<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Bassett Furniture Industries, Inc.
- --------------------------------------------------------------------------------
(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)(1) 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:
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[ ] 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:
- --------------------------------------------------------------------------------
<PAGE> 2
BASSETT FURNITURE INDUSTRIES, INCORPORATED
BASSETT, VIRGINIA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 28, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Bassett Furniture Industries, Incorporated (the "Company"), will be held at the
Bassett Furniture Showroom, 500 Bassett Drive, at Highway 68 and Business 85, in
Thomasville, North Carolina, on Tuesday, March 28, 2000, at 11:30 a.m., local
time, for the purpose of considering and acting upon the following:
1. The election of nine Directors.
2. A proposal to approve the Bassett Furniture Industries, Incorporated
2000 Employee Stock Purchase Plan.
3. A proposal to approve certain amendments to the Bassett Furniture
Industries, Incorporated 1993 Stock Plan for Non-Employee Directors,
including an increase of 50,000 in the number of shares of the
Company's Common Stock available for issuance under the plan.
4. A proposal to ratify the selection of Arthur Andersen LLP as
independent public accountants for the fiscal year ending November 25,
2000.
5. Any and all other matters that may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on February 16, 2000
as the record date for determining the stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof, and only holders of Common
Stock of the Company of record at such date will be entitled to notice of or to
vote at the meeting.
THE BOARD OF DIRECTORS WILL APPRECIATE THE PROMPT RETURN OF THE ENCLOSED
PROXY, DATED AND SIGNED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT
IS EXERCISED AND WILL NOT BE EXERCISED IF YOU ATTEND THE MEETING AND VOTE IN
PERSON.
By Order of the Board of Directors
Paul Fulton
Chairman and Chief Executive Officer
Bassett, Virginia
February 26, 2000
<PAGE> 3
BASSETT FURNITURE INDUSTRIES, INCORPORATED
POST OFFICE BOX 626, BASSETT, VIRGINIA 24055
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of proxies to be used at the Annual
Meeting of Stockholders of Bassett Furniture Industries, Incorporated (the
"Company") to be held at the Bassett Furniture Showroom, 500 Bassett Drive, at
Highway 68 and Business 85, in Thomasville, North Carolina at 11:30 a.m., local
time, on Tuesday, March 28, 2000. This Proxy Statement and accompanying proxy
are being sent to the stockholders of the Company on or about February 26, 2000.
Solicitation other than by mail may be made personally and by
telephone by regularly employed officers and employees of the Company who will
not be additionally compensated therefor. The Company will request brokers,
dealers, banks or voting trustees, or their nominees, who hold stock in their
names for others or hold stock for others who have the right to give voting
instructions, to forward proxy materials to their principals and request
authority for the execution of the proxy and will reimburse such institutions
for their reasonable expenses in so doing. The total cost of soliciting proxies
will be borne by the Company.
Any proxy delivered in the accompanying form may be revoked by the
person executing the proxy at any time, before the authority thereby granted is
exercised, by written request addressed to Barry C. Safrit, Vice President and
Chief Accounting Officer, Bassett Furniture Industries, Incorporated, Post
Office Box 626, Bassett, Virginia 24055 or by attending the meeting and electing
to vote in person. Proxies received in such form will be voted as therein set
forth at the meeting or any adjournment thereof.
The only matters to be considered at the meeting, so far as known to
the Board of Directors, are the matters set forth in the Notice of Annual
Meeting of Stockholders, and routine matters incidental to the conduct of the
meeting. However, if any other matters should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy, or their substitutes, to vote said proxy in
accordance with their judgment on such matters.
Stockholders present or represented and entitled to vote on a matter
at the meeting or any adjournment thereof will be entitled to one vote on such
matter for each share of Common Stock of the Company held by them of record at
the close of business on February 16, 2000, which is the record date for
determining the stockholders entitled to notice of and to vote at such meeting
or any adjournment thereof. Voting on all matters, including the election of
Directors, will be by voice vote or by show of hands. The number of shares of
Common Stock of the Company outstanding on February 16, 2000 was 11,909,232.
Presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting will
constitute a quorum. If a quorum is present, Directors will be elected by a
plurality of the votes cast and action on other matters submitted to the
stockholders will be approved if the votes cast in favor of the action exceed
the votes cast opposing the action. Shares for which the holder has elected to
abstain or to withhold the proxies' authority to vote (including broker
non-votes) on a matter will count toward a quorum but will have no effect on the
action taken with respect to such matter.
PRINCIPAL STOCKHOLDERS AND HOLDINGS OF MANAGEMENT
At February 16, 2000, the only persons known to the Company to be
the beneficial owners of more than 5% of Common Stock, par value $5.00 per
share, of the Company (the "Common Stock") were as follows:
1
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING
- ----------------- -------------------- -----------------
<S> <C> <C>
Bassett Employee Savings/
Retirement Plan 895,619(1) 7.52%
Barry C. Safrit, Trustee
Bassett, VA 24055
Lazard Freres & Co. LLC
30 Rockefeller Plaza 1,067,100(2) 8.96%
New York, NY 10020
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue 638,775(3) 5.36%
11th Floor
Santa Monica, CA 90401
Royce & Associates, Inc.
1414 Avenue of the Americas 599,362(4) 5.03%
New York, NY 10019
</TABLE>
- -------------------
(1) In his capacity as Trustee, Barry C. Safrit, Vice President of the
Company, has sole voting and dispositive power over these shares. Mr.
Safrit disclaims beneficial ownership of these shares.
(2) The information concerning beneficial ownership has been provided to the
Company by Lazard Freres & Co. LLC ("Lazard"). Lazard has sole
dispositive power over all of these shares, sole voting power over
988,800 of these shares and shared power over none of these shares.
(3) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of these shares which are
held by certain investment companies, trusts and other investment
vehicles for which Dimensional serves as investment advisor or manager.
Dimensional has sole investment and voting power with respect to all of
these shares. Dimensional disclaims beneficial ownership of all such
shares. The information provided is as of December 31, 1999.
(4) Royce & Associates, Inc., a registered investment advisor, has sole
voting and investment power with respect to all these shares, which it
holds on behalf of its clients.
The following table sets forth, as of February 16, 2000, information as
to the beneficial ownership of the Common Stock by all Directors and executive
officers of the Company as a group, by those Directors who are retiring from the
Board of Directors effective at the Annual Meeting and by the named Executive
Officers who are not also nominees for Directors. Information with respect to
the beneficial ownership of the Common Stock by the nominees for Directors is
contained in the table under "Election of Directors."
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING
---------------- -------------------- -----------------
<S> <C> <C>
Directors and executive
officers as a group
(20 persons) 1,769,094(2,3) 14.85%
William H. Goodwin, Jr. 31,737 (4,5) (1)
Albert F. Sloan 6,887(4) (1)
John S. Lupo(6) 0 ----
Steven P. Rindskopf 4,775(4) (1)
Keith R. Sanders 4,000(4) (1)
</TABLE>
- ----------------------------
(1) Less than 1% of the outstanding Common Stock.
(2) Includes 409,838 shares subject to options held by Directors and
executive officers that are currently exercisable or that are
exercisable within 60 days.
(3) Includes 895,619 shares held by the Company's Employee
Savings/Retirement Plan, for which Barry C. Safrit, Vice President
of the Company, has sole voting and dispositive power in his
capacity as Trustee. Mr. Safrit disclaims beneficial ownership of
these shares.
(4) Includes shares subject to options that are currently exercisable
or that are exercisable within 60 days as follows: William H.
Goodwin, Jr. 6,500; and Albert F. Sloan 6,500.
(5) Includes 20,000 shares held by Mr. Goodwin's children.
(6) John Lupo resigned as an executive officer of the Company in
November 1999.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide for nine Directors. At the
meeting, nine Directors will be elected to serve, subject to the provisions of
the Bylaws, until the 2001 Annual Meeting of Stockholders and until their
successors are duly elected and qualified. It is the intention of the persons
named in the accompanying proxy to vote all proxies solicited by the Board of
Directors FOR the nine nominees listed below unless authority to vote for the
nominees or any individual nominee is withheld by a stockholder in such
stockholder's proxy. If for any reason any nominee shall not become a candidate
for election as a Director at the meeting, an event not now anticipated, the
proxies will be voted for the nine nominees including such substitutes as shall
be designated by the Board of Directors.
The nine nominees for election as Directors are listed below. All of
the nominees are currently members of the Board of Directors. They were elected
to their current terms, which expire in 2000, at the Annual Meeting of
Stockholders held on March 30, 1999.
3
<PAGE> 6
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME AND OFFICES WITH THE COMPANY OR OTHER OCCUPATION DURING COMMON STOCK COMMON STOCK
DIRECTOR SINCE AGE PAST FIVE YEARS AND DIRECTORSHIPS OWNED OUTSTANDING
- --------------- --- ----------------------------------- ----- -----------
<S> <C> <C> <C> <C>
Amy Woods Brinkley 44 Executive Vice President, President-Consumer Products, 4,500(2) (1)
1998 BankAmerica Corporation (a bank holding company).
Peter W. Brown, M.D. 57 Partner, Virginia Surgical Associates of Richmond 9,276(2) (1)
1993 (general surgery).
Thomas E. Capps 64 Vice Chairman of the Board, President and Chief 7,212(2) (1)
1989 Executive Officer, Dominion Resources, Inc. (electric
utility holding company). Director of Dominion
Resources, Inc.
Willie D. Davis 65 President of All Pro Broadcasting, Inc. (radio 5,135(2) (1)
1997 broadcasting). Director of Sara Lee Corporation,
K-Mart Corp., Dow Chemical Company, MGM Grand Inc.,
Alliance Bank, WICOR Inc., Johnson Controls, Inc.,
MGM, Inc., Strong Capital Management Fund and Rally's
Inc.
Alan T. Dickson 68 Chairman of the Board since 1994 and President from 9,518(2) (1)
1989 1964 to 1994 of Ruddick Corporation (diversified
holding company); Director of Lance, Inc., BankAmerica
Corporation and Sonoco Products Company.
Paul Fulton 65 Chairman and Chief Executive Officer of the 260,000(2) 2.18%
1993 Company since 1997; Dean of the Kenan-Flagler
Business School of the University of North
Carolina at Chapel Hill from 1994 to 1997;
President of Sara Lee Corporation (packaged food
and consumer products) until 1993; Director of
Sonoco Products Company, BankAmerica
Corporation, Cato Corporation, Hudson's Bay Company
and Lowe's Companies, Inc.
Howard H. Haworth 65 President, Haworth Group since 1984 (personal 6,500(2) (1)
1997 and family investment group); Chief Executive
Officer from 1973 to 1982 and Chairman and Chief
Executive Officer from 1982 to 1985 of Drexel
Heritage Furnishings; Chairman Emeritus, North
Carolina State Board of Education since 1995;
Secretary of Commerce of the State of North
Carolina from 1985 to 1987.
Michael E. Murphy 63 Private investor. Vice Chairman and Chief 7,264(2) (1)
1997 Administrative Officer of Sara Lee Corporation,
1994 to 1997; Director of GATX Corporation,
Payless ShoeSource, Inc., True North
Communications Inc. and American General
Corporation.
Robert H. Spilman, Jr. 43 President and Chief Operating Officer of the Company 217,257(2,3) 1.82%
1997 since 1997; Executive Vice President,
Marketing and Merchandising, 1993 to 1997.
</TABLE>
- ------------------
(1) Less than 1% of the outstanding Common Stock.
(2) Includes shares subject to options that are currently exercisable or
exercisable within 60 days as follows: Amy Woods Brinkley 4,500; Peter
W. Brown 6,500; Thomas E. Capps 6,500; Willie D. Davis 4,500; Alan T.
Dickson 6,500; Paul Fulton 250,000; Howard H. Haworth 4,500; Michael E.
Murphy 4,500; and Robert H. Spilman, Jr. 92,713.
4
<PAGE> 7
(3) Includes 12,171 shares held by Mr. Spilman's wife, 21,892 shares held
by his children, and 13,962 shares held in trusts of which Mr. Spilman
is the beneficiary.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met five times during the 1999 fiscal year.
Each Director attended at least 75% of the meetings of the Board of Directors
and Committees on which such Director served. The Board of Directors' committees
include an Audit Committee and an Organization, Compensation and Nominating
Committee.
The Audit Committee is composed of Ms. Brinkley and Messrs. Murphy
and Sloan. Among other things, the Audit Committee monitors the performance of
the independent auditors for the Company; recommends their engagement or
dismissal to the Board of Directors; approves all audit and related fees; and
reviews and evaluates audit activities. The Audit Committee met four times
during the fiscal year.
The Organization, Compensation and Nominating Committee is composed
of Messrs. Brown, Capps, Davis and Haworth. The Organization, Compensation and
Nominating Committee reviews and makes recommendations to the Board of Directors
with respect to executive and officer compensation; establishes, reviews and
recommends changes to the organizational structure of the Company so as to
utilize the management resources to best respond to the changing demands of the
marketplace; reviews the individual performance of each Director in terms of
overall contribution to the betterment of the Company, including meeting
attendance and participation; reviews the composition of the Board; and
recommends a slate of Directors for nomination to the Board. The Organization,
Compensation and Nominating Committee met four times during the fiscal year.
The Organization, Compensation and Nominating Committee will
consider recommendations by stockholders as to nominees for Directors. Such
recommendations should be submitted in writing addressed to Jay R. Hervey,
Secretary, Bassett Furniture Industries, Incorporated, Post Office Box 626,
Bassett, Virginia 24055.
CERTAIN TRANSACTIONS
The daughter of James W. McGlothlin (a former Director of the
Company) was a member of a limited liability company that was previously
licensed by the Company as an authorized retailer to sell certain of the
Company's products in stores bearing the Company's name. In connection with this
former licensing arrangement, the Company executed guaranties, which have now
been terminated with no payments having been due, with respect to the limited
liability company's leases of its retail premises and certain equipment. The
terms of the license agreement and the guaranties were negotiated on an
arms-length basis and were comparable to the Company's arrangements with certain
other licensed retailers. Transactions between the Company and its retailers,
including the former arrangements with the limited liability company of which
Mr. McGlothlin's daughter was a member, are negotiated on an arms-length basis.
Information on transactions with Directors or their family members is limited to
the periods during which the Directors hold office.
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE REPORT
The Organization, Compensation and Nominating Committee of the Board
of Directors (the "Committee") has assisted the Company in developing and
implementing compensation policies and programs which seek to improve the
profitability of the Company and to maximize stockholder value over time. To
accomplish this, the Directors who comprise the Committee have developed
executive compensation policies which are consistent with, and directly linked
to, the Company's business objectives. These business objectives represent a
composite of factors that are considered important for the future success of the
Company. These factors attempt to balance long and short-term performance,
including the continued maintenance of a strong balance sheet, growth of pre-tax
profitability and earnings per share, control of costs, market growth and
diversification and other criteria which may be introduced over time as a result
of changes in the household furniture environment. The members of the Committee
deliberate on matters affecting executive compensation. The decisions are
reviewed by the full Board, with the exception of decisions on stock or option
awards which are made by the Committee to satisfy tax law requirements.
The key principles which the Committee emphasizes in developing
compensation programs affecting senior executives are:
5
<PAGE> 8
- Paying for performance that emphasizes corporate, business
unit and individual achievement.
- Motivating senior executives to achieve strategic and tactical
business goals and objectives and rewarding outstanding
achievement.
- Linking the interests of senior executives with the long-term
interests of the stockholders through ownership of the Common
Stock.
As the level of responsibility increases, an executive's
compensation will be proportionately at greater risk, reflecting the rewards
earned as a result of goal attainment. As responsibility increases, the
compensation mix will rely increasingly on the value of stock awards.
Section 162(m) of the Internal Revenue Code (the "Code") imposes a
$1 million limit on the amount of annual compensation that can de deducted by
the Company with respect to each of the Chief Executive Officer and the four
other most highly compensated executive officers. Performance-based compensation
that meets certain requirements will not be subject to this deductibility limit.
It is generally the Company's policy to seek to qualify the performance-based
components of its compensation program for this exclusion from the Section
162(m) limitation as necessary to maximize the deductibility of executive
compensation so long as doing so is consistent with the Committee's objectives
for executive compensation.
The four components of executive compensation are:
Base Salary. The Committee has reviewed the base salaries of the
named executive officers at similar-sized companies and at the companies
included in the performance peer group shown on page 7. The base salaries of the
Company's executive officers are generally in the low- to mid-range compared
with the base salaries at those other companies. In recent years the base
salaries have been kept at a relatively fixed level to reflect the general
economic conditions of the industry and to keep fixed costs under control.
Increases in base salary have generally been the result of increased
responsibilities assumed by an executive officer to strive to increase
profitability of the Company or a business unit in an increasingly competitive
industry. The Committee and the Company emphasize rewards in the total
compensation context (i.e., with greater emphasis on at-risk compensation),
rather than appreciably increasing base salary.
Annual Incentive Bonuses. Annual incentives are established for each
executive in the form of a percentage of base salary. Bonus targets are based on
performance criteria related to achievement of the Company's annual plans, such
as profitability, earnings per share, market growth and returns on invested
capital and equity. The bonuses paid to the Company's executives for the 1999
fiscal year generally ranged from 20% to 50% of the executives' maximum
potential bonus amounts for the year. The determination of the amount of any
bonus to be paid is made after the end of the year based on the degree to which
the performance criteria have been met. At risk, performance-based bonus
compensation averaged approximately 26% of total annual cash compensation for
the named Executive Officers during the fiscal year ended November 27, 1999.
Stock Option Grants. Grants of stock options to the Company's
executives under the Company's stock option plans provide incentives to achieve
the Company's long-term performance objectives. Because the value of stock
options is entirely a function of the value of the Company's stock, the
Committee believes that this component of the Company's compensation package
closely aligns the interests of executive officers and other key managers with
those of the Company's stockholders. Whether a grant will be made to an
executive officer or key manager, and if so in what amount, is determined by the
Committee based on the Committee's subjective evaluation of the executive
officer's potential contribution to the Company's future success, the level of
incentive already provided by the number and terms of existing stock option
holdings and the market price of the Company's Common Stock. Consistent with the
Committee's compensation philosophy, all stock options awarded to executive
officers and other key managers in fiscal year 1999 were granted with a
three-year vesting requirement.
Benefits. These programs are designed to provide protection against
financial catastrophe that can result from illness, disability or death.
Benefits offered to senior executives are similar to those offered to all
employees, with certain variations to promote tax efficiency and the replacement
of benefits lost due to regulatory limitations.
6
<PAGE> 9
Chief Executive Officer's 1999 Compensation. Paul Fulton, the
Company's Chief Executive Officer, was eligible during fiscal year 1999 to
participate in the same compensation programs available to other senior
executives. The base salary component of Mr. Fulton's compensation for fiscal
year 1999 was $300,000 which is unchanged from his base salary in fiscal year
1998. The annual bonus paid to Mr. Fulton for fiscal year 1999 was based upon
the application of quantifiable, objective performance criteria (which were
operating income, return on equity, earnings per share and a comparison of the
Company's total stockholder return to that of the peer group established by the
Company for purposes of the performance graph) and equaled 22% of his maximum
potential bonus amount for the year. No stock options were granted to Mr. Fulton
during fiscal year 1999.
For fiscal year 2000, the Organization, Compensation and Nominating
Committee has again established performance criteria designed to enhance
stockholder value. These criteria are consistent with financial objectives of
the Company and are representative of the success needed to insure growth and
profitability.
Howard H. Haworth, Chairman
Thomas E. Capps Willie D. Davis
Peter W. Brown, M.D. Albert F. Sloan, former member
STOCKHOLDER RETURN PERFORMANCE GRAPH
Presented below is a line graph comparing the yearly percentage
change in the cumulative total stockholder return on the Company's Common Stock
against the cumulative total return of the Standard & Poor's 500 Index and the
Company's peer group for the period commencing December 1, 1994 and ending
November 27, 1999, covering the Company's five fiscal years ended November 27,
1999. The Company's peer group consists of ten publicly traded companies: the
Company, Bush Industries, Inc. Class A Common Stock, Chromcraft Revington Inc.,
Ethan Allen Interiors, Inc., Furniture Brands International, Inc., La-Z-Boy
Incorporated, Ladd Furniture, Inc., Pulaski Furniture Corp., Rowe Furniture
Corp. and Stanley Furniture Company, Inc., each of which is in the household
furniture industry. This graph assumes that $100 was invested on December 1,
1994 in the Company's Common Stock, the S&P 500 Index and the peer group and
that dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
THE S&P 500 INDEX AND THE PEER GROUP
[GRAPH]
Media General Financial Services supplied the data for the Company,
the S&P 500 Index and the Company's peer Group.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The table below shows the compensation paid or accrued by the
Company for the three fiscal years ended November 27, 1999, to or for the
account of the Chief Executive Officer and the Company's four other most highly
compensated officers who were serving at the end of the fiscal year and whose
total annual salary and bonus exceeded $100,000 for the 1999 fiscal year
(collectively, the "named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------- ----------- --------------------------------------------- ------------------------------ ------------
LONG TERM
ANNUAL COMPENSATION COMPENSATION
- ----------------------------- ----------- ------------- ------------ ------------------ ------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
RESTRICTED SECURITIES ALL OTHER
OTHER ANNUAL STOCK UNDERLYING COMPEN-
NAME AND FISCAL SALARY BONUS COMPENSATION AWARD(s) OPTIONS SATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) ($) (#SH) ($)(4)
- ----------------------------- ----------- ------------- ------------ ------------------ ----------- ------------------ ------------
Paul Fulton 1999 300,000 97,518 0 0 5,175
Chairman of the Board and 1998 300,000 241,125 --- 0 0 1,725
Chief Executive Officer 1997 120,161 150,201 --- 0 250,000 0
- ----------------------------- ----------- ------------- ------------ ------------------ ----------- ------------------ ------------
Robert H. Spilman, Jr. 1998 225,000 89,944 --- 0 0 27,615
President and Chief 1999 210,000 108,360 --- 0 40,000 16,371
Operating Officer 1997 175,000 174,583 --- 0 80,000 11,628
- ----------------------------- ----------- ------------- ------------ ------------------ ----------- ------------------ ------------
John S. Lupo 1999 235,000 115,000 --- 0
Executive Vice
President - 1998 28,936 --- --- 0 5,405
Sales and Marketing 1997 --- --- --- 0 75,000 27,450
- ----------------------------- ----------- ------------- ------------ ------------------ ----------- ------------------ ------------
Steven P. Rindskopf 1999 135,000 40,922 --- 8,000 3,844
Vice President -
Administration 1998 125,000 32,625 --- 29,120(5) 23,275 0
and Human Resources 1997 36,250 15,000 --- 47,280(5) 0 0
- ----------------------------- ----------- ------------- ------------ ------------------ ----------- ------------------ ------------
Keith R. Sanders 1999 147,500 22,523 --- 0 40,000 3,074
Executive Vice
President - 1998 32,817 10,718 --- 0 15,000 632
Operations 1997 --- --- --- 0 0 0
- ----------------------------- ----------- ------------- ------------ ------------------ ----------- ------------------ ------------
</TABLE>
- ----------------
(1) The salaries shown above include deferred compensation for each named
Executive Officer under the Section 401(k) qualified, defined
contribution Employee Savings/Retirement Plan.
(2) Under the Company's incentive bonus program, executives are paid cash
awards which are directly related to their performance and contribution
to the attainment of Company objectives and individual goals. Awards
are made annually following the completion of the fiscal year.
(3) No named Executive Officer has received personal benefits during the
listed years in excess of the lesser of $50,000 or 10% of annual
salary and bonus.
(4) Includes amounts accrued under a deferred compensation agreement with
one of the named Executive Officers and Company matching contributions
under the Company's Employee Savings/Retirement Plan. During the 1999
fiscal year, the amount accrued under the deferred compensation
agreement with Mr. Spilman was $20,715.00.
8
<PAGE> 11
(5) Amount represents the dollar value of shares of restricted stock issued
to the named Executive Officers as of the date of the award. On November
27, 1999, Steve Rindskopf held 4,775 shares of restricted stock with a
value equal to $76,400 based on a closing price of the Common Stock of
$16.00 on the most recent trading day preceding November 27, 1999. The
shares are subject to a restriction on sale until November 7, 2002 and
are subject to forfeiture in the event the holder's employment
terminates by reason other than death, disability or retirement prior to
November 7, 2002. Dividends will be paid with respect to the restricted
shares.
The table below shows the individual grants to the named Executive
Officers of stock options during the fiscal year ended November 27, 1999.
OPTION/SAR GRANTS IN THE 1999 FISCAL YEAR
<TABLE>
<CAPTION>
- ------------------------------------ ----------------------- ----------------------- ----------------------- ----------------------
NUMBER OF SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EMPLOYEES EXERCISE OR BASE EXPIRATION
NAME GRANTED (#SH) IN FISCAL YEAR PRICE ($/SH) DATE
- ------------------------------------ ----------------------- ----------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Paul Fulton 0 N/A N/A N/A
- ------------------------------------ ----------------------- ----------------------- ----------------------- ----------------------
Robert H. Spilman, Jr. 0 N/A N/A N/A
- ------------------------------------ ----------------------- ----------------------- ----------------------- ----------------------
John S. Lupo 0 N/A N/A N/A
- ------------------------------------ ----------------------- ----------------------- ----------------------- ----------------------
Steven P. Rindskopf 8,000(2) 3% 20.50 2/11/2009
- ------------------------------------ ----------------------- ----------------------- ----------------------- ----------------------
Keith R. Sanders 40,000(2) 13% 22.56 6/27/2009
- ------------------------------------ ----------------------- ----------------------- ----------------------- ----------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------ -----------------------
GRANT DATE
PRESENT
NAME VALUE ($)(1)
- ------------------------------------ -----------------------
<S> <C>
Paul Fulton N/A
- ------------------------------------ -----------------------
Robert H. Spilman, Jr. N/A
- ------------------------------------ -----------------------
John S. Lupo N/A
- ------------------------------------ -----------------------
Steven P. Rindskopf 44,416
- ------------------------------------ -----------------------
Keith R. Sanders 247,040
- ------------------------------------ -----------------------
</TABLE>
- -------------------
(1) Based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options. The estimated values under the model
are based on arbitrary assumptions as follows: options to be exercised
in five years, stock price volatility at 0.3454, annual dividend yield
of 3.33% and a risk-free interest rate of 4.42% and 4.61%,
respectively, for Messrs. Rindskopf and Sanders. No downward
adjustments are made to the resulting grant-date option values to
account for potential forfeitures or non-transferability of the
options. The actual value of the options depends upon the actual
performance of the Company's stock during the applicable period.
(2) These options were granted pursuant to the Company's 1997 Employee
Stock Plan, and will become exercisable three years from the date of
grant and have an exercise price equal to the market price of the
Company's Common Stock on the date of grant. The exercisability of the
options is subject to acceleration in the discretion of the
Organization, Compensation and Nominating Committee and upon the
occurrence of a change in control.
The table below shows, on an aggregated basis, each exercise of stock
options during the fiscal year ended November 27, 1999 by each named Executive
Officer and the 1999 fiscal year-end value of unexercised in-the-money options.
AGGREGATED OPTION/SAR EXERCISES IN THE 1999 FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SHARES ACQUIRED NUMBER OF SECURITIES UNDERLYING
ON EXERCISE UNEXERCISED OPTIONS/SARS AT FY-END
NAME (#SH) VALUE REALIZED ($) (#SH)(1) EXERCISABLE/UNEXERCISABLE
- ------------------------------------ ------------------ -------------------- ----------------------------------------
<S> <C> <C> <C>
Paul Fulton 0 0 250,000/0
- ------------------------------------ ------------------ -------------------- ----------------------------------------
Robert H. Spilman, Jr. 0 0 92,713/40,000
- ------------------------------------ ------------------ -------------------- ----------------------------------------
John S. Lupo 0 0 0/75,000
- ------------------------------------ ------------------ -------------------- ----------------------------------------
Steven P. Rindskopf 0 0 0/36,000
- ------------------------------------ ------------------ -------------------- ----------------------------------------
Keith R. Sanders 0 0 0/55,000
- ------------------------------------ ------------------ -------------------- ----------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FY-END ($)(1)(2)
NAME EXERCISABLE/UNEXERCISABLE
- ------------------------------------ ----------------------------------------
<S> <C>
Paul Fulton 0/0
- ------------------------------------ ----------------------------------------
Robert H. Spilman, Jr. 0/0
- ------------------------------------ ----------------------------------------
John S. Lupo --/0
- ------------------------------------ ----------------------------------------
Steven P. Rindskopf --/0
- ------------------------------------ ----------------------------------------
Keith R. Sanders --/0
- ------------------------------------ ----------------------------------------
</TABLE>
- -------------------
9
<PAGE> 12
(1) No SARs were exercised in 1999 and there were no SARs outstanding at the
1999 fiscal year end.
(2) Represents the difference between the fair market value of the
Company's Common Stock and the exercise price at the fiscal year end.
SUPPLEMENTAL RETIREMENT INCOME PLAN
The Company has a Supplemental Retirement Income Plan (the
"Supplemental Plan") that covers certain senior executives to promote their long
service and dedication and to provide an additional retirement benefit. Upon
retirement, the Supplemental Plan provides for lifetime monthly payments in an
amount equal to 65% of the participant's final average compensation as defined
in the Supplemental Plan, which amount is reduced by (i) 50% of old age social
security benefits, (ii) the benefit that would be payable on a life annuity
basis from Company contributions to the Employee Savings/Retirement Plan based
on a formula using maximum employee contributions, and (iii) the benefit that
would be payable on a life annuity basis from funds the Company contributed to a
Defined Benefit Plan that was terminated in 1977. There is no provision under
the Supplemental Plan for a disability benefit if a participant's employment is
terminated prior to age 65 due to disability; however, the participant,
notwithstanding the termination of employment, will continue to be covered by
the Supplemental Plan. The death benefit is divided into (a) prior to retirement
death, which pays the beneficiary 50% of final average compensation for a period
of 120 months, and (b) post retirement death, which pays the beneficiary 200% of
final average compensation in a single payment. There are no benefits payable as
a result of a termination of employment for any reason other than death or
retirement. The Supplemental Plan contains a change of control provision which
provides for the immediate vesting and payment of the retirement benefit under
the Supplemental Plan in the event of an employment termination resulting from a
change of control. The executives covered under this Supplemental Plan have
waived participation in the Company's Group Life Insurance Program.
Assuming no change in the rate of compensation for Robert H. Spilman, Jr.
after November 27, 1999, it is projected that the benefit that would otherwise
have been payable on retirement at age 65 to Mr. Spilman will be fully offset by
the benefits calculated (using the aforementioned formula) to be payable from
Company contributions to the Employee Savings/Retirement Plan. Mr. Spilman is
the only named Executive Officer participating in the Supplemental Plan.
DEFERRED COMPENSATION AGREEMENT
Robert H. Spilman, Jr. has entered into a Deferred Compensation Agreement
with the Company pursuant to the Executive Deferred Compensation Plan. Under
that agreement, Mr. Spilman deferred a portion of his compensation over a
four-year period. Upon Mr. Spilman's retirement, death or disability, he would
be entitled to the following payments for a fifteen year period: upon his
retirement, $108,125.20; upon his death, $14,776.40; and upon his disability,
$8,200.00.
SEVERANCE ARRANGEMENTS WITH FORMER EXECUTIVES
The Company has entered into severance arrangements with two former
executive officers, John Lupo and Douglas W. Miller. Mr. Lupo, formerly
Executive Vice President - Sales and Marketing, terminated in November 1999 and
is receiving severance payments which will total $117,500, representing one-half
of his salary for the 1999 fiscal year. Mr. Miller, formerly Vice President and
Chief Financial Officer, terminated in January 1999 and has received severance
totaling $196,145 (representing twelve months continuation of his salary at the
rate in effect at termination and a lump sum payment of $79,145 paid at the end
of his severance).
DIRECTOR COMPENSATION
Directors who are also employees of the Company receive no additional
compensation for serving as directors. Directors who are not employees of the
Company receive an annual retainer fee of $20,000. Chairpersons of the Board of
Directors standing committees receive an additional fee of $1,000 per Board
meeting.
10
<PAGE> 13
Under the Company's 1993 Stock Plan for Non-Employee Directors (the
"Director Plan"), each Director who is not a regular employee of the Company
automatically receives an option to purchase 2,500 shares of Common Stock upon
his or her initial election to the Board of Directors and on each April 1
thereafter automatically receives an option to purchase 1,000 shares of Common
Stock. All such options have an exercise price equal to the market price of the
Common Stock on the date of grant and are subject to adjustment in the event of
stock dividends and splits, recapitalizations and similar transactions.
An option granted under the Director Plan is not exercisable unless the
optionee remains available to serve as a Director of the Company for six months
after the date of grant. An optionee's rights under all outstanding options will
terminate three years after his termination as a Director, unless the
termination is because of death or disability, in which case the options will be
exercisable for one year after such termination. Unless earlier terminated, all
options granted under the Director Plan expire ten years from the date of grant.
In addition, the Director Plan provides that eligible Directors of the
Company may make quarterly irrevocable elections to receive up to 100% of their
compensation in the form of stock awards. The total number of shares subject to
a stock award will be determined by dividing the amount of the Director's
compensation that is to be paid in Common Stock by 90% of the fair market value
of the Common Stock on the date the award is made. The Director may specify the
percentage of the Director's compensation subject to the election, and the
percentage of and the dates on which the shares covered by the stock award are
to be issued. In the event a Director ceases to be a member of the Board of
Directors for any reason, the total number of shares subject to an award which
have not yet been issued to the Director will be issued to the Director within
one year of his termination as a Director.
The Director Plan is proposed to be amended in the manner described
under "Proposal 3--Amendment of the Company's 1993 Stock Plan for Non-Employee
Directors."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's Directors and executive officers and persons who
own more than 10% of the Company's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of the Common Stock and other equity securities. Executive officers,
Directors and greater than 10% stockholders are required to furnish the Company
with copies of all such reports they file. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, during the fiscal
year ended November 27, 1999, all Section 16(a) filing requirements applicable
to its executive officers, Directors and greater than 10% beneficial
stockholders were complied with, except that through inadvertence Howard H.
Haworth was late in reporting a purchase of Common Stock.
PROPOSAL NO. 2
APPROVAL OF THE COMPANY'S
2000 EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, there will be submitted to stockholders a
proposal to approve the adoption of the Company's 2000 Employee Stock Purchase
Plan (the "Employee Plan") for the benefit of the employees of the Company and
participating subsidiaries. The Board of Directors believes that the Employee
Plan is in the best interests of the Company and its stockholders and employees.
The Employee Plan was adopted by the Board of Directors on January 18, 2000 and
will become effective as of March 28, 2000 if approved by the stockholders.
The Employee Plan is designed to encourage and assist a broad
spectrum of the Company's employees to acquire an equity interest in the Company
through the purchase of Common Stock by means of payroll deductions. It is
believed that the employees' participation in the ownership of the Company will
enhance their interest in the success and progress of the Company. The Company
also believes that the Employee Plan will assist it in recruiting and retaining
employees.
11
<PAGE> 14
The following description of the Employee Plan is not intended to be
complete and is qualified in its entirety by the complete text of the Employee
Plan, which is attached to this Proxy Statement as Exhibit A.
ADMINISTRATION
The Employee Plan will be administered, at the Company's expense, by
the Organization, Compensation and Nominating Committee of the Board of
Directors (the "Plan Committee"). The Plan Committee will have the authority to
interpret the Employee Plan, to make and revise rules and regulations relating
to it and to make all other determination in administering the Employee Plan.
The Plan Committee may delegate some of its routine administrative duties to
Company management.
SHARES ISSUABLE PURSUANT TO THE PLAN
The maximum number of shares of Common Stock that may be issued
under the Employee Plan will be 400,000 (subject to equitable adjustments to
reflect any stock splits, stock dividends or other changes affecting the Common
Stock).
ELIGIBILITY
Any employee of the Company or its subsidiaries designated by the
Plan Committee for participation is eligible to participate in the Employee Plan
if he or she is customarily employed for more than 20 hours per week and for
more than five months per calendar year, except that no employee may participate
if, immediately after a purchase under the plan, the employee would own 5% or
more of the Company's Common Stock. However, the Plan Committee may exclude from
participation such executive officers of the Company or its subsidiaries as the
Plan Committee may determine. Approximately 4600 employees will be eligible to
participate.
PURCHASE OF COMMON STOCK
Shares of Common Stock will be offered under the Employee Plan
through a series of successive three-month offering periods, coinciding
generally with the Company's fiscal quarters. The commencement date and the
duration of an offering period may be changed by the Plan Committee with prior
notice. If the Employee Plan is approved by the stockholders, the first offering
period will begin on August 27, 2000. As of the last day of each offering
period, the Company's transfer agent will automatically apply the funds then in
the participant's account to the purchase of shares of Common Stock. All shares
purchased under the Employee Plan will be held by the Company's transfer agent
in separate investment accounts for each participating employee. The purchase
price for each share will be 85% of the lower of the fair market value of the
Common Stock on The Nasdaq National Market on (i) the first day of the offering
period or (ii) the last day of the offering period. If the number of shares that
would otherwise be purchased at the end of an offering period exceeds the number
of shares remaining available under the Employee Plan, the number of shares so
purchased will be reduced pro rata.
PAYMENT OF PURCHASE PRICE; WITHDRAWAL OF FUNDS
The purchase price of the shares to be acquired under the Employee
Plan is accumulated by payroll deductions during the offering period. The
minimum contribution is $10 per weekly payroll period and $20 per monthly or
bi-weekly payroll period. No employee may accrue the right at any time to
purchase Common Stock at a rate exceeding $25,000 in fair market value in any
one calendar year. A participant may increase or decrease the amount of his or
her payroll deduction by filing the appropriate form at least 30 days prior to
the beginning of the offering period in which the change is to become effective.
A participant may withdraw from the Employee Plan at any time by
filing the appropriate form at least 30 days prior to the payroll period in
which participation is to end, with the withdrawal being effective as of the end
of that payroll period. A withdrawing employee may not participate in the
Employee Plan again until the end of the next completed offering period. If a
participant dies or retires or if his or her employment is terminated for any
reason, the employee's participation in the Employee Plan will end effectively
immediately. Following the termination of an employee's participation as
described above, the transfer agent will refund to the employee (or in
12
<PAGE> 15
the case of death, to his or her estate), the amount of the employee's
uninvested payroll deductions, as well as any shares of Common Stock credited to
the employee's investment account.
NON-TRANSFERABILITY
The right of an eligible employee to participate in the Plan is not
transferable and is exercisable during the employee's lifetime only by him or
her.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may at any time amend the Employee Plan in
any respect without the approval of the stockholders, except that without
stockholder approval no amendment to the Plan may be made that increases the
number of shares issuable under the Employee Plan (other than equitable
adjustments for changes in capitalization) or permits persons other than
employees to participate in the Employee Plan.
The Employee Plan and all rights of employees under the Employee
Plan will terminate on the date that participating employees become entitled to
purchase a number of shares greater than or equal to the number of shares
remaining available under the Employee Plan. In addition, the Board of Directors
may terminate the Employee Plan at any time, in its discretion, after the
completion of any offering period.
UNITED STATES FEDERAL INCOME TAX INFORMATION
The Employee Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Internal Revenue Code (the "Code"). Under these provisions, no income
will be taxable to a participant until the shares purchased under the Employee
Plan are sold or otherwise disposed of. Upon sale or other disposition of the
shares, the participant will generally be subject to tax and the amount of the
tax will depend upon how long the shares have been held by the participant. If
the shares are sold or otherwise disposed of more than two years from the first
day of the applicable offering period or more than one year after the applicable
purchase date, the participant will recognize ordinary income measured as the
lesser of (a) the excess of the fair market value of the shares at the time of
such sale or disposition over the purchase price, or (b) an amount equal to 15%
of the fair market value of the shares as of the first day of the applicable
offering period. Any additional gain will be treated as long-term capital gain,
taxed at a maximum rate of 20%. If the shares are sold or otherwise disposed of
before the expiration of these holding periods, the participant will recognize
ordinary income generally measured as the excess of the fair market value of the
shares on the date the shares are purchased over the purchase price. Any
additional gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on the holding period. The Company is
not entitled to a deduction for amounts taxed as ordinary income or capital gain
to a participant except to the extent of ordinary income recognized by
participants upon a sale or disposition of shares prior to the expiration of the
holding period(s) described above.
The foregoing is only a summary of the effect of federal income
taxation upon the participant and the Company with respect to the shares
purchased under the Employee Plan. Reference should be made to the applicable
provisions of the Code. In addition, this summary does not discuss the tax
consequences of a participant's death or the income tax laws of any state or
foreign country in which the participant may reside.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the approval of the
Company's 2000 Employee Stock Purchase Plan.
13
<PAGE> 16
PROPOSAL NO. 3
AMENDMENTS TO THE COMPANY'S
1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
At the Annual Meeting, the stockholders will be asked to approve
certain amendments to the Company's 1993 Stock Plan for Non-Employee Directors
(the "Director Plan"). The Director Plan was previously approved by stockholders
at the 1993 Annual Meeting. The Director Plan is intended to provide Directors
who are not employees of the Company with a sense of proprietorship and personal
involvement in the development and financial success of the Company and to
encourage such Directors to remain with and to devote their best efforts to the
Company.
AMENDMENTS TO THE DIRECTOR PLAN
If the amendments to the Director Plan are approved, the number of
shares reserved for issuance under the plan will increase from 75,000 to
125,000. In addition, under the Director Plan, as amended, (i) each non-employee
Director will be required to receive at least one-half of his or her annual
retainer fee in the form of Common Stock, whereas previously a Director received
Common Stock in lieu of part or all of his or her compensation only if he or she
elected to do so, (ii) all shares of Common Stock issued pursuant to a stock
award will be issued at fair market value on the date of the award instead of at
a discount, (iii) Directors may no longer defer the receipt of stock awards,
(iv) shares of Common Stock allocated to options that expire or otherwise
terminate unexercised will be available for future option grants or stock awards
under the plan, and (v) the Director Plan may not be amended without stockholder
approval to increase the number of shares issuable under the plan or to reduce
the price at which shares are issued under the plan.
DESCRIPTION OF THE PLAN AS PROPOSED TO BE AMENDED
The following description of the Director Plan, as amended, is not
intended to be a complete description of all of the provisions of the plan. Any
stockholder who wishes to obtain a copy of the actual plan document, as amended,
may do so upon written request to Jay R. Hervey, Secretary, Bassett Furniture
Industries, Incorporated, Post Office Box 626, Bassett, Virginia 24055.
Shares Issuable Pursuant to the Plan
The Board of Directors has reserved 125,000 shares of Common Stock for
issuance upon exercise of the options granted and the payment of stock awards
under the Director Plan. This number, as well as the number of shares issuable
upon exercise of an option and the number of shares subject to a stock award, is
subject to adjustment in the event of stock dividends and splits,
recapitalizations and similar transactions. Shares of Common Stock allocated to
options that expire or otherwise terminate unexercised will again be available
for the granting of a stock option or issuance pursuant to a stock award.
Eligibility
The only persons eligible to receive options or stock awards under the
Director Plan are Directors of the Company who are not regular employees of the
Company on the date of grant of the option or the award. There are currently
seven Directors eligible to participate in the Director Plan.
Stock Option Grants
Each eligible Director automatically receives an option to purchase
2,500 shares of Common Stock upon his or her initial election to the Board of
Directors and, on each April 1 thereafter, automatically receives an option to
purchase 1,000 shares of Common Stock. If there are not sufficient shares
reserved for such grants, each eligible Director will receive an option for a
pro rata number of the remaining shares reserved for grant.
All options granted under the Director Plan have an exercise price
equal to the fair market value of the Common Stock on the date of grant. The
exercise price must be paid at the time of exercise in cash or its equivalent.
The fair market value of a share of Common Stock on February 16, 2000 was
$14.03.
14
<PAGE> 17
An option granted under the Director Plan is not exercisable unless the
optionee remains available to serve as a Director of the Company for six months
after the date of grant. On or after such six months, any or all of such options
may be exercised until the expiration or termination of the option. An
optionee's rights under all outstanding options will terminate three months
after his or her termination as a Director, unless the termination is because of
death or disability, in which case the options will be exercisable for one year
after such termination. Subject to earlier termination as previously discussed,
all options granted under the Director Plan will expire ten years from the date
of grant.
Options granted under the Director Plan are not transferable and may be
exercised during the Director's lifetime only by him or her.
Common Stock Awards
On April 1 of each year, each eligible Director will receive one-half
of his or her annual retainer fee in the form of a Common Stock award. In
addition, each eligible Director may elect to receive all or part of the
remaining portion of his or her annual retainer fee on October 1 in the form of
a Common Stock award. Such election must specify the percentage of the
Director's remaining annual retainer fee that is to be paid in Common Stock and
must be made in writing no later than September 1 of the year for which the
election is made. The total number of shares of Common Stock to be issued
pursuant to a stock award is determined by dividing the amount of the Director's
compensation that is to be paid in Common Stock by the fair market value of a
share of the Common Stock on the date the award is made.
Amendment and Termination of the Plan
The Board of Directors may terminate, suspend or amend the Director
Plan at any time except that (i) without stockholder approval, no amendment may
be made that would increase the number of shares of Common Stock issuable under
the Director Plan or allow the exercise price of options or the price of stock
awards to be less than the fair market value of the Common Stock on the date of
grant, (ii) no termination, suspension or amendment can adversely affect the
rights of a Director as to any outstanding options(s) without the Director's
consent unless the amendment is necessary to preserve or provide exemptions from
the applicability of Section 16(b) of the Exchange Act, and (iii) no amendment
regarding the eligibility of Directors to receive option grants, the date of
grant and the number of options granted to a Director may be made more than once
every six months unless the amendment is necessary to comply with changes in the
Code or the rules and regulations thereunder. Unless sooner terminated by the
Board of Directors, the Director Plan will terminate on October 31, 2003.
UNITED STATES FEDERAL INCOME TAX INFORMATION
For federal income tax purposes, a Director receiving an option under
the Director Plan will realize no taxable income when the option is granted.
Upon exercise of the option, the amount by which the fair market value of the
shares purchased pursuant to such exercise exceeds the exercise price will be
treated as compensation income received by the Director and the Company will
receive an income tax deduction in the same amount. Upon the subsequent
disposition of shares received upon the exercise of an option, generally any
amount realized in excess of the Director's basis (usually the fair market value
at the time of exercise) will be taxed as a capital gain and any amount realized
which is less than the Director's basis will be treated as a capital loss.
For federal income tax purposes, a Director will realize no taxable
income when an election is made to receive a portion of the annual retainer fee
as a stock award. When shares of Common Stock are issued to the Director
pursuant to a stock award, whether automatically or pursuant to an election, the
fair market value thereof at the date of issuance will be taxed as ordinary
income to the Director and the Company will receive an income tax deduction in
the same amount.
DIRECTOR PLAN BENEFITS TABLE
The following table shows the number of shares underlying options
that will be granted to non-employee Directors and the minimum dollar value of
stock awards that will be issued to such Directors under the amended Director
Plan during the 2000 fiscal year. These benefits are substantially the same as
the non-employee Directors have been receiving under the Director Plan, except
that prior to the amendments (i) such Directors did not receive
15
<PAGE> 18
any stock awards in lieu of their annual retainers unless they elected to
do so and (ii) to the extent a Director elected to receive a stock award, the
dollar value of the shares of Common Stock received would have been higher due
to the former discount.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STOCK AWARDS
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
NUMBER OF SHARES MINIMUM DOLLAR VALUE MAXIMUM DOLLAR VALUE
UNDERLYING OF SHARES RECEIVED IN OF SHARES RECEIVED IN
NAME AND POSITION ANNUAL AUTOMATIC LIEU OF CASH LIEU OF CASH
OPTION GRANT (#)(1) RETAINER ($)(2)(4) RETAINER ($)(3)(4)
- -----------------------------------------------------------------------------------------------------------------------------------
Directors
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
<S> <C> <C> <C>
Amy Woods Brinkley 1,000 10,000 20,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
Peter W. Brown, M.D. 1,000 10,000 20,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
Thomas E. Capps 1,000 10,000 20,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
Willie D. Davis 1,000 10,000 20,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
Alan T. Dickson 1,000 10,000 20,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
Howard H. Haworth 1,000 10,000 20,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
Michael E. Murphy 1,000 10,000 20,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
Non-Employee Directors Group 7,000 70,000 140,000
- --------------------------------- ----------------------------- ------------------------------------ ------------------------------
</TABLE>
- --------------------------
(1) The exercise price of all options granted under the plan is the fair
market value of the Common Stock on the date of grant.
(2) Represents one-half of the Directors' annual retainer fees which the
Directors are required to receive in the form of stock awards.
(3) Represents 100% of the Directors' annual retainer fees which the
Directors could receive in the form of stock awards if the Directors elect
to receive the remaining one-half of their annual retainer fees in the form
of stock awards.
(4) All stock awards are issued at fair market value on the date of the award.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the approval of the
amendments to the Company's 1993 Stock Plan for Non-Employee Directors.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation and approval of the Audit Committee, the Board
of Directors has approved the selection of Arthur Andersen LLP as independent
public accountants to audit the financial statements of the Company for the
fiscal year ending November 25, 2000. This selection is being presented to the
stockholders for their ratification at the Annual Meeting of Stockholders. The
firm of Arthur Andersen LLP is considered well qualified. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting of
Stockholders with an opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of Arthur Andersen LLP as independent public accountants to audit the
financial statements of the Company for the fiscal year ending November 25,
2000, and proxies solicited by the Board of Directors will be so voted unless
stockholders specify a different
16
<PAGE> 19
choice. If the stockholders do not ratify the selection of Arthur Andersen
LLP, the selection of independent public accountants will be reconsidered by the
Board of Directors.
STOCKHOLDER PROPOSALS FOR INCLUSION IN THE PROXY STATEMENT
Any proposal that a stockholder intends to present for action at the
2001 Annual Meeting of Stockholders, currently scheduled for March 27, 2001,
must be received by the Company no later than October 29, 2000, in order for the
proposal to be included in the proxy statement and form of proxy for the 2001
Annual Meeting of Stockholders. The proposal should be sent to Jay R. Hervey,
Secretary, Bassett Furniture Industries, Incorporated, Post Office Box 626,
Bassett, Virginia 24055.
OTHER STOCKHOLDER PROPOSALS AND NOMINATIONS
The Company's Bylaws prescribe the procedures that a stockholder must
follow to nominate directors for election at an annual meeting or to bring other
business before an annual meeting (other than matters that have been included in
the Company's proxy statement for such meeting). The Chairman of the meeting may
refuse to acknowledge the nomination of any person as a director or any other
proposal by a stockholder not made in compliance with these procedures. The
following summary of these procedures is qualified by reference to the Company's
Bylaws, a copy of which may be obtained, without charge, upon written request to
Jay R. Hervey, Secretary, Bassett Furniture Industries, Incorporated, Post
Office Box 626, Bassett, Virginia 24055.
A stockholder who desires to nominate a director for election at an
annual meeting must give timely written notice thereof to the Secretary of the
Company by personal delivery or by registered or certified mail, postage
prepaid, at the address shown above. To be timely, a stockholder's notice must
be received not later than December 28, 2000 for nominations to be made at the
2001 Annual Meeting. The notice must contain the information specified in the
Bylaws regarding the stockholder giving the notice and each person whom the
stockholder wishes to nominate for election as a director. The notice must be
accompanied by the written consent of each proposed nominee to serve as a
director of the Company, if elected.
A stockholder who desires to bring any other business before an annual
meeting (other than matters that have been included in the Company's proxy
statement for such meeting) must give timely written notice thereof to the
Secretary of the Company by personal delivery or by registered or certified
mail, postage prepaid, at the address shown above. To be timely, a stockholder's
notice must be received not later than October 19, 2000 for business to be acted
upon at the 2001 Annual Meeting. The notice must contain the information
specified in the Bylaws regarding the stockholder giving the notice and the
business proposed to be brought before the meeting.
With respect to stockholder proposals not included in the Company's
proxy statement for the 2001 Annual Meeting, the persons named in the Board of
Directors' proxy for such meeting will be entitled to exercise the discretionary
voting power conferred by such proxy under the circumstances specified in Rule
14a-4(c) under the Exchange Act, including with respect to proposals received by
the Company after October 19, 2000.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED NOVEMBER 27, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
CAN BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO JAY R. HERVEY, SECRETARY,
BASSETT FURNITURE INDUSTRIES, INCORPORATED, POST OFFICE BOX 626, BASSETT,
VIRGINIA 24055.
17
<PAGE> 20
EXHIBIT "A"
BASSETT FURNITURE INDUSTRIES, INCORPORATED
2000 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF PLAN.
The purpose of the Bassett Furniture Industries, Incorporated 2000 Qualified
Employee Stock Purchase Plan (the "Plan") is to enhance employee interest in the
success and progress of the Bassett Furniture Industries, Incorporated
("Bassett" or the "Company"), by encouraging employee ownership of Common Stock,
$5.00 par value, of the Company ("Common Stock"). The Plan provides the
opportunity to purchase Bassett Common Stock at a 15% discount to the market
price on the Purchase Date through payroll deductions. The Plan is intended to
qualify as an employee stock purchase plan under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code") and shall be administered in
accordance with the requirements of that Section.
2. ELIGIBLE EMPLOYEES.
Any employee (as determined by the Company in its sole discretion and without
reference to any definition of employee under the Code or any other statutory or
regulatory definition) of the Company or its subsidiaries designated by the Plan
Committee (as defined below) for participation (except such executive officers
of the Company or its subsidiaries as the Plan Committee may determine) is
eligible to participate in the Plan, except employees:
(a) whose customary employment is 20 hours or less per week
or five months or less in any calendar year; or
(b) who own, or are considered as owning under Code Section
424(d), 5% or more of the total combined voting power or
value of all classes of stock of the Company or any
participating subsidiary, including the Common Stock
that would otherwise be purchased during the Offering
Period (as defined in Section 6).
Employees eligible to participate in the Plan as defined in this Section 2 are
referred to as "Eligible Employees."
3. ELECTION TO PARTICIPATE
Participation in the Plan is voluntary. Each employee who is an Eligible
Employee may participate in the Plan by completing and delivering to the
Company's Human Resources department an Enrollment/Withdrawal Form. The
completed Enrollment/Withdrawal Form must be received by the Human Resources
department no later than thirty (30) days prior to the beginning of a payroll
period in order to participate in the Plan for that payroll period and
subsequent payroll periods. Eligible Employees who elect to participate in the
Plan in accordance with this Section 3 are referred to herein as "Participating
Employees."
By electing to participate in the Plan, a Participating Employee authorizes the
Company to withhold the amount designated by the Participating Employee on the
Enrollment/Withdrawal Form from the Participating Employee's paycheck for the
next and subsequent payroll periods after timely submission of the
Enrollment/Withdrawal Form. A Participating Employee may only increase or
decrease his or her payroll deduction by timely filing a new
Enrollment/Withdrawal Form at least thirty (30) days prior to the beginning of
the Offering Period in which the increase or decrease is to become effective. So
long as the Plan remains in effect, once an Eligible Employee enrolls in the
Plan, he or she will automatically continue participation on the same basis,
unless he or she elects to change deduction amounts, withdraws from
participation in the Plan, or becomes ineligible to participate in the Plan.
18
<PAGE> 21
Changes in deduction amounts or participation in the Plan must be communicated
in writing to the Company's Human Resources department through timely submission
of a new Enrollment/Withdrawal Form.
4. INVESTING IN THE PLAN.
Elections for Plan investments must be made in whole dollar amounts and
specified on the Enrollment/Withdrawal Form. The minimum dollar amount for
payroll deductions is $10.00 per pay period for employees that are paid weekly
and $20.00 per pay period for employees that are paid bi-weekly or monthly.
5. USE OF FUNDS; NO INTEREST PAID.
All funds received by the Company under the Plan may be included in the general
funds of the Company and may be used by the Company for any corporate purpose.
No separate account or trust fund must be established to hold funds received
under the Plan. No interest will be paid to any Participating Employee for
amounts invested in the Plan.
6. PURCHASES OF COMMON STOCK UNDER THE PLAN.
As of each Purchase Date (as defined in Section 7), each Participating Employee
will be deemed to have purchased, without any further action, a number of whole
and fractional shares of Common Stock determined by dividing the amount of his
or her payroll deductions for the preceding Offering Period (as defined below)
by eighty-five percent (85 %) of the Fair Market Value of a share of Common
Stock as of the Purchase Date. Fractional shares purchased will be combined with
subsequent purchases under the Plan to make whole shares.
Offering Periods begin on the first trading day after the beginning of each of
the Company's accounting quarters beginning with the accounting quarter
commencing on August 27, 2000 and end on the last trading day immediately
preceding the commencement date of the following Offering Period, (each, an
"Offering Period"). The Plan Committee has the power to change the commencement
dates and/or duration of an Offering Period with respect to any future Offering
Period if the change is announced at least fourteen (14) days prior to the
scheduled beginning of the Offering Period to be affected.
7. PURCHASE PRICE.
The purchase price for each share of Common Stock purchased under the Plan for
an Offering Period will be eight-five percent (85%) of the lesser of the Fair
Market Value of the Common Stock on (x) the first day of the Offering Period or,
(y) the last day of the Offering Period (the "Purchase Date").
"Fair Market Value" of the Common Stock as of a Purchase Date will be determined
by the Plan Committee by any fair and reasonable means, including (a) if the
Common Stock is listed for trading on a national securities exchange or is
quoted in the over-the-counter market on the basis of last sales prices, the
average of the high and low sales prices on the exchange or the last sales price
on the over-the-counter market on the Purchase Date or (b) if the Common Stock
is not listed for trading on a national securities exchange or quoted in the
over-the-counter market on the basis of last sales prices, but is traded in the
over-the-counter market, the average of the bid and asked prices for the Common
Stock at the close of business on the Purchase Price.
8. INVESTMENT ACCOUNTS.
All shares Purchased under the Plan will be maintained by the Company's transfer
agent ("Transfer Agent") in separate investment accounts ("Investment Accounts")
for each Participating Employee. Each Investment Account may be in the name of
the Participating Employee, or if he or she so indicates on the
Enrollment/Withdrawal Form, in the Participating Employee's name jointly with a
member of the Participating Employee's family, with right of survivorship. An
employee who is a resident of a jurisdiction that does not recognize a joint
tenancy may have an Investment Account as tenant in common with a family member,
without right of survivorship.
19
<PAGE> 22
9. SALE OR TRANSFER OF COMMON STOCK.
A Participating Employee may sell or transfer any Common Stock in the Employee's
Investment Account at any time after purchase, subject to limitations, if any,
imposed by applicable laws and procedures instituted by the Company. A sale may
be made through the Transfer Agent or by the employee's own broker. Any sale or
transfer is subject to any commission or other sales or transfer charges, which
shall be paid by the Participating Employee.
10. LIMITATION ON NUMBER OF SHARES THAT AN EMPLOYEE MAY PURCHASE.
No employee may purchase Common Stock with a Fair Market Value on the first day
of the Offering Period of more than $25,000.00 in any one calendar year.
11. SHARES RESERVED FOR THE PLAN.
There will be reserved for issuance and purchase by employees under the Plan an
aggregate of 400,000 shares of Common Stock, subject to adjustment as provided
in Section 12. Shares subject to the Plan will be shares authorized but
unissued. If reserved shares are not purchased by a Participating Employee for
any reason or if a right to purchase terminates as provided in the Plan, the
unpurchased shares will again become available for issuance under the Plan
unless the Plan has been terminated, but the unpurchased shares will not
increase the aggregate number of shares reserved for purchase under the Plan.
12. ADJUSTMENT IN CASE OF CHANGES AFFECTING THE COMPANY'S STOCK.
If the outstanding shares of Common Stock are subdivided or split, or a stock
dividend is paid thereon, the number of shares reserved under this Plan will be
adjusted proportionately, and the other provisions of the Plan may be adjusted
as the Board of Directors of the Company may deem necessary or equitable. If any
other change affecting the Common Stock occurs, the Board of Directors may make
such adjustments as they deem equitable to give proper effect to such event.
13. RIGHT AS A STOCKHOLDER.
When at least one whole share of Common Stock is deemed purchased for a
Participating Employee's account, the employee will have all of the rights or
privileges of a stockholder of the Company with respect to whole shares
purchased under the Plan whether or not certificates representing full shares
are issued. Any cash or stock dividend or other distribution on Common Stock
held in a Participating Employee's Investment Account will be credited to the
account. Proxy information will be provided for each meeting of the Company's
stockholders so that each Participating Employee may vote his or her shares in
accordance with his or her instructions. If no written instructions are received
on a timely basis, the voting of shares in the account will be governed by the
rules and policies of the NASDAQ and the Securities and Exchange Commission.
14. RIGHTS NOT TRANSFERABLE.
The right to participate in the Plan is not transferable by a Participating
Employee and is exercisable during his lifetime only by him.
15. WITHDRAWING FROM THE PLAN.
A Participating Employee may withdraw from the Plan at any time by properly
completing and delivering an Enrollment/Withdrawal Form to the payroll
department at least thirty (30) days prior to the payroll period in which
participation is to end, with the withdrawal being effective as of the end of
that payroll period and thereafter. After a Participating Employee properly
withdraws from the Plan, the Transfer Agent will deliver to the withdrawing
Employee the balance of his or her uninvested payroll deductions as soon as
practicable after withdrawal. The Transfer Agent also will deliver to the
withdrawing Employee the whole shares of Common Stock credited to the employee's
Investment Account under the Plan and remit the remaining funds by check. A
withdrawing employee may not participate in the Plan again until the next
Offering Period after the one in which the employee withdrew. To rejoin the
Plan, a new Enrollment/Withdrawal Form must be submitted.
20
<PAGE> 23
16. DEATH, RETIREMENT OR TERMINATION OF EMPLOYMENT
If a Participating Employee dies or retires or if his or her employment is
terminated for any reason, the Participating Employee's participation in the
Plan will end effective immediately and the amount of the employee's uninvested
payroll deductions will be refunded to the employee, or in the case of death to
his or her estate. The Transfer Agent also will deliver to the employee or his
or her estate the whole shares of Common Stock credited to the employee's
Investment Account under the Plan and sell fractional shares on the open market
and remit the net proceeds by check.
17. ADMINISTRATION OF THE PLAN.
The Plan will be administered, at the Company's expense, by the Organization,
Compensation and Nominating Committee of the Board of Directors or any successor
committee appointed by the Board of Directors (the "Plan Committee"). Subject to
the express provisions of the Plan, the Plan Committee will have authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable in
administering the Plan, all of which determinations will be final and binding
upon all persons unless determined otherwise by the Board of Directors. The Plan
Committee may delegate the day-to-day administration of the Plan and may request
advice or assistance or employ such other persons as are necessary for proper
administration of the Plan.
18. AMENDMENT OF THE PLAN.
The Board of Directors may at any time, or from time to time, amend the Plan in
any respect, except that no amendment shall be made without shareholder approval
increasing the number of shares to be reserved under the Plan (other than as
provided in Section 12). No amendment will be permitted that will cause the Plan
to fail to meet the requirements of Section 423 of the Code.
19. TERMINATION OF THE PLAN.
The Plan and all rights of employees under the Plan will terminate: (a) on the
Purchase Date that Participating Employees become entitled to purchase a number
of shares greater than the number of reserved shares remaining available for
purchase (and no such additional shares shall then be purchased); or (b) at any
time, at the discretion of the Board of Directors, after the completion of any
Offering Period. If the Plan terminates under clause (a), reserved shares
remaining as of the termination date will be sold to Participating Employees on
a pro rata basis.
20. EFFECTIVE DATE OF PLAN.
The Plan is effective as of March 28, 2000.
21. LAWS AND REGULATIONS.
The Plan and all rights and obligations of the Company and Participating
Employees under the Plan are subject to all applicable federal, state and
foreign laws, rules and regulations, and to such approvals by and regulatory or
governmental agency as may, in the opinion of counsel for the Company, be
required.
22. ERISA
The Plan is not subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
23. NO CONTINUED EMPLOYMENT
The Plan does not confer any rights of continued employment upon any employee of
the Company or any of its subsidiaries.
21
<PAGE> 24
APPENDIX "A"
BASSETT FURNITURE INDUSTRIES, INCORPORATED
2000 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF PLAN.
The purpose of the Bassett Furniture Industries, Incorporated 2000 Qualified
Employee Stock Purchase Plan (the "Plan") is to enhance employee interest in the
success and progress of the Bassett Furniture Industries, Incorporated
("Bassett" or the "Company"), by encouraging employee ownership of Common Stock,
$5.00 par value, of the Company ("Common Stock"). The Plan provides the
opportunity to purchase Bassett Common Stock at a 15% discount to the market
price on the Purchase Date through payroll deductions. The Plan is intended to
qualify as an employee stock purchase plan under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code") and shall be administered in
accordance with the requirements of that Section.
2. ELIGIBLE EMPLOYEES.
Any employee (as determined by the Company in its sole discretion and without
reference to any definition of employee under the Code or any other statutory or
regulatory definition) of the Company or its subsidiaries designated by the Plan
Committee (as defined below) for participation (except such executive officers
of the Company or its subsidiaries as the Plan Committee may determine) is
eligible to participate in the Plan, except employees:
(a) whose customary employment is 20 hours or less per week or five
months or less in any calendar year; or
(b) who own, or are considered as owning under Code Section 424(d),
5% or more of the total combined voting power or value of all
classes of stock of the Company or any participating subsidiary,
including the Common Stock that would otherwise be purchased
during the Offering Period (as defined in Section 6).
Employees eligible to participate in the Plan as defined in this Section 2 are
referred to as "Eligible Employees."
3. ELECTION TO PARTICIPATE
Participation in the Plan is voluntary. Each employee who is an Eligible
Employee may participate in the Plan by completing and delivering to the
Company's Human Resources department an Enrollment/Withdrawal Form. The
completed Enrollment/Withdrawal Form must be received by the Human Resources
department no later than thirty (30) days prior to the beginning of a payroll
period in order to participate in the Plan for that payroll period and
subsequent payroll periods. Eligible Employees who elect to participate in the
Plan in accordance with this Section 3 are referred to herein as "Participating
Employees."
By electing to participate in the Plan, a Participating Employee authorizes the
Company to withhold the amount designated by the Participating Employee on the
Enrollment/Withdrawal Form from the Participating Employee's paycheck for the
next and subsequent payroll periods after timely submission of the
Enrollment/Withdrawal Form. A Participating Employee may only increase or
decrease his or her payroll deduction by timely filing a new
Enrollment/Withdrawal Form at least thirty (30) days prior to the beginning of
the Offering Period in which the increase or decrease is to become effective. So
long as the Plan remains in effect, once an Eligible Employee enrolls in the
Plan, he or she will automatically continue participation on the same basis,
unless he or she elects to change deduction amounts, withdraws from
participation in the Plan, or becomes ineligible to participate in the Plan.
Changes in deduction amounts or participation in the Plan must be communicated
in writing to the Company's Human Resources department through timely submission
of a new Enrollment/Withdrawal Form.
<PAGE> 25
4. INVESTING IN THE PLAN.
Elections for Plan investments must be made in whole dollar amounts and
specified on the Enrollment/Withdrawal Form. The minimum dollar amount for
payroll deductions is $10.00 per pay period for employees that are paid weekly
and $20.00 per pay period for employees that are paid bi-weekly or monthly.
5. USE OF FUNDS; NO INTEREST PAID.
All funds received by the Company under the Plan may be included in the general
funds of the Company and may be used by the Company for any corporate purpose.
No separate account or trust fund must be established to hold funds received
under the Plan. No interest will be paid to any Participating Employee for
amounts invested in the Plan.
6. PURCHASES OF COMMON STOCK UNDER THE PLAN.
As of each Purchase Date (as defined in Section 7), each Participating Employee
will be deemed to have purchased, without any further action, a number of whole
and fractional shares of Common Stock determined by dividing the amount of his
or her payroll deductions for the preceding Offering Period (as defined below)
by eighty-five percent (85 %) of the Fair Market Value of a share of Common
Stock as of the Purchase Date. Fractional shares purchased will be combined with
subsequent purchases under the Plan to make whole shares.
Offering Periods begin on the first trading day after the beginning of each of
the Company's accounting quarters beginning with the accounting quarter
commencing on August 27, 2000 and end on the last trading day immediately
preceding the commencement date of the following Offering Period, (each, an
"Offering Period"). The Plan Committee has the power to change the commencement
dates and/or duration of an Offering Period with respect to any future Offering
Period if the change is announced at least fourteen (14) days prior to the
scheduled beginning of the Offering Period to be affected.
7. PURCHASE PRICE.
The purchase price for each share of Common Stock purchased under the Plan for
an Offering Period will be eight-five percent (85%) of the lesser of the Fair
Market Value of the Common Stock on (x) the first day of the Offering Period or,
(y) the last day of the Offering Period (the "Purchase Date").
"Fair Market Value" of the Common Stock as of a Purchase Date will be determined
by the Plan Committee by any fair and reasonable means, including (a) if the
Common Stock is listed for trading on a national securities exchange or is
quoted in the over-the-counter market on the basis of last sales prices, the
average of the high and low sales prices on the exchange or the last sales price
on the over-the-counter market on the Purchase Date or (b) if the Common Stock
is not listed for trading on a national securities exchange or quoted in the
over-the-counter market on the basis of last sales prices, but is traded in the
over-the-counter market, the average of the bid and asked prices for the Common
Stock at the close of business on the Purchase Price.
8. INVESTMENT ACCOUNTS.
All shares Purchased under the Plan will be maintained by the Company's transfer
agent ("Transfer Agent") in separate investment accounts ("Investment Accounts")
for each Participating Employee. Each Investment Account may be in the name of
the Participating Employee, or if he or she so indicates on the
Enrollment/Withdrawal Form, in the Participating Employee's name jointly with a
member of the Participating Employee's family, with right of survivorship. An
employee who is a resident of a jurisdiction that does not recognize a joint
tenancy may have an Investment Account as tenant in common with a family member,
without right of survivorship.
2
<PAGE> 26
9. SALE OR TRANSFER OF COMMON STOCK.
A Participating Employee may sell or transfer any Common Stock in the Employee's
Investment Account at any time after purchase, subject to limitations, if any,
imposed by applicable laws and procedures instituted by the Company. A sale may
be made through the Transfer Agent or by the employee's own broker. Any sale or
transfer is subject to any commission or other sales or transfer charges, which
shall be paid by the Participating Employee.
10. LIMITATION ON NUMBER OF SHARES THAT AN EMPLOYEE MAY PURCHASE.
No employee may purchase Common Stock with a Fair Market Value on the first day
of the Offering Period of more than $25,000.00 in any one calendar year.
11. SHARES RESERVED FOR THE PLAN.
There will be reserved for issuance and purchase by employees under the Plan an
aggregate of 400,000 shares of Common Stock, subject to adjustment as provided
in Section 12. Shares subject to the Plan will be shares authorized but
unissued. If reserved shares are not purchased by a Participating Employee for
any reason or if a right to purchase terminates as provided in the Plan, the
unpurchased shares will again become available for issuance under the Plan
unless the Plan has been terminated, but the unpurchased shares will not
increase the aggregate number of shares reserved for purchase under the Plan.
12. ADJUSTMENT IN CASE OF CHANGES AFFECTING THE COMPANY'S STOCK.
If the outstanding shares of Common Stock are subdivided or split, or a stock
dividend is paid thereon, the number of shares reserved under this Plan will be
adjusted proportionately, and the other provisions of the Plan may be adjusted
as the Board of Directors of the Company may deem necessary or equitable. If any
other change affecting the Common Stock occurs, the Board of Directors may make
such adjustments as they deem equitable to give proper effect to such event.
13. RIGHT AS A STOCKHOLDER.
When at least one whole share of Common Stock is deemed purchased for a
Participating Employee's account, the employee will have all of the rights or
privileges of a stockholder of the Company with respect to whole shares
purchased under the Plan whether or not certificates representing full shares
are issued. Any cash or stock dividend or other distribution on Common Stock
held in a Participating Employee's Investment Account will be credited to the
account. Proxy information will be provided for each meeting of the Company's
stockholders so that each Participating Employee may vote his or her shares in
accordance with his or her instructions. If no written instructions are received
on a timely basis, the voting of shares in the account will be governed by the
rules and policies of the NASDAQ and the Securities and Exchange Commission.
14. RIGHTS NOT TRANSFERABLE.
The right to participate in the Plan is not transferable by a Participating
Employee and is exercisable during his lifetime only by him.
15. WITHDRAWING FROM THE PLAN.
A Participating Employee may withdraw from the Plan at any time by properly
completing and delivering an Enrollment/Withdrawal Form to the payroll
department at least thirty (30) days prior to the payroll period in which
participation is to end, with the withdrawal being effective as of the end of
that payroll period and thereafter. After a Participating Employee properly
withdraws from the Plan, the Transfer Agent will deliver to the withdrawing
Employee the balance of his or her uninvested payroll deductions as soon as
practicable after withdrawal. The Transfer Agent also will deliver to the
withdrawing Employee the whole shares of Common Stock credited to the employee's
Investment Account under the Plan and remit the remaining funds by check. A
withdrawing employee
3
<PAGE> 27
may not participate in the Plan again until the next Offering Period after the
one in which the employee withdrew. To rejoin the Plan, a new
Enrollment/Withdrawal Form must be submitted.
16. DEATH, RETIREMENT OR TERMINATION OF EMPLOYMENT
If a Participating Employee dies or retires or if his or her employment is
terminated for any reason, the Participating Employee's participation in the
Plan will end effective immediately and the amount of the employee's uninvested
payroll deductions will be refunded to the employee, or in the case of death to
his or her estate. The Transfer Agent also will deliver to the employee or his
or her estate the whole shares of Common Stock credited to the employee's
Investment Account under the Plan and sell fractional shares on the open market
and remit the net proceeds by check.
17. ADMINISTRATION OF THE PLAN.
The Plan will be administered, at the Company's expense, by the Organization,
Compensation and Nominating Committee of the Board of Directors or any successor
committee appointed by the Board of Directors (the "Plan Committee"). Subject to
the express provisions of the Plan, the Plan Committee will have authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable in
administering the Plan, all of which determinations will be final and binding
upon all persons unless determined otherwise by the Board of Directors. The Plan
Committee may delegate the day-to-day administration of the Plan and may request
advice or assistance or employ such other persons as are necessary for proper
administration of the Plan.
18. AMENDMENT OF THE PLAN.
The Board of Directors may at any time, or from time to time, amend the Plan in
any respect, except that no amendment shall be made without shareholder approval
increasing the number of shares to be reserved under the Plan (other than as
provided in Section 12). No amendment will be permitted that will cause the Plan
to fail to meet the requirements of Section 423 of the Code.
19. TERMINATION OF THE PLAN.
The Plan and all rights of employees under the Plan will terminate: (a) on the
Purchase Date that Participating Employees become entitled to purchase a number
of shares greater than the number of reserved shares remaining available for
purchase (and no such additional shares shall then be purchased); or (b) at any
time, at the discretion of the Board of Directors, after the completion of any
Offering Period. If the Plan terminates under clause (a), reserved shares
remaining as of the termination date will be sold to Participating Employees on
a pro rata basis.
20. EFFECTIVE DATE OF PLAN.
The Plan is effective as of March 28, 2000.
21. LAWS AND REGULATIONS.
The Plan and all rights and obligations of the Company and Participating
Employees under the Plan are subject to all applicable federal, state and
foreign laws, rules and regulations, and to such approvals by and regulatory or
governmental agency as may, in the opinion of counsel for the Company, be
required.
4
<PAGE> 28
22. ERISA
The Plan is not subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
23. NO CONTINUED EMPLOYMENT
The Plan does not confer any rights of continued employment upon any employee of
the Company or any of its subsidiaries.
5
<PAGE> 29
APPENDIX "B"
BASSETT FURNITURE INDUSTRIES, INCORPORATED
1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
AS PROPOSED TO BE AMENDED
1. PURPOSE. This Plan is intended to provide Directors who are not
employees of the Company a sense of proprietorship and personal involvement
in the development and financial success of the Company and to encourage such
Directors to remain with and to devote their best efforts to the Company.
2. DEFINITIONS. Whenever used in the Plan, unless the context
clearly indicates otherwise, the following terms shall have the following
meanings:
(a) "Award" means an award pursuant to Sections 8 through 10 of
the Plan.
(b) "Automatic Award Date" means April 1 of each year.
(c) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(d) "Common Stock" means the Common Stock, $5.00 par value, of
the Company and any other stock or securities resulting from the
adjustment thereof or substitution therefor as described in Section 11
below.
(e) "Company" means Bassett Furniture Industries, Incorporated,
a Virginia corporation, and any corporation succeeding to the Company's
rights and obligations hereunder.
(f) "Compensation" means the annual fee payable by the Company
to a Director for a year of service as a Director without reduction for
withholding taxes and exclusive of (i) reimbursement for expenses, (ii)
meeting attendance fees and (iii) the value of any fringe benefits
which the Director receives or is entitled to receive as a Director of
the Company.
(f) "Director" means a member of the Board of Directors of the
Company who is not a regular employee of the Company or its
subsidiaries.
(h) "Disability" means the condition which results when an
individual has become permanently and totally disabled within the
meaning of Section 72(m)(7) of the Internal Revenue Code of 1986.
(i) "Election" means an election to receive an Award made
pursuant to Section 9 of the Plan.
<PAGE> 30
(j) "Elective Award" means an award made pursuant to an
Election under Section 9 of the Plan.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(l) "Fair Market Value", with respect to a share of the Common
Stock on a particular date, shall be (i) if such Common Stock is listed
on a national securities exchange or a foreign securities exchange or
traded on the NASDAQ National Market System, the closing sale price of
the Common Stock on said date on the national securities exchange, the
foreign securities exchange or the NASDAQ National Market System on
which the Common Stock is principally traded, or, if no sales occur on
said date, then on the next preceding date on which there were such
sales of Common Stock, or (ii) if the Common Stock shall not be listed
on a national securities exchange or a foreign securities exchange or
traded on the NASDAQ National Market System, the mean between the
highest and lowest prices reported by the National Association of
Securities Dealers, Inc. for the over-the-counter market on said date
or, if the highest and lowest prices are not reported on said date,
then on the next preceding date on which there were such quotations, or
(iii) if at any time quotations for the Common Stock shall not be
reported by the National Association of Securities Dealers, Inc. for
the over-the-counter market and the Common Stock shall not be listed on
any national securities exchange or any foreign securities exchange or
traded on the NASDAQ National Market System, the fair market value
based on quotations for the Common Stock by market makers or other
securities dealers as determined by the Board of Directors in such
manner as the Board may deem reasonable.
(m) "Option" means a stock option granted pursuant to this Plan.
(n) "Optionee" means the person to whom an Option is granted.
(o) "Option Price" is defined in Section 6.
(p) "Plan" means this 1993 Stock Plan for Non-Employee
Directors, as in effect from time to time.
(q) "Stock Option Agreement" means the written agreement
between an Optionee and the Company evidencing the grant of an Option
under the Plan and setting forth or incorporating the terms and
conditions thereof.
3. ADMINISTRATION. The Plan shall be administered by the Board of
Directors. The Board shall have all of the powers necessary to enable it
properly to carry out its duties under the Plan, including but not limited to
the power and duty to construe and interpret the Plan and to determine all
questions that shall arise under the Plan, which interpretations and
determinations shall be conclusive and binding upon all persons. Subject to
the express provisions of the Plan, the Board may establish from time to time
such regulations, provisions and procedures which in its opinion may be
advisable in the administration of the Plan.
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Notwithstanding the foregoing or any other provision of this Plan to
the contrary, no discretion concerning decisions regarding the Plan shall be
afforded to a person who is not a "disinterested person" (as defined in the
rules and regulations of the Securities and Exchange Commission under
Section 16 of the Act, as in effect from time to time). In the event that it
is necessary for the proper administration of the Plan to exercise any such
discretion, and the Board is so precluded from exercising such discretion,
the Board may delegate any authority to exercise such discretion to a person
or committee of persons, each of whom is a "disinterested person" as so
defined.
4. ELIGIBILITY; OPTION GRANTS. Each Director shall automatically
be granted an option to purchase 2,500 shares of the Common Stock upon his or
her initial election to the Board of Directors, and shall automatically be
granted an option to purchase 1,000 shares of Common Stock on the Automatic
Award Date of each year beginning on April 1, 1994; provided, however, that
such automatic grants shall be (i) made pro rata to all Directors if on the
date of a grant there shall not be a number of shares sufficient to make all
such grants and (ii) subject to adjustment or substitution pursuant to
Section 11 hereof from the date hereof, irrespective of whether such option
has been granted.
5. SHARES AVAILABLE. The Board of Directors shall reserve for the
purposes of the Plan, and by adoption of the Plan does hereby reserve, out of
the authorized but unissued Common Stock, a total of 125,000 shares of Common
Stock of the Company (subject to adjustment or substitution pursuant to
Section 11 hereof). In the event that an Option granted or Award under the
Plan to any Director expires or is terminated unexercised or is forfeited as
to any shares covered thereby, such shares shall again be available for the
granting of Options or Awards under the Plan.
6. OPTION PRICE. The price at which each share of Common Stock
(subject to adjustment pursuant to Section 11 hereof) may be purchased upon
the exercise of an Option (the "Option Price") shall be the Fair Market Value
of the shares of Common Stock subject to the Option on the date such Option
is granted.
7. EXERCISE OF OPTIONS.
(a) Each Option granted under the Plan by its terms shall
require the Director granted such Option to remain available to serve
as a Director of the Company for six months from the date of the grant
of such Option before the right to exercise any part of such Option
will accrue. A Director may thereafter exercise any or all of such
Option until the expiration or termination of the Option; provided,
that not less than 100 shares may be purchased at any one time unless
the number of shares purchased is the total number at such time
purchasable under the Option. Subject to earlier termination as
provided herein, all Options granted under this Plan shall expire ten
years from the date of grant thereof.
(b) If an Optionee shall cease to be a Director of the Company
otherwise than by reason of such Optionee's death or Disability or a
Change of Control (as hereinafter defined), then, subject to Subsection
7(a) hereof, the Option shall be exercisable at any
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<PAGE> 32
time prior to the earlier of (i) the expiration date of such Option or
(ii) that date which is three years from the date such optionee ceases to
be a Director, such three year period to include the date on which such
termination occurs. If an Optionee ceases to be a Director of the Company
as a result of such Optionee's death or Disability, then, subject to
Subsection 7(a) hereof, the Option shall be exercisable at any time prior
to the earlier of (i) the expiration date of such Option or (ii) that date
which is one year from the date such Optionee ceases to be a Director. If
an Optionee ceases to be a Director by reason of a Change of Control, then
such Option shall be exercisable in full, whether or not it is exercisable
on the date of such termination, at any time prior to the earlier of (i)
the expiration date of such Option or (ii) that date which is one year
from the date such Optionee ceases to be a Director.
(c) Each Option granted under the Plan by its terms shall not
be transferable by the Optionee otherwise than by will, or if the
Optionee dies intestate, by the laws of descent and distribution, and
such Option shall be exercisable during such Optionee's lifetime only
by such Optionee. In the event of the death of an Optionee, then,
subject to Subsection 7(a) hereof, such Optionee's Options shall be
exercisable to the extent herein provided by the executor or personal
representative of the Optionee's estate or by any person who acquired
the right to exercise such Option by bequest under the Optionee's will
or by inheritance.
(d) Each Option shall be confirmed by a Stock Option Agreement
executed by the Company and by the Optionee to whom such Option is
granted.
(e) The Option Price for each share of Common Stock purchased
pursuant to the exercise of each Option shall, at the time of the
exercise of the Option, be paid in full in cash or equivalent. An
Option shall be deemed exercised only when written notice of such
exercise, together with payment of the Option Price, is received from
the Optionee by the Company at its principal office. No Optionee shall
have any rights as a shareholder of the Company with respect to Common
Stock issuable pursuant to such Optionee's Option until such Option is
duly exercised.
(f) To the extent that an Option is not exercised within the
period of time prescribed therefor as set forth in the Plan, the Option
shall lapse and all rights of the Optionee thereunder shall terminate.
8. AUTOMATIC SHARE AWARDS. As of each Automatic Award Date, each
Director shall receive, in lieu of 50% of the Director's Compensation, the
number of shares of Common Stock determined by dividing (i) an amount equal
to 50% of the Director's Compensation by (ii) the Fair Market Value of a
share of the Common Stock on the Award Date.
9. ELECTIVE AWARD OF COMMON STOCK Each Director may, in addition to
the automatic share awards provided for in Section 8, elect to receive a
percentage of the Director's remaining Compensation in the form of Common
Stock. The Election may be for any percentage of the Director's remaining
Compensation (after reduction for the automatic share award provided for in
Section 8) up to 100%. Such Election must specify the percentage of the
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<PAGE> 33
Director's remaining Compensation that is to be paid in Common Stock and
must be made in writing no later than September 1 of the year in which the
Election is made. The Director will receive his or her Elective Award of Common
Stock on October 1 of such year. The total number of shares of Common Stock to
be issued pursuant to an Elective Award shall be determined by dividing the
amount of the Director's Compensation that is to be paid in Common Stock by the
Fair Market Value of a share of the Common Stock on the date the Award is made.
10. FRACTIONAL SHARES. In no event shall the Company be required to
issue fractional shares. Whenever under the terms of Section 8 or 9 a
fractional share of Common Sock would otherwise be required to be issued, an
amount in lieu thereof shall be paid in cash based upon the Fair Market Value
of such fractional share on the date of the Award.
11. ADJUSTMENT OF NUMBER OF SHARES. In the event that a dividend
shall be declared upon the Common Stock payable in shares of Common Stock,
the number of shares of Common Stock then subject to any Option or Award and
the number of shares reserved for issuance pursuant to the Plan but not yet
covered by an Option or an Award shall be adjusted by adding to each such
share the number of shares which would be distributable thereon if such share
had been outstanding on the date fixed for determining the shareholders
entitled to receive such stock dividend. In the event that the outstanding
shares of Common Stock generally shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the
Company or of another corporation, or changed into or exchanged for cash or
property or the right to receive cash or property (but not including any
dividend payable in cash or property other than a liquidating distribution),
whether through reorganization, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any Option or Award, and for each share of
Common Stock reserved for issuance pursuant to the Plan but not yet covered
by an Option or an Award, the number and kind of shares of stock or other
securities or cash or property or the right to receive cash or property into
which each outstanding share of Common Stock shall be so changed or for which
each such share shall be exchanged. In the case of any such substitution or
adjustment as provided for in this Section 11, the aggregate Option Price for
each share or shares covered thereby prior to such substitution or adjustment
shall be the aggregate Option Price for all shares of stock or other
securities or cash or property or the right to receive cash or property which
shall have been substituted for such share or shares or to which such share
or shares shall have been adjusted pursuant to this Section 11. No
adjustment or substitution provided for in this Section 11 shall require the
Company in any Stock Option Agreement to issue a fractional share and the total
substitution or adjustment with respect to each Stock Option Agreement shall be
limited accordingly.
12. CHANGE OF CONTROL.
(a) In the event of a Change of Control (as defined below) of
the Company, all Stock Options then outstanding shall become fully
exercisable as of the date of the Change of Control, whether or not
then exercisable, subject to the limitation that any Stock Option which
has been outstanding less than six months on the date of the Change of
Control shall not be afforded such treatment.
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(b) A "Change of Control" of the Company means, and shall be
deemed to have occurred upon any of the following events:
(i) The acquisition by any person, individual, entity or
"group" (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (collectively, Persons) of beneficial ownership
(the phrases "beneficial ownership", "beneficial owners" and
"beneficially owned" as used herein being within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then outstanding shares of common stock of the
Company (the Outstanding Company Common Stock) or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the Outstanding Company Voting Securities); provided,
however, that the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company or any of its
subsidiaries, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
of its subsidiaries, (iv) any acquisition by any corporation with
respect to which, following such acquisition, more than 75% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors are then beneficially owned by all
or substantially all of the Persons who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
acquisition in substantially the same proportions as their
beneficial ownership, immediately prior to such acquisition, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; or
(ii) Individuals who, as of August 2, 1989, constitute the
Board of Directors of the Company (the Incumbent Board) cease for
any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual who becomes a
director subsequent to August 2, 1989 and whose election, or
whose nomination for election by the Company's shareholders, to
the Board of Directors was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act), other actual or threatened solicitation of proxies
or consents or an actual or threatened tender offer; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with
respect to which all or substantially all of the Persons who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
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<PAGE> 35
immediately prior to such reorganization, merger or consolidation
do not, following such reorganization, merger or consolidation,
beneficially own more than 75% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
beneficial ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be; or
(iv) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, more than 75%
of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned by all or substantially all of the Persons who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their beneficial ownership,
immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be.
13. AMENDMENT OF PLAN. The Board of Directors shall have the right
to amend, suspend or terminate the Plan at any time; provided that, except as
and to the extent authorized and permitted by Section 11 above, (a) without
stockholder approval, no amendment may be made that would increase the number
of shares of Common Stock issuable under the Plan or allow the exercise price
of options or the price of share awards made pursuant to Section 8 or 9 to be
less than the Fair Market Value of the Common Stock on the date of grant, (b)
no amendment, suspension or termination shall adversely affect the rights of
any Optionee as to any outstanding Option without the consent of such
Optionee, subject to any limitation on such rights set forth in the Plan or
such Optionee's Stock Option Agreement except for any amendment the Board
deems necessary to preserve or provide exemptions from the applicability of
Section 16(b) of the Exchange Act to the grant, lapse, disposition,
cancellation or exercise of Options; and (c) no amendment relating to the
determination of the Optionees or of the grant dates, of the number of
Options granted to any Optionee or of the Option Price, shall be made more
than once every six months, other than to comport with changes in the
Internal Revenue Code of 1986, the Employee Retirement Income Security Act or
the rules thereunder. In no event shall the Board of Directors have the
right to amend the Plan to provide that discretion concerning decisions
regarding the Plan shall be afforded to a person who is not a "disinterested
person" under Section 16(b) of the Exchange Act.
14. RESALES OF SHARES. The Company may impose such restrictions on
the sale or other disposition of shares issued pursuant to the exercise of
Options or upon the payment of an Award as the Board deems necessary to
comply with applicable securities laws. Certificates for
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<PAGE> 36
shares issued upon the exercise of Options or the payment of Awards may bear
such legends as the Company deems necessary to give notice of such restrictions.
15. COMPLIANCE WITH LAW AND OTHER CONDITIONS. No shares shall be
issued pursuant to the exercise of any Option of the payment of any Award
granted under the Plan prior to compliance by the Company, to the
satisfaction of its counsel, with any applicable laws. The Company shall not
be obligated to (but may in its discretion) take any action under applicable
federal or state securities laws (including registration or qualification of
the Plan, the Options or the Common Stock) necessary for compliance therewith
in order to permit the issuance of shares upon the granting of Awards or upon
the exercise of Options or the immediate resale thereof by Optionees, except
for actions (other than registration or qualification) that may be taken by
the Company without unreasonable effort or expense and without the incurrence
of any material exposure to liability.
16. NONQUALIFIED OPTIONS. Options granted under the Plan will not be
treated as "incentive stock options" under Section 422 of the Internal
Revenue Code of 1986.
17. EFFECTIVE DATE AND DURATION. The Plan shall be effective on
November 3, 1993, subject to approval of the Plan by the holders of a
majority of the shares presented or represented at the 1994 Annual Meeting of
Shareholders. The Plan shall terminate on October 31, 2003.
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<PAGE> 37
PROXY BASSETT FURNITURE INDUSTRIES, INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD ON MARCH 28, 2000
The undersigned hereby appoints Jay R. Hervey and Barry C. Safrit,
each or either of them, proxies, with full power of substitution, with the
powers the undersigned would possess if personally present, to vote, as
designated below, all shares of the $5.00 par value Common Stock of the
undersigned in Bassett Furniture Industries, Incorporated at the Annual Meeting
of Shareholders of the Company to be held on March 28, 2000, and at any
adjournments thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN AND, UNLESS OTHERWISE
DIRECTED, WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS, FOR THE
APPROVAL OF THE COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN, FOR THE AMENDMENTS
TO THE COMPANY'S 1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS, AND FOR THE
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS. THE BOARD OF DIRECTORS RECOMMENDS
VOTING FOR ON ITEMS 1, 2, 3 AND 4.
1. ELECTION OF DIRECTORS: Nominees are Amy Woods Brinkley, Peter W. Brown, M.D.,
Thomas E. Capps, Willie D. Davis, Alan T. Dickson, Paul Fulton, Howard H.
Haworth, Michael E. Murphy and Robert H. Spilman, Jr.
<TABLE>
<CAPTION>
<S> <C>
[ ] FOR all listed nominees (except do not vote for [ ] WITHHOLD AUTHORITY to vote for all the
nominees listed above below) nominee(s) whose name(s) I have written
</TABLE>
2. PROPOSAL TO APPROVE THE BASSETT FURNITURE INDUSTRIES, INCORPORATED 2000
EMPLOYEE STOCK PURCHASE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO AMEND THE BASSETT FURNITURE INDUSTRIES, INCORPORATED 1993 STOCK
PLAN FOR NON-EMPLOYEE DIRECTORS, including an increase of 50,000 in the number
of shares of the Company's Common Stock available for issuance under the Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP as the Company's
independent public accountants for the fiscal year ending November 25, 2000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The undersigned acknowledges receipt of the Notice of said Annual Meeting and of
the accompanying Proxy Statement attached thereto.
Dated: ______________________________, 2000
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., GIVE FULL TITLE AS SUCH.
Please mark, sign, date and return the proxy card using the enclosed envelope.
1
