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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Under Section 14(d)(4) of
the Securities Exchange Act of 1934
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Pulaski Furniture Corporation
(Name of Subject Company)
Pulaski Furniture Corporation
(Name of Person Filing Statement)
COMMON STOCK
(Title of Class of Securities)
745553107
(CUSIP Number of Class of Securities)
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Harry H. Warner
Chairman of the Board
Pulaski Furniture Corporation
P.O. Box 1371
One Pulaski Square
Pulaski, Virginia 24301
(540) 980-7330
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of the person filing statement)
With a copy to:
C. Porter Vaughan, III, Esq.
Hunton & Williams
951 East Byrd Street
Riverfront Plaza, East Tower
Richmond, Virginia 23219-4074
(804) 788-8200
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Item 1. Subject Company Information.
Name and Address. The name of the subject company to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement")
relates is Pulaski Furniture Corporation, a Virginia corporation (the
"Company"). The address of the principal executive offices of the Company is
P.O. Box 1371, One Pulaski Square, Pulaski, Virginia 24301.
Securities. The title of the class of equity securities to which this
Statement relates is common stock of the Company (the "Common Stock"),
including the associated rights to purchase preferred stock (the "Rights" and
together with the Common Stock, the "Shares"). As of March 28, 2000, there
were 2,896,425 Shares outstanding.
Item 2. Identity and Background of Filing Person.
Name and Address. The name and address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
Tender Offer. This Statement relates to the tender offer by Pine Acquisition
Corp. ("Purchaser"), a Virginia corporation and a wholly owned subsidiary of
Pine Holdings, Inc., a Virginia corporation ("Parent"), disclosed in a Tender
Offer Statement on Schedule TO (the "Schedule TO"), dated April 7, 2000,
offering to purchase all of the outstanding Shares at a price of $22.50 per
Share, net to the seller in cash (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase (the "Offer to
Purchase"), dated April 7, 2000, and the related Letter of Transmittal (the
"Letter of Transmittal," which, together with the Offer to Purchase,
constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and
(a)(2) to this Statement and are incorporated herein by reference. Parent
currently is a wholly owned subsidiary of Quad-C Partners V, L.P., a limited
partnership organized under the laws of Delaware ("Quad-C"). Following
completion of the Offer and at the time of the merger of Purchaser with the
Company described below, the following members of the Company's senior
management, Randolph 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. (each, a "Management Shareholder" and
together 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) and subordinated debt of Parent.
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, Purchaser
and the Company. The Merger Agreement provides, among other things, that
following satisfaction or waiver of the conditions set forth in the Merger
Agreement, Purchaser will be merged with and into the Company (the "Merger"),
the separate corporate existence of Purchaser will cease and the Company will
continue as the surviving corporation (the "Surviving Corporation") and a
direct wholly owned subsidiary of Parent. A copy of the Merger Agreement is
filed as Exhibit (e)(1) to this Statement and is incorporated herein by
reference.
As set forth in the Schedule TO, the principal executive offices of each of
Parent and Purchaser are located at c/o Quad-C Management, Inc., 230 East High
Street, Charlottesville, Virginia 22902.
Item 3. Past Contacts, Transactions, Negotiations and Agreements
Conflicts of Interest
Except as set forth in this Item 3 or as incorporated by reference herein,
to the knowledge of the Company, there are no material contracts, agreements,
arrangements or understandings and no actual or potential conflicts of
interest between the Company or its affiliates and (i) the Company's executive
officers, directors or affiliates or (ii) Parent or Purchaser or their
respective executive officers, directors or affiliates.
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1. Arrangements Between the Company and its Executive Officers, Directors
and Affiliates.
Certain contracts, arrangements or understandings between the Company or its
affiliates and certain of the Company's directors, executive officers and
affiliates are described in the Information Statement of the Company attached
to this Schedule 14D-9 as Schedule I (the "Information Statement"). The
Information Statement is being furnished to the Company's shareholders
pursuant to Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14f-1 issued under the Exchange Act in
connection with Parent's and Purchaser's right pursuant to the Merger
Agreement (after acquiring a majority of the outstanding Shares pursuant to
the Offer) to designate persons to the Board of Directors of the Company (the
"Company Board") otherwise than at a meeting of the shareholders of the
Company. The Information Statement is incorporated herein by reference.
According to the Schedule TO, following the consummation of the Offer and
the Merger, Parent anticipates that the Company Board will be composed solely
of members of Parent's management. Outside directors of the Company are
compensated for their services as directors of the Company. The compensation
provided to directors and executive officers of the Company is described in
the Company's Proxy Statement for its 1999 Annual Meeting of Shareholders are
included in the Information Statement attached as Schedule I to this Statement
and are incorporated herein by reference.
Certain directors of the Company who own Shares will receive the Offer Price
for their shares in the Offer or the Merger on the same terms as the other
shareholders of the Company. As of March 31, 2000, such directors of the
Company owned in the aggregate 15,592 Shares and will receive a payment for
their Shares in the aggregate amount of $350,820, assuming that they tender
all of their Shares in the Offer or their Shares are acquired in the Merger.
See "Special Factors--Interests of Certain Persons in the Offer and the
Merger" in the Offer to Purchase for a description of the treatment of the
Management Shareholders. See Schedule I to this Statement for a listing of
ownership of Shares by the directors and executive officers of the Company.
Pursuant to a program adopted in December, 1999 (the "Continuity Program")
for the assurance of the continued employment and the provision of severance
benefits for Messrs. Wampler, Chrisley, Kelly, Crawford, and Stout, the
Company and Messrs. Wampler, Chrisley, Kelly, Crawford and Stout entered into
the Pulaski Furniture Corporation Employment Continuity Agreements, dated as
of March 29, 2000 (the "Continuity Agreements"). The Continuity Program and
the Continuity Agreements provide for (i) assurance of continued employment
for at least 3 years following a change in control ("Change in Control") at an
annual salary in effect at the time of the Change in Control, (ii) accelerated
vesting, upon the Change in Control of all outstanding restricted stock
awards, (iii) vesting, upon a Change in Control and a subsequent termination
of employment without cause or for good reason, of the executive's entitlement
to receive specified benefits under the Company's Executive Supplemental
Retirement Plan, pro rated based on the actual number of years of service
before such termination plus five, as compared to the total years of service
he would have achieved if he continued his employment to age 65. 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.
2. Certain Arrangements Between the Company and Parent and Purchaser.
The information set forth under "Summary Term Sheet," "Introduction,"
"Special Factors--Background of this Offer," "Special Factors--The Merger
Agreement," "Special Factors--Transactions and Arrangements Concerning the
Common Stock," "The Tender Offer--Certain Information Concerning the Company"
and "The Tender Offer--Certain Information Concerning Quad-C, Parent, the
Purchaser and the Management Shareholders" in the Offer to Purchase is
incorporated herein by reference.
3. Interests of Certain Persons in the Offer and the Merger.
In considering the recommendations of the Company Board and the Special
Committee with respect to the Offer, the Merger and the Merger Agreement and
the fairness of the consideration to be received in the Offer
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and the Merger, shareholders should be aware that certain officers and
directors of Parent, Purchaser and the Company have interests in the Offer and
the Merger which are described in the sections of the Offer to Purchase listed
below and which may present them with certain potential conflicts of interest.
The information contained under "Summary Term Sheet," "Introduction,"
"Special Factors--Background of this Offer," "Special Factors--Interests of
Certain Persons in the Offer and the Merger," "Special Factors--Voting
Agreement," "Special Factors--Management Transaction Agreement," "Special
Factors--Agreement with Respect to Severance," "Special Factors--Employment
Agreement," "Special Factors--Consulting Agreement," "Special Factors--
Indemnification and Insurance," "Special Factors--Stock Options," "Special
Factors--Ownership of Common Stock," "Special Factors--Transactions and
Arrangements Concerning the Common Stock" and "The Tender Offer--Certain
Information Concerning Quad-C, Parent, the Purchaser and the Management
Shareholders," in the Offer to Purchase is incorporated herein by reference.
The Special Committee and the Company Board were aware of these actual and
potential conflicts of interest and considered them along with the other
matters described below in Item 4, "The Solicitation or Recommendation--The
Special Committee."
Item 4. The Solicitation or Recommendation
Recommendation of the Board of Directors
On March 29, 2000, the Company Board, by unanimous vote of all the directors
and based on, among other things, the unanimous recommendation of a Special
Committee of the Company Board consisting of independent directors Harry J.G.
van Beek, Robert C. Greening, Jr., Harry H. Warner and Hugh V. White, Jr. (the
"Special Committee"), (i) determined that the Merger Agreement, and the
transactions contemplated thereby, including the Offer and the Merger, are
fair to and in the best interests of the Company's shareholders (other than
Parent and the Management Shareholders) (the "Non-Affiliated Shareholders"),
(ii) approved the Merger Agreement, and the transactions contemplated thereby,
including the Offer and the Merger, (iii) authorized the execution and
delivery of the Merger Agreement, (iv) recommended that the Company's
shareholders accept the Offer and tender their Shares pursuant to the Offer
and (v) recommended that the Company's shareholders approve and adopt the
Merger Agreement. This recommendation is based in part upon an opinion of BB&T
Capital Markets, a division of Scott & Stringfellow, Inc. ("BBTCM"), dated as
of March 29, 2000, to the effect that, as of such date, the consideration to
be received by the Non-Affiliated Shareholders in the Offer and the Merger is
fair to such shareholders from a financial point of view (the "Fairness
Opinion"). The Fairness Opinion contains a description of the factors
considered, the assumptions made and the scope of the review undertaken by
BBTCM in rendering its opinion. The full text of the Fairness Opinion is
attached as Annex A to this Statement and is incorporated herein by reference.
Shareholders are urged to read the Fairness Opinion in its entirety.
Background
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 the Company Board 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 Board discussed this situation from time to time with one or more
members of the Company's senior management.
In early September, 1999 certain of the Management Shareholders, including
Mr. Wampler, had very preliminary and general discussions with members of the
Company Board regarding the possibility of a management-led acquisition of the
Company to determine whether the Company Board would entertain such a
proposal. After these preliminary discussions, at a meeting of the Company
Board on September 27, 1999, the members of the Company Board, in response to
an inquiry from Mr. Wampler, indicated to Mr. Wampler that, although they were
considering no active plan to sell the Company, they would be willing to
consider a sale in a
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management-led acquisition at a price that reflected a significant improvement
over the recent market price range of the Company's common stock. Mr. Wampler
indicated that he was willing to consider such a transaction and that he,
together with other members of senior management of the Company, would explore
the feasibility of accomplishing and obtaining financing for such a
transaction.
The Company Board also specifically requested its regular outside legal
counsel, Hunton & Williams, to act as its legal advisor in connection with any
proposal that senior management might develop. In making this request, the
Company Board took steps to assure itself of the independence of Hunton &
Williams and the lack of any conflicts of interest with regard to representing
the Company in a transaction involving the Management Shareholders and the
Company.
Following this request, Hunton & Williams advised the Company Board as to
its duties and responsibilities to the Company's public shareholders and, at
the request of the Company Board, confirmed that the members of the Company
Board other than Mr. Wampler were independent directors with respect to any
proposed transaction involving the management and the Company.
During late January, 2000, Mr. Wampler reported to the members of the
Company Board 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 Board encouraged Mr. Wampler to proceed with the development of
such a proposal.
Quad-C and its advisors commenced their due diligence investigation of the
Company in the last week of January, 2000.
On February 7, 2000, Mr. Wampler spoke to certain members of the Company
Board and the Company's legal advisor to inform them that it was possible that
there would soon be a proposal delivered to the Company Board 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 Board
(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.
In its regularly scheduled meeting on February 11, 2000, the Company Board
received Mr. Wampler's report that he and a management group 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
Company Board appointed the Special Committee to evaluate the merits, and
negotiate the terms, of any proposed transaction with the Management
Shareholders and Quad-C, consider such matters as the Special Committee deemed
appropriate and make a recommendation to the full Company Board as to whether
to approve any such transaction. The Company Board also authorized the Special
Committee to retain financial and any other professional advisors the Special
Committee in its discretion deemed necessary to assist it in carrying out its
responsibilities.
The Special Committee retained BBTCM as its exclusive financial advisor in
connection with the proposed transaction and thereafter executed, on behalf of
the Company, an engagement letter with BBTCM (the "BBTCM Engagement Letter"),
providing that BBTCM would serve as its financial advisor in connection with
discussions with Parent, Purchaser and the Management Shareholders. In making
its decision, the Special Committee took steps to assure itself of the
independence of BBTCM and the lack of any conflicts of interest with regard to
advising the Special Committee in a transaction involving the Management
Shareholders, Quad-C and the Company.
At the request of the Special Committee, BBTCM undertook to perform a due
diligence investigation of the Company during the week of February 14, 2000.
In connection with this investigation, BBTCM interviewed members of the
Company's management and visited the primary Company facilities in Pulaski,
Virginia. BBTCM also reviewed financial information concerning the Company,
including budgets and financial projections, prepared by members of the
Company management.
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On February 18, 2000, Quad-C delivered to the Company Board a written
proposal for a company that would be jointly owned by the Management
Shareholders and Quad-C to acquire the Company at $21.00 per share and a
proposed 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, plus 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
Company Board's reaction 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.
The Special Committee met with representatives of BBTCM and Hunton &
Williams on February 24, 2000. At this meeting, BBTCM discussed with the
Special Committee its due diligence investigation and the proposal from Quad-
C. After a lengthy discussion, the Special Committee authorized BBTCM to
continue its analysis of the proposal and the Company.
On March 3, 2000 the Special Committee met again to consider the proposal.
Representatives of BBTCM and Hunton & Williams were present and participated
in these discussions. A representative of BBTCM gave a comprehensive analysis
of the offer and the Company. A representative of Hunton & Williams briefed
the Special Committee regarding the Board's fiduciary duties under Virginia
law in the consideration of the proposal.
The Special Committee concluded that the price offered and 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 and break-up fee and expenses (the "Related Provisions").
Between March 3 and March 20, 2000, BBTCM had a number of discussions with
representatives of Quad-C concerning these principal issues, and BBTCM
consulted with the Special Committee on the progress of these discussions.
On March 20, representatives of Quad-C advised BBTCM that 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, subject to reaching agreement on the Related Provisions
and the other terms and conditions of the proposed merger agreement.
From March 20, 2000 through March 29, 2000, Quad-C, Parent and Purchaser and
the Special Committee and their respective legal and financial advisors
negotiated the Related Provisions and other terms and conditions of the merger
agreement. Parent and the Management Shareholders and their respective legal
counsel negotiated the Voting Agreement during such time. Negotiations of the
agreements were completed on March 29, 2000.
On March 28, 2000, the Special Committee met with Hunton & Williams and
BBTCM to receive an update on the status of the negotiations with Quad-C and
the Management Shareholders. 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 receive BBTCM's
final evaluation of the Offer and the Merger and to review the proposed final
terms and conditions of the Merger Agreement. Representatives of BBTCM and
Hunton & Williams participated in these discussions. At such meeting, BBTCM
provided its oral opinion (which it agreed to confirm and subsequently
confirmed in writing) that, as of that date and based upon the terms of the
Merger Agreement, the proposed consideration to be received by the Non-
Affiliated Shareholders was fair to such Shareholders, from a financial point
of view. In addition, the Company's legal advisors summarized for the Special
Committee the most recent draft of the Merger Agreement. Following the Special
Committee's review of the proposed final terms of the Offer and the Merger,
the Special Committee
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determined to recommend to the Company Board that (i) the Merger Agreement,
and the transactions contemplated thereby, including the Offer and the Merger,
are fair to and in the best interests of the Company's Non-Affiliated
Shareholders, (ii) the Company Board approve the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, (iii)
the Company Board authorize the execution and delivery of the Merger
Agreement, (iv) the Company Board recommend that the Company's shareholders
accept the Offer and tender their Shares pursuant to the Offer, and (v) the
Company Board recommend that the Company's shareholders approve and adopt the
Merger Agreement. In addition the Special Committee recommended that the
Company Board approve an amendment to the Amended and Restated Rights
Agreement between the Company and First Union National Bank, dated as of
December 15, 1997 (the "Rights Agreement Amendment").
The Company Board subsequently held a special meeting on March 29, 2000, by
conference telephone. The purpose of this meeting was to advise the Company
Board of the recommendations of the Special Committee. Representatives of
BBTCM and Hunton & Williams participated in these discussions. At this
meeting, the Company Board unanimously (i) determined that the Merger
Agreement, and the transactions contemplated thereby, including the Offer and
the Merger, are fair to and in the best interests of the Company's Non-
Affiliated Shareholders, (ii) approved the Merger Agreement, and the
transactions contemplated thereby, including the Offer and the Merger, (iii)
authorized the execution and delivery of the Merger Agreement, (iv)
recommended that the Company's shareholders accept the Offer and tender their
Shares pursuant to the Offer, and (v) recommended that the Company's
shareholders approve and adopt the Merger Agreement. The Company Board also
approved the Rights Agreement Amendment.
On March 29, 2000, the Company, Parent and Purchaser executed and delivered
the Merger Agreement, and Parent and Purchaser executed and delivered the
Voting Agreement with the Management Shareholders.
THE COMPANY BOARD UNANIMOUSLY RECOMMENDS, BASED ON, AMONG OTHER THINGS, THE
UNANIMOUS RECOMMENDATION OF THE SPECIAL COMMITTEE, THAT THE COMPANY'S
SHAREHOLDERS TENDER THEIR SHARES TO PURCHASER BECAUSE THE COMPANY BOARD HAS
DETERMINED THAT THE TERMS OF THE TENDER OFFER AND THE MERGER, TAKEN TOGETHER,
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS NON-AFFILIATED
SHAREHOLDERS. THE PRINCIPAL REASONS FOR THE SPECIAL COMMITTEE'S AND THE
COMPANY BOARD'S RECOMMENDATIONS ARE SUMMARIZED BELOW.
The Special Committee
As described above, 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 Non-Affiliated Shareholders. In making such determination and its
recommendation that the 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 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 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,
including the fact that the $22.50 per Share to be paid in the Offer
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and the Merger represents a premium of approximately 34% over the $16.75
closing sale price for the common stock on the Nasdaq Stock Market 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 Board at the March 29,
2000 meeting of the Special Committee and the Company 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 Company common stock in the Offer and the Merger was fair, from a
financial point of view, to such 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 to be followed by
a Merger for the same consideration, thereby enabling the Non-Affiliated
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;
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 Board, 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 to 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 shareholders 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 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 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
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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 not allow the Non-Affiliated 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 Non-Affiliated 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 Non-Affiliated 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 Shareholders 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 Board
In reaching its determination referred to above, the Company Board
considered and relied upon the conclusions and unanimous recommendation of the
Special Committee that the full Company Board 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 Company Board's 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.
In light of the number and variety of factors that the Special Committee and
the Company Board considered in connection with their evaluation of the Offer
and the Merger, neither the Special Committee nor the Company Board found it
practicable to quantify or otherwise assign relative weights to the foregoing
factors, and, accordingly, neither the Special Committee nor the Company Board
did so. In addition, individual members of the Special Committee and the
Company Board may have given different weights to different factors. Rather,
the Special Committee and the Company Board viewed their positions and
recommendations as being based on the totality of the information presented to
and considered by it.
The Company Board 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 Board to represent solely the interests of the Company's
Non-Affiliated 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 Board believes that sufficient procedural safeguards to ensure
fairness of the transaction and to permit the Special Committee to represent
the interests of the Company's Non-Affiliated 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 Company's Non-
Affiliated Shareholders and retention by the Special Committee of its
own independent legal counsel and financial advisor, and
8
<PAGE>
. 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.
The Company Board, after receiving the unanimous recommendation of the Offer
and the Merger by the Special Committee, (i) determined that the Merger
Agreement, and the transactions contemplated thereby, including the Offer and
the Merger, are fair to and in the best interests of the Non-Affiliated
Shareholders, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, (iii) authorized the
execution and delivery of the Merger Agreement, (iv) recommended that the
Company's shareholders accept the Offer and tender their Shares pursuant to
the Offer, and (v) recommended that the Company's shareholders approve and
adopt the Merger Agreement.
Opinion of the Financial Advisor.
On March 29, 2000, BBTCM rendered its opinion that as of such date, the
consideration to be received by the Non-Affiliated Shareholders in the
proposed offer and subsequent merger (the "Transaction") was fair from a
financial point of view to the Non-Affiliated 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
hereto. Shareholders 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 shareholder as to whether such shareholder should tender
its shares of Common Stock in the Offer or how such shareholder should vote at
any shareholders meeting in connection with the Merger. The summary of the
opinion of BBTCM set forth in this Statement 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.
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
9
<PAGE>
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.
10
<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.
Intent to Tender
To the knowledge of the Company, all of its executive officers, directors
(other than the Management Shareholders who are required not to tender in the
Voting Agreement), affiliates and subsidiaries currently intend to tender
pursuant to the Offer all Shares held of record or beneficially owned by such
persons (other than shares issuable upon the exercise of Options and Shares,
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.
Item 5. Person/Assets Retained, Employed, Compensated or Used.
Pursuant to the terms of the engagement letter dated March 3, 2000 (the
"BBTCM Engagement Letter"), the Special Committee retained BBTCM as its
financial advisor in considering the Company's financial and strategic
alternatives, including the possible sale of (or other extraordinary
transactions involving) the Company and its subsidiaries.
The Company agreed in the BBTCM Engagement Letter to pay BBTCM (i) a non-
refundable retainer fee of $25,000, (ii) $150,000 upon delivery of the
Fairness Opinion and (iii) a transaction fee of $225,000, upon consummation of
the Offer and the Merger. In addition, the Company has agreed to pay BBTCM a
supplemental fee equal to 3.0% of any excess of the amount of consideration
paid to shareholders of the Company in excess of $22.00 per share. Whether or
not any transaction is proposed or consummated, the Company also has agreed to
reimburse BBTCM for reasonable out-of-pocket expenses, including reasonable
legal fees and expenses. In the BBTCM Engagement Letter, the Company agreed to
indemnify BBTCM against certain liabilities arising out of BBTCM's engagement.
In the ordinary course of business, BBTCM and its affiliates may actively
trade securities of the Company, Parent and their affiliates for their own
accounts and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
Except as disclosed herein, neither the Company nor any person acting on its
behalf has employed, retained or agreed to compensate any person to make
solicitations or recommendations to the shareholders of the Company concerning
the Offer or the Merger.
Item 6. Interest in Securities of the Subject Company.
During the past 60 days, no transactions in Shares have been effected by the
Company or, to the Company's knowledge, by any of its executive officers,
directors, affiliates or subsidiaries.
Item 7. Purposes of the Transaction and Plans or Proposals.
Except as set forth in this Statement, the Company is not engaged in any
negotiation in response to the Offer that relates to or would result in (i) an
extraordinary transaction, such as a merger, reorganization or
11
<PAGE>
liquidation involving the Company or any subsidiary of the Company, (ii) a
purchase, sale or transfer of a material amount of assets by the Company or
any subsidiary of the Company, (iii) a tender offer for or other acquisition
of securities by or of the Company or (iv) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company.
Except as described in Item 3 or 4 above (the provisions of which are hereby
incorporated by reference), there are no transactions, Board of Directors
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the events referred to
in this Item 7.
Item 8. Additional Information.
Section 14(f) Information Statement
The Information Statement attached as Schedule I hereto is being furnished
to the Company's shareholders pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 issued under the Exchange Act in connection with Parent's and
Purchaser's right pursuant to the Merger Agreement (after acquiring any of the
Shares pursuant to the Offer) to designate persons to the Company Board
otherwise than at a meeting of the shareholders of the Company.
Other
The information contained in the Offer to Purchase filed as Exhibit (a)(1)
hereto is incorporated herein by reference.
Item 9. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated April 7, 2000.*
(a)(2) Letter of Transmittal.*
(a)(3) Letter to Shareholders, dated April 7, 2000.+
(a)(4) Press Release issued by the Company on March 29, 2000.
(a)(5) Fairness Opinion of BBTCM, dated March 29, 2000 (included as
Annex A to this Statement).+
(a)(6) Amendment to Rights Agreement between the Company and First
Union National Bank, dated as of March 29, 2000.**
(e)(1) Agreement and Plan of Merger, dated as of March 29, 2000, by and
among Parent, Purchaser and the Company.*
(e)(2) Stock Voting and Non-Tender Agreement, dated as of March 29,
2000, among Parent and certain officers and directors of the
Company named therein.*
(e)(3) Form of Pulaski Furniture Corporation Employment Continuity
Agreement.
(e)(4) Article VII of the Company's Bylaws.
(g) None.
</TABLE>
- --------
+ Included in copies mailed to the shareholders of the Company.
* Incorporated by reference to Schedule TO filed by Parent, Purchaser, the
Company, 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.
** Incorporated by reference to the Company's Current Report on Form 8-K dated
March 29, 2000 and filed by the Company on March 31, 2000.
12
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Pulaski Furniture Corporation
By: /s/ Harry H. Warner
-----------------------------------
Name: Harry H. Warner
Title:Chairman of the Board
Dated: April 7, 2000
13
<PAGE>
SCHEDULE I
PULASKI FURNITURE COMPANY
P. O. BOX 1371
ONE PULASKI SQUARE
PULASKI, VIRGINIA 24301
INFORMATION STATEMENT PURSUANT TO SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
General
This Information Statement is being mailed on or about April 7, 2000 as part
of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") of Pulaski Furniture Corporation, a Virginia corporation (the
"Company"), to the holders of record of shares of common stock, $1.00 par
value per share (the "Common Stock"), including the associated rights to
purchase preferred stock (the rights to purchase preferred stock and the
Common Stock are collectively referred to herein as the "Shares"), of the
Company. You are receiving this Information Statement in connection with the
possible election of persons designated by Parent (as defined below) to a
majority of the seats on the Board of Directors of the Company (the "Company
Board"). As of March 28, 2000, there were 2,896,425 shares of the Common Stock
outstanding.
On March 29, 2000, the Company, Pine Holdings, Inc., a Virginia corporation
("Parent"), and Pine Acquisition Corp., a Virginia corporation and a wholly
owned subsidiary of Parent ("Purchaser"), entered into an Agreement and Plan
of Merger (the "Merger Agreement"), pursuant to which (i) Parent shall cause
Purchaser to commence a tender offer (the "Offer") for all outstanding Shares
at a price of $22.50 per Share, net to the seller in cash, without interest
thereon, and (ii) Purchaser shall be merged with and into the Company (the
"Merger"). As a result of the Offer and the Merger, the Company will become a
wholly owned subsidiary of Parent.
The Merger Agreement provides that, promptly after the purchase of Shares
pursuant to the Offer, Purchaser shall be entitled to designate such number of
directors (the "Parent Designees") to the Company Board as will give Parent
representation proportionate to its ownership interest, subject to certain
conditions. The Merger Agreement requires the Company to take such action as
Parent may request to cause the Parent Designees to be elected to the Company
Board under the circumstances described therein. This Information Statement is
required by Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used and not otherwise
defined shall have the meaning set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning Parent
and Purchaser has been furnished to the Company by Parent. The Company assumes
no responsibility for the accuracy or completeness of such information.
Right to Designate Directors; Parent Designees
Promptly upon the acceptance for payment of, and payment by Purchaser for,
Shares equal to at least a majority of the outstanding shares of Common Stock,
Purchaser shall be entitled to designate up to such number of directors on the
Company Board, rounded up to the next whole number, as will give Purchaser,
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, representation on the Company Board equal to at least
that number of directors which equals the product of the total number of
directors on the Company Board (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 Purchaser and Parent and the denominator of which shall
be the number of shares of
S-1
<PAGE>
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 this Information
Statement, 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 the Parent Designees. Parent and Purchaser shall be
solely responsible for any information with 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 Company Board (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 the Parent Designees
to be elected to the Company Board.
The following table sets forth certain information with respect to
individuals Purchaser may designate as the Parent Designees (including age as
of the date hereof, current principal occupation or employment and five-year
employment history).
<TABLE>
<CAPTION>
Present Principal Occupation or Employment:
Material Positions Held During the Past
Name and Current Business Address Five Years
--------------------------------- -------------------------------------------
<C> <S>
Partner of Quad-C Management, Inc. (5/93 to
Anthony R. Ignaczak present).
Terrence D. Daniels President of Quad-C Management, Inc. (11/89
to present).
Franklin H. Winslow Associate of Quad-C Management, Inc. (1998
to present). Consultant of Public Financial
Mgmt. (1996 to 1998).
</TABLE>
Parent has informed the Company that each of the individuals listed above
has consented to act as a director, if so designated. If necessary, Parent may
choose additional or other Parent Designees, subject to the requirements of
Rule 14f-1.
Based solely on the information set forth in the Offer to Purchase, none of
the Parent Designees (i) is currently a director of, or holds any position
with, the Company, (ii) has a familial relationship with any directors or
executive officers of the Company, or (iii) to the best knowledge of Parent,
beneficially owns any securities (or any rights to acquire such securities) of
the Company. The Company has been advised by Parent that, to the best of
Parent's knowledge, none of the Parent Designees has been involved in any
transactions with the Company or any of its directors, officers, or affiliates
which are required to be disclosed pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"), except as may be disclosed
herein.
S-2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The Company Board is divided into Classes I, II and III, with one Class
being elected every year for a term of three years.
The following table sets forth the name, age and positions held within the
past five years of each director and executive officer of the Company.
<TABLE>
<CAPTION>
Year First Present Principal Occupation
Elected or and Employment during
Name Age Appointed Office(s) the Last Five Years
---- --- ---------- --------- ------------------------------------
<S> <C> <C> <C> <C>
Harry J. G. van Beek.... 65 1996 Director President, Klockner Capital Corp.,
Inc. (manufacturing company) (since
1983); former President of Klockner
Pentaplast of America, Inc. (since-
1977).
Robert C. Greening, 40 1998 Director Vice President, General Manager of
Jr..................... Neiman Marcus Northbrook (specialty
retailer) (since 1994); former Vice
President, Divisional Merchandise
Manager of Neiman Marcus (1991-
1994).
Harry H. Warner......... 64 1979 Chairman of the Board Chairman of the Board of Pulaski
Furniture Corporation (since May 6,
1999); Financial Consultant;
Director of Allied Research Corp.,
Chesapeake Corporation and Virginia
Management Investment Corp.
John G. Wampler (1)..... 41 1989 Director, President and President and Chief Executive
Chief Executive Officer Officer of Pulaski Furniture
Corporation (since February 14,
1997); former Chief Operating
Officer (1992-1997) of Pulaski
Furniture Corporation.
Hugh V. White, Jr....... 66 1978 Director Retired, Former Partner, Hunton &
Williams (1969-1999); Director of
Chesapeake Corporation.
Randolph V. Chrisley.... 51 1983 Senior Vice President--
Sales (2)
Ira S. Crawford......... 62 1978 Senior Vice President--
Administration, Secretary (2)
Carl W. Hoffman......... 35 1999 Treasurer (2)
James H. Kelly.......... 57 1971 Senior Vice President--
Product Development (2)
Paul T. Purcell......... 52 1998 Vice President--Credit
Administration (2)
James W. Stout.......... 54 1996 Vice President--
Manufacturing (2)
Raymond E. Winters, 41 1998 Vice President--
Jr. ................... Operations (2)
</TABLE>
- -------
(1) John G. Wampler is the son of Bernard C. Wampler, former Chairman of the
Board and Chief Executive Officer of the Company.
(2) Each of the executive officers, other than Messrs. Hoffman, Purcell, Stout
and Winters has been an officer of the Company for the last five years.
Mr. Hoffman has been with the Company since 1990, starting as a staff
accountant. In 1996, he was promoted to the position of Controller, and
held that position until being named Treasurer in 1999. Mr. Purcell has
been with the Company since 1993, as Director of Credit until being named
Vice President of Credit
S-3
<PAGE>
Administration in 1998. Mr. Stout has been with the Company since 1972,
starting as a trainee. In 1975, he was promoted to the position of Plant
Manager of the Company's plant in Pulaski, Virginia and held that position
until being named Vice President of Manufacturing in 1996. Mr. Winters was
previously the Director of Manufacturing and Quality Assurance with Rowe
Furniture. He has been with the Company since 1995, as Director of
Continuous Improvement until being named Vice President of Operations in
1998. The Company's executive officers are elected by and serve at the
pleasure of the Company Board.
Additional Information Concerning the Board of Directors
Other than the directorships held by Messrs. Warner and White, no other
directorships are held by directors of the Company in other companies
registered under Section 12 or subject to the requirements of Section 15(d) of
the Securities Exchange Act of 1934 or registered as an investment company
under the Investment Company Act of 1940.
There are no family relationships among any of the directors or executive
officers of the Company.
The Company Board meets quarterly. During the last fiscal year, the Company
Board held four regular meetings and two special meetings. No director, while
he was a member of the Company Board, attended fewer than 75% of the meetings
of the Company Board and any committee on which he served.
Committees of the Board of Directors. The Company Board has an Audit
Committee and a Compensation Committee, and until July 29, 1999, the Company
Board had a Stock Incentive Plan Committee. The Stock Incentive Plan Committee
was dissolved effective July 29, 1999, and the duties of the Stock Incentive
Plan Committee were moved back to the Compensation Committee. There are no
other standing committees of the Company Board. No member of any of these
committees is an employee of the Company or any of its subsidiaries.
Messrs. Greening, van Beek, and White currently comprise the Audit
Committee. Mr. McCartney, whose resignation from the Company Board was
effective May 24, 1999, was formerly a member of the Audit Committee and was
present at the one meeting that convened during his service on the Board of
Directors. The Audit Committee met twice during fiscal 1999. The Audit
Committee reviews and approves various internal accounting functions of the
Company. The Audit Committee also reviews the year-end audit performed by the
Company's auditors and meets with those auditors and Company personnel to
discuss audit procedures and policies.
Messrs. Greening, van Beek, Warner and White currently comprise the
Compensation Committee. The Compensation Committee met once during fiscal
1999. The Compensation Committee, at the direction of the Company Board,
undertakes studies and makes recommendations on matters of non stock-based
executive compensation. Effective July 29, 1999, the Compensation Committee
took on the responsibilities of administering the Company's Stock Incentive
Plan.
Messrs. Greening, van Beek and Warner comprised the Stock Incentive Plan
Committee. The Stock Incentive Plan Committee met once during fiscal 1999, and
was dissolved effective July 29, 1999. The Stock Incentive Plan Committee
administered the Company's Stock Incentive Plan prior to dissolution; the
Compensation Committee currently administers the Company's Stock Incentive
Plan.
Director Compensation. Employee directors of the Company are not paid for
their service on the Company Board. Other directors receive an annual retainer
of $10,000 for service on the Company Board and an attendance fee of $1,000,
plus travel expenses, for each Board or committee meeting attended. The
Chairman of the Board of Directors receives an additional retainer of $10,000
per year for service on the Company Board and an additional attendance fee of
$1,000 for his attendance at each Board meeting. In addition, pursuant to the
Company's Stock Incentive Plan for Non-Employee Directors, each non-employee
director is entitled to receive 200 shares of Common Stock annually, as
additional compensation for his service on the Company Board.
S-4
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own beneficially more than 10%
of the Company's Common Stock to file reports of ownership and changes in
ownership of such stock with the SEC. Directors, executive officers and
greater than 10% shareholders are required by SEC regulations to furnish the
Company with copies of all such forms they file. To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the
Company and written representations that no other reports were required, its
directors, executive officers and greater than 10% shareholders complied,
through the end of fiscal 1999, with all applicable Section 16(a) filing
requirements, except that Messrs. van Beek and Greening each had one late
report on Form 4 with respect to a single transaction.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 2000, as to the
beneficial ownership, direct or indirect, of the Common Stock by all directors
and nominees for director, the executive officers named in the Summary
Compensation Table, all directors and officers as a group, and all persons
known by the Company to own beneficially more than 5% of the outstanding
Common Stock. Unless indicated below, the current business address for each
individual listed below is One Pulaski Square, Pulaski, Virginia 29301,
telephone: (540) 994-5270.
<TABLE>
<CAPTION>
Sole Voting Shared Voting Aggregate
and Investment and Investment Percentage
Name Power(1) Power(2) Total Owned
---- -------------- -------------- ------- ----------
<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%
David L. Babson and Company
Incorporated(3)............. 341,900 -- 341,900 11.8%
One Memorial Drive, Suite
1100
Cambridge, MA 02142-1300
Dimensional Fund Advisors
Inc.(4)..................... 156,800 -- 156,800 5.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Franklin Resources, Inc.(5).. 272,000 -- 272,000 9.4%
777 Mariners Island Boulevard
San Mateo, CA 94404
</TABLE>
- --------
* Less than 1%
(1) Includes 15,000 Shares that may be acquired within 60 days under the
Company'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 SEC, but the inclusion of these Shares does not
constitute an admission of beneficial ownership.
(3) David L. Babson and Company Incorporated ("Babson") is an investment
adviser registered with the SEC. Babson, in its capacity as investment
adviser, may be deemed the beneficial owner of 341,900 Shares which are
owned by numerous investment counseling clients. The information contained
herein with respect to
S-5
<PAGE>
Babson is based solely on a Schedule 13G filed by Babson on February 4,
2000 with the SEC. A copy of this filing was received by the Company on
February 15, 2000. Schedule 13G stated that the shares were acquired in the
ordinary course of business and were not acquired for the purpose of and do
not have the effect of changing or influencing the control of the Company
and were not acquired in connection with or as a participant in any
transaction having such purpose or effect.
(4) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingling group trusts.
(These investment companies and investment vehicles are the "Portfolio.")
In its role as investment advisor and investment manager, Dimensional
possesses both voting and investment power over 156,800 Shares as of
September 30, 1999. The Portfolios own all securities reported in this
Information Statement, and Dimensional disclaims beneficial ownership of
such securities.
(5) Franklin Resources, Inc. ("Franklin Resources") is an investment advisor
based in California and organized in Delaware, and is the beneficial owner
of 272,000 Shares. The information contained herein with respect to
Franklin Resources is based solely on a Schedule 13G filed by Franklin
Resources with the SEC, a copy of which was received by the Company on
February 14, 1997. The Schedule 13G stated that the acquisition of such
Shares was in the ordinary course of business and that such Shares were not
acquired for the purpose of and do not have the effect of changing or
influencing the control of the Company and were not acquired in connection
with or as a participant in any transaction having such purposes or
effects.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The members of the Compensation Committee are all non-employee directors of
the Company. The Compensation Committee administers the non stock-based
components of the Company's executive compensation program which consists of
two elements: base salary and cash-based incentive compensation. Effective July
29, 1999, the Compensation Committee administers the Company's 1994 Stock
Incentive Plan, from which the stock-based incentive compensation is derived.
The overall objectives of the Company's executive compensation program are:
. to provide a total compensation package that will enable the Company to
attract and retain qualified executives;
. to reward executives for achieving corporate and personal performance
goals; and
. to align executives" financial interests with the interests of the
Company"s shareholders by encouraging executive stock ownership.
Base Salary
The Compensation Committee recommends for consideration of the Company Board
base salaries based on (i) an evaluation of each executive"s contributions to
the achievement of corporate performance goals; (ii) each executive's time in
service and level of responsibility; and (iii) the inflation rate.
Cash-Based Incentive Compensation
The Compensation Committee awards annual cash-based incentive compensation to
executive officers pursuant to the Company's Production Bonus Plan,
Administrative Bonus Plan and the Bonus Plan for the Company's Chief Executive
Officer.
The Production Bonus Plan provides that key production personnel of the
Company may earn cash bonuses equal to a percentage of annual base salary (not
to exceed 35%) based upon the Company's earnings performance, the attainment of
certain plant production variances and the achievement of personal performance
objectives established by the Chief Executive Officer.
S-6
<PAGE>
The Administrative Bonus Plan provides that key administrative personnel of
the Company, including executive officers, may earn cash bonuses equal to a
percentage of annual base salary (not to exceed 35%) based upon the Company's
earnings performance and the achievement of personal performance objectives
established by the Chief Executive Officer.
The Bonus Plan for the Chief Executive Officer of the Company provides that
the Chief Executive Officer may earn a cash bonus equal to a percentage of
annual base salary (not to exceed 50%) based on the Company's earnings
performance and the Chief Executive Officer's achievement of personal
performance objectives. For the fiscal year 1999, the Compensation Committee
recommended that Mr. John G. Wampler be awarded a bonus of $125,000 under this
Bonus Plan. This award represents the Compensation Committee's evaluation of
Mr. Wampler's contribution to the Company's performance during 1999. The bonus
award reflects the Compensation Committee's view that the Chief Executive
Officer's performance during the year has been excellent, with concentration
on marketing, sales, product development and operations, as well as
realization of opportunities in the import division.
Stock-Based Incentive Compensation
The Committee awards the executive officers stock-based incentive
compensation pursuant to the Company's 1994 Stock Incentive Plan (the "Stock
Incentive Plan"). Under the Stock Incentive Plan, the former Stock Incentive
Plan Committee, prior to being dissolved and its duties being moved back to
the Compensation Committee, made incentive awards to the executive officers of
the Company whereby such officers could receive awards of restricted stock if
the Company achieved certain levels of earnings per share in fiscal 1999.
Based upon the earnings for fiscal 1999, Mr. John G. Wampler received 8,400
Shares under the Stock Incentive Plan, and Messrs. Chrisley, Crawford, Kelly
and Stout each received 3,500 Shares under the Stock Incentive Plan.
Harry J.G. van Beek
Robert C. Greening, Jr.
Harry H. Warner
Hugh V. White, Jr., Chairman.
Compensation Committee Interlocks and Insider Participation
Hugh V. White, Jr. is a retired partner of the law firm of Hunton &
Williams, the Company's principal law firm, and chairman of the Compensation
Committee of the Company Board. The amount of fees paid by the Company to
Hunton & Williams during the Company's 1998 fiscal year was less than 1% of
the gross revenues of Hunton & Williams for the firm's most recent fiscal
year.
S-7
<PAGE>
EXECUTIVE OFFICER COMPENSATION
Table I--Summary Compensation Table
The following table shows for the fiscal years ended October 31, 1999,
November 1, 1998, and November 2, 1997, the total compensation of the Chief
Executive Officer and each of the four next most highly compensated executive
officers of the Company (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------- ---------------------------------
Restricted All Other
Other Stock Awards Compensation
Year Salary Bonus ($)(1) ($)(2) ($)(3)
---- ------- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John G. Wampler.......... 1999 250,000 125,000 24,290 134,400(4) 13,020
President and CEO 1998 206,000 100,000 10,047 335,400 10,886
1997 200,000 15,000 11,304 -- 10,251
Randolph V. Chrisley..... 1999 130,000 45,500 10,587 56,000(4) 7,536
Senior V.P., Sales 1998 115,360 40,376 6,127 139,750 6,821
1997 112,000 15,000 7,384 -- 6,620
James H. Kelly........... 1999 130,000 45,500 10,587 56,000(4) 7,515
Senior V.P., Product 1998 115,360 40,376 6,127 139,750 6,800
Development 1997 112,000 15,000 7,384 -- 6,599
Ira S. Crawford..........
Senior, V.P., 1999 130,000 45,500 10,587 56,000(4) 7,574
Administration, 1998 103,000 36,050 6,127 139,750 6,433
Secretary 1997 100,000 15,000 7,384 -- 6,082
James W. Stout........... 1999 115,000 28,750 6,987 56,000(4) 6,420
V.P., Manufacturing 1998 103,000 36,050 -- 139,750 5,833
1997 100,000 15,000 -- -- 5,589
</TABLE>
- --------
(1) "Other" Annual Compensation for 1999 represents the Company's payment of
income taxes related to issuance of stock pursuant to the Stock Incentive
Plan on behalf of each of the Named Executive Officers: Mr. John G.
Wampler, $24,290; Mr. Chrisley, $10,587; Mr. Kelly, $10,587; Mr. Crawford,
$10,587; and Mr. Stout, $6,987.
(2) The Company awarded an aggregate of 32,475 shares of restricted stock in
1999, 48,100 shares in 1998, and no shares in 1997. Restricted stock vests
in 20% increments over a five-year period. Dividends are paid on
restricted stock.
(3) "All Other Compensation" for 1999 includes the following: (a) the
Company's premium payments on life insurance policies for each of the
Named Executive Officers: Mr. John G. Wampler, $1,020; Mr. Chrisley,
$1,296; Mr. Kelly, $1,275; Mr. Crawford, $1,334; and Mr. Stout, $900; and
(b) the Company's 60% matching contribution under the Company's Salaried
Employee's Stock Purchase Plan: Mr. John G. Wampler, $12,000; Mr.
Chrisley, $6,240; Mr. Kelly, $6,240; Mr. Crawford, $6,240; and Mr. Stout,
$5,520.
(4) The aggregate number of shares of restricted stock held by the Named
Executive Officers as of October 31, 1999, and the value of such shares
were as follows: Mr. John G. Wampler, 37,650, $689,906; Mr. Chrisley,
18,750, $328,781; Mr. Kelly, 18,750, $328,781; Mr. Crawford, 18,750,
$328,781; and Mr. Stout, 10,000, $195,750.
S-8
<PAGE>
Table II--Option/SAR Exercises and Year-End Value Table
The following table sets forth the information with respect to the Named
Executive Officers concerning their exercise of options and SARs during 1999,
and unexercised options and SARs held by them on October 31, 1999.
Aggregated Option/SAR Exercised in
Last Fiscal Year and FY-End Options/SAR Value
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Shares Options/SARs at Options/SARs at
Acquired Value FY-End (#) FY-End ($) (1)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
John G. Wampler......... -0- -0- 7,500 3,125E
Randolph V. Chrisley.... -0- -0- 5,000 -0-
James H. Kelly.......... -0- -0- 7,500 3,125E
Ira S. Crawford......... -0- -0- 5,000 -0-
James W. Stout.......... -0- -0- -0- -0-
</TABLE>
- --------
(1) The value of unexercised in-the-money options/SARs represents the positive
spread between the October 29, 1999 closing price of the Common Stock and
the exercise price of any unexercised options/SARs.
RETIREMENT BENEFITS
The following table illustrates the estimated aggregate annual retirement
benefits payable under the Company's funded retirement plan to covered
participants (including the Named Executive Officers) retiring at age 65,
determined as of October 31, 1999, to persons with specified earnings and
years of benefit service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefit at 65 under Retirement Plan
Years of Credited Service
Final Average ---------------------------------------------------------------------
Earnings 10 15 20 25 30 35 40
- ------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000.. 2,789 4,184 5,578 6,973 8,368 8,368 8,368
$100,000.. 6,956 10,434 13,912 17,390 20,868 20,868 20,868
$150,000.. 11,123 16,684 22,245 27,806 33,368 33,368 33,368
$200,000.. 12,717 18,182 24,927 31,673 38,351 39,286 44,839
$250,000.. 14,272 21,228 29,922 38,617 47,312 50,194 56,143
$300,000.. 15,633 24,148 34,791 45,435 56,079 60,911 67,447
$350,000.. 15,633 25,707 38,300 50,892 63,485 70,266 78,751
</TABLE>
The above amounts are stated as payments in the form of straight-life
annuity. The amounts are subject to a reduction for social security benefits
and deferred compensation arrangements. Final Average Earnings are defined as
the average of the highest five consecutive years' salary and bonus. The years
of credited service for John G. Wampler, Ira S. Crawford, Randolph V.
Chrisley, James H. Kelly and James W. Stout as of October 31, 1999, were 19,
22, 30, 31, and 27, respectively.
Supplemental Executive Retirement Plan
The Company adopted a nonqualified and unfunded supplemental executive
retirement plan to provide key management employees, designated by the Company
Board, a benefit of 70% of the average of the employee's highest five
consecutive years' compensation offset by the employee's benefits entitlement
under other pension plans, social security and deferred compensation plans
with the Company. It is anticipated that all of the Named executive officers
of the Company will participate in the supplemental executive retirement plan
and that, except upon approval by the Company Board, receipt of benefits under
this plan will be conditioned upon employment with the Company until at least
age 65.
S-9
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to the Company's shareholders during the
five-year period ended October 31, 1999, as compared with the NASDAQ Non-
financial Index and the Media-General Industry Peer Group Index.
<TABLE>
<CAPTION>
Pulaski NASDAQ/ Media-General
Furniture Non-financial index Industry Peers
--------- ------------------- --------------
<S> <C> <C> <C>
10-94.............................. $100 $100 $100
10-95.............................. 87 119 110
10-96.............................. 86 139 135
10-97.............................. 108 183 193
10-98.............................. 124 206 199
10-99.............................. 95 341 222
</TABLE>
- --------
*Total return assumes reinvestments of dividends
**Assumes $100 invested October 31, 1994
The industry peer group is comprised of the following nine companies whose
primary business is the manufacture of wood household furniture: Bassett
Furniture Industries, Bush Industries Inc., Chromcraft Revington Inc., DMI
Furniture Inc., Ethan Allen Interiors, Furniture Brands International, Ladd
Furniture Inc., O'Sullivan Industries & Holdings Inc., and Stanley Furniture
Inc. Insilco Holdings Co. and Meadowcraft Inc. are no longer included in the
industry peer group: these companies were acquired by investment groups and are
no longer public companies.
S-10
<PAGE>
Exhibit (a)(3)
PULASKI FURNITURE CORPORATION
P.O. Box 1371
One Pulaski Square
Pulaski, Virginia 24301
April 7, 2000
Dear Shareholder:
We are pleased to report that Pulaski Furniture Corporation has entered into
an agreement and plan of merger with Pine Holdings, Inc., a Virginia
corporation, and its wholly owned subsidiary Pine Acquisition Corp., a
Virginia corporation, that provides for the acquisition of Pulaski Furniture
by Pine Holdings at a price of $22.50 per share in cash. Under the terms of
the proposed transaction, Pine Acquisition is today commencing a cash tender
offer for all outstanding shares of Pulaski Furniture's common stock at $22.50
per share.
Following the successful completion of the tender offer, Pine Acquisition
will be merged with and into Pulaski Furniture and all shares (other than
shares held by Pulaski Furniture's senior management and Pine Holdings) not
purchased by Pine Aquisition in the tender offer will be converted into the
right to receive $22.50 per share in cash in the merger. Certain members of
Pulaski Furniture's senior management team, including 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 C. Wampler, and Raymond E.
Winters, Jr., have agreed that their shares will be exchanged for equity and
debt interest in Pine Holdings as part of the Merger.
At a meeting on March 29, 2000, our Board of Directors, by unanimous vote of
all directors, based on, among other things, the unanimous recommendation of a
Special Committee comprised of all the directors other than Mr. Wampler, has
approved the tender offer and determined that the terms of the tender offer
and the merger, taken together, are fair to, and in the best interests of,
Pulaski Furniture and its shareholders, other than the management
shareholders. Accordingly, the Board of Directors recommends acceptance of the
tender offer and approval and adoption of the agreement and plan of merger by
the shareholders of Pulaski Furniture.
In arriving at its recommendations, the special committee and the Board of
Directors gave careful consideration to a number of factors. These factors
included the opinion dated March 29, 2000 of BB&T Capital Markets, a division
of Scott & Stringfellow, Inc., financial advisor to the Special Committee, to
the effect that, as of that date and based upon and subject to certain matters
stated in such opinion, the cash consideration of $22.50 per share to be
received by Pulaski Furniture shareholders (other than the Management
Shareholders, Pine Holdings, Pine Acquisition and their affiliates) in the
offer and the merger was fair from a financial point of view to such
shareholders.
Accompanying this letter is a copy of the Pulaski Furniture's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is Pine
Acquisition's Offer to Purchase and related materials, including a Letter of
Transmittal for your use in tendering shares. We urge you to read carefully
the enclosed materials, including BB&T Capital Markets' opinion, which is
attached to the Schedule 14D-9.
We thank you for the support you have given Pulaski Furniture.
Sincerely
/s/ Harry H. Warner
Harry H. Warner
Chairman of the
Board
<PAGE>
EXHIBIT (a)(4)
PULASKI FURNITURE CORPORATION AGREES TO MANAGEMENT ACQUISITION
PULASKI, VIRGINIA - March 29, 2000 - Pulaski Furniture Corporation
(NASDAQ: PLFC), a leading manufacturer and importer of medium-priced residential
furniture, announced today that it has entered into an Agreement and Plan of
Merger under which an investment group formed by Pulaski's President and Chief
Executive Officer, John G. Wampler, and the Company's senior management team,
with support from an affiliate of Quad-C Management, Inc., a Virginia based
private equity fund, will acquire all of the outstanding common stock of the
Company for a cash price of $22.50 per share. The total consideration for the
transaction, including assumption of debt, is approximately $125 million. Under
the agreement, which has been unanimously approved by the Company's Board of
Directors, the group will commence a tender offer for the outstanding shares of
the Company's common stock within seven business days. The group's obligation to
purchase shares under the agreement will be subject to the group's receiving
more than two-thirds of the outstanding shares of the Company's common stock in
the tender offer, as well as other customary conditions. Upon consummation of
the tender offer, the group would acquire any remaining outstanding shares in a
merger at $22.50 per share in cash.
The Board of Directors of the Company concluded that the agreement
price, which represents a 34% premium over today's closing price, is in the best
interests of the Company
1
<PAGE>
shareholders. Harry H. Warner, Chairman of the Board, said "In the Board's view,
this transaction is an excellent way to bring significant value to our
shareholders."
Speaking for the acquiring group, Wampler said "a transaction led by
management, and supported by a financial partner with the capital to fund future
growth and expansion, is the best way to assure our employees and customers that
Pulaski Furniture Corporation will continue to be an industry leader poised for
the future and a solid corporate citizen in our communities."
The transaction is subject to typical regulatory approvals and is
expected to close in the second quarter of 2000. The management group's
financial advisor is Mann, Armistead & Epperson, Ltd. The Company's financial
advisor is BB&T Capital Markets, a division of Scott & Stringfellow.
This release contains certain forward-looking statements relating to
the consummation of future transactions. The consummation of these transactions
is subject to a number of significant conditions.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF
AN OFFER TO SELL SHARES OF THE COMPANY. AT THE TIME THE OFFER IS COMMENCED, THE
ACQUIRING ENTITY WILL FILE A TENDER OFFER STATEMENT AND THE COMPANY WILL FILE A
SOLICITATION/ RECOMMENDATION STATEMENT WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION WITH RESPECT TO THE OFFER. THE TENDER OFFER STATEMENT (INCLUDING AN
OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS)
AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT INFORMATION
WHICH SHOULD BE READ CAREFULLY
2
<PAGE>
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE OFFER TO PURCHASE,
THE RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS, AS WELL AS
THE SOLICITATION/RECOMMENDATION STATEMENT, WILL BE MADE AVAILABLE TO ALL
SHAREHOLDERS OF THE COMPANY, AT NO EXPENSE TO THEM. THE TENDER OFFER STATEMENT
(INCLUDING THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND ALL
OTHER OFFER DOCUMENTS FILED WITH THE COMMISSION) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO BE AVAILABLE AT NO CHARGE AT THE
COMMISSION'S WEBSITE AT WWW.SEC.GOV.
<PAGE>
ANNEX A
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 (e)(3)
--------------
PULASKI FURNITURE CORPORATION
EMPLOYMENT CONTINUITY AGREEMENT
-------------------------------
THIS AGREEMENT is between Pulaski Furniture Corporation, a Virginia
corporation (the "Company"), and _____________ (the "Executive").
The Company's Board of Directors (the "Board") acknowledges that
Executive's contributions to the past growth and success of the Company have
been and are expected to continue to be substantial. As a publicly held
corporation, the Board recognizes that there exists a possibility of a change in
control of the Company. The Board also recognizes that the mere possibility of
such a change in control or transaction often creates uncertainty on the part of
senior management and sometimes results in the departure of, the inability to
recruit, or at least the distraction of, senior management from their day to day
operating responsibilities.
Outstanding management is essential to advancing the best interests of the
Company and its shareholders. In the event of a threat or occurrence of a bid to
acquire or change control of the Company or to effect a business combination, it
is particularly important that the Company's business be continued with a
minimum of disruption. Likewise, the Board has concluded that the objective of
securing and retaining outstanding management is more likely achieved if the
Company's key management employees are given assurances of employment security
so they will not be distracted by personal uncertainties and risks created in
the event such circumstances were to arise.
The Board has approved entering into agreements with the Company's key
management executives in order to help assure that the foregoing objectives are
achieved. Executive is a key management executive of the Company. Accordingly,
the Company and Executive enter into this Agreement to induce Executive to
remain an employee of the Company and to continue to devote his full energies to
the Company's affairs.
1. Term.
This Agreement is effective from the date of its execution by the Company
("Effective Date") for a term of three years (the "Initial Term"). This
Agreement automatically continues in effect from year to year after
expiration of the Initial Term unless the Company notifies the Executive in
writing ninety (90) days before any anniversary of the Effective Date
following the Initial Term that the Agreement will terminate as of that
anniversary date. Notwithstanding the foregoing, no notice of termination
of this Agreement under the preceding sentence shall be effective during an
Employment Period as defined in Section 2 below.
2. Employment Period
a. Employment Period. An Employment Period begins on the occurrence of a
-----------------
Control Change Date and ends three years following the Control Change
Date.
<PAGE>
b. Effect of Termination During an Employment Period. Executive is
-------------------------------------------------
entitled to receive Continued Compensation (as defined below)
according to the provisions of Section 3 if Executive's employment
with the Company terminates during the term of this Agreement and
during an Employment Period (as defined below) because of an event
described in either Section 3(a) or 3(b), but subject to Executive's
express offer to work that is rejected by the Company. If Executive's
employment terminates during an Employment Period and an event
described in Section 3(a) or 3(b) has not occurred, or in the event of
Executive's death or Disability during the term of this Agreement,
this Agreement terminates. For this purpose, "Disability" shall mean a
"total disability" as defined under the Company's Long Term Disability
Plan covering salaried employees.
c. Change in Control. For purposes of this Agreement, a Change of Control
-----------------
occurs if: (i) any Person or group (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) other than a Person who is not an Acquiring Person), at any
time becomes the Beneficial Owner of the then outstanding voting
securities of the Company entitled to vote generally in the election
of directors (the "Voting Securities"), other than (A) through an
acquisition of Voting Securities directly from the Company, (B) as a
result of the Company's repurchase of Voting Securities if,
thereafter, such Beneficial Owner purchases no additional Voting
Securities, or (C) pursuant to a Business Combination (as defined
below) that does not constitute a Change in Control pursuant to
Section 2(c)(iii); (ii) Continuing Directors cease to constitute a
majority of the members of the Board other than pursuant to a Business
Combination that does not constitute a Change in Control pursuant to
Section 2(c)(iii); (iii) the shareholders of the Company approve a
reorganization, merger, share exchange or consolidation (a "Business
Combination"), in each case, unless immediately following such
Business Combination, (A) all or substantially all of the Persons who
were the Beneficial Owners, respectively, of the Common Stock and
Voting Securities outstanding immediately prior to such Business
Combination Beneficially Own more than 80% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns
the Company through one or more Subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such
Business Combination, of the Common Stock and Voting Securities, as
the case may be, (B) no Person (other than a Person who is not an
Acquiring Person) Beneficially Owns 50% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting
from such Business combination or the combined voting power of the
then outstanding voting securities of such corporation and (C) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination are Continuing
Directors; or (iv) the shareholders of the Company approve a complete
liquidation or dissolution of the Company or the sale or other
disposition of all or
2
<PAGE>
substantially all of the assets of the Company, in each case, unless
immediately following such liquidation, dissolution, sale or other
disposition, (A) more than 80% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
Beneficially Owned by all or substantially all of the Persons who were
the Beneficial Owners, respectively, of the Common Stock and Voting
Securities outstanding immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of such Common
Stock and Voting Securities, as the case may be, (B) less than 20% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then Beneficially Owned by any Person
(other than any Person who is not an Acquiring Person), and (C) at
least a majority of the members of the board of directors of such
corporation are Continuing Directors immediately following such sale
or disposition; provided, however, that no Change of Control shall be
deemed to occur as a result of any transaction undertaken by Pine
Holdings, Inc. ("Parent"), Pine Acquisition Corp. ("Acquiror"), or any
of their Affiliates or Associates (as those terms are defined in the
Amended and Restated Rights Agreement referenced in the next
paragraph) pursuant to the Agreement and Plan of Merger, dated as of
March 29, 2000, by and among Parent, Acquiror and the Company.
For purposes of the foregoing definition, the terms Acquiring Person,
----------------
Beneficial Owner, Company, Continuing Director, and Person shall have
---------------- ------- ------------------- ------
the same definitions as set forth in the Company's Amended and
Restated Rights Agreement dated as of December 15, 1997, as amended.
d. Control Change Date. For purposes of this Agreement, a Control Change
-------------------
Date is the date on which a Change in Control occurs. If a Change in
Control occurs on account of a series of transactions, the Control
Change Date is the date of the last of such transactions
3. Termination of Employment.
a. Termination by the Company. Executive is entitled to receive Continued
--------------------------
Compensation, as defined below, if Executive's employment is
terminated by the Company during an Employment Period without Cause
("Cause" being limited to (i) Executive's acts of fraud,
misappropriation or willful misconduct that is demonstrably and
materially injurious to the property or business of the Company and/or
the Company's subsidiaries or affiliates, monetarily or otherwise, or
(ii) Executive's conviction of, or plea of no contest to, a felony or
crime involving moral turpitude).
For purposes of the definition of Cause, no act, or failure to act, on
the
3
<PAGE>
Executive's part shall be deemed "willful" unless done, or omitted to
be done, by the Executive in bad faith and without reasonable belief
that the Executive's act, or failure to act, was in the best interest
of the Company or its subsidiaries or affiliates. Any act, or failure
to act, based upon authority given pursuant to a resolution duly
adopted by the Board, or upon the instructions of the Board (or a
committee thereof) or a more senior officer, or upon the advice of
counsel for the Company shall be conclusively presumed to have been
done, or omitted to be done, by the Executive in good faith and in the
best interests of the Company and their subsidiaries and affiliates.
The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and
the Executive is given an opportunity, together with counsel, to be
heard before the Board) finding that, in the good faith opinion of the
Board, the Executive has acted in a manner constituting Cause, and
specifying the particulars thereof in detail, or one of the events set
forth in part (ii) of this Section 3(a) has occurred.
b. Voluntary Termination. Executive is entitled to receive Continued
---------------------
Compensation if Executive voluntarily terminates employment during an
Employment Period after (i) Executive does not receive salary
increases comparable to the salary increases that Executive received
in prior years or, if greater, that other executives in comparable
positions receive in the current year; or (ii) Executive's
compensation or employment related benefits are reduced; or (iii)
Executive's status, title(s), office(s), working conditions, or
management responsibilities are diminished (other than changes in
reporting or management responsibilities required by applicable
federal or state law); or (iv) Executive's place of employment is
relocated more than fifty (50) miles from Pulaski, Virginia, without
Executive's consent. Executive's voluntary termination under this
Section must occur within six months after an event described in part
(i), (ii), (iii), or (iv) of this Section 3(b), or within six months
after the last in a series of such events.
c. Continued Compensation. Continued Compensation means an amount equal
----------------------
to the Executive's annual base salary that would have been payable
during the remainder of the Employment Period following Executive's
termination (i) absent Executive's termination of employment and (ii)
disregarding any reductions in such annual base salary during the
Employment Period. Continued Compensation shall be paid in equal
monthly installments during the remainder of the Employment Period
following Executive's termination. Continued Compensation payments to
Executive shall commence on the later of the fifteenth business day
after Executive's employment termination or the first day of the month
following his employment termination. At the Company's sole
discretion, however, Continued Compensation payments may be commenced
on an earlier date or paid in accordance with the Company's normal
payroll practice relating to executives.
4
<PAGE>
The Company may also elect to make a lump sum payment to Executive
equal to the present value of all monthly installments of Continued
Compensation due to Executive, on the later of the fifteenth business
day after Executive's employment termination or the first day of the
month following his employment termination (or such later time as
mutually agreed upon by the Company and Executive). For purposes of
the preceding sentence, a discount rate equal to 120 percent of the
applicable Federal rate (determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended) (the "Code") compounded
semiannually shall be used to calculate present value.
d. Benefits in Lieu of SERP Payments. If Executive becomes entitled to
---------------------------------
Continued Compensation, he shall also be entitled to the payment
described in this Section 3(d), which shall be in lieu of any amounts
payable under the Company's Executive Supplemental Retirement Plan
(the "SERP"). Executive shall be entitled to a benefit equal to the
present value of the benefit he would have received under the SERP had
he continued to work for the Company until age 65, divided by a
fraction, the numerator of which is the sum of (i) the number of his
actual years of Credited Service (as defined in the Pulaski Furniture
Corporation Pension Plan for Employees, as amended (the "Pension
Plan")) through the date of his termination and (ii) five, and the
denominator of which is the number of years of Credited Service (as
defined in the Pension Plan) he would have had if he had continued
working until age 65. The benefit described in the preceding sentence
shall be paid to Executive in a single sum on the date of his
termination of employment, and shall be determined using the actuarial
assumptions and methods in effect under the SERP as of the Control
Change Date.
e. Restricted Stock. If (i) Executive is employed by the Company on the
----------------
date of an event described in Section 2(c)(i), or (ii) or on the date
of the consummation of a Business Combination, liquidation,
dissolution or sale or disposition of assets described in Section
2(c)(iii) or (iv); or (ii) Executive's employment with the Company
terminates during the Employment Period because of an event described
in Section 3(a) or 3(b), but subject to Executive's express offer to
work that is rejected by the Company, then any shares of common stock
of the Company issued to Executive under the Company's 1991 Stock
Incentive Plan or any other stock incentive plans adopted by the
Company before or after the date of this Agreement, that are not then
transferable and nonforfeitable ("restricted stock"), shall become
transferable and nonforfeitable on the earlier of the dates identified
in parts (i) and (ii) of this Section 3(e), notwithstanding any
provision to the contrary in the agreement or plan governing the
restricted stock award.
f. Other Payments or Benefits. In addition to any payments provided for
--------------------------
under this Agreement, Executive is entitled to all payments or
benefits due to him under any other arrangement between Executive and
the Company.
5
<PAGE>
4. Offsets Against Continued Compensation.
a. General. Continued Compensation to which Executive otherwise is
-------
entitled under this Agreement may be reduced under this Section, but
not below zero. Reductions in Continued Compensation must be made
under this Section in the manner described in Section 4(c), and the
Company must make any required determination or calculation in good
faith.
b. Actual Earnings from Other Employment. Executive is not required to
-------------------------------------
seek or accept any employment following a termination of employment
with the Company. If Executive obtains any employment during the
months remaining in Executive's Employment Period after his
termination date, however, Continued Compensation must be reduced by
all wages, salaries, professional fees and other amounts received by
Executive as compensation for such employment during those months.
c. Method of Reducing Continued Compensation. If Continued Compensation
-----------------------------------------
must be reduced under this Section 4, either (i) the Company must
reduce installment payments of Continued Compensation by the
appropriate amounts; or (ii) within ninety days after the Company
determines that this Section requires a reduction, Executive must
refund to the Company the amount required so that Executive retains a
total amount of Continued Compensation equal to the present value,
using a discount rate equal to 120 percent of the applicable Federal
rate (determined under Section 1274(d) of the Code) compounded
semiannually, of the amount he would retain if installment payments
were reduced under this sentence. To prevent hardship, repayment of
Continued Compensation under this Section may be made by Executive in
installments if and as permitted in the Company's sole discretion.
5. Reduction of Parachute Payments.
If any payment that Executive has the right to receive from the Company
(including Continued Compensation payments) or any affiliated entity or any
payment or benefit under any plan or agreement maintained by the Company or
any affiliated entity would otherwise constitute an "excess parachute
payment" (as defined in Code Section 280G), all such payments (other than
payments received under Section 7) must be reduced (but not below zero) 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 Code. The
determination of any reduction pursuant to this subsection must be made by
the Company in good faith, before any such payments are due and payable to
Executive.
6. Restriction on Executive's Conduct.
a. No Interference. For so long as the Executive is employed by the
---------------
Company, Executive shall not, whether for his own account or for the
account of any other individual, partnership, firm, corporation or
other business organization (other
6
<PAGE>
than the Company or one of its affiliates), directly or indirectly,
intentionally solicit, endeavor to entice away from the Company (or
any of its affiliates), or otherwise interfere with the relationship
of the Company (or any of its affiliates) with any person who is
employed by or otherwise engaged to perform services for the Company
(or any of its affiliates) including, but not limited to, any
independent representatives or organizations, or any person or entity
that is a customer of the Company (or any of its affiliates);
provided, however, that if a customer of the Company (or any of its
affiliates) also engages in business in areas outside of Virginia that
are not served by the business of the Company (and/or any of its
affiliates) with which the Executive is involved, the Board may
determine, in an appropriate situation, that the solicitation of such
customer in such areas does not violate the restrictions of this
Section 6(a).
b. Confidential Information. The Executive covenants and agrees with the
------------------------
Company that he will not at any time, during or after employment with
the Company, except in performance of the Executive's obligations to
the Company or with the prior express written consent of the Board,
directly or indirectly, intentionally or unintentionally, disclose any
Confidential Information that he may learn or has learned by reason of
his employment or association with the Company or any of its
affiliates, or any predecessors to its business, or use any such
information for his own personal benefit or gain. The term
"Confidential Information" includes, without limitation, information
not previously disclosed to the public or to the trade by the
Company's management with respect to the products, facilities and
methods, trade secrets and other intellectual property, systems,
procedures, manuals, confidential reports, fee or rate information,
customer lists, financial information (including without limitation
the revenues, costs or profits associated with any of the Company's
(or any of its affiliates') activities or products), business plans,
prospects, opportunities or other information of the Company or any of
its affiliates. Confidential Information shall not include information
which (i) is or becomes generally available to the public other than
as a result of disclosure by the Executive in violation of this
Section 6(b) or (ii) the Executive is required to disclose under any
applicable laws, regulations or directives of any government agency,
tribunal or authority having jurisdiction in the matter or under
subpoena or other process of law. The Executive understands and agrees
that the rights and obligations set forth in this Section 6(b) extend
beyond the Employment Period.
c. Exclusive Property. The Executive confirms that all Confidential
------------------
Information is and shall remain the exclusive property of the Company
and its affiliates. All business records, papers and documents kept or
made by the Executive relating to the business of the Company (or any
of its affiliates) or any Confidential Information shall be and remain
the property of the Company and its affiliates. Upon termination of
employment or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company and shall not without
the prior express written consent of the Company retain, any and all
copies of (i) any
7
<PAGE>
written materials not previously made available to the public, or (ii)
records and documents made by the Executive or coming into his
possession concerning any Confidential Information regarding the
business or affairs of the Company or any predecessors to its
business, or any of its affiliates. The Executive understands and
agrees that the rights and obligations set forth in this Section 6(c)
extend beyond the Employment Period.
d. Covenant Not to Compete. During the Employment Period if Executive's
-----------------------
employment with the Company terminates other than as a result of an
event described in Section 3(a) or 3(b), the Executive shall not
compete, directly or indirectly, with the Company or its affiliates
within fifty (50) miles of any geographic area in which the Company or
its affiliates has material business interests with which the
Executive is involved at the time of the termination of the
Executive's employment. If it is judicially determined that this
provision, or any portion thereof, is unenforceable under applicable
law(s) (statutes, common law or otherwise), then it is hereby agreed
by the Executive and the Company that the unenforceable portion shall
be redrafted to the extent necessary to render it enforceable, while
leaving the remaining portions intact. By agreeing to this contractual
modification prospectively at this time, the parties intend to make
this provision enforceable under the law(s) of all applicable states
so that the entire agreement not to compete and/or this Agreement as
prospectively modified shall remain in full force and effect and shall
not be rendered void or illegal. Such modifications shall not affect
the payments made to the Executive under this Agreement. The Executive
acknowledges that his skills are such that he can be gainfully
employed in noncompetitive employment and that the agreement not to
compete will in no way prevent him from earning a living, that he has
the financial resources to enter into this undertaking and has
consulted with knowledgeable advisors before doing so.
e. Injunctive Relief. Without intending to limit the remedies available
-----------------
to the Company, the Executive acknowledges that a breach of any of the
covenants contained in Section 6(a), (b), (c), or (d) may result in
material irreparable injury to the Company or its affiliates for which
there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of
such a breach or threat thereof, the Company shall be entitled to
obtain a temporary restraining order and/or a preliminary or permanent
injunction restraining the Executive from engaging in activities
prohibited by these Sections or such other relief as may be required
to specifically enforce any of the covenants in these Sections.
7. Legal Fees and Expenses.
The Company must pay all legal fees and expenses, if any, incurred by
Executive in obtaining, enforcing, or defending any right or benefit
provided by this Agreement, whether successful or not, but only if any such
action by Executive was undertaken in good faith.
8
<PAGE>
As indicated in Section 5, payments under this Section are not subject to
reduction under any other Section of this Agreement.
8. Governing Law.
This Agreement is construed according to the laws of the Commonwealth of
Virginia.
9. Amendment.
This Agreement may not be amended except by the written agreement of
Executive and the Company (with the Company acting by adoption of a
resolution by the Board of Directors).
10. Binding Effect.
The parties agree that this Agreement is enforceable under the laws of the
Commonwealth of Virginia. This Agreement is binding on the Company, its
successors, and assigns and on Executive and his personal representatives.
If the Company is consolidated or merged with or into another corporation,
or if another entity purchases all or substantially all of the Company's
assets, the surviving or acquiring corporation succeeds to the Company's
rights and obligations under this Agreement. This Agreement inures to the
benefit of and is enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If Executive dies while any amounts
are payable under this Agreement following a Control Change Date, all such
amounts, unless otherwise provided, must be paid in accordance with the
terms of this Agreement to Executive's spouse, or if none, to his devisee,
legatee, or other designee or, if there be no such designee, to his estate.
11. Notice.
For purposes of this Agreement, notices and all other communications must
be in writing and are effective when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to
Executive or his personal representative at his last known address. All
notices to the Company must be directed to the attention of the Chairman of
the Board or the President and Chief Executive Officer, if Executive is not
such officer, as applicable. Such other addresses may be used as either
party may have furnished to the other in writing. Notices of change of
address are effective only upon receipt.
12. Miscellaneous.
No provision of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing
signed by Executive and the Company. A waiver of any breach of or
compliance with any provision or condition of this Agreement is not a
waiver of similar or dissimilar provisions or conditions. The invalidity
or unenforceability of any provision of this Agreement does not affect the
validity or
9
<PAGE>
enforceability of any other provision of this Agreement, which remains in
full force and effect.
13. No Assignment.
Executive may not assign, alienate, anticipate, or otherwise encumber any
rights, duties, or amounts that he might be entitled to receive under this
Agreement.
10
<PAGE>
The parties have executed this Agreement effective as of this 29th day of
March 29, 2000.
Pulaski Furniture Corporation
By:
--------------------------------------------
Chairman of Board
-----------------------------------------------
11
<PAGE>
Exhibit (e)(4)
--------------
ARTICLE VII OF THE COMPANY'S BYLAWS
Limit on Liability: Indemnification
Section 1. Definitions. In this Article:
"Applicant" means the person seeking indemnification pursuant to this
Article;
"Expenses" includes counsel fees;
"Liability" means the obligation to pay a judgment, settlement, penalty,
fine, including any excise tax assessed with respect to an employee benefit
plan, or reasonable expenses incurred with respect to a proceeding;
"Party" includes an individual who was, is or is threatened to be made a
named defendant or respondent in a proceeding; and
"Proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal.
Section 2. Limitation on Liability. To the fullest extent that the Virginia
Stock Corporation Act, as it exists on the date hereof or may hereinafter be
amended, permits the limitation or elimination of the liability of directors and
officers, no Director or officer of the Corporation shall be liable to the
Corporation or its shareholders for monetary damages with respect to any
transaction, occurrence or course of conduct, whether prior or subsequent to the
effective date of this Article.
Section 3. Indemnification. The Corporation shall indemnify (a) any person
who was or is a party to any proceeding, including a proceeding brought by or in
the right of the Corporation, by reason of the fact that he is or was a Director
or officer of the Corporation, or (b) any Director or officer of the Corporation
who is or was serving at the request of the Corporation as a director, trustee,
partner or officer of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against any liability incurred by him
in connection with such proceeding unless he engaged in willful misconduct or a
knowing violation of the criminal law. A person is considered to be serving an
employee benefit plan at the Corporation's request if his duties to the
Corporation also impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan. The Board of Directors
is hereby empowered, by a majority vote of a quorum of disinterested Directors,
to enter into a contract to indemnify any Director or officer in respect of any
proceeding arising from any act or omission, whether occurring before or after
the execution of such contract.
Section 4. Application: Amendment. The provisions of this Article shall be
applicable to all proceedings commenced after the adoption hereof by the
shareholders of the Corporation, arising from any act or omission, whether
occurring before or after such adoption. No amendment or repeal of this Article
shall have any effect on the rights provided under this Article with respect to
any act or omission occurring prior to such amendment or repeal. The
<PAGE>
Corporation shall promptly take all such actions, and make all such
determinations, as shall be necessary or appropriate to comply with its
obligation to make any indemnity under this Article and shall promptly pay or
reimburse all reasonable expenses1 including attorneys' fees, incurred by any
Director or officer in connection with such actions and determinations or
proceedings of any kind arising therefrom.
Section 5. Termination of Proceeding. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the applicant engaged
in willful-misconduct or a knowing violation of the criminal law.
Section 6. Determination of Availability. Any indemnification under Section
3 of this Article (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the applicant is proper in the circumstances because the
applicant did not engage in willful misconduct or a knowing violation of the
criminal law.
The determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum consisting of
Directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under subsection (a) of this section, by
majority vote of a committee duly designated by the Board of Directors (in which
designation Directors who are parties may participate), consisting solely of two
or more Directors not at the time parties to the proceeding;
(c) By special legal counsel:
(i) selected by the Board of Directors or its committee in the manner
prescribed in subsection (a) or (b) of this section; or
(ii) if a quorum of the Board of Directors cannot be obtained under
subsection (a) of this section and a committee cannot be designated under
subsection (b) of this section, selected by majority vote of the full Board of
Directors, in which selection Directors who are parties may participate; or
(d) By the shareholders, but shares owned by or voted under the control of
Directors who are at the time parties to the proceeding may not be voted on the
determination.
Any evaluation as to the reasonableness of expenses shall be made in the
same manner as the determination that indemnification is permissible, except
that if the determination is made by special legal counsel, such evaluation as
to reasonableness of expenses shall be made by those entitled under subsection
(c) of this section to select counsel.
<PAGE>
Notwithstanding the foregoing, in the event there has been a change in the
composition of a majority of the Board of Directors after the date of the
alleged act or omission with respect to which indemnification is claimed, any
determination as to indemnification and advancement of expenses with respect to
any claim for indemnification made pursuant to this Article shall be made by
special legal counsel agreed upon by the Board of Directors and the applicant.
If the Board of Directors and the applicant are unable to agree upon such
special legal counsel the Board of Directors and the applicant each shall select
a nominee, and the nominees shall select such special legal counsel.
Section 7. Advances.
(a) The Corporation may pay for or reimburse the reasonable expenses
incurred by any applicant who is a party to a proceeding in advance of final
disposition of the proceeding or the making of any determination under Section 6
if:
(i) the applicant furnishes the Corporation a written statement of his
good faith belief that he has met the standard of conduct described in Section
3; and
(ii) the applicant furnishes the Corporation a written undertaking,
executed personally or on his behalf, to repay the advance if it is ultimately
determined that he did not meet such standard of conduct.
(b) The undertaking required by paragraph (ii) of subsection (a) of this
section shall be an unlimited general obligation of the applicant but need not
be secured and may be accepted without reference to financial ability to make
repayment.
(c) Authorizations of payments under this section shall be made in the
manner specified in Section 6.
Section 8. Indemnification of Others. The Board of Directors is hereby
empowered, by majority vote of a quorum of disinterested Directors, to cause the
Corporation to indemnify or contract to indemnify any person not specified in
Section 3 of this Article who was, is or may become a party to any proceeding,
by reason of the fact that he is or was an employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, to the same extent as if such person
were specified as one to whom indemnification is granted in Section 3. The
provisions of Sections 4 through 7 of this Article shall be applicable to any
indemnification provided hereafter pursuant to this Section 8.
Section 9. Insurance. The Corporation may purchase and maintain insurance
to indemnify it against the whole or any portion of the liability assumed by it
in accordance with this Article and may also procure insurance, in such amounts
as the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against any liability asserted against or incurred by him in
any such capacity or arising
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from his status as such, whether or not the Corporation would have power to
indemnify him against such liability under the provisions of this Article.
Section 10. Further Indemnity. Every reference herein to Directors,
officers, employees or agents shall include former Directors, officers,
employees and agents and their respective heirs, executors and administrators.
The indemnification hereby provided and. provided hereafter pursuant to the
power hereby conferred on the Board of Directors shall not be exclusive of any
other rights to which any person may be entitled, including any right under
policies of insurance that may be purchased and maintained by the Corporation or
others, with respect to claims, issues or matters in relation to which the
Corporation would not have the power to indemnify such person under the
provisions of this Article. Such rights shall not prevent or restrict the power
of the Corporation to make or provide for any further indemnity, or provisions
for determining entitlement to indemnity, pursuant to one or more
indemnification agreements, bylaws, or other arrangements (including, without
limitation, creation of trust funds or security interests funded by letters of
credit or other means) approved by the Board of Directors (whether or not any of
the Directors of the Corporation shall be a party to or beneficiary of any such
agreements, bylaws or arrangements); provided, however, that any provision of
such agreements, bylaws or other arrangements shall not be effective if and to
the extent that it is determined to be contrary to this Article or applicable
laws of the Commonwealth of Virginia.
Section 11. Further Board Action. Any other provision of this Article
notwithstanding, the Board of Directors shall be empowered to amend this Article
from time to time, to the extent permitted by then applicable law, to limit,
eliminate or extend the rights provided hereunder, provided that no such
amendment shall limit or reduce the rights provided under this Article with
respect to any act or omission occurring prior to such amendment.
Section 12. Severability. Each provision of this Article shall be
severable, and an adverse determination as to any such provision shall in no way
affect the validity of any other provision.
