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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarterly Period Ended April 3, 1994
Commission File Number 0-12016
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INTERFACE, INC.
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(Exact name of registrant as specified in its charter)
GEORGIA 58-1451243
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ORCHARD HILL ROAD, P.O. BOX 1503, LAGRANGE, GEORGIA 30241
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(Address of principal executive offices and zip code)
(706) 882-1891
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(Registrant's telephone number, including area code)
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
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Shares outstanding of each of the registrant's classes of common stock at
May 10, 1994:
Class Number of Shares
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Class A Common Stock, $.10 par value per share 15,057,828
Class B Common Stock, $.10 par value per share 3,103,525
Page 1 of Pages
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The Exhibit Index appears at page .
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INTERFACE, INC.
Index
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Page
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Part I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
Balance Sheets April 3, 1994 and January 2, 1994 3
Statements of Income - Three Months
Ended April 3, 1994 and April 4, 1993 4
Statements of Cash Flows -
Three Months Ended April 3, 1994 and April 4, 1993 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in the Rights of the Company's Security
Holders 10
Item 3. Defaults by the Company on Its Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERFACE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
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(In thousands)
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April 3, January 2,
ASSETS 1994 1994
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CURRENT ASSETS:
Cash and Cash Equivalents $2,339 $4,674
Escrowed and Restricted Funds 4,015 4,015
Accounts Receivable 123,240 124,170
Inventories 130,797 116,041
Deferred Tax Asset 2,539 2,539
Prepaid Expenses 17,863 15,078
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TOTAL CURRENT ASSETS 280,793 266,517
PROPERTY AND EQUIPMENT, less
accumulated depreciation 150,542 145,125
EXCESS OF COST OVER NET ASSETS ACQUIRED 198,994 195,143
OTHER ASSETS 38,310 35,534
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$668,639 $642,319
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LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts Payable 58,700 56,043
Accrued Expenses 42,268 52,744
Current Maturities of Long-Term Debt 16,629 17,155
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TOTAL CURRENT LIABILITIES 117,597 125,942
LONG-TERM DEBT, less current maturities 208,334 187,712
CONVERTIBLE SUBORDINATED DEBENTURES 103,925 103,925
DEFERRED INCOME TAXES 18,086 17,856
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TOTAL LIABILITIES 447,942 435,435
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Redeemable Preferred Stock 25,000 25,000
Common Stock:
Class A 1,862 1,793
Class B 311 311
Additional Paid-In Capital 94,118 83,989
Retained Earnings 127,286 125,960
Foreign Currency Translation Adjustment (10,134) (12,423)
Treasury Stock, 3,600
Class A Shares, at Cost (17,746) (17,746)
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$668,639 $642,319
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
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INTERFACE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share amounts)
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<CAPTION>
Three Months Ended
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April 3, April 4,
1994 1993
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Net Sales $160,719 $135,041
Cost of Sales 112,375 93,805
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Gross Profit on Sales 48,344 41,236
Selling, General and Administrative Expense 37,905 32,532
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Operating Income 10,439 8,704
Other (Expense) Income - Net (6,044) (5,310)
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Income before Taxes on Income 4,395 3,394
Taxes on Income 1,583 1,190
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Net Income 2,812 2,204
Less: Preferred Dividends 438 0
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Net Income Applicable to Common Shareholders $2,374 $2,204
=============== ================
Primary Earnings Per Common Share $0.14 $0.13
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
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INTERFACE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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April 3, April 4,
(In thousands) 1994 1993
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OPERATING ACTIVITIES:
Net Income $2,812 $2,202
Adjustment to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 6,853 5,681
Deferred income taxes (154) (29)
Cash provided by (used for):
Accounts receivable (1,656) 6,732
Inventories (7,647) (2,848)
Prepaid and other (2,382) (3,618)
Accounts payable and accrued expenses (9,685) (4,959)
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(11,859) 3,161
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INVESTING ACTIVITIES:
Capital Expenditures (4,824) (2,436)
Acquisitions of businesses (643) (4,330)
Other (100) (1,350)
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(5,567) (8,116)
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FINANCING ACTIVITIES:
Net borrowing of long-term debt 16,151 5,515
Issuance of common stock 328 0
Dividends paid (1,486) (1,036)
Other 0 0
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14,993 4,479
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Net cash provided by operating,
investing and financing activities (2,433) (476)
Effect of exchange rate changes on cash 98 250
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CASH AND CASH EQUIVALENTS:
Net increase (decrease) during the period (2,335) (226)
Balance at beginning of period 4,674 5,824
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Balance at end of period $2,339 $5,598
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</TABLE>
See accompanying notes to consolidated condensed financial statements.
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INTERFACE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
NOTE 1 - CONDENSED FOOTNOTES
As contemplated by the Securities and Exchange Commission instructions
to Form 10-Q, the following footnotes have been condensed and, therefore, do
not contain all disclosures required in connection with annual financial
statements. Reference should be made to the notes to the Company's year-end
financial statements contained in its Annual Report to Shareholders for the
fiscal year ended January 2, 1994, as filed with the Securities and Exchange
Commission.
NOTE 2 - INVENTORIES
Inventories are summarized as follows:
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April 4, January 2,
1994 1994
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Finished Goods $70,171 $ 64,497
Work-in-Process 24,662 20,010
Raw Materials 35,964 31,534
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$130,797 $116,041
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NOTE 3 - BUSINESS ACQUISITIONS
On March 29, 1994, the Company acquired 100% of the outstanding shares
of Prince Street Technologies, Ltd. ("PST"), a broadloom carpet producer
located in Atlanta, Georgia. The Company issued 674,953 shares of Class A
Common Stock in exchange for 100% of the outstanding shares of PST. The
transaction will be accounted for as a purchase, and the operations of PST will
be included in the consolidated results of the Company from the date of the
acquisition.
NOTE 4 - EARNINGS PER SHARE AND DIVIDENDS
Earnings per share are computed by dividing net income applicable to
common shareholders by the combined weighted average number of shares of Class A
and Class B common stock outstanding during each year. The computation does not
include a negligible dilutive effect of stock options. Neither the Convertible
Debentures issued in September 1988 nor the Preferred Stock issued during June
1993 were determined to be common stock equivalent. In computing primary
earnings per share, the preferred stock dividend reduces income
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INTERFACE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
applicable to common shareholders. Primary earnings per share are based upon
17,463,000 shares, and 17,265,000 shares for the periods ended April 3, 1994
and April 4, 1993, respectively. For the periods ended April 3, 1994 and April
4, 1993, fully diluted earnings per common share were antidilutive. For the
purposes of computing earnings per share and dividends paid per share, the
Company is treating as treasury stock (and therefore not outstanding) the
shares that are owned by a wholly-owned subsidiary (3,600,000 Class A shares,
recorded at cost).
______________________________________________________________________________
The financial information included in this report has been prepared by
the Company, without audit, and should not be relied upon to the same extent as
audited financial statements. In the opinion of management, the financial
information included in this report contains all adjustments (all of which are
normal and recurring) necessary for a fair presentation of the results for the
interim periods. Nevertheless, the results shown for interim periods are not
necessarily indicative of results to be expected for the year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS. The Company's net sales increased $25.7
million (19.0%) for the quarter ended April 3, 1994, compared with the
same period in 1993. The increase was primarily attributable to (i) sales
generated by Bentley Mills, Inc., which was acquired during June 1993, (ii)
increased sales volume in the Company's carpet tile operations in Europe and
Southeast Asia, and (iii) continued improvement in unit volume in the Company's
interior fabric and chemical operations. These increases were offset somewhat
by the strengthening of the U.S. Dollar, the Company's reporting currency,
against certain key European currencies; a decrease in sales volume in Japan,
which continues to experience a recessionary economic climate.
Cost of sales increased as a percentage of sales for the quarter ended
April 3, 1994, compared with the same period in 1993. The increase was due
primarily to (i) increased manufacturing costs in the Company's interior fabric
division, and (ii) the acquisition of Bentley, which had a higher cost of sales
than the Company, in June 1993.
Selling, general and administrative expenses as a percentage of sales
decreased to 23.6% for the three months ended April 3, 1994, compared to 24.4%
for the same period in 1993, primarily as a result of (i) the acquisition of
Bentley, which had lower selling, general and administrative costs than the
Company, in June 1993, and (ii) the continuation of cost controls measures
initiated in 1991 and 1992, which reduced discretionary marketing cost and
fixed overhead expenditures.
Other expense increased $.7 million for the quarter ended April 3,
1994, compared to the same period in 1993, primarily due to an increase in bank
debt coupled with the increase in U.S. interest rates.
Due, by and large, to the aforementioned factors, coupled with the
dividends paid on the Series A Preferred Shares, the Company's net income
increased 7.7% to $2.4 million for the first quarter of 1994, from $2.2 million
for the same period in 1993.
LIQUIDITY AND CAPITAL RESOURCES. The primary uses of cash during the
period have been (i) $11.9 million for operations, (ii) $4.8 for additions to
property and equipment in the Company's manufacturing facilities, (iii) $.6
million associated with the acquisition of Prince Street Technologies, Ltd.,
and (iv) $1.5 million for dividends paid. These uses were funded, in part, by
$16.2 million from long-term financing.
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The Company, as of April 3, 1994, recognized a $2.3 million decrease
in foreign currency translation adjustment compared to that of January 2, 1994,
primarily due to the movement of the U.S. dollar against two key functional
currencies, the British pound sterling and the Dutch Guilder. The adjustment
to shareholders' equity was converted by the guidelines of the Financial
Accounting Standards Board (FASB) 52.
Management believes that the cash provided by operations and available
under long-term loan commitments will provide adequate funds for current
commitments and other requirements in the foreseeable future.
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PART II - OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
The Company is not aware of any material pending legal proceedings involving it or any of its property.
ITEM 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS
None
ITEM 3. DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report:
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<TABLE>
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Exhibit
Number Description of Exhibit
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10.1 Employment agreement of Charles R. Eitel.
10.2 Employment agreement of Royce R. Renfroe.
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(b) No reports on Form 8-K were filed during the quarter ended April
3. 1994.
10
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SIGNATURE
Pursuant to the requirements 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.
INTERFACE, INC.
Date: May 13, 1994 By:/s/Daniel T. Hendrix
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Daniel T. Hendrix
Vice President
(Principal Financial Officer)
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EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT SEQUENTIAL
NUMBER PAGE NO.
10.1 Employment agreement of Charles R. Eitel.
10.2 Employment agreement of Royce R. Renfroe.
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the Effective Date (as
defined below), by and between INTERFACE, INC., a Georgia corporation (the
"Company"), and CHARLES EITEL ("Executive").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into an agreement for the
employment of Executive by the Company on the terms and conditions hereinafter
stated;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment, Duties and Term. (a) Subject to the terms and
conditions of this Agreement, the Company hereby employs Executive in an
executive capacity. Executive shall report to the Chief Executive Officer of
the Company, and shall perform such duties and functions for the Company and
its subsidiaries and other affiliates, as shall be specified from time to time
by the Chief Executive Officer or Board of Directors of the Company; and
Executive hereby accepts such employment and agrees to perform such executive
duties as may be so assigned to him.
(b) Executive initially shall be employed by the Company as a
Senior Vice President of the Company and as President of the Company's
subsidiaries, Interface Flooring Systems, Inc. and Interface Americas, Inc.
Executive's duties in such positions shall be to manage and supervise, and to
have general responsibility for, the conduct of the business of manufacturing,
purchasing for resale, developing products and markets for, marketing, selling
and distributing carpet tile and broadloom carpet in 6-foot and competitive
widths (all of the foregoing, "Executive's Services") in North and South
America for the Company and its subsidiaries and other affiliates.
(c) The Company agrees to nominate Executive for election as a
director of the Company at the next annual meeting of the Shareholders of the
Company, and agrees to continue to nominate Executive for election as a
director of the Company during the term of his employment hereunder.
(d) Unless earlier terminated as provided herein, Executive's
employment under this Agreement shall be for a three year term commencing on
the date shown at the foot of this Agreement as the date of execution hereof by
Executive (the "Effective Date"), and ending on the third anniversary of the
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Effective Date; provided that Executive's employment hereunder shall be
extended for an additional period of one year (i) on such third anniversary and
(ii) on each successive anniversary of the Effective Date thereafter through
and including the fourteenth (14th) anniversary of the Effective Date, unless
either Company or Executive shall, by written notice given at least 90 days and
not more than 120 days prior to any such anniversary, notify the other party of
its or his intention to terminate Executive's employment hereunder on such
anniversary, in which event Executive's employment hereunder shall terminate on
such anniversary. Executive's employment hereunder shall not be extended
beyond the fifteenth (15th) anniversary of the Effective Date except by written
agreement of both parties. The anniversary date on which Executive's
employment terminates as provided in this Section l(d) is herein called the
"Expiration Date."
2. Time to be Devoted to Duties. Executive hereby agrees that
during the term of his employment under this Agreement he will devote his full
business time, attention and energies to the diligent performance of his duties
hereunder. Executive shall not, without the prior written consent of the
Company, directly or indirectly, at any time during the term of his employment
hereunder: (a) accept employment with, or render services of a business,
professional or commercial nature to, any Person other than the Company or its
subsidiaries and other affiliates; (b) engage in any venture or activity which
the Company may in good faith consider to be competitive with or adverse to the
business of the Company or of any affiliate of the Company, whether alone, as a
partner, or as an officer, director, employee or shareholder or otherwise,
except that the ownership of not more than two percent (2%) of the publicly
traded securities of any corporation or other entity shall not be deemed a
violation of this Section; or (c) engage in any venture or activity which the
Board of Directors of the Company may in good faith consider to interfere with
Executive's performance of his duties hereunder.
3. Compensation. In consideration of Executive's services
hereunder, Company shall pay to Executive compensation as set forth below
(which compensation shall be paid in accordance with the normal compensation
practices of the Company and shall be subject to such deductions and
withholdings as are required by law or policies of the Company in effect from
time to time, provided that the Executive's salary pursuant to Section 3.2
shall be payable not less frequently than monthly):
3.1 One-Time Compensatory Bonus. Executive has advised the
Company that his resignation from his former employment may result in his
forfeiture of the opportunity to obtain amounts under the incentive
compensation plan of his former employer for its 1993 fiscal year. The Company
agrees
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that upon its receipt of written confirmation from Executive that under the
terms of his separation from his former employer, his former employer has
declined after request to make full payment to Executive under his incentive
compensation arrangement for its 1993 fiscal year, Executive shall become
entitled to a one-time bonus of $175,000, less any incentive compensation
received from such former employer, to compensate Executive for his foregone
opportunity to receive incentive compensation from such employer. Any such
bonus shall be payable at the time the Company pays amounts to its executives
pursuant to its Incentive Compensation Program for Executives for its 1993
fiscal year.
3.2 Annual Salary. During the term of his employment hereunder,
the Company shall pay to Executive a salary at the rate of $295,000 per annum,
prorated for each period (including any partial pay periods) in which services
are provided. Executive's salary will be reviewed by the Board of Directors of
the Company or the Compensation Committee of such Board during each of its
fiscal years beginning in 1994 and, in the sole discretion of the Company, may
be increased for subsequent periods.
3.3 Annual Incentive Bonus. For each fiscal year of the Company
in which Executive shall be employed hereunder (other than fiscal 1993),
Executive shall be eligible to receive an annual discretionary bonus pursuant
to the Company's Incentive Compensation Program for Executives, described on
Exhibit A hereto. Any such annual bonus may be earned pursuant to a
personalized bonus plan for Executive established by the Company pursuant to
such plan. Executive shall have a potential bonus amount under each such
personalized bonus plan during the term of his employment under this Agreement
of up to 100% of Executive's salary. Executive shall be entitled to
participate in such Incentive Compensation Program only if and to the extent
that such program is in effect for a fiscal year and if Executive is employed
hereunder throughout such fiscal year (except as provided in Section 5.3(c)),
and only for so long as the Company provides or offers such Incentive
Compensation Program. Executive shall be eligible to participate, on such
terms as the Board of Directors shall determine in its discretion, in any
successor or substitute incentive plan made generally available to the
Company's most highly ranking United States-based executives.
3.4 Stock Options. (a) The Company shall grant to Executive,
effective as of the Effective Date, options to purchase 100,000 shares of the
Company's Class B Common Stock pursuant to the Company's Key Employee Stock
Option Plan (1993) (the "Option Plan"), in accordance with the standard form of
Stock Option Agreement of Company used in connection with such grants under the
Option Plan; Executive hereby acknowledges receipt of a copy of the Option Plan
and the option agreement
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form. Such option agreement form shall be appropriately completed in
accordance herewith and executed by the Company and Executive on or before the
Effective Date. Such option agreement shall provide that Executive shall be
entitled to exercise his options as to 25,000 shares on or after the date of
grant and shall further provide that Executive shall become entitled to
exercise his options as to an additional 25,000 shares on each anniversary of
the Effective Date through the third such anniversary. The option price for
each share covered by option hereunder shall be the Fair Market Value, as
defined in the Option Plan, on the Effective Date. The stock options granted
hereunder shall be "Incentive Stock Options" as defined in the Option Plan to
the extent permitted under the Option Plan and applicable law, and the balance
of such options shall be "Nonqualified Stock Options", as defined in the Option
Plan. Such option agreement and the Option Plan shall govern as to all terms
and conditions of or relating to such options to purchase shares, and if any
term or condition hereof relating directly or indirectly to Executive's options
to purchase shares shall be inconsistent with such option agreement or the
Option Plan, such option agreement or the Option Plan, as the case may be,
shall control.
(b) Nothing contained in the foregoing provisions relating to the
grant of options under this Agreement shall be deemed to disqualify Executive
from consideration by the Company's Board of Directors or its Compensation
Committee from time to time for the grant of additional options to Executive,
pursuant to the Option Plan or otherwise, any such grant and the terms and
conditions thereof being in the sole discretion of the Company.
3.5 Salary Continuation Program. Executive shall be entitled to
participate in the Company's salary continuation program for senior executives,
and the Company agrees to execute in Executive's favor, effective as of the
Effective Date, the form of Salary Continuation Agreement attached hereto as
Exhibit B.
3.6 Other Benefits. (a) The Company shall provide Executive with a
car allowance of $1,000 per month during the term of Executive's employment
hereunder, and shall reimburse Executive for his reasonable out-of-pocket costs
of car insurance for one automobile.
(b) The Company shall provide to Executive during the term of his
employment hereunder supplemental medical and dental expense reimbursement
coverage in accordance with the Company's existing medical reimbursement plan
for its executives, provided that the aggregate amount of such reimbursements
shall not exceed, in any year of such term, 5% of Executive's per annum salary
during such year. The Company acknowledges and agrees
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that the cost of Executive's annual physical examination at the Mayo Clinic
shall constitute a reimbursable expense under such existing Company plan.
(c) Executive shall be entitled to participate in any other
employee benefit plans generally provided by the Company to its most highly
ranking United States-based executives, but only if and to the extent provided
in such employee benefit plans and for so long as the Company provides or
offers such benefit plans. Such benefit plans currently in effect are listed
on Exhibit C to this Agreement.
4. Other Agreements.
4.1 Relocation. Executive shall be based in Georgia and shall
perform his services hereunder in LaGrange, Georgia, and Atlanta, Georgia, and
will relocate his permanent residence from Chattanooga, Tennessee, to LaGrange
or Atlanta, as determined by the Company in consultation with the Executive,
for that purpose; provided that Executive shall have no obligation to relocate
his permanent residence to LaGrange or Atlanta prior to June 1, 1995. Until
such date, Executive will nevertheless spend such time in LaGrange and Atlanta
as is required to perform his duties hereunder therein on a full time basis,
and the Company shall make available to Executive an apartment in LaGrange for
his use as temporary quarters in connection with services performed there and
shall otherwise provide or reimburse Executive for the cost of lodging in
Atlanta in connection with services provided there. The Company will reimburse
the Executive for the expenses of relocating his residence as provided above
pursuant to and to the extent provided in the relocation expense policy
attached hereto as Exhibit D. Notwithstanding anything in the foregoing to the
contrary, Executive may be required to engage in reasonable business related
travel in connection with his employment by the Company.
4.2 Reimbursement for Expenses. Executive shall be entitled to
reimbursement for all expenses, including travel, promotion and entertainment
expenses, which are reasonably incurred by Executive in providing services
hereunder and which are submitted to Company within 60 days after being
incurred, subject to compliance with all policies of the Company applicable to
its executives in positions comparable to that of Executive with respect to
documentation for reimbursable expenses and limitations on reimbursable
expenses; provided that Executive shall take no deduction on any tax return in
respect of any expense reimbursed hereunder. Executive's reasonable costs of
participating in the Young Presidents Organization and in the Society of
International Business Fellows, including the costs of Executive's spouse's
participation, shall constitute reimbursable expenses hereunder.
4.3 Confidential Information. (a) Executive agrees that he shall
protect Company Confidential Information and shall not
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disclose to any Person, or otherwise use, except in connection with and as
necessary for his duties performed for the Company, any Company Confidential
Information; provided, however, that Executive may make disclosures required by
a valid order or subpoena issued by a court or administrative agency of
competent jurisdiction, in which event Executive will promptly notify the
Company of such order or subpoena to provide the Company an opportunity to
protect its interests. Executive's obligations under this Section shall
survive and continue in effect after any expiration or termination of
Executive's employment under this Agreement, and shall apply to any Company
Confidential Information in Executive's possession thereafter, whether as an
employee, officer or director of the Company, or otherwise.
(b) "Company Confidential Information," as used herein, means
information relating to the business of the Company (including the business of
the Company's subsidiaries and other affiliates) which derives economic value,
actual or potential, from not being generally known to other Persons,
including, but not limited to, technical or nontechnical data, formulas
(including cost and/or pricing formulas), patterns, compilations, programs,
devices, methods (including manufacturing, cost and/or pricing methods and
operating methods), techniques, drawings, processes, financial data, or lists
of actual or potential customers or suppliers. Company Confidential
Information does not include information which is not a trade secret one (1)
year after termination of Executive's employment with Company.
(c) Upon the termination of Executive's employment with the
Company, or when otherwise requested by the Company, Executive agrees to
deliver promptly to the Company all files, customer lists, management reports,
memoranda, research, forms, financial data and reports and other documents
supplied to or created by him in connection with his employment with the
Company (including all copies of the foregoing) in his possession or control
and all of the equipment and other materials of the Company (including of the
Company's subsidiaries and other affiliates) in his possession or control.
Executive's obligations under this Section shall survive and continue in effect
after any expiration or termination of Executive's employment under this
Agreement, and shall apply to any documents, equipment and other materials in
Executive's possession thereafter, whether as an employee, officer or director
of the Company or otherwise.
5. Termination. Executive's employment under this Agreement may
be terminated prior to the Expiration Date only in accordance with the
following provisions:
5.1 Death or Disability. Executive's employment hereunder shall
be deemed to be terminated as of the earlier of the date of Executive's death
or the date on which the Company reasonably determines that Executive has
become Disabled. As used
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herein, "Disabled" or "Disability" shall mean Executive's inability as a result
of physical or mental incapacity to substantially perform his duties for the
Company on a full time basis for an aggregate of 90 days during any period of
180 consecutive days.
5.2 Termination by the Company. The Company may terminate
Executive's employment hereunder at any time with Cause or without Cause. As
used herein, "Cause" shall mean (i) Executive's refusal or repeated failure to
follow the reasonable lawful directions of the Company, (ii) Executive's gross
negligence, dishonesty, malfeasance or willful misconduct, (iii) Executive's
refusal or repeated failure to follow the established reasonable and lawful
policies of the Company applicable to persons occupying the same or similar
position, (iv) Executive's material breach of this Agreement, or (v)
Executive's conviction of a felony or crime involving moral turpitude. A
termination of Executive with Cause based on clause (i), (iii) or (iv) of the
preceding sentence shall take effect 30 days after the Company gives written
notice of such termination to Executive unless Executive shall, during such
30-day period, remedy the events or circumstances constituting Cause to the
reasonable satisfaction of the Company; provided, however, that such
termination shall take effect immediately upon the giving of written notice of
termination with Cause under one of such clauses if the Company shall have
determined in good faith that such events or circumstances are not remediable
(which determination shall be stated in such notice). Any determination by the
Company that grounds exist for termination of Executive for Cause hereunder
shall be made only by the Board of Directors or Executive Committee of the
Company.
5.3 Severance. (a) If Executive's employment hereunder is
terminated by the Company pursuant to the foregoing Section 5.2 without Cause
or by the Company by notice to Executive pursuant to Section l(d), Executive
shall be entitled to continue to receive the salary payable for his services
hereunder, as provided in Section 3.2, and the other benefits described in
Section 3.6 (subject to Section 5.3(b), below) for the period beginning on the
date of such termination and ending on the Expiration Date or on the first
anniversary of the date of such termination, whichever is later, as if
Executive had continued to be employed for such period. If Executive's
employment hereunder is terminated by death, Disability or for any reason other
than by Company without Cause, Executive or his heirs, executors,
administrators or legal representatives, as the case may be, shall be entitled
to receive the salary payable to Executive hereunder to the date of
termination.
(b) Executive's rights under Section 5.3(a) to the benefits
described in Section 3.6 after termination of his employment by the Company
pursuant to Section 5.2 without Cause or by the Company by notice pursuant to
Section l(d) shall be subject to the terms and conditions of Section 3.6 and to
his continued
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<PAGE> 8
eligibility under the terms of each benefit plan in which he is then
participating and applicable law, and the Company's obligations to make such
benefits available are limited to the following: to the extent Company prior to
termination paid such costs, Company shall continue through the first
anniversary of the date of termination to pay the costs of Executive's
participation in such benefits, in the case of health benefits, by paying
Executive's contribution pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), and, in the case of other benefits, by
continuing to pay the costs of Executive's participation under the applicable
employee benefit plan. Sections 5.3(a) and (b) are not intended and shall not
extend the period during which Executive may be eligible for benefits under
COBRA or any similar law, which such period shall commence upon the date of the
termination of Executive's employment.
(c) If Executive's employment hereunder is terminated prior to the
end of one of the Company's fiscal year by the Company without Cause or by the
Company by notice to Executive pursuant to Section l(d), Executive shall be
entitled to a portion of any annual incentive bonus provided for in Section 3.3
that Executive would have otherwise become entitled if his employment had
continued through the end of such fiscal year, any such portion being
determined pro rata based on the number of days from the beginning of the
then-current fiscal year to the date of such termination, as compared to the
number of days in such fiscal year, and being determined as soon as practicable
after such termination. To the extent such annual incentive bonus would
otherwise be based on financial results of the Company or any subsidiary
thereof for the entire fiscal year or other period not yet available, the
amount thereof shall be determined by the Company in good faith based on the
Company's or such subsidiary's interim financial results through the month
most-recently ended at the time of termination. Executive shall be entitled to
no other amount as bonus for any periods after the date of termination.
(d) Except as expressly provided above in this Section 5.3 or as
required by law, the express terms of the separate agreements entered into
pursuant hereto, or the express terms of any employee benefit plan in which
Executive participates pursuant to Section 3 hereof, neither Executive nor his
heirs, executors, administrators, or legal representatives shall be entitled to
any salary, bonus or other compensation or any benefits during or for any
period after the date of any termination of his employment.
6. Relationship of the Company and Executive; Post-Employment
Covenants. (a) Executive acknowledges that, prior to and during the term of
Executive's employment with the Company, the Company has furnished Executive
and will furnish to him Company Confidential Information which could be used by
Executive on behalf of a competitor of the Company or others to the Company's
substantial detriment. Moreover, the parties recognize that
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<PAGE> 9
Executive during the course of his employment with the Company may develop
important relationships with customers and others having valuable business
relationships with the Company. In view of the foregoing, Executive
acknowledges and agrees that the restrictive covenants contained in this
Agreement are reasonably necessary to protect the Company's legitimate business
interests and good will.
(b) Services Provided to Competitors. For a period of one (1)
year after expiration or termination of Executive's employment with the Company
for any reason (or if the Company terminates Executive's employment prior to
the second anniversary of the Effective Date without cause and acknowledges in
writing its obligation to continue to make payments pursuant to Section 5.3(a)
through the Expiration Date, then for the period from such termination through
the Expiration Date), Executive will not provide any of the Executive's
Services within the Territory to any Person providing goods identical to or
reasonably substitutable for Products.
(c) Solicitation of Customers. For a period of one (1) year after
expiration or termination of Executive's employment with the Company for any
reason, Executive will not solicit Customers for the purpose of providing goods
identical to or reasonably substitutable for Products.
(d) Solicitation of Employees. During the term of Executive's
employment with the Company and for a period of one (1) year after expiration
or termination of Executive's employment with the Company for any reason,
Executive will not directly or indirectly induce or solicit to leave employment
with the Company, or with any affiliate of the Company, anyone who is or was,
during the last year of Executive's relationship with the Company, an employee
of the Company or an affiliate of the Company.
7. Copyrights and Inventions.
(a) Copyrights. Executive agrees that all writings, tapes,
recordings, computer programs and other works in any tangible medium of
expression, regardless of the form of medium, which have been or are prepared
by Executive, or to which Executive contributes, in connection with Executive's
relationship with the Company (collectively the "Works") and all copyrights and
other rights in and to the Works, belong solely,irrevocably and exclusively
throughout the world to the Company as works made for hire. However, to the
extent any court or agency should conclude that the Works (or any of them) do
not constitute or qualify as a "work made for hire," Executive hereby assigns,
grants and delivers, solely, irrevocably, exclusively and throughout the world
to the Company, all copyrights and other rights to the Works. Executive also
agrees to cooperate with the Company and to execute such other and further
grants and assignments of all rights as the Company from time to time
reasonably may request for the purpose of
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<PAGE> 10
evidencing, enforcing, registering or defending its ownership of the Works and
appoints the Company as his agent and attorney-in-fact, with full power of
substitution, in his name, place and stead, to execute and deliver any and all
such assignments or other instruments which Executive shall fail or refuse
promptly to execute and deliver, this power and agency being coupled with an
interest and being irrevocable. Without limiting the preceding provisions of
this Section, Executive agrees that the Company may edit and otherwise modify,
and use, publish and otherwise exploit, the Works in all media and in such
manner as the Company, in its discretion, may determine.
(b) Inventions, Ideas and Patents. Executive shall disclose
promptly to the Company and only to the Company, any invention or idea of
Executive (developed alone or with others) in any way connected with
Executive's employment or related to the Business of the Company or its
subsidiaries or other affiliates conceived or made during Executive's
employment by the Company. Executive assigns each such invention or idea to
the Company and agrees to cooperate with the Company and to sign all papers
deemed necessary by the Company to enable it, at its expense, to obtain,
maintain and protect patents covering such inventions and ideas and to confirm
the Company's exclusive ownership of all rights in such inventions, ideas and
patents.
8. Definitions. For purposes of this Agreement, each of the
following terms shall have the meaning specified below:
(a) "Person" - any individual, corporation, bank, partnership,
joint venture, association, joint stock company, government agency, trust,
entity or unincorporated organization.
(b) "Territory" - North and South America, which is where
Executive shall perform Executive's Services for the Company.
(c) "Customers" - all customers of the Company or its affiliates
in the Territory with whom Executive has had contact on behalf of the Company
during the one (1) year immediately prior to expiration or termination of
Executive's employment with the Company.
(d) "Products" - carpet tile and broadloom carpet in 6-foot and
competitive widths.
9. No Conflicting Obligations. Executive represents and warrants
to the Company that he is not now under any obligation of a contractual or
other nature to any Person which is inconsistent or in conflict with this
Agreement, or which would prevent, limit or impair in any way the performance
by him of his obligations hereunder.
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<PAGE> 11
10. Interpretation; Severability of Invalid Provisions. All
rights and restrictions contained in this Agreement may be exercised and shall
be applicable and binding only to the extent that they do not violate any
applicable laws and are intended to be limited to the extent necessary so that
they will not render this Agreement illegal, invalid or unenforceable. If any
term of this Agreement shall be held to be illegal, invalid or unenforceable by
a court of competent jurisdiction, the remaining terms shall remain in full
force and effect. The provisions of this Agreement do not in any way limit or
abridge any rights of the Company or any of its subsidiaries or other
affiliates under the laws of unfair competition, trade secret, copyright,
patent, trademark or any other applicable law(s), all of which are in addition
to and cumulative of the Company's rights under this Agreement. The existence
of any claim by Executive against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to enforcement by the
Company of any or all of the provisions and covenants in favor or the Company
herein.
11. Relief. The parties acknowledge that a breach or threat to
breach any of the terms of this Agreement by Executive would result in material
and irreparable damage and injury to the Company, or both, and that it would be
difficult or impossible to establish the full monetary value of such damage.
Therefore, the Company shall be entitled to injunctive relief by a court of
appropriate jurisdiction in the event of Executive's breach or threatened
breach of any of the terms contained in this Agreement.
12. Tolling Provision. The duration of any posttermination
obligation contained in this Agreement shall be extended by the length of time
during which Executive is in breach of the obligation.
13. Notice. All notices, demands and requests, where permitted to
be given under this Agreement, shall be deemed sufficient if mailed by
registered or certified mail, postage prepaid, addressed as follows:
To the Company:
Interface, Inc.
P.O. Box 1503
Orchard Hill Road
LaGrange, Georgia 30241
Attention: Chief Financial Officer
With a copy to:
Interface, Inc.
2159 Paces Ferry Road
Suite 2000
Atlanta, Georgia 30339
Attention: General Counsel
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<PAGE> 12
To Executive:
Charles Eitel
210 JoConn Road
Lookout Mountain, TN 37350
14. Agreement Binding; Assignment. This Agreement shall inure to
the benefit of the Company, its subsidiaries and other affiliates, Executive,
and their respective successors, assigns, heirs, executors, administrators and
legal representatives and shall be binding upon the Company, Executive and
their respective successors, assigns, heirs, executors, administrators and
legal representatives. This Agreement is personal in its nature and the
parties hereto shall not, without the consent of the other, assign or transfer
this Agreement or any rights or obligations hereunder relating to Executive's
employment; provided, however, that the Company may assign its rights or
obligations under this Agreement to any subsidiary or other affiliate of the
Company, or to any successor of the Company or of any of its affiliates engaged
in manufacturing, selling or distributing Products, whether by merger,
consolidation, transfer all or substantially all assets or otherwise.
15. Nonwaiver. The failure of the Company to insist upon strict
performance of the terms of this Agreement or to exercise any option herein,
shall not be construed as a waiver or a relinquishment for the future or such
term or option, but that the same shall continue in full force and effect.
16. Entire Agreement. This Agreement, including any attachments,
contains the entire agreement between the parties and no statement, promises or
inducements made by any party hereto, or agent of either party, which is not
contained in this Agreement or in a writing signed by both parties and
expressly providing that it is supplemental to this Agreement, shall be valid
or binding; and this Agreement may not be enlarged, modified or altered except
in writing signed by the parties; any such writing signed by the Company or any
successor or assign thereof shall also be effective as to the Company's rights
hereunder. The term of Executive's employment under this Agreement shall not
be deemed to be automatically or otherwise extended or renewed except as
provided in Section 1(d) or by written agreement of both parties. After the
Expiration Date, Executive's continued employment shall be for an indefinite
term, shall be at will, and shall not be subject to this Agreement (except that
Sections 4.3, 6 and 7 shall continue in effect during such employment at will
and after any termination of Executive's employment, whether such termination
is before or after the Expiration Date, subject to the expiration of any time
limitations contained therein commencing with such termination of Executive's
employment).
17. Governing Law. This Agreement has been executed and delivered
in and is to be performed in the State of Georgia and it and the rights and
obligations of the parties hereunder shall be
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<PAGE> 13
construed under and governed by the laws of the State of Georgia without giving
effect to principles of conflicts of laws.
18. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
19. Headings. Paragraph and other headings contained in this
Agreement are for reference purposes only and are in no way intended to define,
interpret, describe or otherwise limit the scope, extent or intent of this
Agreement or any of its provisions.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and Executive has executed this
Agreement, as of the date set forth below the Executive's signature hereto.
INTERFACE, INC.
By:_________________________________
Daniel T. Hendrix, Vice President
EXECUTIVE
_________________________________
Date of Executive's
Execution (Effective Date):
________________________, 1993
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<PAGE> 1
(Royce Renfroe) EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT made and entered into this ___ day of June, 1993, by
and between BENTLEY MILLS, INC. ("Company"), and ROYCE RENFROE ("Employee"):
RECITALS
WHEREAS, Employee is currently employed by Company as its President
and Chief Executive Officer, and in such capacity has acquired outstanding and
special skills and abilities and an extensive background in and knowledge of
Company's business (the "Company Business") of designing, manufacturing and
marketing carpet and carpet tiles ("Products") and the industry in which it is
engaged; and
WHEREAS, Interface, Inc. ("Interface") is contemporaneously herewith
entering into an Agreement for Purchase of Capital Stock with Employee and
certain other shareholders of Company (the "Purchase Agreement") pursuant to
which, subject to the terms and conditions thereof, Interface will acquire all
of Employee's shares of Company's capital stock and other shares of Company's
capital stock constituting a controlling interest in and a majority of the
equity interests in Company; and
WHEREAS, Company and Interface desire to be assured of the continued
association and services of Employee in order to retain for the benefit of
Company his experience, skills, abilities, background, knowledge, and to
facilitate long-range planning and the execution of Company's business in the
most orderly and efficient manner, and is therefore willing to engage
Employee's services upon the terms and to compensate him in the manner provided
herein; and
WHEREAS, Employee has learned and will continue to learn special and
particular knowledge of the business of Interface and Company, and Company
desires to provide for Employee's maintenance of the confidentiality of such
proprietary information and otherwise to obtain Company's continued ability to
engage successfully in its business following Interface's acquisition of
Company; and
WHEREAS, Employee desires to enter into the employ of Company and is
willing to do so upon the terms provided herein; and
WHEREAS, Company desires to employ Employee upon the terms provided
herein.
<PAGE> 2
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, and other
good and valuable consideration, which consideration is acknowledged to be
sufficient, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meaning specified below:
(a) "Person" - any individual, corporation, bank,
partnership, joint venture, association, joint stock company, trust or
unincorporated organization.
(b) "Services" - the services Employee shall provide as
an employee are as set forth on Exhibit A to this Agreement.
(c) "Territory" - the geographic area set forth on
Exhibit A to this Agreement, which is where Employee performs Services for
Loom.
(d) "Customers" - all customers, including, without
limitation, contact persons for such customers, of Company in the Territory
with whom Employee or any other employee or representative of Company directly
or indirectly under Employee's supervision has had contact on behalf of Company
during the 12 months immediately prior to termination of Employee's employment
with Company.
(e) "Confidential Information" - information relating to
the business of Company or Interface which derives economic value, actual or
potential, from not being generally known to other Persons, including, but not
limited to, technical or nontechnical data, formula (including cost and/or
pricing formula), patterns, designs, compilations, programs, devices, methods
(including manufacturing methods, cost and/or pricing methods and operating
methods), techniques, drawings, processes, financial data, business plans,
sales/marketing plans, lists of actual or potential customers or suppliers, and
proprietary or confidential information otherwise protected by law.
Confidential Information does not include any information (i) known generally
to the public, (ii) known throughout the industry in which Company conducts the
Company Business (other than as a result of unauthorized disclosure by
Employee), or (iii) which is not a trade secret or proprietary or confidential
information otherwise protected by law two (2) years after the termination of
Employee's employment with Company for any reason.
2. Duties and Responsibilities of Employee.
(a) Company hereby employs Employee to provide Services
for Company, and Employee accepts such employment. Employee hereby promises to
perform and discharge well and faithfully the duties that may be assigned to
him from time to time that are similar to or of equal or greater responsibility
than
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<PAGE> 3
those currently performed by Employee for Company, and Company agrees to assign
to him only such duties. Employee shall report to Company's Board of Directors
("Board"), to any committee of the Board ("Committee of the Board") designated
by the Board, or to the Chairman of the Board.
(b) Employee shall devote his full working time,
attention and effort to the Company Business and shall not during the term of
his employment with Company be engaged in any other substantial business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage; but this shall not be construed as preventing
Employee from investing his personal assets in businesses which do not compete
with Company or Interface in such form or manner as will not require services
on the part of Employee in the operations or affairs of the companies in which
such investments are made.
(c) In connection with his employment under this
Agreement, Employee shall be based at Company's principal executive office,
which is currently located at 14641 East Don Julian Road, City of Industry,
California 91746, or such other location to which he may be assigned within a
radius of 25 miles of said location. In the event that Employee is required to
be based outside of said 25-mile radius, then Employee may at any time within
15 days after written notice of such requirement resign and receive all
compensation that he would be entitled to under paragraph 3 herein if Company
had terminated Employee without Cause. Notwithstanding the foregoing, Employee
may be required to engage in business-related travel in connection with his
employment by Company, provided, however, that such travel shall be limited to
such frequency as is customary for employees of equivalent position to Employee
in the industry in which Company conducts the Company Business, and Employee
shall have no resignation right based on such required travel.
3. Compensation; Severance.
(a) As compensation for Employee's Services during the
term of Employee's employment hereunder, Company shall pay Employee a salary at
the annual rate set forth in Exhibit A to this Agreement, prorated for each
period in which Services are provided and payable in accordance with Company's
normal salary payment policies for salaried employees of Company. Such salary
may not be reduced at any time during the term of Employee's employment
hereunder. Employee may be paid additional compensation, if any, as may be
determined from time to time in the sole and absolute discretion of the Board
of Directors of Company or of the Compensation Committee of the Board of
Directors of Interface.
(b) For each fiscal year of Company during which Employee
shall be employed hereunder, Employee shall also be entitled to have the
opportunity to be considered for receipt of an annual discretionary bonus. For
the current fiscal year, any such annual bonus shall be earned in accordance
with the terms and conditions of the bonus arrangement with Company in which
Employee has previously participated during the current year, a true,
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<PAGE> 4
correct and complete copy of which is attached hereto as Exhibit E. For each
subsequent fiscal year, any annual bonus may be earned pursuant to a
personalized bonus plan for Employee established by Interface pursuant to
Interface's incentive compensation program for executive officers of Interface
and its subsidiaries described in Exhibit D to this Agreement. Employee shall
be entitled to a potential bonus amount under such personalized bonus plan as
set forth on Exhibit A hereto. Employee shall be entitled to participate in
such Interface incentive compensation program only if and to the extent such
program is in effect for a fiscal year and if Employee is employed hereunder
during such fiscal year, and only for so long as Interface provides or offers
such incentive compensation program.
(c) (i) If Employee's employment hereunder is terminated
by Company pursuant to paragraph 5 hereof without Cause, Employee shall be
entitled to continue to receive the salary payable for his Services hereunder
for the period beginning on the date of such termination, and ending on the
scheduled Agreement expiration date set forth on Exhibit A to this Agreement
(the "Expiration Date") as if Employee had continued to be employed for such
period, with the salary payable for the month or other pay period in which such
period ends being prorated to the anniversary of such termination, provided,
however, that such salary shall be reduced by any amounts earned by Employee
during such period from employment with others or self-employment (Employee
having no duty to seek or accept such employment), unless Company shall at its
sole option determine to continue such salary payments without reduction under
this proviso. If Employee's employment hereunder is terminated for any reason
other than by Company without Cause, except as otherwise expressly provided in
this Agreement, the salary payable for the pay period in which termination
occurs shall be prorated to the date of termination. During any period after
termination of Employee's employment hereunder (by either party, including,
without limitation, by Company with Cause or by Employee's resignation) through
the Expiration Date in which Company shall continue Employee's salary without
reduction, Employee shall continue to comply with paragraphs 9 through 11
hereof. Notwithstanding the preceding sentence, if Company terminates
Employee's employment hereunder without Cause, Executive may, at any time while
Company continues Employee's salary, advise Company that he will not accept
further payments of such salary, and in such event (A) Company shall have no
further obligation to make such payments to Employee, and (B) from and after
the date of the last such payment to Employee, Employee shall no longer be
subject to the restrictions of paragraphs 9, 10 or 11 hereof.
(ii) If Employee's employment hereunder is terminated
prior to the Expiration Date by Company pursuant to paragraph 5 hereof without
Cause, subject to his continued eligibility under the terms of any such plan in
accordance with its respective terms, to the extent Company heretofore paid
such costs, and to the extent Company makes the benefits available to its
employees, Company shall continue through the first anniversary of the date of
termination to pay the costs of Employee's participation in health, medical and
dental insurance benefits, by
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<PAGE> 5
paying Employee's contribution pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), and shall continue to pay the costs of
Employee's participation in life and disability insurance benefits then
provided to Employee under any employee benefit plan pursuant to paragraph 6(e)
of this Agreement, subject to the provisions of such paragraph 6(e). This
paragraph is not intended and shall not extend the period during which Employee
may be eligible for benefits under COBRA or any similar law, which such period
shall commence upon the date of the termination of Employee's employment.
(iii) If Employee's employment hereunder is
terminated prior to the Expiration Date by Company, whether with or without
Cause, Employee shall be entitled to a portion of any annual bonus that
Employee would have otherwise become entitled, any such portion being
determined pro rata based on the period from the beginning of the then-current
fiscal year to the date of termination, and being determined as soon as
practicable after such termination, and to the extent such annual bonus is
based on financial results of Company or Interface, the amount thereof shall be
based on Company's or Interface's interim financial results through the month
most-recently ended at the time of termination. Employee shall be entitled to
no bonus for any subsequent period, whether such termination is with or without
Cause.
(iv) Except as expressly provided above in this
paragraph 3 or as required by law or the express terms of any employee benefit
plan in which Employee participates pursuant to paragraph 6(e) hereof, Employee
shall be entitled to no salary, bonus or other compensation or any benefits
during or for any period after the date of any termination of his employment,
including, without limitation, the benefits described on Exhibits A, B and C
hereto.
(d) Under no circumstances will Employee be eligible for
severance benefits if Employee materially breaches any provision of paragraphs
7 through 12 hereof.
(e) Under no circumstances will Employee be eligible for
severance benefits on the grounds that Company has terminated his employment
without Cause, if Employee is temporarily or permanently separated from payroll
by reason of retirement, voluntary or paid leave of absence, military leave,
jury duty, or other similar cause.
(f) In the event of a sale of all or substantially all of
the assets or stock of Company to or merger or consolidation with another
person, partnership, corporation, association, or other entity (a "Buyer"),
under no circumstances will Employee be eligible for severance benefits on the
grounds that Company has terminated his employment without Cause if Employee is
offered employment by a Buyer or any successor to Company on substantially all
of the terms hereof, whether or not Employee accepts such offer of employment.
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<PAGE> 6
4. Term of Employment. Employee's employment hereunder shall
commence on (and this Agreement shall not become effective, nor shall any party
hereto have any right, liability or obligation hereunder, until) the "Closing
Date" (as defined in Section 1.3(a) of the Purchase Agreement), and shall
continue until the earlier of (i) the Expiration Date, (ii) the date of
Employee's death, (iii) the date on which Employee suffers "Total Disability"
within the meaning of such phrase in Company's group long-term disability
insurance policy currently in effect (or if such policy is no longer in effect
at any time, suffers total disability within the meaning of the successor
long-term disability insurance policy in effect at such time), or (iv) the date
on which Employee's employment hereunder is terminated by Company pursuant to
paragraph 5 hereof. Notwithstanding anything to the contrary in this
Agreement, if the "Closing" (as defined in Section 1.3(a) of the Purchase
Agreement) does not occur, for any reason or no reason, on or before July 31,
1993, then this Agreement shall be null and void ab initio and shall have no
force or effect, and none of the parties hereto shall have any right, liability
or obligation hereunder.
5. Termination by Company. Company may terminate Employee's
employment hereunder at any time with Cause or without Cause, and without prior
notice or warning in either case. As used herein, "Cause" shall mean (a)
Employee having been convicted of any felony or other crime involving moral
turpitude; (b) the continued and habitual use of narcotics or alcohol to an
extent which materially impairs Employee's performance of his duties hereunder;
(c) malfeasance or gross negligence by Employee in the performance of his
duties hereunder; (d) the knowing, material violation by Employee of this
Agreement; (e) willful or gross misconduct by Employee materially injurious to
Company; or (f) the knowing misstatement of a material fact by Employee (or by
Company if known to Employee) or a failure by Employee (or by Company if known
to Employee) to state a material fact, the omission of which would make
statements made misleading, in the Purchase Agreement or the Selling
Shareholders Agreement executed contemporaneously therewith.
6. Reimbursement for Expenses; Vacation; Benefits.
(a) Employee shall be entitled to reimbursement for all
expenses including travel, promotion, and entertainment expenses, which are
reasonably incurred by Employee in providing the Services and which are
submitted to Company within 60 days after being incurred, subject to compliance
with all policies of Company applicable to its executives in positions
comparable to that of Employee with respect to documentation for reimbursable
expenses and limitations on reimbursable expenses; provided that Employee shall
take no deduction on any tax return in respect of any expense reimbursed
hereunder.
(b) Employee shall be entitled to such annual amount of
paid vacation in each calendar year of Employee's employment as shall be
indicated on Exhibit A hereto. Paid vacation taken by Employee during his
employment with Company during the current year
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shall be deducted from the vacation time otherwise available in the current
year. Except as otherwise provided in Company's policies for vacations for
employees in the state in which Employee works, (i) Company shall not pay
Employee any additional compensation for any vacation time which is not used
prior to the end of a calendar year or any earlier termination of employment,
and (ii) any vacation time which is not used prior to the end of a calendar
year may not be used in any subsequent year.
(c) Employee will be entitled to all paid holidays given
to Company's employees generally.
(d) Employee shall be granted tax-qualified incentive
options to purchase the number of shares of stock of Interface described on
Exhibit A pursuant to the Interface, Inc. Key Employee Stock Option Plan (1993)
(the "Option Plan"), in accordance with the standard Interface stock option
agreement used in connection with such grants under the Option Plan, which
option agreement shall be appropriately completed in accordance herewith and
executed by Interface and Employee immediately after the Closing (as defined in
Section 1.3(a) of the Purchase Agreement). Such option agreement and the
Option Plan shall govern as to all terms and conditions of or relating to such
options to purchase stock, and if any term or condition hereof relating
directly or indirectly to Employee's options to purchase Interface stock shall
be inconsistent with such option agreement or the Option Plan, such option
agreement or the Option Plan, as the case may be, shall control.
(e) Employee shall also be entitled to participate in any
employee benefit plans which Company may establish or provide for United
States-based employees in positions similar to that of Employee, but only if
and to the extent provided in such employee benefit plans and for so long as
Company provides or offers such benefit plans. Such benefit plans currently in
effect are listed on Exhibit B to this Agreement.
(f) If Employee's employment hereunder shall terminate
prior to the Expiration Date because Employee suffers Total Disability as
provided in paragraph 4 hereof, (i) notwithstanding anything in paragraph
3(c)(i) to the contrary, for a period of one hundred eighty (180) days Company
shall continue to pay Employee's salary (less any amounts payable to Employee
under Company's long term disability plan) and Employee shall be entitled to
participate in all health, life, medical and dental insurance benefits then
provided to Employee under any employee benefit plan pursuant to paragraph 6(e)
of this Agreement, subject to his continued eligibility under the terms of such
plan in accordance with its terms, and after such one hundred eighty (180) day
period, Employee shall not be entitled to such salary or to participate in such
benefits, but after such period through the Expiration Date Company shall pay
to Employee any excess of the benefits payable to Employee under Company's long
term disability plan now in effect and Company's long term disability plan in
effect at the time of termination.
7
<PAGE> 8
(g) During the term of his employment hereunder, Employee
shall be entitled to paid sick leave in accordance with Interface's policies in
effect from time to time for employees in positions similar to that of
Employee, so long as Employee does not become disabled within the meaning of
paragraph 4(iii) of this Agreement.
(h) Employee shall also be entitled to those benefits
identified on Exhibit C to this Agreement during the term of his employment
hereunder.
7. Confidential Information. Employee shall protect Confidential
Information. Employee will not use, except in connection with work for Company
or Interface, and will not disclose or give to others during or after
Employee's employment with Company hereunder, any Confidential Information.
8. Return of Materials. Upon termination of Employee's
employment with Company for any reason, or at any time at Company's or
Interface's request, Employee will deliver promptly to Company or Interface all
materials, plans, records, financial documents, customer lists, notes,
drawings, designs, equipment, papers, computer disks and diskettes (hard and
soft), other media containing information, documents (including, without
limitation, rolodex cards) and any copies thereof and all other items of
tangible property in Employee's possession or control relating in any way to
the business of Company or Interface, which at all times shall be the property
of Company or Interface, as the case may be, pursuant to Section 2860 of the
California Labor Code.
9. Services Provided to Competitors. During the term of
Employee's employment with Company, and for any period after termination of
Employee's employment with Company through the Expiration Date in which Company
continues to pay Employee compensation as provided above, Employee will not
engage in, or have any interest in any Person (whether as an advisor,
principal, consultant, independent contractor, agent, partner, officer,
director, stockholder, employee, member of any association or otherwise) that
engages in any activity within any of the states of the United States or in any
foreign country in which Company, or any of its subsidiaries or affiliates
(including Interface) conducts its business, which activity is competitive with
any activity engaged in by Company, Interface, or any of Company's or
Interface's respective subsidiaries or affiliates (or any of their successors)
as of the date of termination of Employee's employment by Company, so long as
Company, Interface, or any of their respective subsidiaries or affiliates (or
any of their successors) shall engage in such activity in any of the states
within the United States or in any foreign country. Notwithstanding the
foregoing, Employee may purchase securities in any corporation whose securities
are regularly traded in an established securities market, provided that such
purchases shall not result in his owning beneficially at any time more than 1%
of any class of securities of any corporation engaged in a business competitive
with that of Company or Interface.
8
<PAGE> 9
10. Solicitation of Customers. During the term of Employee's
employment with Company, and for any period after termination of Employee's
employment with Company through the Expiration Date in which Company continues
to pay Employee compensation as provided above, Employee will not solicit
Customers for the purpose of providing goods identical to or reasonably
substitutable for, similar to or competitive with Products.
11. Post-Employment Hiring or Solicitation of Employees. During
the term of Employee's employment with Company, and for any period after
termination of Employee's employment with Company through the Expiration Date
in which Company continues to pay Employee compensation as provided above,
Employee will not hire or induce or solicit to leave employment with Company or
Interface anyone who is or was, during the last year of Employee's relationship
with Company, an employee of Company or Interface.
12. Work For Hire Acknowledgment; Assignment. Employee
acknowledges that all of Employee's work on and contributions to Products,
including, without limitation, any and all patterns, designs, artwork and other
expressions in any tangible medium for Products (collectively, "Works") are
within the scope of Employee's employment and are a part of the Services,
duties and responsibilities of Employee. All of Employee's work on and
contributions to the Works will be rendered and made by Employee for, at the
instigation of, and under the overall direction of Company (or if Employee
performs Services hereunder other than for Company, of Interface), and all of
Employee's said work and contributions, as well as the Works, are and at all
times shall be regarded as "work made for hire" as that term is used in the
United States Copyright Laws. Without curtailing or limiting this
acknowledgment, Employee hereby assigns, grants, and delivers exclusively to
Company (or Interface as to work on and contribution to Products pursuant
hereto other than for Company) all rights, titles, and interests in and to any
such Works, and all copies and versions, including all copyrights and renewals.
Employee will execute and deliver to Company (or Interface, if applicable), or
its successors and assigns, such other and further assignments, instruments and
documents as it from time to time reasonably may request for the purpose of
establishing, evidencing, and enforcing or defending its complete, exclusive,
perpetual, and worldwide ownership of all rights, titles, and interests of
every kind and nature whatsoever, including all copyrights, in and to the
Works, and Employee hereby constitutes and appoints Company (or Interface, if
applicable) as its agent and attorney-in-fact, with full power of substitution,
to execute and deliver such assignments, instruments or documents as Employee
may fail or refuse to execute and deliver, this power and agency being coupled
with an interest and being irrevocable.
13. Interpretation; Severability of Invalid Provisions. All
rights and restrictions contained in this Agreement may be exercised and shall
be applicable and binding only to the extent that they do not violate any
applicable laws and are intended to be limited to the extent necessary so that
they will not render this Agreement illegal, invalid or unenforceable. If any
term of this
9
<PAGE> 10
Agreement shall be held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, the remaining terms shall remain in full force and
effect. The provisions of this Agreement do not in any way limit or abridge
any rights of Company or Interface under the laws of unfair competition, trade
secret, copyright, patent, trademark or any other applicable law(s), all of
which are in addition to and cumulative of Company's or Interface's rights
under this Agreement. The existence of any claim by Employee against Company
or Interface, whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by Company or Interface of any or all of
such provisions or covenants.
14. Tolling Provision. The duration of any post-termination
obligation contained in this Agreement shall be extended by the length of time
during which Employee is in breach of the provision.
15. Notice. All notices, demands and requests, where permitted to
be given under this Agreement, shall be deemed sufficient if mailed by
registered or certified mail, postage prepaid, addressed as follows (or
addressed to such other address as a party hereto may have specified by notice
given to the other party pursuant to this provision):
To Company:
Bentley Mills, Inc.
c/o Interface, Inc.
Orchard Hill Road
LaGrange, Georgia
Attention: Chief Financial Officer
with a copy to:
Interface, Inc.
2159 Paces Ferry Road
Suite 2000
Atlanta, Georgia 30339
Attention: General Counsel
To Employee: at the address specified
below Employee's signature hereto.
16. Agreement Binding. This Agreement shall inure to the benefit
of Company, Interface and their successors, assignees, and designees and shall
be binding upon Employee and Employee's heirs, executors, administrators and
personal representatives. This Agreement shall also inure to the benefit of
Employee and Employee's heirs, executors, administrators and personal
representatives, and shall be binding on Company and Company's successors,
assignees and designees. This Agreement may not be assigned by Company other
than in connection with any sale of Company or the Company Business without the
written consent of Employee, provided, however, that such assignee shall be
obligated to perform this Agreement in accordance with its terms.
10
<PAGE> 11
17. Nonwaiver. The failure of Company or Interface to insist upon
strict performance of the terms of this Agreement or to exercise any option
herein, shall not be construed as a waiver or a relinquishment for the future
or such term or option, but that the same shall continue in full force and
effect.
18. Entire Agreement; No Automatic Renewal. This Agreement,
including any attachments, contains the entire agreement between the parties
and no statement, promises or inducements made by any party hereto, or agent of
either party, which is not contained in this Agreement, shall be valid or
binding; and this Agreement may not be enlarged, modified or altered except in
writing signed by the parties; any such writing signed by Company or any
successor or permitted assign thereof shall also be effective as to Company's
rights hereunder. The occurrence of the "Closing" (as defined in Section
1.3(a) of the Purchase Agreement) and commencement of Employee's employment
hereunder shall constitute, automatically and without further action by the
parties, a termination of any existing employment agreement between Employee
and Company effective on the date of such events, provided that salary and
other rights and obligations of the parties accrued under any such agreement
prior to the effective date hereof shall not be affected by such termination
and shall be paid or satisfied when due in the ordinary course. The term of
Employee's employment under this Agreement shall not be deemed to be
automatically or otherwise extended or renewed except by written agreement of
both parties. After the Expiration Date, Employee's continued employment shall
be for an indefinite term, shall be at will, and shall not be subject to this
Agreement (except that paragraphs 7, 8, 9, 10, 11, 12 and 14 shall continue in
effect during such employment at will and after any termination of Employee's
employment, whether such termination is before or after the Expiration Date,
subject to the expiration of any time limitations contained therein commencing
with such termination of Employee's employment).
19. Governing Law. This Agreement and the rights and obligations
of the parties hereunder shall be construed under and governed by the laws of
the State of California and the federal laws of the United States of America.
20. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
21. Headings. Paragraph and other headings contained in this
Agreement are for reference purposes only and are in no way intended to define,
interpret, describe or otherwise limit the scope, extent or intent of this
Agreement or any of its provisions.
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<PAGE> 12
22. Dispute Resolution.
(a) Except as otherwise provided in paragraph 23 below,
any and all disputes arising out of or in connection with the negotiation,
execution, interpretation, performance or nonperformance of this Agreement, or
the employment of Employee by Company, shall be solely and finally settled by
arbitration, which shall be conducted in Los Angeles, California, by a panel of
three arbitrators. The arbitrators shall be familiar with employment and labor
disputes, shall be impartial and shall not have been employed by or affiliated
with any of the parties hereto. The arbitration procedure may be initiated by
either party by written notice to the other; such notice shall specify in
reasonable detail the dispute being submitted to arbitration and shall name one
arbitrator to the panel. The other party shall appoint one arbitrator to the
panel within 30 days after receipt of such notice. The two arbitrators so
appointed shall, within 30 days after appointment of the second arbitrator,
select a third arbitrator (the "Umpire"), who shall meet all of the foregoing
qualifications and, in addition, shall be an attorney at law admitted to
practice law in the State of California and regularly practicing employment and
labor law. If the two arbitrators selected by the parties cannot agree on a
third arbitrator within such 30-day period, or if either party fails or refuses
to appoint an arbitrator, then selection of such arbitrator shall be made, in
accordance with the foregoing qualifications, upon application of either party,
by the American Arbitration Association.
(b) The parties hereby renounce all recourse to
litigation and agree that the award of the arbitrators shall be final and
subject to no judicial review. The arbitrators shall conduct the proceedings
pursuant to the Rules of the American Arbitration Association, as now or
hereafter amended (the "Rules"); provided that the provisions of this Agreement
shall prevail in the event of any conflict between the Rules and the provisions
of this Agreement.
(c) The panel of arbitrators shall decide the issues
submitted to them in accordance with the provisions and commercial purposes of
this Agreement; provided that all substantive questions of law shall be
determined under the laws of the State of California (without regard to the
principles of conflicts of laws of such jurisdiction) and the federal laws of
the United States of America. All questions and issues in connection with the
dispute, including procedural issues, shall be decided by the concurrence of at
least two arbitrators, and all decisions shall be in writing and submitted to
both parties, provided that, if after a reasonable period, concurrence of two
arbitrators cannot be obtained with respect to a question or issue, then the
Umpire shall make all decisions necessary to resolve the dispute.
(d) In no event shall any party be entitled to receive,
and the arbitrators shall not be empowered to award, punitive or exemplary
damages. Each party hereby irrevocably waives any claim or right for or to
punitive or exemplary damages.
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<PAGE> 13
(e) The parties shall facilitate the arbitration by: (i)
making available to one another and to the arbitrator for examination,
inspection and extraction all documents, books, records and personnel under
their control if determined by the arbitrator to be relevant to the dispute;
(ii) conducting arbitration hearings to the greatest extent possible on
successive days; and (iii) observing strictly the time periods established by
the Rules or by the arbitrator for submission of evidence or briefs.
(f) In the final award, the panel of arbitrators shall
award to the prevailing party all costs and expenses, including reasonable
attorneys' fees, incurred by such prevailing party.
23. Equitable Remedies. The parties acknowledge that a breach or
threat to breach any of the terms of paragraphs 7 through 12 of this Agreement
by Employee would result in material and irreparable damage and injury to
Company, Interface, or both, and that it would be difficult or impossible to
establish the full monetary value of such damage. Therefore, notwithstanding
anything to the contrary herein, Company or Interface shall be entitled to
injunctive relief by a court of appropriate jurisdiction in the event of
Employee's breach or threatened breach of any of the terms contained in
paragraphs 7 through 12 of this Agreement.
24. Withholding. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by Company hereunder to
Employee or his estate or beneficiaries shall be subject to the withholding of
such amounts relating to taxes as Company may reasonably determine it should
withhold pursuant to any applicable law or regulation.
25. Tax Consequences. Company shall have no obligation to any
person entitled to the benefits of this Agreement with respect to any tax
obligation any such person incurs as a result of or attributable to this
Agreement, including all supplemental agreements and employee benefits plans
incorporated by reference therein, or arising from any payments made or to be
made hereunder or thereunder.
26. Independent Advice from Counsel. Each of the parties has
received independent legal advice from legal counsel of his or its choice with
respect to the advisability of entering into this Agreement and its terms.
27. Negotiated Agreement. The terms of this Agreement are
contractual, not a mere recital, and are the result of negotiations between the
parties.
IN WITNESS WHEREOF, Company has caused this Agreement to be executed
by its duly authorized officer, and Employee has executed this Agreement, as of
the date written above.
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<PAGE> 14
COMPANY
BENTLEY MILLS, INC.
By:_______________________________
Name:__________________________
Title:_________________________
EMPLOYEE
__________________________________
Royce Renfroe
Address: 2915 Sierra Crest
Hacienda Heights, CA 91745
<PAGE> 15
EXHIBIT A
to
Employment Agreement
of
Royce Renfroe
1. Services: Employee shall serve as President and Chief Executive
Officer and as a director of Company, and shall perform
and discharge well and faithfully all duties currently
being performed by him and such other duties as may be
assigned to him from time to time that are appropriate
for a President and Chief Executive Officer of an
organization of the size of Company engaged in the
Company Business.
2. Territory: United States and Canada
3. Annual Salary: $225,000.00
Bonus Potential: Up to 75% of salary, pursuant to personalized bonus
plan described in paragraph 3(b) of this Agreement
Annual Vacation: Four weeks
4. Stock Option Shares: 40,000
5. Scheduled Agreement Expiration Date: 5th Anniversary of the "Closing
Date" (as defined in Section
1.3(a) of the Purchase Agreement)
<PAGE> 16
EXHIBIT B
to
Employment Agreement
of
Royce Renfroe
Existing Company Benefit Plans
1. Company Group Medical Insurance Plan, including payment for dependant
medical coverage
2. Company Group Dental Insurance Plan, including payment for dependant
dental coverage
3. Company Group Disability Insurance Plan
<PAGE> 17
EXHIBIT C
to
Employment Agreement
of
Royce Renfroe
Additional Benefits
1. Company shall provide to Employee the use of the automobile currently
provided to him by Company.
2. Country club dues in amounts not greater than currently being paid, and
the monthly service charge for a cellular telephone in the automobile
referred to in item 1 above and air time toll charges incurred thereon
for business use, to the extent that such air time toll charges are
otherwise subject to reimbursement pursuant to paragraph 6(a) of this
Agreement.
3. Continued payment of premiums on currently-provided whole life
insurance policy with coverage in the amount of $1,000,000
(beneficiaries to be designated by Employee).
4. Supplemental medical and dental insurance coverage in an amount not to
exceed $10,000.00 per year, in accordance with Company's existing plan
for its executives.
<PAGE> 18
EXHIBIT D
to
Employment Agreement
of
Royce Renfroe
Interface Incentive Compensation Program (1993)
Interface's incentive compensation program as currently in effect is
tied to Interface, business unit (subsidiary) and individual performance.
Under the authority of the Compensation Committee of Interface, each executive
officer of Interface (including the Chief Executive Officer) is assigned a
range of bonus potential (expressed as a percentage of base salary), and a
personalized set of financial and non-financial objectives for the year. At
least 65% of each executive officer's bonus potential is based on measurable
financial performance. The amount of bonus earned is determined by the degree
to which the financial and non-financial objectives have been achieved as
determined by Interface.
For the senior executives of Interface who are directly accountable for
the profitability of subsidiaries, financial objectives for 1993 focused on:
(i) earnings per share, (ii) return on net assets managed, (iii) subsidiary
sales growth, measured against budgeted amounts and results from the prior
year, and (iv) control of fixed costs, also measured against budgeted amounts
and results from the prior year. Non-financial objectives for such senior
executives are currently tailored to their respective markets and geographic
regions, but generally focus on sales and competitive strategies, strategic
acquisitions, investments and alliances, technological advancements, quality
control measures and employee relations.
<PAGE> 19
EXHIBIT E
to
Employment Agreement
of
Royce Renfroe
1993 Bonus Plan
The Base bonus amount is calculated at 75% of the year end annual compensation
rate.
The Bonus plan provides for payment from between 90% and 125% of the Base bonus
as prorated with this proportional achievement of the budgeted operating income
amount between 90% and 125%.
For 1993 the budgeted target for the bonus plan is $10,457,000 of operating
income. Operating income is defined as net sales less: cost of sales,
shipping, selling, and general and administrative expenses, as consistently
presented in Bentley's monthly financial statements.
