-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HMWso/pJgcrDLI53oYWlLUtxiesYjuuSxHsMj/vYB4GX94HBkhE7WwnWfQZ0Lf80 31P9uafk+ygP6fUf+7QRFQ== 0000950144-97-002581.txt : 19970320 0000950144-97-002581.hdr.sgml : 19970320 ACCESSION NUMBER: 0000950144-97-002581 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970319 SROS: CSX SROS: NASD SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAVERTY FURNITURE COMPANIES INC CENTRAL INDEX KEY: 0000216085 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FURNITURE STORES [5712] IRS NUMBER: 580281900 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08498 FILM NUMBER: 97559293 BUSINESS ADDRESS: STREET 1: 866 W PEACHTREE ST NW CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 4048811911 MAIL ADDRESS: STREET 1: 866 W PEACHTREE ST NW CITY: ATLANTA STATE: GA ZIP: 30308 10-K 1 HAVERTY FURNITURE COMPANIES, INC. 1 ================================================================================ 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. ================================================================================ 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. 1 3 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:
YEAR ENDED DECEMBER 31, ----------------------------------------- 1996 1995 1994 ------ ------ ------ 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% ===== ===== =====
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. 2 4 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:
AGE POSITION WITH THE COMPANY NAME AS OF 3-07-97 AND OTHER INFORMATION ---- ------------- ------------------------- 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.
3 5 EXECUTIVE OFFICERS (CONTINUED)
AGE POSITION WITH THE COMPANY NAME AS OF 3-07-97 AND OTHER INFORMATION ---- ------------- ------------------------- 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.
4 6 EXECUTIVE OFFICERS (CONTINUED)
AGE POSITION WITH THE COMPANY NAME AS OF 3-07-97 AND OTHER INFORMATION ---- ------------- ------------------------- 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.
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:
Retail Market Area Regional Locations (c) Warehouses Warehouses --------- ------------ ---------- Owned (a) 48 8 3 Leased (b) 47 14 0 -- -- - Total 95 22 3 == == =
(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.
1996 1995 1994 ------ ------ ------ 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
5 7 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 8 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. 7 9 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. 8 10 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.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- *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)
9 11
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT 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)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- *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) ------------
* 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 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. 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)
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.
SIGNATURE TITLE DATE --------- ----- ---- /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
12 14
SIGNATURE TITLE DATE --------- ----- ---- - --------------------------------------------------- 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
13 15 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS HAVERTY FURNITURE COMPANIES, INC. AND SUBSIDIARIES (In thousands)
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 - ----------- ------------ ------------ ------------ ----------- 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 ====== ====== ====== ======
(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 16 EXHIBIT INDEX HAVERTY FURNITURE COMPANIES, INC. 10-K FOR THE YEAR ENDED DECEMBER 31, 1996
Exhibit No. Description ----------- ----------- 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)
EX-3.1.3 2 AMMENDMENT TO ARTICLES OF INCORPORATION 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. 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) EX-4.1.2 3 SECOND AMMENDMENT TO NOTE AGREEMENT DATED JULY 19 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: 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. 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 EX-10.3.1 4 AMMENDMENT TO NO. ONE THRIFT PLAN AND TRUST 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: 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 - 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 - 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 - 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 - 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 - 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 - 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 - EX-10.3.2 5 AMMENDMENT NO. TWO TO THRIFT PLAN AND TRUST 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: 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 - EX-10.3.3 6 AMMENDMENT NO. THREE TO THRIFT PLAN AND TRUST 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." 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 - EX-10.12 7 FORM OF AGREEMENT DATED JANUARY 1, 1997 1 EXHIBIT 10.12 AGREEMENT BETWEEN HAVERTY FURNITURE COMPANIES, INC. A GEORGIA CORPORATION, AND _______________________ AS OF __________, 1996 2 TABLE OF CONTENTS 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
-i- 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 EX-10.13 8 FORM OF AGREEMENT DATED JANUARY 1, 1997 1 EXHIBIT 10.13 AGREEMENT BETWEEN HAVERTY FURNITURE COMPANIES, INC. A GEORGIA CORPORATION, AND AS OF __________, 1996 2 TABLE OF CONTENTS 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
-i- 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 EX-21.1 9 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT
Name State of Incorporation ---- ---------------------- Havertys Capital, Inc. Nevada Havertys Credit Services, Inc. Tennessee Havertys Enterprises, Inc. Nevada
EX-23.1 10 CONSENT OF ERNST & YOUNG 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 EX-27 11 FDS
5 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. YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 414 0 208,009 7,100 77,385 283,130 178,791 64,441 399,875 125,440 128,340 0 0 12,498 138,418 399,875 456,860 470,250 239,976 239,976 0 4,416 14,463 19,132 6,885 12,247 0 0 0 12,247 1.05 1.05
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