EXHIBIT 10.4

 

 

AGREEMENT

 

between

 

Haverty Furniture Companies, Inc.

 

a Maryland corporation,

 

and

 

          Name         

 

As of

 

             Date             

 

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TABLE OF CONTENTS

 

 

1.

Defined Terms

1

 

2.

Term of Agreement

1

 

3.

Company's Covenants Summarized

2

 

4.

The Executive's Covenants

2

 

5.

Compensation Other Than Severance Payments

2

 

6.

Severance Payments

3

 

7.

Termination Procedures and Compensation During Dispute

9

 

8.

No Mitigation

11

 

9.

Successors; Binding Agreement

12

 

10.

Notices

12

 

11.

Miscellaneous

13

 

12.

Counterparts

14

 

13.

Settlement of Disputes; Arbitration

14

 

14.

Definitions

14

 

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AGREEMENT

 

THIS AGREEMENT dated as of                   is made by and between Haverty
Furniture Companies, Inc., a Maryland 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,       ; provided, however,
that commencing on January 1,        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

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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 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

 

2

 

 

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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 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

 

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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 Termination is based or
(y) two (2) 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,
and (iii) the higher of the amount paid to the Executive as non-equity incentive
plan compensation 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), (ii) any non-equity incentive plan compensation 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), (iii) 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

 

4

 

 

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Date of Termination occurred and the denominator of which shall be three hundred
and sixty-five (365) days (“pro rata portion”), and (iv) a pro rata portion of
any non-equity incentive plan compensation earned for the fiscal year in which
the Date of Termination occurs, based upon the higher of: the last 3 year
average actual annual earnings for non-equity incentive plan compensation or the
current year projected earnings for non-equity incentive plan compensation using
annualized actual results and performance through the most recently available
period end or 25% of the current year targeted earnings for non-equity incentive
plan;

(C)         The Company shall repurchase all Equity Awards held by Executive
(which Equity Awards 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 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, if applicable of each such Equity Award held by
the Executive, times

 

(ii)

the total number of Company Shares covered by each such Equity Award with each
Equity Award being deemed fully vested.

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

 

5

 

 

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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

(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 the full cost being paid by the
Company, 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

 

6

 

 

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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 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

 

7

 

 

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reason of section 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 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

 

8

 

 

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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     Executive shall be provided senior executive transition services to be
provided for up to one year following termination of employment by a service
provider of the Company’s choice.

6.05     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 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

 

9

 

 

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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
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

 

10

 

 

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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 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.

 

11

 

 

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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 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:

 

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To the Company:

Haverty Furniture Companies, Inc.

 

780 Johnson Ferry Rd., Suite 800

 

Atlanta, Georgia 30342

 

Attention: President

 

 

To the Executive:

Officers’ Name

 

Street

 

City, State, Zip Code

 

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 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. This
Agreement shall be construed in a manner consistent with the applicable
requirements of section 409A of the Code, and the Board, in its sole discretion
and without the consent of any Executive, may amend the provisions of this
Agreement if and to the extent that the Board determines that such amendment

 

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is necessary or appropriate to comply with the applicable requirements of
section 409A of the Code.

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 shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions of this
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

 

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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 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) that
together with equity securities held by such Persons represent more than 50% of
the combined voting power of the Company's then outstanding securities; or

(II)              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
acquire (or have acquired during the 12-month period ending on the date of the
most recent acquisition by such Persons) ownership of equity securities of the
Company

 

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possessing 30% or more of the total voting power of the equity securities of the
Company;

(III)during any period of one year (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), (II) 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 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

(IV) the shareholders of the Company approve 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 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, the Executive is unable to engage in any
substantial gainful activity

 

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by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months.

(J) “Equity Awards" shall mean options, restricted stock grants, stock
appreciation rights and other equity awards for Company Shares granted to the
Executive under the Company's stock option and long-term incentive plans.

(K) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.

(L) "Executive" shall mean the individual named in the first paragraph of this
Agreement.

(M) "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:

(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

 

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Company's business to an extent substantially consistent with the Executive's
present business travel obligations;

(IV) any other action or inaction that constitutes a material breach by the
Company of the Agreement.

The Executive shall provide notice to the Company of the existence of Good
Reason described in this section within a period not to exceed ninety (90) days
of the initial existence of the condition, upon the notice of which the Company
must be provided a period of at least thirty (30) days during which it may
remedy the condition and not be required to pay the amount.

(N) "Notice of Termination" shall have the meaning stated in Section 7.01
hereof.

(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;

(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

 

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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.

 

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       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:

President and Chief Executive Officer

 

 

 

EXECUTIVE

 

 

 

xxxxxxxxxxxxxxxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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