forwarding offering material to their customers.
It is estimated that the fees and expenses incurred by Parent, the
Purchaser and the Surviving Corporation in connection with the Offer, the
Merger and the other transactions contemplated by the Merger Agreement will be
approximately as set forth below:
<TABLE>
<S> <C>
Financing and Commitment Fees................................. $3,425,000
Investment Banking Fees....................................... 1,300,000
Filing Fees................................................... 15,000
Quad-C Transaction Fee........................................ 1,300,000
Legal Fees and Expenses....................................... 1,150,000
Accounting and Consultants' Fees and Expenses................. 341,000
Printing and Mailing Costs.................................... 100,000
Miscellaneous................................................. 250,000
Total....................................................... $7,881,000
</TABLE>
Under certain circumstances, the Company is obligated to reimburse the
Purchaser for certain expenses and to pay the Purchaser the Termination Fee.
See "SPECIAL FACTORS--Merger Agreement."
Miscellaneous.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of shares of Common Stock in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. However, the Purchaser may, in its sole
discretion, take such action as it may deem necessary to make the Offer in any
such jurisdiction and extend the Offer to holders of shares of Common Stock in
such jurisdiction.
The Purchaser is not aware of any jurisdiction in which the making of the
Offer or the acceptance of shares of Common Stock in connection therewith
would not be in compliance with the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Parent or the Purchaser not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
Parent and the Purchaser have filed with the Commission the Schedule TO,
together with exhibits, pursuant to Section 14(d)(1) of the Exchange Act and
Rule 14d-3 promulgated thereunder, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule TO
and any amendments thereto, including exhibits, may be inspected at, and
copies may be obtained from, the same places and in the manner set forth in
"THE TENDER OFFER--Certain Information Concerning the Company" (except that
they will not be available at the regional offices of the Commission).
April 7, 2000 Pine Acquisition Corp.
59
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PINE HOLDINGS, INC., PINE ACQUISITION CORP. AND THE MEMBERS OF THE
GENERAL PARTNER OF QUAD-C PARTNERS V, L.P.
1. Members of QUAD-C ADVISORS V, L.L.C., the General Partner of Quad-C
Partners V, L.P. Set forth below is the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each Member of QUAD-C ADVISORS V, L.L.C. The principal
address of QUAD-C ADVISORS V, L.L.C. and, unless indicated below, the current
business address for each individual listed below is 230 East High Street,
Charlottesville, Virginia 22902, Telephone: (804) 979-2070. Each such person
is, unless indicated below, a citizen of the United States.
<TABLE>
<CAPTION>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
---------------- --------------------------------------------------
<C> <S>
Anthony R. Ignaczak Partner of Quad-C Management, Inc. (5/93 to present).
Edward T. Harvey, Jr. Vice President of Quad-C Management, Inc. (1/00 to present). Vice President of
Quad-C Inc. (4/90 to 12/99). Vice President of Quad-C Advisors V, LLC (4/98 to
present). General Partner of Quad-C Partners V, L.P. (4/98 to present). Director
of Stimsonite Corporation (8/90 to 7/99).
Terrence D. Daniels President of Quad-C Management, Inc. (11/89 to present).
Stephen M. Burns Partner of Quad-C Management, Inc. (6/94 to present).
</TABLE>
2. Board of Directors and Executive Officers of PINE HOLDINGS, INC. Set
forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments for the past five years
of each member of the Board of Directors and each executive officer of PINE
HOLDINGS, INC. The principal address of PINE HOLDINGS, INC. and, unless
indicated below, the current business address for each individual listed below
is c/o Quad-C Partners V, L.P., 230 East High Street, Charlottesville, Virginia
22902, Telephone: (804) 979-2070. Each such person is, unless indicated below,
a citizen of the United States.
<TABLE>
<CAPTION>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
---------------- --------------------------------------------------
<C> <S>
Anthony R. Ignaczak Partner of Quad-C Management, Inc. (5/93 to present).
Franklin H. Winslow Associate of Quad-C Management, Inc. (1998 to present). Consultant of Public
Financial Mgmt. (1996 to 1998).
</TABLE>
3. Directors and Executive Officers of PINE ACQUISITION CORP. Set forth
below is the name, present principal occupation or employment and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of PINE ACQUISITION CORP. Each person identified
below has held his position since the formation of Pine Acquisition, Inc. in
March 2000. The principal address of PINE ACQUISITION CORP. is 1013 Center
Road, Wilmington, Delaware 19805, Telephone: (800) 927-9800. The current
business address for each individual listed below, unless indicated below, is
230 East High Street, Charlottesville, Virginia 22902, Telephone: (804) 979-
2070. Each such person is, unless indicated below, a citizen of the United
States. Directors are identified by an asterisk.
60
<PAGE>
<TABLE>
<CAPTION>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
---------------- --------------------------------------------------
<C> <S>
Anthony R. Ignaczak Partner of Quad-C Management, Inc. (5/93 to present).
Franklin H. Winslow Associate of Quad-C Management, Inc. (1998 to present). Consultant of Public
Financial Mgmt. (1996 to 1998).
</TABLE>
4. Ownership of shares of Common Stock by Members, Directors and Executive
Officers. To the best knowledge of Quad-C Partners V, L.P., Pine Holdings Inc.
and Pine Acquisition, Inc., none of the persons listed on this Schedule I
beneficially owns or has a right to acquire directly or indirectly any shares
of Common Stock, and none of the persons listed on this Schedule I has effected
any transactions in the shares of Common Stock during the past 60 days.
61
<PAGE>
SCHEDULE II
1. Directors and Executive Officers of PULASKI FURNITURE CORPORATION. Set
forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments for the past five years
of each director and executive officer of PULASKI FURNITURE CORPORATION. The
principal address of PULASKI FURNITURE CORPORATION is One Pulaski Square,
Pulaski, Virginia 24301, Telephone: (540) 994-5270. The current business
address for each individual listed below, unless indicated below, is One
Pulaski Square, Pulaski, Virginia 24301, Telephone: (540) 994-5270. Each such
person is, unless indicated below, a citizen of the United States. Directors
are identified by an asterisk.
<TABLE>
<CAPTION>
Name, Age and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
--------------------- --------------------------------------------------
<C> <S>
Hugh V. White, Jr.*....... Director of Pulaski Furniture Corporation (1978 to present). Retired, Former
Partner of Hunton & Williams (1969 to 1999). Director of Chesapeake
Corporation.
Raymond E. Winters, Jr.... Vice President of Operations of Pulaski Furniture Corporation (1998 to
present). Director of Continuous Improvement of Pulaski Furniture Corporation
(1995 to 1998). Director of Manufacturing of Rowe Companies Inc.
Randolph V. Chrisley...... Senior Vice President for Sales of Pulaski Furniture Corporation (1983 to
present). Director of CNB Holdings.
Carl W. Hoffman........... Treasurer of Pulaski Furniture Corporation (1999 to present). Controller of
Pulaski Furniture Corporation (1996 to 1999). Staff Accountant of Pulaski
Furniture Corporation (1990 to 1996).
John G. Wampler*.......... Director, President and Chief Executive Officer of Pulaski Furniture
Corporation (1997 to present). President and Chief Operating Officer of
Pulaski Furniture Corporation (1992 to 1997).
Harry J.G. van Beek*...... Director of Pulaski Furniture Corporation (1996 to present). President of
Klockner Capital Corp. Inc. (1993 to present). Former President of Klockner
Pentaplast of America, Inc.
Robert C. Greening, Jr.*.. Director of Pulaski Furniture Corporation (1998 to present). Vice President
and General Manager of Neiman Marcus Northbrook (1994 to present).
James W. Stout............ Vice President of Manufacturing of Pulaski Furniture Corporation (1996 to
present). Group Manager of Plants 1, 11, and 12 of Pulaski Furniture
Corporation (1995 to 1997). Plant Manager of Pulaski Furniture Corporation's
plant in Pulaski, Virginia (1975 to 1996).
Harry H. Warner*.......... Chairman of the Board of Pulaski Furniture Corporation (1999 to present).
Financial Consultant, real estate developer. Director of Chesapeake
Corporation. Director of Allied Research Corporation. Director of Virginia
Management Investment Corp.
Paul J. Purcell........... Vice President of Credit Administration of Pulaski Furniture Corporation
(1998 to present). Director of Credit and Collections of Pulaski Furniture
Corporation (1993 to 1998).
Ira S. Crawford........... Senior Vice President of Administration of Pulaski Furniture Corporation
(1978 to present).
James H. Kelly............ Senior Vice President of Product Development (1971 to present).
</TABLE>
62
<PAGE>
2. Ownership of shares of Common Stock by Members, Directors and Executive
Officers. Except for the transactions described in this Offer to Purchase, none
of the persons listed on this Schedule I has effected any transactions in the
shares of Common Stock during the past 60 days.
<TABLE>
<CAPTION>
Sole Shared
Voting Voting
and and Aggregate
Investment Investment Percentage
Power (1) Power (2) Total Owned
Name ---------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Harry J.G. van Beek.................... 1,500 -- 1,500 *
Randolph V. Chrisley................... 39,312 -- 39,312 1.4%
Ira S. Crawford........................ 33,671 -- 33,671 1.2%
Robert C. Greening, Jr................. 850 -- 850 *
James H. Kelly......................... 50,263 1,554 51,817 1.8%
James W. Stout......................... 27,384 -- 27,384 *
John G. Wampler........................ 68,483 5,040 73,523 2.5%
Harry H. Warner........................ 5,442 -- 5,442 *
Hugh V. White, Jr...................... 4,400 3,400 7,800 *
All Directors and Officers
as a group (13 persons)............... 240,462 9,994 250,456 8.6%
</TABLE>
- --------
* Less than 1%
(1) Includes 15,000 shares that may be acquired within 60 days under the
Corporation's stock incentive plans and shares held in various fiduciary
capacities.
(2) Includes shares owned by relatives and in certain trust relationships.
These shares may be deemed to be beneficially owned under Rules and
Regulations of the Securities and Exchange Commission, but the inclusion of
these shares does not constitute an admission of beneficial ownership.
63
<PAGE>
Copies of the Letter of Transmittal, properly completed and duly signed,
will be accepted. The Letter of Transmittal, certificates and any other
required documents should be sent by each Holder or such Holder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of the addresses set forth below:
The Depositary for the Offer is:
First Union National Bank
By Mail: By Hand/Overnight Courier:
First Union National Bank First Union National Bank
1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd.
Charlotte, NC 28288 Charlotte, NC 28262
Attn: Corporate Actions NC-1153 Attn: Corporate Actions NC-1153
(800) 829-4232
Questions and requests for assistance may be directed to the Information
Agent at their address and telephone number as set forth below. Additional
copies of this Offer to Purchase, the Letter of Transmittal, or other related
tender offer materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call: (800) 662-5200
Shareholders, Please Call: (800) 566-9061
<PAGE>
Exhibit A(2)
LETTER OF TRANSMITTAL
To Tender
Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pulaski Furniture Corporation
Pursuant to the Offer to Purchase
Dated April 7, 2000
by
Pine Acquisition Corp.
A Direct Wholly Owned Subsidiary of
Pine Holdings, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
First Union National Bank
<TABLE>
<S> <C> <C>
By Mail: By Hand/Overnight Courier:
-------- --------------------------
First Union National Bank First Union National Bank
1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd.
Charlotte, NC 28288 Charlotte, NC 28262
Attn: Corporate Actions NC-1153 Attn: Corporate Actions NC-1153
</TABLE>
(800) 829-8432
DESCRIPTION OF SHARES OF COMMON STOCK TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and
Address(es) of
Registered
Holder(s)
(Please fill
in, if blank,
exactly as
name(s)
appear(s)
on the Shares of Common Stock Tendered
certificate(s)) (Attach additional list if necessary)
Total Number
of Shares of
Common Stock Number of Shares
Certificate Evidenced by of Common Stock
Number(s)* Certificate(s)* Tendered:**
- -------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
Total Shares of Common Stock Tendered
- -------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Holders.
** Unless otherwise indicated, it will be assumed that all shares of Common
Stock evidenced by any Certificate(s) delivered to the Depositary are
being tendered. See Instruction 4.
[_If]certificate is lost please check here.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of certificates
representing shares of Common Stock (as such term is defined in the Offer to
Purchase) (such holders of shares of Common Stock, collectively, the
"Holders"), either if certificates for shares of Common Stock are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchaser) is utilized, if tenders of shares of Common Stock are to be made by
book-entry transfer into the account of First Union National Bank, as
Depositary (the "Depositary"), at The Depository Trust Company (the "Book-
Entry Transfer Facility" or "DTC") pursuant to the procedures set forth in
"THE TENDER OFFER--Procedures for Tendering Shares of Common Stock" of the
Offer to Purchase. Holders who tender shares of Common Stock by book-entry
transfer are referred to herein as "Book-Entry Holders" and other Holders are
referred to herein as "Certificate Holders."
Any holders who desire to tender shares of Common Stock and whose
certificate(s) evidencing such shares of Common Stock (the "Certificates") are
not immediately available, or who cannot comply with the procedures for book-
entry transfer described in the Offer to Purchase on a timely basis, may
nevertheless tender such shares of Common Stock by following the procedures
for guaranteed delivery set forth in "THE TENDER OFFER--Procedures for
Tendering Shares of Common Stock" of the Offer to Purchase. See Instruction 2
of this Letter of Transmittal. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
2
<PAGE>
[_]CHECK HERE IF SHARES OF COMMON STOCK ARE BEING TENDERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN
THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY
TRANSFER):
Name(s) of Tendering Institution ________________________________________
Check box of Book-Entry Transfer Facility:
[_]The Depository Trust Company
Account Number __________________________________________________________
Transaction Code Number _________________________________________________
[_]CHECK HERE IF SHARES OF COMMON STOCK ARE BEING TENDERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) _________________________________________
Window Ticket Number (if any) ___________________________________________
Date of Execution of Notice of Guaranteed Delivery ______________________
Name of Institution which Guaranteed Delivery ___________________________
Account Number (if delivered by Book-Entry Transfer) ____________________
Transaction Code Number _________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Pine Acquisition Corp. (the "Purchaser"),
a Virginia corporation and a direct wholly owned subsidiary of Pine Holdings,
Inc., a Virginia corporation ("Parent"), the above-described shares of Common
Stock including the associated preferred stock purchase rights of Pulaski
Furniture Corporation, a Virginia corporation (the "Company"), upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated April
7, 2000 (the "Offer to Purchase"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which, as they may be amended and
supplemented from time to time, together constitute the "Offer"). The
undersigned understands that the Purchaser reserves the right to assign to
Parent, or to any other direct or indirect wholly owned subsidiary of Parent,
the right to purchase all or any portion of the shares of Common Stock
tendered pursuant to the Offer, but the undersigned further understands that
any such assignment will not relieve the Purchaser of its obligations under
the Offer and the Merger Agreement (as hereinafter defined) and that any such
assignment will in no way prejudice the rights of tendering Holders to receive
payment for the shares of Common Stock validly tendered and accepted for
payment pursuant to the Offer. This Offer is being made pursuant to the
Agreement and Plan of Merger, dated as of March 29, 2000 (as amended from time
to time, the "Merger Agreement"), by and among Parent, the Purchaser and the
Company.
Subject to, and effective upon, acceptance for payment of, and payment for,
the shares of Common Stock tendered herewith in accordance with the terms of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser, all right,
title and interest in and to all of the shares of Common Stock that are being
tendered hereby and any and all dividends, distributions, rights, or other
securities issued or issuable in respect of such shares of Common Stock on or
after April 7, 2000 (collectively, "Distributions"), and irrevocably appoints
the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such shares of Common Stock and all Distributions
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) to (a) transfer ownership of such
shares of Common Stock and all Distributions, together with all accompanying
evidences of transfers and authenticity, to or upon the order of the
Purchaser, (b) present such shares of Common Stock and all Distributions for
transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such shares of Common
Stock and all Distributions, all in accordance with the terms and subject to
the conditions of the Offer as set forth in the Offer to Purchase.
The undersigned hereby irrevocably appoints each designee of the Purchaser
as such attorney-in-fact and proxy of the undersigned, with full power of
substitution, to vote the shares of Common Stock as described below in such
manner as each such attorney-in-fact and proxy (or any substitute thereof)
shall deem proper in its sole discretion, and to otherwise act (including
pursuant to written consent) to the full extent of the undersigned's rights
with respect to the shares of Common Stock and all Distributions tendered
hereby and accepted for payment by the Purchaser prior to the time of such
vote or action. All such proxies shall be considered coupled with an interest
in the tendered shares of Common Stock and shall be irrevocable and are
granted in consideration of, and are effective upon, the acceptance for
payment of such shares of Common Stock and all Distributions in accordance
with the terms of the Offer. Such acceptance for payment by the Purchaser
shall revoke, without further action, any other proxy or power of attorney
granted by the undersigned at any time with respect to such shares of Common
Stock and all Distributions and no subsequent proxies or powers of attorney
will be given (or, if given, will not be deemed effective) with respect
thereto by the undersigned. The designees of the Purchaser will, with respect
to the shares of Common Stock for which the appointment is effective, be
empowered to exercise all voting and other rights as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, by written consent or otherwise, and
the Purchaser reserves the right to require that, in order for shares of
Common Stock or any Distributions to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such shares of Common Stock,
the Purchaser must be able to exercise all rights (including, without
limitation, all voting rights and rights of conversion) with respect to such
shares of Common Stock and receive all Distributions.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the shares of
Common Stock and all Distributions tendered hereby and that, when the same are
accepted for
4
<PAGE>
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment, and transfer of the shares of Common Stock and
all Distributions tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of the Purchaser any and
all Distributions in respect of the shares of Common Stock tendered hereby,
accompanied by appropriate documentation of transfer and, pending such
remittance or appropriate assurance thereof, the Purchaser shall be, subject
to applicable law, entitled to all rights and privileges as owner of any such
Distributions and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by the Purchaser in
its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Subject to the withdrawal rights set forth in "THE TENDER OFFER--
Withdrawal Rights" of the Offer to Purchase, the tender of the shares of
Common Stock and related Distributions hereby made is irrevocable.
The undersigned understands that tenders of the shares of Common Stock
pursuant to any of the procedures described in "THE TENDER OFFER--Procedures
for Tendering Shares of Common Stock" of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions set
forth in the Offer. Without limiting the generality of the foregoing, if the
price to be paid in the Offer is amended in accordance with the terms of the
Merger Agreement, the price to be paid to the undersigned will be amended. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchaser may not be required to accept for payment any of
the shares of Common Stock tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
not tendered or not accepted for payment in the name(s) of the registered
Holder(s) appearing under "Description of Shares of Common Stock Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
not tendered or not accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered Holder(s) appearing above
under "Description of Shares of Common Stock Tendered." In the event that both
the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or issue any
Certificates not so tendered or accepted for payment in the name of, and
deliver said check and/or return such Certificates to, the person or persons
so indicated. Unless otherwise indicated under Special Payment Instructions,
please credit any shares of Common Stock tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
the Purchaser has no obligation, pursuant to the Special Payment Instructions,
to transfer any shares of Common Stock from the name(s) of the registered
holder(s) thereof if the Purchaser does not accept for payment any of the
shares of Common Stock so tendered.
5
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if
To be completed ONLY if Certificate(s) that are not
Certificate(s) that are not tendered or that are not purchased
tendered or that are not purchased and/or the check for the purchase
and/or the check for the purchase price of shares of Common Stock
price of shares of Common Stock purchased are to be sent to someone
purchased are to be issued in the other than the undersigned, or to
name of someone other than the the undersigned at an address other
undersigned or if shares of Common than that shown above.
Stock tendered by book-entry
transfer which are not accepted for Mail check and Certificate(s) to:
payment are to be returned by
credit to an account maintained at Name: ______________________________
the Book-Entry Transfer Facility Please Type or Print
other than that designated above.
Address: ___________________________
Issue check and Certificate(s) to:
------------------------------------
Name: ______________________________ (Include Zip Code)
Please Type or Print
__________________________________ *
Address: ___________________________ (Tax Identification or Social
Security No.)
------------------------------------ (See Substitute Form W-9 Included
(Include Zip Code) Herewith)
__________________________________ * [_] Check here if permanent address
(Tax Identification or Social change
Security No.)
(See Substitute Form W-9 Included
Herewith)
-------
* Signature Guarantee required
6
<PAGE>
IMPORTANT
HOLDER(S) SIGN HERE
(See Instructions 1 and 5)
(Please Complete Substitute Form W-9 Contained Herein)
Signature(s) of Holders(s): ____________________________________________________
Date: ______________________, 2000
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on
Certificate(s) or on a security position listing or by person(s) authorized to
become registered Holder(s) by Certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or other
person acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
Name(s): _______________________________________________________________________
(Please Print )
Capacity (Full Title): _________________________________________________________
Address: _______________________________________________________________________
- --------------------------------------------------------------------------------
(Include Zip Code)
-------------------------------------------
- ---------------------------------- (Tax Identification or Social Security
(Daytime Area Code and Telephone No.)
No.)
Guarantee of Signature(s)
(See Instructions 1 and 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
(Please Type or Print)
Title: _________________________________________________________________________
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ________________________________________________
Date: ______________________, 2000
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion
Program, The New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered Holder(s) (which term, for
purposes of this document, shall include any participant in the Book-Entry
Transfer Facility whose name appears on a security position listing as the
owner of shares of Common Stock) of the shares of Common Stock tendered
herewith and such Holder(s) have not completed the box entitled either
"Special Payment Instructions" or "Special Delivery Instructions" on this
Letter of Transmittal or (b) if such shares of Common Stock are tendered for
the account of an Eligible Institution. See Instruction 5 of this Letter of
Transmittal.
2. Delivery of Letter of Transmittal and Certificates or Book-Entry
Confirmations. This Letter of Transmittal must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date (as
defined in the Offer to Purchase).
Holders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary
prior to the Expiration Date or who cannot complete the procedures for book-
entry transfer on a timely basis may nevertheless tender their shares of
Common Stock by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedure set forth in "THE
TENDER OFFER--Procedures for Tendering Shares of Common Stock" of the Offer to
Purchase. Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Purchaser, must be received by the Depositary prior to the Expiration Date;
and (iii) Certificates, as well as a Letter of Transmittal (or copy thereof),
properly completed and duly executed with any required signature guarantees
(or, in the case of a book-entry delivery, an Agent's Message (as defined in
the Offer to Purchase)), and all other documents required by this Letter of
Transmittal must be received by the Depositary within three Nasdaq Stock
Market trading days after the date of execution of such Notice of Guaranteed
Delivery.
If Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal (or copy thereof)
must accompany each such delivery.
The method of delivery of this Letter of Transmittal, the shares of Common
Stock, Certificates and all other required documents, including delivery
through the Book-Entry Transfer Facility, is at the option and risk of the
tendering Holder, and the delivery will be deemed made only when actually
received by the Depositary (including, in the case of book-entry transfer, by
Book-Entry Confirmation (as defined in the Offer to Purchase)). If delivery is
by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional shares of Common Stock will be purchased. All tendering Holders, by
execution of this Letter of Transmittal (or a copy hereof), waive any right to
receive any notice of the acceptance of their shares of Common Stock for
payment.
3. Inadequate Space. If the space provided under "Description of Shares of
Common Stock Tendered" is inadequate, the share Certificate numbers and/or the
number of shares of Common Stock should be listed on a separate schedule and
attached hereto.
4. Partial Tenders (Applicable to Certificate Holders Only; Not Applicable
to Shares of Common Stock Which are Tendered by Book-Entry Transfer). If fewer
than all the shares of Common Stock evidenced by any Certificate submitted are
to be tendered, fill in the number of shares of Common Stock which are to be
tendered in the box entitled "Number of Shares of Common Stock Tendered." In
such cases, new Certificate(s) evidencing the remainder of the shares of
Common Stock that were evidenced by Certificate(s) delivered to the Depositary
will be sent to the person signing this
8
<PAGE>
Letter of Transmittal, unless otherwise provided in the box entitled "Special
Delivery Instructions" on this Letter of Transmittal, as soon as practicable
after the Expiration Date. All shares of Common Stock represented by
Certificate(s) delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered Holder(s) of the shares
of Common Stock tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the shares of Common Stock tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any of the tendered shares of Common Stock are registered in different
names on several Certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations of the shares of Common Stock.
If this Letter of Transmittal or any Certificate or stock power is signed
by a trustee, executor, administrator, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and evidence satisfactory to the
Depositary and the Purchaser of such person's authority so to act must be
submitted.
If this Letter of Transmittal is signed by the registered Holder(s) of the
shares of Common Stock transmitted hereby, no endorsements of Certificate(s)
or separate stock powers are required unless payment is to be made to, or
Certificate(s) evidencing the shares of Common Stock not tendered or purchased
are to be issued in the name of, a person other than the registered Holder(s).
Signatures on such Certificate(s) or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of the shares of Common Stock tendered hereby, the
Certificate(s) must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holder or
holders appear(s) on such Certificate(s). Signatures on such Certificate(s) or
stock powers must be guaranteed by an Eligible Institution.
6. Transfer Taxes. Except as otherwise provided in this Instruction 6, the
Purchaser will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of purchased shares of Common Stock to it or its order
pursuant to the Offer. If, however, payment of the purchase price of any
shares of Common Stock purchased is to be made to or, in the circumstances
permitted hereby, if Certificate(s) for the shares of Common Stock not
tendered or purchased are to be registered in the name of, any person other
than the registered holder, or if tendered Certificate(s) are registered in
the name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any transfer taxes (whether imposed on the
registered Holder or such person) payable on account of the transfer to such
person will be deducted from the purchase price for such shares of Common
Stock if satisfactory evidence of the payment of such taxes, or exemption
therefrom, is not submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter
of Transmittal.
7. Special Payment and Delivery Instructions. If a check for the purchase
price is to be issued in the name of, and/or Certificates for the shares of
Common Stock not tendered or not accepted for payment are to be issued in the
name of, a person other than the signer of this Letter of Transmittal or if a
check and/or such Certificates for shares of Common Stock are to be mailed to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. A Book-Entry Holder may request that shares
of Common Stock not accepted for payment be credited to such account
maintained at the Book-Entry Transfer Facility as such Book-Entry Holder may
designate under "Special Payment Instructions." If no such instructions are
given, such shares of Common Stock not accepted for payment will be returned
by crediting the account at the Book-Entry Transfer Facility designated above.
9
<PAGE>
8. Requests for Assistance or Additional Copies. Questions or requests for
assistance may be directed to, or additional copies of the Offer to Purchase,
this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be obtained from, the Information Agent at its address set
forth on the back cover of the Offer to Purchase or from your broker, dealer,
commercial bank or trust company.
9. Lost, Mutilated or Destroyed Certificates. If any Certificates have been
lost, mutilated or destroyed, the Holder should promptly notify the Depositary
by checking the box on the front page of this Letter of Transmittal. The
Holder will then be instructed as to the procedure to be followed in order to
replace the relevant Certificates. This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost,
mutilated or destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A COPY HEREOF, TOGETHER WITH
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a tendering Holder may be
subject to backup withholding tax at a rate of 31% with respect to payments by
the Depositary pursuant to the Offer unless such Holder: (i) is a corporation
or other exempt recipient and, if required, establishes its exemption from
backup withholding; (ii) provides its correct taxpayer identification number
("TIN"), certifies that the TIN provided is correct (or that such Holder is
awaiting a TIN) and otherwise complies with applicable requirements of the
backup withholding rules; or (iii) certifies as to its non-United States
status. If such Holder is an individual, the TIN is his or her social security
number. Completion of a Substitute Form W-9, in the case of a U.S. Holder,
provided in this Letter of Transmittal, should be used for this purpose.
Failure to provide such Holder's TIN on the Substitute Form W-9, if
applicable, may subject the tendering Holder (or other payee) to a $50 penalty
imposed by the Internal Revenue Service ("IRS"). More serious penalties may be
imposed for providing false information which, if willfully done, may result
in fines and/or imprisonment. The box in part 3 of the Substitute Form W-9 may
be checked if the tendering Holder (or other payee) is required to submit a
Substitute Form W-9 and has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is so
checked and the Depositary is not provided with a TIN by the time of payment,
the Depositary will withhold 31% on all such payments of the Offer Price until
a TIN is provided to the Depositary. In order for a foreign Holder to qualify
as an exempt recipient, that Holder should submit an IRS Form W-8 or a
Substitute Form W-8, signed under penalties of perjury, attesting to that
Holder's exempt status. Such forms can be obtained from the Depositary.
Failure to provide the information on the form may subject tendering Holders
to 31% United States federal income tax withholding on the payment of the
purchase price of cash pursuant to the Offer.
10
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYER'S NAME: First Union National Bank
- -------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR Social Security Number
TIN IN THE BOX AT RIGHT AND or Employer
CERTIFY BY SIGNING AND Identification Number
DATING BELOW.
--------------------------------------------------------
Part 2--If you are exempt from backup withholding,
please check the box: [_]
SUBSTITUTE Part 3--If you are
awaiting TIN, check
box: [_]
Part 4--Certification--Under penalties of perjury, I
Form W-9 certify that:
----------------------
[X]
Department of the (1) The number shown on this form is my correct
Treasury Internal Taxpayer Identification Number (or I am waiting
Revenue Service for a number to be issued to me), and
--------------------------------------------------------
(2) I am not subject to backup withholding because
(i) I am exempt from backup withholding, (ii) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup
withholding.
Payer's Request for
Taxpayer Identifi- Certification Instructions--You must cross out item
cation Number ("TIN") (2) above if you have been notified by the IRS that
and Certification you are subject to backup withholding because of
under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding, you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out such item (2).
--------------------------------------------------------
SIGNATURE ________________________________________
DATED ____________________________________________
NAME (Please Print) ______________________________
ADDRESS __________________________________________
CITY, STATE AND ZIP CODE _________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable cash payments made to me thereafter
will be withheld until I provide a taxpayer identification number.
Signature: ______________________________________
Date: ______ ,2000
11
<PAGE>
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth below. Additional copies of
the Offer to Purchase, this Letter of Transmittal or other related tender offer
materials may be obtained from the Information Agent or from brokers, dealers,
commercial banks or trust companies.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue
New York, New York 10022
Call Collect: (212) 754-8000
Banks and Brokerage Firms, Please Call: (800) 662-5200
Shareholders, Please Call: (800) 566-9061
<PAGE>
Exhibit A(3)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are
in any doubt as to the action to be taken, you should seek your own financial
advice immediately from your own appropriately authorized independent
financial advisor. If you have sold or transferred all of your registered
holdings of shares of Common Stock (as defined below), please forward this
document and all accompanying documents to the stockbroker, bank or other
agent through whom the sale or transfer was effected, for transmission to the
purchaser or transferee.
NOTICE OF GUARANTEED DELIVERY
(Not to be used for Signature Guarantees)
For Tender of Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pulaski Furniture Corporation
Pursuant to the Offer to Purchase
dated April 7, 2000
by
Pine Acquisition Corp.
A Direct Wholly Owned Subsidiary of
Pine Holdings, Inc.
As set forth under "THE TENDER OFFER--Procedures for Tendering Shares of
Common Stock" in the Offer to Purchase, dated April 7, 2000, and any
supplements or amendments thereto (the "Offer to Purchase"), this form (or a
copy hereof) must be used to accept the Offer (as defined in the Offer to
Purchase) if (i) certificates (the "Certificates") representing shares of
common stock together with the associated preferred stock purchase rights
(together, the "Common Stock") of Pulaski Furniture Corporation, a Virginia
corporation (the "Company"), are not immediately available, (ii) if the
procedures for book-entry transfer cannot be completed on a timely basis or
(iii) time will not permit Certificates and all other required documents to
reach First Union National Bank (the "Depositary") prior to the Expiration
Date (as defined in "THE TENDER OFFER--Terms of the Offer" of the Offer to
Purchase). This Notice of Guaranteed Delivery may be delivered by hand, by
mail or by overnight courier or transmitted by facsimile transmission to the
Depositary and must include a signature guarantee by an Eligible Institution
(as defined in "THE TENDER OFFER--Procedures for Tendering Shares of Common
Stock" of the Offer to Purchase) in the form set forth herein. See the
guaranteed delivery procedures described in the Offer to Purchase under "THE
TENDER OFFER--Procedures for Tendering Shares of Common Stock".
The Depositary for the Offer is:
First Union National Bank
<TABLE>
<CAPTION>
By Mail: By Hand/Overnight Courier:
<S> <C> <C>
First Union National Bank First Union National Bank
1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd.
Charlotte, NC 28288 Charlotte, NC 28262
Attn: Corporate Actions NC-1153 Attn: Corporate Actions NC-1153
</TABLE>
(800) 829-8432
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instruction via facsimile transmission
other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee a
signature. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in "THE TENDER OFFER--
Procedures for Tendering Shares of Common Stock" of the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Pine Acquisition Corp., a Virginia
corporation and a direct wholly owned subsidiary of Pine Holdings, Inc., a
Virginia corporation, upon the terms and subject to the conditions set forth
in the Offer to Purchase and the related Letter of Transmittal, receipt of
each of which is hereby acknowledged, the number of shares of Common Stock
indicated below pursuant to the Guaranteed Delivery Procedures described in
the Offer to Purchase under "THE TENDER OFFER--Procedures for Tendering Shares
of Common Stock".
Name of Record Holder(s): __________________________________________________
----------------------------------------------------------------------------
Address(es): _______________________________________________________________
----------------------------------------------------------------------------
Area Code(s) and Tel. No(s).: (home)_________________(work)_________________
Signature(s): ______________________________________________________________
Date: ______________________________________________________________________
Number of shares of Common Stock: __________________________________________
Certificate Number(s) if available: ________________________________________
If shares of Common Stock will be tendered by book-entry transfer check box:
[_]The Depository Trust Company
Account Number: ________________________________________________________
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as defined in "THE TENDER OFFER--
Procedures for Tendering Shares of Common Stock" of the Offer to Purchase),
hereby guarantees that the undersigned will deliver to the Depositary, at one
of its addresses set forth above, either the Certificates representing the
shares of Common Stock tendered hereby, in proper form for transfer, or Book-
Entry Confirmation (as defined in the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal, including any
required signature guarantees, or, in the case of book-entry delivery of
shares of Common Stock, an Agent's Message (as defined in the Offer to
Purchase), and any other documents required by the Letter of Transmittal, all
within three Nasdaq Stock Market trading days (as defined in "THE TENDER
OFFER--Procedures for Tendering Shares of Common Stock" of the Offer to
Purchase) after the date hereof.
Name of Firm: Authorized Signature:
- ------------------------------------- ------------------------------------
- ------------------------------------- Name: ______________________________
(Please Print)
Address: ____________________________
(Zip Code) Address: ___________________________
Area Code and Tel. No.: ____________ Date: ______________________________
NOTE: DO NOT SEND CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY;
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
Exhibit A(4)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the Payer.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of --
- --------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, the first
individual on
the account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor
guardian or committee for a or incompetent
designated ward, minor or person(3)
incompetent person
7. a. A revocable savings
trust account (in which The grantor-
grantor is also trustee) trustee(1)
b. Any "trust" account that The actual
is not a legal or valid owner(4)
trust under State law
8. Sole proprietorship account The owner(4)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
- ------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension trust Legal entity (Do
not furnish the
identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of Agriculture in the name The public
of a public entity (such as a State or local government, entity
school district, or prison) that receives agricultural
program payments
</TABLE>
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish
such person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and ap-
ply for a number.
Payees Exempt from Backup Withholding
Payees that may be exempted from backup withholding on payments include the
following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or a custodial ac-
count under section 403(b)(7) if the account satisfies the requirements of
section 401(f)(2)
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by indi- viduals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments of mortgage interest to you.
Exempt payees described above should file Form W-9 to avoid possible errone-
ous backup withholding.
FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE
THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.-- Section 6109 requires most recipients of dividend, in-
terest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are re-
quired to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includable payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 20% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Exhibit A(5)
OFFER TO PURCHASE FOR CASH
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pulaski Furniture Corporation
at
$22.50 Net Per Share of Common Stock
by
Pine Acquisition Corp.
A Direct Wholly Owned Subsidiary of
Pine Holdings, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED.
April 7, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Morrow & Co., Inc. has been appointed by Pine Acquisition Corp., a Virginia
corporation (the "Purchaser") and a direct wholly owned subsidiary of Pine
Holdings, Inc., a Virginia corporation ("Parent"), to act as Information Agent
in connection with the Purchaser's offer to purchase all of the issued and
outstanding shares of common stock including the associated preferred stock
purchase rights (together, the "Common Stock"), of Pulaski Furniture
Corporation, a Virginia corporation (the "Company"), at a price of $22.50 per
share of Common Stock, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated April 7, 2000 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, as they may be amended and supplemented from
time to time, together constitute the "Offer"), copies of which are enclosed
herewith. Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold shares of Common Stock in your name or in
the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated April 7, 2000.
2. The Letter of Transmittal to tender shares of Common Stock for your
use and for the information of your clients. Facsimile copies of the Letter
of Transmittal may be used to tender shares of Common Stock.
3. A letter to stockholders of the Company from Harry H. Warner,
Chairman of the Board of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to
stockholders of the Company.
<PAGE>
4. The Notice of Guaranteed Delivery for shares of Common Stock to be
used to accept the Offer if the procedures for tendering shares of Common
Stock set forth in the Offer to Purchase cannot be completed prior to the
Expiration Date (as defined in the Offer to Purchase).
5. A printed form of letter which may be sent to your clients for whose
accounts you hold shares of Common Stock registered in your name or in the
name of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $22.50 per share of Common Stock, net to the
seller in cash, without interest thereon, as set forth in the Introduction
to the Offer to Purchase.
2. The Offer is conditioned on, among other things, (i) there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the Offer to Purchase) a number of shares of Common Stock
which when added to the shares of Common Stock, if any, previously acquired
by the Purchaser constitutes more than two-thirds of the outstanding shares
of Common Stock on a fully diluted basis, (ii) the receipt by the Purchaser
of the financing for the Offer contemplated by a bank commitment letter,
and (iii) certain other conditions. See the Introduction and "THE TENDER
OFFER--Terms of the Offer" and "THE TENDER OFFER--Conditions of the Offer"
of the Offer to Purchase.
3. The Offer is being made for all of the issued and outstanding shares
of Common Stock.
4. Tendering holders of shares of Common Stock ("Holders") whose shares
of Common Stock are registered in their own name and who tender directly to
First Union National Bank, as Depositary (the "Depositary"), will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of shares of Common Stock by the Purchaser pursuant to the Offer. However,
federal income tax backup withholding at a rate of 31% may be required,
unless an exemption is available or unless the required tax identification
information is provided. See Instruction 9 of the Letter of Transmittal.
5. The Offer and the withdrawal rights will expire at 12:00 midnight,
New York City time, on Friday, May 5, 2000, unless the Offer is extended.
6. The Board of Directors of the Company has, based on the unanimous
recommendation of a special committee of independent directors, unanimously
approved the Agreement and Plan of Merger (the "Merger Agreement"), dated
as of March 29, 2000 by and among Parent, the Purchaser and the Company and
the transactions contemplated thereby, including the Offer and the merger
(the "Merger") of the Purchaser with and into the Company, determined that
the Offer and the Merger are fair to, and in the best interests of, the
Holders (other than Management Shareholders as defined in the Offer to
Purchase), and recommends that the Holders accept the Offer and tender
their shares of Common Stock pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for shares
of Common Stock accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates evidencing
such shares of Common Stock (the "Certificates") or, if such shares of
Common Stock are held in book-entry form, timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such shares of Common Stock
into the account of First Union National Bank, as depositary (the
"Depositary"), at The Depository Trust Company, and if certificates
evidencing the associated preferred stock purchase
2
<PAGE>
rights (the "Rights") have been issued, such certificates or a Book-Entry
Confirmation, if available, with respect to such certificates (unless the
Purchaser elects, in its sole discretion, to make payment for the shares of
Common Stock pending receipt of such certificates or a Book-Entry
Confirmation, if available, with respect to such certificates), (ii) a
properly completed and duly executed Letter of Transmittal or a copy
thereof with any required signature guarantees (or, in the case of a book-
entry transfer, an Agent's Message (as defined in the Offer to Purchase))
and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering Holders may be paid at different times depending
upon when Certificates for shares of Common Stock (or certificates for
Rights) or Book-Entry Confirmations with respect to shares of Common Stock
(or Rights, if applicable) are actually received by the Depositary. Under
no circumstances will interest be paid on the purchase price of the shares
of Common Stock to be paid by the Purchaser, regardless of any extension of
the Offer or any delay in making such payment.
In order to take advantage of the Offer, Certificates, as well as a Letter
of Transmittal (or copy thereof), properly completed and duly executed with
any required signature guarantees (or, in the case of a book-entry delivery,
an Agent's Message), and all other documents required by the Letter of
Transmittal must be received by the Depositary, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
Any Holder who desires to tender shares of Common Stock and whose
Certificate(s) evidencing such shares of Common Stock are not immediately
available, or who cannot comply with the procedures for book-entry transfer
described in the Offer to Purchase on a timely basis, may tender such shares
of Common Stock by following the procedures for guaranteed delivery set forth
in "THE TENDER OFFER--Procedures for Tendering Shares of Common Stock" of the
Offer to Purchase.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of shares of Common
Stock pursuant to the Offer (other than the Depositary and the Information
Agent as described in the Offer to Purchase). The Purchaser will, however,
upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
The Purchaser will pay or cause to be paid any transfer taxes with respect to
the transfer and sale of purchased shares of Common Stock to it or its order
pursuant to the Offer, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Morrow & Co., Inc., the Information Agent for the Offer, at 445 Park Avenue,
New York, New York 10022, telephone number (212) 754-8000.
Requests for copies of the enclosed materials may also be directed to the
Information Agent at the above addresses and telephone numbers.
Very truly yours,
Morrow & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
Exhibit A(6)
OFFER TO PURCHASE FOR CASH
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pulaski Furniture Corporation
at
$22.50 Net Per Share of Common Stock
by
Pine Acquisition Corp.
A Direct Wholly Owned Subsidiary of
Pine Holdings, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MAY 5, 2000, UNLESS THE OFFER IS EXTENDED.
April 7, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated April 7,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as they may be amended and supplemented from time to time, together constitute
the "Offer") relating to the offer by Pine Acquisition Corp., a Virginia
corporation (the "Purchaser") and a direct wholly owned subsidiary of Pine
Holdings, Inc., a Virginia corporation ("Parent"), to purchase all of the
issued and outstanding shares of common stock including the associated
preferred stock purchase rights (together, the "Common Stock"), of Pulaski
Furniture Corporation, a Virginia corporation (the "Company"), at a price of
$22.50 per share of Common Stock, net to the seller in cash, without interest
thereon (the "Offer Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal. Any
holders who desire to tender shares of Common Stock and whose certificate(s)
evidencing such shares of Common Stock (the "Certificates") are not
immediately available, or who cannot comply with the procedures for book-entry
transfer described in the Offer to Purchase on a timely basis, may tender such
shares of Common Stock by following the procedures for guaranteed delivery set
forth in "THE TENDER OFFER--Procedures for Tendering Shares of Common Stock"
of the Offer to Purchase.
We are (or our nominee is) the holder of record of shares of Common Stock
held for your account. A tender of such shares of Common Stock can be made
only by us as the holder of record and pursuant to your instructions. The
Letter of Transmittal is furnished to you for your information only and cannot
be used by you to tender shares of Common Stock held by us for your account.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all shares of Common Stock held by us for your
account pursuant to the terms and conditions set forth in the Offer.
Please note the following:
1. The Offer Price is $22.50 per share of Common Stock, net to the
seller in cash, without interest thereon, as set forth in the Introduction
to the Offer to Purchase.
1
<PAGE>
2. The Offer is conditioned on, among other things, (i) there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the Offer to Purchase) a number of shares of Common Stock
which when added to the shares of Common Stock, if any, previously acquired
by the Purchaser constitutes more than two-thirds of the outstanding shares
of Common Stock on a fully diluted basis, (ii) the receipt by the Purchaser
of the financing for the Offer contemplated by a bank commitment letter,
and (iii) certain other conditions. See the Introduction and "THE TENDER
OFFER--Terms of the Offer" and "THE TENDER OFFER--Conditions of the Offer"
of the Offer to Purchase.
3. The Offer is being made for all of the issued and outstanding shares
of Common Stock.
4. Tendering holders of shares of Common Stock ("Holders") whose shares
of Common Stock are registered in their own name and who tender directly to
First Union National Bank, as Depositary (the "Depositary"), will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of shares of Common Stock pursuant to the Offer. However, federal
income tax backup withholding at a rate of 31% may be required, unless an
exemption is available or unless the required tax identification
information is provided. See Instruction 9 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, May 5, 2000, (the "Expiration Date") unless the
Offer is extended.
6. The Board of Directors of the Company has, based on the unanimous
recommendation of a special committee of independent directors, unanimously
approved the Agreement and Plan of Merger (the "Merger Agreement"), dated
as of March 29, 2000, by and among Parent, the Purchaser and the Company
and the transactions contemplated thereby, including the Offer and the
merger (the "Merger") of the Purchaser with and into the Company,
determined that the Offer and Merger are fair to, and in the best interests
of, the Holders (other than Management Shareholders as defined in the Offer
to Purchase), and recommends that the Holders accept the Offer and tender
their shares of Common Stock pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for shares
of Common Stock accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) Certificates for shares
of Common Stock or, if such shares of Common Stock are held in book-entry
form, timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such shares of Common Stock into the Depositary's account
at The Depository Trust Company, and if certificates evidencing the
associated preferred stock purchase rights (the "Rights") have been issued,
such certificates or a Book-Entry Confirmation, if available, with respect
to such certificates (unless the Purchaser elects, in its sole discretion,
to make payment for the shares of Common Stock pending receipt of such
certificates or a Book-Entry Confirmation, if available, with respect to
such certificates), (ii) a properly completed and duly executed Letter of
Transmittal or a copy thereof with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase)) and (iii) any other documents required by the Letter of
Transmittal. Accordingly, tendering Holders may be paid at different times
depending upon when Certificates for shares of Common Stock (or
certificates for Rights) or Book-Entry Confirmations with respect to shares
of Common Stock (or Rights, if applicable) are actually received by the
Depositary. Under no circumstances will interest be paid on the purchase
price of the shares of Common Stock to be paid by the Purchaser, regardless
of any extension of the Offer or any delay in making such payment.
If you wish to have us tender any or all of the shares of Common Stock held
by us for your account, please so instruct us by completing, executing,
detaching and returning to us the instruction form set forth herein. If you
authorize the tender of your shares of Common Stock, all such shares of Common
Stock will be tendered
2
<PAGE>
unless otherwise specified below. An envelope to return your instructions to
us is enclosed. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf prior to the Expiration Date.
The Purchaser is not aware of any jurisdiction where the making of the
Offer is prohibited by administrative or judicial action pursuant to any valid
state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of shares of Common
Stock pursuant thereto, the Purchaser will make a good faith effort to comply
with such state statute or seek to have such statute declared inapplicable to
the Offer. If, after such good faith effort, the Purchaser cannot comply with
any such state statute, the Offer will not be made to (and tenders will not be
accepted from or on behalf of) Holders in such state. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
the Purchaser by one or more registered brokers or dealers which are licensed
under the laws of such jurisdiction.
3
<PAGE>
Instructions with Respect to the
Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pulaski Furniture Corporation
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase, dated April 7, 2000, and the related Letter of Transmittal (which,
as they may be amended and supplemented from time to time, together constitute
the "Offer") in connection with the offer by Pine Acquisition Corp., a
Virginia corporation (the "Purchaser") and a direct wholly owned subsidiary of
Pine Holdings, Inc., a Virginia corporation, to purchase all of the issued and
outstanding shares of common stock including the associated preferred stock
purchase rights (together, the "Common Stock"), of Pulaski Furniture
Corporation, a Virginia corporation, at a purchase price of $22.50 per share
of Common Stock, upon the terms and subject to the conditions set forth in the
Offer to Purchase and the related Letter of Transmittal.
This will instruct you to tender to the Purchaser the number of shares of
Common Stock indicated below (or if no number is indicated below, all shares
of Common Stock) which are held by you for the account of the undersigned,
upon the terms and subject to the conditions set forth in the Offer.
Number of Shares of Common Stock to be Tendered*:__________________________
Date:______________________________________________________________________
All registered shareholders sign below:
Signature: ________________________________________________________________
Print Name(s): ____________________________________________________________
___________________________________________________________________________
Print Address: ____________________________________________________________
___________________________________________________________________________
Area Code and Telephone Number(s): (home) ____________ (work) _____________
Taxpayer Identification or Social Security Number: ________________________
- --------
* Unless otherwise indicated, it will be assumed that all of your shares of
Common Stock held by us for your account are to be tendered.
4
<PAGE>
EXHIBIT A(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell shares of Common Stock (as defined below). The Offer (as defined below)
is made solely by the Offer to Purchase dated April 7, 2000 and the related
Letter of Transmittal and any amendments or supplements thereto and is being
made to all holders of shares of Common Stock. The Purchaser (as defined below)
is not aware of any state or jurisdiction where the making of the Offer or the
acceptance of shares of Common Stock is prohibited by any applicable law. If the
Purchaser becomes aware of any state or jurisdiction where the making of the
Offer or the acceptance of shares of Common Stock is not in compliance with any
applicable law, the Purchaser will make a good faith effort to comply with such
law. If, after such good faith effort, the Purchaser cannot comply with such
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of shares of Common Stock in such state or jurisdiction.
In any state or jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such state or jurisdiction.
Notice of Offer to Purchase for Cash All of the
Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pulaski Furniture Corporation
at
$22.50 Net Per Share of Common Stock
by
Pine Acquisition Corp.
A Direct Wholly Owned Subsidiary of
Pine Holdings, Inc.
Pine Acquisition Corp., a Virginia corporation (the "Purchaser"), and a
direct wholly owned subsidiary of Pine Holdings, Inc., a Virginia corporation
("Parent"), is offering to purchase (the "Offer") all of the issued and
outstanding shares of Common Stock (the "Common Stock") of Pulaski Furniture
Corporation (the "Company"), including the associated Rights (as defined below),
at a price of $22.50 per share of Common Stock, net to the seller in cash,
without interest thereon (the "Offer Price"), on the terms and subject to the
conditions set forth in the Offer to Purchase dated April 7, 2000 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, as they may be
amended and supplemented from time to time, together constitute the "Offer").
Unless the context indicates otherwise, all references to shares of Common Stock
shall include the associated preferred stock purchase rights (the "Rights")
issued pursuant to the Amended and Restated Rights Agreement dated December 15,
1997, by and between the Company and First Union National Bank, as Rights Agent
(as amended, the "Rights Agreement").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 5, 2000 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned on, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of shares of Common Stock which, when added to the shares of Common
Stock, if any, previously acquired by the Purchaser, constitutes more than
two-thirds of the outstanding shares of Common Stock on a fully diluted basis
(excluding the effect of the Rights) (the "Minimum Condition") and (ii) the
receipt by the Purchaser of the financing for the Offer contemplated by a bank
commitment letter. See "SPECIAL FACTORS--Financing of the Offer" of the Offer to
Purchase. The Offer is also subject to other terms and conditions described in
"THE TENDER OFFER--Conditions of the Offer" of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 29, 2000 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides that, promptly upon
consummation of the Offer, Parent will cause the Purchaser to be merged with and
into the Company (the "Merger"). At the effective time of the Merger (the
"Effective Time"), except for (i) shares of Common Stock which are held by any
wholly owned subsidiary of the Company, or which are held by Parent or the
Purchaser or any of their subsidiaries, all of which shall be canceled and none
of which shall receive any payment with respect thereto and (ii) shares of
Common Stock held by certain management shareholders each of which shall be
converted into the right to receive 5.625 shares of common stock of Parent and
$11.25 in principal amount of subordinated notes of Parent, each share of Common
Stock issued and outstanding immediately prior to the Effective Time and all
rights in respect thereof shall, by virtue of the Merger and without any action
on the part of the Holder, forthwith cease to exist and be converted into and
represent the right to receive an amount in cash equal to $22.50, without
interest thereon. The Merger Agreement is more fully described in "SPECIAL
FACTORS--Merger Agreement" of the Offer to Purchase.
In connection with the Merger Agreement, certain members of the Company's
management, including John G. Wampler, the Company's Chief Executive Officer,
(the "Management Shareholders") have agreed that their shares of Common Stock
will be exchanged for shares of common stock and subordinated debt of Parent as
part of the Merger. The Management Shareholders will not tender the shares of
Common Stock owned by them and have agreed to vote all such shares in favor of
the Merger Agreement and the transactions contemplated thereby and against any
competing offer.
The Board of Directors of the Company, based on the unanimous
recommendation of a special committee of independent directors, unanimously
approved the Merger Agreement, the Offer and the Merger, determined that the
Offer and the Merger of the Purchaser with and into the Company is fair to, and
in the best interests of, the holders of shares of Common Stock (the "Holders")
(other than Management Shareholders) and recommends that the Holders accept the
Offer and tender their shares pursuant to the Offer.
Tendering Holders whose shares of Common Stock are registered in their own
name and who tender directly to First Union National Bank, as Depositary (the
"Depositary") will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of shares of Common Stock pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) shares of Common Stock validly tendered and not
properly withdrawn if, as and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such shares of
Common Stock. On the terms and subject to the conditions of the Offer, payment
for shares of Common Stock accepted pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering Holders for the purpose of receiving payments from the
Purchaser and transmitting payments to such tendering Holders whose shares of
Common Stock have been accepted for payment. In all cases, payment for shares of
Common Stock purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) the certificates evidencing such shares of
Common Stock or timely confirmation of a book-entry transfer of such shares of
Common Stock into the Depositary's account at the Book-Entry Transfer Facility
(as defined in "THE TENDER OFFER--Acceptance for Payment and Payment for Shares
of Common Stock" of the Offer to Purchase), pursuant to the procedures set forth
in "THE TENDER OFFER--Procedures for Tendering Shares of Common Stock" of the
Offer to Purchase, (ii) the Letter of Transmittal (or a copy thereof), properly
completed and duly executed with any required signature guarantees, or an
Agent's Message (as defined in "THE TENDER OFFER--Acceptance for Payment and
Payment for Shares of Common Stock" of the Offer to Purchase) in connection with
a book-entry transfer and (iii) any other documents required to be included with
the Letter of Transmittal under the terms and subject to the conditions of the
Letter of Transmittal and the Offer to Purchase. Under no circumstances will
interest on the purchase price for shares of Common Stock be paid to the
Purchaser, regardless of any delay in making such payment or extension of the
Expiration Date (as defined below).
The term "Expiration Date" shall mean 12:00 midnight, New York City time,
on Friday, May 5, 2000, unless and until the Purchaser, in its sole discretion
(but subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission), shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire. Subject to the terms of the Merger Agreement and to the applicable
rules and regulations of the Commission and to applicable law, the Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend for any reason the period of time during which the Offer is
open, including upon the occurrence of any of the events specified in "THE
TENDER OFFER--Conditions of the Offer" of the Offer to Purchase, by giving
notice of such extension to the Depositary and by making a public announcement
thereof.
Subject to the provisions of the Merger Agreement, applicable rules and
regulations of the Commission and to applicable law, the obligation of the
Purchaser to accept for payment, and pay for, any shares of Common Stock
tendered pursuant to the Offer shall be subject to the conditions set forth in
"THE TENDER OFFER--Conditions of the Offer" of the Offer to Purchase, any of
which, other than the Minimum Condition, may be waived by Parent or the
Purchaser in their sole discretion. The Purchaser reserves the right to modify
the terms of the Offer provided that, without the prior written consent of the
Company, the Purchaser will not (i) waive the Minimum Condition,(ii) reduce the
number of shares of Common Stock subject to the Offer, (iii) reduce the Offer
Price, (iv) change the form of consideration payable in the Offer, (v) amend or
add any condition of the Offer in any manner that would adversely affect the
Holders or (vi) extend the expiration date of the Offer beyond May 5, 2000,
except as required by law and except that Parent and the Purchaser shall have
the right, in their sole discretion, (A) to extend the expiration date of the
Offer for up to ten (10) business days after the initial Expiration Date if as
of that date there shall not have been tendered a number of shares of Common
Stock that, when added to the number of shares of Common Stock subject to the
Voting Agreement (as defined in the Merger Agreement), with the Management
Shareholders constitute at least ninety percent (90%) of the outstanding shares
of Common Stock, (B) to elect to provide a subsequent offering period for the
Offer in accordance with Rule 14d-11 under the Exchange Act or (C) to extend the
expiration date of the Offer from time to time for a period of up to 20 days,
but in no event later than July 29, 2000, if the conditions set forth in "THE
TENDER OFFER--Conditions of the Offer" of the Offer to Purchase are not
satisfied.
During any such extension, all shares of Common Stock previously tendered
and not properly withdrawn will remain subject to the Offer, subject to the
right of a tendering Holder to withdraw its shares of Common Stock. Any such
extension, delay, termination, waiver or amendment will be followed, as promptly
as practicable, by a public announcement thereof by no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-l under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), which require that material changes be promptly disseminated to
Holders in a manner reasonably designed to inform them of such changes) and
without limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser will have no obligation to publish, advertise or
otherwise communicate any such public announcement.
Except as otherwise provided below, tenders of shares of Common Stock made
pursuant to the Offer are irrevocable. Shares of Common Stock tendered pursuant
to the Offer may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after June 5, 2000, or at such later time as
may apply if the Offer is extended. For a withdrawal to be effective, a written
or facsimile notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
shares of Common Stock to be withdrawn, the number of shares of Common Stock to
be withdrawn, and the name of the registered holder of the shares of Common
Stock, if different from that of the person who tendered such shares of Common
Stock. If certificates evidencing shares of Common Stock to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution (as defined
in "THE TENDER OFFER--Procedures For Tendering Shares of Common Stock" of the
Offer to Purchase), unless such shares of Common Stock have been tendered for
the account of an Eligible Institution. Shares of Common Stock tendered pursuant
to the procedure for book-entry transfer as set forth in "THE TENDER
OFFER--Procedures For Tendering Shares of Common Stock" of the Offer to Purchase
may be withdrawn only by means of the withdrawal procedures made available by
the Book-Entry Transfer Facility, must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
shares of Common Stock and must otherwise comply with the Book-Entry Transfer
Facility's procedures.
Withdrawals of tendered shares of Common Stock may not be rescinded without
the Purchaser's consent, and any Shares of Common Stock properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. None of Parent, the Purchaser, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification. Any shares of
Common Stock properly withdrawn may be re-tendered at any time prior to the
Expiration Date by following any of the procedures described in "THE TENDER
OFFER--Procedures For Tendering Shares of Common Stock" of the Offer to
Purchase.
The information required to be disclosed by paragraph (e)(l) of Rule 13e-3
and paragraph (d)(1) of Rule 14d-6 under the Exchange Act, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings in respect of the shares of Common Stock for the
purpose of disseminating the Offer to Purchase, the Letter of Transmittal and
other relevant materials to Holders. The Offer to Purchase, the Letter of
Transmittal and any other relevant materials will be mailed to record holders of
shares of Common Stock whose names appear on the Company's list of holders of
the shares of Common Stock and will be furnished, for subsequent transmittal to
beneficial owners of shares of Common Stock, to brokers, dealers, commercial
banks, trust companies and similar persons whose names or the names of whose
nominees, appear on the Company's list of holders of the shares of Common Stock,
or, where applicable, who are listed as participants in a clearing agency's
security position listing.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent as set forth below, and copies will be furnished promptly at Purchaser's
expense. Questions or requests for assistance may be directed to the Information
Agent as set forth below.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, NY 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms Call: (800) 662-5200
Shareholders Please Call: (800) 566-9061
April 7, 2000
<PAGE>
EXHIBIT B(1)
BANKERS TRUST COMPANY
ONE BANKERS TRUST PLAZA
NEW YORK, NEW YORK 10006
February 18, 2000
Quad-C Management, Inc.
230 East High Street
Charlottesville, Virginia 22902
Re: Pulaski Furniture Corporation Acquisition Financing
- -------------------------------------------------------
COMMITMENT LETTER
-----------------
Ladies and Gentlemen:
You have advised Bankers Trust Company ("BTCo") that you intend to
consummate a friendly transaction (the "Transaction") pursuant to which you will
form a company ("Holdings") which will acquire (the "Acquisition"), through a
newly-formed wholly-owned subsidiary of Holdings ("Acquisition Subsidiary"), all
of the stock of Pulaski Furniture Corporation (the "Acquired Business"). The
Acquisition will be structured as a tender offer ("Tender Offer") by Acquisition
Subsidiary for 100% (but in any event not less than a sufficient number of
shares to enable Acquisition Subsidiary, voting without any other shareholders
of the Acquired Business, to approve a merger of Acquisition Subsidiary with
the Acquired Business) of the issued and outstanding common shares (along with
associated rights) of Pulaski Furniture Corporation, followed as soon as
possible thereafter by a merger (the "Merger") of Acquisition Subsidiary with
and into Pulaski Furniture Corporation.
BTCo understands that the funding required to effect the Transaction
(including the repayment of indebtedness required thereunder) and to pay related
fees and expenses in connection therewith shall be in an amount not to exceed
$125 million and shall be provided solely from (i) at least $20 million in cash
from the issuance by Holdings of equity or membership interests (the "Equity
Issuance") to Quad-C Management, Inc. ("Quad-C") and management of Pulaski
Furniture Corporation, (ii) $20 million from the issuance by Holdings to Quad-C,
affiliates of Quad-C and/or other investors satisfactory to BTCo of subordinated
notes which will pay interest in kind for a period of time acceptable to BTCo
(except that, unless a default or event of default exists under the Senior Bank
Financing (as defined below), (a) cash
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interest may be paid in an amount sufficient to allow the subordinated lender
to pay cash taxes in respect of the subordinated notes and (b) cash interest may
be paid if the senior leverage ratio of the Borrower and its Subsidiaries is
less than 2.5 times) and otherwise be on terms acceptable to BTCo (the "Subordi-
nated Notes"), and (iii) the incurrence by the Borrower (as defined in the
attached term sheet) of the senior secured bank financing described below.
Quad-C may assign its rights (but not its obligations) under this commitment
letter to Acquisition Subsidiary.
BTCo further understands that the senior secured bank financing will
be in the form of (i) a term loan facility (the "Term Loan Facility") in the
aggregate amount of $35 million and (ii) a revolving credit facility (the
"Revolving Credit Facility," and together with the Term Loan Facility, the
"Senior Bank Financing") in the amount of $85 million (it being understood that
not more than $47.5 million of the Revolving Credit Facility may be utilized on
the Closing Date referred to in the Summary of Terms referred to below). A
summary of certain terms and conditions of the Senior Bank Financing is attached
as Exhibit A to this Letter (the "Summary of Terms").
BTCo is pleased to confirm that subject to and upon the terms and
conditions set forth herein and in the Summary of Terms, it (i) commits to
provide the Senior Bank Financing on the terms and conditions set forth herein
and in the Summary of Terms, (ii) will act as Agent for the syndicate of
financial institutions (the "Lenders") party to the Senior Bank Financing, (iii)
will act as the sole Lead Arranger and Book Manager in connection with the
Senior Bank Financing, and (iv) will act as Financial Advisor to you.
BTCo reserves the right, prior to or after execution of the definitive
credit documentation, to syndicate all or part of its commitments to one or more
financial institutions that will become parties to such definitive credit
documentation for the Senior Bank Financing pursuant to a syndication to be
managed by BTCo. BTCo shall commence syndication efforts promptly after the
execution of this letter, and you agree actively to assist BTCo in achieving a
syndication that is satisfactory to BTCo and you. Such syndication will be
accomplished by a variety of means, including direct contact during the
syndication between senior management and advisors of Holdings, the Borrower,
Quad-C, the Acquired Business and the proposed syndicate members. To assist
BTCo in its syndication efforts, you hereby agree both before and after the
Closing Date (as defined in the Summary of Terms) (a) to provide and cause your
advisors to provide BTCo and other syndicate members upon request with all
reasonable information deemed necessary by us to complete syndication, including
but not limited to, information and evaluations prepared by Holdings, the
Borrower, the Acquired Business, Quad-C and their respective advisors or on
their behalf relating to the transactions contemplated
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<PAGE>
hereby and (b) to assist BTCo upon request in the preparation of a Confidential
Information Memorandum to be used in connection with the syndication of the
Senior Bank Financing, including making available officers of Holdings, Quad-C,
the Acquired Business and the Borrower from time to time and to attend and make
presentations regarding the business and prospects of Holdings and the Borrower,
as appropriate, at a meeting or meetings of Lenders or prospective Lenders.
To induce BTCo to issue this letter, you hereby agree that all fees
and expenses (including the reasonable fees and expenses of counsel) of BTCo and
its affiliates (collectively "BT") arising in connection with this letter (and
our due diligence in connection herewith) and in connection with the
transactions described herein shall be for your account, whether or not the
Transaction is consummated, the Senior Bank Financing is made available or
definitive credit documents are executed. You further agree to indemnify and
hold harmless BT and each director, officer, employee and affiliate thereof
(each an "indemnified person") from and against any and all actions, suits,
proceedings (including any investigations or inquiries), claims, losses,
damages, liabilities or expenses of any kind or nature whatsoever which may be
incurred by or asserted against or involve BT or any such indemnified person as
a result of or arising out of or in any way related to or resulting from this
letter and, upon demand, to pay and reimburse BT and each indemnified person for
any reasonable legal or other out-of-pocket expenses incurred in connection with
investigating, defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim (whether or not BT
or any such indemnified person is a party to any action or proceeding out of
which any such expenses arise, and whether any such action, suit or proceeding
is between Quad-C, Holdings, the Acquired Business, the Borrower, and BT or an
indemnified person or between BT or an indemnified person and a third person or
otherwise); provided, however, that you shall not have to indemnify any
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indemnified person against any loss, claim, damage, expense or liability which
resulted from the gross negligence or willful misconduct of any indemnified
person. This letter is issued for your benefit only and no person or entity
other than Quad-C may rely thereon.
The provisions of the immediately preceding paragraph shall survive
any termination of this letter, provided that if and when definitive credit
--------
documentation in respect of the Senior Bank Financing is executed and the
Transaction is consummated, such paragraph shall be superseded and replaced by
such definitive credit documentation.
BTCo reserves the right to employ the services of its affiliates
(including Deutsche Bank Securities Inc. ("DBSI")) in providing services contem-
plated by this letter and to allocate in whole or in part, to DBSI certain fees
payable
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<PAGE>
to BTCo in such manner as BTCo and DBSI may agree in their sole discretion. You
acknowledge that BTCo may share with any of its affiliates (including DBSI) any
information related to the Transaction or any of the matters contemplated
hereby. BTCo agrees to treat, and cause any such affiliate to treat, all
non-public information provided to it by Quad-C, Holdings, the Acquired Business
or the Borrower as confidential information in accordance with customary banking
industry practices.
BTCo's willingness to provide the Senior Bank Financing as set forth
above will terminate on June 29, 2000, if a definitive credit agreement
evidencing the Senior Bank Financing, satisfactory in form and substance to BTCo
(the "Credit Agreement"), shall not have been entered into prior to such date.
BTCo shall not be responsible or liable for any consequential damages which may
be alleged as a result of its failure to provide the Senior Bank Financing.
Except as otherwise required by law or unless BTCo has otherwise
consented, you are not authorized to show or circulate this letter to any other
person or entity (other than your legal or financial advisors in connection with
your evaluation hereof and, after you execute this and the related fee letter
and return a fully executed copy of same to the undersigned, the Acquired
Business, its board of directors and their legal and financial advisors). BTCo
will be given reasonable opportunity to review and consent to any communications
with the Acquired Business' stockholders regarding this commitment letter,
including, without limitation, an offer to purchase shares from the Acquired
Business' stockholders and a proxy statement, and BTCo will not unreasonably
withhold its consent thereto. If this letter is not accepted by you as provided
in the immediately succeeding paragraph, you are to immediately return this
letter (and any copies hereof) to the undersigned.
If you are in agreement with the foregoing, please sign and return to
BTCo (including by way of facsimile transmission) the enclosed copy of this
letter no later than 5:00 p.m., New York time, on February 18, 2000. This
letter may be executed in any number of counterparts, and by the different
parties hereto on separate counterparts, each of which when executed and
delivered, shall be an original, but all of which shall together constitute one
and the same instrument.
* * *
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<PAGE>
THIS LETTER AND THE RELATED FEE LETTER SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
CONTEMPLATED BY THIS COMMITMENT LETTER AND/OR THE RELATED FEE LETTER IS HEREBY
WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND
NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY
DISPUTE RELATED TO THIS COMMITMENT LETTER AND/OR THE RELATED FEE LETTER OR ANY
MATTERS CONTEMPLATED HEREBY OR THEREBY.
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ W.W. Archer
-------------------------
Name:
Title: Managing Director
Agreed to and Accepted this
___ day of February, 2000
QUAD-C MANAGEMENT, INC.
By: /s/ Anthony R. Iqnaczak
------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
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SUMMARY OF CERTAIN TERMS AND CONDITIONS
---------------------------------------
I. Description of Facilities Comprising the Senior Bank Financing
--------------------------------------------------------------
A. Term Loan Facilities
--------------------
Term Loan: $35 million.
Maturity: The date occurring six years after the initial
borrowing under the Senior Bank Financing (the "Closing
Date").
Amortization: The Term Loan shall amortize quarterly in a
manner to be mutually agreed by the parties.
Use of Proceeds: The Term Loan shall only be utilized (x)
to finance the Transaction, (y) to pay fees and
expenses incurred in connection with the Transaction,
and (z) to refinance the indebtedness of the Acquired
Business.
Availability: The Term Loan may only be borrowed on the
Closing Date and on the date the Merger consideration
is required to be paid (the "Merger Closing Date"),
which shall not be later than June 29, 2000. No amount
of Term Loans once repaid may be reborrowed.
B. Revolving Credit Facility
-------------------------
Revolving Credit Facility: Revolving Credit Facility of up
to the lesser of (i) $85 million and (ii) 85% of
eligible receivables and 60% of eligible inventory
(including LIFO reserves), which may be utilized
through the incurrence of loans and/or the issuance of
letters of credit (subject to a sublimit for letters of
credit to be agreed upon).
Maturity: The date occurring six years after the Closing
Date. Loans made pursuant to the Revolving Credit
Facility (the "Revolving Loans") shall be repaid in
full on such date.
Use of Proceeds: The proceeds of all Revolving Loans may be
incurred on or after the Closing Date and may be
utilized (w) on and after the date of the Merger, for
the Borrower's
<PAGE>
EXHIBIT A
Page 2
working capital requirements, other general corporate
purposes and letters of credit, (x) to finance the
Transaction, (y) to pay fees and expenses incurred in
connection with the Transaction, and (z) to refinance
the indebtedness of the Acquired Business.
Availability: Revolving Loans may be borrowed, repaid and
reborrowed on and after the Closing Date, provided,
that not more than $47.5 million of Revolving Loans may
be outstanding on the Closing Date and/or the date of
the Merger.
II. Terms Applicable to the Entire Senior Bank Financing
----------------------------------------------------
Borrower: On the Closing Date, Acquisition Subsidiary; on
and after the date of the Merger, the survivor of the
Merger.
Agent: Bankers Trust Company ("BTCo").
Sole Lead
Arranger and
Book Manager: BTCo.
Lenders: BTCo and/or a syndicate of lenders formed by BTCo
(the "Lenders").
Guaranty: All obligations under the Senior Bank Financing
shall be unconditionally guaranteed by Holdings and
each of its domestic (and, to the extent no adverse
tax consequences result therefrom, U.S. Virgin Islands)
subsidiaries other than the Borrower (the
"Guarantors"), subject to customary exceptions for
transactions of this type.
Security: The obligations of the Borrower and the Guarantors
shall be secured by a first priority perfected security
interest in (x) all stock of each direct and indirect
subsidiary of Holdings (including the Borrower, but
limited to 65% in the case of foreign and, if necessary
to avoid adverse tax consequences, U.S. Virgin Islands,
subsidiaries) and (y) all other tangible and intangible
assets of the Guarantors and the Borrower, subject to
customary exceptions for transactions of this type.
<PAGE>
EXHIBIT A
Page 3
Interest Rates: At the option of the Borrower, Loans under
the Senior Bank Financing may be maintained from time
to time as (x) Base Rate Loans which shall bear
interest at the Applicable Margin in excess of the Base
Rate in effect from time to time or (y) Reserve
Adjusted Eurodollar Loans which shall bear interest at
the Applicable Margin (as defined in the Fee Letter) in
excess of the Eurodollar Rate (adjusted for maximum re-
serves) as determined by the Agent for the respective
interest period, provided that until the earlier to
occur of (x) the 60th day following the Closing Date
and (y) that date upon which the Agent has determined
(and notifies the Borrower) that the primary
syndication of the Senior Bank Financing (and the
resultant addition of institutions as Lenders) has been
com pleted, only one month interest periods shall be
available for Reserve Adjusted Eurodollar Loans and all
such interest periods must end on the same day.
Applicable Margins for Revolving Credit Loans and Term
Loans shall be subject to a stepdown to be agreed upon
based on performance.
"Base Rate" shall mean the higher of (x) 1/2 of 1% in excess of
the Federal Reserve reported certificate of deposit rate and (y)
the rate that BTCo announces from time to time as its prime
lending rate, as in effect from time to time.
Interest periods of 1, 2, 3 and 6 months shall be available in
the case of Reserve Adjusted Eurodollar Loans.
The Senior Bank Financing shall include BTCo's standard
protective provisions for such matters as defaulting banks,
capital adequacy, increased costs, actual reserves, funding
losses, illegality and withholding taxes.
Interest in respect of Base Rate Loans shall be payable quar-
terly in arrears on the last business day of each fiscal quarter.
Interest in respect of Reserve Adjusted Eurodollar Loans shall be
payable in arrears at the end of the applicable interest period
and every three months in the case of interest periods in excess
of three months. Interest will also be payable at the time of
repayment of any Loans and at maturity. All interest and
commitment fee and other fee calculations shall be based on a
360-day year and actual days elapsed.
<PAGE>
EXHIBIT A
Page 4
Overdue principal and interest shall bear interest at a rate
per annum equal to the greater of (i) the rate which is 2%
in excess of the rate otherwise applicable to Base Rate
Loans from time to time and (ii) the rate which is 2% in
excess of the rate then borne by such borrowings. Such
interest shall be payable on demand.
Voluntary Prepayments: Voluntary prepayments may be made at
any time without premium or penalty, but subject to the
payment of breakage costs (if any) in the case of
voluntary prepayments of Reserve Adjusted Eurodollar
Loans on a date which is not the last day on an
interest period applicable thereto. All voluntary
prepayments of Term Loan Facilities will be applied to
reduce future scheduled amortization payments in direct
order to the extent of scheduled payments in the year
following any such prepayment and, if in excess
thereof, on a pro rata basis.
Mandatory Prepayments: Mandatory prepayments (and, in the
case of the Revolving Credit Facility, commitment
reductions) shall be required in the amounts equal to
(a) 100% of the net proceeds from asset sales, with
customary exceptions to be agreed upon, (b) 100% of the
net proceeds from issuances of debt, with customary
exceptions to be agreed upon, (c) 100% (subject to
reduction to be agreed upon based on leverage) of the
net proceeds from equity issuances or capital
contributions, with customary exceptions to be agreed
upon, and (d) 75% of annual excess cash flow (the
definition of which will be mutually agreed upon). In
addition, (i) Loans shall be required to be repaid in
full, and all commitments under the Senior Bank
Financing shall terminate, upon the occurrence of a
change of control (the definition of which will be
mutually agreed upon) and (ii) Revolving Loans shall be
required to be prepaid (and letters of credit cash
collateralized) if at any time the aggregate principal
amount thereof exceeds the total Revolving Credit
Facility commitments or the borrowing base, with such
prepayment (and/or cash collateralization) to be in an
amount equal to such excess. All mandatory prepayments
shall be applied first, to the future scheduled
amortization payments on the Term Loan Facilities on a
<PAGE>
EXHIBIT A
Page 5
pro rata basis, second, to the outstanding Revolving
Credit Facility and third, to the cash
collateralization of letters of credit.
Voluntary Commitment Reductions: Voluntary reductions of
the total commitments may be made on a permanent basis,
subject to minimum amounts and notice.
Agent/Lender Fees: The Agent and the Lenders shall receive
such fees as have been separately agreed upon with the
Agent.
Commitment Fees: 1/2 of 1% per annum of the unutilized total
commitments under the Senior Bank Financing (including
any undrawn portion of the Term Loan), as in effect
from time to time, commencing on the Closing Date and
continuing to and including the termination of the
Senior Bank Financing, payable in arrears quarterly
and upon the termination of the Senior Bank Financing.
Letter of Credit Fees: Applicable Margin for Revolving Loans
maintained as Reserve Adjusted Eurodollar Loans on the
aggregate outstanding stated amounts of letters of
credit plus an additional 1/4 of 1% on the aggregate
outstanding stated amounts of letters of credit to be
paid as a fronting fee to the issuing Lender.
Documentation: The Lenders' commitments will be subject to
the negotiation, execution and delivery of definitive
financing agreements (and related security
documentation, guaranties, etc.) consistent with the
terms of this letter, in each case prepared by counsel
to the Agent. All documentation other than real estate
mortgages shall be governed by New York law.
Conditions Precedent: In addition to conditions precedent
typical for these types of facilities and any other
conditions reasonably appropriate in the context of the
proposed transaction, the following conditions apply:
A. Conditions To the Initial Loans
-------------------------------
<PAGE>
EXHIBIT A
Page 6
(i) The structure and all terms of, and the documentation for, the
Transaction shall be reasonably satisfactory to the Agent and the
Required Lenders. All conditions precedent to the consummation
of the Tender Offer as set forth in the documentation relating
thereto shall have been satisfied, and not waived except with the
consent of the Agent and the Required Lenders, to the reasonable
satisfaction of the Agent and the Required Lenders. The Tender
Offer shall have been consummated in all material respects in
accordance with such documentation and all applicable laws.
(ii) Holdings shall have received gross cash proceeds from the Equity
Issuance of at least $20 million. All terms and conditions
(and the documentation) in connection with the Equity Issuance
shall be reasonably satisfactory to the Agent and the Required
Lenders. Management of the Acquired Business shall have rolled
over its equity in an amount and on terms reasonably satisfactory
to the Agent and the Required Lenders.
(iii) Holdings shall have received gross cash proceeds from the
issuance of the Subordinated Notes of at least $20 million, and
Holdings shall have either loaned such proceeds to the Borrower
or contributed them as equity to the Borrower. Interest on the
Subordinated Notes shall be payable in kind for a period of time
acceptable to the Agent and the Required Lenders (except that,
unless a default or event of default exists under the Senior Bank
Financing (as defined below), (a) cash interest may be paid in an
amount to allow the subordinated lender to pay cash taxes in
respect of the subordinated notes and (b) cash interest may be
paid if the senior leverage ratio of the Borrower and its
Subsidiaries is less than 2.5 times). All terms and conditions
(and the documentation entered into in connection with the
issuance) of the Subordinated Notes (including, without
limitation, interest rate, mandatory redemptions, covenants,
defaults, remedies, subordination provisions and other terms)
shall be satisfactory to the Agent and the Required Lenders.
(iv) The Borrower shall have used the aggregate amount received from
the Equity Issuance and the Subordinated Notes to make payments
owing in connection with the Tender Offer before utilizing any
proceeds of Loans pursuant to the Senior Bank Financing for such
purpose.
<PAGE>
EXHIBIT A
Page 7
(v) All necessary government and third party approvals in connection
with the Transaction (other than any shareholder approval of the
Merger) and the other transactions contemplated by the Senior
Bank Financing and otherwise referred to herein (including
without limitation any consents required under the Acquired
Business' debt agreements) shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which
restrains, prevents, or imposes materially adverse conditions
upon, the consummation of the Transaction or the other
transactions contemplated by the Senior Bank Financing and
otherwise referred to herein.
(vi) The Lenders shall have become aware of no facts or conditions not
previously known, and since October 31, 1999 nothing shall have
occurred which the Agent or the Required Lenders shall
reasonably determine could reasonably be expected to have a
material adverse effect on the rights or remedies of the Lenders
or the Agent, or on the ability of Holdings, the Bor rower, the
Acquired Business and their respective subsidiaries to perform
their obligations to the Lenders or which could reasonably be
expected to have a materially adverse effect on the business,
property, assets, nature of assets, liabilities, condition
(financial or otherwise), results of operations or prospects of
Holdings, the Borrower, the Acquired Business and their
subsidiaries taken as a whole after giving effect to the
Transaction.
(vii) No litigation by any entity (private or governmental) shall be
pending or threatened with respect to the Transaction, the Senior
Bank Financing or any documentation executed in connection
therewith (which could be reasonably expected to have a material
adverse effect on the Transaction) or which the Agent or the
Required Lenders shall reasonably determine could reasonably be
expected to have a materially adverse effect on the business,
property, assets, nature of assets, liabilities, condition
(financial or otherwise) or prospects of Holdings, the Borrower,
the Acquired Business and their subsidiaries taken as a whole.
(viii) The Lenders shall have received legal opinions from counsel, and
covering matters, reasonably acceptable to the Agent and the
Required Lenders.
(ix) The corporate and capital structure (and all agreements related
thereto, including any rights plans) of Holdings, the Borrower,
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EXHIBIT A
Page 8
the Acquired Business and their respective subsidiaries, and all
organizational documents of such entities shall be reasonably
satisfactory to the Agent and the Required Lenders.
(x) All Loans and other financings to Holdings and the Borrower shall
be in full compliance with all applicable requirements of the
margin regulations and the Borrower shall have delivered an
appropriately completed Form U-1 for each Lender.
(xi) All costs, fees, expenses (including, without limitation,
reasonable legal fees and expenses) and other compensation
contemplated hereby payable to the Lenders or the Agent shall
have been paid to the extent due.
(xii) The Lenders shall have received opinions of value and other
appropriate factual information and expert advice (including
without limitation, (i) a report of the value of the inventory
and receivables of the Borrower and its Subsidiaries, (ii)
insurance analyses in scope, and in form and substance,
reasonably acceptable to the Agent and the Required Lenders, and
(iii) a solvency opinion with respect to the Borrower and its
subsidiaries reasonably acceptable to the Agent and the Required
Lenders.
(xiii) All labor and related employee agreements and liabilities, and
all pension and other employee benefit plans and liabilities
(including, without limitation, with respect to retiree health
benefits), and all insurance policies of Holdings, the Borrower
and the Acquired Business and their respective subsidiaries shall
be in force and shall be reasonably satisfactory to the Agent and
the Required Lenders.
(xiv) Holdings, the Borrower and their respective subsidiaries shall
have no other indebtedness for borrowed money or liens except
such indebtedness and liens which shall be permitted under the
Senior Bank Financing.
(xv) (a) Trading in securities generally on the New York or American
Stock Exchange shall not have been suspended; minimum or maximum
prices shall not have been established on any such exchange; (b)
a banking moratorium shall not have been declared by New York or
United States authorities and any foreign power; and (c) there
shall not have been (x) an out break or escalation of hostilities
between the United States and any foreign power, or (y) an
outbreak or escalation of any other insurrection
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EXHIBIT A
Page 9
or armed conflict involving the United States or any other
national or international calamity or emergency, or (z) any
material change in the general financial markets of the United
States which, in each case, in the reasonable judgment of the
Agent or the Required Lenders, would materially and adversely
affect the ability to sell or syndicate loans of a nature similar
to the Senior Bank Financing.
(xvi) The Agent and the Lenders shall have received, and shall be
satisfied with, an opening pro forma balance sheet of Holdings
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and its subsidiaries, in each case after giving effect to the
Transaction, and a related funds flow statement.
(xvii) The Agent and the Lenders shall have received and completed their
review of Uniform Commercial Code, judgment and tax lien searches
for Holdings, the Borrower, the Acquired Business and their
respective subsidiaries and after such completion, the Agent and
the Required Lenders shall be satisfied in their reasonable
discretion with the results thereof.
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EXHIBIT A
Page 10
(xviii) The Lenders shall have a perfected first priority security inter
est in all shares of the Acquired Business owned by Holdings and
the Borrower, whether acquired through the Tender Offer or
otherwise.
B. Conditions to the Term Loan made on the Merger Closing Date
-----------------------------------------------------------
(i) All conditions precedent to the consummation of the Merger as set
forth in the documentation relating thereto shall have been
satisfied, and not waived except with the consent of the Agent
and the Required Lenders, to the reasonable satisfaction of the
Agent and the Required Lenders. The Merger shall have been
consummated in all material respects in accordance with such
documents and all applicable laws.
(ii) All Loans and other financings to Holdings and the Borrower shall
be in full compliance with all applicable requirements of the
margin regulations.
(iii) All costs, fees and expenses (including, without limitation,
reasonable legal fees and expenses) and other compensation
contemplated hereby payable to the Lenders or the Agent shall
have been paid to the extent due.
(iv) Holdings, the Borrower and their respective subsidiaries shall
have no other indebtedness for borrowed money or liens except
such indebtedness and liens which shall be permitted under the
Senior Bank Financing.
(v) The Lenders shall have a perfected first priority security
interest in the assets of Holdings, the Borrower and the Acquired
Business and their respective subsidiaries as required above.
(vi) Simultaneously with the Merger, Pulaski Furniture Corporation's
debt for borrowed money shall be repaid in a manner satisfactory
to the Agent.
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EXHIBIT A
Page 11
C. Conditions to all Loans
-----------------------
Absence of material adverse change, absence of material
litigation, absence of default or unmatured default under the
Senior Bank Financing and continued accuracy of representations
and warranties.
Representationsand Warranties: The Senior Bank Financing and related
documentation shall contain representations and warranties
typical for these types of facilities, as well as any additional
ones appropriate in the context of the proposed transaction.
Covenants: Those typical for these types of facilities and any
additional covenants appropriate in the context of the proposed
transaction (with such covenants having such exceptions or
baskets as may be mutually agreed upon). "Special Purpose
Corporation" covenants shall be applicable at all times to
Holdings and any intermediate holding companies. Although the
covenants have not yet been specifically determined, we
anticipate that the covenants shall in any event include:
(i) Restrictions on other indebtedness.
(ii) Restrictions on mergers, acquisitions, joint ventures,
partnerships and acquisitions and dispositions of assets.
(iii) Restrictions on sale-leaseback transactions and lease payments.
(iv) Restrictions on dividends, stock repurchases and amendments of
organizational, corporate and other documents.
(v) Restrictions on voluntary prepayments of other indebtedness
(including the Subordinated Notes) and amendments thereto.
(vi) Restrictions on transactions with affiliates and formation of
subsidiaries.
(vii) Restrictions on investments.
(viii) Maintenance of existence and properties.
(ix) Restrictions on liens.
<PAGE>
EXHIBIT A
Page 12
(x) Various financial covenants customary for a transaction of this
type (including without limitation minimum interest coverage and
maximum leverage).
(xi) Adequate insurance coverage.
(xii) ERISA covenants.
(xiii) The obtaining of interest rate protection in amounts and for
periods to be determined.
(xiv) Limitations on capital expenditures.
(xv) Financial reporting.
(xvi) Compliance with laws.
Events of Default: Those typical for these types of facilities and any
additional ones appropriate in the context of the proposed
transaction including, without limitation, a change of control of
Holdings or the Borrower.
Assignments and Participations: The Borrower may not assign its rights
or obligations under the Senior Bank Financing without the prior
written consent of the Lenders. Any Lenders may assign, and may
sell participations in, its rights and obligations under the
Senior Bank Financing, subject (x) in the case of participations,
to customary restrictions on the voting rights of the
participants and (y) in the case of assignments, to such
limitations as may be established by the Agent. The Senior Bank
Financing shall provide for a mechanism which will allow for each
assignee to become a direct signatory to the Senior Bank
Financing and will relieve the assigning Lender of its
obligations with respect to the assigned portion of its
commitment, subject to the consent of the Borrower, which consent
shall not be unreasonably withheld. Any assignments and
participations shall be in amounts of at least $5 million.
Required Lenders: Majority, except for customary matters requiring
unanimous action.
<PAGE>
Exhibit C (1)
BB&T Capital Markets Equity Group
- -------------------------------------------------------------------------------
P.O. Box 1575
909 East Main Street (23219)
Richmond, VA
23216-1575
March 29, 2000
Special Committee of the Board of Directors
Pulaski Furniture Corporation
One Pulaski Square
P.O. Box 1371
Pulaski, VA 24301
Gentlemen:
The Pulaski Furniture Corporation (the "Company"), Pine Holdings, Inc.
("Parent"), and Pine Acquisition Corp., a wholly owned subsidiary of the
Parent (the "Acquiror"), plan to approve the acquisition of the Company by the
Parent pursuant to a tender offer (the "Offer") by the Acquiror for all of the
outstanding shares of Common Stock (the "Common Stock") including associated
preferred share purchase rights (the "Rights", and together with the Common
Stock the "Shares"), other than those owned by certain members of the
Company's management (collectively, the "Management Stockholders") (such
Shares are referred to herein as the "Public Shares") and the subsequent
merger of Acquiror with and into the Company (the "Merger" and together with
the Offer, the "Proposed Transaction") pursuant to the Agreement and Plan of
Merger, dated as of March 29, 2000 among the Company, Parent and Acquiror (the
"Merger Agreement"). In connection with the Merger Agreement, a related
agreement was entered into, the Stock Voting and Non-Tender Agreement, dated
March 29, 2000 (the "Voting Agreement" and together with the Merger Agreement
the "Agreements").
Pursuant to the Merger Agreement, the Parent will acquire the Public Shares
not owned by the Parent for cash consideration of $22.50 per Share, subject to
and upon the terms and conditions of the Agreements (the "Consideration"). In
addition, pursuant to the Voting Agreement, the Management Stockholders have
committed that all Shares of the Company owned by them, representing
approximately 8.0% of the total number of Company Shares issued and
outstanding as of the date of the Merger Agreement will be converted in the
Merger into stock and subordinated notes of the Acquiror. You have requested
our opinion with respect to the fairness from a financial point of view to the
holders of Public Shares, as of the date of this letter, of the Consideration
to be received by them in the Proposed Transaction.
BB&T Capital Markets, a division of Scott & Stringfellow, Inc. ("BBTCM") as
a customary part of its investment banking business, is regularly engaged in
the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. We will receive a fee
upon the delivery of this opinion and the Company has agreed to indemnify us
for certain liabilities arising out of the rendering of this opinion. In the
ordinary course of our business, we and our affiliates may actively trade or
hold the securities of the Company for our own account or for the account of
our customers and, accordingly, may at any time hold a long or short position
in such securities.
BB&T Capital Markets is a division of Scott & Stringfellow, Inc., a registered
broker/dealer subsidiary of BB&T Corporation . Member NYSE/SIPC
<PAGE>
Special Committee of the Board of Directors
Pulaski Furniture Corporation
March 29, 2000
Page 2
In developing our opinion, we have, among other things: (1) reviewed the
final Agreements and discussed with management and representatives of the
Company and the Parent the proposed material terms of the Proposed
Transaction; (2) reviewed, among other public information, the Company's
Annual Reports, Forms 10-K and related financial statements and certain other
relevant financial and operating information for the fiscal year ended October
31, 1999 and the fiscal years ended November 1, 1998 and November 2, 1997; (3)
the Company's quarterly report on Form 10-Q and related financial statements
and certain other relevant financial and operating information for the quarter
dated January 23, 2000; (4) reviewed certain information, including financial
forecasts provided to us by the management of the Company relating to the
business, earnings, cash flow, assets and prospects of the Company; (5)
conducted discussions with members of senior management of the Company
concerning the Company's businesses, prospects, and the forecasts provided to
us by the management of the Company; (6) reviewed the historical market prices
and trading activity for the Company's Common Stock and compared such prices
and trading activity with those of certain publicly traded companies which we
deemed to be relevant; (7) compared the financial position and results of
operation of the Company with those of certain publicly traded companies which
we deemed to be relevant; (8) compared the proposed financial terms of the
Proposed Transaction with the financial terms of certain other business
combinations which we deemed to be relevant; (9) reviewed the premiums paid by
the purchaser in other business combinations relative to the closing price one
day prior to the announcement, one week prior to the announcement and four
weeks prior to the announcement; and (10) reviewed other such financial
studies and analyses and performed such other investigations and took into
account all other matters as we deemed to be material or otherwise necessary
to render our Opinion, including our assessment of regulatory, economic,
market, and monetary conditions.
In conducting our review and arriving at our opinion, we discussed with
members of management and representatives of the Company and the Parent the
background of the Proposed Transaction, the reasons and basis for the Proposed
Transaction and the business and future prospects of the Company. We have
relied upon and assumed the accuracy and completeness of the information
furnished to us by or on behalf of the Company and the Parent. We have not
attempted independently to verify such information, nor have we made any
independent appraisal of the assets of the Company. We have conducted only a
limited physical inspection of the Company's facilities. We have not prepared
or obtained any independent evaluation or appraisal of any of the assets or
liabilities of the Company. We have further assumed that the financial
forecasts provided to us by the Company have been reasonably prepared on a
basis reflecting the best judgment and currently available estimates of
management and that such forecasts will be realized in the amounts and at the
times contemplated. We have taken into account our assessment of general
economic, financial, market and industry conditions as they exist and can be
evaluated as of the date hereof, as well as our experience in business
valuations in general. We have also assumed that, in the course of obtaining
regulatory and third party consents for the Proposed Transaction, no
restriction will be imposed that will have a material adverse effect on the
future results of operations or financial condition of the Company.
Our opinion expressed herein was prepared for the use of the Special
Committee of the Board of Directors of the Company in connection with its
consideration of the Proposed Transaction and does not constitute a
recommendation to the holders of the Public Shares as to whether such holder
should tender its Shares in the Offer or how they should vote at the
stockholders' meeting in connection with the Proposed Transaction. Our opinion
may not be used for any other purpose without our prior written consent. We
hereby consent, however, to the inclusion of a description of and reproduction
in full of this opinion in the Schedule TO, the Schedule 14D-9 and any proxy
statement distributed in connection with the Proposed Transaction.
<PAGE>
Special Committee of the Board of Directors
Pulaski Furniture Corporation
March 29, 2000
Page 3
On the basis of our analyses and review and in reliance on the accuracy and
completeness of the information furnished to us and subject to the conditions
and assumptions noted above, it is our opinion that, as of the date hereof,
the Consideration to be received by the holders of Public Shares in the
Proposed Transaction is fair from a financial point of view to the holders of
Public Shares of the Company.
Very truly yours,
BB&T CAPITAL MARKETS
A division of Scott & Stringfellow,
Inc.
<PAGE>
EXHIBIT D(1)
[EXECUTION VERSION]
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PINE HOLDINGS, INC.
PINE ACQUISITION CORP.
AND
PULASKI FURNITURE CORPORATION
Dated as of March 29, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I THE OFFER............................................................................................2
Section 1.1 The Offer...................................................................................2
Section 1.2 Company Actions.............................................................................3
Section 1.3 Composition of the Board of Directors.......................................................4
ARTICLE II THE MERGER...........................................................................................5
Section 2.1 The Merger..................................................................................5
Section 2.2 Effective Time..............................................................................5
Section 2.3 Effects of the Merger.......................................................................5
Section 2.4 Articles of Incorporation and Bylaws; Directors and Officers................................5
Section 2.6 Exchange of Certificates....................................................................6
Section 2.7 Closing of Books............................................................................8
Section 2.9 Further Assurances..........................................................................9
Section 2.10 Withholding Rights........................................................................10
Section 2.11 Closing...................................................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................10
Section 3.1 Organization, Standing and Power..........................................................10
Section 3.2 Capital Structure..........................................................................11
Section 3.3 Subsidiaries...............................................................................11
Section 3.4 Other Interests............................................................................12
Section 3.5 Authority..................................................................................12
Section 3.6 Non-Contravention........................................................................12
Section 3.7 SEC Documents and Financial Statements.....................................................13
Section 3.8 Offer Documents; Schedule 14D-9............................................................14
Section 3.9 Absence of Certain Events..................................................................14
Section 3.10 Title to Properties; Liens................................................................14
Section 3.11 Litigation................................................................................15
Section 3.12 Compliance with Applicable Law............................................................15
Section 3.13 Employee Benefit Plans....................................................................16
Section 3.14 Employment Relations and Agreement........................................................17
Section 3.15 Contracts.................................................................................18
Section 3.16 Rights Agreement..........................................................................19
Section 3.17 State Takeover Statutes; Charter and By-Law Provisions....................................20
Section 3.18 Taxes.....................................................................................20
Section 3.19 Intellectual Properties...................................................................22
Section 3.20 Environmental Laws and Regulations........................................................22
Section 3.21 Voting Requirements.......................................................................24
Section 3.22 Brokers...................................................................................24
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 3.23 Fairness Opinion..........................................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
AND ACQUIROR ......................................................................................24
Section 4.1 Organization, Standing and Power; Capitalization of Parent and Acquiror....................24
Section 4.2 Authority..................................................................................25
Section 4.3 Non-Contravention..........................................................................25
Section 4.4 Offer Documents; Schedule 14D-9 and Proxy Statement........................................25
Section 4.5 Financing..................................................................................26
Section 4.6 Brokers....................................................................................26
Section 4.7 Business of Parent and Acquiror............................................................26
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS..........................................................27
Section 5.1 Access to Information Concerning Properties and Records....................................27
Section 5.2 Confidentiality............................................................................27
Section 5.3 Conduct of Business by the Company Pending the Merger......................................27
Section 5.4 Acquisition Proposals......................................................................29
ARTICLE VI ADDITIONAL AGREEMENTS..............................................................................31
Section 6.1 Company Shareholder Approval; Proxy Statement..............................................31
Section 6.2 Fees and Expenses..........................................................................32
Section 6.3 Reasonable Efforts.........................................................................33
Section 6.4 Public Announcements; Certain Notices......................................................33
Section 6.5 Indemnification; Directors and Officers Insurance..........................................33
Section 6.7 Rights Agreement...........................................................................34
Section 6.8. Subsequent Filings........................................................................34
Section 6.9. Severance Plan............................................................................35
Section 6.10 Financing Related Efforts.................................................................35
ARTICLE VII CONDITIONS PRECEDENT...............................................................................35
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.................................35
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..................................................................36
Section 8.1 Termination................................................................................36
Section 8.2. Effect of Termination.....................................................................38
Section 8.3 Amendment..................................................................................39
Section 8.4 Waiver.....................................................................................39
ARTICLE IX GENERAL PROVISIONS.................................................................................39
Section 9.1 Non-Survival of Representations and Warranties.............................................39
Section 9.2 Notices....................................................................................39
Section 9.3 Interpretation.............................................................................40
Section 9.4 Counterparts...............................................................................40
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 9.5 Entire Agreement; No Third-Party Beneficiaries.............................................41
Section 9.6 Governing Law..............................................................................41
Section 9.7 Assignment.................................................................................41
Section 9.8 Severability...............................................................................41
Section 9.9 Enforcement of this Agreement..............................................................41
Section 9.10 Incorporation of Exhibits.................................................................41
Section 9.11 Certain Definitions.......................................................................41
Section 9.12 Additional Definitions....................................................................42
</TABLE>
Annex A - Conditions to Offer
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of March 29, 2000 (this
"Agreement"), among Pine Holdings, Inc., a Virginia corporation ("Parent"), Pine
Acquisition Corp., a Virginia corporation ("Acquiror"), and Pulaski Furniture
Corporation, a Virginia corporation (the "Company") (Acquiror and the Company
being hereinafter collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
--------------------
WHEREAS, the respective Boards of Directors of Parent, Acquiror and
the Company have approved the acquisition of the Company by Parent pursuant to a
tender offer (the "Offer") by Acquiror for all of the outstanding shares of
Common Stock (the "Common Stock"), together with the associated Rights (as
defined below) (the shares of Common Stock and associated Rights are referred to
herein as "Shares"), of the Company at a price of $22.50 per Share (such price
or any higher price per Share as may be paid to any holder of Shares in the
Offer being referred to herein as the "Offer Price"), net to the seller in cash,
followed by a merger (the "Merger") of Acquiror with and into the Company on the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously adopted
resolutions approving this Agreement, the Offer and the Merger, determining that
the Offer and the Merger are fair to and in the best interests of the holders of
Shares and unanimously recommending that the Company's shareholders accept the
Offer and approve and adopt this Agreement and approve the Merger and the other
transactions contemplated hereby;
WHEREAS, certain members of the Company's management (namely, Messrs.
Chrisley, Crawford, Jack Dawson, Jim Dawson, Hoffman, Kelly, Purcell, Stout,
Wampler and Winters) (collectively the "Management Shareholders") are
simultaneously entering into a stock voting and non-tender agreement with Parent
(the "Voting Agreement") pursuant to which the Management Shareholders have
agreed, among other things, with respect to certain questions that may be put to
shareholders of the Company for a vote, to vote shares of Common Stock now owned
or hereafter acquired by such Management Shareholders, in each case, in
accordance with the terms and conditions of the Voting Agreement and not to
tender such Shares in the Offer;
WHEREAS, in connection with the Merger, each issued and outstanding
Share not owned directly or indirectly by Parent, Acquiror or the Company or any
Management Shareholder will be converted into the right to receive the per Share
consideration paid pursuant to the Offer; and
WHEREAS, in connection with the Merger, each issued and outstanding
Share owned by the Management Shareholders will be converted into the right to
receive shares of common stock of Parent and subordinated notes of Parent.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE OFFER
---------
Section 1.1 The Offer. (a) Provided that this Agreement shall not
---------
have been terminated in accordance with Article VIII and so long as none of the
events set forth in Annex A (the "Tender Offer Conditions") shall have occurred
and no fact, occurrence or circumstance shall exist which would result in a
failure to satisfy any of the Tender Offer Conditions, subject to the provisions
of this Agreement, as promptly as reasonably practicable, but in no event later
than seven (7) Business Days following the first public announcement of the
terms of this Agreement, Acquiror shall commence, within the meaning of Rule
14d-2 under the Exchange Act (as hereinafter defined), the Offer at the Offer
Price. The initial expiration date of the Offer shall be the twentieth Business
Day following the date the Offer is commenced within the meaning of Rule 14d-2
under the Exchange Act (the "Initial Expiration Date"). The obligation of
Acquiror to commence the Offer and accept for payment, and pay for, any Shares
tendered pursuant to the Offer shall be subject to the conditions set forth in
Annex A, any of which, other than the Minimum Condition (as defined in Annex A),
may be waived by Parent or Acquiror in their sole discretion. Parent and
Acquiror expressly reserve the right to modify the terms of the Offer; provided
--------
that, without the prior written consent of the Company, neither Parent nor
Acquiror shall (i) waive the Minimum Condition, (ii) reduce the number of Shares
subject to the Offer, (iii) reduce the price per Share to be paid pursuant to
the Offer, (iv) change the form of consideration payable in the Offer, (v) amend
any term or add any condition of the Offer (including the conditions set forth
on Annex A), in each case, in any manner that would adversely affect the
shareholders of the Company in any material respect or (vi) extend the Initial
Expiration Date, except as required by law and except that Parent and the
Acquiror shall have the right, in their sole discretion, (A) to extend the
expiration date of the Offer for up to ten (10) Business Days after the Initial
Expiration Date if as of that date there shall not have been tendered a number
of Shares that, when added to the number of Shares subject to the Voting
Agreement, constitute at least ninety percent (90%) of the outstanding shares of
Common Stock on a fully-diluted basis, (B) to elect to provide a subsequent
offering period for the Offer in accordance with Rule 14d-11 under the Exchange
Act or (C) to extend the expiration date of the Offer from time to time for
successive periods of up to 20 Business Days each, but in no event later than
the four month anniversary of the date of this Agreement, if the conditions set
forth in Annex A have not been met. If on any scheduled expiration date of the
Offer, the Offer would have expired without any Shares being purchased because
the conditions set forth in Annex A have not been met, Parent and Acquiror
shall, at the request of the Company (subject always to the terms and conditions
of this Agreement, including Article VIII), extend the expiration date of the
Offer from time to time for successive periods of up to 20 Business Days each
(but in no event later than the four-month anniversary of the date of this
Agreement) unless Parent
2
<PAGE>
reasonably believes at such time that such conditions are not capable of being
satisfied. Subject to the terms and conditions of the Offer set forth in Annex
A, Acquiror shall pay for all Shares validly tendered and not withdrawn pursuant
to the Offer as soon after the expiration of the Offer as it is legally
permitted to do so under applicable law.
(b) On the date of commencement of the Offer, Parent and Acquiror
shall file with the Securities and Exchange Commission (the "SEC") and cause to
be disseminated to holders of the Shares a Tender Offer Statement on Schedule TO
with respect to the Offer, which shall contain (included as an Exhibit) or
incorporate by reference an offer to purchase and a related letter of
transmittal, a summary advertisement and a Rule 13e-3 Transaction Statement on
Schedule 13E-3 (collectively, together with any supplements or amendments
thereto, the "Offer Documents"). The Company and its counsel shall be given an
opportunity to review and comment upon the Offer Documents prior to the filing
thereof with the SEC. Each of Parent, Acquiror and the Company agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that such information shall have become false or misleading in any
material respect, and Parent and Acquiror further agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of shares of Common Stock, in each case as and
to the extent required by applicable federal securities laws. Parent and
Acquiror agree to provide the Company and its counsel in writing with copies of
any written comments Parent, Acquiror or their counsel may receive from the SEC
or its staff with respect to the Offer Documents.
Section 1.2 Company Actions. (a) The Company hereby represents that
---------------
the Board of Directors of the Company, by unanimous vote, has (i) duly adopted
resolutions approving this Agreement, the Offer and the Merger, determined that
the Offer and Merger are fair to, and in the best interests of, the Company's
shareholders (other than the Management Shareholders) and recommending that the
Company's shareholders accept the Offer and approve and adopt this Agreement and
approve the Merger and the other transactions contemplated hereby and (ii) taken
all other action necessary to render (x) Sections 13.1-725 through 13.1-727.1
and 13.1-728.1 through 13.1-728.9 of the Virginia Stock Corporation Act (the
"Virginia Code") and (y) the Amended and Restated Rights Agreement dated as of
December 15, 1997 between the Company and First Union National Bank (as amended
to date, the "Rights Agreement") inapplicable to the Offer and the Merger and
the transactions contemplated hereby (including, without limitation, the Voting
Agreement). The Company hereby consents to the inclusion in the Offer Documents
of the recommendations of the Company's Board of Directors described above. The
Company has been advised that each of its directors and executive officers other
than the Management Shareholders intends to tender pursuant to the Offer all
Shares owned of record and beneficially by such director and executive officer.
(b) On the date the Offer Documents are filed with the SEC and the
Offer is commenced, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule
14D-9"), and shall disseminate the Schedule 14D-9 to the shareholders of the
Company as required by Rule 14d-9 under the Securities Exchange Act of 1934 as
amended (including the rules and regulations promulgated thereunder, the
"Exchange Act"). The Schedule 14D-9 shall contain the recommendation described
in paragraph (a) of this Section 1.2.
3
<PAGE>
Parent and Acquiror and their counsel shall be given an opportunity to review
and comment upon the Schedule 14D-9 prior to the filing thereof with the SEC.
Each of the Company, Parent and Acquiror agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 or the Proxy Statement
(as defined below) if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 and Proxy Statement as so
corrected to be filed with the SEC and disseminated to the holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
The Company agrees to provide Parent and Acquiror and their counsel in writing
with any comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 or Proxy Statement promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Parent and Acquiror with mailing labels containing the
names and addresses of the record holders of Shares as of a recent date and of
those persons or entities becoming record holders subsequent to such date,
together with copies of all lists of shareholders, security position listings
and computer files and all other information in the Company's possession or
control regarding the beneficial owners of Shares, and shall furnish to Parent
and Acquiror such information and assistance (including updated lists of
shareholders, security position listings and computer files) as Parent or
Acquiror may reasonably request in communicating the Offer to the record and
beneficial owners of the Shares. Subject to the requirements of law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Acquiror and each of
their affiliates, agents or representatives shall hold in confidence the
information contained in any of such labels, lists and files, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, will promptly deliver to the Company all copies of such
information then in their possession.
Section 1.3 Composition of the Board of Directors. Promptly upon the
-------------------------------------
acceptance for payment of, and payment by Acquiror for, Shares equal to at least
a majority of the outstanding shares of Common Stock, Acquiror shall be entitled
to designate up to such number of directors on the Board of Directors of the
Company, rounded up to the next whole number, as will give Acquiror, subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, representation on the Board of Directors of the Company equal to at
least that number of directors which equals the product of the total number of
directors on the Board of Directors of the Company (giving effect to the
directors elected pursuant to this sentence) multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock directly or
indirectly beneficially owned by Acquiror and Parent and the denominator of
which shall be the number of shares of Common Stock then outstanding. Subject
to applicable law, the Company shall take all action requested by Parent which
is reasonably necessary to effect any such election, including mailing to its
shareholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company agrees to make such mailing with the mailing of the Schedule 14D-9 so
long as Parent shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Parent's designees. Parent and Acquiror shall be solely responsible for any
information with
4
<PAGE>
respect to either of them and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1. In furtherance thereof, the Company
shall increase the size of the Board of Directors of the Company (subject to the
limitations set forth in the Company's Articles of Incorporation or the
Company's Bylaws or imposed by applicable law), or use its reasonable best
efforts to secure the resignation of directors, or both, as is reasonably
necessary to permit Acquiror's designees to be elected to the Board of Directors
of the Company.
ARTICLE II
THE MERGER
----------
Section 2.1 The Merger. On the terms and subject to the conditions
----------
hereof, and in accordance with the Virginia Code, Acquiror shall be merged with
and into the Company at the Effective Time (as hereinafter defined). Following
the Merger, the separate corporate existence of Acquiror shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation"), and shall continue to be governed by the laws of the Commonwealth
of Virginia with all its rights, privileges, immunities, powers and franchises
and shall continue unaffected by the Merger except as set forth in this Article
II or provided by the Virginia Code.
Section 2.2 Effective Time. As soon as practicable after the
--------------
satisfaction or waiver of the conditions to the Merger set forth herein,
Acquiror and the Company shall file articles of merger (the "Articles of
Merger") with the State Corporation Commission of the Commonwealth of Virginia
(the "Corporation Commission"). The "Effective Time" shall be the date and time
that the Certificate of Merger is issued by the Corporation Commission in
respect of the Merger (unless otherwise agreed upon by the parties and specified
in the Articles of Merger, in which case, subject to Section 13.1-606 of the
Virginia Code, the Effective Time shall be the date and time so specified).
Section 2.3 Effects of the Merger. The Merger shall have the effects
---------------------
set forth in Section 13.1-721 of the Virginia Code. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
property, rights, privileges, powers and franchises of the Company and Acquiror
shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Acquiror shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 2.4 Articles of Incorporation and Bylaws; Directors and
---------------------------------------------------
Officers. (a) The parties shall take all steps necessary to ensure that the
- --------
Articles of Incorporation of Acquiror, as in effect immediately prior to the
Effective Time, shall be amended to change the name of Acquiror to "Pulaski
Furniture Corporation" and, as so amended, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or applicable law. The Bylaws of the Company, as in effect
immediately prior to the Effective Time, shall be
5
<PAGE>
the Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or in the Articles of Incorporation and applicable law.
(b) The directors of Acquiror immediately prior to the Effective Time
shall become the directors of the Surviving Corporation as of the Effective
Time. The officers of the Company immediately prior to the Effective Time shall
be the officers of the Surviving Corporation as of the Effective Time.
Section 2.5 Conversion of Securities. As of the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of any shareholder of
the Company:
(a) All Shares that are held by any wholly owned Subsidiary (as
hereinafter defined) of the Company and any Shares owned by Parent or
Acquiror or any of their Subsidiaries shall be canceled and no
consideration shall be delivered in exchange therefor.
(b) Each Share owned by a Management Shareholder shall be exchanged
as of the Effective Time for 5.625 shares of common stock of Parent and
$11.25 in principal amount of subordinated notes of Parent. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate or
certificates representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the consideration
specified in the preceding sentence.
(c) Each Share issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
2.5(a) or converted in accordance with Section 2.5(b)) shall be converted
as of the Effective Time into the right to receive from the Surviving
Corporation in cash, without interest, the Offer Price (the "Merger
Consideration"). All such Shares, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and each holder
of a certificate or certificates (the "Certificates") representing any such
Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration.
(d) Each issued and outstanding share of the capital stock of
Acquiror shall be converted into and become as of the Effective Time one
fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
Section 2.6 Exchange of Certificates. (a) Paying Agent. Parent and
------------------------ ------------
Acquiror shall authorize a commercial bank or trust company to act as paying
agent hereunder (the "Paying Agent") for the payment of the Merger Consideration
upon surrender of Certificates.
(b) Acquiror to Provide Funds. Acquiror shall deposit or cause to be
-------------------------
deposited in trust with the Paying Agent simultaneously with or prior to the
Effective Time cash in an amount
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necessary to pay for all of the Shares pursuant to Section 2.5(c) or 2.8. Such
amount shall hereinafter be referred to as the "Exchange Fund."
The Exchange Fund shall be invested by the Paying Agent as directed by
Parent or Acquiror in direct obligations of the United States, obligations for
which the full faith and credit of the United States is pledged to provide for
the payment of principal and interest, commercial paper rated of the highest
quality by Moody's Investors Services, Inc. or Standard & Poor's Ratings Group
or certificates of deposit, bank repurchase agreements or bankers' acceptances
of a commercial bank having at least $100,000,000 in assets (collectively
"Permitted Investments") or in money market funds which are invested in
Permitted Investments, and any net earnings with respect thereto shall be paid
to Parent as and when requested by Parent. The Paying Agent shall, pursuant to
irrevocable instructions, make the payments referred to in Section 2.5(c) and
2.8 out of the Exchange Fund. The Exchange Fund shall not be used for any other
purpose except as otherwise agreed to by the Company and Acquiror.
If the amount of cash in the Exchange Fund is insufficient to pay all
of the amounts required to be paid pursuant to Sections 2.5(c) and 2.8, Acquiror
from time to time after the Effective Time shall take all steps necessary to
enable and cause the Surviving Corporation to deposit in trust additional cash
with the Paying Agent sufficient to make all such payments.
(c) Exchange Procedures. As soon as practicable after the Effective
-------------------
Time, the Paying Agent shall mail to each holder of record of a Certificate,
other than Parent, Acquiror and any Subsidiary of the Parent or Acquiror, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon actual delivery
of the Certificates to the Paying Agent and shall be in a form and have such
other provisions as Parent or Acquiror may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent or to such other agent or agents as may be appointed by the
Surviving Corporation, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 2.5, and the Certificates so
surrendered shall forthwith be canceled. No interest will be paid or will
accrue on the cash payable upon the surrender of any Certificate. If payment is
to be made to a person or entity other than the person or entity in whose name
the Certificate so surrendered is registered, it shall be a condition of payment
that such Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person or entity requesting such payment shall pay any
transfer or other taxes required by reason of such Certificate or establish to
the satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.6, each
Certificate (other than Certificates representing any Shares owned by Parent,
Acquiror, any of their Subsidiaries or any Management Shareholder) shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 2.5. Notwithstanding the foregoing, none of the Paying
Agent, Parent, the Surviving Corporation or any party hereto shall be liable to
a former shareholder of the Company for any cash or interest
7
<PAGE>
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any portion of the Exchange Fund that remains unclaimed
by the shareholders of the Company for six months after the Effective Time shall
be delivered to the Surviving Corporation (including, without limitation, all
interest and other income received by the Paying Agent in respect of all such
funds). Thereafter, persons or entities who prior to the Merger held Shares
shall look only to the Surviving Corporation (subject to the terms of this
Agreement, abandoned property, escheat and other similar laws) as general
creditors thereof with respect to any Merger Consideration that may be payable
upon due surrender of the Certificates held by them, without interest.
(d) Lost, Stolen or Destroyed Certificates. If any Certificate shall
--------------------------------------
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed,
the Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with this Article II; provided, that the Person to whom
--------
the Merger Consideration is paid shall, as a condition precedent to the payment
thereof, give the Surviving Corporation a bond in such sum as it may direct or
otherwise indemnify the Surviving Corporation in a manner satisfactory to it
against any claim that may be made against the Surviving Corporation with
respect to the Certificate claimed to have been lost, stolen or destroyed.
Section 2.7 Closing of Books. At the Effective Time, the stock
----------------
transfer books of the Company shall be closed and no transfer of Shares shall
thereafter be made. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and converted as provided in
this Article II.
Section 2.8 Stock Options. (a) The Company shall (i) terminate the
-------------
Pulaski Furniture Corporation 1991 Stock Incentive Plan (the "Stock Option
Plan"), the Stock Purchase Plan (as hereinafter defined), and any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any of its Subsidiaries
(collectively "Stock Incentive Plans"), immediately prior to the Effective Time,
(ii) grant no additional Stock Options (as hereinafter defined), restricted
stock awards, stock appreciation rights or other interests in respect of any
Shares under the Stock Incentive Plans and (iii) amend, immediately prior to the
Effective Time, the provisions of any other Employee Benefit Plan (as
hereinafter defined), program, arrangement or agreement providing for the
issuance, transfer or grant of any Shares, or any interest in respect of any
Shares, to provide no continuing rights to acquire, hold, transfer, or grant any
Shares or any interest in any Shares.
(b) Immediately prior to the Effective Time, the Company shall have
taken all necessary actions, including obtaining any required consents, such
that all outstanding employee stock options, whether or not then fully
exercisable or vested, to purchase Shares (a "Stock Option") and all outstanding
stock appreciation rights, heretofore granted under the Stock Incentive Plans
whether or not then fully exercisable or vested, shall become fully exercisable
and vested, and the Stock Options and stock appreciation rights shall be
canceled by the Company, and the holders thereof shall receive a cash payment
(the "Cash Payment") from the Company in an amount (if any), equal to the
product of (i) and (ii), where (i) is the number of
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<PAGE>
Shares subject to such Stock Option or, in the case of a stock appreciation
right, the number of Shares to which such stock appreciation right relates, and
(ii) is the difference (if positive) between the Merger Consideration and the
exercise price per Share covered by the Stock Option or the stock appreciation
right. Prior to the Effective Time, the Company shall have taken all actions
necessary, including obtaining all required consents, such that all amounts, if
any, deducted by the Company prior to the Effective Time from the payroll of a
participant under the Stock Purchase Plan shall be paid to such participant
immediately prior to the Effective Time. Further, all company contributions, if
any, attributable to such amounts and accrued under the Stock Purchase Plan
shall also be paid to such participant immediately prior to the Effective Time.
(c) Immediately prior to the Effective Time, the Company shall have
taken all necessary actions, including obtaining all required consents, such
that each restricted stock award under the Stock Incentive Plans (an "Award")
shall become fully and immediately vested and transferable and the restrictions
thereon shall lapse. At the Effective Time, each holder of an Award shall be
paid in full satisfaction of such Award a cash payment in an amount in respect
thereof equal to the product of (i) and (ii), where (i) is the Merger
Consideration and (ii) is the number of Shares subject to such Award. The
number of Shares of restricted stock of the Company to be awarded to certain
officers and employees of the Company pursuant to stock incentive award
agreements for fiscal year 2000, each dated as of December 15, 2000, shall, for
each such officer or employee, be equal to the product of (i) and (ii), where
(i) is the number of shares of restricted stock of the Company that would be
awarded under each such stock incentive award agreement, assuming the Company
has achieved the $3.03 EPS goal set forth in such award and (ii) is a fraction
where the numerator is the actual number of days such participant is employed by
the Company prior to the Effective Time during the Company's fiscal year ending
in 2000 and the denominator is 365, and all restrictions on such restricted
stock shall lapse immediately prior to the Effective Time.
(d) The Company shall deliver to Acquiror within five business days
of the date hereof a true and complete list of Stock Options and stock
appreciation rights under the Stock Incentive Plans which are outstanding as of
the date hereof, together with detailed calculations of the Cash Payments
relating to such Stock Options and stock appreciation rights had the Effective
Time occurred on the date of delivery thereof. The Company shall update such
list and such calculations as of, and deliver such update to Acquiror on, the
date that is two business days prior to the Effective Time, such updated list
and calculations made as if the Effective Time would occur on such date.
(e) The Company shall ensure that neither it nor any of its
Subsidiaries is or will be bound by any Stock Options, stock appreciation
rights, other options, warrants rights or agreements which would entitle any
person or entity, other than Acquiror or its Subsidiaries, to own any Shares or
to receive any payment in respect thereof. Notwithstanding the foregoing,
Acquiror and any employee of the Company may agree in writing that all or a
portion of the Stock Options held by such employee will, in lieu of being
canceled in consideration for the Cash Payment pursuant to this Section 2.8, be
converted into options to acquire shares of Parent common stock or other
securities of Parent. In such event, the Company shall not make the Cash
Payment in respect of any such converted Stock Options.
9
<PAGE>
Section 2.9 Further Assurances. If at any time after the Effective
------------------
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its officers and
directors or their designees shall be authorized to execute and deliver, in the
name and on behalf of either of the Constituent Corporations in the Merger, all
such deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper, consistent with the terms of this Agreement (as
in effect immediately prior to the acceptance of Shares in the Offer, or as
thereafter amended in accordance with Section 8.3), to vest, perfect or confirm
its right, title or interest in, to or under any of the rights, privileges,
powers, franchises, properties or assets of such Constituent Corporation and
otherwise to carry out the purposes of this Agreement.
Section 2.10 Withholding Rights. The Paying Agent, Parent and the
------------------
Company shall be entitled to deduct and withhold, or cause to be deducted or
withheld, from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares, Stock Options or stock appreciation rights, restricted
stock or other interests in respect of shares, such amounts as are required to
be deducted and withheld with respect to the making of such payment under the
Code (as defined below), or any provision of applicable state, local or foreign
Tax (as defined below) law. To the extent that amounts are so deducted and
withheld, such deducted and withheld amounts shall be treated for all purposes
of this Agreement as having been paid to such holders in respect of which such
deduction and withholding was made.
Section 2.11 Closing. The closing of the transactions contemplated
-------
by this Agreement (the "Closing") shall take place at the offices of White &
Case LLP, 1155 Avenue of the Americas, New York, New York 10036, at 10:00 a.m.,
local time, on the second business day after the day on which the last of the
conditions set forth in Article VII hereof shall have been fulfilled or waived
or at such other time and place as Acquiror and the Company shall agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Acquiror as follows:
Section 3.1 Organization, Standing and Power. The Company and each
--------------------------------
of its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of its Subsidiaries is duly qualified to do business, and is in good
standing, in
10
<PAGE>
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. The Company has delivered to Parent and Acquiror complete and correct
copies of the Restated Articles of Incorporation and By-Laws of the Company and
the comparable governing documents of each of its Subsidiaries, in each case as
amended to the date of this Agreement. Other than as set forth in Section 3.1 of
the Company's disclosure letter (the "Company Disclosure Letter") delivered
concurrently with the delivery of this Agreement, the respective certificates of
incorporation and by-laws or other organizational documents of the Subsidiaries
of the Company do not contain any provision limiting or otherwise restricting
the ability of the Company to control such Subsidiaries in any material respect.
Section 3.2 Capital Structure. As of the date hereof, the authorized
-----------------
capital stock of the Company consists of 10,000,000 shares of Common Stock and
1,000,000 shares of preferred stock ("Preferred Stock"). At the close of
business on the date immediately preceding the date of this Agreement, (i)
2,896,425 shares of Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights, (ii)
36,525 shares of Common Stock were reserved for future issuance pursuant to the
Stock Option Plan and (iii) 22,954 shares of Common Stock were reserved for
future sale and issuance pursuant to the Company's 1996 Salaried Employees'
Stock Purchase Plan (the "Stock Purchase Plan"). No shares of Preferred Stock
are outstanding. A total of 500,000 shares of Preferred Stock designated as
Series A Cumulative Preferred Stock ("Series A Preferred Stock"), in connection
with the Rights Agreement, have been reserved for issuance upon exercise of the
Rights to purchase Series A Preferred Stock ("Rights") pursuant to the Rights
Agreement. As of the date of this Agreement, except as set forth above, no
shares of capital stock or other voting securities of the Company were
authorized, issued, reserved for issuance or outstanding. The Company does not
have any outstanding bonds, debentures, notes or other obligations the holders
of which have the right to vote (or which are convertible into or exchangeable
or exercisable for securities having the right to vote) with the shareholders of
the Company on any matter ("Voting Debt"). As of the date of this Agreement,
except for not more than 15,000 outstanding Stock Options and not more than
172,725 shares of restricted stock all of which were awarded under the Stock
Option Plan, and except for options to purchase approximately $411,000 of shares
of Common Stock that will be accrued as of May 14, 2000 under the Stock Purchase
Plan, there are no outstanding or authorized options, warrants, calls, rights or
subscriptions, claims of any character, obligations, convertible or exchangeable
securities or other commitments, contingent or otherwise, to which the Company
is a party or by which it is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or Voting Debt of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right or agreement (each an
"Issuance Obligation"). Except as contemplated by this Agreement or the Rights
Agreement, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Common Stock or the capital stock of the Company or any of its Subsidiaries.
11
<PAGE>
Section 3.3 Subsidiaries. Section 3.3 of the Company Disclosure
------------
Letter contains a true, accurate and correct list of all of the Subsidiaries of
the Company. All of the outstanding capital stock of, or ownership interests
in, each Subsidiary of the Company is owned by the Company, directly or
indirectly. All of the shares of capital stock of each Subsidiary are duly
authorized, validly issued, fully paid and non-assessable and no Shares of
capital stock of any of the Company's Subsidiaries are reserved for issuance.
No Subsidiary of the Company has outstanding Voting Debt and no Subsidiary of
the Company is bound by, obligated under, or party to an Issuance Obligation
with respect to any security of the Company or any Subsidiary of the Company.
Except as set forth in Section 3.3 of the Company Disclosure Letter, all of such
capital stock or ownership interest is owned by the Company, directly or
indirectly, free and clear of all Liens. Other than as set forth in Section 3.3
of the Company Disclosure Letter, there are no restrictions of any kind that
prevent the payment of dividends by any of the Company's Subsidiaries.
Section 3.4 Other Interests. Except for the Company's interest in
---------------
its Subsidiaries, or as set forth in Section 3.4 of the Company Disclosure
Letter, neither the Company nor its Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in, nor is the Company or any of
its Subsidiaries subject to any obligation or requirement to provide for or to
make any investment (in the form of a loan, capital contribution or otherwise)
to or in, any Person.
Section 3.5 Authority. The Company has the corporate power and
---------
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by the
Board of Directors of the Company and no other corporate action on the part of
the Company is necessary to authorize the execution, delivery and performance of
this Agreement by the Company and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement by the holders of
more than two-thirds of the outstanding shares of Common Stock entitled to
vote). This Agreement has been duly executed and delivered by the Company and
(assuming the valid authorization, execution and delivery of this Agreement by
each other party hereto) constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except
that such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights,
generally, and by general equitable principles.
Section 3.6 Non-Contravention. Except as set forth in Section 3.6
-----------------
of the Company Disclosure Letter, the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries under, any provision of (i)
the Restated Articles of Incorporation or Bylaws of the Company or any provision
of the comparable charter or organization documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or
12
<PAGE>
license applicable to the Company or any of its Subsidiaries or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective properties
or assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights, or Liens that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the
Company, or prevent or materially delay the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required to be
obtained or made by the Company or any of its Subsidiaries in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated hereby, except for (i) in
connection or in compliance with the provisions of the Exchange Act, (ii) the
filing of the Articles of Merger with the Corporation Commission and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iii) such filings and approvals as may be required
under the HSR Act and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the corporation, takeover or blue sky laws of various states or the Nasdaq
National Market.
Section 3.7 SEC Documents and Financial Statements. (a) Since
--------------------------------------
October 31, 1996, the Company has filed with the SEC all documents required to
be filed under the Securities Act of 1933, as amended (including the rules and
regulations promulgated thereunder) (the "Securities Act"), and the Exchange
Act. The Company has, prior to the date of this Agreement, made available to
Parent true and complete copies of all forms, reports, registration statements
and other documents filed by the Company with the SEC between October 31, 1996
and the date hereof (such documents, together with any exhibits, schedules,
amendments or supplements thereto, and any information incorporated by reference
therein, the "Company SEC Documents"). No Subsidiary of the Company is required
to file any form, report, schedule, registration statement, proxy statement or
other document with the SEC. Except to the extent amended or superseded by a
subsequent filing with the SEC made prior to the date hereof, as of their
respective dates (and if so amended or superseded, then on the date of such
filing), the Company SEC Documents complied in all material respects (and any
forms, reports, registration statements and other documents, together with any
exhibits, schedules, amendments or supplements thereto and any information
incorporated by reference therein, filed by the Company with the SEC subsequent
to the date hereof (the "Subsequent Filings") will comply in all material
respects) with the requirements of the Securities Act or the Exchange Act, as
the case may be, and none of the Company SEC Documents contained (and all
Subsequent Filings will not contain) any untrue statement of a material fact or
omitted (and all Subsequent Filings will not omit) to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Company SEC
Documents comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by the
rules applicable to Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the consolidated financial
position of the Company and its consolidated
13
<PAGE>
Subsidiaries as at the dates thereof and the consolidated results of their
operations and changes in financial position for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). The Company has
made available to Parent true and correct copies of any filings or any
amendments or modifications to any Company SEC documents that have not yet been
filed with the SEC but that are required to be filed with the SEC in accordance
with the Securities Act or the Exchange Act, as the case may be.
(b) Except as set forth in the Company SEC Documents or Section 3.7
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
October 31, 1999 that, individually and in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on the Company.
Section 3.8 Offer Documents; Schedule 14D-9. The Schedule 14D-9 will
-------------------------------
comply in all material respects with the requirements of the Exchange Act and,
on the date filed with the SEC and on the date first published, sent or given to
the Company's shareholders, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation is made
by the Company with respect to information supplied by Parent or Acquiror in
writing expressly for inclusion in the Schedule 14D-9. The information supplied
or to be supplied by the Company or its Subsidiaries expressly for inclusion or
incorporation by reference in the Offer Documents, if any, together with any
amendment or supplement thereto, will not at the respective times such documents
are filed with the SEC and are first published, sent or given to the Company's
shareholders contain any untrue statement of a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. Notwithstanding
the foregoing, no representation or warranty is made with respect to any
information concerning Parent or Acquiror or their officers, directors and
affiliates provided to the Company by Parent or Acquiror expressly for inclusion
in the Offer Documents.
Section 3.9 Absence of Certain Events. Since October 31, 1999, the
-------------------------
Company and its Subsidiaries have operated their respective businesses only in
the ordinary course consistent with past practices and, except as disclosed in
Section 3.9 of the Company Disclosure Letter, there has not occurred (a) any
event, occurrence or conditions that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company or could
prevent or materially delay the consummation of the transactions contemplated
hereby or (b) any action specified in Section 5.3 of this Agreement.
Section 3.10 Title to Properties; Liens. (a) The Company and each
--------------------------
of its Subsidiaries has good, and in the case of owned real property, marketable
fee, title to (A) all of its material tangible properties and assets including,
without limitation, all such properties and assets reflected in the Company's
14
<PAGE>
consolidated balance sheet as of October 31, 1999 except as indicated in the
notes thereto and except for properties and assets reflected in the Company's
consolidated balance sheet as of October 31, 1999 that have been sold or
otherwise disposed of in the ordinary course of business after such date, and
(B) all the material tangible properties and assets that have been purchased by
the Company or any of its Subsidiaries since October 31, 1999 except for such
properties and assets that have been sold or otherwise disposed of in the
ordinary course of business, in each case subject to no Lien, except for (1)
Liens reflected in the Company's consolidated balance sheet as of October 31,
1999 (including the notes thereto), (2) Liens consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of real property or irregularities in title thereto that do not materially
detract from the value of, or materially impair the use of, such property by the
Company or any of its Subsidiaries in the operation of its respective business,
(3) statutory liens or liens of landlords, carriers, warehousemen, mechanics,
suppliers, materialmen or repairmen arising in the ordinary course of business
or (4) Liens for current taxes, assessments or governmental charges or levies on
property not yet due and delinquent (such Liens, "Permitted Liens").
(b) Section 3.10 of the Company Disclosure Letter contains a list of
all of the real property and interests in real property owned by the Company or
any of its Subsidiaries and all material leases of real property to which the
Company or any of its Subsidiaries is a party or by which any of them holds a
leasehold interest (collectively, the "Real Property"). Except as disclosed in
the Company SEC Documents, (1) each material Real Property lease to which the
Company or its Subsidiary is a party is in full force and effect in accordance
with its terms, (2) all rents and additional rents due to date from the Company
or a Subsidiary on each such lease have been paid, (3) neither the Company nor
any Subsidiary has received written notice that it is in default thereunder, and
(4) there exists no default by the Company or any Subsidiary under such lease,
except to the extent that such failure to be in full force and effect, pay such
rents or such defaults has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
None of the Company nor any of its Subsidiaries is obligated under or bound by
any option, right of first refusal, purchase contract, or other agreement or
commitment to sell or otherwise dispose of any Real Property or any other
interest in any Real Property.
Section 3.11 Litigation. Except as disclosed in the Company SEC
----------
Documents, there are no investigations, actions, suits or proceedings pending
against the Company or its Subsidiaries or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries (or any of their respective
properties, rights or franchises), at law or in equity, or before or by any
federal or state commission, board, bureau, agency, regulatory or administrative
instrumentality or other Governmental Entity or any arbitrator or arbitration
tribunal, that, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Company.
Section 3.12 Compliance with Applicable Law. The Company and its
------------------------------
Subsidiaries hold all permits, licenses, variances, exceptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company and could not prevent or materially delay the
consummation of the transactions contemplated hereby. The Company and its
Subsidiaries are in
15
<PAGE>
compliance with the terms of the Company Permits, except where the failure so to
comply would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company and would not prevent or
materially delay the consummation of the transactions contemplated hereby. The
businesses of the Company and its Subsidiaries are not in violation of any law,
ordinance or regulation of any Governmental Entity except for violations or
possible violations that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company and could not
prevent or materially delay the consummation of the transactions contemplated
hereby. Except as set forth in Section 3.12 of the Company Disclosure Letter, no
investigation or review by any Governmental Entity with respect to the Company
or any of its Subsidiaries is pending or, to the knowledge of the Company,
threatened, nor, to the knowledge of the Company, has any Governmental Entity
indicated an intention to conduct the same, other than, in each case, those
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company and could not prevent or
materially delay the consummation of the transactions contemplated hereby.
Section 3.13 Employee Benefit Plans. (a) Set forth in Section 3.13
----------------------
of the Company Disclosure Letter attached hereto is an accurate and complete
list of all domestic and foreign (i) "employee benefit plans," within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations thereunder ("ERISA"), (ii) bonus,
stock option, stock purchase, restricted stock, incentive, fringe benefit,
"voluntary employees' beneficiary associations" under Section 501(c)(9) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder (the "Code"), profit-sharing, pension or retirement, deferred
compensation, medical, life insurance, disability, accident, salary
continuation, severance, accrued leave, vacation, sick pay, sick leave,
supplemental retirement and unemployment benefit plans, programs, arrangements,
commitments and/or practices (whether or not insured), and (iii) employment,
consulting, termination, and severance contracts or agreements, in each case for
active, retired or former employees or directors, whether or not any such plans,
programs, arrangements, commitments, contracts, agreements and/or practices
(referred to in (i), (ii) or (iii) above) are in writing or are otherwise exempt
from the provisions of ERISA, that have been established, maintained or
contributed to (or with respect to which an obligation to contribute has been
undertaken) or with respect to which any potential liability is borne by the
Company or any of its Subsidiaries (including, for this purpose and for the
purpose of all of the representations in this Section 3.13, any predecessors to
the Company or to any of its Subsidiaries and all employers (whether or not
incorporated) that would be treated together with the Company or any of its
Subsidiaries as a single employer within the meaning of Section 414 of the Code
since January 1, 1993 (an "ERISA Affiliate") (collectively, "Employee Benefit
Plans").
(b) Except as set forth in Section 3.13 of the Company Disclosure
Letter: (i) each Employee Benefit Plan is in compliance with applicable law and
has been administered and operated in all respects in accordance with its terms,
except to the extent that the failure to comply would not reasonably be expected
to result in a material liability, (ii) each Employee Benefit Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code, has
received a favorable determination letter from the Internal Revenue Service and,
to the knowledge of the Company, no event has occurred and no condition exists
which could
16
<PAGE>
reasonably be expected to result in the revocation of any such determination,
(iii) no Employee Benefit Plan is a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, covered by Title IV of ERISA (a "Multiemployer
Plan"), (iv) neither the Company nor any ERISA Affiliate has incurred any
unsatisfied withdrawal liability under Part 1 of Subtitle E of Title IV of ERISA
to any Multiemployer Plan, (v) the actuarial present value of the accumulated
plan benefits (whether or not vested) under any Employee Benefit Plan covered by
Title IV of ERISA determined as of the close of its most recent plan year on the
basis of actuarial assumptions, each of which is reasonable, did not exceed the
fair value of the assets allocable thereto, (vi) no Employee Benefit Plan
covered by Title IV of ERISA has been terminated and no proceedings have been
instituted to terminate or appoint a trustee to administer any such plan, (vii)
no "reportable event" (as defined in Section 4043 of ERISA) has occurred or will
occur by virtue of the transactions contemplated by this Agreement with respect
to any Employee Benefit Plan covered by Title IV of ERISA, (viii) no Employee
Benefit Plan subject to Section 412 of the Code or Section 302 of ERISA has
incurred any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, or obtained a waiver of any minimum funding
standard or an extension of any amortization period under Section 412 of the
Code or Section 303 or 304 of ERISA, (ix) neither the Company nor any of its
Subsidiaries, nor, to the Company's knowledge, any other "disqualified person"
or "party in interest" (as defined in Section 4975(e)(2) of the Code and Section
3(14) of ERISA, respectively) has engaged in any transactions in connection with
any Employee Benefit Plan that could reasonably be expected to result in the
imposition upon the Company of a penalty pursuant to Section 502 of ERISA,
damages pursuant to Section 409 of ERISA or a tax pursuant to Section 4975 of
the Code, which in any case is a material amount, (x) no Employee Benefit Plan
provides for post-employment or retiree welfare benefits, except to the extent
required by Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the
Code and (xi) no liability, claim, action or litigation, has been made,
commenced or, to the Company's knowledge, threatened with respect to any
Employee Benefit Plan (other than routine claims for benefits payable in the
ordinary course, and appeals of denied such claims).
(c) Except as set forth in Section 3.13 of the Company Disclosure
Letter, the execution of this Agreement and the consummation of the transactions
contemplated hereby, do not constitute a triggering event under any Employee
Benefit Plan, policy, arrangement, statement, commitment or agreement, whether
or not legally enforceable, which (either alone or upon the occurrence of any
additional or subsequent event) will or may result in any payment (whether of
severance pay or otherwise), "parachute payment" (as such term is defined in
Section 280G of the Code), acceleration, vesting or increase in benefits to any
employee or former employee or director of the Company or any of its
subsidiaries. Except as set forth in Section 3.13 of the Company Disclosure
Letter, no Employee Benefit Plan provides for the payment of severance,
termination, change in control or similar-type payments or benefits.
(d) The Company has delivered or caused to be delivered to Parent
true and correct copies of (i) the most recent annual report (Form 5500) filed
with the Internal Revenue Service (the "IRS") for each applicable Employee
Benefit Plan, (ii) the Employee Benefit Plan document or documents, (iii) each
trust agreement relating to each Employee Benefit Plan, (iv) the most recent
summary plan description for each Employee Benefit Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation, if
any, relating to an
17
<PAGE>
Employee Benefit Plan subject to Title IV of ERISA and (vi) the most recent
determination, if any, issued by the IRS with respect to any Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code.
Section 3.14 Employment Relations and Agreement. (a) Except as would
----------------------------------
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company and could not prevent or materially delay the
consummation of the transactions contemplated hereby, (i) each of the Company
and its Subsidiaries is in compliance in all material respects with all federal,
state or other applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and is not engaged in
any unfair labor practice, (ii) to the knowledge of the Company, no unfair labor
practice complaint against the Company or any of its Subsidiaries is pending
before the National Labor Relations Board, (iii) there is no labor strike,
dispute, slowdown or stoppage actually pending or, to the knowledge of the
Company, threatened against or involving the Company or any of its Subsidiaries,
(iv) no arbitration proceeding arising out of or under any collective bargaining
agreement is pending, (v) no collective bargaining agreement is currently being
negotiated by the Company or any of its Subsidiaries, (vi) there has been no
"mass layoff" or "plant closing" by the Company or any of its Subsidiaries as
defined in the Federal Workers Adjustment Retraining And Notification Act
("WARN") or any state law equivalent, or any other mass layoff or plant closing
that would trigger notice pursuant to WARN or any state law equivalent, within
(90) days prior to the Effective Time and (vii) there is no union organizing
effort pending, or to the Company's knowledge, threatened with respect to the
employees of the Company or its Subsidiaries.
(b) Except for employment agreements and similar agreements, true and
complete executed copies of which, as amended, have been delivered to Parent,
and as set forth in the Company SEC Documents or Section 3.14(b) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
written, or, to the knowledge of the Company, any oral, collective bargaining,
employment, benefit or severance agreement with any other Person. The executed
copies of the employment agreements and similar agreements previously delivered
to Parent have not since been amended, modified or rescinded except to the
extent disclosed in writing to Acquiror.
Section 3.15 Contracts. Except as set forth in Section 3.15 of the
---------
Company Disclosure Letter and except as included as an exhibit to the Company's
Annual Report on Form 10-K for the year ended October 31, 1999 (the items set
forth in such Section 3.15 and/or filed as such exhibits are referred to as the
"Material Contracts"), neither the Company nor any of its Subsidiaries is a
party to or is otherwise bound by:
(i) any agreement, contract or commitment that involves the supply of
goods or products or the provision of services by it in an amount or for
payments (as measured by the revenue derived therefrom during fiscal year 1999)
in excess of $150,000 annually, unless terminable by the Company on not more
than 30 days' notice,
(ii) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution in
respect of its capital stock,
18
<PAGE>
(iii) any agreement, contract or commitment to be performed relating
to capital expenditures in excess of $250,000 in any calendar year, or in the
aggregate require expenditures in excess of $300,000,
(iv) any loan agreement, credit agreement, note, bond, mortgage or
other agreement, indenture or instrument relating to indebtedness for borrowed
money, the deferred purchase price of property, conditional sale arrangements,
capital lease obligations, obligations secured by a Lien, or interest rate or
currency hedging activities ("indebtedness") (excluding trade payables in the
ordinary course of business, intercompany indebtedness and leases for
telephones, copy machines, facsimile machines and other office equipment),
(v) any loan or advance to, or investment in (other than investments
in Subsidiaries), any Person, or any agreement, contract or commitment relating
to the making of any such loan, advance or investment or any agreement, contract
or commitment involving a sharing of profits (except for bonus arrangements with
employees entered into in the ordinary course of business consistent with past
practice),
(vi) any guarantee or other contingent liability in respect of any
indebtedness (as defined in paragraph (iv) above) of any Person (other than with
respect to any indebtedness or obligation of the Company or any Subsidiary),
(vii) any management service, consulting or any other similar type of
contract, involving payments of more than $100,000 annually, unless terminable
by the Company on not more than 30 days' notice, or
(viii) any agreement, contract or commitment limiting the ability of
the Company or any of its Subsidiaries to engage in any line of business or to
compete with any Person.
Except as otherwise set forth in Section 3.15 of the Company
Disclosure Letter, each Material Contract is in full force and effect, is a
valid and binding obligation of the Company or the Subsidiary party thereto and,
to the knowledge of the Company, each other party thereto. Except as otherwise
set forth in Section 3.15 of the Company Disclosure Letter, (A) there exists no
default or event of default or event, occurrence, condition or act (including
the consummation of the Merger) on the part of the Company or any Subsidiary
that, with the giving of notice, the lapse of time or the happening of any other
event or condition, would become a default or event of default under any
Material Contract, except for such defaults or events of default which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company and (B) no approval or consent of, or
notice to, any Person is needed in order that each Material Contract or
agreement shall continue in full force and effect in accordance with its terms
without penalty, acceleration or rights of early termination by reason of the
consummation of the transactions contemplated by this Agreement.
Section 3.16 Rights Agreement. The Company and the Board of
----------------
Directors of the Company have taken all necessary action to amend the Rights
Agreement (subject only to the execution of such amendment by the Rights Agent,
which execution the Company shall cause to take place prior to the commencement
of the Offer) to (a) render the Rights Agreement
19
<PAGE>
inapplicable with respect to the Offer, the Merger and the other transactions
contemplated by this Agreement and the Voting Agreement and (b) ensure that (i)
none of the Parent, Acquiror or any of their affiliates (as defined in the
Rights Agreement) or Associates (as defined in the Rights Agreement) is
considered to be an Acquiring Person (as defined in the Rights Agreement) and
(ii) the provisions of the Rights Agreement, including the occurrence of a
Distribution Date (as defined in the Rights Agreement), are not and shall not be
triggered by reason of the announcement or consummation of the Offer, the Merger
or the consummation of any of the other transactions contemplated by this
Agreement and the Voting Agreement. The Company has delivered to Acquiror a
complete and correct copy of the Rights Agreement as amended and supplemented to
the date of this Agreement.
Section 3.17 State Takeover Statutes; Charter and By-Law Provisions.
------------------------------------------------------
The Board of Directors of the Company has, to the extent such statute is
applicable, taken all action necessary to exempt Parent, Acquiror, their
affiliates, the Merger, this Agreement, the Voting Agreement and the
transactions contemplated hereby and thereby from Sections 13.1-725 through
13.1-727.1 and 13.1-728.1 through 13.1-728.9 of the Virginia Code. No other
state takeover statutes and no charter or bylaw provisions are applicable to the
Merger, this Agreement, the Voting Agreement and the transactions contemplated
hereby and thereby.
Section 3.18 Taxes. (a) Tax Returns. Except as set forth in
----- -----------
Section 3.18 of the Company Disclosure Letter, the Company and each Subsidiary
has timely filed or will timely file with the appropriate taxing authorities all
material returns, statements, forms and reports for Taxes (as hereinafter
defined) ("Returns") that are required to have been filed by, or with respect
to, the Company and each Subsidiary on or before the consummation of the Offer.
The Returns accurately reflect all liability for material Taxes of the Company
and each Subsidiary for the periods covered thereby.
(b) Payment of Taxes. Except as set forth in Section 3.18 of the
----------------
Company Disclosure Letter, all material Taxes of the Company and each Subsidiary
for all taxable years or periods that end on or before the consummation of the
Offer and with respect to any taxable year or period beginning before or ending
after the consummation of the Offer, the portion of such taxable year or period
ending on and including the consummation of the Offer, have been or (for the
portion of any such period after the date hereof) will be timely paid in full or
accrued and fully provided for as of the consummation of the Offer. The Company
and each Subsidiary has withheld or collected all material Taxes they were
required to withhold and collect, and have timely paid to the proper authorities
such Taxes withheld or collected to the extent due and payable.
(c) "Tax". For purposes of this Agreement, "Tax" (and, with
-----
correlative meaning, "Taxes" and "Taxable") means all taxes, assessments,
charges, duties, fees, levies or other governmental charges, including, without
limitation, all Federal, state, local, foreign and other income, franchise,
profits, capital gains, capital stock, transfer, sales, use, occupation,
property, excise, severance, windfall profits, stamp, license, payroll,
withholding and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Return), all estimated
taxes, deficiency assessments, additions to tax, penalties and interest with
respect to
20
<PAGE>
any of the foregoing and shall include any liability for such amounts as a
result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any Person.
(d) Other Tax Matters. Except as set forth in Section 3.18 of the
-----------------
Company Disclosure Letter:
(i) neither the Company nor any of its Subsidiaries has been the
subject of an audit or other examination of Taxes for any taxable period after
December 31, 1994 by the tax authorities of any nation, state or locality nor
has the Company or any of its Subsidiaries received any written notices from any
taxing authority relating to any issue which could reasonably be expected to
affect materially the Tax liability of the Company or any of its Subsidiaries
after the date thereof.
(ii) Neither the Company nor any of its Subsidiaries, as of the
Effective Time, (A) has entered into an outstanding agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of material Taxes of the
Company or any of its Subsidiaries, (B) is presently contesting the Tax
liability of the Company or any of its Subsidiaries before any court, tribunal
or agency or (C) has applied for and/or received a ruling or determination from
a taxing authority regarding a past or prospective transaction of the Company or
any of its Subsidiaries which could affect the Tax liability of the Company or
any of its Subsidiaries after the date hereof.
(iii) Neither the Company nor any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return of any other
Person provided for under the law of the United States, any foreign jurisdiction
or any state or locality with respect to material Taxes for any taxable period
for which the statute of limitations has not expired.
(iv) No claim has ever been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file material
Returns that the Company or any of its subsidiaries is or may be subject to
taxation by that jurisdiction;
(v) There are no tax sharing, allocation, indemnification or similar
agreements in effect as between the Company or any predecessor or affiliate
thereof and any other Person under which the Company or any of its Subsidiaries
could be liable for any material Taxes of any other Person.
(vi) Neither the Company nor any of its Subsidiaries has applied for,
been granted, or agreed to any accounting method change for which it will be
required to take into account after the date hereof any material adjustment
under Section 481 of the Code or any similar provision of the Code or the
corresponding tax laws of any nation, state or locality.
(vii) No election under Section 341(f) of the Code has been made or
shall be made prior to the Effective Time to treat the Company or any of its
subsidiaries as a consenting corporation, as defined in Section 341 of the Code.
21
<PAGE>
(viii) No material amount of indebtedness of the Company or any of
its Subsidiaries consists of "corporate acquisition indebtedness" within the
meaning of Section 279 of the Code.
(ix) The Company is not a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
(x) The Company has delivered to Acquiror correct and complete copies
of all United States federal, state and all foreign income Tax Returns (to the
extent filed as of the date hereof or, if not filed, correct and complete copies
of extensions thereof), examination reports, statements of deficiencies assessed
against or agreed to by the Company and any of its Subsidiaries, or any other
similar correspondence from a taxing authority, relating to taxable years 1997,
1998 and 1999.
Section 3.19 Intellectual Properties. (a) The Company exclusively
-----------------------
owns, without restrictions, or is licensed to use, the worldwide rights to all
patents, trademarks, trade names, service marks, copyrights together with any
registrations and applications therefor, Internet domain names, net lists,
schematics, inventories, technology, trade secrets, proprietary information,
know-how, computer software programs or applications including, without
limitation, all object and source codes and tangible or intangible proprietary
information or material that are used in the business of the Company and any of
its Subsidiaries as currently conducted (the "Company Intellectual Property")
except where the failure to so own or license would not reasonably be expected
to have individually or in the aggregate, a Material Adverse Effect on the
Company. Section 3.19 of the Company Disclosure Letter sets forth: (i) all
material patents, trademarks, trade names, service marks, registered copyrights,
and any applications therefor in any nation included in the Company Intellectual
Property; and (ii) all material licenses and other agreements to which the
Company or any of its Subsidiaries is a party and pursuant to which the Company
or any of its Subsidiaries is authorized to use any Company Intellectual
Property and includes the identities of the parties thereto, a description of
the nature and subject matter thereof, the applicable royalty and the term
thereof. Neither the Company nor any of its Subsidiaries is, or as a result of
the execution, delivery or performance of the Company's obligations hereunder
will be, in violation of, or lose any rights pursuant to, any license or
agreement set forth in Section 3.19 of the Company Disclosure Letter, except as
would not individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.
(b) No claims have been asserted or, to the knowledge of the Company,
are threatened by any person or entity (i) to the effect that the manufacture,
sale, use, offer for sale, reproduction, distribution or modification, of any
product or process by the Company or any of its Subsidiaries infringes any
copyright, trade secret, trademark, patent or other intellectual property right
of any person or entity, (ii) that, if sustained, would preclude the use by the
Company or any of its Subsidiaries of any Company Intellectual Property, or
(iii) challenging the ownership, validity or enforceability of any of the
Company Intellectual Property, except in each case as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company. All granted and issued patents and all registered trademarks and
service marks set forth in Section 3.19 of the Company Disclosure Letter and all
copyrights
22
<PAGE>
held by the Company or any of its Subsidiaries are valid, enforceable and
subsisting, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. To the Company's
knowledge, there has not been and there is not any unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property by
any person or entity, including, without limitation, any employee or former
employee.
Section 3.20 Environmental Laws and Regulations. Except as disclosed
----------------------------------
in the Company SEC Documents or in Section 3.20 of the Company Disclosure Letter
and as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company, (a) Hazardous Materials (as
hereinafter defined) have not at any time been generated, used, treated or
stored on, or transported to or from or released or disposed of on any Company
Property (as hereinafter defined) or, to the knowledge of the Company, any
property adjoining or adjacent to any Company Property, except in material
compliance with Environmental Laws (as hereinafter defined) and so as not to
result in or reasonably be the basis for a material Environmental Claim (as
hereinafter defined), (b) the Company and each of its Subsidiaries are in
compliance in all material respects with all Environmental Laws and the
requirements of any permits issued under such Environmental Laws with respect to
any Company Property, (c) there are no past, pending or, to the knowledge of
the Company, threatened Environmental Claims against the Company or any of its
Subsidiaries or any Company Property, (d) there are no facts or circumstances,
conditions or occurrences regarding any Company Property or, to the knowledge of
the Company, any property adjoining or adjacent to any Company Property that
could reasonably be anticipated (A) to form the basis of an Environmental Claim
against the Company or any of its subsidiaries or any Company Property or (B) to
cause such Company Property to be subject to any restrictions on its ownership,
occupancy, use or transferability under any Environmental Law, (e) there are not
now and to the knowledge of the Company never have been any underground storage
tanks located on any Company Property and (f) no Company Property is listed on
the National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq. or state equivalent lists and laws.
-- ---
For purposes of this Agreement, the following terms shall have the
following meanings: (A) "Company Property" means any real property and
improvements at any time owned, leased, used, operated or occupied by the
Company or any of its Subsidiaries; (B) "Hazardous Materials" means (i) any
petroleum or petroleum products, radioactive materials, asbestos in any form
that is friable, urea formaldehyde foam insulation, dielectric fluid containing
levels of polychlorinated biphenyls, and radon gas; (ii) any chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
substances," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, under any applicable Environmental Law;
and (iii) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Authority; (C)
"Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law in effect and in each
case as amended as of the date hereof and the Effective Time, and any judicial
or legally binding administrative interpretation thereof as of the date hereof
and
23
<PAGE>
the Effective Time, including any judicial or administrative order, consent,
decree or judgment, relating to the environment, health, safety or Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S)9601
et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
- -- ----
(S)6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
-- ----
(S)1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. (S)2601 et seq.;
-- ---- -- ----
the Clean Air Act, 42 U.S.C. (S)7401 et seq.; the Safe Drinking Water Act, 42
-- ----
U.S.C. (S)3808 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
-- ----
(S)(S) 651 - 678 (1999); and the Oil Pollution Act, 33 U.S.C. (S)(S) 2701 - 2706
(1999); and (D) "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law (for purposes of this subclause (D), "Claims")
or any permit issued under any such Environmental Law, including, without
limitation (i) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (ii) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
Section 3.21 Voting Requirements. The affirmative vote of the
-------------------
holders of more than two-thirds of the outstanding shares of Common Stock
(voting as one class, with each share having one vote) is the only vote of the
holders of any class or series of the Company's capital stock necessary to
approve the Merger.
Section 3.22 Brokers. Except for the fees and expenses of Scott &
-------
Stringfellow, which will be paid by the Company, no agent, broker, Person or
firm acting on behalf of the Company or its Board of Directors is, or will be,
entitled to any fee, commission or broker's or finder's fees from any of the
parties hereto, or from any Person, controlling, controlled by or under common
control with any of the parties hereto, in connection with this Agreement or any
of the transactions contemplated hereby. The Company has delivered to Parent an
accurate description of the material terms of the Company's engagement letter
with Scott & Stringfellow as in effect on the date hereof, including an estimate
of fees and expenses payable to Scott & Stringfellow.
Section 3.23 Fairness Opinion. The Company's Board of Directors has
----------------
received the written opinion of Scott & Stringfellow that the proposed
consideration to be received by the holders of Shares (other than the Management
Shareholders) pursuant to the Offer and the Merger is fair to such holders from
a financial point of view. A complete and correct signed copy of such opinion
has been delivered to Parent. The Company has been authorized by Scott &
Stringfellow to permit the inclusion of such fairness opinion (or a reference
thereto) in the Offer Documents and in the Schedule 14D-9.
24
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
PARENT AND ACQUIROR
-------------------
Each of Parent and Acquiror represents and warrants to the Company as
follows:
Section 4.1 Organization, Standing and Power; Capitalization of
---------------------------------------------------
Parent and Acquiror. Each of Parent and Acquiror is a corporation duly
- -------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
Section 4.2 Authority. Each of Parent and Acquiror has all
---------
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Acquiror and the consummation by Parent and
Acquiror of the transactions contemplated hereby have been duly authorized by
the Boards of Directors of Parent and Acquiror and by Parent as sole shareholder
of Acquiror and no other corporate action on the part of Parent or Acquiror is
necessary to authorize the execution, delivery and performance of this Agreement
by Parent or Acquiror. This Agreement has been duly executed and delivered by
Parent and Acquiror and (assuming the valid authorization, execution and
delivery of this Agreement by the other parties thereto) constitutes a valid and
binding obligation of Parent and Acquiror enforceable against Parent and
Acquiror in accordance with its terms, except that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditor's rights generally and by general
equitable principles.
Section 4.3 Non-Contravention. The execution and delivery of this
-----------------
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the
creation of Liens (as hereinafter defined) upon any of the properties or assets
of Parent or Acquiror under, any provision of (i) the Articles of Incorporation
or Bylaws of Parent or Acquiror, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or Acquiror or any of their properties
or assets or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or Acquiror or any of their properties or
assets, other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, rights, or Liens that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect (as
hereinafter defined) on Parent or Acquiror or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement. No
filing or registration with, or authorization, consent or approval of, any
domestic (federal, state or local), foreign or supranational court, commission,
governmental body, regulatory or administrative agency, authority or tribunal (a
"Governmental
25
<PAGE>
Entity") is required to be made or obtained by Parent or Acquiror in connection
with the execution and delivery of this Agreement by Parent or Acquiror or the
consummation by Acquiror or Parent of the transactions contemplated hereby,
except for (i) in connection or in compliance with the Exchange Act, (ii) the
filing of the Articles of Merger with the Corporation Commission and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iii) such filings and approvals as may be required
under the Hart-Scott-Rodino Improvements Act of 1976, as amended (the "HSR
Act"), (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states or the Nasdaq National
Market, and (v) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Acquiror.
Section 4.4 Offer Documents; Schedule 14D-9 and Proxy Statement. The
---------------------------------------------------
Offer Documents comply in all material respects with the requirements of the
Exchange Act, and on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders, the Offer Documents will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent or Acquiror with
respect to information supplied by the Company in writing expressly for
inclusion in the Offer Documents. The written information supplied or to be
supplied by Parent or Acquiror expressly for inclusion or incorporation by
reference in the Proxy Statement, if any, and the Schedule 14D-9, together with
any amendments or supplements to any of the foregoing will, at the time filed
with the SEC and at the date first published, sent or given to the Company's
shareholders, and in addition, in the case of the Proxy Statement, at the date
mailed to shareholders, at the time of any Shareholder Meeting (as defined
below) and at the Effective Time not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made with respect to any information concerning
the Company or its officers, directors and affiliates provided to Parent or
Acquiror by the Company specifically for inclusion in the Schedule 14D-9, Proxy
Statements or amendments or supplements thereto.
Section 4.5 Financing. Parent has obtained a commitment letter (the
---------
"Commitment Letter") from Bankers Trust Company addressed to Quad-C Management,
Inc. which, on the terms and subject to the conditions thereof, provides for a
$120 million Senior Secured and Revolving Credit Facility. A true, complete and
correct copy of the Commitment Letter has been furnished to the Company. The
aggregate proceeds covered by the Commitment Letter, together with equity
available to Parent or Acquiror, are sufficient to acquire all of the Shares in
the Offer and the Merger and to pay anticipated expenses in connection
therewith. As of the date hereof, the Commitment Letter has not been
terminated. Parent has cash and cash equivalents of not less than $1,000,000.
Section 4.6 Brokers. Except for the fees and expenses of Quad-C or
-------
its affiliate, which will be paid by Parent and Acquiror, no agent, broker,
Person or firm acting on behalf of
26
<PAGE>
Parent or Acquiror is, or will be, entitled to any fee, commission or broker's
or finder's fees from any of the parties hereto, or from any Person,
controlling, controlled by or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
Section 4.7 Business of Parent and Acquiror. Parent and Acquiror
-------------------------------
were organized solely for the purpose of acquiring the Company and engaging in
the transactions contemplated by this Agreement and have not engaged in any
business since they were incorporated which is not in connection with the
acquisition of the Company and this Agreement. During the period from the date
of this Agreement through the date on which Shares are purchased in accordance
with the Offer, Parent and Acquiror shall not engage in any activities of any
nature except as provided in or contemplated by this Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 5.1 Access to Information Concerning Properties and Records.
-------------------------------------------------------
During the period commencing on the date hereof and ending on the Effective
Date, the Company shall, and shall cause each of its Subsidiaries to, upon
reasonable notice, afford Parent and Acquiror, and their respective counsel,
accountants, financing sources, consultants and other authorized
representatives, reasonable access during normal business hours to the
employees, properties, books and records and accountants of the Company and its
Subsidiaries in order that they may have the opportunity to make such
investigations as they shall desire of the affairs of the Company and its
Subsidiaries. The Company shall furnish promptly to Parent and Acquiror (a) a
copy of each report, schedule, registration statement and other document filed
by it or its Subsidiaries during such period pursuant to the requirements of
Federal or state securities laws and (b) all other information concerning its or
its Subsidiaries' business, properties and personnel as Parent and Acquiror
shall from time to time reasonably request. The Company shall cause its title
insurers to provide to Parent title insurance reports with respect to each of
the material real properties owned by the Company or any of its Subsidiaries on
or prior to the tenth Business Day after the date hereof.
Section 5.2 Confidentiality. Information obtained by Parent and
---------------
Acquiror and their respective counsel, accountants, consultants and other
authorized representatives pursuant to Section 5.1 hereof shall be subject to
the provisions of the Confidentiality Agreement between the Company and Quad-C,
Inc. dated January 4, 2000 (the "Confidentiality Agreement").
Section 5.3 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
Except as otherwise expressly permitted or required by this Agreement or as
described in the Company Disclosure Letter, during the period from the date of
this Agreement through the Effective Time, the Company shall, and shall cause
its Subsidiaries to, in all material respects carry on their respective
businesses in, and not enter into any material transaction other than in
accordance with, the regular and ordinary course and, to the extent consistent
therewith, use its reasonable
27
<PAGE>
best efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with them. Without limiting the generality of the foregoing, and,
except as otherwise expressly permitted or required by this Agreement or as
described in the Company Disclosure Letter, the Company shall not, and shall not
permit any of its Subsidiaries to, without the prior written consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to shareholders of the Company in their
capacity as such, other than dividends payable to the Company declared by any of
the Company's Subsidiaries and regular quarterly cash dividends consistent with
past practice in an amount not to exceed $0.17 per share of Common Stock, (ii)
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any Voting Debt or other voting securities or
equity equivalent or any securities convertible into or exchangeable or
exercisable for, or any rights, warrants or options to acquire, any such shares,
Voting Debt or voting securities or convertible securities or equity equivalent
or any phantom stock or stock appreciation rights (other than, in the case of
the Company, the issuance of Shares during the period from the date of this
Agreement through the Effective Time upon the exercise of Stock Options
outstanding (as set forth in Section 3.2) on the date of this Agreement in
accordance with their current terms or enter into any agreement or contract with
respect to the sale or issuance of any of its securities;
(c) amend its charter or bylaws or the Rights Agreement or equivalent
governing documents;
(d) acquire or agree to acquire by merging with, or by purchasing a
material amount of assets of or equity in, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any material assets
other than inventory in the ordinary course of business;
(e) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets that are material, individually or in
the aggregate, to the Company, other than sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice, or allow any properties or assets to become subject to any Lien other
than Permitted Liens;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, or make any loans, advances or capital contributions to,
or investments in, any other Person other than a wholly owned subsidiary, enter
into any "keep-well" or other agreement to maintain any
28
<PAGE>
financial state and condition of another Person or enter into any arrangement
having the economic effect of any of the foregoing;
(g) grant any severance or termination pay not currently required to
be paid under existing severance plans or enter into or adopt, or amend any
existing, severance plan, agreement or arrangement or, enter into or amend any
employee benefit plan (including without limitation, the Stock Option Plan and
any change or modification under the Proposed Program for the Assurance of
Continued Employment and Severance Benefit other than as set forth in Sections
3.13(a)(ii)(2) and 3.13(c) of the Company Disclosure Letter) except as required
by applicable law, or enter into or amend any employment or consulting
agreement;
(h) enter into any contract or commitment with respect to capital
expenditures with a value in excess of, or requiring expenditures by the Company
and its Subsidiaries in excess of, $250,000, individually, or enter into
contracts or commitments with respect to capital expenditures with a value in
excess of, or requiring expenditures by the Company and its Subsidiaries in
excess of, $300,000, in the aggregate;
(i) except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the date of
this Agreement, materially increase the compensation or fringe benefits of any
of its directors, officers or employees;
(j) agree to the settlement of any material claim or litigation;
(k) make or rescind any material tax election or settle or compromise
any material tax liability;
(l) except as required by applicable law or GAAP, make any change in
its method of accounting or accounting policies or procedures;
(m) except as required under the Stock Option Plan and as otherwise
permitted or required by this Agreement, accelerate the payment, right to
payment or vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits;
(n) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction (1) of any such claims, liabilities or
obligations in the ordinary course of business and consistent with past practice
or (2) of claims, liabilities or obligations reflected or reserved against in,
or contemplated by, the consolidated financial statements (or the notes thereto)
contained in the Company SEC Documents, in each case, that are not in excess of
$100,000;
(o) enter into any agreement, understanding or commitment that
restrains, limits or impedes the Company's or any of its Subsidiaries' ability
to compete with or conduct any business or line of business, including, but not
limited to, geographic limitations on the Company's or any of its Subsidiaries'
activities;
29
<PAGE>
(p) materially modify, amend or terminate any Material Contract or
waive any of its rights or claims thereunder or enter into any contract,
agreement, commitment or arrangement that, if in existence on the date hereof,
would be a Material Contract;
(q) establish, adopt, enter into or amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees; or
(r) agree, in writing or otherwise, to take any of the foregoing
actions.
Section 5.4 Acquisition Proposals. (a) The Company shall and shall
---------------------
cause its Subsidiaries and affiliates and each of their directors, officers,
employees, agents, advisors and representatives to immediately cease any
discussions or negotiations with third parties with respect to any Acquisition
Transaction (as hereinafter defined). Prior to the Effective Time, the Company
agrees that it shall not, and shall not authorize or permit any of its
Subsidiaries or affiliates or any of their directors, officers, employees,
agents, advisors or representatives to, directly or indirectly:
(i) solicit, initiate, facilitate or encourage (including without
limitation by furnishing information to a third party or by taking any
action which would make the Rights Agreement or Sections 13.1-725 through
13.1-727.1 and 13.1-728.1 through 13.1-728.9 of the Virginia Code
inapplicable to any Acquisition Transaction (other than the Offer or the
Merger) any inquiries or the making of any proposal with respect to any
tender offer or exchange offer involving the Company or any proposal with
respect to any merger, consolidation or other business combination
involving the Company or any Subsidiary of the Company, the acquisition of
all or any significant part of the assets of the Company or any Subsidiary
of the Company or more than 10% of the capital stock of the Company or any
Subsidiary of the Company (each, an "Acquisition Transaction");
(ii) except for agreements with respect to a Superior Proposal entered
into in accordance with Section 8.1(d) and except for a confidentiality
agreement entered into in connection with actions permitted in accordance
with Section 5.4(a)(iii), enter into any agreement, arrangement or
understanding with respect to any Acquisition Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate
or fail to consummate the Offer, the Merger or any other transaction
contemplated by this Agreement; or
(iii) negotiate, explore or otherwise engage in discussions with any
Person (other than Parent and its representatives) with respect to any
Acquisition Transaction, or any inquiry that may reasonably be expected to
lead to a proposal for an Acquisition Transaction; provided, however, that
-------- -------
the Company may (A) participate in discussions with or request
clarifications from or furnish information (pursuant to a confidentiality
agreement with terms not more favorable to such third party than the terms
of the Confidentiality Agreement) to any third party which makes an
unsolicited written proposal to effect an Acquisition Transaction that did
not result from the breach of this
30
<PAGE>
Section 5.4 and subject to compliance with its obligations under Section
5.4(b), in each case solely for the purpose of obtaining information
reasonably necessary to ascertain whether such Acquisition Transaction is,
or could reasonably likely lead to, a Superior Proposal (as hereinafter
defined) and (B) in response to an unsolicited written proposal from a
third party making a Superior Proposal that did not result from the breach
of this Section 5.4 and subject to compliance with its obligations under
Section 5.4(b), furnish information (pursuant to a confidentiality
agreement with terms not more favorable to such third party than the terms
of the Confidentiality Agreement) to and engage in discussions and
negotiations with such third party, but only, in the case of each of clause
(A) and clause (B), if the Board of Directors of the Company determines in
good faith (after receiving written advice from its financial advisors and
after receiving advice from outside independent counsel) that taking such
action is in the best interests of the Company and its shareholders and
such action is required by its fiduciary duties under applicable law.
Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in this Section 5.4(a) by any director, officer,
employee, agent, advisor or representative of the Company, whether or not such
Person is purporting to act on behalf of the Company, shall constitute a breach
of this Section 5.4(a) by the Company.
(b) The Company agrees to advise Parent in writing within 24 hours of
the receipt thereof of the existence of:
(i) any inquiries or proposals (or desire to make a proposal) received
by (or indicated to), any such information requested from, or any
negotiations or discussions sought to be initiated with, the Company, its
Affiliates, or any of the respective directors, officers, employees, agents
or representatives of the foregoing, in each case from a Person (other than
Parent and its representatives) with respect to an Acquisition Transaction;
and
(ii) the terms thereof, including the identity of such third party and
the terms of any financing arrangement or commitment in connection with
such Acquisition Transaction, and update on an ongoing basis or upon
Parent's reasonable request, the status thereof.
The Company shall simultaneously provide to Parent any non-public
information concerning the Company provided to any other Person or group in
connection with any Acquisition Transaction which was not previously provided to
Parent.
(c) As used herein "Superior Proposal" means a bona fide written and
unsolicited proposal or offer made by any Person (or group) (other than Parent
or any of its Subsidiaries) to acquire all or substantially all of the capital
stock of the Company pursuant to a tender offer, exchange offer, merger or other
business combination or to purchase all or substantially all of the assets of
the Company (i) on terms that, as determined by the Board of Directors of the
Company in good faith (based on written advice of its independent financial
advisors), are more favorable from a financial point of view to the Company and
its shareholders than the transactions contemplated hereby and any alternative
proposed by Parent or Acquiror
31
<PAGE>
and (ii) that is not conditioned upon obtaining additional financing the
likelihood of closing of which is less certain than the satisfaction of the
condition set forth in paragraph (i) of Annex A.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
Section 6.1 Company Shareholder Approval; Proxy Statement. (a)
---------------------------------------------
Promptly following the purchase of Shares pursuant to the Offer if approval of
the Merger by the shareholders of the Company is required by applicable law, the
Company shall call a meeting of its shareholders (the "Shareholder Meeting") for
the purpose of voting on the Merger and shall take all action necessary or
advisable to obtain shareholder approval of the Merger and the Company agrees
that this Agreement and the Merger shall be submitted at such meeting. The
Shareholder Meeting shall be held as soon as practicable following the purchase
of Shares pursuant to the Offer and the Company will, through its Board of
Directors, subject to this Agreement, recommend to its shareholders the approval
of the Merger. Subject to Section 5.4, the Company agrees that it shall include
in the Proxy Statement the recommendation of its Board of Directors to the
shareholders of the Company to approve and adopt this Agreement and approve the
Merger. The record date for the Shareholder Meeting shall be a date subsequent
to the date Acquiror becomes a record holder of Shares purchased pursuant to the
Offer.
(b) If shareholder approval of the Merger is required by applicable
law, the Company will, as soon as practicable following the expiration of the
Offer, prepare and file a preliminary Proxy Statement (the "Proxy Statement")
with the SEC and will use its reasonable best efforts to respond to any comments
of the SEC or its staff and to cause the Proxy Statement to be cleared by the
SEC. The Company will notify Parent of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. The Company shall give
Parent and its counsel the opportunity to review the Proxy Statement prior to
its being filed with the SEC and shall give Parent and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of the Company and
Parent agrees to use its reasonable best efforts, after consultation with the
other parties hereto, to respond promptly to all such comments of and requests
by the SEC. As promptly as practicable after the Proxy Statement has been
cleared by the SEC, the Company shall mail the Proxy Statement to the
shareholders of the Company. If at any time prior to the approval of this
Agreement by the Company's shareholders there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the Company
will prepare and mail to its shareholders such an amendment or supplement. The
Company shall not use any proxy material in connection with the meeting of its
shareholders without Parent's prior approval.
32
<PAGE>
(c) The Company shall use its commercially reasonable efforts to
obtain the necessary approvals by its shareholders of the Merger, this Agreement
and the transactions contemplated hereby.
(d) Acquiror agrees to cause all Shares purchased pursuant to the
Offer and all other Shares owned by Acquiror to be voted in favor of the
approval of the Merger.
(e) Notwithstanding the foregoing, in the event that Acquiror shall
acquire at least 90% of the outstanding Shares, the parties hereto agree to take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a meeting of
shareholders of the Company, in accordance with Section 13.1-719 of the Virginia
Code.
Section 6.2 Fees and Expenses. Whether or not the Merger is
-----------------
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, except as expressly set forth in this Agreement.
Section 6.3 Reasonable Efforts. On the terms and subject to the
------------------
conditions set forth in this Agreement, each of the parties agrees to use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including (a) obtaining all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, including without limitation, all
filings under the HSR Act) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from or to avoid an action or
proceeding by any Governmental Entity, (b) obtaining all necessary consents,
approvals or waivers from third parties, (c) defending any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (d) executing and delivering
any additional instruments necessary to consummate the transactions contemplated
by this Agreement. Notwithstanding the foregoing, no loan agreement or contract
for borrowed money shall be repaid except as currently required by its terms, in
whole or in part, and no contract shall be amended to increase the amount
payable thereunder or otherwise to be more burdensome to the Company or any of
its Subsidiaries in order to attain any such consent, approval or authorization
without the prior written consent of Parent.
Section 6.4 Public Announcements; Certain Notices. (a) Parent and
-------------------------------------
the Company will consult with each other before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law or regulation or by obligations pursuant to any
listing agreement with any national securities exchange or the Nasdaq National
Market so long as it has
33
<PAGE>
used reasonable best efforts to consult with the other party prior to issuing
such press release or making such public disclosure.
(b) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of the occurrence, or failure to occur, of
any event, which occurrence or failure to occur would likely cause any
representation or warranty made by it contained in the Agreement to be untrue in
any material respect at any time from the date of this Agreement to the Closing
Date. Each of the Company and Parent shall give prompt notice to the other
party of any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
Section 6.5 Indemnification; Directors and Officers Insurance. (a)
-------------------------------------------------
The articles of incorporation and the bylaws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Articles of Incorporation and ByLaws on the
date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who on
or prior to the Effective Time were directors, officers, employees or agents of
the Company (the "Indemnified Parties"), unless such modification is required by
law.
(b) For a period of six years from the Effective Time, the Surviving
Corporation shall either (x) maintain in effect the Company's current directors'
and officers' liability insurance covering the Indemnified Parties; provided,
--------
that in no event shall Surviving Corporation be required to expend in any one
year an amount in excess of 125% of the annual premiums currently paid by the
Company for such insurance which the Company represents to be approximately
$52,000 for the twelve month period ending on November 4, 2000; provided,
--------
further that if the annual premiums of such insurance coverage exceed such
- -------
amount, the Surviving Corporation shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount; provided,
--------
further that the Surviving Corporation may substitute for such Company policies,
- -------
policies providing at least the same coverage and containing terms and
conditions which are no less advantageous provided that said substitution does
not result in any gaps or lapses in coverage with respect to matters occurring
prior to the Effective Time or (y) cause the Parent's directors' and officers'
liability insurance then in effect to cover the Indemnified Parties with respect
to those matters covered by the Company's directors' and officers' liability
policy.
Section 6.6 State Takeover Laws. If any "fair price," "business
-------------------
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby,
Parent, the Company and its Board of Directors shall take all such action as may
be necessary or advisable to obtain such approvals and take such actions as are
necessary or advisable so that the transactions contemplated hereby and by the
Voting Agreements may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to minimize the effects of any
such statute or regulation on the transactions contemplated hereby and thereby.
34
<PAGE>
Section 6.7 Rights Agreement. The Company shall not, unless required
----------------
to do so by a court of competent jurisdiction, (i) redeem the Rights (ii) amend
(other than to delay the Distribution Date (as defined therein) or to render the
Rights inapplicable to the Offer and the Merger) or terminate the Rights
Agreement prior to the Effective Time without the consent of Acquiror, or (iii)
take any action which would allow any Person (as such term is defined in the
Rights Agreement) other than Acquiror and the Management Shareholders to be the
Beneficial Owner (as such term is defined in the Rights Agreement) of 15% or
more of the Common Stock without causing a Distribution Date (as such term is
defined in the Rights Agreement) or a Triggering Event (as such term is defined
in the Rights Agreement) to occur.
Section 6.8. Subsequent Filings. Until the Effective Time, the
------------------
Company will timely file with the SEC each Subsequent Filing required to be
filed by the Company and will promptly deliver to Parent and Acquiror copies of
each such Subsequent Filing filed with the SEC. As of their respective dates,
none of such Subsequent Filings shall contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of the Company included in such
Subsequent Filings shall be prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except the notes thereto)
and shall fairly present the financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the results of their
operations and changes in financial position for the periods then ended, except
that the unaudited interim financial statements are subject to normal and
recurring year-end adjustments.
Section 6.9. Severance Plan. The Company agrees that neither it nor
--------------
any of its Subsidiaries has entered into or will enter into any severance,
retention, compensation or employee benefit plan, policy, program, arrangement
or agreement under the Proposed Program for the Assurance of Continued
Employment and Severance Benefits pursuant to which the execution of this
Agreement or the consummation of the transactions contemplated hereby
constitutes or would constitute a "change in control" of the Company within the
meaning of such proposed program.
Section 6.10 Financing Related Efforts. (a) Parent shall use all
-------------------------
commercially reasonable efforts to consummate the financing provided in the
Commitment Letter and Parent shall provide funds to Acquiror to permit it to
perform its obligations hereunder and in the Offer.
(b) Parent will provide the Company with true, correct and complete
copies of all amendments and supplements to the Commitment Letter as well as
true, correct and complete copies of all other commitments and agreements (and
any amendments or supplements thereto) with respect to the financing by third
parties of the transactions contemplated by this Agreement.
35
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
- ------
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approval. If approval of the Merger by the holders
--------------------
of the Common Stock is required by applicable law, the Merger shall have been
approved by the requisite vote of such holders.
(b) No Order. No Governmental Entity or court of competent
--------
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree or injunction which prohibits or
has the effect of prohibiting the consummation of the Merger; provided, however,
-------- -------
that the party asserting this condition shall have used its reasonable best
efforts to have any such order, decree or injunction vacated.
(c) Purchase of Shares. Acquiror shall have accepted for payment and
------------------
paid for all Shares properly tendered pursuant to the Offer in an amount
sufficient to satisfy the Minimum Condition; provided, that this condition will
--------
be deemed to have been satisfied with respect to the obligations of Acquiror to
effect the Merger if Acquiror fails to accept for payment and pay for any Shares
validly tendered pursuant to the Offer in violation of the terms of this
Agreement or the Offer.
(d) HSR Act Waiting Period. The applicable waiting period (and any
----------------------
extension thereof) under the HSR Act shall have expired or been terminated.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing (whether before or after the approval of this Agreement by the
shareholders of the Company) as follows:
(a) by mutual written agreement of Parent and the Company; or
(b) (i) By either the Company or Parent if the Offer shall have
expired without any Shares being accepted for purchase hereunder by the
Acquiror and without the Acquiror having had an obligation under Section
1.1 to extend the Offer; provided, however, that none of the parties shall
-------- -------
be entitled to terminate this Agreement pursuant to this Section 8.1(b)(i)
if, at the time of such proposed termination, it is in material breach
36
<PAGE>
of its representations and warranties, covenants or other agreements under
this Agreement; or
(ii) by the Company;
(A) if the Offer has not commenced within seven Business Days of
the execution of this Agreement; or
(B) if prior to the acceptance for purchase of Shares pursuant to
the Offer, there has been a material breach by either Parent or the
Acquiror of any representation, warranty, covenant or agreement set
forth herein (and such breach is not reasonably capable of being cured
within thirty (30) days of notice thereof); provided, however, that
-------- -------
the Company shall not be entitled to terminate this Agreement pursuant
to this Section 8.1(b)(ii)(B) if it is in material breach of its
representations and warranties, covenants or other agreements under
this Agreement; or
(c) (i) By either Parent or the Company if a court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or filing or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement;
(ii) by Parent, if prior to the acceptance for purchase of Shares
pursuant to the Offer, there has been a material breach by the Company of
any representation, warranty, covenant or agreement set forth in this
Agreement, which breach shall result in any condition set forth in Annex A
not being satisfied (and such breach is not reasonably capable of being
cured and such condition satisfied within thirty (30) days after the
receipt of notice thereof); provided, however, that Parent shall not be
-------- -------
entitled to terminate this Agreement pursuant to this Section 8.1(c)(ii) if
it or the Acquiror is in material breach of its representations and
warranties, covenants or other agreements under this Agreement; or
(iii) By either Parent or the Company if by the four month
anniversary of the date hereof, the Acquiror has not purchased any Shares
pursuant to the Offer; provided, however, that the right to terminate this
-------- -------
Agreement pursuant to this clause (iii) shall not be available to any party
whose failure to fulfill any material obligation under this Agreement has
been the cause of, or resulted in, the Acquiror's failure to make such
purchases; or
(d) By the Company to allow the Company to enter into one or more
related agreements in accordance with Section 5.4(a) with respect to a
Superior Proposal if the Company's Board of Directors has determined in
good faith (after receiving advice from independent outside counsel) that a
failure to terminate this Agreement and enter into an agreement to effect
the Superior Proposal would constitute a breach of its fiduciary duties;
provided, however, that:
-------- -------
37
<PAGE>
(i) the Company has complied with all provisions of Section 5.4;
and
(ii) Parent does not make, within five Business Days of receipt
of the Company's written notification of its intention to enter into a
binding agreement for a Superior Proposal, an offer to enter into an
amendment to this Agreement containing terms such that the Board of
Directors of the Company determines in good faith, after receiving
advice from its financial advisors, that this Agreement as so amended
is at least as favorable, from a financial point of view, to the
shareholders of the Company as the Superior Proposal; and
(iii) The Company makes simultaneous payment of the Termination
Fee, plus any amounts then due as a reimbursement of Expenses; and
(iv) Substantially contemporaneously with such termination, the
Company enters into a definitive agreement to effect the Superior
Proposal.
(e) By Parent, at any time prior to the acceptance for purchase of the
Shares pursuant to the Offer, if:
(i) the Company's Board of Directors, or any committee thereof,
shall have withdrawn, modified, or changed its recommendation in
respect of this Agreement or the Offer in a manner adverse to the
Acquiror or Parent or resolved to do so;
(ii) the Company's Board of Directors, or any committee shall
have recommended any proposal other than by Parent or the Acquiror in
respect of an Acquisition Transaction or resolved to do so;
(iii) the Company has received a proposal regarding an
Acquisition Transaction and the Company shall not have rejected such
proposal within ten Business Days of its receipt or, if sooner, the
date its existence first becomes publicly disclosed.
Section 8.2. Effect of Termination. (a) In the event of the
---------------------
termination of this Agreement as provided in Section 8.1 hereof, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall forthwith become null and void and there shall be no liability on the part
of Parent, the Acquiror or the Company, except as set forth in Section 8.2(b)
hereof; provided, however, that nothing herein shall relieve any party from
-------- -------
liability for any willful breach of this Agreement.
(b) If:
(i) Parent shall have terminated this Agreement pursuant to Section
8.1(e);
(ii) (x) Parent shall have terminated this Agreement pursuant to
Section 8.1(c)(ii) and (y) following the date hereof and either prior to
such termination or
38
<PAGE>
within two months after such termination, (A) the Company shall have
received a proposal with respect to an Acquisition Transaction that the
Company has not rejected prior to such termination and (B) within twelve
(12) months of the date of such termination, the Company shall enter into a
definitive agreement with respect to such Acquisition Transaction; or
(iii) the Company shall have terminated this Agreement pursuant to
Section 8.1(d),
then the Company shall pay:
(A) simultaneously with such termination if pursuant to Section
8.1(d);
(B) on the Business Day next succeeding the execution of a
definitive agreement with respect to an Acquisition Transaction under
the circumstances described in Section 8.2(b)(ii); or
(C) promptly, but in no event later than two business days after
the date of such termination if pursuant to Section 8.1(e);
to Parent a termination fee (the "Termination Fee") of $2,900,000,
plus an amount, not in excess of $1,200,000, equal to Parent's actual
and documented out-of-pocket expenses incurred or paid by Parent and
the Acquiror in connection with the Offer, the Merger, this agreement
and the consummation of the transactions contemplated thereby
("Expenses"), which amount shall be payable by wire transfer to such
account as Parent may designate in writing to the Company.
Section 8.3 Amendment. This Agreement may be amended by the parties
---------
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after any approval of the Merger by the shareholders of
the Company but, after the purchase of Shares pursuant to the Offer, no
amendment shall be made which decreases the Merger Consideration or which in any
way materially adversely affects the rights of such shareholders, without the
further approval of such shareholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
39
<PAGE>
ARTICLE IX
GENERAL PROVISIONS
------------------
Section 9.1 Non-Survival of Representations and Warranties. None
----------------------------------------------
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time; provided
--------
however, this Section 9.1 shall not limit any covenant or agreement of the
- -------
parties which by its terms contemplates performance after the Effective Time.
Section 9.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally, mailed,
certified or registered mail with postage prepaid sent by overnight courier or
telecopied to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or Acquiror, to
c/o Quad-C Management, Inc.
230 East High Street
Charlottesville, VA 22902
Attention: Anthony R. Ignaczak
Facsimile No.: (804) 979-1145
with copies to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attention: John M. Reiss, Esq.
Gregory Pryor, Esq.
Facsimile No.: (212) 354-8113
(b) if to the Company, to
Pulaski Furniture Corporation
One Pulaski Square
Pulaski, VA 24301
Attention: Chairman of the Board
Facsimile No.: (540) 994-5756
with a copy to (prior to the Effective Time):
Hunton & Williams
Riverfront Plaza
40
<PAGE>
951 East Byrd Street
Richmond, VA 23219
Attention: C. Porter Vaughan, III, Esq.
Facsimile No.: (804) 788-8218
and with a copy to (after the Effective Time):
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attention: John M. Reiss, Esq.
Gregory Pryor, Esq.
Facsimile No.: (212) 354-8113
Section 9.3 Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." When the phrase "knowledge of the
Company" is used herein, it shall refer to the actual knowledge of the
individuals set forth in Section 9.3 of the Company Disclosure Schedule.
Section 9.4 Counterparts. This Agreement may be executed in
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, including the documents and instruments referred to herein, together
with the Confidentiality Agreement, (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (b) is not intended to
confer upon any person or entity other than the parties any rights or remedies
hereunder.
Section 9.6 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the Commonwealth of Virginia, without
regard to the conflict of laws rules thereof.
Section 9.7 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties, except that
Parent and Acquiror may assign, in their sole discretion, any of or all their
rights, interests and obligations under this Agreement to any direct or indirect
wholly owned subsidiary of Parent (but without relieving any party hereto of any
obligation hereunder). Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
41
<PAGE>
Section 9.8 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible.
Section 9.9 Enforcement of This Agreement. The parties agree that
-----------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 9.10 Incorporation of Exhibits. The Company Disclosure
-------------------------
Letter and all Exhibits and annexes attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if fully
set forth herein.
Section 9.11 Certain Definitions. As used herein, the following
-------------------
terms have the following meanings:
"Business Day" shall mean any day, other than a Saturday, Sunday or a
day on which banks located in New York, New York shall be authorized or required
by law to close.
"Lien" shall mean, with respect to any property or asset, any
mortgage, security interest, lien, claim, pledge, option, right of first
refusal, charge or other encumbrance of any nature.
"Material Adverse Change" or "Material Adverse Effect" shall mean, (i)
when used with respect to the Company, any materially adverse change in or
effect on the business, assets, liabilities, properties, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, other than (A) changes or effects that are or result from occurrences
relating to the economy in general or the furniture industry in general and not
specifically relating to the Company, (B) changes or effects set forth or
described in the Company's SEC Reports filed prior to the date hereof, (C)
changes or effects that result from the loss of customers or delay or
cancellation or cessation of orders for the Company's products directly
attributable to the announcement of this Agreement or (D) changes or effects
arising solely as a result of any decline in the market price of the Shares or
(ii) when used with respect to Parent, Acquiror or the Company, as the case may
be, any materially adverse change in or effect on the ability of Parent,
Acquiror or the Company, as the case may be, to perform their respective
obligations hereunder and/or under the Voting Agreement.
42
<PAGE>
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, a limited liability company, an unincorporated
organization and a government or other department or agency thereof.
"Subsidiary" of a Person means any corporation, partnership, joint
venture or other legal entity of which (i) such Person or any of its
Subsidiaries, is a general partner or (ii) such Person (either alone or through
or together with any other Subsidiary), owns, directly or indirectly, 50% or
more of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
Section 9.12 Additional Definitions:
Defined in
Term Section
- --------------------------------------- -------------
Acquiror............................... Preamble
Acquisition Transaction................ 5.4(a)(i)
Agreement.............................. Preamble
Articles of Merger..................... 2.2
Award.................................. 2.8(c)
Cash Payment........................... 2.8(b)
Certificates........................... 2.5(b)
Closing................................ 2.11
Code................................... 3.13(a)
Commitment Letter...................... 4.5
Common Stock........................... Recitals
Company................................ Preamble
Company Disclosure Letter.............. 3.1
Company Intellectual Property.......... 3.19(a)
Company Permits........................ 3.12
Company Property....................... 3.20
Company SEC Documents.................. 3.7
Confidentiality Agreement.............. 5.2
Constituent Corporations............... Preamble
Corporation Commission................. 2.2
Effective Time......................... 2.2
Employee Benefit Plans................. 3.13(a)
Environmental Claims................... 3.20
Environmental Law...................... 3.20
ERISA.................................. 3.13(a)
ERISA Affiliate........................ 3.13(a)
Exchange Act........................... 1.2(b)
Exchange Fund.......................... 2.6(b)
Expenses............................... 6.2(b)
Governmental Entity.................... 4.3
43
<PAGE>
Hazardous Materials.................... 3.20
HSR Act................................ 4.3
Indemnified Parties.................... 6.5(a)
IRS.................................... 3.13(d)
Issuance Obligation.................... 3.2
Management Shareholders................ Recitals
Material Contracts..................... 3.15
Merger................................. Recitals
Merger Consideration................... 2.5(b)
Minimum Condition...................... Annex A
Multiemployer Plan..................... 3.13(b)
Offer.................................. Recitals
Offer Documents........................ 1.1(b)
Parent................................. Preamble
Paying Agent........................... 2.6(a)
Permitted Investments.................. 2.6(b)
Permitted Liens........................ 3.10(a)
Preferred Stock........................ 3.2
Proxy Statement........................ 6.1(b)
Real Property.......................... 3.10(b)
Returns................................ 3.18(a)
Rights................................. 3.2
Rights Agreement....................... 1.2(a)
Schedule 14D-9......................... 1.2(b)
SEC.................................... 1.1(b)
Securities Act......................... 3.7
Series A Preferred Stock............... 3.2
Shareholder Meeting.................... 6.1(a)
Shares................................. Recitals
Stock Incentive Plans.................. 2.8
Stock Option........................... 2.8(b)
Stock Option Plan...................... 2.8(a)
Stock Purchase Plan.................... 3.2
Subsequent Filings..................... 3.7
Superior Proposal...................... 5.4(a)
Surviving Corporation.................. 2.1
Tax, Taxes and Taxable................. 3.18(c)
Tender Offer Conditions................ 1.1(a)
Virginia Code.......................... 1.2(a)
Voting Agreement....................... Recitals
Voting Debt............................ 3.2
WARN................................... 3.14(a)
44
<PAGE>
IN WITNESS WHEREOF, Acquiror and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
PINE HOLDINGS, INC.
By: /s/ Anthony R. Ignaczak
_________________________
Name: Anthony R. Ignaczak
Title: President
PINE ACQUISITION CORP.
By: /s/ Anthony R. Ignaczak
________________________
Name: Anthony R. Ignaczak
Title: President
PULASKI FURNITURE CORPORATION
By: /s/ Harry H. Warner
____________________
Name: Harry H. Warner
Title: Chairman of the Board
<PAGE>
ANNEX A
-------
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is attached.
Tender Offer Conditions. Notwithstanding any other term of the Offer
-----------------------
or this Agreement, Acquiror shall not be required to accept for payment,
purchase or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) of the Exchange Act, pay for, any tendered Shares and
may postpone the acceptance for payment or, subject to the restrictions referred
to above, the payment for, any tendered Shares, if (i) any applicable waiting
period under the HSR Act has not expired or been terminated prior to the
expiration of the Offer or (ii) there shall not have been validly tendered and
not validly withdrawn pursuant to the Offer, a number of Shares which, when
added to the Shares, if any, previously acquired by Acquiror (but excluding
Shares subject to the Voting Agreement), constitute more than two-thirds of the
outstanding Shares calculated on a fully diluted (excluding the effect of the
Rights) basis (the "Minimum Condition"). In addition to and not limiting the
foregoing, notwithstanding any other provision of the Offer, the Acquiror shall
not be required to accept for payment or, subject to the applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, pay for
any tendered Shares and may elect not to commence the Offer, may terminate,
subject to the terms of this Agreement, or amend the Offer and may postpone the
acceptance of and payment for, tendered Shares at any time on or after this date
and at or before the time of acceptance of tendered Shares for payment pursuant
to the Offer or payment therefor (whether or not any tendered Shares have been
accepted for payment or paid for) if any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding by any Governmental Entity, or by any other Person, domestic or
foreign, before any court of competent jurisdiction or Governmental Entity,
which could reasonably be expected to: (i) make illegal, impede or otherwise
directly or indirectly restrain or prohibit the Offer or the Merger or seeking
to obtain material damages in connection therewith, (ii) prohibit or materially
limit the ownership or operation by Parent or Acquiror of all or any material
portion of the business or assets of the Company and its Subsidiaries taken as a
whole or compel Parent or Acquiror or their affiliates to dispose of or hold
separately all or any material portion of the business or assets of Parent,
Acquiror or the Company and its Subsidiaries taken as a whole, or seeking to
impose any limitation on the ability of Parent or Acquiror or their affiliates
to conduct their business or own such assets, (iii) impose limitations on the
ability of Parent or Acquiror effectively to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
acquired or owned by Parent or Acquiror on all matters properly presented to the
Company's shareholders, (iv) require divestiture by Parent or Acquiror of any
Shares or (v) otherwise directly or indirectly relating to the Offer or the
Merger and which would reasonably be expected to have a Material Adverse Effect
on the Company, Parent or Acquiror;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, enacted, enforced, promulgated,
amended or issued and applicable to (i) Parent, Acquiror, the Company or any of
its Subsidiaries or (ii) the Offer or the Merger, by any legislative body or
other Governmental Entity other than the routine application of the waiting
period provisions of the HSR Act to the Offer or to the Merger, which could
reasonably
<PAGE>
Annex A
Page 2
be expected to directly or indirectly, result in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any event, change, circumstance or
occurrence that has had or that would reasonably be expected to have a Material
Adverse Effect on the Company;
(d) any of the representations or warranties made by the Company in
the Merger Agreement shall be untrue or incorrect in any respect (without giving
effect to materiality or similar qualifications contained therein) that when
taken together with all such other representations and warranties that are not
true and correct would reasonably be expected to have a Material Adverse Effect,
in each case as of the date of the Merger Agreement or the date of consummation
of the Offer, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date;
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement on or prior to the date of consummation of the Offer;
(f) the Company's Board of Directors or any committee thereof shall
have withdrawn, or shall have modified or amended in a manner adverse to Parent
or Acquiror, the approval, adoption or recommendation, as the case may be, of
the Offer, the Merger or the Merger Agreement, or approved or recommended any
Acquisition Transaction other than the Offer and the Merger or shall have
announced a neutral position with respect to any Acquisition Transaction and not
rejected such Acquisition Transaction within ten (10) Business Days after the
announcement of such neutral position or after request by Parent, shall fail to
reaffirm its approval and recommendation of the Offer, the Merger or the Merger
Agreement within three (3) Business Days after Parent's request for such
reaffirmation or shall have resolved to do any of the foregoing;
(g) it shall have been publicly disclosed, or Parent or Acquiror
shall have otherwise learned, that beneficial ownership (determined for the
purposes of this paragraph (g) as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of the Shares has been acquired other than pursuant
to this Agreement;
(h) there shall have occurred, and be continuing, (i) any general
suspension of, or limitation on prices for, trading in securities on The New
York Stock Exchange or through the Nasdaq Stock Market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) a commencement of a war, armed hostilities or other
national or international crisis directly or indirectly involving the United
States or (iv) in the case of any of the foregoing clauses (i) through (iii)
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof;
(i) Parent and Acquiror shall not have obtained the financing set
forth in the Commitment Letter; or
<PAGE>
Annex A
Page 3
(j) the Merger Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Parent and
Acquiror and may be asserted by Parent or Acquiror or may be waived by Parent or
Acquiror, in whole or part, at any time and from time to time, in the sole
discretion of Parent or Acquiror (subject to the terms of the Merger Agreement).
The failure by Parent or Acquiror at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
<PAGE>
EXHIBIT D(2)
AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT TO RIGHTS AGREEMENT is made as of March 29, 2000, by and
between PULASKI FURNITURE CORPORATION, a Virginia corporation (the "Company"),
and FIRST UNION NATIONAL BANK, a national banking corporation (the "Rights
Agent").
W I T N E S S E T H :
--------------------
WHEREAS, that certain Amended and Restated Rights Agreement, dated as
of December 15, 1997, was entered into between the Company and the Rights Agent
(the "Original Rights Agreement") relating to the distribution of a dividend of
certain rights to the holders of shares of common stock of the Company; and
WHEREAS, Section 27 of the Original Rights Agreement permits the
Company (and, upon the direction of the Company, requires the Rights Agent), at
any time before the Distribution Date (as defined in the Original Rights
Agreement) to supplement or amend the Original Rights Agreement in certain
respects, and, in accordance with such Section, the Company desires to amend the
Rights Agreement as set forth herein and hereby directs the Rights Agent to join
in the execution hereof;
NOW, THEREFORE, in consideration of the premises, the mutual promises
and agreements contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledges, the parties hereby agree
as follows:
Section 1. Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Original
Rights Agreement.
Section 2. Amendments. The following new Section 35 shall be added:
"35. Exemption of Pine Holdings, Inc. and Pine Acquisition
Corp. Offer and Merger: Notwithstanding anything to the contrary contained in
this Agreement: (i) the provisions of Section 3(a), 7(a), 11(a) (ii) and 13(a)
shall not apply with respect to any transaction undertaken by Pine Holdings,
Inc. ("Parent"), Pine Acquisition Corp. ("Acquiror") or any of their Affiliates
or Associates pursuant to the Agreement and Plan of Merger, dated March 29,
2000, by and among Parent, Acquiror and the Company (the "Merger Agreement"), or
any action taken by any Management Shareholder pursuant to the Voting Agreement
(as those terms are defined in the Merger Agreement); (ii) none of Parent,
Acquiror or any of their Affiliates or Associates or any Management Shareholder
shall be deemed to be an Acquiring Person as a result of any such transactions
or actions;
1
<PAGE>
and (iii) no Distribution Date, Stock Acquisition Date or Triggering Event shall
be deemed to have occurred as a result of any such transactions or actions."
Section 3. Confirmation. Except as expressly amended hereby, the
Original Rights Agreement shall continue in full force and effect in accordance
with the provisions thereof.
Section 4. Governing Law. This amendment shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia.
Section 5. Counterparts. This Amendment may be executed in any number
of counterparts and, if so executed, each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
PULASKI FURNITURE CORPORATION
By: /s/ Harry H. Warner
--------------------------------
Its: Chairman of the Board
FIRST UNION NATIONAL BANK
By: /s/ Frances Beam
-------------------------------
Its: Vice President
2
<PAGE>
EXHIBIT D(3)
================================================================================
STOCK VOTING AND NON-TENDER AGREEMENT
BY AND AMONG
PINE HOLDINGS, INC.
PINE ACQUISITION CORP.
AND
THE INDIVIDUALS NAMED HEREIN
Dated as of March 29, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions..............................................................1
2. Non-Tender of Shares.....................................................1
3. Provisions Concerning the Securities.....................................2
(a) Agreement to Vote the Securities....................................2
(b) Grant of Proxy......................................................2
(c) Other Proxies Revoked...............................................2
4. Representations and Warranties of each Stockholder.......................2
(a) Power, etc..........................................................3
(b) Ownership of Securities.............................................3
(c) No Conflicts........................................................3
(d) No Finder's Fees....................................................3
(e) No Encumbrances.....................................................3
(f) Reliance by Acquiror................................................4
5. Additional Covenants of each Stockholder.................................4
(a) No Solicitation.....................................................4
(b) Restriction on Transfer, Proxies and Non-Interference...............4
(c) Waiver of Appraisal Rights..........................................5
(d) Stop Transfer; Changes in Subject Shares............................5
(e) Cooperation.........................................................5
(f) Releases............................................................5
6. Fiduciary Duties.........................................................5
7. Miscellaneous............................................................5
(a) Further Assurances..................................................5
(b) Notices.............................................................5
(c) Interpretation......................................................6
(d) Counterparts........................................................6
(e) Entire Agreement; No Third-Party Beneficiaries......................6
(f) Governing Law.......................................................7
(g) Assignment..........................................................7
(h) Severability........................................................7
(i) Enforcement of this Agreement.......................................7
8. Termination..............................................................7
<PAGE>
STOCK VOTING AND NON-TENDER AGREEMENT
STOCK VOTING AND NON-TENDER AGREEMENT (this "Agreement") dated as of
March 29, 2000, among Pine Holdings, Inc., a Virginia corporation ("Parent"),
Pine Acquisition Corp., a Virginia corporation ("Acquiror") and the individuals
listed on Schedule I hereto (each a "Stockholder", and collectively, the
"Stockholders").
W I T N E S S E T H :
-------------------
WHEREAS, simultaneously with entering into this Agreement, Parent,
Acquiror and Pulaski Furniture Corporation, a Virginia corporation (the
"Company"), are entering into an Agreement and Plan of Merger (such agreement,
the "Merger Agreement"), pursuant to which Acquiror will be merged with and into
the Company (the "Merger");
WHEREAS, each Stockholder has agreed that such Stockholder shall not
tender any Shares beneficially owned by such Stockholder in the Offer as set
forth herein;
WHEREAS, as of the date hereof, each Stockholder is the record and
beneficial owner of the number of Shares set forth opposite such Stockholders'
name on Schedule I hereto; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Acquiror has required that each Stockholder enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement capitalized terms
-----------
used and not defined herein have the respective meanings ascribed to them in the
Merger Agreement.
2. Non-Tender of Shares.
--------------------
(a) Each Stockholder hereby agrees not to tender for acceptance by
Acquiror in the Offer any Shares owned by such Stockholder as of the date hereof
and any Shares hereafter acquired (all such Shares owned as of the date hereof
or hereinafter acquired, the "Securities").
(b) Each Stockholder hereby agrees to permit Parent and Acquiror to
publish and disclose in the Offer Documents and, if approval of the stockholders
of the Company is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) its identity and intent with
respect to the Securities and the nature of its commitments under this
Agreement.
<PAGE>
3. Provisions Concerning the Securities.
------------------------------------
(a) Agreement to Vote the Securities. Each Stockholder, in its
--------------------------------
capacity as such, hereby agrees that during the period commencing on the date
hereof and continuing until the earlier of the Effective Time or the termination
of this Agreement (such period, the "Voting Period"), at any meeting of the
holders of any class or classes of the capital stock of the Company, however
called, or in connection with any written consent of the holders of any class or
classes of the capital stock of the Company, such Stockholder shall vote (or
cause to be voted) the Securities (x) in favor of the Merger, and the approval
of the terms of the Merger Agreement and each of the other transactions
contemplated by the Merger Agreement and this Agreement and any actions required
in furtherance thereof, (y) against any action, transaction or agreement that
would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or of such Stockholder under this Agreement, and (z) except as
otherwise agreed to in writing in advance by Acquiror, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of its
Subsidiaries; (ii) a sale, lease or transfer of a significant part of the assets
of the Company or any of its Subsidiaries, or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of its
Subsidiaries; (iii) (A) any change in the Persons who constitute the board of
directors of the Company; (B) any change in the present capitalization of the
Company or any amendment of the Company's Articles of Incorporation or By-laws;
(C) any other material change in the Company's corporate structure or business;
or (D) any other action involving the Company or any of its Subsidiaries which
is intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by this Agreement or the Merger Agreement. Each Stockholder hereby
agrees that such Stockholder shall not enter into any agreement or understanding
with any Person the effect of which would be to violate the provisions and
agreements contained in this Agreement.
(b) Grant of Proxy. Each Stockholder hereby appoints Parent, Acquiror
--------------
and any designee of Parent or Acquiror, each of them individually, such
Stockholder's proxy and attorney-in-fact, with full power of substitution and
resubstitution, to vote or act by written consent during the Voting Period with
respect to the Securities in accordance with paragraph (a) of this Section.
This proxy is given to secure the performance of the duties of each Stockholder
under this Agreement. Each Stockholder affirms that this proxy is coupled with
an interest and shall be irrevocable. Each Stockholder shall take such further
action or execute such other instruments as may be necessary to effectuate the
intent of this proxy.
(c) Other Proxies Revoked. Each Stockholder represents and warrants
---------------------
that any proxies heretofore given in respect of such Stockholder's Securities
are not irrevocable, and that all such proxies have been or are hereby revoked.
4. Representations and Warranties of each Stockholder. Each
--------------------------------------------------
Stockholder, severally and not jointly, hereby represents and warrants to
Acquiror as follows:
2
<PAGE>
(a) Power, etc. Such Stockholder has all necessary power and
-----------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Stockholder and, assuming its due authorization,
execution and delivery by each other party hereto, constitutes a legal, valid
and binding obligation of such Stockholder, enforceable against such Stockholder
in accordance with its terms.
(b) Ownership of Securities. Such Stockholder is the record and
-----------------------
beneficial owner of the Securities listed beside such Stockholder's name on
Schedule I attached hereto. The Securities listed on Schedule I constitute all
of the shares of capital stock of the Company owned of record or beneficially by
such Stockholder as of the date hereof. All of such Securities are issued and
are outstanding and except as set forth on Schedule II attached hereto, such
Stockholder does not own, of record or beneficially, any warrants, options or
other rights to acquire any shares of capital stock of the Company. Such
Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Sections 2 and 3 hereof, sole power of
disposition, sole power of conversion, sole power to demand appraisal rights and
sole power to agree to all of the matters set forth in this Agreement, in each
case with respect to all of such Securities, with no limitations, qualifications
or restrictions on such rights, subject only to applicable laws, the Company's
Articles of Incorporation and the terms of this Agreement.
(c) No Conflicts. (i) No filing with, and no permit,
------------
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated hereby
and (ii) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof shall (A) conflict with or result in any breach of or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which such Stockholder is a
party or by which such Stockholder or any of such Stockholder's properties or
assets may be bound, or (B) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to such Stockholder or
any of such Stockholder's properties or assets.
(d) No Finder's Fees. Except as disclosed pursuant to the Merger
----------------
Agreement and except for the fees and expenses of Mann, Armistead and Epperson,
no broker, investment banker, financial advisor or other person is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Stockholder.
(e) No Encumbrances. The Securities listed beside such Stockholder's
---------------
name on Schedule I attached hereto and the certificates representing such
Securities are now, and at all times during the term hereof will be, held by
such Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, claims, security interests, proxies,
3
<PAGE>
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder.
(f) Reliance by Acquiror. Such Stockholder understands and
--------------------
acknowledges that Parent and Acquiror are entering into the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement.
5. Additional Covenants of each Stockholder. Each Stockholder
----------------------------------------
covenants and agrees as follows:
(a) No Solicitation. Such Stockholder shall not, in its capacity as
---------------
such, directly or indirectly (i) solicit, facilitate, initiate or encourage any
inquiries or the making of any proposal with respect to an Acquisition
Transaction, (ii) enter into an agreement, arrangement or understanding with
respect to any Acquisition Transaction or enter into any agreement, arrangement
or understanding requiring such Stockholder to abandon, terminate or fail to
consummate this Agreement or any other transaction contemplated hereby or (iii)
negotiate, explore or otherwise engage in discussions, or furnish to any Person
(other than Parent or Acquiror) any information, with respect to any inquiries
or the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Transaction. Such Stockholder should not, in its
capacity as such, (i) withdraw or modify or propose to withdraw or modify, in a
manner adverse to Parent or Acquiror, the approval or recommendation by such
Stockholder of the Offer, the Merger, the Merger Agreement or this Agreement or
(ii) endorse or recommend, or proposed to endorse or recommend, any Acquisition
Transaction. If such Stockholder receives any inquiry or proposal regarding any
Acquisition Transaction, such Stockholder shall promptly inform Acquiror of that
inquiry or proposal and the details thereof. Nothing in this paragraph 5(a)
shall prevent any Stockholder who is a director of the Company from taking any
action, solely in his capacity as a director of the Company, that a director of
the Company is permitted to take in accordance with Section 5.4 of the Merger
Agreement. Additionally, nothing in this paragraph 5(a) shall prevent any
Stockholder who is an officer of the Company from taking any action, solely in
his or her capacity as an officer of the Company, if requested or directed to do
so by the Board of Directors of the Company acting in a compliance with Section
5.4 of the Merger Agreement.
(b) Restriction on Transfer, Proxies and Non-Interference. Such
-----------------------------------------------------
Stockholder shall not (i) directly or indirectly, offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of the Securities or any Stock
Option or any interest therein; (ii) except as contemplated by this Agreement,
grant any proxies or powers of attorney, deposit any of the Securities into a
voting trust or enter into a voting agreement with respect to any of the
Securities or any Stock Option; (iii) exercise any Stock Option; or (iv) take
any action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing such Stockholder's obligations under
this Agreement.
4
<PAGE>
(c) Waiver of Appraisal Rights. Such Stockholder hereby irrevocably
--------------------------
waives any rights of appraisal or rights to dissent from the Merger that such
Stockholder may have.
(d) Stop Transfer; Changes in Subject Shares. Such Stockholder agrees
----------------------------------------
with, and covenants to, Acquiror that such Stockholder shall not request that
the Company register the transfer (book-entry or otherwise) of any certificate
or uncertificated interest representing any of the Securities or any Stock
Option, unless such transfer is made in compliance with this Agreement. In the
event of a stock dividend or distribution, or any change in any class of capital
stock of the Company by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Securities" shall be deemed to refer to and include the Securities as well as
all such stock dividends and distributions and any shares into which or for
which any or all of the Securities may be changed or exchanged. Such
Stockholder shall be entitled to receive (free of any restrictions of this
Agreement) any cash dividend paid by the Company in respect of the Securities
during the term of this Agreement until the Effective Time.
(e) Cooperation. Such Stockholder, in the capacity as a stockholder,
-----------
shall cooperate fully with Parent, Acquiror and the Company in connection with
their respective efforts to fulfill the conditions to the Merger set forth in
Article VII of the Merger Agreement and the conditions to the Offer set forth in
Annex A to the Merger Agreement.
(f) Releases. Such Stockholder hereby fully, unconditionally and
--------
irrevocably releases, effective as of the Effective Time, any and all claims and
causes of action that such Stockholder has or may have against the Company or
any of its Subsidiaries or any present or former director, officer, employee or
agent of the Company or any of its Subsidiaries arising or resulting from or
relating to any act, omission, event or occurrence prior to the date hereof. If
requested by Parent, such Stockholder shall execute an additional release at the
Effective Time releasing such claims as may arise between the date hereof and
the Effective Time.
6. Fiduciary Duties. Notwithstanding anything in this Agreement to
----------------
the contrary, the covenants and agreements set forth herein shall not prevent
any Stockholder serving on the Company's Board of Directors from taking any
action, subject to the applicable provisions of the Merger Agreement, while
acting in the capacity of a director of the Company.
7. Miscellaneous.
-------------
(a) Further Assurances. From time to time, at Acquiror's request and
------------------
without further consideration, each Stockholder shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
(b) Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed given if delivered personally, mailed,
certified or registered mail with postage prepaid, sent by overnight courier or
telecopied to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
5
<PAGE>
(i) if to Parent or Acquiror, to
c/o Quad-C Management, Inc.
230 East High Street
Charlottesville, Virginia 22902
Attention: Anthony R. Ignaczak
Facsimile No.: (804) 979-1145
with copies to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attention: John M. Reiss, Esq.
Gregory Pryor, Esq.
Facsimile No.: (212) 354-8113
(ii) if to the Stockholders, to the address set forth beside each
Stockholder's name listed on Schedule I hereto
with a copy to:
McGuire, Woods, Battle & Boothe LLP
World Trade Center
Suite 9000
101 West Main Street
Norfolk, Virginia 23510-1655
Attention: William R. Waddell, Esq.
Facsimile No.: (757) 640-3972
(c) Interpretation. When a reference is made in this Agreement to a
--------------
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
(d) Counterparts. This Agreement may be executed in counterparts,
-------------
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement,
----------------------------------------------
including the documents and instruments referred to herein (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any person or entity other than the
parties any rights or remedies hereunder.
6
<PAGE>
(f) Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the Commonwealth of Virginia, without
regard to the conflict of laws rules thereof.
(g) Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Parent and
Acquiror may assign, in their sole discretion, any of or all their rights,
interests and obligations under this Agreement to any direct or indirect wholly
owned subsidiary of Parent. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
(h) Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest extent
possible.
(i) Enforcement of this Agreement. The parties agree that
-----------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
8. Termination. This Agreement shall terminate, and neither Acquiror
-----------
nor any Stockholder shall have any rights or obligations hereunder and this
Agreement shall become null and void and have no effect upon the termination of
the Merger Agreement in accordance with its terms, except nothing in this
Section 8 shall relieve any party of liability for breach of this Agreement.
7
<PAGE>
IN WITNESS WHEREOF, Parent, Acquiror and each Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
PINE HOLDINGS, INC.
By: /s/ Anthony R. Ignaczak
--------------------------------
Name: Anthony R. Ignaczak
Title: President
PINE ACQUISITION CORP.
By: /s/ Anthony R. Ignaczak
--------------------------------
Name: Anthony R. Ignaczak
Title: President
<PAGE>
/s/ Randolph V. Chrisley
--------------------------------
Randolph V. Chrisley
/s/ Ira S. Crawford
--------------------------------
Ira S. Crawford
/s/ Jack Dawson
--------------------------------
Jack Dawson
/s/ James Dawson
--------------------------------
James Dawson
/s/ Carl W. Hoffman
--------------------------------
Carl W. Hoffman
/s/ James H. Kelley
--------------------------------
James H. Kelley
/s/ Paul T. Purcell
--------------------------------
Paul T. Purcell
/s/ James W. Stout
--------------------------------
James W. Stout
/s/ John G. Wampler
--------------------------------
John G. Wampler
/s/ Raymond E. Winters
--------------------------------
Raymond E. Winters
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
Amount of Shares
Name of Stockholder Beneficially Owned Notice Address
- ---------------------- ---------------------- -----------------------
<S> <C> <C>
Randolph V. Chrisley 36,812 Route 1, Box 229
Draper, VA 24324
Ira S. Crawford 31,171 P.O. Box 1207
Pulaski, VA 24301
Jack Dawson 1,700 700 Colonial Drive
Webb City, MO 64870
James Dawson 2,500 1717 Homestead Dr.
Webb City, MO 64870
Carl W. Hoffman 2,778 901 Hidden Valley Road
Blacksburg, VA 24060
James H. Kelly 45,263 P.O. Box 786
Pulaski, VA 24301
Paul T. Purcell 2,510 745 Stonewood Drive
Salem, VA 24153
James W. Stout 27,384 6809 Cleburne Blvd.
Dublin, VA 24084
John G. Wampler 63,483 5332 Fox Ridge Road
Roanoke, VA 24014
Raymond E. Winters 2,947 490 Chinquapin Trail
Christiansburg, VA 24073
</TABLE>
<PAGE>
SCHEDULE II
-----------
<TABLE>
<CAPTION>
Amount of options, warrants or other rights to
Name of Stockholder acquire Shares
--------------------------------- --------------------------------------------------
<S> <C>
Randolph V. Chrisley 2,500 Stock Options
Ira S. Crawford 2,500 Stock Options
Jack Dawson 0
James Dawson 0
Carl W. Hoffman 0
James H. Kelly 5,000 Stock Options
Paul T. Purcell 0
James W. Stout 0
John G. Wampler 5,000 Stock Options
Raymond E. Winters 0
</TABLE>
<PAGE>
EXHIBIT D(4)
MANAGEMENT TRANSACTION AGREEMENT
March 29, 2000
Pine Holdings, Inc.
230 East High Street
Charlottesville, VA 22902
Gentlemen:
Reference is made to the Agreement and Plan of Merger (as amended from time to
time, the "Merger Agreement"), dated as of March 29, 2000, by and among Pine
Holdings, Inc., a Virginia corporation (the "Company"), Pulaski Furniture
Corporation, a Virginia corporation, and Pine Acquisition Corp., a Virginia
corporation. Capitalized terms used but not otherwise defined herein shall have
the meaning set forth in the Merger Agreement.
1. Commitment. This letter (the "Letter Agreement") will confirm the
commitment of each of Randolph V. Chrisley, Ira S. Crawford, Jack Dawson, James
Dawson, James H. Kelley, Paul T. Purcell, James W. Stout, John G. Wampler,
Raymond E. Winters and Carl W. Hoffman (the "Management"):
(a) to exchange their respective Shares (as set forth on Schedule I)
for shares of common stock of the Company and subordinated notes of the
Company (such subordinated notes to be on the terms and conditions set
forth in the term sheet attached hereto as Exhibit A) in accordance with
Section 2.5(b) of the Merger Agreement, and
(b) to execute and deliver a Shareholders Agreement and a Registration
Rights Agreement on the terms and conditions set forth in the term sheet
attached hereto as Exhibit B;
and will confirm the commitment of the Company to adopt a Management Performance
Stock Option Plan and an Annual Incentive Compansation Plan for Key Management
on the terms and conditions set forth in the term sheets attached hereto as
Exhibits C and D, respectively, and to execute and deliver the Shareholders
Agreement and Registration Rights Agreement.
2. Tax Treatment of Exchange. The exchange described in paragraph
1(a) hereof shall take place simultaneously with an exchange by an investor or
investors for shares of common stock of the Company such that, immediately after
the exchanges, the exchanging parties will be in control, as defined in Section
351(a) of the Internal Revenue Code of 1986, as amended, of the Company.
3. Conditions. The commitments of each of the parties are subject to the
consummation of the Merger. The commitments of Management are subject to the
performance
<PAGE>
by the Company of its obligations hereunder and the commitments of the Company
are subject to the performance by each member of Management of his or her
respective obligations hereunder.
4. Effectiveness; Termination. This commitment will be effective upon the
Company's acceptance of the terms and conditions of this letter and will expire
on the first to occur of (a) the Closing (as defined in the Merger Agreement) or
(b) the termination of the Merger Agreement.
5. Governing Law. This Letter Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Virginia, without
regard to the conflict of laws rules thereof.
6. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
7. Entire Agreement; No Third-Party Beneficiaries. This Agreement,
including the documents and instruments referred to herein, (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (b) is not intended to confer upon any person or entity other than the
parties any rights or remedies hereunder.
8. Headings. The headings contained in this Letter Agreement are for
reference only and shall not affect in any way the meaning or interpretation of
this Letter Agreement.
Very truly yours,
/s/ Randolph V. Chrisley
------------------------------
Randolph V. Chrisley
/s/ Ira S. Crawford
------------------------------
Ira S. Crawford
/s/ Jack Dawson
------------------------------
Jack Dawson
/s/ James Dawson
------------------------------
James Dawson
<PAGE>
/s/ James H. Kelly
------------------------------
James H. Kelly
/s/ Paul T. Purcell
------------------------------
Paul T. Purcell
/s/ James W. Stout
------------------------------
James W. Stout
/s/ John G. Wampler
------------------------------
John G. Wampler
/s/ Raymond E. Winters
------------------------------
Raymond E. Winters
/s/ Carl W. Hoffman
------------------------------
Carl W. Hoffman
Accepted as of the date first above written:
PINE HOLDINGS, INC.
By: /s/ Anthony R. Ignaczak
-------------------------
Name: Anthony R. Ignaczak
Title: President
<PAGE>
CONFIDENTIAL
This Draft if for Discussion Purposes Only.
Project Liberty (the "Company")
Subordinated Note (the "Note") Term Sheet
-----------------------------------------
<TABLE>
<S> <C>
Issuer: Pine Holdings, Inc. (the "Issuer").
- -------
Principal Amount: $1,000.00 per Note.
- -----------------
Maturity: Seven years after the initial issuance date of the Notes (the "Maturity Date")
- ---------
Interest: Interest shall accrue on the unpaid principal amount of each Note at a rate of 12%
- --------- per annum (the "Interest Rate"); provided, that interest on the Notes shall be payable
solely in kind in the form of additional Notes (except that, so long as a default or
event of default does not exist under that certain Credit Agreement to be entered into
among Pine Holdings, Inc., Pine Acquisition, Inc., the lenders from time to time
party thereto and Bankers Trust Company, as Agent (the "Credit Agreement"), cash
interest may be paid in respect of the Notes (i) in an amount sufficient to allow
the holders of Notes to pay cash taxes in respect of the Notes or (ii) if the
"senior leverage ratio" (as defined in the Credit Agreement) of the Issuer and its
subsidiaries is less than 2.5:1).
Interest shall be payable on each ________ and __________ until the Maturity Date.
Interest will be computed on the basis of a 360-day year of twelve 30-day months.
Default Interest: If the Issuer shall default on the payment when due of principal or interest, the
- ----------------- Issuer shall, on demand from time to time pay interest, to the extent permitted by
law, on such defaulted amount up to but not including the date of actual payment
at a rate per annum equal to the Interest Rate.
Prepayments: On not less than thirty (30) days written notice to the holder of any Note, the
- ------------ Issuer may, at any time and from time to time without premium or penalty, prepay
all or a portion of the unpaid principal amount of any Note together with the unpaid
interest accrued on such portion of the principal amount of such Note; provided that
no prepayment shall be made if such prepayment is then prohibited by the terms of
any senior indebtedness. All such prepayments shall be made pro rata among the
holders of all outstanding Notes.
Pro Rata Payments: Any payments made to any holder of any outstanding Notes (whether for principal,
- ------------------ interest or otherwise) shall be made pro rata among all holders of outstanding
Notes.
Subordination: Payment of the principal of, interest on and all other amounts owing in respect of
- -------------- the Notes will be expressly and fully subordinated to the payment in full in cash
of all indebtedness of the Issuer other than (i) indebtedness which is expressly
pari passu with or junior to the Notes, (ii) trade payables in the ordinary course
of business and (iii) taxes.
Events of Default: An event of default ("Event of Default") shall be deemed to have occurred upon (i)
- ------------------ the Issuer's failure to pay on the Maturity Date any portion of the unpaid
principal amount of the Notes, (ii) the Issuer's failure to pay on any interest
payment date any portion of the unpaid Interest on the Notes and (iii) the commencement
of bankruptcy, reorganization, insolvency or liquidation proceedings involving the
Issuer (other than an involuntary proceeding which is dismissed or terminated
within 90 days of commencement).
Upon the occurrence and during the continuance of an Event of Default (but subject
to the subordination provisions of the Notes), the holders of a majority of the
outstanding Notes may declare all or any portion of the outstanding principal
amount of the Notes due and payable and demand immediate payment of such amount.
Transfer Restrictions: The Notes are subject to certain transfer restrictions set forth in the
- ---------------------- Shareholders Agreement of Pine Holdings, Inc.
Governing Law: Virginia.
- --------------
</TABLE>
<PAGE>
CONFIDENTIAL
This Draft if for Discussion Purposes Only.
Project Liberty (the "Company")
Subordinated Note (the "Note") Term Sheet
-----------------------------------------
<TABLE>
<S> <C>
Issuer: Pine Holdings, Inc. (the "Issuer").
- -------
Principal Amount: $1,000.00 per Note.
- -----------------
Maturity: Seven years after the initial issuance date of the Notes (the "Maturity Date")
- ---------
Interest: Interest shall accrue on the unpaid principal amount of each Note at a rate of 12%
- --------- per annum (the "Interest Rate"); provided, that for a period of time acceptable to
Bankers Trust Company, interest on the Notes shall be payable solely in kind in
the form of additional Notes (except that, so long as a default or event of
default does not exist under that certain Credit Agreement to be entered into
among Pine Holdings, Inc., Pine Acquisition, Inc., the lenders from time to time
party thereto and Bankers Trust Company, as Agent (the "Credit Agreement"), cash
interest may be paid in respect of the Notes (i) in an amount sufficient to allow
the holders of Notes to pay cash taxes in respect of the Notes or (ii) if the
"senior leverage ratio" (as defined in the Credit Agreement) of the Issuer and its
subsidiaries is less than 2.5:1).
Interest shall be payable on each April 30 and October 31 until the Maturity Date.
Subject to the foregoing, the Issuer may pay Interest accrued on each Note at such
time and from time to time as it shall determine and may elect, in its sole
discretion, not to pay such Interest and to allow such Interest to accrue.
Interest will be computed on the basis of a 360-day year of twelve 30-day months.
Default Interest: If the Issuer shall default on the payment when due of principal or interest, the
- ----------------- Issuer shall, on demand from time to time pay interest, to the extent permitted by
law, on such defaulted amount up to but not including the date of actual payment
at a rate per annum equal to the Interest Rate.
Prepayments: On not less than thirty (30) days written notice to the holder of any Note, the
- ------------ Issuer may, at any time and from time to time without premium or penalty, prepay
all or a portion of the unpaid principal
</TABLE>
<PAGE>
<TABLE>
<S> <C>
amount of any Note together with the unpaid interest accrued on such portion of the
principal amount of such Note. All such prepayments shall be made pro rata among the
holders of all outstanding Notes.
Pro Rata Payments: Any payments made to any holder of any outstanding Notes (whether for principal,
- ------------------ interest or otherwise) shall be made pro rata among all holders of outstanding
Notes.
Subordination: Payment of the principal of, interest on and all other amounts owing in respect of
- -------------- the Notes will be expressly and fully subordinated to the payment in full in cash
of all indebtedness of the Issuer other than (i) indebtedness which is expressly
pari passu with or junior to the Notes, (ii) trade payables in the ordinary course
of business and (iii) taxes.
Events of Default: An event of default ("Event of Default") shall be deemed to have occurred upon (i)
- ------------------ the Issuer's failure to pay on the Maturity Date any portion of the unpaid
principal amount of the Notes, (ii) the Issuer's failure to pay on the Maturity
Date any portion of the unpaid Interest on the Notes and (iii) the commencement of
bankruptcy, reorganization, insolvency or liquidation proceedings involving the
Issuer (other than an involuntary proceeding which is dismissed or terminated
within 90 days of commencement).
Upon the occurrence and during the continuance of an Event of Default (but subject
to the subordination provisions of the Notes), the holders of a majority of the
outstanding Notes may declare all or any portion of the outstanding principal
amount of the Notes due and payable and demand immediate payment of such amount.
Transfer Restrictions: The Notes are subject to certain transfer restrictions set forth in the
- ---------------------- Shareholders Agreement of Pine Holdings, Inc.
Governing Law: Virginia.
- --------------
</TABLE>
<PAGE>
CONFIDENTIAL
This Draft is for Discussion Purposes Only.
Project Liberty (the "Company")
General Provisions of Shareholders Agreement
(Including Those Affecting Management Rollover Shareholders)
------------------------------------------------------------
Types of Securities: a. Subordinated Notes and Common Stock.
- -------------------- b. Each purchaser will purchase Units consisting of equal
dollar amounts of Subordinated Notes and Common Stock.
Aggregate Amount: a. $23.8 million of Subordinated Notes
-----------------
and $23.8 million of Common Stock. Management will
rollover 100% of their existing Common Stock, aggregating
approximately $5.8 million, into equal amounts of
Subordinated Notes and Common Stock. Certain members of
Management will also invest an additional $1.0 million of
cash on the same basis. Partnerships controlled by Quad-C
and individuals affiliated with Quad-C ("Quad-C") will
contribute the remaining Subordinated Notes and Common
Stock.
In addition, Management shareholders have the right to
rollover 100% of their existing options.
Price: The price will be $1,000 per Note and $2.00 per Share of
- ------ Common Stock. Securities will be sold in Units of $2,000
each, representing one Note and 500 Shares of Common
Stock. Investment "rollover" by Management shareholders
will be valued at the same price as paid by Quad-C.
Voting Rights: One vote per Share of Common Stock.
- --------------
Dividends: None.
- ----------
Non-Competition/
Non-Disclosure/
Non-Disturbance
Agreements: Management shareholders, as part of the Shareholders
Agreement, will be required to enter into non-
competition, non-disclosure and non-disturbance
agreements with the Company. The non-competition
agreements will survive for a period of two years, and
the non-disclosure and non-disturbance agreements will
survive for a period of three years, following
termination of the shareholder's employment with the
Company; provided, however, that the Company agrees to
-------- -------
pay such management
<PAGE>
shareholder his base compensation in effect prior to
termination during the term of such non-compete, non-
disclosure or non-disturbance agreements.
Rights of Transfer: Securities may be transferred only as Units, not
- ------------------- separately, other than in connection with a Compelled
Sale or Tag-Along Sale. Units may be transferred to
Permitted Transferees (an "Exempt Transfer"), to include
the following:
i) any transfer among the Initial Shareholders (other
than Management Shareholders),
ii) any transfer pursuant to a Public Offering,
Compelled Sale, Company Call or Put,
iii) any transfer to a shareholder's spouse or lineal
descendants or to trusts solely for the benefit of
such spouse or lineal descendants,
iv) any transfer pursuant to the laws of succession,
distribution and descent,
v) any transfer from a corporation, limited liability
company or partnership which is a distribution-in-
kind to all of such corporation's shareholders, or
such limited liability company's owners or such
partnership's limited partners and general
partner,
vi) any transfer to an Affiliate, as defined,
vii) any transfer required by a regulatory authority
having jurisdiction over the transferor, or
viii) any transfer by Quad-C made in compliance with the
provisions for Tag-Along Rights.
Other than Exempt Transfers, all transfers will be
subject to a Right of First Refusal Obligation described
below. Permitted Transferees will be required to become
parties to the Shareholders Agreement.
Transfer of Management securities also may be further
restricted by covenants of the Senior Debt.
Company Call: Prior to the second anniversary date, the Company will
- ------------- have the right, but not the obligation, to purchase
("Call") the securities of a Management Shareholder upon
any event of termination other than Death, Permanent
<PAGE>
Disability or, in the case of Pete Crawford, Retirement
at age 65 or over. In the event of Voluntary
Termination or termination for Cause (a "Just Cause
Dismissal"), the Call price will be at the initial
rollover value ("Initial Fair Value"). In the event of
Involuntary Termination not for Cause, the Call price
will be Fair Market Value (based on the Company as a
whole and as a going concern) as reasonably determined
by the Board of Directors using commonly known and
widely accepted valuation methods without taking into
account any discount for minority interests.
The definition of Just Cause Dismissal will include (i)
the continual or deliberate neglect of the performance
of an executive's material duties, (ii) failure of an
executive to devote substantially all of his working
time to the business of the Company, (iii) engaging
willfully in misconduct in connection with the
performance of any of his duties, (iv) willfully
failing to follow the directives of the Board of
Directors or the Chief Executive Officer of the
Company, (v) breach of confidentiality agreements with
the Company, (vi) active disloyalty to the Company, or
(vii) engaging in conduct which would be reasonably
likely to result in material injury to the reputation
of the Company, including commission of a felony,
fraud, or embezzlement.
The Company will have 60 days following termination in
which to exercise its Call right, after which the
Company's Call right will expire.
Employee Put: In the event of Death or Permanent Disability of a
- ------------- Management shareholder or the Retirement of Pete
Crawford at age 65 or older, if the Company has not had
an event of liquidity (an Initial Public Offering or a
Compelled Sale), the Management shareholder or his
estate will have the right to require the Company to
purchase ("Put") part or all of the Units held by him
or it (except that in the case of the Retirement of
Pete Crawford, such Put right shall apply only to the
Units held by him as of the date of the Shareholders
Agreement) at a purchase price equal to the Fair Market
Value as reasonably determined by the Board of
Directors.
The executive or his estate will have 90 days following
his termination by means of Death or Permanent
Disability in which to exercise its Put right, after
which the Put right will expire.
Payment for securities purchased under the Put right
will be in cash, provided that at the option of the
Company up to two-thirds of the purchase price may be
paid in the form of a two-year note bearing interest at
N.Y. prime rate and amortizable 50% on the first
anniversary and the balance on the second anniversary.
This note will rank junior to any senior and
subordinated debt.
<PAGE>
Liquidity Right: After the earlier of (i) 10 years or (ii) six months
- ---------------- after the acquisition financing is fully repaid (other
than by way of recapitalization or refinancing), if the
Company has not had an event of liquidity (an Initial
Public Offering or a Compelled Sale), the Management
shareholders will have an annual right, exercisable by
notice prior to October 31 of such year, to sell all or
a part of their securities to the Company at a price
equal to the Fair Market Value (on the same basis as
provided in the Company Call) of such securities, as
reasonably determined by the Board of Directors.
Payment for securities purchased under the Liquidity
Right will be in cash, provided that at the option of
the Company up to two-thirds of the purchase price may
be paid in the form of a two-year note bearing interest
at N.Y. prime rate and amortizable 50% on the first
anniversary and the balance on the second anniversary.
This note will rank junior to any senior and
subordinated debt.
The Board of Directors may postpone the Liquidity Right
if it determines that repurchase of the securities
would materially impair the financial health of the
Company or violates any financing agreements of the
Company.
Other Provisions Which Will Be
Included in a Shareholders Agreement:
- -------------------------------------
Term: The Shareholders Agreement will terminate upon the
- ----- earlier to occur of i) an Initial Public Offering;
ii) a Compelled Sale, or iii) a Control Transfer.
Preemptive Rights: All shareholders of the Company will have preemptive
- ------------------ rights with respect to any equity issuance subsequent
to closing, enabling all shareholders to maintain their
pro rata ownership in the Company.
Rights of First Refusal: The Company will have the right of first refusal on the
- ------------------------ sale of any securities of the Company (in a transfer
that is not a Control Transfer or Compelled Sale) to
any person who is not a Permitted Transferee. To the
extent the Company is unable or unwilling to purchase
such securities, the right of first refusal will run to
the then shareholders of the Company on a pro rata
basis. Shares not purchased by a shareholder or
shareholders will be reoffered to the purchasing
shareholders. In the event the securities covered under
the right of first refusal are securities held by
Management, if so requested by the other Management
shareholders, the Company will assign part or all of
its rights under the right of first refusal to the
other Management Shareholders and they will have a
priority right over the
<PAGE>
Company and other shareholders to purchase such
securities. Such priority right will not operate in the
event of a "Company Call" (see above).
All, but not less than all, of the offered securities
must be purchased; otherwise, the shareholder will be
free to sell the securities to a third-party. No sale
may occur during the period in which the securities are
subject to the "Company Call" (see above).
Compelled Sale: In the event shareholders controlling not less than 50%
- --------------- of the voting Common Stock of the Company propose to
make a Control Transfer, then all shareholders of the
Company, including shareholders by virtue of holding
warrants or options to purchase or securities
exchangeable into Common Stock of the Company, can be
required to sell their securities in the Control
Transfer on a pro rata basis at the same price and on
the same terms as the compelling holders (a "Compelled
Sale"). A Control Transfer means sale or transfer of
greater than 50% of the voting Common Stock of the
Company to a third party.
Tag-Along Rights: If any Principal Investor (defined as partnerships or
- ----------------- corporations controlled by Quad-C) transfers or sells
more than 5% of the securities it owns in the Company
(in a transfer that is not an Exempt Transfer, a
Compelled Sale or a public sale), all other
shareholders of the Company, including shareholders by
virtue of holding warrants or options to purchase (but
only to the extent vested) or securities exchangeable
in Common Stock of the Company, shall have the right to
participate in such sale on a pro rata basis at the
same price and under the same terms as the Principal
Investor.
Board of Directors: Board size and representation will be determined.
- ------------------- Quad-C will control the Board. The Chief Executive
Officer of the Company and one additional Management
representative will be members of the Board.
Registration Rights: A Registration Rights Agreement will be entered into by
- -------------------- all shareholders. Following an initial public offering
("IPO") of the Company, all shareholders who are
subject to securities law sale restrictions will have
pro rata piggyback rights on incidental registrations
of securities by the Company. Priority of registration
will be i) first to the Company for the shares it
wishes to register and sell, and ii) thereafter, to the
extent approved by the underwriters and the Company,
pro rata to the piggybacking shareholders. In addition,
Quad-C will be granted two long form demand
registrations.
Management shareholders will not have a right to sell
shares in an IPO unless recommended by the Board and
approved by the underwriters.
<PAGE>
However, in the event that the underwriters allow non-
Management shareholders to sell shares in the IPO, the
Board and Company will use their reasonable efforts to
enable Management shareholders to sell shares in the
IPO.
Other: Pete Crawford will keep his SERP benefits if his
- ------ employment ends before age 65 unless such he is
terminated for cause.
The Management shareholders agree that they have not
entered into and will not enter into any severance,
retention, compensation or employee benefit plan,
policy, program, arrangement or agreement under the
Proposed Program for the Assurance of Continued
Employment and Severance Benefits (the "Severance
Plan") pursuant to which the execution of the Merger
Agreement between Pine Holdings, Inc., Pine Acquisition
Corp. and Pulaski Furniture Corporation or the
consummation of the transactions contemplated thereby
constitutes or would constitute a "change in control"
of Pulaski Furniture Corporation within the meaning of
the Severance Plan. The parties further agree that the
Severance Plan will be terminated upon consummation of
the merger contemplated by such Merger Agreement.
<PAGE>
EXHIBIT (F)
CODE OF VIRGINIA
TITLE 13.1. CORPORATIONS.
CHAPTER 9. VIRGINIA STOCK CORPORATION ACT.
ARTICLE 15. DISSENTERS' RIGHTS
Copyright (C) 1949-1999 by LEXIS Law Publishing, a division of Reed Elsevier
Inc. and Reed Elsevier Properties Inc. All rights reserved.
Current through End of 1999 Regular Session.
(S) 13.1-730 Right to dissent.
A. A shareholder is entitled to dissent from, and obtain payment of the fair
value of his shares in the event of, any of the following corporate actions:
1. Consummation of a plan of merger to which the corporation is a party (i) if
shareholder approval is required for the merger by (S) 13.1-718 or the articles
of incorporation and the shareholder is entitled to vote on the merger or (ii)
if the corporation is a subsidiary that is merged with its parent under (S)
13.1-719;
2. Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
3. Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation if the shareholder was entitled to vote on the sale
or exchange or if the sale or exchange was in furtherance of a dissolution on
which the shareholder was entitled to vote, provided that such dissenter's
rights shall not apply in the case of (i) a sale or exchange pursuant to court
order, or (ii) a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
4. Any corporate action taken pursuant to a shareholder vote to the extent the
articles of incorporation, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares.
B. A shareholder entitled to dissent and obtain payment for his shares under
this article may not challenge the corporate action creating his entitlement
unless the action is unlawful or fraudulent with respect to the shareholder or
the corporation.
C. Notwithstanding any other provision of this article, with respect to a plan
of merger or share exchange or a sale or exchange of property there shall be no
right of dissent in favor of holders of shares of any class or series which, at
the record date fixed to determine the shareholders entitled to receive notice
of and to vote at the meeting at which the plan of merger or share exchange or
the sale or exchange of property is to be acted on, were (i) listed on a
national securities exchange or on the National Association of Securities
Dealers Automated Quotation System (NASDAQ) or (ii) held by at least 2,000
record shareholders, unless in either case:
1. The articles of incorporation of the corporation issuing such shares
<PAGE>
provide otherwise;
2. In the case of a plan of merger or share exchange, the holders of the class
or series are required under the plan of merger or share exchange to accept for
such shares anything except:
a. Cash;
b. Shares or membership interests, or shares or membership interests and cash
in lieu of fractional shares (i) of the surviving or acquiring corporation or
limited liability company or (ii) of any other corporation or limited liability
company which, at the record date fixed to determine the shareholders entitled
to receive notice of and to vote at the meeting at which the plan of merger or
share exchange is to be acted on, were either listed subject to notice of
issuance on a national securities exchange or held of record by at least 2,000
record shareholders or member; or
c. A combination of cash and shares or membership interests as set forth in
subdivisions 2 a and 2 b of this subsection; or
3. The transaction to be voted on is an "affiliated transaction" and is not
approved by a majority of "disinterested directors" as such terms are defined in
(S) 13.1-725.
D. The right of a dissenting shareholder to obtain payment of the fair value
of his shares shall terminate upon the occurrence of any one of the following
events:
1. The proposed corporate action is abandoned or rescinded;
2. A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
3. His demand for payment is withdrawn with the written consent of the
corporation.
E. Notwithstanding any other provision of this article, no shareholder of a
corporation located in a county having a county manager form of government and
which is exempt from income taxation under (S) 501 (c) or (S) 528 of the
Internal Revenue Code an no part of whose income inures or may inure to the
benefit of any private share holder or individual shall be entitled to dissent
and obtain payment for his shares under this article.
