<PAGE> 1
As filed with the Securities and Exchange Commission on May 20, 1998
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HAVERTY FURNITURE COMPANIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 58-0281900
--------------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
866 West Peachtree Street, N.W., Atlanta, Georgia 30308
----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
1998 STOCK OPTION PLAN
----------------------------------------------------------------------
(Full Title of the Plan)
JOHN E. SLATER, JR.
President and Chief Executive Officer
866 West Peachtree Street, N.W.
Atlanta, Georgia 30308
(404) 881-1911
-------------------------------------------
(Name, address, telephone number, including
area code, of agent for service)
----------------------
Copies Requested to:
Terry Ferraro Schwartz, Esq.
Smith, Gambrell & Russell, LLP
1230 Peachtree Street, N.E.
Suite 3100, Promenade II
Atlanta, Georgia 30309-3592
(404) 815-3731
----------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered Share(1) Price(1) Registration Fee
--------------------- -------------------- --------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Options and Shares of
$1.00 par value 1,000,000 $21.44 $21,440,000 $6,325
Common Stock Shares
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the high and low reported
prices of the Common Stock on the Nasdaq National Market on May 15, 1998.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are hereby incorporated by reference into
this Registration Statement, and all documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended, prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be part hereof from the date of
filing such documents:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997, together with those portions of the Company's
1997 Annual Report to Stockholders, including the audited
financial statements contained therein, which are incorporated
by reference into the Company's Form 10-K;
2. The Company's Definitive Proxy Statement, dated March 23, 1998,
as filed with the Securities and Exchange Commission (the
"Commission") in connection with the Company's 1998 Annual
Meeting of Stockholders;
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998, as filed with the Commission; and
4. The Company's Registration Statement on Form 8-A, as filed with
the Commission on April 22, 1986, to register the Company's
$1.00 par value Common Stock under Section 12(g) of the
Securities Exchange Act of 1934, as amended, which Registration
Statement contains a description of the Common Stock.
ITEM 4. DESCRIPTION OF SECURITIES.
No response is required to this item.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
No response is required to this item.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Fifteenth Article of the Articles of Incorporation of the Company
provides that, to the fullest extent permitted by Maryland law, no director or
corporate officer of the Company shall have any liability to the Company or its
stockholders for damages. The Fifteenth Article further provides that the
Company shall indemnify and advance expenses to its directors and corporate
officers to the fullest extent that indemnification of directors is permitted by
Maryland law.
Section 2-418 of the Maryland General Corporation Law provides, under
certain circumstances, for the indemnification of any director made a party to
any proceeding by reason of serving as a director of a corporation against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by the director in connection with the proceeding.
The Company maintains director and officer liability insurance.
<PAGE> 3
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
No response to this Item is required.
ITEM 8. EXHIBITS.
The following exhibits are filed with or incorporated by reference
into this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- -----------------------------------------------------
<S> <C>
5.1 Opinion of Smith, Gambrell & Russell, LLP.
10.1 Registrant's 1998 Stock Option Plan.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Smith, Gambrell & Russell, LLP (contained
in their opinion filed as Exhibit 5.1).
24.1 Powers of Attorney (contained on the signature page
to this Registration Statement).
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement
to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's Annual Report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities
II-2
<PAGE> 4
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on this 19th day of
May, 1998.
HAVERTY FURNITURE COMPANIES, INC.
By: /s/ John E. Slater, Jr.
-----------------------------------
John E. Slater, Jr.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Rawson Haverty, John E. Slater, Jr. and
Dennis L. Fink or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including a Registration Statement filed under Rule 462(b) of the
Securities Act of 1933, as amended, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Rawson Haverty Chairman of the Board May 19, 1998
- ----------------------------------------------------
Rawson Haverty
/s/ John E. Slater, Jr. President, Chief Executive May 19, 1998
- ---------------------------------------------------- Officer and Director
John E. Slater, Jr. (Principal Executive
Officer)
/s/ Fred J. Bates Regional Manager and May 19, 1998
- ---------------------------------------------------- Director
Fred J. Bates
/s/ Dan C. Bryant Controller (Principal May 19, 1998
- ---------------------------------------------------- Accounting Officer)
Dan C. Bryant
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ Dennis L. Fink Executive Vice President May 19, 1998
- ---------------------------------------------------- and Chief Financial Officer
Dennis L. Fink (Principal Financial Officer)
/s/ John T. Glover Director May 19, 1998
- ----------------------------------------------------
John T. Glover
/s/ Rawson Haverty, Jr. Vice President and Director May 19, 1998
- ----------------------------------------------------
Rawson Haverty, Jr.
/s/ L. Phillip Humann Director May 19, 1998
- ----------------------------------------------------
L. Phillip Humann
- ---------------------------------------------------- Director
Lynn H. Johnston
/s/ Frank S. McGaughey, III Director May 19, 1998
- ----------------------------------------------------
Frank S. McGaughey, III
Director
- ----------------------------------------------------
Clarence H. Ridley
/s/ Clarence H. Smith Senior Vice President and May 19, 1998
- ---------------------------------------------------- Director
Clarence H. Smith
Director
- ----------------------------------------------------
Robert R. Woodson
</TABLE>
II-5
<PAGE> 7
Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------------------------
<S> <C>
5.1 Opinion of Smith, Gambrell & Russell, LLP.
10.1 1998 Stock Option Plan.
23.1 Consent of Ernst & Young LLP.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
SMITH, GAMBRELL & RUSSELL, LLP
ATTORNEYS AT LAW
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309-3592
TELEPHONE -------- WEBSITE
(404) 815-3500 www.sgratl.com
FACSIMILE Established 1893
(404) 815-3509
May 19, 1998
Board of Directors
Haverty Furniture Companies, Inc.
866 West Peachtree Street, N.W.
Atlanta, Georgia 30308
RE: Haverty Furniture Companies, Inc.
Registration Statement on Form S-8
1,000,000 Shares of Common Stock
1998 Stock Option Plan
Gentlemen:
We have acted as counsel for Haverty Furniture Companies, Inc. (the
"Company") in connection with the registration of 1,000,000 shares of its $1.00
par value Common Stock (the "Shares") reserved to the Company's 1998 Stock
Option, as amended (the "Plan") pursuant to a Registration Statement on Form S-8
to be filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Act"), covering the Shares.
In connection therewith, we have examined the following:
(1) The Certificate of Incorporation of the Company, as amended,
certified by the Secretary of State of the State of Maryland;
(2) The Bylaws of the Company, certified as complete and correct by the
Secretary of the Company;
(3) The minute book of the Company, certified as correct and complete
by the Secretary of the Company;
(4) Certificate of Good Standing with respect to the Company, issued by
the Secretary of State of the State of Maryland; and
(5) The Registration Statement on Form S-8 to be filed with the
Securities and Exchange Commission pursuant to the Act (the
"Registration Statement").
<PAGE> 2
Board of Directors
Haverty Furniture Companies, Inc.
May 19, 1998
Page 2
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that:
(A) The Company has been duly incorporated under the laws of the State
of Maryland and is validly existing under the laws of that state.
(B) The 1,000,000 Shares covered by the Registration Statement have
been legally authorized by the Company and when sold in accordance
with the terms described in said Registration Statement, will be
validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus. In giving this consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Act, or the rules and regulations of the Securities and
Exchange Commission thereunder.
Sincerely,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Terry Ferraro Schwartz
-------------------------------
Terry Ferraro Schwartz
<PAGE> 1
EXHIBIT 10.1
HAVERTY FURNITURE COMPANIES, INC.
1998 STOCK OPTION PLAN
EFFECTIVE AS OF DECEMBER 18, 1997
1. PURPOSE
The primary purpose of the Haverty Furniture Companies, Inc. 1998 Stock
Option Plan (the "Plan") is to encourage and enable eligible directors, officers
and key employees of Haverty Furniture Companies, Inc. (the "Company") and its
subsidiaries to acquire proprietary interests in the Company through the
ownership of Common Stock of the Company. The Company believes that directors,
officers and key employees who participate in the Plan will have a closer
identification with the Company by virtue of their ability as shareholders to
participate in the Company's growth and earnings. The Plan also is designed to
provide motivation for participating directors, officers and key employees to
remain in the employ of and to give greater effort on behalf of the Company. It
is the intention of the Company that the Plan provide for the award of
"incentive stock options" qualified under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations promulgated
thereunder, as well as the award of non-qualified stock options. Accordingly,
the provisions of the Plan related to incentive stock options shall be construed
so as to extend and limit participation in a manner consistent with the
requirements of Section 422 of the Code.
2. DEFINITIONS
The following words or terms shall have the following meanings:
(a) "Agreement" shall mean a stock option agreement between the Company
and an Eligible Employee, Eligible Participant or Non-Employee Director pursuant
to the terms of this Plan.
(b) "Board of Directors" shall mean the Board of Directors of the
Company or the Executive Committee of such Board.
(c) "Committee" shall mean the committee appointed by the Board of
Directors to administer the Plan, if any, as set forth in Section 5 of the Plan.
(d) "Company" shall mean Haverty Furniture Companies, Inc., a Maryland
corporation.
(e) "Eligible Employee(s)" shall mean key employees regularly employed
by the Company or a Subsidiary (including officers, whether or not they are
directors) as the Board of Directors or the Committee shall select from time to
time.
(f) "Eligible Participant(s)" shall mean directors, officers, key
employees of the Company and its Subsidiaries, consultants, advisors and other
persons who may not otherwise be eligible to receive Qualified Incentive Options
pursuant to Section 8 of the Plan.
(g) "Market Price" shall mean the closing price of the Company's Common
Stock on the date in question, as quoted by the Nasdaq National Market System
(or other nationally recognized quotation service). If the Company's Common
Stock is not traded on the Nasdaq National Market but is registered on a
national securities exchange, "Market Price" shall mean the closing sales price
of the
<PAGE> 2
Company's Common Stock on such national securities exchange. If the Company's
shares of Common Stock are not traded on a national securities exchange or
through any other nationally recognized quotation service, then "Market Price"
shall mean the fair market value of the Company's Common Stock as determined by
the Board of Directors or the Committee, acting in good faith, under any method
consistent with the Code, or Treasury Regulations thereunder, as the Board of
Directors or the Committee shall in its discretion select and apply at the time
of the grant of the option concerned. Subject to the foregoing, the Board of
Directors or the Committee, in fixing the market price, shall have full
authority and discretion and be fully protected in doing so.
(h) For purposes of Section 10 herein, "Non-Employee Director(s)" shall
mean a director of the Company who is not a regular salaried employee of the
Company or one of its Subsidiaries.
(i) "Optionee" shall mean an Eligible Employee, Eligible Participant or
Non-Employee Director having a right to purchase Common Stock under an
Agreement.
(j) "Option(s)" shall mean the right or rights granted to Eligible
Employees, Eligible Participants or Non-Employee Directors to purchase Common
Stock under the Plan.
(k) "Plan" shall mean this Haverty Furniture Companies, Inc. 1998 Stock
Option Plan.
(l) "Shares," "Stock," or "Common Stock" shall mean shares of the $1.00
par value common stock of the Company.
(m) "Subsidiary" or "Subsidiaries" shall mean any corporation(s), if
the Company owns or controls, directly or indirectly, more than a majority of
the voting stock of such corporation(s).
(n) "Ten Percent Owner" shall mean an individual who, at the time an
Option is granted, owns directly or indirectly more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or a
Subsidiary.
3. EFFECTIVE DATE
The effective date of the Plan (the "Effective Date") shall be the date the
Plan is adopted by the Committee (subject to ratification of the Board of
Directors), or by the Board of Directors, or the date the Plan is approved by
the shareholders of the Company, whichever is earliest. The Plan must be
approved by the affirmative vote of not less than a majority of the shares
present and voting at a meeting at which a quorum is present, which shareholder
vote must be taken within twelve (12) months after the date the Plan is adopted
by the Board of Directors. Such shareholder vote shall not alter the Effective
Date of the Plan. In the event shareholder approval of the adoption of the Plan
is not obtained within the aforesaid twelve (12) month period, then any Options
granted in the intervening period shall be void.
4. SHARES RESERVED FOR PLAN
The shares of the Company's Common Stock to be sold to Eligible Employees,
Eligible Participants and Non-Employee Directors under the Plan may at the
election of the Board of Directors be either treasury shares or Shares
originally issued for such purpose. The maximum number of Shares which shall be
reserved and made available for sale under the Plan shall be one million
(1,000,000); provided, however, that such Shares shall be subject to the
adjustments provided in Section 8(h). Any
2
<PAGE> 3
Shares subject to an Option which for any reason expires or is terminated
unexercised may again be subject to an Option under the Plan.
5. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors or the Committee. The
Committee shall be comprised of not less than two (2) members appointed by the
Board of Directors of the Company from among its members, each of whom qualifies
as a "Non-Employee Director" as such term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor regulation.
Within the limitations described herein, the Board of Directors of the Company
or the Committee shall administer the Plan, select the Eligible Employees and
Eligible Participants to whom Options will be granted, determine the number of
shares to be optioned to each Eligible Employee and Eligible Participant and
interpret, construe and implement the provisions of the Plan. The Board of
Directors or the Committee shall also determine the price to be paid for the
Shares upon exercise of each Option, the period within which each Option may be
exercised, and the terms and conditions of each Option granted pursuant to the
Plan. The Board of Directors and Committee members shall be reimbursed for
out-of-pocket expenses reasonably incurred in the administration of the Plan.
If the Plan is administered by the Board of Directors, a majority of the
members of the Board of Directors shall constitute a quorum, and the act of a
majority of the members of the Board of Directors present at any meeting at
which a quorum is present, or acts approved in writing by all members of the
Board of Directors shall be the acts of the Board of Directors. If the Plan is
administered by the Committee, a majority of the members of the Committee shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all of the
members of the Committee shall be the acts of the Committee.
6. ELIGIBILITY
Options granted pursuant to Section 8 shall be granted only to Eligible
Employees. Options granted pursuant to Section 9 may be granted to Eligible
Employees and to Eligible Participants. Options granted pursuant to Section 10
shall be granted only to Non-Employee Directors.
7. DURATION OF THE PLAN
The Plan shall remain in effect until all Shares subject to or which may become
subject to the Plan shall have been purchased pursuant to Options granted under
the Plan; provided that Options under the Plan must be granted within ten (10)
years from the Effective Date. The Plan shall expire on the tenth anniversary of
the Effective Date.
8. QUALIFIED INCENTIVE OPTIONS
It is intended that Options granted under this Section 8 shall be qualified
incentive stock options under the provisions of Section 422 of the Code and the
regulations thereunder or corresponding provisions of subsequent revenue laws
and regulations in effect at the time such Options are granted. Such Options
shall be evidenced by stock option agreements in such form and not inconsistent
with this Plan as the Committee or the Board of Directors shall approve from
time to time, which Agreements shall contain in substance the following terms
and conditions:
3
<PAGE> 4
(a) Price. The purchase price for shares purchased upon exercise will
be equal to 100% of the Market Price on the day the Option is granted; provided
that the purchase price of stock deliverable upon the exercise of a qualified
incentive stock option granted to a Ten Percent Owner under this Section 8 shall
be not less than one hundred ten percent (110%) of the Market Price on the day
the Option is granted, as determined by the Board of Directors or the Committee,
but in no case less than the par value of such stock.
(b) Number of Shares. The Agreement shall specify the number of Shares
which the Optionee may purchase under such Option, as determined by the Board of
Directors or the Committee.
(c) Exercise of Options. The shares subject to the Option may be
purchased in whole or in part by the Optionee in accordance with the terms of
the Agreement from time to time after shareholder approval of the Plan, as
determined by the Board of Directors or the Committee, but in no event later
than ten (10) years from the date of grant of the Option. Notwithstanding the
foregoing, Shares subject to an Option granted to a Ten Percent Owner under this
Section 8 may be purchased from time to time but in no event later than five (5)
years from the date of grant of the Option.
(d) Medium and Time of Payment. Stock purchased pursuant to an
Agreement shall be paid for in full at the time of purchase. Payment of the
purchase price shall be in cash or, in lieu of payment of all or part of the
purchase price in cash, the Optionee may surrender to the Company shares of the
common stock of the Company (including either $1.00 par value Common Stock or
$1.00 par value Class A Common Stock) valued at the Market Price on the date of
exercise of the Option in accordance with the terms of the Agreement. Upon
receipt of payment, the Company shall, without transfer or issue tax, deliver to
the Optionee (or other person entitled to exercise the Option) a certificate or
certificates for such Shares.
(e) Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any Shares covered by an Option until the date of
issuance of the stock certificate to the Optionee for such Shares. Except as
otherwise expressly provided in the Plan, no adjustments shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued.
(f) Nonassignability of Option. No Option shall be assignable or
transferable by the Optionee except by will or by the laws of descent and
distribution. During the lifetime of the Optionee, the Option shall be
exercisable only by him or her.
(g) Effect of Termination of Employment or Death.
(1) In the event that an Optionee during his or her lifetime
ceases to be an employee of the Company or of any Subsidiary of the Company
for any reason (including retirement) other than (A) termination for "cause"
(defined in (g)(2) below), or (B) death or permanent and total disability, any
Option or unexercised portion thereof which was otherwise exercisable on the
date of termination of employment shall expire unless exercised within a period
of three (3) months from the date on which the Optionee ceased to be an
employee, but in no event after the term provided in the Optionee's Agreement.
In the event that an Optionee ceases to be an employee of the Company or of any
Subsidiary of the Company for any reason (including retirement) other than (A)
termination for "cause" (defined in (g)(2) below), or (B) death or permanent
and total disability prior to the time that an Option or portion thereof
becomes exercisable, such Option or portion thereof which is not then
exercisable shall terminate and be
4
<PAGE> 5
null and void. Whether authorized leave of absence for military or government
service shall constitute termination of employment for the purpose of this Plan
shall be determined by the Board of Directors or the Committee, which
determination shall be final and conclusive.
(2) In the event that an Optionee during his or her lifetime
ceases to be an employee of the Company or of any Subsidiary of the Company as
a result of termination for "cause," any Option or unexercised portion thereof,
whether or not exercisable, on the date of termination of employment shall
expire and be deemed canceled on the date of termination of employment. For
purposes of this Plan, termination for "cause" shall mean termination for any
one of the following reasons:
(A) failure to perform or substandard performance of the
services required of Optionee as an employee;
(B) gross negligence or willful misconduct of Optionee
materially damaging to the business of the Company;
(C) engaging in any activity prohibited by the Company's
established employment policies; or
(D) conviction of Optionee of a crime involving breach of
trust or moral turpitude.
(3) Notwithstanding the provisions contained in subparagraph (g)
(1) above, in the event that an Optionee voluntarily leaves the employment of
the Company or of any Subsidiary of the Company and thereafter becomes employed
by, or engages directly or indirectly, in any capacity in, a business that is
competitive with the business of the Company or any Subsidiary of the Company,
any Option or unexercised portion thereof which was otherwise exercisable on the
date of termination of employment shall expire and shall be deemed cancelled as
of the date of termination of employment of the Optionee with the Company or any
Subsidiary of the Company.
(4) In the event that an Optionee during his or her lifetime
ceases to be an employee of the Company or any Subsidiary of the Company by
reason of death or permanent and total disability, any Option or unexercised
portion thereof which was otherwise exercisable on the date such Optionee ceased
employment shall expire unless exercised within a period of one (1) year from
the date on which the Optionee ceased to be an employee, but in no event after
the term provided in the Optionee's Agreement. In the event that an Optionee
during his or her lifetime ceases to be an employee of the Company or any
Subsidiary of the Company by reason of death or permanent and total disability,
any Option or portion thereof which was not exercisable on the date such
Optionee ceased employment shall become immediately exercisable for a period of
one (1) year from the date on which the Optionee ceased to be an employee, but
in no event shall the exercise period extend past the term provided in the
Optionee's Agreement.
"Permanent and total disability" as used in this Plan shall be as defined in
Section 22(e)(3) of the Code.
In the event of the death of an Optionee, the Option shall be exercisable by
his or her personal representatives, heirs or legatees, as provided herein.
5
<PAGE> 6
(h) Recapitalization. In the event that dividends are payable in Common
Stock of the Company or in the event there are splits, subdivisions or
combinations of shares of Common Stock of the Company, the number of Shares
available under the Plan shall be increased or decreased proportionately, as the
case may be, and the number and Option exercise price of Shares deliverable upon
the exercise thereafter of any Option theretofore granted shall be increased or
decreased proportionately, as the case may be, as determined to be proper and
appropriate by the Board of Directors or the Committee.
(i) Reorganization. In case the Company is merged or consolidated with
another corporation and the Company is not the surviving corporation, or in case
the property or stock of the Company is acquired by another corporation, or in
case of a separation, reorganization, recapitalization or liquidation of the
Company, the Board of Directors of the Company, or the Board of Directors of any
corporation assuming the obligations of the Company hereunder, shall either (i)
make appropriate provision for the protection of any outstanding Options by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to the shares of Common Stock of the Company, provided only
that the excess of the aggregate fair market value of the Shares subject to
option immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the Shares
subject to option immediately before such substitution over the purchase price
thereof, or (ii) upon written notice to the Optionee provide that the Option
(including, in the discretion of the Board of Directors, any portion of such
Option which is not then exercisable) must be exercised within sixty (60) days
of the date of such notice or it will be terminated. If any adjustment under
this Section 8(i) would create a fractional share of Stock or a right to acquire
a fractional share, such shall be disregarded and the number of shares of Stock
available under the Plan and the number of Shares covered under any Options
previously granted pursuant to the Plan shall be the next lower number of shares
of Stock, rounding all fractions downward. An adjustment made under this Section
8(i) by the Board of Directors shall be conclusive and binding on all affected
persons.
Except as otherwise expressly provided in this Plan, the Optionee shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class, or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class, or by reason of any dissolution,
liquidation, merger, or consolidation or spin-off of assets or stock of another
corporation; and any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
prices of shares of Common Stock subject to an Option.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(j) Annual Limitation. The aggregate fair market value (determined at
the time the Option is granted) of the shares with respect to which incentive
stock options are exercisable for the first time by an Optionee during any
calendar year (under all incentive stock option plans of the Company and its
Subsidiaries) shall not exceed $100,000. Any excess over such amount shall be
deemed to be related to and part of a non-qualified stock option granted
pursuant to Section 9.
(k) General Restriction. Each Option shall be subject to the
requirement that if at any time the Board of Directors shall determine, in its
reasonable discretion, that the listing, registration or
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qualification of the Shares subject to such Option upon any securities exchange
or under any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issue or purchase of Shares thereunder,
such Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors.
Alternatively, such Options shall be issued and exercisable only upon such terms
and conditions and with such restrictions as shall be necessary or appropriate
to effect exemption from such listing, registration, or other qualification
requirement.
9. NON-QUALIFIED OPTIONS
The Board of Directors or the Committee may grant to Eligible Employees or
Eligible Participants Options under the Plan which are not qualified incentive
stock options under the provisions of Section 422 of the Code. Such
non-qualified options shall be evidenced by Agreements in such form and not
inconsistent with this Plan as the Board of Directors or the Committee shall
approve from time to time, which Agreements shall contain in substance the same
terms and conditions as set forth in Section 8 hereof with respect to qualified
incentive stock options; provided, however, that:
(i) the limitations set forth in Sections 8(a) and 8(c) with respect
to Ten Percent Owners shall not be applicable to non-qualified options granted
to any Ten Percent Owner;
(ii) the limitations set forth in Section 8(g) with respect to
termination of employment or death shall not be applicable to non-qualified
option grants, and any such limitations shall be determined on a case by case
basis by the Board of Directors or the Committee at the time of the
non-qualified option grant;
(iii) the limitation set forth in Section 8(j) with respect to the
annual limitation of incentive stock options shall not be applicable to
non-qualified option grants; and
(iv) non-qualified options may be granted at a purchase price equal
to not less than 75% of the Market Price on the day the Option is granted.
10. OPTIONS TO NON-EMPLOYEE DIRECTORS
This Section 10 of the Plan provides the following annual Option grants to
Non-Employee Directors:
(a) On the last business day of October of each year during the term of
this Plan, each then Non-Employee Director of the Company shall be granted,
without the necessity of action by the Board of Directors or the Committee, an
Option to purchase 3,000 shares of Common Stock at an option exercise or
purchase price equal to 100% of the Market Price of such Stock on the date of
grant.
(b) Options granted under this Section 10 shall be exercisable commencing
on the date of grant or, with respect to any Option granted prior to stockholder
approval of this Plan, upon the date of such stockholder approval, and
thereafter until the earlier to occur of the following: the close of business on
(i) the date which is the tenth anniversary of the date of grant; (ii) the date
which is the 90th day following the date upon which such Non-Employee Director
ceases to be a director of the Company for any reason other than death or
permanent and total disability; or (iii) the date which is the first
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anniversary of the date on which such Non-Employee Director ceases to be a
director of the Company as a result of death or permanent and total disability.
(c) In all other respects, Options granted to Non-Employee Directors
hereunder shall contain in substance the same terms and conditions as set forth
in Section 9 hereof with respect to non-qualified options. Non-Employee
Directors shall also be eligible to receive Options under Section 9 of the Plan.
11. AMENDMENT OF THE PLAN
The Plan may at any time or from time to time be terminated, modified or
amended by the affirmative vote of not less than a majority of the shares
present and voting thereon by the Company's shareholders at a meeting of the
shareholders at which a quorum is present. The Board of Directors may at any
time and from time to time modify or amend the Plan in any respect, except that
without shareholder approval the Board of Directors may not (1) increase the
maximum number of Shares for which Options may be granted under the Plan (other
than increases due to changes in capitalization as referred to in Section 8(h)
hereof), or (2) change the class of persons eligible for qualified incentive
options. The termination or any modification or amendment of the Plan shall not,
without the written consent of an Optionee, affect his or her rights under an
Option or right previously granted to him or her. With the written consent of
the Optionee affected, the Board of Directors or the Committee may amend
outstanding option agreements in a manner not inconsistent with the Plan.
Without employee consent, the Board of Directors may at any time and from time
to time modify or amend outstanding option agreements in such respects as it
shall deem necessary in order that incentive options granted hereunder shall
comply with the appropriate provisions of the Code and regulations thereunder
which are in effect from time to time respecting "Qualified Incentive Options."
The Company's Board of Directors may also suspend the granting of Options
pursuant to the Plan at any time and may terminate the Plan at any time;
provided, however, no such suspension or termination shall modify or amend any
Option granted before such suspension or termination unless (1) the affected
participant consents in writing to such modification or amendment or (2) there
is a dissolution or liquidation of the Company.
12. BINDING EFFECT
All decisions of the Board of Directors or the Committee involving the
implementation, administration or operation of the Plan or any offering under
the Plan shall be binding on the Company and on all persons eligible or who
become eligible to participate in the Plan.
13. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Common Stock
pursuant to Options exercised hereunder will be used for general corporate
purposes.
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CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement pertaining to the 1998 Stock Option Plan of Haverty
Furniture Companies, Inc. and to the incorporation by reference therein of our
reports dated January 30, 1998, with respect to the consolidated financial
statements of Haverty Furniture Companies, Inc. incorporated by reference in
its Annual Report (Form 10-K) for the year ended December 31, 1997 and the
related financial statement schedule included therein, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
May 14, 1998
