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for his retirement income, and the redemption of his shares was
not motivated by David Pedigo’s reduced responsibilities at the
store.
Other redemptions of stock occurred before and after the
years in issue. On December 22, 1988, Paul Pedigo redeemed 13.5
shares that he had inherited from his mother. Jan Knight
redeemed 140 shares on January 16, 1998, for $352,556.82. Sharon
Pedigo, wife of David Pedigo, redeemed 80 shares in May 1998 for
$226,921.60 to obtain funds to buy a new home and to pay for the
college tuition of her two daughters.
On January 29, 1996, Steve Pedigo wrote a letter to Sam
Knight and to petitioner discussing the then recent demotion and
removal of David Pedigo from the board. His letter, in part,
stated:
The manner in which the board of Knight Furniture
Company has redefined David Pedigo’s responsibilities
and disseminated the announcement appears to be
designed to undermine David’s credibility with his
peers and co-workers. Restricting David from physical
locations within the store was mean-spirited and petty
and designed to reduce David’s credibility and
compromise his dignity.
As I understand the bylaws of Knight Furniture Company,
a change in the board of directors requires a vote of
all shareholders including David, * * * [Paul] and
myself. It appears that the board is attempting to
make a change without the appropriate vote.
In looking at the stock ownership, except for token
amounts owned by Jimmy H. Hughes and Henry Griffin, the
remainder of the stock is owned by either the Ed Pedigo
family or the Sam Knight family. I would hope the
recent events have not been orchestrated to force the
Pedigo family to sell.
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