<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ROWE FURNITURE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
_______________
NOTICE
OF
ANNUAL MEETING
OF
STOCKHOLDERS
AND
PROXY STATEMENT
____________________
TIME:
Tuesday, March 30, 1999
at 10:00 a.m.
PLACE:
Ritz Carlton
McLean, Virginia
_________________
ROWE FURNITURE CORPORATION
MCLEAN, VIRGINIA
_______________
<PAGE>
ROWE FURNITURE CORPORATION
1650 Tysons Boulevard, Suite 710
McLean, Virginia 22102
To The Stockholders of
Rowe Furniture Corporation
February 22, 1999
Notice is hereby given that the annual meeting of stockholders of Rowe Furniture
Corporation (the "Company") will be held at the Ritz Carlton, 1700 Tysons
Boulevard, McLean, Virginia 22102, on Tuesday, March 30, 1999 at 10:00 a.m. The
meeting is being held for the purpose of considering and acting upon:
(1) The election of three directors of the company, each for a term of three
years;
(2) The approval of an amendment to the Company's Articles of Incorporation to
change the name of the Company from "Rowe Furniture Corporation" to "The
Rowe Companies";
(3) The approval of an amendment to the Company's Articles of Incorporation to
increase the authorized shares of the Company's common stock from
20,000,000 to 50,000,000;
(4) The approval of an amendment to the Company's 1993 Stock Option and
Incentive Plan in order to increase the number of shares reserved for
issuance thereunder; and
such other business as may properly come before the meeting or any adjournment
or postponement thereof. The Board of Directors is not aware of any other
business to come before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above, or on any date or dates to which the meeting may be
adjourned or postponed. Stockholders of record at the close of business on
February 12, 1999 are the stockholders entitled to vote at the meeting, and at
any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.
By Order of the Board of Directors,
ARTHUR H. DUNKIN, Secretary-Treasurer
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE THE PRESENCE OF A QUORUM AT THE
MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE
IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
ROWE FURNITURE CORPORATION
1650 Tysons Blvd., Suite 710
McLean, Virginia 22102
________________________________
PROXY STATEMENT
_________________________________
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MARCH 30, 1999
__________________________________
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Rowe Furniture Corporation
(hereinafter called the "Company") to be used at the Annual Meeting of
Stockholders of the Company (hereinafter called the "Meeting"), which will be
held at the Ritz Carlton, 1700 Tysons Boulevard, McLean, Virginia, on Tuesday,
March 30, 1999 at 10:00 a.m., and all adjournments and postponements of the
Meeting. The accompanying Notice of Meeting, form of proxy and this proxy
statement are first being mailed to stockholders on or about February 22, 1999.
At the Meeting, the stockholders of the Company are being asked to: (i)
elect three directors of the Company; (ii) approve an amendment to the Company's
Articles of Incorporation to change the name of the Company from "Rowe Furniture
Corporation" to "The Rowe Companies;" (iii) approve an amendment to the
Company's Articles of Incorporation to increase the number of shares of common
stock, par value $1.00 per share (the "Common Stock"), which the Company is
authorized to issue from 20,000,000 to 50,000,000; (iv) approve an amendment to
the Company's 1993 Stock Option and Incentive Plan (the "Stock Option Plan") to
increase the number of shares of common stock available for issuance thereunder
from 1,968,125 to 2,968,125 and providing that such amount will be automatically
increased by up to 500,000 shares to cover stock options granted in connection
with future acquisitions by the Company; and (v) such other matters as may
properly come before the Meeting or any adjournments or postponements thereof.
All shares of the Common Stock represented at the Meeting by properly
executed proxies received prior to or at the Meeting, and not revoked, will be
voted at the Meeting in accordance with the instructions thereon. If no
instructions are indicated, properly executed proxies will be voted FOR the
nominees set forth in this Proxy Statement, FOR approval of the amendments to
the Articles of Incorporation to change the name of the Company and to increase
the authorized shares of Common Stock and FOR approval of the amendment to the
Stock Option Plan. A majority of the shares of Common Stock entitled to vote at
the Meeting, represented in person or by proxy, shall constitute a quorum.
Proxies marked as abstaining will be treated as present for purposes of
determining a quorum at the Meeting, but will not be counted as voting on any
<PAGE>
matter for which an abstention is indicated. Proxies returned by brokers as
"non-votes" on behalf of shares held in street name will not be treated as
present for purposes of determining a quorum for the Meeting unless they are
voted by the broker on at least one matter on the agenda. Such non-voted shares
will not be counted as voting on any matter as to which a non-vote is indicated
on the broker's proxy.
The Company does not know of any matters, other than as described in the
Notice of Meeting, that are to come before the Meeting. If any other matters are
properly presented at the Meeting for action, the persons named in the enclosed
form of proxy and acting thereunder will have the discretion to vote on such
matters in accordance with their best judgment.
Stockholders who execute proxies solicited by the Company's Board of
Directors retain the right to revoke them at any time. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments and postponements thereof. The presence of a stockholder at the
Meeting will not automatically revoke such stockholder's proxy. Any proxy may be
revoked, however, at any time prior to its exercise by written notice to the
Secretary of the Company or the filing of a later dated proxy prior to a vote
being taken on a particular proposal at the Meeting or by attending the Meeting
and voting in person. Any written notice revoking a proxy should be delivered to
Arthur H. Dunkin, Secretary-Treasurer of the Company, at 1650 Tysons Boulevard,
Suite 710, McLean, Virginia 22102.
STOCKHOLDER APPROVAL
Although the Company's principal administrative offices are located in
McLean, Virginia, the Company is incorporated under the laws of the State of
Nevada. Under Nevada law, the affirmative vote of a plurality of the votes cast
at the Meeting is required for the election of Directors. Accordingly,
withholding of authority and broker non-votes will have no effect upon the
election of Directors. Approval of the amendments to the Company's Articles of
Incorporation to change the name of the Company and to increase the authorized
shares of Common stock requires the affirmative vote of a majority of the
outstanding shares of Common Stock. The amendment to the Stock Option Plan
requires the affirmative vote of holders of a majority of the shares represented
and entitled to vote on the matter at the Meeting. Abstentions will have the
effect of votes against the amendments to the Articles of Incorporation and the
Stock Option Plan. Broker non-votes will have the effect of votes against the
amendments to the Articles of Incorporation and no effect on the proposal to
amend the Stock Option Plan.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on February 12, 1999
will be entitled to one vote for each share then held. As of February 12, 1999,
the Company had 12,290,617 shares of common stock issued and outstanding.
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of February 12, 1999, by (i) each person who is
known by the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock, (ii) each director, nominee and Named
Executive (as defined herein) and (iii) all directors, nominees and executive
officers as a group. The Company believes that the individuals listed
2
<PAGE>
each have sole voting and investment power with respect to such shares, except
as otherwise indicated in the footnotes to the table.
Unless otherwise indicated below, the business address of each person
listed below is: c/o Rowe Furniture Corporation, 1650 Tysons Boulevard, Suite
710, McLean, Virginia 22102.
<TABLE>
<CAPTION>
Shares Beneficially
Owned
-------------------
Amount of
Beneficial Percent
Ownership(1) of Class
------------ ---------
Name and Address,
of Beneficial Owner
-------------------
<S> <C> <C>
Caryl S. Bentz (2) 1,172,433 9.5%
Gerald M. Birnbach (3)(4)(5) 1,690,797 13.5
Sidney J. Silver (6) 1,469,286 11.9
Arthur H. Dunkin 158,157 1.3
Keith J. Rowe (3) (7) (8) 1,184,955 9.6
Harvey I. Ptashek 71,365 *
Gerald O. Woodlief (10) 177,147 1.4
Richard E. Cheney 86,908 *
Charles T. Rosen 52,156 *
Allan Tofias 4,764 *
All directors, nominees and executive officers
as a group (9 persons) 4,100,964 32.0
</TABLE>
* Less than one percent.
(1) Includes shares subject to options currently exercisable or which will
become exercisable within 60 days of February 12, 1999 granted to the
directors and executive officers as follows: Mr. Birnbach -196,400, Mr.
Cheney - 44,437, Mr. Dunkin - 76,750, Mr. Ptashek - 20,500, Mr. Rosen -
44,437, Mr. Rowe - 44,437, Mr. Silver - 29,250, Mr. Tofias - 4,500 and Mr.
Woodlief - 44,437. Also includes shares held in retirement accounts.
(2) Ms. Bentz's business address is- 4749 Barclay Square, Roanoke, Virginia
24018.
(3) Includes 280,098 shares held by Mr. Birnbach and Mr. Keith Rowe, as co-
trustees under the trust FBO Michael Rowe, over which shares these
individuals exercise shared voting and investment power. Mr. Birnbach does
not have any income or residuary interest in these shares.
(4) Includes 115,803 and 398,670 shares held as co-trustee under irrevocable
trust agreements for the descendants of D. E. Rowe, Jr. and for the
descendants of Gladys B. Rowe, respectively, over which shares Mr. Birnbach
exercises shared voting and investment power.
(5) Includes 2,430 shares held jointly by Mr. Birnbach with his wife.
Includes 43,562 shares as co-trustee with Miriam Birnbach for the
Irrevocable Trust for the Benefit of Jami Taff and the Descendants of Jami
Taff, 43,562 shares as co-trustee with Miriam Birnbach for the Irrevocable
Trust for the Benefit of Bruce Birnbach and the Descendants of Bruce
Birnbach, 34,352 shares as co-trustee with Miriam Birnbach for the
Irrevocable Trust for the Benefit of Nina Patton and the Descendants of
Nina Patton, and 34,390 shares as co-trustee with Miriam Birnbach for the
Irrevocable Trust for the Benefit of Tom Birnbach and the Descendants of
Tom Birnbach. Includes 53,600 shares as Trustee for the Birnbach Family
Foundation. Includes 3,795 shares held by Mr. Birnbach's wife of which Mr.
Birnbach disclaims beneficial ownership.
3
<PAGE>
(6) Excludes the following shares of which Mr. Silver disclaims beneficial
ownership: 1,900 shares owned by Mr. Silver's wife, 189,843 shares held by
Mr. Silver's wife and son as trustees under the Irrevocable Trust for the
Wife and Descendants of Sidney J. Silver, 16,825 shares held by Mr.
Silver's wife and son as trustees under the Irrevocable Trust for the
Benefit of Beth D. Silver and the Descendants of Beth D. Silver, 40,475
shares held by Mr. Silver's wife and son as trustees under the Irrevocable
Trust for the Benefit of Patricia A. Silver and the Descendants of Patricia
A. Silver, 55,800 shares held by Mr. Silver's wife and son as trustees
under the Irrevocable Trust for the Benefit of Lisa E. Cannon and the
Descendants of Lisa E. Cannon, 16,825 shares held by Mr. Silver's wife and
son as trustees under the Irrevocable Trust for the Benefit of David C.
Silver and the Descendants of David C. Silver and 16,825 shares held by Mr.
Silver's wife and son as trustees under the Irrevocable Trust for the
Benefit of Daniel B. Silver and the Descendants of Daniel B. Silver.
Includes 115,803 and 398,670 shares held as co-trustee under Irrevocable
Trust agreements for the descendants of D.E. Rowe, Jr. and for the
descendants of Gladys B. Rowe, respectively, 792 shares held as co-trustee
under the Revocable Trust Agreement FBO Jonathan Simon Elsberg and 20,500
shares in the Silver, Freedman & Taff Profit Sharing Plan and Trust over
which shares Mr. Silver exercises shared voting and investment power. Mr.
Silver's business address is: c/o Silver, Freedman & Taff, L.L.P., 1100 New
York Ave., N.W., Washington, D.C. 20005.
(7) Messrs. Michael and Keith Rowe are co-executors of the estate of Elizabeth
J. Rowe and have shared voting and investment power with respect to 10,084
shares.
(8) Excludes 792 shares owned by Mr. Rowe's wife of which Mr. Rowe disclaims
beneficial ownership. Includes 132,890 shares held as co-trustee with Mr.
Rowe's wife in the Rowe Charitable Remainder Trust of which Mr. Rowe
disclaims beneficial ownership.
(9) Includes 72,595 shares held as co-trustee with Mr. Woodlief's wife of which
Mr. Woodlief disclaims beneficial ownership.
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is composed of nine directors.
Approximately one-third of the Directors are elected annually. Three Directors
are to be elected at the Meeting for terms of three years or until their
successors are elected and qualified.
Unless contrary specification is indicated, it is intended that the
accompanying form of proxy will be voted for the election of the three nominees
named below. If any of such persons is unable, or declines to serve, the persons
named in the accompanying proxy may vote for another person, or persons, in
their discretion. There are no arrangements or understandings between any
nominee and any other person pursuant to which such nominee was selected.
The following table sets forth certain information with respect to each
nominee for election to the Board and each Director continuing to serve.
INFORMATION CONCERNING NOMINEES
DIRECTOR TERM TO
AGE SINCE EXPIRE
-------- ------- ------
Charles T. Rosen.................. 65 1977 1999
Sidney J. Silver.................. 64 1982 1999
Arthur H. Dunkin.................. 53 1986 1999
4
<PAGE>
DIRECTORS CONTINUING TO SERVE
DIRECTOR TERM TO
AGE SINCE EXPIRE
--- ------- -------
Harvey I. Ptashek.................. 60 1984 2000
Gerald O. Woodlief................. 68 1982 2000
Allan Tofias....................... 68 1998 2000
Gerald M. Birnbach................. 68 1966 2001
Keith J. Rowe...................... 55 1977 2001
Richard E. Cheney.................. 77 1988 2001
Charles T. Rosen has served as Vice President of Luth Research, Inc., a
market research company since 1993.
Sidney J. Silver has been a member of the Washington, D.C. law firm Silver,
Freedman & Taff, L.L.P. since 1972.
Arthur H. Dunkin has been the Company's Secretary-Treasurer since 1986.
Mr. Dunkin has been in the service of the Company since 1984.
Harvey I. Ptashek served as Senior Vice President of the Company from 1984
until his retirement in September 1998. From 1964 until 1984, Mr. Ptashek served
in various executive sales positions with the Company. Subsequent to his
retirement with the Company, Mr. Ptashek became a director of United States
Leather, Inc.
Gerald O. Woodlief served as a Senior Vice President of the Company from
1982 until his retirement in December 1992. Mr. Woodlief was a consultant to the
Company from January, 1993 until December, 1997. From 1949 until 1982, Mr.
Woodlief served in various manufacturing positions with the Company.
Allan Tofias was appointed to the Board of Directors effective February 3,
1998. Mr. Tofias is the former managing shareholder and President of the
accounting firm of Tofias, Fleishman, Shapiro & Company, P.C. Mr. Tofias is a
trustee of Gannett Welsh & Kotler Fund, a mutual fund.
Gerald M. Birnbach has been in the service of the Company since 1956. He
has served as the Company's President since 1972, and Chairman of the Board
since 1976. Prior to becoming President, he was Vice President of Merchandising
and Sales.
Keith J. Rowe served as a Vice President of the Company from 1977 to January
1993. He is presently a private investor and currently serves on the board of
directors of Enabling Technologies, Inc.
Richard E. Cheney was the Chairman of the Board of Hill & Knowlton, an
international public relations company, from 1987 to 1991 and served as the
Chairman Emeritus of Hill & Knowlton from 1991 to 1993. He currently serves on
the boards of directors of Chattem, Inc. and Stoneridge, Inc.
Board of Directors Meetings and Committees. The Board conducts its business
through meetings of the Board and through the activities of its committees.
During the fiscal year ended November 29, 1998, the Board of Directors held
eight regular Board meetings and eight special
5
<PAGE>
Board meetings. No incumbent director of the Company attended fewer than 75
percent of the total meetings of the Board of Directors and committee meetings
on which such Board member served during this period.
The Audit Committee of the Board of Directors consists of Messrs. Cheney,
Rosen, Rowe, Tofias and Silver. The primary functions of this committee are to
evaluate audit performance, oversee relations with the Company's independent
auditors, and evaluate internal accounting policies and procedures. Three
meetings were held by the Audit Committee during the fiscal year ended November
29, 1998.
The Executive Committee of the Board of Directors consists of Messrs.
Birnbach, Rowe, Silver and Woodlief. This committee determines the compensation
of the executive officers of the Company. One meeting was held by the Executive
Committee during the fiscal year ended November 29, 1998.
The Stock Option Committee of the Board of Directors consists of Messrs.
Cheney, Rosen, Rowe, Tofias and Woodlief. The Stock Option Committee determines
the number of stock options to be granted to all officers and employees of the
Company. Five meetings were held by the Stock Option Committee during the fiscal
year ended November 29, 1998.
The Company's full Board of Directors acts as a nominating committee for
the annual selection of nominees for election as Directors. While the Board of
Directors will consider nominees recommended by stockholders, it has not
established any procedures for this purpose.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation for each of the last three
fiscal years earned by the President and each of the most highly compensated
executive officers whose salary and bonus exceeded $100,000 for the fiscal year
ended November 29, 1998 (the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
----------
Name and Compensation Securities Underlying All Other
Principal Position Year Salary Bonus Options Compensation(1)
- ------------------------ ------------ --------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Gerald M. Birnbach
Chairman and President 1998 $791,850 300,000 50,000(3) 51,511
1997 777,600 0 0 250,656
1996 754,512 250,000(2) 50,000 249,271
Harvey I. Ptashek(4)
Senior Vice President 1998 208,333 10,000 0 11,800
1997 230,000 0 0 18,900
1996 230,000 15,000 16,000 18,700
Arthur H. Dunkin
Secretary Treasurer 1998 215,000 10,000 15,000(3) 17,500
1997 213,333 0 0 16,800
1996 195,000 0 16,000 15,700
</TABLE>
(1) Except as noted below with respect to Mr. Birnbach, includes (i) director's
fees, (ii) matching contributions by the Company pursuant to its Cash-or-
Deferred Non-Qualified Executive Retirement Plan (the "Executive Retirement
Plan") and (iii) supplemental contributions under the Executive Retirement
Plan, as follows: Mr. Birnbach - 1998 $4,000, $23,756 and $23,755, 1997
$4,000, $23,328 and $23,328 1996 $4,000 $22,636 and $22,635; Mr. Ptashek -
1998 $5,250, $6,550 and 0, 1997 $4,000, $7,450 and $7,450, 1996 $4,000,
$7,350 and $7,350 and Mr. Dunkin - 1998 $4,000, $6,750 and $6,750, 1997
$4,000, $6,400 and $6,400, 1996 $4,000, $5,850 and $5,850. The amounts for
Mr. Birnbach also include payments to Mr. Birnbach of $200,000 in 1997 and
1996 pursuant to the termination and settlement of his Supplemental
Executive Retirement Plan (the "SERP") agreement. The SERP agreement was
terminated in December, 1993 in connection with amendments to Mr.
Birnbach's then existing employment agreement.
(2) Payable in the year following Mr. Birnbach's retirement and will accrue
interest annual based on the average ten-year treasury bond rate.
(3) For additional information regarding this award, see the table below
captioned "Option Grants in Last Fiscal Year.
(4) Mr. Ptashek retired as an officer of the Company on September 30, 1998.
7
<PAGE>
The following table sets forth certain information concerning stock options
granted pursuant to the Company's Stock Option Plan to the Named Executives in
fiscal 1998. No stock appreciation rights have been awarded under such plans.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES UNDERLYING % OF TOTAL EXERCISE
OPTIONS OPTIONS GRANTED OR BASE
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME #(1) IN FISCAL YEAR ($/SH) DATE 5%($) $10%($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
G. M. Birnbach 50,000 22.8% $6.875 12-02-07 $ 216,183 $547,849
A. H. Dunkin 15,000 6.8% 6.875 12-02-07 64,855 164,355
H. I. Ptashek(2) 0 0% 0 0
</TABLE>
(1) Mr. Birnbach's options consist of 35,500 shares underlying a non-qualified
stock option, which became exercisable immediately upon grant and 14,500
shares underlying an incentive stock option, which became exercisable on
January 2, 1999. Mr. Dunkin's options consist of 2,300 shares underlying a
non-qualified stock option which became exercisable immediately upon grant
and 12,700 shares underlying an incentive stock option which became
exercisable on January 2, 1998.
(2) Mr. Ptashek retired as an officer of the Company on September 30, 1998.
The following table sets forth information concerning the exercise of
options during the last fiscal year and unexercised options held as of the end
of the fiscal year with respect to each of the Named Executives.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at 11-29-98 Options at 11-29-98
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized(1) Unexercisable Unexercisable(2)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerald M. Birnbach 0 0 181,900/ $853,284/
14,500 $58,000
Harvey I. Ptashek(3) 48,750 $251,406 16,000/ $ 52,000/
0 0
Arthur H. Dunkin 0 0 76,750/ $370,206/
0 0
</TABLE>
_______________________
8
<PAGE>
(1) The difference between fair market value of the Company's Common Stock
at the time of exercise and the exercise price.
(2) The difference between fair market value of the Company's Common Stock at
fiscal year end and the exercise price.
(3) Mr. Ptashek retired as an officer of the Company on September 30, 1998.
Supplemental Executive Retirement Plan ("SERP"). The SERP provides for a fixed
retirement benefit at age 65 of $100,000 per year for ten years for a total sum
of $1.0 million. A participant who retires between the ages of 55 and 65 will
receive a reduced annual payment over a greater number of years for a total sum
of one million dollars. A participant who retires at age 53 or 54 will receive a
reduced annual payment over a greater number of years for total sums of $650,000
or $700,000, respectively. A participant who retires before age 53 will receive
a lump sum payment equal to the total amount previously accrued by the Company
for financial accounting purposes. In September 1995, the Company revised the
SERP to provide for the transfer into a separate grantor trust of assets equal
to the Company's obligations and to eliminate the reduction in the full benefit
provided by the Plan because of age in the event of a change in control. Mr.
Dunkin is the only Named Executive who is a participant in the plan.
Employment Agreements. Effective December 1, 1997, the Company entered
into a new employment agreement with Mr. Birnbach. The agreement provides for
an annual base salary of $791,850. The annual base salary is subject to
adjustment annually based upon increases in the Consumer Price Index (the
"adjusted base salary"). Provision is also made for a bonus for unusual efforts
made by Mr. Birnbach on behalf of the Company to be awarded in the sole
discretion of the Company's Board of Directors. The employment agreement also
provides for termination benefits, disability and death benefits, vacation and
other employee benefits, including the furnishing of an automobile to Mr.
Birnbach.
The employment agreement is for a term of five years, commencing on
December 1, 1997 (the "Commencement Date"). On each anniversary of the
Commencement Date, the term of the employment agreement will automatically be
extended for an additional year unless at least 90 days before such anniversary
the Company's Board of Directors, by the affirmative vote of at least two-thirds
of its membership, determines not to extend the term and written notice of such
action is provided to Mr. Birnbach.
The employment agreement provides for mandatory deferral of certain
compensation by Mr. Birnbach, if necessary, to assure tax deductibility thereof
by the Company.
The employment agreement allows the Board of Directors to terminate Mr.
Birnbach's employment at any time with or without cause. If Mr. Birnbach
voluntarily terminates his employment with the Company prior to a change in
control of the Company without "good reason," or the Company terminates his
employment for "cause," then he will not be entitled to any severance payments.
If Mr. Birnbach terminates his employment prior to a change in control for "good
reason," or the Company terminates his employment without "cause" (other than on
account of permanent disability), then he will be entitled to receive all
compensation which he would otherwise have been paid for the remainder of the
term of the employment agreement in installments consistent with prior practice.
The employment agreement defines the term "good reason" as the occurrence of
certain diminutions of or interferences with Mr. Birnbach's duties,
responsibilities or benefits under the agreement. If Mr. Birnbach's employment
is terminated prior to a change in control on account of permanent disability,
then he will be entitled to partial salary continuation through the remaining
term of the employment agreement. If Mr. Birnbach should die
9
<PAGE>
while employed and prior to the Board of Directors approving a change in control
transaction, his estate shall be entitled to receive his adjusted base salary as
then in effect for the lesser of 18 months or the balance of the employment
agreement term.
If Mr. Birnbach's employment is terminated for any reason in connection
with or following a change in control of the Company, then in lieu of the
benefits described above and other benefits under the employment agreement
through the date of termination, he shall be entitled to receive, on the date of
termination, an amount equal to 299% of his "base amount," as determined under
Section 280G of the Code, payable in a single cash lump sum. If the termination
in connection with or following the change in control of the Company is
involuntary (excluding death or total disability) or made by Mr. Birnbach for
good reason and Mr. Birnbach offers to continue to provide services as
contemplated by the employment agreement and the offer is declined, then,
subject to certain conditions, the Company must also, during the shorter period
of the date of termination through the remaining term of the employment
agreement or two years following the termination, pay to Mr. Birnbach monthly
1/12 of his adjusted base salary, plus 1/12 of the average amount of cash bonus
and cash incentive compensation earned by Mr. Birnbach for the two full years
preceding the change in control.
Mr. Birnbach and his spouse will also receive certain post-termination
health benefits for their respective lifetimes following termination of Mr.
Birnbach's employment; provided such benefits will not be provided if his
termination of employment is for "cause" prior to and not in connection with a
change in control.
Under the employment agreement, subject to limited exceptions, for a period
of two years after the voluntary or involuntary termination of Mr. Birnbach's
employment with the Company, Mr. Birnbach may not compete or own an interest in
any other business in competition with that of the Company's business, except
for the purchase and holding of securities of any publicly traded company.
The Board of Directors approved employment contracts with Messrs. Ptashek
and Dunkin in 1984 and 1985, respectively. The contracts provide that if the
officers are terminated for the convenience of the Company, without cause or any
reason related to job performance, they may receive a sum equal to their annual
base compensation for a period of two years or until the attainment of the
normal retirement age under the Company's retirement plans, whichever is
earlier. Payments made under these employment contracts are credited toward age
requirements under the SERP. These employment contracts were amended in
September, 1995 to provide for the transfer into a separate grantor trust of
assets equal to the Company's obligations in the event of a change in control of
the Company. As noted elsewhere in this proxy statement, Mr. Ptashek retired as
an officer of the Company effective September 30, 1998.
Cash-or-Deferred Non-Qualified Executive Retirement Plan. Effective
December 1, 1994, the Company adopted an unfunded Cash-or-Deferred Non-Qualified
Executive Retirement Plan (the "Executive Retirement Plan"). The Executive
Retirement Plan is designed to enable the executive officers to defer current
income. Under the Executive Retirement Plan, a participant may elect to defer an
unlimited amount of his salary and bonus. Each participant will receive a
matching Company contribution equal to (i) 75% of the first 1% to 3% of
compensation deferred and (ii) 25% of deferred amounts from 4% to 6% of
compensation. No matching contribution will be made for deferred amounts in
excess of 6% of salary and bonus. In its discretion, the Board of Directors may
award supplemental credits to the account of plan participants. Participants are
fully vested in the amounts credited to their plan accounts at all times.
Prior to January 26, 1998, participant deferral
10
<PAGE>
amounts, matching credits and any supplemental credits earned interest based on
the then current 10-year treasury bond rate. Effective January 27, 1998, the
Executive Retirement Plan was amended to allow participants to earn additional
credits on amounts held in their accounts based on the performance of one or
more of four measurement funds available to participants for their selection.
In addition, the Executive Retirement Plan provides for the transfer into a
separate grantor trust of assets equal to the Company's obligations to the plan
participants upon the occurrence of certain events, including a change in
control of the Company. As of November 29, 1998, Messrs. Birnbach and Dunkin
participated in the Executive Retirement Plan.
Director Compensation. Directors employed by the Company are paid fees of
$500 per meeting and non-employee directors receive a fee of $1,750 per meeting.
No fees are paid to members of committees appointed by the Board of Directors
for their service on committees. In fiscal 1998, for serving on the Company's
Board of Directors, Messrs. Cheney, Silver, Rosen, Rowe and Woodlief each
received $14,000, Mr. Ptashek received $5,250 and Mr. Birnbach and Mr. Dunkin
each received $4,000. In accordance with the Stock Option Plan, directors who
are not employees of the Company automatically receive an annual grant of
options to purchase 4,500 shares at an exercise price per share not less than
the market value per share of the Common Stock on the date of grant.
Accordingly, the following directors each received on February 2, 1998, an
option to purchase 4,500 shares at an exercise price of $8.125 per share:
Messrs. Cheney, Rosen, Rowe, Silver and Woodlief. No stock options by non-
employee directors were exercised during fiscal 1998. On June 2, 1998, the Stock
Option Plan was amended to change the date on which the non-employee directors
are awarded the automatic annual grant of options to purchase 4,500 shares from
the first Monday in February of each year to the first Monday in December of
each year.
Compensation Committee Interlocks and Insider Participation. The members
of the Company's Compensation Committee are Messrs. Birnbach, Rowe, Silver and
Woodlief. Mr. Birnbach is currently the Company's Chairman, President and Chief
Executive Officer, and Messrs. Rowe and Woodlief are former officers of the
Company. Mr. Woodlief was a consultant to the Company from December 1992 to
January 1998. Mr. Silver is a member of the law firm Silver, Freedman & Taff,
L.L.P., which serves as general counsel to the Company. Total fees incurred for
legal services rendered by this firm to the Company and its subsidiaries during
the fiscal year ended November 29, 1998 did not exceed 5% of such firm's gross
revenues in its last fiscal year.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934 requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
the ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16 (a) forms they
file.
To the Company's knowledge, based solely upon information provided to the
Company by the officers and directors subject to Section 16 of the Securities
Exchange Act of 1934, each of the Company's executive officers, directors and
greater than 10% shareholders timely filed all required reports during the
fiscal year ended November 29, 1998.
11
<PAGE>
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The compensation policies of the Company seek to align the compensation of
its executive officers with the Company's financial and other performance
aspects, thereby improving performance and enhancing stockholder value.
Compensation Philosophy. The Company's compensation programs are designed
to attract and retain qualified management personnel by providing competitive
compensation while, at the same time, providing incentive to enhance stockholder
value consistent with the business strategies and long-term objectives of the
Company. Accordingly, the Company's compensation programs include the following
aspects:
The compensation program primarily includes a base salary providing
competitive compensation and reflecting the Company's financial and other
performance as well as the individual's performance. The compensation program
also includes long-term incentive awards in the form of stock options, designed
to reward and retain executives over a period of years, and to align the
interests of executives with those of stockholders by relating compensation to
the Company's stock price.
Base Salaries. Base salaries are intended to compensate fairly all of the
executive officers of the Company for the effective exercise of their
responsibilities, their management of the business functions for which they are
responsible, and their extended period of service to the Company. Actual
salaries paid to the Company's executive officers are based upon their level of
experience and performance and their years of service to the Company.
Long-term Incentives. The Company provides long-term, stock-related
incentives to key executives and employees, including the Named Executives under
the Stock Option Plan. Awards under the Stock Option Plan may be either
"incentive" stock options, qualifying for favorable income tax treatment, or
"non-qualified" stock options. Awards are designed to align management's
incentives with the interests of the Company's stockholders and to reward
executives for increases in stockholder value. On December 2, 1997, stock
options were awarded to the following Named Executives in the following amounts:
Mr. Birnbach - 50,000 shares and Mr. Dunkin - 15,000 shares. For additional
information regarding these awards, see the table above captioned "Option Grants
in Last Fiscal Year."
Compensation of the Chief Executive Officer. Effective December 1993,
Mr. Birnbach received an increase in his salary from $641,600 to $725,000 as an
inducement to extend his contract to serve as Chairman and President of the
Company and to reward him for improvement in the Company's financial and other
performance. Mr. Birnbach's compensation is adjusted annually for cost of living
increases. Effective December 1, 1997, the Company entered into a new
employment agreement with Mr. Birnbach to compensate him for his value and past
services to the Company and as an inducement to secure his future services to
the Company. See "Executive Compensation - Employment Agreements." The new
employment agreement provides for annual adjustments to Mr. Birnbach's base
salary for cost of living increases, and for the granting to Mr. Birnbach of a
bonus, in the discretion of the Company's Board of Directors. The Board of
Directors awarded Mr. Birnbach a $300,000 cash bonus for the Company's
performance in fiscal 1998. Payment of the bonus has been structured so as to
not cause Mr. Birnbach's compensation in any year to exceed $1.0 million.
12
<PAGE>
In 1993, Section 162(m) was added to the Internal Revenue Code of 1986, as
amended (the "Code"), the effect of which was to eliminate the deductibility of
compensation over $1 million, with certain exclusions, paid to each of certain
highly compensated executive officers of publicly held corporations, such as the
Company. Section 162(m) applies to remuneration (both cash and non-cash) that
would otherwise be deductible for tax years beginning on or after January 1,
1994, unless expressly excluded. The Company has included a provision in Mr.
Birnbach's employment agreement limiting his compensation to the $1 million
threshold and deferring any amount in excess of such limit. In addition,
although the current compensation of each of the Company's other executive
officers is below the $1 million threshold, the Company intends to consider this
provision in establishing future compensation policies for such officers.
EXECUTIVE COMMITTEE
Gerald M. Birnbach
Keith J. Rowe
Sidney J. Silver
Gerald O. Woodlief
STOCK OPTION COMMITTEE
Richard E. Cheney
Charles T. Rosen
Keith J. Rowe
Allan Tofias
Gerald O. Woodlief
13
<PAGE>
PERFORMANCE GRAPH
The following is a line graph comparing the yearly change in the
cumulative total return on the Company's Common Stock with the cumulative total
return on the NYSE Market Index and the Company's peer group index for the
Company's last five fiscal years.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE COMPANIES, PEER GROUPS,
INDUSTRY INDEXES AND/OR BROAD MARKETS
<TABLE>
<CAPTION>
------------------------------ FISCAL YEAR ENDING -----------------------------
COMPANY/INDEX/MARKET 11/30/1993 11/25/1994 12/01/1995 11/29/1996 11/28/1997 11/27/1998
<S> <C> <C> <C> <C> <C> <C>
Rowe Furniture 100.00 120.12 102.11 164.84 144.06 237.66
Household Furniture 100.00 79.68 97.50 122.53 166.74 177.57
NYSE Market Index 100.00 101.67 130.06 161.76 204.70 239.28
</TABLE>
The peer group consists of household furniture manufacturing companies with
the same Standard Industrial Classification as the Company.
14
<PAGE>
PROPOSAL II - AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE NAME OF
THE CORPORATION
The corporate name of the Company since its incorporation has been "Rowe
Furniture Corporation". While the Company's core business has remained the same
since its formation, in recent years the Company has expanded its business to
include wood furniture and retail furniture operations. The Company now
conducts its business through the following operating subsidiaries: The Wexford
Collection, Inc., a manufacturer of solid wood casual furniture; Rowe ShowPlace,
Inc., DBA Home Elements, an operator of company-owned retail furniture stores;
The Mitchell Gold Co., a manufacturer of casual upholstered furniture; and Rowe
Industries, Inc. In order to better reflect the Company's business and
operating structure, the Board of Directors recommends to the stockholders for
their adoption at the Meeting an amendment to the Company's Articles of
Incorporation to change the Company's name from "Rowe Furniture Corporation" to
"The Rowe Companies."
If the amendment is adopted, the First Article of the Company's Articles of
Incorporation would be amended to read as follows:
"FIRST: The name of the Corporation is The Rowe Companies".
Approval of the amendment requires the affirmative vote of a majority of
the issued and outstanding shares of the Common Stock.
The Board of Directors recommends a vote FOR this proposal.
15
<PAGE>
PROPOSAL III - AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK
On September 10, 1998, the Board of Directors approved an amendment (the
"Stock Amendment") to the Company's Articles of Incorporation to increase the
authorized shares of Common Stock of the Company from 20,000,000 to 50,000,000.
Stockholders are being asked to approve the Stock Amendment at the Meeting.
The Articles of Incorporation currently authorize the issuance of an
aggregate of 20,000,000 shares of Common Stock, $1.00 par value. As of February
12, 1998, 12,290,617 shares of the Common Stock were issued and outstanding,
(excluding 2,651,832 shares held in the company's treasury) 1,366,438 shares
were reserved for issuance pursuant to stock options granted or to be granted
under the Stock Option Plan, (with up to approximately 1,500,000 additional
shares reserved for issuance pursuant to future awards under the Stock Option
Plan, assuming stockholder approval of the Amendment to the Stock Option Plan at
the Meeting; see Proposal IV) and up to 357,676 shares of Common Stock were
reserved for issuance under the Company's $3,000,000 of convertible debentures
issued in connection with the Company's acquisition of The Mitchell Gold Co.
The principal purpose of the Stock Amendment is to give the Company greater
flexibility in its financial affairs by making 30 million additional shares of
Common Stock available for issuance by the Company in such transactions and at
such times as the Board of Directors considers appropriate, whether in public or
private offerings, as stock splits or dividends or in connection with mergers
and acquisitions or otherwise. The Company's stockholders may or may not be
given the opportunity to vote on such a transaction, depending on the nature of
the transaction, applicable law, the rules and policies of the New York Stock
Exchange and the judgment of the Company's Board of Directors regarding the
submission of such transaction to a vote of the Company's stockholders. The
Company has no present plans, understandings or agreements for the issuance or
use of the proposed additional shares of Common Stock.
The additional shares of Common Stock authorized for issuance pursuant to
the Stock Amendment will have all of the rights and privileges which the
presently outstanding shares of Common Stock possess; the increase in authorized
shares will not affect the terms, or rights of holders, of existing shares of
Common Stock. All outstanding shares would continue to have one vote per share
on all matters to be voted on by the shareholders, including the election of
directors. Holders of Common Stock have no preemptive or conversion rights and
are not subject to further calls or assessments by the Company. Because
stockholders do not have preemptive rights, the interests of existing
stockholders may (depending on the particular circumstances in which additional
capital stock is issued) be diluted by any issuance of the proposed additional
shares of common stock.
It is possible that additional shares of Common Stock could be issued for
the purpose of making an acquisition by an unwanted suitor of a controlling
interest in the Company more difficult, time-consuming or costly or to otherwise
discourage an attempt to acquire control of the Company. Under such
circumstances, the availability of authorized and unissued shares may make it
more difficult for stockholders of the Company to obtain a premium for their
shares. Such authorized and unissued shares could be used to create voting or
other impediments or to frustrate a person or other entity seeking to obtain
control of the Company by means of a merger, tender offer, proxy contest or
other means. For instance, such shares could be privately placed with
purchasers who might cooperate with the Company's Board of Directors in opposing
an attempt by a third party to gain control of the Company by voting such shares
against the transaction with the third party or
16
<PAGE>
could be used to dilute the stock ownership or voting rights of a person or
entity seeking to obtain control of the Company. Although the Company's Board of
Directors does not currently anticipate issuing additional shares of Common
Stock for purposes of preventing a takeover of the Company, the Company's Board
of Directors reserves its right (consistent with its fiduciary responsibilities)
to issue shares for such purpose.
If the Stock Amendment is adopted, the first sentence of the Fourth Article
of the Company's Articles of Incorporation would be amended to read as follows:
"FOURTH: The amount of the total authorized capital stock of the
corporation shall be FIFTY MILLION DOLLARS ($50,000,000) consisting of one (1)
class of FIFTY MILLION (50,000,000) shares of common voting stock, par value
$1.00 per share."
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for approval of the proposed Stock Amendment.
The Board of Directors recommends a vote FOR this proposal.
17
<PAGE>
PROPOSAL IV - AMENDMENT TO THE STOCK OPTION PLAN
The Stock Option Plan was adopted in order to permit the granting of
long-term incentive awards to directors, officers and key employees as a means
of enhancing and encouraging the recruitment and retention of the individuals on
whom the continued success of the Company most depends. The Stock Option Plan
also gives the Company the flexibility to award stock options in connection with
the acquisitions of other companies to the key executives and employees of such
companies to more closely align their interests with the Company's stockholders.
The Company's stockholders approved the Stock Option Plan in 1993, and an
amendment to the Stock Option Plan in 1997 which increased the number of shares
of Common Stock authorized for issuance thereunder from 1,468,125 to 1,968,125.
Because nearly all of the 1,968,125 shares have been utilized for awards, the
remaining authorized shares are not sufficient to cover options to purchase
323,000 shares of Common Stock recently granted to certain executive officers
and employees in December 1998 (the "New Awards"); such grants are contingent
upon stockholder approval of the Option Amendment (as defined below).
The Company's Board of Directors recommends that stockholders approve an
amendment to the Stock Option Plan (the "Option Amendment") to increase the
number of shares authorized for issuance thereunder from 1,968,125 to 2,968,125
and which would also provide that the maximum number of shares with respect to
which awards may be made under the Stock Option Plan (i.e., 2,968,125 shares,
subject to adjustment as described below under "Effect of Merger and Other
Adjustments") shall be automatically increased by the number of shares of Common
Stock that the Company reserves for issuance under stock options granted in
connection with future acquisitions made by the Company, not to exceed 500,000
shares. Thus, if the Option Amendment is approved, the maximum number of shares
reserved for issuance under the Stock Option Plan could ultimately increase to
3,468,125 (subject to further adjustment as described below under "Effect of
Merger and Other Adjustments").
Without approval of the Option Amendment the New Awards cannot become
effective and the Company will also be unable to grant additional options to the
Company's directors, officers and employees. As a result, the Company's
objective of structuring compensation in a manner to closely align the interests
of such persons with stockholders will be undermined. The inability to award
additional stock options also impairs the Company's ability to attract and
retain qualified persons to serve as directors, officers and employees. In
addition, the Company's ability to continue to acquire companies and businesses
which Board of Directors believes would be in the best interests of stockholders
could be severely impaired if the Company were unable to award stock options
under the Stock Option Plan to the key executives and employees of such
companies and businesses.
The Company's Board of Directors approved the Option Amendment in September
1998. The complete text of the Stock Option Plan, amended and restated, is
attached to this proxy statement as Appendix A.
The principal features of the Stock Option Plan are summarized below.
GENERAL. The Stock Option Plan provides for awards in the form of stock
options. Each award shall be on such terms and conditions, consistent with the
Stock Option Plan, as the committee administering the Stock Option Plan may
determine.
18
<PAGE>
Pursuant to the Stock Option Plan, 1,968,125 shares are currently
authorized for issuance thereunder. If the Option Amendment is approved,
2,968,195 shares will be authorized for issuance, provided that the maximum
number of shares with respect to which awards may be made under the Stock Option
Plan (i.e., 2,968,195 shares, subject to adjustment as described below under
"Effect of Merger and Other Adjustments") will be automatically increased by the
number of shares of Common Stock that the Company reserves for issuance under
stock options granted in connection with future acquisitions made by the
Company, not to exceed 500,000 shares. During any calendar year, no participant
may be granted awards under the Stock Option Plan with respect to more than
100,000 shares of Common Stock, subject to adjustment as described below under
"Effect of Merger and Other Adjustments").
Shares may be either authorized but unissued shares or reacquired shares
held by the Company in its treasury. Any shares subject to an award, which
expires or is terminated unexercised will again be available for issuance under
the Stock Option Plan. Generally, no award or any right or interest therein is
assignable or transferable except under certain limited exceptions set forth in
the Plan.
Administration. The Stock Option Plan is administered by a committee (the
"Committee") consisting of two or more members, each of whom must be (i) an
"outside director," as defined under Section 162(m) of the Code and the Treasury
regulations thereunder, and (ii) a "non-employee director," as defined in Rule
16b-3 under the Exchange Act. Directors Cheney, Rosen, Rowe, Tofias and
Woodlief are the current members of the Committee.
Stock Options. The term of stock option granted under the Stock Option
Plan may not exceed ten years from the date of grant. The Committee may grant
either "Incentive Stock Options" ("ISOs") as defined under Section 422 of the
Code or stock options not intended to qualify as such ("non-qualified stock
options"). The Committee determines whether to grant ISOs or non-qualified
stock options based on all relevant factors, including the identity of the
grantee and the respective tax and accounting consequences to the Company.
In general, stock options granted under the Stock Option Plan are not
exercisable after the expiration of their terms. In the event that a
participant ceases to maintain continuous service (as defined in the Stock
Option Plan) for any reason other than death or termination for cause, an
already exercisable stock option will remain exercisable for a period of three
months, but in no event after the expiration date of the option. In the case of
a participant who has served the Company for at least ten years and who takes
normal retirement, a stock option awarded to such an individual may be
exercisable for a period of five years following the date of retirement, but in
no event later than ten years from the date of grant. In the event of the death
of a participant during such service or within the three month or five year
periods referred to above, an option will continue to be exercisable for one
year, to the extent exercisable by the participant immediately prior to his
death, but in no event later than ten years from the date of grant. Following
the death of any participant, the Committee may, as alternative means of
settlement of an option, elect to pay to the holder the amount by which the
market value of the shares covered by the option on the date of exercise exceeds
the exercise price. A stock option will automatically terminate and will no
longer be exercisable as of the date a participant ceases to serve as a
director, officer, or employee if such individual was terminated for cause.
The exercise price for the purchase of shares subject to a stock option at
the date of grant may not be less than 100% of the market value of the shares
covered by the option on that date.
19
<PAGE>
The exercise price must be paid in full in cash or shares of Common Stock, or a
combination of both, as determined by the Committee.
The Stock Option Plan provides for the grant of a non-incentive stock
option to purchase 4,500 shares of Common Stock to each director who is not a
full-time employee of the Company on the first Monday of December of each year
during the term of the 1993 Stock Option Plan. The exercise price per share of
such options must equal the fair market value of the Common Stock on the date of
grant.
Effect of Merger and Other Adjustments. Shares as to which awards may be
granted under the Stock Option Plan, and shares then subject to awards will be
adjusted by the Committee in the event of any reorganization, recapitalization,
stock split, stock dividend, combination or exchange of shares, merger,
consolidation, or other change in the corporate structure or shares of the
Company.
In the event of any merger or consolidation of the Company with or into
another entity, whereby either the Company is not the continuing entity or its
outstanding shares are converted into or exchanged for different securities,
cash or other property or any combination thereof, any participant to whom a
stock option has been granted will generally have the right, upon exercise of
the option, to an amount equal to the excess of fair market value on the date of
exercise over the consideration receivable in the merger, consolidation or
combination with respect to the shares covered or represented by the stock
option over the exercise price of the option, multiplied by the number of shares
with respect to which the options have been exercised.
In addition, in the event a tender or exchange offer for shares of Common
Stock (other than such an offer by the Company) is commenced, or in the event
the stockholders of the Company approve a transaction pursuant to which
substantially all of the Company's assets will be sold, or pursuant to which the
Company will cease to be an independent publicly owned entity, all outstanding
stock options not fully exercisable will become exercisable in full and remain
so for a period of 60 days from the date of such commencement of the offer or
from the date of stockholder approval, as the case may be, after which they will
revert to being exercisable in accordance with their terms.
Amendment or Termination. The Board of Directors of the Company may at any
time amend, suspend or terminate the Plan or any portion thereof but may not,
without the prior approval of the stockholders, make any amendment which (i)
materially increases the total number of shares which may be subject to awards,
(ii) materially increases the aggregate number of shares which may be subject to
awards to participants who are not employees or (iii) changes the class of
persons eligible to participate in the Plan. Unless previously terminated, the
Stock Option Plan will continue in effect for a term of ten years, beginning on
the date of initial stockholder approval of the Stock Option Plan (March 30,
1993) after which no further awards may be granted under the Plan.
Federal Income Tax Consequences. Under present federal income tax laws,
awards under the Stock Option Plan will have the following consequences: (1)
The grant of an award will not, by itself, result in the recognition of taxable
income to the participant nor entitle the Company to a deduction at the time of
such grant. (2) The exercise of a stock option which is an ISO within the
meaning of Section 422 of the Code will generally not, by itself, result in the
recognition of taxable income to the participant nor entitle the Company to a
deduction at the time of such exercise. However, the difference between the
exercise price and the fair market value of the option shares on the date of
exercise is an item of adjustment included for purposes of calculating the
alternative minimum tax. (3) If the shares acquired upon exercise of an ISO are
not held for at least one year
20
<PAGE>
after transfer of such shares to the participant or two years after the grant of
the ISO, whichever is later, the participant will recognize ordinary income or
loss upon disposition of the shares in an amount equal to the difference between
the exercise price and the fair market value on the date of exercise of the
shares. In such an event, the Company will generally be entitled to a
corresponding deduction, provided the Company meets its federal withholding tax
obligations. The participant will also recognize capital gain or loss in an
amount of the difference, if any, between the sale price and the fair market
value of the shares on the date of exercise of the ISO; such capital gain or
loss will be characterized short-term if the shares were not held for more than
one year after the exercise of the ISO and as long-term if the shares were held
for more than one year after the exercise of the ISO. The Company will not be
entitled to a corresponding deduction for such capital gain or loss. (4) If the
shares acquired upon exercise of an ISO are held by the participant for one year
after the ISO is exercised and two years after the ISO was granted, the
participant will recognize a capital gain or loss upon disposition of the shares
in an amount equal to the difference between the sale price and the exercise
price; such capital gain or loss will be characterized as short-term if the
shares were not held for more than one year after the exercise of the ISO and
long-term if the shares were held for more than one year after the exercise of
the ISO. The Company will not be entitled to a corresponding deduction for such
capital gain or loss. (5) The exercise of a non-qualified stock option will
result in the recognition of ordinary income by the participant on the date of
exercise in an amount equal to the difference between the exercise price and the
fair market value on the date of exercise of the option shares acquired pursuant
to the stock option. (6) The Company will be allowed a deduction at the time,
and in the amount of any ordinary income recognized by the participant upon the
exercise of a non-qualified stock option, provided the Company meets is federal
withholding tax obligations. (7) Upon sale of the shares acquired upon exercise
of a non-qualified stock option, any appreciation or depreciation in the value
of such shares from the time of exercise will result in the recognition of a
capital gain or loss by the participant. Such capital gain or loss will be
short-term if the shares were not held by the participant for more than one year
after the exercise of the non-qualified stock option and long-term if the
participant held the shares for more than one year following exercise of the
non-qualified stock option.
Awards Under the Stock Option Plan. The following table presents
information with respect to the dollar value and the number of awards
outstanding as of November 29, 1998 under the Stock Option Plan.
<TABLE>
<CAPTION>
Participant Value of Options(1) Number of Options(2)
- ----------- ------------------- --------------------
<S> <C> <C>
G. M. Birnbach $ 911,284 196,400
H. I. Ptashek 52,000 16,000
A. H. Dunkin 370,206 76,750
All executive officers
as a group (3 persons) $1,333,490 289,150
All directors who are not
executive officers as a
group (6 persons) $2,006,415 169,311
All employees other than
executive officers
(412 persons) $6,004,190 891,007
</TABLE>
21
<PAGE>
______________
(1) Represents the difference between the aggregate option price and the fair
market value of the underlying shares at November 29, 1998 ($10.875 per
share, based on the closing price per share of the Common Stock on the New
York Stock Exchange on November 27, 1998).
(2) Includes options currently exercisable and not currently exercisable.
The following table presents information with respect to the dollar value
and number of shares underlying options granted under the Stock Option Plan,
subject to stockholder approval of the Option Amendment.
<TABLE>
<CAPTION>
Participant Dollar Value Number of Units(1)
- ----------- ------------ ------------------
<S> <C> <C>
G. M. Birnbach $ 607,000 60,000
H. I. Ptashek 0 0
A. H. Dunkin 151,875 15,000
All executive officers
as a group (3 persons) $ 759,375 75,000
All employees other than
executive officers
(160 persons) $2,511,000 248,000
</TABLE>
______________
(1) Each unit represents an option to purchase one share of common Stock
The Board of Directors recommends a vote FOR approval of the Option
Amendment.
22
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors engaged the independent certified public accounting
firm of BDO Seidman, L.L.P. to audit the records of the Company for the 1996,
1997 and 1998 fiscal years. Representatives of BDO Seidman, L.L.P. are expected
to attend the Meeting to respond to appropriate questions and to make a
statement if they so desire.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the next year's annual meeting of stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's principal
administrative offices at 1650 Tysons Boulevard, McLean, Virginia no later than
October 25, 1999. Any such proposal shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934, as amended and,
as with any stockholder proposal (regardless of whether included in the
Company's proxy materials), the Company's Articles of Incorporation and Bylaws
and Nevada law. Under the proxy rules, in the event that the Company receives
notice of a stockholder proposal to take action at the next Annual Meeting that
is not submitted for inclusion in the Company's proxy materials, or is submitted
for inclusion but is properly excluded from such proxy materials, the persons
named in the form of proxy sent by the Company to its stockholders will have the
discretion to vote on such proposal in accordance with their best judgment if
notice of the proposal is not received at the main office of the Company by
January 8, 2000.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this proxy statement.
However, if other matters should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Company's Common Stock. In addition to
solicitation by mail, directors, officers and regular employees of the Company
may solicit proxies personally or by telegraph or telephone, without additional
compensation. The Company may also retain the services of a proxy solicitation
firm, the fees and expenses of which firm will be paid for by the Company,
although there is no present intention to retain any such firm.
The Company's annual report to stockholders, including financial
statements, has been mailed to all stockholders of record as of the close of
business on February 22, 1999. Any stockholder who has not received a copy of
such annual report may obtain a copy by writing to the Company. Such annual
report is not to be treated as part of the proxy solicitation materials, nor as
having been incorporated herein by reference.
ARTHUR H. DUNKIN
Secretary-Treasurer
February 22, 1999
23
<PAGE>
EXHIBIT A
Amended and Restated
ROWE FURNITURE CORPORATION
1993 Stock Option and Incentive Plan
1. PLAN PURPOSE. The purpose of the Plan is to promote the long-term
------------
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, officers and Employees of the Corporation
and its Affiliates. It is intended that designated Options granted pursuant to
the provisions of this Plan to persons employed on a full-time basis will
qualify either as Incentive Stock Options or Non-Qualified Stock Options, as
designated under the terms of the Award. Options granted to persons who are not
full-time Employees will be Non-Qualified Stock Options.
2. DEFINITIONS. The following definitions are applicable to the Plan:
-----------
"Affiliate" - means any "parent corporation" or "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
"Award" - means the grant of an Incentive Stock Option or a Non-
Qualified Stock Option, or any combination thereof, as provided in the Plan.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, officer or Employee of the Corporation or
an Affiliate, except that, when used with respect to persons granted an
Incentive Stock Option, means the absence of any interruption or termination of
service as a full-time Employee of the Corporation or an Affiliate. Service
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Corporation or in the case of
transfers between payroll locations of the Corporation or between the
Corporation, its subsidiaries or its successor.
"Corporation" - means Rowe Furniture Corporation, a Nevada
corporation.
"Employee" - means any person, including an officer, who is employed
by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974,
as amended.
24
<PAGE>
"Exercise Price" - means the price per Share at which the Shares
subject to an Option may be purchased upon exercise of such Option.
"Incentive Stock Option" - means an option to purchase Shares granted
by the committee pursuant to Section 6 hereof , which is subject to the
limitation and restriction of Section 8 hereof and is intended to qualify under
Section 422 of the Code. Unless otherwise set forth in the Option Agreement,
any Option which does not qualify as an Incentive Stock Option for any reason
shall be deemed ab initio to be a Non-Qualified Stock Option.
"Market Value" - means the average of the high and low quoted sales
price on the date in question (or, if there is no reported sale on such date, on
the last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for the New York Stock Exchange - Listed Stocks, or, if the
Shares are not listed or admitted to trading on such Exchange, on the principal
United States securities exchange registered under the Securities Exchange Act
of 1934 on which the Shares are listed or admitted to trading, or, if the Shares
are not listed to or admitted to trading on any such exchange, the mean between
the closing high and low asked quotations with respect to a Share on such date
on the Nasdaq Stock Market, or any similar system then in use, or if no such
quotations are available, the fair market value on such date of a Share as the
Committee shall determine.
"Non-Qualified Stock Option" - means an option to purchase Shares
granted by the Committee pursuant to Section 6 hereof, which option is not
intended to qualify under Section 422 of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, officer or Employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award and any director of the Corporation who is granted an Award pursuant to
Section 18 hereof.
"Plan" - means the 1993 Stock Option and Incentive Plan of the
Corporation, as amended and restated in this document.
"Shares" - means the shares of common stock of the corporation.
3. ADMINISTRATION. The Plan shall be administered by a Committee
--------------
consisting of two or more members, each of whom (i) shall be an "outside
director," as defined under Section 162(m) of the Code and the Treasury
regulations thereunder, and (ii) shall be a "non-employee director," as defined
under Rule 16(b) of the Securities Exchange Act of 1934 or any similar or
successor provision. The members of the Committee shall be appointed by the
Board of Directors of the Corporation. Except as limited by the express
provisions of the Plan, the Committee shall have sole and complete authority and
discretion to (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the
25
<PAGE>
terms and conditions upon which Awards shall be granted under the Plan; (iv)
prescribe the form and terms of instruments evidencing such grants; and (v)
establish from time to time regulations for the administration of the Plan,
interpret the Plan, and make all determinations deemed necessary or advisable
for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. PARTICIPATION IN COMMITTEE AWARDS. The Committee may select from time
---------------------------------
to time Participants in the plan from those Employees and directors (other than
members of the Committee) of the Corporation or its Affiliates who, in the
opinion of the Committee, have the capacity for contributing to the successful
performance of the Corporation or its Affiliates.
5. SHARES SUBJECT TO PLAN. Subject to adjustment by the operation of
----------------------
Section 9 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 2,968,125; provided, however, that the maximum number
of Shares with respect to which Awards may be made under the Plan shall be
automatically increased by the number of Shares of stock of the Corporation that
it reserves for issuance under stock options granted in connection with future
acquisitions made by the Corporation, but not to exceed 500,000 Shares. The
shares with respect to which Awards may be made under the Plan may be either
authorized and unissued shares or issued shares heretofore or hereafter
reacquired and held as treasury shares. An Award shall not be considered to
have been made under the Plan with respect to any Option which terminates, and
new Awards may be granted under the Plan with respect to the number of Shares as
to which such termination has occurred. During any calendar year, no
Participant may be granted Awards under the Plan of more than 100,000 Shares,
subject to adjustment as provided in Section 9.
6. GENERAL TERMS AND CONDITIONS OF OPTIONS. The Committee shall have
---------------------------------------
full and complete authority and discretion, except as expressly limited by the
Plan, to grant Options and to provide the terms and conditions (which need to be
identical among Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions: (i) the Exercise Price of any
Option, which shall not be less than the Market Value per Share at the date of
grant of such Option, (ii) the number of shares subject to and the expiration
date of any Option, which expiration date shall not exceed ten years from the
date of the grant, (iii) the manner, time and rate (cumulative or otherwise) of
exercise of such Option, and (iv) the restrictions, if any, to be placed upon
such Option or upon Shares which may be issued upon exercise of such Option.
At the time of any Award, the Participant shall enter into an
agreement with the Corporation in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Option Agreement").
26
<PAGE>
7. EXERCISE OF OPTIONS.
-------------------
(a) An Option granted under the Plan shall be exercisable during the
lifetime of the Participant to whom such Option was granted only by such
Participant and, except as provided in paragraphs (c) and (d) of this Section 7,
no such Option may be exercised unless at the time such Participant exercises
such Option, such Participant has maintained Continuous Service since the date
of grant of such Option.
(b) To exercise an Option under the Plan, the Participant to whom such
Option was granted shall give written notice to the Corporation in form
satisfactory to the committee (and, if partial exercises have been permitted by
the Committee, by specifying the number of Shares with respect to which such
Participant elects to exercise such Option) together with full payment of the
Exercise Price, if any and to the extent required. The date of exercise shall
be the date on which such notice is received by the Corporation. Payment, if
any is required, shall be made either (i) in cash (including check, bank draft
or money order) or (ii) if permitted by the Committee in the terms of the Award,
by delivering (A) Shares already owned by the Participant and having a fair
market value equal to the applicable Exercise Price, such fair market value to
be determined in such appropriate manner as may be provided by the Committee or
as may be required in order to comply with or to confirm to requirements of any
applicable laws or regulations, or (B) a combination of cash and such Shares.
In addition, the Committee may, in the Option Agreement, also permit
Participants (either on a selective or group basis) to simultaneously exercise
Options and sell the Shares thereby acquired, pursuant to a brokerage "cashless
exercise" arrangement, selected by and approved of in all respects in advance by
the Committee, and use the proceeds from such sale as payment of the Exercise
Price of such Options, all in accordance with Section 220.3(e)(4) of Regulation
T, 12 C.F.R., Part 220.
(c) If a Participant to whom an Option was granted shall cease to
maintain Continuous Service for any reason (including total or partial
disability and normal or early retirement, but excluding death and termination
of employment by the Corporation or any Affiliate for cause), such Participant
may, but only within the period of three months immediately succeeding such
cessation of Continuous Service and in no even after the expiration date of such
Option, exercise such Option to the extent that such Participant was entitled to
exercise such Option at the date of such cessation, provided, however, that such
right of exercise after cessation of Continuous Service shall not be available
to a Participant if the Committee otherwise determines and so provides in the
applicable Option Agreement. Notwithstanding the foregoing, if a Participant to
whom an Option was granted shall cease to maintain Continuous Service due to
normal retirement, and such Participant has served the Corporation for at least
ten years, the Participant may, but only during the period of five years
immediately succeeding such cessation of Continuous Service and in no event
after the expiration of such Option, exercise such Option. Notwithstanding
anything herein to the contrary, if the Continuous Service of a Participant to
whom an Option was granted by the
27
<PAGE>
Corporation is terminated for cause, all rights under any Option of such
Participant shall expire immediately upon the giving to the Participant of
notice of such termination.
(d) In the event of the death of a Participant while in the Continuous
Service of the Corporation or an Affiliate or within the three month and five
year periods referred to in paragraph (c) of this Section 7, the person to whom
any Option held by the Participant at the time of his death is transferred by
will or the laws of descent and distribution may, but only to the extent such
Participant was entitled to exercise such Option immediately prior to his death,
exercise such Option at any time within a period of one year succeeding the date
of death of such Participant, but in no event later than ten years from the date
of grant of such Option. Following the death of any Participant to whom an
Option was granted under the Plan, the Committee may, as an alternative means of
settlement of such Option, elect to pay to the person to whom such Option is
transferred by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of ERISA or
the rules thereunder, the amount by which the Market Value per Share on the date
of exercise of such Option shall exceed the Exercise Price of such Option,
multiplied by the number of Shares with respect to which such Option is properly
exercised. Any such settlement of an Option shall be considered an exercise of
such Option for all purposes of the Plan.
8. INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted only
-----------------------
to Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock is granted, (ii) the Exercise Price of
any Incentive Stock Option shall not be less than the Market Value per Share on
the date such Incentive Stock Option is granted, (iii) any Incentive Stock
Option shall not be transferable by the Participant to whom such Incentive Stock
Option is granted other than by will or the laws of descent and distribution and
shall be exercisable during such Participant's lifetime only by such
Participant, (iv) no Incentive Stock Option shall be granted to any individual
who, at the time such Incentive Stock Option is granted, owns stock possessing
more than ten percent of the total combined voting power of all classes of stock
of the Corporation or any Affiliate unless the Exercise Price of such Incentive
Stock Option is at least 110 percent of the Market Value per Share at the date
of grant and such Incentive Stock Option is not exercisable after the expiration
of five years from the date such Incentive Stock Option is granted, and (v) the
aggregate Market Value (determined as of the time any Incentive Stock Option is
granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by a Participant in any calendar year shall not
exceed $100,000.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
------------------------------------------
change in the outstanding Shares subsequent to the effective date of the Plan by
reason of any reorganization, recapitalization, stock split, stock dividend,
corporate structure or Shares of
28
<PAGE>
the Corporation, the maximum aggregate number and class of shares as to which
Awards may be granted under the Plan and the number and class of shares with
respect to which Awards theretofore have been granted under the Plan shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
10. EFFECT OF MERGER ON OPTIONS. In the event of any merger or
---------------------------
consolidation of the Corporation (other than a merger or consolidation in which
the Corporation is the continuing entity and which does not result in the
outstanding Shares being converted into or exchanged for different securities,
cash or other property, or any combination thereof) pursuant to a plan or
agreement the terms of which are binding upon all stockholders of the
Corporation (except to the extent that dissenting stockholders may be entitled,
under statutory provisions or provisions contained in the certificate of
incorporation, to receive the appraised or fair value of their holdings), any
Participant to whom an Option has been granted shall have the right (subject to
the provisions of the Plan and any limitation applicable to such Option),
thereafter and during the term of each such Option, to receive upon exercise of
any such Option an amount equal to the excess of the fair market value on the
date of such exercise of the securities, cash or other property, or combination
thereof, receivable upon such merger, consolidation or combination in respect of
a Share over the Exercise Price of such Option, multiplied by the number of
Shares with respect to which such Option shall have been exercised. Such amount
may be payable fully in cash, fully in one or more of the kind or kinds of
property payable in such merger, consolidation or combination, or partly in cash
and partly in one or more of such kind or kinds of property, all in the
discretion of the Committee.
11. EFFECT OF CHANGE IN CONTROL. Each of the events specified in the
---------------------------
following clauses (i) through (iii) of this Section 11 shall be deemed a "change
in control": (i) any third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Corporation with respect to which 25% or more of the
total number of votes for the election of the Board of Directors of the
Corporation may be cast, (ii) as a result of, or in connection with, any cash
tender offer, merger or other business combination, sale of assets or contested
election, or combination of the foregoing, the persons who were directors of the
corporation shall cease to constitute a majority of the Board of Directors of
the Corporation, or (iii) the shareholders of the Corporation shall approve an
agreement providing either for a transaction in which the Corporation will cease
to be an independent publicly owned entity or for a sale or other disposition of
all or substantially all the assets of the corporation; provided, however, that
the occurrence of any such events shall not be deemed a "change in control" if,
prior to such occurrence, a resolution specifically approving such occurrence
shall have been adopted by at least a majority of the Board of Directors of the
Corporation. If a tender offer or exchange offer for Shares (other than such an
offer by the Corporation) is commenced, or if the event specified in clause
(iii) above shall occur, unless the Committee shall have otherwise provided in
the Option Agreement, all Options theretofore granted and not fully exercisable
shall become exercisable in full upon the happening of such event and shall
remain so exercisable for a period of sixty days following such date, after
which they shall revert to
29
<PAGE>
being exercisable in accordance with their terms; provided, however, that no
Option which has previously been exercised or otherwise terminated shall become
exercisable.
12. ASSIGNMENTS AND TRANSFERS. No Award nor any right or interest of a
-------------------------
Participant under the Plan in any Option Agreement may be assigned, encumbered
or transferred except, in the event of the death of a Participant, by will or
the laws of descent and distribution or in the case of an Award other than an
Incentive Stock Option, pursuant to a qualified domestic relations order as
defined in the Code or Title I of ERISA or the rules thereunder.
13. EMPLOYEE RIGHTS UNDER THE PLAN. No director, officer or Employee
------------------------------
shall have a right to be selected as a Participant nor, having been so selected,
to be selected again as a Participant, and no director, officer, Employee or
other person shall have any claim or right to be granted an Award under the Plan
or under any other incentive or similar plan of the corporation or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any Employee any right to be retained in the employ of the Corporation
or any Affiliate.
14. DELIVERY AND REGISTRATION OF STOCK. The Corporation's obligation to
----------------------------------
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any
representation requirement shall become inoperative upon a registration of the
Shares or other action eliminating the necessity of such representation under
such Securities Act or other securities legislation. The Corporation shall not
be required to deliver any Shares under the Plan prior to (i) the admission of
such shares listing on any stock exchange on which Shares may then be listed,
and (ii) the completion of such stock registration or other qualification of
such Shares under any state or Federal law, rule or regulation, as the Committee
shall determine to be necessary or advisable.
15. WITHHOLDING TAX. The Corporation shall have the right to deduct from
---------------
all amounts paid in cash with respect to the exercise of an Option under the
Plan any taxes required by law to be withheld with respect to such exercise.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option pursuant to the Plan, the Corporation shall have the
right to require the Participant of such other person to pay the Corporation the
amount of any taxes which the Corporation is required to withhold with respect
to such Shares, or, in lieu thereof, to retain, or sell without notice, a number
of such Shares sufficient to cover the amount required to be withheld.
16. AMENDMENT OR TERMINATION. The Board of Directors of the Corporation
------------------------
may amend, suspend or terminate the Plan or any portion thereof at any time, but
(except as provided in Section 9 hereof) no amendment shall be made without
approval of the
30
<PAGE>
Stockholders of the corporation which shall (i) materially increase the
aggregate number of Shares with respect to which Awards may be made under the
Plan, (ii) materially increase the aggregate number of Shares which may be
subject to Awards to Participants who are not Employees or (iii) change the
class of persons eligible to participate in the Plan; provided, however, that no
such amendment, suspension or termination shall impair the rights of any
Participant, without his consent, in any Award thereto made pursuant to the
Plan.
17. EFFECTIVE DATE AND TERM OF PLAN. The Plan became effective upon its
-------------------------------
adoption by the Board of Directors of the Corporation and its approval by vote
of the holders of a majority of the outstanding shares of the corporation
entitled to vote on the adoption of the Plan. This amendment and restatement of
the Plan shall become effective upon its adoption by the Board of Directors
inasmuch as the approval of stockholders in not required pursuant to Section 16
hereof or the requirements of applicable law. The Plan shall continue in effect
for a term of ten years from its original effective date unless sooner
terminated under Section 16 hereof.
18. GRANT TO DIRECTORS. By, and simultaneously with, the adoption of this
------------------
Plan, each member of the Board of Directors of the corporation who is not a
full-time Employee on the first Monday of December is hereby granted Options on
the first Monday of December of each year during the term of the Plan to
purchase 4,500 Shares. The Option Exercise Price per Share shall be equal to
the Market Value of one such Share on the date such Options are granted. Each
such Option shall be evidenced by an Option Agreement in a form approved by the
Committee and shall be subject in all respects to the terms and conditions of
this Plan.
RESTATED FOR THE JANUARY 15, 1993, OCTOBER 5, 1993, JANUARY 15, 1994
AND DECEMBER 6, 1994 STOCK SPLITS
31
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ROWE FURNITURE CORPORATION - COMMON STOCK PROXY
For the Annual Meeting of Stockholders to be held at 10:00 a.m., local
time, on Tuesday, March 30, 1999 at the Ritz Carlton 1700 Tysons Boulevard
McLean, Virginia 22102
The undersigned hereby appoints G. M. Birnbach and B. A. Rotramel or
either one of them with full powers of substitution as Proxies to vote the
Common Stock of Rowe Furniture Corporation (the "Company") held by the
undersigned at the above stated Annual Meeting or any adjournments and or
postponements thereof, upon the matters set forth in the Notice of Annual
Meeting of Stockholders and Proxy Statement dated February 22, 1998, as follows:
ELECTION OF DIRECTORS. The nominees to serve until 2002 are Messrs.
Arthur H. Dunkin Charles T. Rosen Sidney J. Silver
VOTE FOR all nominees ______ VOTE WITHHELD for all nominees ______
VOTE FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
APPROVAL OF THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE
THE NAME OF THE COMPANY FROM "ROWE FURNITURE CORPORATION" TO "THE ROWE
COMPANIES".
VOTE FOR ________________ AGAINST ___________________ ABSTAIN _____________
APPROVAL OF THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE
THE AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK.
VOTE FOR ________________ AGAINST ___________________ ABSTAIN ______________
APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION AND INCENTIVE PLAN
IN ORDER TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER.
VOTE FOR ________________ AGAINST ___________________ ABSTAIN ______________
In their discretion, the Proxies are authorized to vote upon such other matters
as may properly come before the Annual Meeting or any adjournments or
postponements thereof.
The Board of Directors recommends a vote "FOR" each of the proposals.
(continued and to be signed on the reverse side)
<PAGE>
This proxy will be voted as specified. If no specification is made, this Proxy
will be voted FOR all proposals. If any other matter is presented at the
Annual Meeting, this proxy will be voted by those named in their best judgment.
At the present time, the Board of Directors knows of no other matter to be
presented at the Annual Meeting.
Any proxy heretofore given by the undersigned with respect to such stock is
hereby revoked. Receipt of the Notice of the 1999 Annual Meeting, Proxy
Statement and Annual Report to Shareholders is hereby acknowledged. PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
----------------------------------------
SIGNATURE DATE
----------------------------------------
SIGNATURE DATE
Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on
this card. When signing as attorney, trustee, executor, administrator or
guardian, please give your full title. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
<PAGE>
ROWE FURNITURE CORPORATION
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, March
30, 1999.
Sincerely,
Rowe Furniture Corporation
