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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to ______________
Commission file number: 0-8498
HAVERTY FURNITURE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 58-0281900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
866 WEST PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30308
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 881-1911
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK ($1.00 PAR VALUE)
(Title of class)
CLASS A COMMON STOCK ($1.00 PAR VALUE)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Paragraph 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
----
The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant as of March 7, 1997 was $83,520,628. The
aggregate market value was computed by reference to the average of the closing
bid and asked prices of the registrant's two classes of common stock on such
date. For the purpose of this response only, executive officers, directors and
holders of 5% or more of common stock are affiliates of the registrant.
As of March 7, 1997, the number of shares outstanding of the registrant's
two classes of $1.00 par value common stock were: Common Stock -- 8,731,701;
Class A Common Stock -- 2,933,696.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement and its appendix, dated March
19, 1997, for the 1997 annual meeting of stockholders are incorporated by
reference herein in response to Items 5 - 8 of Part II and to Part III of this
report, except information on executive officers, which is included in Part I
of this report.
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<PAGE> 2
PART I
ITEM 1. BUSINESS.
GENERAL
Haverty Furniture Companies, Inc. (the "Company" or "Havertys") is a
full-service home furnishings retailer. The Company operates 95 showrooms in
12 contiguous states in the Southeast and Southwest. Havertys provides its
customers with a wide selection of furniture and accessories primarily in the
middle to upper-middle price ranges. As an added convenience to its customers,
the Company offers financing through a revolving charge credit plan. The
Company originated as a family business in 1885 in Atlanta, Georgia. Havertys
has been a publicly held company since 1929, incorporated under the laws of the
State of Maryland. The Company's corporate headquarters are located at 866
West Peachtree Street, N.W., Atlanta, Georgia.
BUSINESS STRATEGY
The Company serves a target customer in the middle to upper-middle income
ranges. Havertys has attracted this discriminating and demanding consumer by
focusing on the key elements: stores, merchandise price and selection, and
customer service. The Company has made investments in technology and in new
retail stores. Havertys plans to continue to expand into new markets and
strengthen its position in its current market areas utilizing existing
distribution infrastructure.
STORES
The Company, as of December 31, 1996, operates 95 stores serving 48
markets in 12 states. Havertys has executed a program of remodeling and
expanding showrooms and replacing smaller stores in growth markets with a new
larger format store. Accordingly, the number of retail locations has increased
by only five since the year ended 1994, but total square footage has increased
25%. Havertys entered three new markets during 1996: Wichita, Kansas, and
Asheville and Fayetteville, North Carolina. The expansion into the new markets
in North Carolina was not with newly constructed stores. These locations are
leased from their owners, former independent furniture operators, and were
remodeled and reopened. The Company will use this approach and lease, remodel
and open two stores during 1997 in Louisville and Lexington, Kentucky.
Havertys also plans to open five newly constructed replacement stores in 1997.
MERCHANDISING
The Company is able to tailor its merchandise presentation to the needs
and tastes of the local market. All five regional managers are included in
Havertys' buying team, and reflect their preferences in a merchandising mix
that is roughly 20 to 25 percent regionalized. Each local market manager can
then select from region specific merchandise items that are appropriate to that
particular metropolitan area. On other than specific merchandise advertised
chain wide, these managers also are responsible for pricing in their respective
markets. This allows Havertys to be competitively priced in each city and
maintain good gross margins.
The Company's merchandising team develops a broad selection of merchandise
for its customers at values targeted for their income levels. Management has
avoided the lower, more promotional price-driven merchandise category that many
national chains have emphasized, giving Havertys a unique position for a large
retailer. The Company selects its merchandise from a wide array of
manufacturers. During 1996, the Company purchased approximately 50% of its
volume from 10 vendors, creating significant purchasing power. Approximately
75% of the Company's volume was purchased from 30 vendors, which gives the
Company's customers an outstanding assortment, especially compared to
franchised retailers who offer only one manufacturer's product line. The
Company offers brands such as Drexel Heritage and Thomasville which are a
visible demonstration to the consumer of Havertys' market position. The
customer awareness of these quality names serves as an umbrella for all of the
Company's better-end merchandise.
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REVENUES
The following table sets forth the approximate percentage contributions by
product or service to the Company's gross revenues for the past three years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Merchandise:
Living Room Furniture . . . . . . . . . . . . . . . . . 52.2% 51.0% 51.8%
Bedroom Furniture . . . . . . . . . . . . . . . . . . . 22.6 23.0 22.2
Dining Room Furniture . . . . . . . . . . . . . . . . . 12.6 12.6 13.1
Bedding . . . . . . . . . . . . . . . . . . . . . . . . 6.6 7.1 7.1
All Other Merchandise and Accessories . . . . . . . . . 3.5 3.5 2.9
Credit Service Charges . . . . . . . . . . . . . . . . . 2.5 2.8 2.9
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
DISTRIBUTION
The Company uses a regional warehouse distribution network to provide
central receiving points from vendors and distribution of product to local
market warehouses. Havertys operates three regional warehouses in Charlotte,
North Carolina; Jackson, Mississippi; and Ocala, Florida. The regional
warehouses serve all of the Company's local markets except for Dallas, Texas
and Atlanta, Georgia, which each have a regional-size warehouse. Havertys'
enhanced information system and just-in-time delivery practices have resulted
in the reduction of inventory in local market warehouses. This reduction has
allowed management to convert this warehouse space into prepping centers and
cross-dock locations for local deliveries.
The system currently in place will facilitate the implementation of
additional distribution enhancements. The regional warehouse concept and
positive vendor relationships have created additional opportunities to improve
inventory management. The Company has purchased and is testing new software
which will allow management to forecast inventory requirements and reorder
merchandise more precisely. Havertys is also developing a warehouse management
system to complement its JIT system and to provide additional efficiencies in
operations.
The Company is opening a new Dallas warehouse in March 1997. This
facility will have approximately 224,000 square feet of warehouse space which
is over 50,000 square feet smaller than the warehouse it replaces. The
implementation of the automated systems allows for efficient use of the new
facility's 50-foot high ceilings and over 2.3 million cubic feet of storage
space.
CREDIT OPERATIONS
The Company's customers are provided a revolving charge credit plan within
a credit limit determined by an on-line credit approval system. In 1996,
approximately 77% of Havertys' sales were transacted under various credit
programs resulting in net financings of over $300 million. The Company's
standard (non-promotional) credit service charge rates were 18% to 21% per
annum (except in Arkansas where it is 10%) depending on state laws and may vary
in the future with market conditions. Havertys offers a lower credit service
charge rate for individual purchases of over $3,000. Promotions which offer
interest-free periods for a specific period are also routinely used.
Management believes that responding to the terms of advertised financing
promotions offered by many of its competitors reduces the need to emphasize
off-price promotional activity and can stimulate sales. Under the Company's
credit programs, retroactive interest is not charged to customers who do not
completely pay off the balance during the free-interest or deferred payment
period unlike many competitors' credit programs.
Over the last five years, provisions for losses on customer accounts
receivable have averaged less than 1% of sales. The Company experienced a 1%
write-off of receivables in 1996 which is higher than normal for Havertys but
which management believes is low relative to the industry. Management believes
its rate of write-offs is comparatively low due to a thorough screening and
collection program and to the Company's attracting a more affluent customer
through its overall marketing programs.
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During 1996, the Company consolidated its credit operations from 45
market-area locations to one corporate site in Chattanooga, Tennessee.
Management believes that this consolidation, while accretive to earnings in the
long-term via savings in general and administrative expenses, contributed to
higher delinquencies during the transition year.
COMPETITION
The retail sale of home furnishings is a highly fragmented and competitive
business. The Company believes that the primary elements of competition in its
industry are customer service, merchandise (quality, style, selection, price,
and display) and store location and design. The degree and source of
competition varies by geographic area. The Company competes with numerous
individual retail furniture stores as well as chains and the better department
stores. Department stores benefit competitively from more established name
recognition in specific markets, a larger customer base due to their
non-furnishings product lines and proprietary credit cards.
The Company believes it has uniquely positioned itself in the marketplace
with merchandise that appeals to customers who are somewhat more affluent than
those of most other competitive furniture store chains. Management believes
that this customer segment responds more cautiously to typical discount
promotions and focuses on the real value and customer service offered by a
retailer. The Company regards its experienced sales personnel and personalized
customer service as important factors in its competitive success. Lastly,
management believes its ability to make prompt delivery of orders through
maintenance of inventory and to tailor the inventory to a store's local demands
provides additional competitive advantages. The Company currently ranks among
the top ten in sales for full-service retail home furnishings store chains in
the United States, based on available industry data for 1995.
EMPLOYEES
As of December 31, 1996, the Company employed approximately 2,996
employees: 2,725 in individual retail store operations, 122 in its corporate
offices, 65 in its credit operations and 84 in its regional warehouses. No
employee of the Company is a party to any union contract and the Company
considers its employee relations to be good.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company:
<TABLE>
<CAPTION>
AGE POSITION WITH THE COMPANY
NAME AS OF 3-07-97 AND OTHER INFORMATION
---- ------------- -------------------------
<S> <C> <C>
Rawson Haverty . . . . . . . . . . . . . . . . . . . 76 Chairman of the Board since 1984. President from 1955 to
1984. Chief Executive Officer from 1955 to 1990.
Director since 1947.
John E. Slater, Jr. . . . . . . . . . . . . . . . . . 62 President and Chief Executive Officer since April 1994.
Executive Vice President from 1993 to 1994. Chief
Operating Officer from 1992 to 1994. Senior Vice
President from 1987 to 1993. General Manager, Stores
of the Company from 1990 to 1992. Director since 1983.
Dan C. Bryant . . . . . . . . . . . . . . . . . . . . 54 Controller since 1985.
</TABLE>
3
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EXECUTIVE OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
AGE POSITION WITH THE COMPANY
NAME AS OF 3-07-97 AND OTHER INFORMATION
---- ------------- -------------------------
<S> <C> <C>
Steven G. Burdette . . . . . . . . . . . . . . . . . 35 Vice President, Merchandising, since 1994. Assistant
Vice President, Merchandising, from 1993 to 1994.
Various merchandising management positions since 1992.
J. Edward Clary . . . . . . . . . . . . . . . . . . . 36 Vice President, Management Information Services (MIS),
since 1994. Various MIS management positions since 1992.
Thomas P. Curran . . . . . . . . . . . . . . . . . . 44 Vice President, Advertising, since 1987.
Dennis L. Fink . . . . . . . . . . . . . . . . . . . 45 Executive Vice President since 1996 and Chief Financial
Officer since 1993. Senior Vice President from 1993 to
1996. Senior Vice President, Treasurer and Chief
Financial Officer and a director of Horizon Industries,
Inc., a publicly held carpet manufacturer, from 1985 to
1992.
Rawson Haverty, Jr. . . . . . . . . . . . . . . . . . 40 Vice President, Real Estate and Insurance Divisions,
since 1992. Assistant Vice President from 1987 to
1992. Director since 1992.
Gerald M. Hohman . . . . . . . . . . . . . . . . . . 52 Vice President, Operations and Training, since 1996.
Regional Manager, Atlanta, Georgia retail operations
from 1995 to 1996 and General Manager from 1994 to
1996. Various management positions in Atlanta retail
operations since 1992.
Christine M. Jones . . . . . . . . . . . . . . . . . 67 Vice President, Stockholder Relations, since 1993 and
Corporate Secretary since 1978. Assistant Vice
President from 1986 to 1993.
Joan S. Nagy . . . . . . . . . . . . . . . . . . . . 61 Vice President, Human Resources, since 1993. Assistant
Vice President, Human Resources from 1985 to 1993.
Jenny Hill Parker . . . . . . . . . . . . . . . . . . 38 Vice President, Finance and Assistant Secretary, since
1996. Financial officer since 1994. Senior Manager at
KPMG Peat Marwick LLP from 1988 to 1994 and other
positions within that firm since 1981.
Clarence H. Smith . . . . . . . . . . . . . . . . . . 46 Senior Vice President and General Manager, Stores, since
1996. Vice President, Operations and Development, from
1994 to 1996. Vice President from 1984 to 1994.
Regional Manager and General Manager of Atlanta,
Georgia retail operations from 1986 to 1994. Director
since 1989.
</TABLE>
4
<PAGE> 6
EXECUTIVE OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
AGE POSITION WITH THE COMPANY
NAME AS OF 3-07-97 AND OTHER INFORMATION
---- ------------- -------------------------
<S> <C> <C>
Hugh G. Wells, Jr. . . . . . . . . . . . . . . . . . 63 Vice President since 1985 and Treasurer
since 1987.
M. Tony Wilkerson . . . . . . . . . . . . . . . . . . 51 Senior Vice President, Marketing, since 1994. Vice
President, Merchandising, from 1990 to 1994.
</TABLE>
Rawson Haverty and John Rhodes Haverty, M.D. (a director of the Company)
are first cousins. Clarence H. Smith is the nephew of Rawson Haverty and the
first cousin of Clarence H. Ridley (a director of the Company) and Rawson
Haverty, Jr. Rawson Haverty, Jr. is the son of Rawson Haverty and the first
cousin of Clarence H. Ridley and Clarence H. Smith. Clarence H. Ridley is the
nephew of Rawson Haverty and first cousin of Clarence H. Smith and Rawson
Haverty, Jr.
ITEM 2. PROPERTIES.
The Company's executive and administrative offices are located at 866 West
Peachtree Street, N.W., Atlanta, Georgia and occupy a two-story brick building
purchased in 1971 and an adjacent, one-story brick building purchased in 1986.
These facilities contain approximately 29,000 and 15,000 square feet of working
area, respectively.
The following table sets forth information concerning the operating
facilities of the Company as of December 31, 1996:
<TABLE>
<CAPTION>
Retail Market Area Regional
Locations (c) Warehouses Warehouses
--------- ------------ ----------
<S> <C> <C> <C>
Owned (a) 48 8 3
Leased (b) 47 14 0
-- -- -
Total 95 22 3
== == =
</TABLE>
(a) Includes capital leases on 10 facilities.
(b) The leases have various termination dates through 2010 plus
renewal options.
(c) 24 of the retail locations have attached warehouse space.
In addition, as of December 31, 1996, the Company has 1 retail facility
under construction and has entered into an agreement for the lease of 8 others.
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Retail square footage at December 31 (in thousands) 2,960 2,764 2,357
% Change in retail square footage 7.1% 17.3% 4.5%
Net Sales per Square Foot (in thousands) $159 $159 $160
</TABLE>
5
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For additional information, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in this report under
Item 7 of Part II.
ITEM 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings, other than routine
litigation incidental to the business of the Company, to which the Company is a
party or of which any of its properties is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of fiscal 1996.
6
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information under the heading "Market Prices and Dividend Information"
on page F-16 of the appendix to the Company's proxy statement for the 1997
annual meeting of stockholders, dated March 19, 1997, is incorporated herein by
reference in response to this item.
ITEM 6. SELECTED FINANCIAL DATA.
Selected 5-Year Financial Data on page F-16 of the appendix to the
Company's proxy statement for the 1997 annual meeting of stockholders, dated
March 19, 1997, is incorporated herein by reference in response to this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages F-1 through F-3 of the appendix to the Company's proxy
statement for the 1997 annual meeting of stockholders, dated March 19, 1997, is
incorporated herein by reference in response to this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The report of the independent auditors and the financial statements on
pages F-4 through F-15 of the appendix to the Company's proxy statement for the
1997 annual meeting of stockholders, dated March 19, 1997, are incorporated
herein by reference.
Selected Quarterly Financial Data on page F-15 of the appendix to the
Company's proxy statement for the 1997 annual meeting of stockholders, dated
March 19, 1997, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to directors of the Company contained on pages 5
through 7 of the Company's proxy statement for the 1997 annual meeting of
stockholders, dated March 19, 1997, is incorporated herein by reference.
Information relating to executive officers of the Company is included in this
report under Item 1 of Part I.
ITEM 11. EXECUTIVE COMPENSATION.
The information relating to executive compensation contained on pages 10
through 19 of the Company's proxy statement for the 1997 annual meeting of
stockholders, dated March 19, 1997, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information relating to security ownership of certain beneficial owners
and management contained on pages 2 through 4 of the Company's proxy statement
for the 1997 annual meeting of stockholders, dated March 19, 1997, is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information relating to certain relationships and related transactions
contained on pages 16 and 17 of the Company's proxy statement for the 1997
annual meeting of stockholders, dated March 19, 1997, is incorporated herein by
reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
The following exhibits, financial statements and financial statement
schedule are filed as a part of this report:
(a) (1) and (2). LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULE
The following consolidated financial statements of Haverty Furniture
Companies, Inc., included in the appendix to the Company's proxy statement
for the 1997 annual meeting of stockholders, dated March 19, 1997, are
incorporated by reference in Item 8:
Consolidated Balance Sheets--December 31, 1996 and 1995
Consolidated Statements of Income--Fiscal Years ended December 31, 1996,
1995 and 1994
Consolidated Statements of Stockholders' Equity--Fiscal Years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows--Fiscal Years ended December 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
The following financial statement schedule of Haverty Furniture
Companies, Inc. is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
(3) Exhibits.
The exhibits listed below are filed with or incorporated by reference
into this Report. Unless otherwise indicated, the exhibit number of
documents incorporated by reference corresponds to the exhibit number in
the referenced document. Exhibits 10.1 through 10.13 represent
compensatory plans.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
*3.1 -- Articles of Incorporation of Haverty Furniture Companies, Inc. as
amended and restated on March 6, 1973, and amended on April 24,
1979, and as amended on April 25, 1985. (10-Q for the quarter
ended June 30, 1985)
*3.1.1 -- Articles of Incorporation of Haverty Furniture Companies, Inc. as
amended on April 25, 1986. (10-Q for the quarter ended March 31,
1986)
*3.1.2 -- Amendment to Articles of Incorporation of Haverty Furniture
Companies, Inc. as amended on April 28, 1989. (10-Q for the
quarter ended June 30, 1989)
</TABLE>
9
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
<S> <C> <C>
3.1.3 -- Amendment to Articles of Incorporation of Haverty Furniture Companies, Inc. as amended on April 28, 1995.
*3.2.2 -- Amended and Restated By-Laws of Haverty Furniture Companies, Inc. as amended on August 5, 1987. (10-K for
the year ended December 31, 1987)
*3.2.3 -- Amendment to By-Laws of Haverty Furniture Companies, Inc. as amended on November 4, 1988. (10-Q for the
quarter ended March 31, 1989)
*4.1 -- Note Agreement between Haverty Furniture Companies, Inc. and The Prudential Purchasers (The Prudential
Insurance Company of America) c/o Prudential Capital Group, dated December 29, 1993. (10-K for the year
ended December 31, 1993)
*4.1.1 -- First Amendment to Note Agreement effective March 31, 1994, between Haverty Furniture Companies, Inc. and
The Prudential Insurance Company of America. (10-K for the year ended December 31, 1994)
4.1.2 -- Second Amendment to Note Agreement dated July 19, 1996, between Haverty Furniture Companies, Inc. and The
Prudential Insurance Company of America, as previously amended.
No other instrument authorizes long-term debt securities in an amount in excess of ten percent (10%)
of the total assets of the Company. The Company agrees to furnish copies of instruments and agreements
authorizing long-term debts of less than ten percent (10%) of its total assets to the Commission upon
request.
*10.1 -- Second Amendment and Restatement of Directors' Deferred Compensation Plan. (10-Q for the quarter ended June
30, 1996, Exhibit 10.1.2)
*10.2 -- Supplemental Executive Retirement Plan, effective January 1, 1983. (10-K for the year ended December 31,
1984, Exhibit 10.3)
*10.3 -- Thrift Plan and Trust, as amended and restated, effective January 1, 1987. (Exhibit 4.1 to Registration
Statement on Form S-8, File No. 33-44285)
10.3.1 -- Amendment No. One to Thrift Plan and Trust, as previously amended and restated, effective July 1, 1994.
10.3.2 -- Amendment No. Two to Thrift Plan and Trust, as previously amended and restated, effective January 1, 1989.
10.3.3 -- Amendment No. Three to Thrift Plan and Trust, as previously amended and restated, effective January 1, 1997.
*10.4 -- 1986 Non-Qualified Stock Option Plan. (10-K for the year ended December 31, 1987, Exhibit 10.7)
*10.5 -- 1988 Incentive Stock Option Plan, as amended. (Exhibit 4.1 to Registration Statement on Form S-8, File No.
33-53609)
*10.6 -- 1988 Non-Qualified Stock Option Plan. (10-Q for the quarter ended June 30, 1989, Exhibit 10.2)
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C> <C>
*10.6.1 -- Amendment Number One to 1988 Non-Qualified Stock Option Plan. (Registration Statement on Form S-2, File No.
33-59400, Exhibit 10.9.1)
*10.7 -- Haverty Furniture Companies, Inc. Employee Stock Purchase Plan, as amended and restated as of February 7,
1995. (10-K for the year ended December 31, 1994)
*10.8 -- Deferred Compensation Agreement between Haverty Furniture Companies, Inc. and Rawson Haverty, Sr., dated
December 21, 1992. (10-K for the year ended December 31, 1993, Exhibit 10.9)
*10.9 -- 1993 Non-Qualified Stock Option Plan. (Registration Statement on Form S-8, File No. 33-53607, Exhibit 5.1)
*10.10 -- Supplemental Executive Retirement Plan, effective January 1, 1996. (10-K for the year ended December 31,
1995)
*10.11 -- Directors' Compensation Plan as of April 26, 1996. (10-Q for quarter ended June 30, 1996, Exhibit 10.11)
10.12 -- Form of Agreement dated January 1, 1997, Regarding Change in Control with the following Named Executive
Officers: John E. Slater, Jr., Dennis L. Fink, Clarence H. Smith and M. Tony Wilkerson.
10.13 -- Form of Agreement dated January 1, 1997, Regarding Change in Control with the following employee directors:
Rawson Haverty, Jr. (a Named Executive Officer) and Fred J. Bates.
21.1 -- Subsidiaries of the Registrant
23.1 -- Consent of Ernst & Young LLP
27 -- Financial Data Schedule (for SEC use only)
------------
</TABLE>
* Incorporated by reference.
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
(c) Exhibits -- The response to this portion of Item 14 is as
submitted in Item 14(a)(3).
(d) Financial Statement Schedules -- The response to this portion
of Item 14 is submitted as a separate section of this report.
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
HAVERTY FURNITURE COMPANIES, INC.
Date: March 17, 1997 By: /s/ JOHN E. SLATER, JR.
------------------------------------------------------
John E. Slater, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 18, 1997 By: /s/ DENNIS L. FINK
-----------------------------------------------------
Dennis L. Fink
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: March 18, 1997 By: /s/ DAN C. BRYANT
------------------------------------------------------
Dan C. Bryant
Controller (Principal Accounting Officer)
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <S>
/s/ RAWSON HAVERTY Chairman of the Board March 17, 1997
- -------------------------------------------------------
Rawson Haverty
/s/ JOHN E. SLATER, JR. President and Chief Executive March 17, 1997
- ------------------------------------------------------- Officer; Director
John E. Slater, Jr.
/s/ FRED J. BATES Regional Manager and Director March 17, 1997
- -------------------------------------------------------
Fred J. Bates
- ------------------------------------------------------- Director March , 1997
John T. Glover
/s/ JOHN RHODES HAVERTY, M.D. Director March 14, 1997
- -------------------------------------------------------
John Rhodes Haverty, M.D.
/s/ RAWSON HAVERTY, JR. Vice President and Director March 18, 1997
- -------------------------------------------------------
Rawson Haverty, Jr.
/s/ L. PHILLIP HUMANN Director March 17, 1997
- -------------------------------------------------------
L. Phillip Humann
/s/ LYNN H. JOHNSTON Director March 18, 1997
- -------------------------------------------------------
Lynn H. Johnston
/s/ FRANK S. MCGAUGHEY, III Director March 14, 1997
- -------------------------------------------------------
Frank S. McGaughey, III
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
- --------------------------------------------------- Director March , 1997
William A. Parker, Jr.
/s/ CLARENCE H. RIDLEY Director March 18, 1997
- ---------------------------------------------------
Clarence H. Ridley
/s/ CLARENCE H. SMITH Senior Vice President March 15, 1997
- --------------------------------------------------- and Director
Clarence H. Smith
/s/ ROBERT R. WOODSON Director March 17, 1997
- ---------------------------------------------------
Robert R. Woodson
</TABLE>
13
<PAGE> 15
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES
(In thousands)
<TABLE>
<CAPTION>
Column A Column B Column C-1 Column D Column E
- ------------------------------------------------------------------------------------------------------------------------
Additions
Balance at charged Balance at
beginning of to costs and Deductions- end of
Description period expenses describe (1) period
- ----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1996:
Allowance for doubtful accounts $7,105 $4,416 $4,416 $7,105
====== ====== ====== ======
Year ended December 31, 1995:
Allowance for doubtful accounts $7,105 $2,854 $2,854 $7,105
====== ====== ====== ======
Year ended December 31, 1994:
Allowance for doubtful accounts $6,485 $2,773 $2,153 $7,105
====== ====== ====== ======
</TABLE>
(1) Uncollectible accounts written off, net of recoveries and the disposal
value of repossessions.
(2) Column C-2 "Additions Charged To Other Accounts" has been omitted as
the response is "none".
F-1
<PAGE> 16
EXHIBIT INDEX
HAVERTY FURNITURE COMPANIES, INC.
10-K FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1.3 Amendment to Articles of Incorporation of Haverty Furniture Companies, Inc.
as amended on April 28, 1995.
4.1.2 Second Amendment to Note Agreement dated July 19, 1996, between Haverty
Furniture Companies, Inc. and The Prudential Insurance Company of America,
as previously amended.
10.3.1 Amendment No. One to Thrift Plan and Trust, as previously amended and
restated, effective July 1, 1994.
10.3.2 Amendment No. Two to Thrift Plan and Trust, as previously amended and
restated, effective January 1, 1989.
10.3.3 Amendment No. Three to Thrift Plan and Trust, as previously amended and
restated, effective January 1, 1997.
10.12 Form of Agreement dated January 1, 1997, Regarding Change in Control with
the following Named Executive Officers: John E. Slater, Jr., Dennis L.
Fink, Clarence H. Smith and M. Tony Wilkerson.
10.13 Form of Agreement dated January 1, 1997, Regarding Change in Control with
the following employee directors: Rawson Haverty, Jr. (a Named Executive
Officer) and Fred J. Bates.
21.1 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
EXHIBIT 3.1.3
ARTICLES OF AMENDMENT
OF
HAVERTY FURNITURE COMPANIES, INC.
Haverty Furniture Companies, Inc., a Maryland corporation (the
"Corporation"), hereby amends its charter as follows:
FIRST: The existing Sixth Article of the Articles of Incorporation is amended
in the following respects:
(a) Part I, subsection A and sub-subsection (1) are amended as
follows:
"SIXTH
I
The authorized capital of the Corporation shall consist of 66,000,000
shares and shall be represented by the following securities:
A. 65,000,000 shares of $1 par value common stock divided into
classes as follows:
(1) 50,000,000 shares of $1 par value common stock
designated as Common Stock and having the following attributes:"
(b) Part I, subsection A, sub-subsection (2) is amended as
follows:
"(2) 15,000,000 shares of $1 par value common stock
designated as Class A Common Stock and having the following attributes:"
SECOND: The foregoing amendments to the Corporation's charter were advised by
the Board of Directors and approved by the Stockholders of the Corporation.
THIRD: (a) Prior to the filing of these Articles of Amendment, the
Corporation's authorized capital stock consisted of 21,000,000 shares,
consisting of 15,000,000 shares of $1 par value common stock designated as
Common Stock, 5,000,000 shares of $1 par value common stock designated as Class
A Common Stock and 1,000,000 shares of $1 par value preferred stock designated
as Preferred Stock.
(b) These Articles of Amendment increase the
Corporation's authorized capital stock to 66,000,000 shares, consisting of
50,000,000 shares of $1 par value common stock designated as Common Stock,
15,000,000 shares of $1 par value common stock designated as Class A Common
Stock and 1,000,000 shares of $1 par value preferred stock designated as
Preferred Stock.
(c) The aggregate par value of all shares of all classes
of stock of the Corporation authorized prior to filing of these Articles of
Amendments was $21,000,000. The aggregate par value of all classes of stock of
the Corporation as increased by these Articles of Amendment is $66,000,000.
These Articles of Amendment increase the aggregate par value of all shares of
all classes of stock of the Corporation by $45,000,000.
<PAGE> 2
FOURTH: The description of each class, including the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption was not changed by these
Articles of Amendment.
FIFTH: The President of Haverty Furniture Companies, Inc., who executed these
Articles of Amendment on behalf of the Corporation acknowledges them to be the
act of Haverty Furniture Companies, Inc., and states that to the best of his
knowledge, information and belief, the matters and facts set forth in these
Articles of Amendment with respect to authorization and approval are true in
all material respects. This statement is made under penalties for perjury.
IN WITNESS WHEREOF, these Articles of Amendment have been executed by
the Corporation through its duly authorized officers this 28th day of April,
1995.
HAVERTY FURNITURE COMPANIES, INC.
By: /s/ John E. Slater, Jr.
------------------------------------
John E. Slater, Jr., President & CEO
Attest:
/s/ Christine M. Jones
- ----------------------------
Christine M. Jones
Vice President and Secretary
(CORPORATE SEAL)
<PAGE> 1
EXHIBIT 4.1.2
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Capital Group
One Gateway Center, 11th Floor
7-45 Raymond Boulevard West
Newark, New Jersey 07102-5312
July 19, 1996
Haverty Furniture Companies, Inc.
866 West Peachtree Street, N.W.
Atlanta, GA 30308-1123
Attention: Dennis L. Fink
Senior Vice President and Chief Financial Officer
Ladies and Gentlemen:
Reference is made to that certain Note Agreement dated as of December
29, 1993 (the "Note Agreement"), between Haverty Furniture Companies, Inc. (the
"Company") and The Prudential Insurance Company of America ("Prudential").
Terms not otherwise defined herein are used with the respective definition
given them in the Note Agreement.
Pursuant to paragraph 12C of the Note Agreement as holder of all of
the Notes, Prudential hereby agrees with the Company as follows:
1. Section 7A(ii) of the Note Agreement is hereby amended and
restated in its entirety as follows:
"(ii) Consolidated Debt (less 50% of Unused Capacity for
Financed Receivables) to exceed 60% of Consolidated
Capitalization (less 50% of Unused Capacity for
Financed Receivables); or"
2. Sections 7B(5) and 7B(7) of the Note Agreement are hereby
amended and restated in their entirety as follows:
<PAGE> 2
Haverty Furniture Companies, Inc.
July 19, 1996
Page 2
"7B(5) SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse,
or discount or otherwise sell for less than the face value
thereof, any of its notes or accounts receivable except (i) in
a Receivables Financing that could not, or over time, violate
paragraph 7A(v) above, provided that, on the date of any
proposed Receivables Financing and immediately upon giving
effect thereto, the Financed Receivables Amount does not
exceed the Retained Receivables Amount, or (ii) to any
Subsidiary or to the Company;"
"7B(7) TRANSACTIONS WITH RELATED PARTY. Effect any
transaction with any Affiliate or Subsidiary by which any
asset or services of the Company or a Subsidiary is
transferred to such Affiliate or Subsidiary, or from such
Affiliate or Subsidiary, or enter into any other transaction
with an Affiliate or Subsidiary, on terms more favorable than
would be reasonably expected in a similar transaction with an
unrelated entity, except for sales of accounts and notes
receivable by the Company to any Subsidiary or by any
Subsidiary to the Company or to any other Subsidiary as
permitted under paragraph 7B(5)."
3. Section 7C of the Note Agreement is hereby amended by deleting
the word "and" at the end of Section 7C (iii) and adding the following
subsection (v) at the end of Section 7C:
"and (v) the Company may dispose of its accounts or notes
receivable, trade names or service marks to any Subsidiary."
4. Section 11B of the Note Agreement is hereby amended by adding,
in alphabetical order, the following definition:
"Unused Capacity for Financed Receivables" shall mean the
difference between (i) 55% of the sum of Retained Receivables
plus Financed Receivables, and (ii) Financed Receivables.
<PAGE> 3
Haverty Furniture Companies, Inc.
July 19, 1996
Page 3
5. Except to the extent amended by the provisions hereof, all of
the terms, conditions and obligations of the Note Agreement shall remain in
full force and effect.
If you agree to the foregoing, please sign each copy of this letter
enclosed and return two of them to Prudential, at which time this letter shall
become a binding agreement between us as of the date above written.
Very truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Robert R. Derrick
-----------------------------
Name: Robert R. Derrick
Title: Senior Vice President
Agreed to and accepted
as of July 19, 1996
HAVERTY FURNITURE COMPANIES, INC.
By: /s/ Dennis L. Fink
------------------------------------
Name: Dennis L. Fink
Title: Executive Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.3.1
AMENDMENT NO. ONE
HAVERTY FURNITURE COMPANIES, INC. THRIFT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1987)
WHEREAS, Haverty Furniture Companies, Inc. (the "Company") maintains
the Haverty Furniture Companies, Inc. Thrift Plan (the "Thrift Plan"), which
was amended and restated effective January 1, 1987; and
WHEREAS, the Board of Directors of the Company has adopted resolutions
authorizing a formal amendment to the Thrift Plan in order to: (1) incorporate
the reduced compensation limitation and direct rollover requirements of Code
Sections 401(a)(17) and 401(a)(31), respectively, (2) increase the maximum
contribution rate to 16%; (3) reduce the eligibility service requirement and
the minimum contribution suspension period; (4) permit monthly investment
election changes; and (5) make other desirable administrative changes;
NOW, THEREFORE, pursuant to the power reserved to the Company under
Section 8.1 of the Thrift Plan, the Thrift Plan is hereby amended, effective
July 1, 1994, except as otherwise specifically provided herein, in the
following respects:
1. Section 1.9 of the Thrift Plan is hereby amended by deleting
the number "10" and by substituting therefor the number "16".
2. Section 1.15 of the Thrift Plan is hereby amended, effective
January 1, 1994, by deleting the second paragraph in its
entirety and by substituting therefor the following:
"Notwithstanding the preceding, effective January 1,
1989, each Participant's Compensation taken into
account for any purpose under the Plan shall be
limited to the amount set forth in Code Section
401(a)(17) (i.e. $200,000 for Plan Years beginning
before January 1, 1994, and $150,000 for Plan Years
beginning on or after such date), as adjusted for
increases in the cost of living. For purposes of the
limit, the Plan will aggregate the Compensation of
(a) each Eligible Employee who either is a 5-percent
owner of a Controlled Group member or is among the
10 highest-paid employees of the Controlled Group,
and (b) his Spouse and/or his lineal descendants who
have not reached age 19 as of the last day of the
Plan Year. If the limit is exceeded as a result of
applying this rule, then the limit will be prorated
among the affected Employees in proportion to such
Employee's Compensation."
3. Section 1.25 of the Thrift Plan is hereby amended by adding
thereto the following sentence:
<PAGE> 2
"Effective July 1, 1994, each April 1 and October 1
shall also be an Enrollment Date."
4. Section 1.38 of the Thrift Plan is hereby amended, effective
January 1, 1988, by adding thereto the following sentence:
"Effective January 1, 1988, Normal Retirement Age
shall be the later of a Participant's 65th birthday
or the 5th anniversary of the date he began
participating in the Plan."
5. Section 1.39 of the Thrift Plan is hereby amended by adding
thereto the following sentence:
"Notwithstanding the preceding, effective July 1,
1994, solely for purposes of participation upon
reemployment under Section 2.2, a One-Year Break
shall mean a One-Year Period of Severance, as
defined in Section 2.4(c)."
6. Section 2.1 of the Thrift Plan is hereby amended by adding
thereto the following paragraph:
"Notwithstanding the preceding, each Employee who
has both reached age 21 and completed a three (3)
consecutive month Period of Service (as defined in
Section 2.4) as of July 1, 1994, shall become a
Participant in the Plan on such date. Each other
Employee shall become a Participant as of the first
Enrollment Date coincident with or next following
the date he has both reached age 21 and completed a
three (3) consecutive month Period of Service."
7. Article 2 of the Thrift Plan is hereby amended by adding the
following Section 2.4 after the existing Section 2.3:
"2.4 Service. Effective July 1, 1994, an
Employee's Service for purposes of
eligibility for participation shall be
based on his Period of Service, determined
in accordance with the following:
(a) Period of Service. A Participant
shall be credited for the time
period commencing with his
employment commencement date (the
date an Employee first performs an
Hour of Service) and ending on the
date a Period of Severance begins.
A Period of Service for these
purposes includes a Period of
Separation of less than twelve
(12) consecutive months and any
period of authorized leave of
absence. A Participant's total
Period of Service shall be
determined by aggregating all
individual Periods of Service,
whether or not completed
consecutively.
Notwithstanding the foregoing, the
determination of a Participant's
Period of Service shall be subject
to the reemployment provisions of
Section 2.2.
- 2 -
<PAGE> 3
(b) Period of Severance. A period of
time (during which an Employee
does not perform an Hour of
Service for the Employer)
commencing with the earlier of
(such date being known as the
Employee's "Severance from Service
Date") (1) the date an Employee
separates from service by reason
of quitting, retirement, death, or
discharge, or (2) the date twelve
(12) months after the date of an
Employee's absence from employment
for any other reason (except for
an authorized leave of absence) or
(3) the second anniversary of the
commencement of a continuous
period of absence by reason of
Parental Leave (as defined in
Section 1.34(d)(1)); and ending,
in the case of an Employee who
separates from service by reason
other than death, with the date
such Employee resumes employment
with the Employer.
(c) One-Year Period of Severance. A
twelve (12) consecutive month
period beginning on an Employee's
Severance from Service Date and
ending on the first anniversary of
such date, provided that the
Employee fails to perform an Hour
of Service during such twelve (12)
consecutive month period.
(d) Hour of Service. Solely for
purposes of this Section 2.4, an
hour for which an Employee is
credited with an Hour of Service
under Section 1.34(a)(1).
(e) Period of Separation. A period of
time commencing with the date an
Employee separates from service
and ending with the date such
Employee resumes employment with
the Employer."
8. Section 3.1(a)(1) of the Thrift Plan is hereby amended by
deleting the number "10" and by substituting therefor the
number "16".
9. Section 3.1(c)(3) of the Thrift Plan is hereby amended by
deleting the words "and will be suspended from resuming
participation for six months."
10. Section 3.1(c)(4) of the Thrift Plan is hereby amended by
deleting the words "after the expiration of his six-months
suspension period" from the first sentence thereof.
11. Section 3.2(e) of the Thrift Plan is hereby amended,
effective January 1, 1987, by deleting the clause "and
receives additional allocations of Matching Contributions"
from the first sentence thereof.
12. Section 3.4 of the Thrift Plan is hereby amended and restated
in its entirety, effective January 1, 1993, to read as
follows:
- 3 -
<PAGE> 4
"3.4 Rollover Contributions. An Employee
eligible to participate in the Plan,
regardless of whether he has satisfied the
participation requirements of Section 2.1,
may transfer to the Trust Fund an "Eligible
Rollover Distribution," as defined in Code
Section 402(c)(4), provided that such
distribution is from a plan which meets the
requirements of Code Section 401(a) (the
"Other Plan"). The procedures approved by
the Committee shall provide that such a
transfer may be made only if the following
conditions are met:
(a) the amount is received directly
from the Other Plan or the transfer
occurs on or before the 60th day
following the Employee's receipt of
the distribution from the Other
Plan; and
(b) the amount transferred is equal to
any portion of the distribution the
Employee received from the Other
Plan, subject to the maximum
rollover provision of Code Section
402(c)(2).
Notwithstanding the foregoing, if an
Employee had deposited an "Eligible
Rollover Distribution" previously received
from an Other Plan into an individual
retirement account ("IRA"), as defined in
Code Section 408, and that IRA contains no
other money from any other source, he may
transfer the amount of such distribution,
plus earnings thereon from the IRA, to this
Plan; provided, such rollover amount is
deposited with the Trustee on or before the
60th day following receipt thereof from the
IRA.
The Committee shall develop such
procedures, and may require such
information from an Employee desiring to
make such a transfer, as it deems necessary
or desirable to determine that the proposed
transfer will meet the requirements of this
Section 3.4. Upon approval by the
Committee, the amount transferred shall be
deposited in the Trust Fund and shall be
credited to the Employee's Rollover
Account. Such account shall be 100% vested
and shall share in gains/losses and
expenses allocated in accordance with
Section 4.1(a)(4), but shall not share in
Employer Contributions. Upon termination of
employment, the total amount of the
Employee's Rollover Account shall be
distributed in accordance with Article 6.
Upon such a transfer by an Employee who is
otherwise eligible to participate in the
Plan but who has not yet completed the
participation requirements of Section 2.1,
his Rollover Account shall represent his
sole interest in the Plan until he becomes
a Participant."
13. Section 4.2(c) of the Thrift Plan is hereby amended by adding
thereto the following sentence:
- 4 -
<PAGE> 5
"Effective July 1, 1994, each Participant may make
one investment election per month, which will become
effective the first day of the following month,
provided he submits the appropriate investment
election form within such time as the Committee may
prescribe. Such an election will automatically apply
to both the Participant's existing Account balance
and any future allocations under Section 4.1(a)."
14. Section 6.2(a) of the Thrift Plan is hereby amended,
effective January 1, 1993, by deleting the parenthetical
phrase "(which will include an election regarding income tax
withholding)."
15. Section 6.2(c) of the Thrift Plan is hereby amended,
effective January 1, 1993, by adding the following sentence
to the end of the first paragraph thereof:
"Effective January 1, 1993, all payments shall
comply with the requirements of Code Section
401(a)(31), as set forth in Plan Section 6.7."
16. Section 6.3 of the Thrift Plan is hereby amended, effective
January 1, 1987, by deleting the parenthetical phrase
"(excluding his Rollover Account balance)" from paragraphs
(a), (b) and (d) thereof at all places where the same
appears.
17. Section 6.4(b) of the Thrift Plan is hereby amended,
effective January 1, 1987, by inserting the words "or
authorized Plan representative" immediately after the words
". . . notary public" at the end of the second sentence.
18. Article VI is hereby amended, effective January 1, 1993, by
inserting the following Sections 6.7 and 6.8 immediately
after the existing Section 6.6:
"6.7 Direct Rollover Option. Notwithstanding any
provision of the Plan to the contrary that
would otherwise limit a distributee's
election under this Plan, a distributee who
is not subject to any of the three
limitations set forth in the following
paragraph may elect, at the time and in the
manner prescribed by the Committee, to have
any portion of an eligible rollover
distribution paid directly to an eligible
retirement plan specified by the
distributee in a direct rollover.
(a) The three limitations on a
distributee's direct rollover
rights are as follows:
(1) a distributee may not
divide an eligible
rollover distribution into
two or more separate
distributions to be paid
in direct rollovers to two
or more eligible
retirement plans; instead,
an eligible rollover
distribution that is
distributed in a direct
rollover may only be paid
to one eligible retirement
plan selected by the
distributee;
- 5 -
<PAGE> 6
(2) if the distributee elects
to have only a portion of
an eligible rollover
distribution paid to an
eligible retirement plan
in a direct rollover, such
portion must equal at
least five hundred dollars
($500); if the entire
amount of the eligible
rollover distribution is
less than five hundred
dollars ($500) the
distributee may not divide
the distribution; and
(3) a distributee shall not be
eligible to elect a direct
rollover of an eligible
rollover distribution
unless the distributee
makes such election within
the time period
established by the
Committee.
(b) For purposes of this Section 6.7,
the following definitions shall
apply:
(1) Eligible rollover
distribution. An eligible
rollover distribution is
any distribution of all or
any portion of the balance
of the credit of the
distributee, except that
an eligible rollover
distribution does not
include: any distribution
that is one of a series of
substantially equal
periodic payments (not
less frequently than
annually) made for the
life (or life expectancy)
of the distributee or the
joint lives (or joint life
expectancies) of the
distributee and the
distributee's designated
beneficiary; or for a
specified period of ten
(10) years or more; any
distribution to the extent
such distribution is
required under Code
Section 401(a)(9); and the
portion of any
distribution that is not
includible in gross income
(determined without regard
to the exclusion for net
unrealized appreciation
with respect to employer
securities).
(2) Eligible retirement plan.
An eligible retirement
plan is an individual
retirement account
described in Code Section
408(a), an individual
retirement annuity
described in Code Section
408(b), an annuity plan
described in Code Section
403(a), or a qualified
trust described in Code
Section 401(a), that
accepts the distributee's
eligible rollover
distribution. However, in
the case of an eligible
rollover distribution to
the surviving spouse, an
eligible retirement plan
is an individual
retirement account or
individual retirement
annuity.
- 6 -
<PAGE> 7
(3) Distributee. A distributee
includes an Employee or
former Employee. In
addition, the Employee's
or former Employee's
surviving spouse and the
Employee's or former
Employee's spouse or
former spouse who is the
alternate payee under a
qualified domestic
relations order, as
defined in Code Section
414(p), are distributees
with regard to the
interest of the spouse or
former spouse.
(4) Direct rollover. A direct
rollover is a payment by
the Plan to the eligible
retirement plan specified
by the distributee.
6.8 Distributee Notice. If a distribution is
one to which the provisions of Code
Sections 401(a)(11) and 417 do not apply,
such distribution may commence less than
thirty (30) days after the notice under
Reg. Section 1.411(a)-11(c) is given,
provided that:
(1) the Committee clearly informs the
Participant that he has a right to
a period of at least thirty (30)
days to consider the decision of
whether or not to elect a
distribution (and, if applicable, a
particular distribution option);
and
(2) the Participant, after receiving
the notice, affirmatively elects a
distribution."
19. Section 7.2(a) of the Thrift Plan is hereby amended by adding
the following sentence after the end of the last paragraph:
"However, this optional election shall be available
only to Participants who attain age 70 (1/2) on or
before June 30, 1994."
20. Section 7.3 of the Thrift Plan is hereby amended, effective
January 1, 1993, by adding thereto the following sentence:
"Effective January 1, 1993, all payments under this
Article 7 shall comply with the requirements of Code
Section 401(a)(31), as set forth in Plan Section
6.7."
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Amendment No. One to
the Thrift Plan to be executed by its President and its corporate seal to be
affixed by the Secretary, both duly authorized, effective the 1st day of July,
1994, except as otherwise specifically provided herein, but executed this 6th
day of May, 1994.
HAVERTY FURNITURE COMPANIES, INC.
By:/s/ John E. Slater, Jr.
-------------------------------------
President & C.E.O.
Attest:
/s/ Christine M. Jones
- ------------------------------
V.P. & Secretary
[CORPORATE SEAL]
- 8 -
<PAGE> 1
EXHIBIT 10.3.2
AMENDMENT NO. TWO
HAVERTY FURNITURE COMPANIES, INC., THRIFT PLAN
(AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1987)
WHEREAS, Haverty Furniture Companies, Inc. (the "Company") maintains
the Haverty Furniture Companies, Inc. Thrift Plan (the "Thrift Plan"), as
amended and restated effective January 1, 1987, and subsequently amended by
Amendment No. One adopted by the Company's Board of Directors on May 6, 1994,
and executed on behalf of the Company by the President and C.E.O. on that date;
and
WHEREAS, the Employee Benefits Committee (the "Committee") is
authorized under Section 8.1 of the Thrift Plan to make any amendments required
in order to maintain the Thrift Plan's qualification for tax-exempt status; and
WHEREAS, the Committee desires to amend the Thrift Plan in order to
add certain provisions required by the IRS for a favorable determination
letter;
NOW, THEREFORE, pursuant to the power reserved to the Committee, the
Thrift Plan is hereby amended, effective January 1, 1989, in the following
respects:
1. Section 3.2(c) of the Thrift Plan is hereby amended by inserting the
following immediately after the first sentence thereof:
"Notwithstanding anything contained herein to the contrary,
all such Safe Harbor Contributions shall be fully vested and
nonforfeitable when made. In addition, they must satisfy the
conditions described in Regs. ss.1.401(k)-1(b)(5) and
ss.1.401(m)-1(b)(5)."
2. Section 5.2(a) of the Thrift Plan is hereby amended by inserting the
following immediately after the first sentence thereof:
"If the Employer maintains any other plan subject to Code
Section 401(k), the aggregation rules of Code Section
401(k)(3) and Reg. ss.1.401(k)-1(b)(3) shall apply."
3. Section 5.2(a)(1) of the Thrift Plan is hereby amended by adding
thereto the following sentence:
"Before-Tax Contributions will be taken into account
hereunder only to the extent that they satisfy the
requirements of Reg. ss.1.401(k)-1(b)(4)."
4. Section 5.2(b) of the Thrift Plan is hereby amended by inserting the
following immediately after the first sentence thereof:
<PAGE> 2
"If the Employer maintains any other plan subject to Code
Section 401(m), the aggregation rules of Code Section
401(m)(2)(B) and Reg. ss.1.401(m)-1(b)(3) shall apply."
5. Section 5.2(c) of the Thrift Plan is hereby amended and restated in
its entirety to read as follows:
"(c) Multiple Use Prohibited. In any Plan Year the
Committee may either reclassify ADP amounts as ACP
amounts for testing purposes only, or may use the
combined limit test described in subsection (d). All
ADP amounts reclassified as ACP amounts shall
satisfy the conditions described in Reg.
ss.1.401(m)-1(b)(5) and any such reclassification
shall be determined before the Committee conducts
the ACP Test under Subsection (b). All rules of
application with reference to these
nondiscrimination tests, including any modification
or restriction on the multiple use of the
2-point-spread-2-times-multiplier, shall be governed
by Reg.ss.1.401(m)-2. If multiple use occurs, the
ADP, ACP, or a combination of the two, as determined
by the Committee, shall be reduced for all Highly
Compensated Employees under the arrangement(s)
subject to the reduction, to the extent necessary to
meet the tests."
6. Section 6.1(a) of the Thrift Plan is hereby deleted in its entirety
and the remaining subsections (b) - (f) redesignated accordingly as
(a) - (e).
Except as specifically amended hereby, the Thrift Plan shall remain in
full force and effect as prior to this Amendment No. Two.
IN WITNESS WHEREOF, the Company has caused this Amendment No. Two to
the Thrift Plan to be executed by its duly authorized representatives,
effective January 1, 1989, but executed this 30th day of August, 1996.
EMPLOYEE BENEFITS COMMITTEE
OF THE BOARD OF DIRECTORS OF
HAVERTY FURNITURE COMPANIES, INC.
/s/ Lynn H. Johnston
------------------------------------
Lynn H. Johnston, Chairman
/s/ Frank S. McGaughey, III
------------------------------------
Attest: Frank S. McGaughey, III
/s/ Christine M. Jones /s/ John T. Glover
- ---------------------------------- ------------------------------------
Christine M. Jones John T. Glover
Vice President and Secretary
HAVERTY FURNITURE COMPANIES, INC.
- 2 -
<PAGE> 1
EXHIBIT 10.3.3
AMENDMENT NO. THREE
HAVERTY FURNITURE COMPANIES, INC., THRIFT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1987)
WHEREAS, Haverty Furniture Companies, Inc. (the "Company") maintains
the Haverty Furniture Companies, Inc. Thrift Plan (the "Thrift Plan"), which
was amended and restated effective January 1, 1987, and subsequently amended by
Amendments No. One and Two, dated May 6, 1994, and August 30, 1996,
respectively; and
WHEREAS, the Employee Benefits Committee (the "Committee") is
authorized under Section 8.1 of the Thrift Plan to make any minor amendments
that do not materially affect the cost of the Thrift Plan or change benefits
thereunder; and
WHEREAS, the Committee desires to amend the Thrift Plan in order to
permit separate investment election changes with respect to a participant's
existing account balance and future contributions;
NOW, THEREFORE, pursuant to the power reserved to the Committee, the
Thrift Plan is hereby amended, effective January 1, 1997, by restating Section
4.2(c) (as previously amended by Amendment No. One) in its entirety to read as
follows:
"(c) Participant Elections. Each Participant may make one
investment election per month, which will become
effective the first day of the following month,
provided he submits the appropriate investment
election in whatever form and within such time as
the Committee may prescribe. A Participant may elect
to invest his Account among the investment funds
made available from time to time, in ten percent
(10%) increments, provided that the Committee may
from time to time establish different increments,
which it will uniformly apply and timely communicate
to Participants. A Participant may choose to make
either the same or different investment elections
for his existing Account balance and future
contributions to his Account."
<PAGE> 2
IN WITNESS WHEREOF, the Company has caused this Amendment No. Three to
the Thrift Plan to be executed by its duly authorized members of the Committee,
effective the 1st day of January, 1997, but executed this 27th day of December,
1996.
EMPLOYEE BENEFITS COMMITTEE
OF THE BOARD OF DIRECTORS OF
HAVERTY FURNITURE COMPANIES, INC.
/s/ Lynn H. Johnston
------------------------------------------
Lynn H. Johnston, Chairman
/s/ Frank S. McGaughey, III
------------------------------------------
Attest: Frank S. McGaughey, III
/s/ Christine M. Jones /s/ John T. Glover
- ------------------------------- -------------------------------------------
Christine M. Jones John T. Glover
Vice President and Secretary
HAVERTY FURNITURE COMPANIES, INC.
[SEAL]
- 2 -
<PAGE> 1
EXHIBIT 10.12
AGREEMENT
BETWEEN
HAVERTY FURNITURE COMPANIES, INC.
A GEORGIA CORPORATION,
AND
_______________________
AS OF
__________, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Company's Covenants Summarized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. The Executive's Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Compensation Other Than Severance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Severance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Termination Procedures and Compensation During Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. No Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. Successors; Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13. Settlement of Disputes; Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-i-
<PAGE> 3
AGREEMENT
THIS AGREEMENT dated as of ______________, 1996 is made by and between
Haverty Furniture Companies, Inc., a Georgia corporation (the "Company"), and
__________________________________________ (the "Executive").
WHEREAS the Company considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel; and
WHEREAS the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly-held corporations, the possibility of
a Change in Control (as defined in the last Section hereof) exists and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in
this Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1997; provided,
however, that commencing on
<PAGE> 4
January 1, 1998 and each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company or the Executive shall have
given notice not to extend this Agreement or a Change in Control shall have
occurred prior to such January 1; provided, however, if a Change in Control
shall have occurred during the term of this Agreement, this Agreement shall
continue in effect for a period of not less than thirty-six (36) months beyond
the month in which such Change in Control occurred.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.01 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control and during the term of this Agreement. Except as
provided by the second sentence of Section 6.01 hereof or the last sentence of
Section 9.01 hereof, no amount or benefit shall be payable under this Agreement
unless there shall have been a termination of the Executive's employment with
the Company following a Change in Control. This Agreement shall not be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject
to the terms and conditions of this Agreement, in the event of a Potential
Change in Control during the term of this Agreement, the Executive will remain
in the employ of the Company until the earliest of (i) a date which is six (6)
months after the date of such Potential Change of Control, (ii) the date of a
Change
2
<PAGE> 5
in Control, (iii) the date of termination by the Executive of the Executive's
employment for Good Reason, by reason of death, Disability or Retirement, or
(iv) the termination by the Company of the Executive's employment for any other
reason.
5. Compensation Other Than Severance Payments.
5.01 Following a Change in Control and during the term of
this Agreement, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive's full salary
to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive's employment is terminated
by the Company for Disability.
5.02 If the Executive's employment shall be terminated for
any reason following a Change in Control and during the term of this Agreement,
the Company shall pay the Executive's full salary to the Executive through the
Date of Termination at the rate in effect at the time the Notice of Termination
is given, together with all compensation and benefits payable to the Executive
through the Date of Termination under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company during such period.
5.03 If the Executive's employment shall be terminated for
any reason following a Change in Control and during the term of this Agreement,
the Company shall pay the Executive's normal post-termination compensation and
benefits to the Executive as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
3
<PAGE> 6
with, the Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements.
6. Severance Payments.
6.01 Subject to Section 6.02 hereof, the Company shall pay
the Executive the payments described in this Section 6.01 (the "Severance
Payments") upon the termination of the Executive's employment following a
Change in Control and during the term of this Agreement, in addition to the
payments and benefits described in Section 5 hereof, unless such termination is
(i) by the Company for Cause, (ii) by reason of death, Disability or
Retirement, or (iii) by the Executive without Good Reason. For purposes of the
immediately preceding sentence, if a termination of the Executive's employment
occurs prior to a Change in Control, but following a Potential Change in
Control in which a Person has entered into an agreement with the Company the
consummation of which will constitute a Change in Control, such termination
shall be deemed to have followed a Change in Control and to have been (i) by
the Company without Cause, if the Executive's employment is terminated without
Cause at the direction of such Person, or (ii) by the Executive with Good
Reason, if the Executive terminates his employment with Good Reason and the act
(or failure to act) which constitutes Good Reason occurs following such
Potential Change in Control and at the direction of such Person.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination and in lieu
of any severance benefit otherwise payable to the Executive, the
Company shall pay to the Executive a lump sum severance payment, in
cash, equal to the sum of (i) the higher of (x) two (2) times the
Executive's annual base salary in effect immediately prior to the
occurrence of the event or circumstance upon which the
4
<PAGE> 7
Notice of Termination is based or (y) two (2) times the average of
Executive's annual base salary for the three (3) years immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based, and (ii) the higher of (x) two (2) times the
amount paid to the Executive as an annual discretionary bonus in the
year preceding the year in which the Date of Termination occurs or (y)
two (2) times the average amount so paid in the three (3) years
preceding that in which the Date of Termination occurs.
(B) The Company shall pay to the Executive a lump
Sum amount, in cash, equal to the sum of (i) any annual discretionary
bonus which has been allocated or awarded to the Executive for a
completed fiscal year preceding the Date of Termination but has not yet
been paid (pursuant to Section 5.02 hereof or otherwise), and (ii) a pro
rata portion of an annual discretionary bonus for the fiscal year in
which the Date of Termination occurs, determined by multiplying the
Executive's annual discretionary bonus awarded or paid for the most
recently completed fiscal year by a fraction, the numerator of which
shall be the number of full days the Executive was employed by the
Company during the fiscal year in which the Executive's Date of
Termination occurred and the denominator of which shall be three hundred
and sixty-five (365) days;
(C) At the option of Executive exercised by
written notice to the Board of Directors within thirty (30) days of
termination, the Company shall repurchase all Options held by Executive
(which Options shall be cancelled upon the making of the payment
referred to below) by the payment of a lump sum amount, in cash, equal
to the product of
(i) the excess of the higher of (x) the Current
Market Value of the Company Shares (as hereinafter
defined) or (y) the highest per share price for
5
<PAGE> 8
Company Shares actually paid within six (6) months
preceding or after any Change in Control (whether by
the person or group obtaining such control or by the
Company), over the per share exercise price of each
such Option held by the Executive, times
(ii) the number of Company Shares covered by each
such Option. As used in this subparagraph, the term "Current Market
Value" shall mean the Closing Price of such shares on the date of the
Executive's termination, or if no shares were traded or bid or ask
quotations were published on such date, then on the next preceding date
on which such sales transactions or quotations were actually made. The
term "Closing Price" shall mean:
(1) if the Company Shares are listed on a national
securities exchange, the NASDAQ National Market, or authorized
for trading in any other market or quotation system in which
last sale transactions are reported on a contemporary basis,
the last reported sales price, regular way, of such security
on such exchange or in such quotation system for such day; or
(2) if the Company Shares are not listed, or authorized
for trading in the markets described in (1) above, the last
bid quotation in the over-the-counter market on such trading
day as reported by the National Association of Securities
Dealers, Inc. through NASDAQ, its automated system for
reporting quotations, or its successor or such other generally
accepted source of publicly reported bid quotations as the
Company's Board of Directors may reasonably designate; or
6
<PAGE> 9
(3) if the Company Shares are not traded in the
organized securities markets, the fair market value of the
Company Shares as determined by the Board of Directors of the
Company in good faith.
(D) For a twenty-four (24) month period after the
Date of Termination, the Company shall arrange to provide the Executive
with life, disability, accident and health insurance benefits
substantially similar to those which the Executive is receiving
immediately prior to the Notice of Termination (without giving effect to
any reduction in such benefits subsequent to a Change in Control which
reduction constitutes Good Reason). Benefits otherwise receivable by
the Executive pursuant to this Section 6.01(D) shall be reduced to the
extent comparable benefits are actually received by or made available to
the Executive without cost during the twenty-four (24) month period
following the Executive's termination of employment (any such benefits
actually received by the Executive shall be reported to the Company by
the Executive). If the benefits provided to the Executive under this
Section 6.01(D) shall result in a decrease, pursuant to Section 6.02, in
the Severance Payments and these Section 6.01(D) benefits are thereafter
reduced pursuant to the immediately preceding sentence because of the
receipt of comparable benefits, the Company shall, at the time of such
reduction, pay to the Executive the lesser of (a) the amount of the
decrease made in the Severance Payments pursuant to Section 6.02, or (b)
the maximum amount which can be paid to the Executive without being, or
causing any other payment to be, nondeductible by reason of section 280G
of the Code.
6.02 Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by the Executive in connection with and contingent
7
<PAGE> 10
on a Change in Control or the termination of the Executive's employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person) (all such
payments and benefits, including the Severance Payments, being hereinafter
called "Total Payments") would not be deductible (in whole or part), by the
Company, an affiliate or Person making such payment or providing such benefit,
as a result of section 280G of the Code, then, to the extent necessary to make
the remaining portion of the Total Payments deductible (and after taking into
account any reduction in the Total Payments provided by reason of Section 280G
of the Code in such other plan, arrangement or agreement), (A) the cash
Severance Payments and/or other cash payments provided for hereunder, in each
case, to the extent still unpaid, shall first be reduced (if necessary, to
zero), and (B) all other noncash Severance Payments and/or other non-cash
benefits provided for hereunder, in each case, to the extent still unfurnished,
shall next be reduced (if necessary, to zero), and (C) the Executive shall have
no right to receive hereunder, and neither the Company, any Person whose
actions result in a Change in Control or any Person affiliated with the Company
or such Person shall be obligated to make, pay or furnish to the Executive
hereunder any payment or benefit in excess of those payments or benefits
provided hereunder as reduced, if applicable, pursuant to clause (A) or clause
(B) above. For purposes of this limitation (i) no portion of the Total
Payments the receipt or enjoyment of which the Executive shall have effectively
waived in writing prior to the Date of Termination shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which in the
opinion of tax counsel selected by the Company's independent auditors and
reasonably acceptable to the Executive does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code, including by
reason of section
8
<PAGE> 11
280G(b)(4)(A) of the Code, (iii) the Severance Payments shall be reduced only
to the extent necessary so that the Total Payments (other than those referred
to in clauses (i) or (ii)) in their entirety constitute reasonable compensation
for services actually rendered within the meaning of section 280G(b)(4)(B) of
the Code or are otherwise not subject to disallowance as deductions, in the
opinion of the tax counsel referred to in clause (ii); and (iv) the value of
any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the Code.
If it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the Executive and the Company in applying the terms of this Section
6.02, the aggregate "parachute payments" paid to or for the Executive's benefit
are in an amount that would result in any portion of such "parachute payments"
not being deductible by reason of section 280G of the Code, then the Executive
shall have an obligation to pay the Company upon demand an amount equal to the
sum of (i) the excess of the aggregate "parachute payments" paid to or for the
Executive's benefit over the aggregate "parachute payments" that could have
been paid to or for the Executive's benefit without any portion of such
"parachute payments" not being deductible by reason of section 280G of the
Code; and (ii) interest on the amount set forth in clause (i) of this sentence
at the rate provided in section 1274(b)(2)(B) of the Code from the date of the
Executive's receipt of such excess until the date of such payment.
6.03 The payments and other items provided for in Section
6.01 (other than Section 6.01(D)) hereof shall be made not later than the
fifteenth (15th) day following the Date of Termination or the date of exercise
by Executive of any of Executive's rights hereunder, provided, however, that if
the amounts of such payments, and the limitation on such payments set forth in
9
<PAGE> 12
Section 6.02 hereof, cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which the
Executive is clearly entitled and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section, the Company
shall provide the Executive with a written statement setting forth the manner
in which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).
6.04 The Company also shall pay to the Executive all legal
and accounting fees and expenses incurred by the Executive as a result of a
termination which entitles the Executive to the Severance Payments (including
all such fees and expenses, if any, incurred in disputing any such termination
or in seeking in good faith to obtain or enforce any benefit or right provided
by this Agreement or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder). Such payments shall be made within
fifteen (15) business days after delivery of the Executive's written
10
<PAGE> 13
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.01 Notice of Termination. After a Change in Control and
during the term of this Agreement, any purported termination of the Executive's
employment (other than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other party hereto in
accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.02 Date of Termination. "Date of Termination", with
respect to any purported termination of the Executive's employment after a
Change in Control or prior to a Change in Control, but following a Potential
Change in Control in which a Person has entered into an agreement with the
Company the consummation of which will constitute a Change in Control and
during the term of this Agreement, shall mean (i) if the Executive's employment
is terminated for
11
<PAGE> 14
Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).
7.03 Dispute Concerning Termination. If within fifteen
(15) days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.03), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution in such dispute with reasonable diligence.
7.04 Compensation During Dispute. If a purported
termination occurs following a Change in Control and during the term of this
Agreement, and such termination is disputed in accordance with Section 7.03
hereof, the Company shall continue to pay the Executive the full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and
12
<PAGE> 15
insurance plans in which the Executive was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 7.03 hereof. Amounts paid under this Section 7.04 are
in addition to all other amounts due under this Agreement (other than those due
under Section 5.02 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 or Section 7.04. Further, the amount of any payment or benefit provided for
in Section 6 (other than Section 6.01(D)) or Section 7.04 shall not be reduced
by any compensation earned by the Executive as the result of employment by
another employer, by retirement benefits, by offset against any amount claimed
to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.01 In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to
13
<PAGE> 16
hereunder if the Executive were to terminate the Executive's employment for
Good Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.02 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company: Haverty Furniture Companies, Inc.
866 West Peachtree St., NW
Atlanta, Georgia 30308
Attention: President
To the Executive: ____________________________
____________________________
____________________________
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the
14
<PAGE> 17
Executive and such officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Georgia. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder sha11 be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The obligations of
the Company and the Executive under Sections 6 and 7 shall survive the
expiration of the term of this Agreement. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement sha11 be delivered to the Executive in writing
and shall set forth the specific reasons for the denial and the specific
provisions of this
15
<PAGE> 18
Agreement relied upon. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that the Executive shall
be entitled to seek specific performance of the Executive's right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
14. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.
(B) "Board" shall mean the Board of Directors of the Company.
(C) "Cause" for termination by the Company of the Executive's
employment, after any Change in Control (or after any Potential Change in
Control under the circumstances described in the second sentence of Section
6.01 hereof), shall mean (i) the willful and continued failure by the Executive
for a period of ninety (90) days to substantially perform the Executive's
duties with the Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 7.01) after a written demand for
substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably
16
<PAGE> 19
and materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless done,
or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to act, was in the best
interest of the Company.
(D) A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall have been
satisfied:
(I) any Persons other than Rawson Haverty, Mrs.
Betty Haverty Smith, Clarence H. Ridley, John Rhodes Haverty,
M.D. and Frank S. McGaughey, Jr., their spouses, lineal
descendants, heirs, administrators or representatives is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates, as such term is
defined in the rules and regulations of the Securities and
Exchange Commission) representing 20% or more of the combined
voting power of the Company's then outstanding securities; or
(II) during any period of two consecutive years
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (I),
(III) or (IV) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at
17
<PAGE> 20
the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or
(III) the shareholders of the Company approve a
merger or statutory share exchange of the Company with any other
corporation, other than (i) a merger or statutory share exchange
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with
the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or statutory share exchange, or (ii) a merger
or statutory share exchange effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(IV) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all the Company's assets.
(E) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(F) "Company" shall mean the Haverty Furniture Companies, Inc.
and any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of
18
<PAGE> 21
law, or otherwise (except in determining, under Section 15(E) hereof, whether
or not any Change in Control of the Company has occurred in connection with
such succession).
(G) "Company Shares" shall mean shares of common stock of the
Company or any equity securities into which such shares have been converted.
(H) "Date of Termination" shall have the meaning stated in
Section 7.02 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from the full-time performance of the Executive's duties with
the Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(K) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(L) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, or after any Potential
Change in Control under the circumstances described in the second sentence of
Section 6.01 hereof (treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by the Company, or failures by the
Company to act:
19
<PAGE> 22
(I) the assignment to the Executive of any duties
inconsistent with the Executive's status as an executive officer
of the Company or a substantial adverse alteration in the nature
or status of the Executive's responsibilities from those in
effect immediately prior to the Change in Control;
(II) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the
same may be increased from time to time;
(III) the relocation of the Company's principal
executive offices to a location outside a ten (10) mile radius
from the city limits of Atlanta, Georgia (or, if different, a
ten (10) mile radius from the city limits in which such offices
are located immediately prior to the Change in Control) or the
Company's requiring the Executive to be based anywhere other
than the metropolitan area in which the Executive is based
immediately prior to the Change in Control except for required
travel on the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by the Company, without the
Executive's consent, to pay to the Executive any portion of the
Executive's current compensation or to pay to the Executive any
portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven (7)
days of the date such compensation is due;
(V) the failure by the Company to continue in effect
any compensation plan in which the Executive participates
immediately prior to the Change in Control which is material to
the Executive's total compensation, including but not limited to
the
20
<PAGE> 23
Company's stock option, incentive compensation, bonus and other
plans or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue the
Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, as
existed at the time of the Change in Control;
(VI) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those
enjoyed by the Executive under any of the Company's pension,
life insurance, medical, dental, health and accident, or
disability plans in which the Executive was participating at the
time of the Change in Control, the taking of any action by the
Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect
at the time of the Change in Control; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of
21
<PAGE> 24
Section 9.01; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
(M) "Notice of Termination" shall have the meaning stated in
Section 7.01 hereof.
(N) "Options" shall mean options for Company Shares granted to
the Executive under the Company's stock option plans.
(O) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company.
(P) "Potential Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied;
(I) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
22
<PAGE> 25
(II) the Company or any Person publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(III) any Persons other than Rawson Haverty, Mrs.
Betty Haverty Smith, Clarence H. Ridley, John Rhodes Haverty,
M.D. and Frank McGaughey, Jr., their spouses, lineal
descendants, heirs, administrators or representatives who is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding
securities, increases such Person's beneficial ownership of such
securities by 5% or more over the percentage so owned by such
Person on the date hereof; or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(Q) "Retirement" shall be deemed the reason for the
termination by the Company or the Executive of the Executive's employment if
such employment is terminated in accordance with the Company's retirement
policy, not including early retirement, generally applicable to its salaried
employees, as in effect immediately prior to the Change in Control, or in
accordance with any retirement arrangement established with the Executive's
consent with respect to the Executive.
(R) "Severance Payments" shall mean those payments
described in Section 6.01 hereof.
(S) "Shares" shall mean shares of the common stock of the
Company.
(T) "Total Payments" shall mean those payments described
in Section 6.02 hereof.
23
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
all as of the day and year first above written.
HAVERTY FURNITURE COMPANIES, INC.
By:
--------------------------------
Name:
Title:
EXECUTIVE
--------------------------------
24
<PAGE> 1
EXHIBIT 10.13
AGREEMENT
BETWEEN
HAVERTY FURNITURE COMPANIES, INC.
A GEORGIA CORPORATION,
AND
AS OF
__________, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Company's Covenants Summarized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. The Executive's Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Compensation Other Than Severance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Severance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Termination Procedures and Compensation During Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. No Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. Successors; Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13. Settlement of Disputes; Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-i-
<PAGE> 3
AGREEMENT
THIS AGREEMENT dated as of ______________, 1996 is made by and between
Haverty Furniture Companies, Inc., a Georgia corporation (the "Company"), and
__________________________________________ (the "Executive").
WHEREAS the Company considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel; and
WHEREAS the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly-held corporations, the possibility of
a Change in Control (as defined in the last Section hereof) exists and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in
this Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1997; provided,
however, that commencing on
<PAGE> 4
January 1, 1998 and each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company or the Executive shall have
given notice not to extend this Agreement or a Change in Control shall have
occurred prior to such January 1; provided, however, if a Change in Control
shall have occurred during the term of this Agreement, this Agreement shall
continue in effect for a period of not less than thirty-six (36) months beyond
the month in which such Change in Control occurred.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.01 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control and during the term of this Agreement. Except as
provided by the second sentence of Section 6.01 hereof or the last sentence of
Section 9.01 hereof, no amount or benefit shall be payable under this Agreement
unless there shall have been a termination of the Executive's employment with
the Company following a Change in Control. This Agreement shall not be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject
to the terms and conditions of this Agreement, in the event of a Potential
Change in Control during the term of this Agreement, the Executive will remain
in the employ of the Company until the earliest of (i) a date which is six (6)
months after the date of such Potential Change of Control, (ii) the date of a
Change
2
<PAGE> 5
in Control, (iii) the date of termination by the Executive of the Executive's
employment for Good Reason, by reason of death, Disability or Retirement, or
(iv) the termination by the Company of the Executive's employment for any other
reason.
5. Compensation Other Than Severance Payments.
5.01 Following a Change in Control and during the term of
this Agreement, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive's full salary
to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive's employment is terminated
by the Company for Disability.
5.02 If the Executive's employment shall be terminated for
any reason following a Change in Control and during the term of this Agreement,
the Company shall pay the Executive's full salary to the Executive through the
Date of Termination at the rate in effect at the time the Notice of Termination
is given, together with all compensation and benefits payable to the Executive
through the Date of Termination under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company during such period.
5.03 If the Executive's employment shall be terminated for
any reason following a Change in Control and during the term of this Agreement,
the Company shall pay the Executive's normal post-termination compensation and
benefits to the Executive as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
3
<PAGE> 6
with, the Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements.
6. Severance Payments.
6.01 Subject to Section 6.02 hereof, the Company shall pay
the Executive the payments described in this Section 6.01 (the "Severance
Payments") upon the termination of the Executive's employment following a
Change in Control and during the term of this Agreement, in addition to the
payments and benefits described in Section 5 hereof, unless such termination is
(i) by the Company for Cause, (ii) by reason of death, Disability or
Retirement, or (iii) by the Executive without Good Reason. For purposes of the
immediately preceding sentence, if a termination of the Executive's employment
occurs prior to a Change in Control, but following a Potential Change in
Control in which a Person has entered into an agreement with the Company the
consummation of which will constitute a Change in Control, such termination
shall be deemed to have followed a Change in Control and to have been (i) by
the Company without Cause, if the Executive's employment is terminated without
Cause at the direction of such Person, or (ii) by the Executive with Good
Reason, if the Executive terminates his employment with Good Reason and the act
(or failure to act) which constitutes Good Reason occurs following such
Potential Change in Control and at the direction of such Person.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination and in lieu
of any severance benefit otherwise payable to the Executive, the Company
shall pay to the Executive a lump sum severance payment, in cash, equal
to the sum of (i) the higher of (x) the Executive's annual base salary
in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of
4
<PAGE> 7
Termination is based or (y) the average of Executive's annual base
salary for the three (3) years immediately prior to the occurrence of
the event or circumstance upon which the Notice of Termination is based,
and (ii) the higher of (x) the amount paid to the Executive as an annual
discretionary bonus in the year preceding the year in which the Date of
Termination occurs or (y) the average amount so paid in the three (3)
years preceding that in which the Date of Termination occurs.
(B) The Company shall pay to the Executive a lump
Sum amount, in cash, equal to the sum of (i) any annual discretionary
bonus which has been allocated or awarded to the Executive for a
completed fiscal year preceding the Date of Termination but has not yet
been paid (pursuant to Section 5.02 hereof or otherwise), and (ii) a pro
rata portion of an annual discretionary bonus for the fiscal year in
which the Date of Termination occurs, determined by multiplying the
Executive's annual discretionary bonus awarded or paid for the most
recently completed fiscal year by a fraction, the numerator of which
shall be the number of full days the Executive was employed by the
Company during the fiscal year in which the Executive's Date of
Termination occurred and the denominator of which shall be three hundred
and sixty-five (365) days;
(C) At the option of Executive exercised by
written notice to the Board of Directors within thirty (30) days of
termination, the Company shall repurchase all Options held by Executive
(which Options shall be cancelled upon the making of the payment
referred to below) by the payment of a lump sum amount, in cash, equal
to the product of
(i) the excess of the higher of (x) the Current
Market Value of the Company Shares (as hereinafter
defined) or (y) the highest per share price for
5
<PAGE> 8
Company Shares actually paid within six (6) months
preceding or after any Change in Control (whether by
the person or group obtaining such control or by the
Company), over the per share exercise price of each
such Option held by the Executive, times
(ii) the number of Company Shares covered by each
such Option.
As used in this subparagraph, the term "Current Market Value" shall mean the
Closing Price of such shares on the date of the Executive's termination, or if
no shares were traded or bid or ask quotations were published on such date,
then on the next preceding date on which such sales transactions or quotations
were actually made. The term "Closing Price" shall mean:
(1) if the Company Shares are listed on a national
securities exchange, the NASDAQ National Market, or authorized
for trading in any other market or quotation system in which
last sale transactions are reported on a contemporary basis,
the last reported sales price, regular way, of such security
on such exchange or in such quotation system for such day; or
(2) if the Company Shares are not listed, or authorized
for trading in the markets described in (1) above, the last bid
quotation in the over-the-counter market on such trading day as
reported by the National Association of Securities Dealers,
Inc. through NASDAQ, its automated system for reporting
quotations, or its successor or such other generally accepted
source of publicly reported bid quotations as the Company's
Board of Directors may reasonably designate; or
6
<PAGE> 9
(3) if the Company Shares are not traded in the organized
securities markets, the fair market value of the Company Shares
as determined by the Board of Directors of the Company in good
faith.
(D) For a twelve (12) month period after the Date of
Termination, the Company shall arrange to provide the Executive with
life, disability, accident and health insurance benefits substantially
similar to those which the Executive is receiving immediately prior to
the Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason). Benefits otherwise receivable by the
Executive pursuant to this Section 6.01(D) shall be reduced to the
extent comparable benefits are actually received by or made available to
the Executive without cost during the twelve (12) month period following
the Executive's termination of employment (any such benefits actually
received by the Executive shall be reported to the Company by the
Executive). If the benefits provided to the Executive under this
Section 6.01(D) shall result in a decrease, pursuant to Section 6.02, in
the Severance Payments and these Section 6.01(D) benefits are thereafter
reduced pursuant to the immediately preceding sentence because of the
receipt of comparable benefits, the Company shall, at the time of such
reduction, pay to the Executive the lesser of (a) the amount of the
decrease made in the Severance Payments pursuant to Section 6.02, or (b)
the maximum amount which can be paid to the Executive without being, or
causing any other payment to be, nondeductible by reason of section 280G
of the Code.
6.02 Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by the Executive in connection with and contingent
7
<PAGE> 10
on a Change in Control or the termination of the Executive's employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person) (all such
payments and benefits, including the Severance Payments, being hereinafter
called "Total Payments") would not be deductible (in whole or part), by the
Company, an affiliate or Person making such payment or providing such benefit,
as a result of section 280G of the Code, then, to the extent necessary to make
the remaining portion of the Total Payments deductible (and after taking into
account any reduction in the Total Payments provided by reason of Section 280G
of the Code in such other plan, arrangement or agreement), (A) the cash
Severance Payments and/or other cash payments provided for hereunder, in each
case, to the extent still unpaid, shall first be reduced (if necessary, to
zero), and (B) all other noncash Severance Payments and/or other non-cash
benefits provided for hereunder, in each case, to the extent still unfurnished,
shall next be reduced (if necessary, to zero), and (C) the Executive shall have
no right to receive hereunder, and neither the Company, any Person whose
actions result in a Change in Control or any Person affiliated with the Company
or such Person shall be obligated to make, pay or furnish to the Executive
hereunder any payment or benefit in excess of those payments or benefits
provided hereunder as reduced, if applicable, pursuant to clause (A) or clause
(B) above. For purposes of this limitation (i) no portion of the Total
Payments the receipt or enjoyment of which the Executive shall have effectively
waived in writing prior to the Date of Termination shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which in the
opinion of tax counsel selected by the Company's independent auditors and
reasonably acceptable to the Executive does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code, including by
reason of section
8
<PAGE> 11
280G(b)(4)(A) of the Code, (iii) the Severance Payments shall be reduced only
to the extent necessary so that the Total Payments (other than those referred
to in clauses (i) or (ii)) in their entirety constitute reasonable compensation
for services actually rendered within the meaning of section 280G(b)(4)(B) of
the Code or are otherwise not subject to disallowance as deductions, in the
opinion of the tax counsel referred to in clause (ii); and (iv) the value of
any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the Code.
If it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the Executive and the Company in applying the terms of this Section
6.02, the aggregate "parachute payments" paid to or for the Executive's benefit
are in an amount that would result in any portion of such "parachute payments"
not being deductible by reason of section 280G of the Code, then the Executive
shall have an obligation to pay the Company upon demand an amount equal to the
sum of (i) the excess of the aggregate "parachute payments" paid to or for the
Executive's benefit over the aggregate "parachute payments" that could have
been paid to or for the Executive's benefit without any portion of such
"parachute payments" not being deductible by reason of section 280G of the
Code; and (ii) interest on the amount set forth in clause (i) of this sentence
at the rate provided in section 1274(b)(2)(B) of the Code from the date of the
Executive's receipt of such excess until the date of such payment.
6.03 The payments and other items provided for in Section
6.01 (other than Section 6.01(D)) hereof shall be made not later than the
fifteenth (15th) day following the Date of Termination or the date of exercise
by Executive of any of Executive's rights hereunder, provided, however, that if
the amounts of such payments, and the limitation on such payments set forth in
9
<PAGE> 12
Section 6.02 hereof, cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which the
Executive is clearly entitled and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section, the Company
shall provide the Executive with a written statement setting forth the manner
in which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).
6.04 The Company also shall pay to the Executive all legal
and accounting fees and expenses incurred by the Executive as a result of a
termination which entitles the Executive to the Severance Payments (including
all such fees and expenses, if any, incurred in disputing any such termination
or in seeking in good faith to obtain or enforce any benefit or right provided
by this Agreement or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder). Such payments shall be made within
fifteen (15) business days after delivery of the Executive's written
10
<PAGE> 13
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.01 Notice of Termination. After a Change in Control and
during the term of this Agreement, any purported termination of the Executive's
employment (other than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other party hereto in
accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.02 Date of Termination. "Date of Termination", with
respect to any purported termination of the Executive's employment after a
Change in Control or prior to a Change in Control, but following a Potential
Change in Control in which a Person has entered into an agreement with the
Company the consummation of which will constitute a Change in Control and
during the term of this Agreement, shall mean (i) if the Executive's employment
is terminated for
11
<PAGE> 14
Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).
7.03 Dispute Concerning Termination. If within fifteen
(15) days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.03), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution in such dispute with reasonable diligence.
7.04 Compensation During Dispute. If a purported
termination occurs following a Change in Control and during the term of this
Agreement, and such termination is disputed in accordance with Section 7.03
hereof, the Company shall continue to pay the Executive the full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and
12
<PAGE> 15
insurance plans in which the Executive was participating when the notice giving
rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 7.03 hereof. Amounts paid under this Section 7.04 are
in addition to all other amounts due under this Agreement (other than those due
under Section 5.02 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 or Section 7.04. Further, the amount of any payment or benefit provided for
in Section 6 (other than Section 6.01(D)) or Section 7.04 shall not be reduced
by any compensation earned by the Executive as the result of employment by
another employer, by retirement benefits, by offset against any amount claimed
to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.01 In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to
13
<PAGE> 16
hereunder if the Executive were to terminate the Executive's employment for
Good Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.02 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company: Haverty Furniture Companies, Inc.
866 West Peachtree St., NW
Atlanta, Georgia 30308
Attention: President
To the Executive: ____________________________
____________________________
____________________________
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the
14
<PAGE> 17
Executive and such officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Georgia. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The obligations of
the Company and the Executive under Sections 6 and 7 shall survive the
expiration of the term of this Agreement. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement sha11 be delivered to the Executive in writing
and shall set forth the specific reasons for the denial and the specific
provisions of this
15
<PAGE> 18
Agreement relied upon. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that the Executive shall
be entitled to seek specific performance of the Executive's right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
14. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.
(B) "Board" shall mean the Board of Directors of the Company.
(C) "Cause" for termination by the Company of the Executive's
employment, after any Change in Control (or after any Potential Change in
Control under the circumstances described in the second sentence of Section
6.01 hereof), shall mean (i) the willful and continued failure by the Executive
for a period of ninety (90) days to substantially perform the Executive's
duties with the Company (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 7.01) after a written demand for
substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably
16
<PAGE> 19
and materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless done,
or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to act, was in the best
interest of the Company.
(D) A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall have been
satisfied:
(I) any Persons other than Rawson Haverty, Mrs.
Betty Haverty Smith, Clarence H. Ridley, John Rhodes Haverty,
M.D. and Frank S. McGaughey, Jr., their spouses, lineal
descendants, heirs, administrators or representatives is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates, as such term is
defined in the rules and regulations of the Securities and
Exchange Commission) representing 20% or more of the combined
voting power of the Company's then outstanding securities; or
(II) during any period of two consecutive years
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (I),
(III) or (IV) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at
17
<PAGE> 20
the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or
(III) the shareholders of the Company approve a
merger or statutory share exchange of the Company with any other
corporation, other than (i) a merger or statutory share exchange
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with
the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or statutory share exchange, or (ii) a merger
or statutory share exchange effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(IV) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all the Company's assets.
(E) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(F) "Company" shall mean the Haverty Furniture Companies, Inc.
and any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of
18
<PAGE> 21
law, or otherwise (except in determining, under Section 15(E) hereof, whether
or not any Change in Control of the Company has occurred in connection with
such succession).
(G) "Company Shares" shall mean shares of common stock of the
Company or any equity securities into which such shares have been converted.
(H) "Date of Termination" shall have the meaning stated in
Section 7.02 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from the full-time performance of the Executive's duties with
the Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(K) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(L) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, or after any Potential
Change in Control under the circumstances described in the second sentence of
Section 6.01 hereof (treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by the Company, or failures by the
Company to act:
19
<PAGE> 22
(I) the assignment to the Executive of any duties
inconsistent with the Executive's status as an executive officer
of the Company or a substantial adverse alteration in the nature
or status of the Executive's responsibilities from those in
effect immediately prior to the Change in Control;
(II) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the
same may be increased from time to time;
(III) the relocation of the Company's principal
executive offices to a location outside a ten (10) mile radius
from the city limits of Atlanta, Georgia (or, if different, a
ten (10) mile radius from the city limits in which such offices
are located immediately prior to the Change in Control) or the
Company's requiring the Executive to be based anywhere other
than the metropolitan area in which the Executive is based
immediately prior to the Change in Control except for required
travel on the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by the Company, without the
Executive's consent, to pay to the Executive any portion of the
Executive's current compensation or to pay to the Executive any
portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven (7)
days of the date such compensation is due;
(V) the failure by the Company to continue in effect
any compensation plan in which the Executive participates
immediately prior to the Change in Control which is material to
the Executive's total compensation, including but not limited to
the
20
<PAGE> 23
Company's stock option, incentive compensation, bonus and other
plans or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue the
Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, as
existed at the time of the Change in Control;
(VI) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those
enjoyed by the Executive under any of the Company's pension,
life insurance, medical, dental, health and accident, or
disability plans in which the Executive was participating at the
time of the Change in Control, the taking of any action by the
Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect
at the time of the Change in Control; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of
21
<PAGE> 24
Section 9.01; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
(M) "Notice of Termination" shall have the meaning stated in
Section 7.01 hereof.
(N) "Options" shall mean options for Company Shares granted to
the Executive under the Company's stock option plans.
(O) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company.
(P) "Potential Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following paragraphs
shall have been satisfied;
(I) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
22
<PAGE> 25
(II) the Company or any Person publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(III) any Persons other than Rawson Haverty, Mrs.
Betty Haverty Smith, Clarence H. Ridley, John Rhodes Haverty,
M.D. and Frank McGaughey, Jr., their spouses, lineal
descendants, heirs, administrators or representatives who is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding
securities, increases such Person's beneficial ownership of such
securities by 5% or more over the percentage so owned by such
Person on the date hereof; or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(Q) "Retirement" shall be deemed the reason for the
termination by the Company or the Executive of the Executive's employment if
such employment is terminated in accordance with the Company's retirement
policy, not including early retirement, generally applicable to its salaried
employees, as in effect immediately prior to the Change in Control, or in
accordance with any retirement arrangement established with the Executive's
consent with respect to the Executive.
(R) "Severance Payments" shall mean those payments
described in Section 6.01 hereof.
(S) "Shares" shall mean shares of the common stock of the
Company.
(T) "Total Payments" shall mean those payments described
in Section 6.02 hereof.
23
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
all as of the day and year first above written.
HAVERTY FURNITURE COMPANIES, INC.
By:
--------------------------------
Name:
Title:
EXECUTIVE
--------------------------------
24
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name State of Incorporation
---- ----------------------
<S> <C>
Havertys Capital, Inc. Nevada
Havertys Credit Services, Inc. Tennessee
Havertys Enterprises, Inc. Nevada
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Haverty Furniture Companies, Inc. of our report dated January 31, 1997,
included in the appendix to the Company's proxy statement, dated March 19,
1997, for the annual meeting of stockholders.
Our audits also included the financial statement schedule of Haverty Furniture
Companies, Inc. listed in Item 14(a). This schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Company's Registration
Statement (Form S-8 No. 33-53607) pertaining to the 1993 Non-Qualified Stock
Option Plan of Haverty Furniture Companies, Inc., the Registration Statement
(Form S-8 No. 33-28560) pertaining to the 1988 Non-Qualified Stock Option Plan
of Haverty Furniture Companies, Inc., the Registration Statement (Form S-8 No.
33-13755) pertaining to the 1986 Non-Qualified Stock Option Plan of Haverty
Furniture Companies, Inc., the Registration Statement (Form S-8 No. 33-53609)
pertaining to the 1988 Incentive Stock Option Plan of Haverty Furniture
Companies, Inc. and the Registration Statement (Form S-8 No. 33-45724)
pertaining to the Employee Stock Purchase Plan of Haverty Furniture Companies,
Inc. of our report dated January 31, 1997, with respect to the financial
statements incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement schedule included
in this Annual Report (Form 10-K) of Haverty Furniture Companies, Inc.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 17, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HAVERTY FURNITURE COS., INC. AND
SUBSIDIARIES AS OF DECEMBER 31, 1996 AND FOR THE YEAR THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 414
<SECURITIES> 0
<RECEIVABLES> 208,009
<ALLOWANCES> 7,100
<INVENTORY> 77,385
<CURRENT-ASSETS> 283,130
<PP&E> 178,791
<DEPRECIATION> 64,441
<TOTAL-ASSETS> 399,875
<CURRENT-LIABILITIES> 125,440
<BONDS> 128,340
0
0
<COMMON> 12,498
<OTHER-SE> 138,418
<TOTAL-LIABILITY-AND-EQUITY> 399,875
<SALES> 456,860
<TOTAL-REVENUES> 470,250
<CGS> 239,976
<TOTAL-COSTS> 239,976
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,416
<INTEREST-EXPENSE> 14,463
<INCOME-PRETAX> 19,132
<INCOME-TAX> 6,885
<INCOME-CONTINUING> 12,247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,247
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
