<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended January 1, 1995
Commission File No: 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 of incorporation) (I.R.S. Employer Identification No.)
2859 PACES FERRY ROAD
SUITE 2000
ATLANTA, GEORGIA 30339
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(Address of principal (zip code)
executive offices)
Registrant's telephone number, including area code: (404) 437-6800
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Securities Registered Pursuant to Section 12(b) of the Act: NONE
----
Securities Registered Pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, $0.10 PAR VALUE PER SHARE
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(Title of Class)
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2013
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter peiod that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 15, 1995 (assuming conversion of Class B Common
Stock into Class A Common Stock): $232,203,465 (16,294,980 shares valued at
the last sales price of $14.25). See Item 12.
Number of shares outstanding of each of the registrant's classes of
Common Stock, as of March 15, 1995:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES
----- ----------------
<S> <C>
Class A Common Stock,
$0.10 par value per share ........................... 15,157,728
Class B Common Stock,
$0.10 par value per share ........................... 3,074,625
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year
ended January 1, 1995 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement for the 1995 Annual Meeting of
Shareholders are incorporated by reference into Part III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Interface, Inc. (the "Company"), through its various operating
subsidiaries, manufactures and sells, in domestic and international markets,
modular carpet under the Interface(R) and Heuga(R) brands, broadloom carpet
under the Bentley(R) and Prince St. Technologies(R) brands, and interior
fabrics under the Guilford of Maine(R) and Stevens Linen(TM) brands, for use
primarily in offices, health care facilities and other commercial and
institutional interiors. The Company also manufactures and markets a number of
specialty products and chemicals, including Intersept(R), an antimicrobial
chemical agent used in the Company's carpet and fabric products and licensed to
others for use in noncompetitive products. The complementary nature of the
Company's businesses facilitates cross-marketing of products and positions the
Company to take a "total interior solution" approach to expand its significant
presence in the worldwide commercial interiors market.
The Company's traditional core business has been the development,
manufacture, marketing and servicing of modular carpet (carpet tile and six
foot roll goods). Modular carpet offers certain inherent advantages over other
soft surface flooring systems. (See "Carpet - Products".) The Company's
principal modular carpet subsidiaries are Interface Flooring Systems, Inc.
("IFS"), based in the United States, and Interface Europe B.V. ("Interface
Europe", formerly Interface Heuga B.V.), based in the Netherlands. The Company
also has modular carpet manufacturing operations in Australia, Canada and the
United Kingdom. The Company is the world's largest manufacturer and marketer
of modular carpet for commercial, institutional and residential use.
Within the last two years, the Company has established a significant
presence in the commercial broadloom carpet market through acquisitions. In
June 1993, the Company acquired California based Bentley Mills, Inc. ("Bentley
Mills"), a leading manufacturer and marketer of high quality, designer-oriented
broadloom carpeting used primarily for commercial and institutional
applications, with 1994 sales in excess of $125 million. In March 1994, the
Company acquired Prince Street Technologies, Ltd. ("Prince Street"), a Georgia
based company engaged in the manufacture and distribution of innovative and
technically advanced tufted broadloom carpeting for commercial interiors.
Bentley Mills and Prince Street are recognized industry leaders in product
design and styling -- ranked #1 and #2, respectively, in a 1994 survey of U.S.
interior design professionals (as reported in Interior Focus magazine).
Guilford of Maine, Inc. ("Guilford"), the Company's interior fabrics
subsidiary, is the leading U.S. manufacturer of fabrics for use in open plan
office furniture systems. Open plan office furniture systems are typically
panel enclosed work stations, customized to particular work environments. The
system panels are usually covered in fabric, which enhances the aesthetic and
acoustical qualities of the system. Guilford also designs, manufactures and
markets fabrics for use as upholstery, window treatments, and wall and ceiling
coverings. In 1993, Guilford acquired the fabric division assets of Stevens
Linen Associates, Inc., based in Dudley, Massachusetts. The acquisition
significantly expanded Guilford's business in seating and decorative upholstery
fabrics.
Interface Research Corporation ("IRC"), Rockland React-Rite, Inc.
("Rockland") and Pandel, Inc. ("Pandel") comprise the Company's chemicals and
specialty products group. IRC and Rockland are engaged in the development,
production and marketing of specialty chemicals, including antimicrobial,
soil-resistant and stain-inhibiting additives for use in a wide variety of
interior finishes. Pandel manufactures and sells vinyl carpet tile backing,
including the CushionBac(TM) system utilized on certain of the Company's carpet
products, and specialty mat and foam products. These three U.S. subsidiaries
also constitute the research and development arm of the Company.
A major focus of the Company over the past several years has been the
development of the Envirosense(R) Consortium, an international organization of
companies concerned with addressing workplace environmental issues,
particularly poor indoor air quality. The Consortium now totals 29 member
organizations. A number of the consortium members are manufacturers and
marketers of products containing the Company's Intersept antimicrobial.
In the latter part of 1994, a new industrial ecology initiative took
shape at the Company -- under the banner EcoSense(TM). EcoSense is a campaign
directed toward the elimination of waste in the Company's businesses, and, on a
broader and more long-term scale, the practical reclamation -- and ultimate
restoration -- of shared environmental resources. The initiative involves a
commitment by the Company to learn to meet its raw material and energy needs
through recycling carpet and other petrochemical products, and to pursue the
creation of new processes to help sustain the earth's non-renewable natural
resources.
The Company made two changes in key management in 1994. Brian DeMoura
joined the Company in March 1994 as President of Guilford. In October 1994,
Charles Eitel, who joined the Company in late 1993 as President of IFS, was
appointed President and CEO, Floorcoverings Group, and became responsible for
the Company's worldwide carpet operations. (See "Executive Officers of the
Registrant".)
<PAGE> 3
CARPET
Products. The Company's traditional business has centered on the
development, manufacture, marketing and servicing of modular carpet (carpet
tile and six foot roll goods). The Company is the world's largest manufacturer
and marketer of modular carpet. With the acquisitions of Bentley Mills in 1993
and Prince Street in the first quarter of 1994, a significant portion of the
Company's carpet sales are now of high quality, designer-oriented broadloom
carpet. Approximately 80% of the Company's total revenues come from its carpet
operations.
The Company's free-lay modular carpet system utilizes carpet tiles cut
in precise, dimensionally stable squares to produce a floor covering which
combines the appearance and texture of broadloom carpet with the advantages of
a modular carpet system. The Company uses a number of conventional and
technologically advanced methods of carpet construction to produce carpet tiles
in a wide variety of colors, patterns, textures, pile heights and densities
designed to meet both the practical and aesthetic needs of a broad group of
commercial interiors -- particularly offices, health care facilities, airports,
educational and other institutions, and retail facilities. The Company
produces both fusion-bonded and tufted carpet tile products. (Fusion-bonding
is a non-textile process whereby yarn is implanted directly into a
thermoplastic base.) The Company manufactures carpet tile in standard styles
and to customer specifications. Approximately 18% of the Company's carpet tile
sales in 1994 were pursuant to custom orders. The Company's carpet tile
systems permit distinctive styling and patterning that can be used to
complement interior designs, to set off areas for particular purposes and to
convey graphic information.
The growing use of open plan interiors and modern office arrangements
utilizing demountable, movable partitions and modular furniture systems has
encouraged the use of carpet tile, as compared to other soft surface flooring
products. The Company's patented GlasBac(R) technology employs a unique,
fiberglass-reinforced polymeric composite backing that allows the tile to be
installed and remain flat on the floor without the need for general application
of adhesives or use of fasteners. Carpet tile thus may be easily removed and
replaced, permitting rearrangement of office partitions and modular furniture
systems without the inconvenience and expense associated with removing,
replacing or repairing other soft surface flooring products, including
broadloom carpeting. Carpet tile facilitates access to under-floor telephone,
electrical and computer wiring by lessening disruption of operations, and also
eliminates the cumulative damage and unsightly appearance commonly associated
with frequent cutting of conventional carpet as utility connections and
disconnections are made. Since a relatively small portion of a carpet
installation often receives the bulk of traffic and wear, selective
replacement, and the ability to rotate carpet tiles between high traffic and
low traffic areas, can significantly increase the average life and cost
efficiency of the floor covering.
The Company produces and sells carpet tile specially adapted for the
health care facility market. The Company's carpet tile possesses
characteristics (such as the use of the Intersept antimicrobial,
static-controlling nylon yarns, and thermally pigmented, colorfast yarns)
making it suitable for use in such facilities in lieu of hard surface flooring.
An important development for the Interface Americas carpet tile
business in 1994 was the hiring of the design consulting firm of Roman Oakey,
Inc., which has agreed to provide carpet design and related services to the
Company on an exclusive basis. David Oakey, President of Roman Oakey,
instituted a new product development concept -- "simple inputs for pretty
outputs" -- resulting in the ability to efficiently produce many products from
a single yarn system. This "mass customization" concept facilitated the
introduction of 17 new products in 1994, the largest number in one year in the
Company's history. The new products were well received -- IFS won five
national design awards, sweeping the carpet tile category in the International
Interior Design Association's APEX (a product of excellence) competition. In
late 1994, David Oakey began expanding his design services to include Prince
Street and Interface Europe.
The Company also manufactures and sells fusion-bonded, tufted and
needle-punched broadloom floor coverings, including six- foot roll goods under
the System Six(R) mark. Principal customers for System Six products are
educational and governmental institutions. Bentley Mills' principal products
are high-style broadloom carpeting (and carpet tiles) for sale in the
commercial and institutional markets. Bentley Mills maintains a significant
share of the upscale market niche by combining innovative design and short
delivery time with a marketing strategy geared toward serving and working
closely with interior designers. Prince Street's design-sensitive broadloom
products center around unique, multi-dimensional textured carpets with a
hand-tufted look. In 1994, Bentley Mills and Prince Street each had the best
year -- in terms of both sales and profits -- in their respective histories.
Bentley Mills and Prince Street won three APEX awards which, combined with
those won by IFS, provided the Interface carpet companies with eight out of the
12 awards given.
Marketing, Sales, Installation and Service. The Company markets its
carpet products in North America, the United Kingdom, Continental Europe,
Australia and Japan, principally under registered trademarks. The Company is
aggressively pursuing developing market opportunities in South and Central
America, Eastern Europe, China and Southeast Asia. The Company traditionally
has focused its marketing strategy on major accounts, seeking to build lasting
relationships with national and multinational end-users. The acquisition of
Bentley Mills and Prince Street has significantly enhanced the Company's
marketing efforts with interior designers and architects. The Company's sales
are made through its own sales
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<PAGE> 4
force as well as through independent dealers. Installation is generally
performed by an independent dealer. The Company maintains a Creative Services
staff that works directly with clients on upscale projects, helping in
determining product selection, customer specifications and unique approaches to
design issues. The Company has product and design studios in the United
States, England, France, Germany, Spain, Norway, the Netherlands, Australia,
Japan and Singapore. The Company's Field Services staff provides on-site
customer service for both in-progress and completed installations.
The Company emphasizes sales to the office market, both new
construction and renovation, as well as to health care facilities, and
institutions and public facilities, including libraries, museums, convention
and hospitality centers, airports, schools and hotels. In recent years,
Interface Europe B.V. has expanded its sales of products for household and
residential use. The Company anticipates significant growth opportunities for
international sales by Bentley Mills and Prince Street.
The Company advertises its carpet products in sales publications and
trade journals directed toward major corporate and institutional carpet users
and their interior design consultants. Sales representatives also contact such
persons directly to encourage specification of the Company's products for
pending projects. The Company's sales representatives and design specialists
also work with architects, interior designers and end-users in developing
desired patterns and colors.
Recognizing that many of the Company's customers are moving towards
designating a single source supplier for their interior finish needs, the
Company has taken steps in recent years to bolster its project coordination and
after-installation service capabilities. Interface Service Management, Inc.
("ISM") was formed to provide the Company's U.S. customers with a complete
range of flooring maintenance services to help ensure the long-term appearance
of floor covering products. The Company has acquired the interest of its
former joint venture partner in ISM, ISS International Service System, Inc.,
but continues to utilize ISS contractors to perform various facility
maintenance services for customers of ISM. In 1994, ISM broadened its scope of
services to include (i) purchase order management, to provide customers, and
the Company's sales force, with a single point of contact, and (ii) project
management, to provide customers with installation management and contract
coordination under a single invoice.
A similar but independent initiative has been implemented by the
Company in Europe, where the Company has licensed selected independent service
contractors to provide carpet maintenance services under the mark - IMAGE(SM)
(Interface Maintenance Advisory Group of Europe).
Manufacturing. The Company manufactures carpet in the United States,
the Netherlands, the United Kingdom, Canada and Australia. These multiple
locations give the Company sufficient capacity and flexibility to supply its
customers with carpet which is produced at the facility offering the most
advantageous location for delivery times, exchange rates, tariffs/duties and
freight expense. Consistent with this strategy, the Company in 1994 entered
into a joint venture with Modernform Group Public Co., Ltd. to build a carpet
tile manufacturing operation in Thailand. The Company expects the plant to
become operational in early 1996. The Company has also begun construction of a
new Prince Street plant in Cartersville, Georgia, which should become
operational in late 1995. The design of the new facility is a manifestation of
the Company's EcoSense initiative. The state-of-the-art facility will
introduce new systems for energy efficiency and variable eliminate control --
for increased human productivity, waste reduction and water purification -- and
will incorporate the use of both recycled and non-toxic building materials.
The Company utilizes both conventional and technologically advanced
methods of carpet construction. The use of multiple manufacturing processes
enables the Company to manufacture carpet which can be sold over a broad range
of prices. Management believes that the Company is the only company with the
current ability to offer carpet utilizing any of three different fusion-bonding
processes, a tufting process or a needle-punching process. In 1994, the
Company made a major capital investment in high speed tufting technology.
Tufted products now represent the substantial majority of the Company's carpet
sales.
The Company pursues stringent quality control programs. By 1992, the
Company's manufacturing operations in the Netherlands and the United Kingdom
had received the ISO-9002 certification, awarded by the International
Organization for Standardization.
The Company has no long-term contracts for any of its principal raw
materials, but believes that adequate alternative sources of supply are
generally available at comparable prices.
Competition. The commercial floor covering industry is highly
competitive. The Company competes, on a global basis, in the sale of its
modular and broadloom carpet with other carpet manufacturers and manufacturers
of vinyl and other types of floor covering. There are a large number of such
floor covering manufacturers, although the industry has experienced significant
consolidation in the recent past. Management believes that the Company is the
largest manufacturer of modular carpet in the world, possessing a global market
share that is perhaps two or three times that of its nearest competitor.
However, a number of domestic and foreign competitors manufacture modular
carpet as one segment of their business, and certain of these competitors have
financial resources in excess of the Company's. On January 31,
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<PAGE> 5
1995, the Company's principal carpet tile competitor in the U.S., Milliken &
Company, suffered a fire that destroyed its U.S. carpet tile production plant
(located in LaGrange, Georgia). Milliken has indicated that it will rebuild
the facility. The impact of this event, if any, on the Company's business is
not yet known.
The Company believes the principal competitive factors in its primary
markets are broad product lines, quality, appearance, design, product life,
marketing strategy, pricing and service. In the office market, modular carpet
competes with various floor coverings, of which broadloom carpet is the most
common. The appearance, design, longer average life, flexibility (design
options, selective rotation or replacement, use in combination with roll goods)
and convenience of the Company's modular carpet are its principal competitive
advantages, offset in part by its higher initial cost for comparable grades.
The Company believes that the recent acquisitions of Bentley Mills and Prince
Street have enhanced the Company's competitive position by enabling the Company
to offer high-quality, designer-oriented broadloom carpet as an alternative or
companion product to its carpet tile.
In the health care facility market, the Company's products compete
primarily with resilient tile. The Company believes that treatment of its
modular carpet with the Intersept antimicrobial chemical agent is a material
factor in its ability to compete successfully in the health care market and,
increasingly, in other commercial markets.
INTERIOR FABRICS
Products. Guilford designs, manufactures and markets specialty
fabrics for open plan office furniture systems and commercial interiors. Open
plan office furniture systems are typically panel-enclosed work stations,
customized to particular work environments. The open plan concept offers a
number of advantages over conventional office designs, including more efficient
floor space utilization, reduced energy consumption, tax advantages associated
with more rapid depreciation than would otherwise be available, and greater
flexibility to redesign existing space. Since carpet and fabrics are used in
the same types of commercial interiors, Guilford and the Company's carpet
subsidiaries are able to coordinate the color, design and marketing of such
products. Guilford also incorporates Intersept into certain of its commercial
fabrics.
Guilford manufactures fabrics made of 100% polyester, as well as
wool-polyester blends and numerous other natural and man-made blends, which
are either woven or knitted. Guilford products feature a high degree of color
consistency, natural dimensional stability and fire retardancy, in addition to
their overall aesthetic appeal. Guilford's primary products are fire retardant
woven fabrics for panels, which are produced in a wide range of styles, colors
and textures. Sales of panel fabrics presently constitute approximately 80% of
Guilford's total sales. Guilford also produces woven and knitted seating
fabrics, wall covering fabrics that are paper-backed for vertical wall surfaces
or acrylic-backed for panel-wall application, ceiling fabrics used to cover
tiles or for stretch ceiling construction, and fabrics used for vertical blinds
in office interiors. The 1993 acquisition of the Stevens Linen(TM) lines added
decorative, upscale upholstery fabrics and specialty textile products to
Guilford's product offerings. All of Guilford's product lines are color and
texture coordinated. Enhanced performance is continuously sought through
experimentation with different fibers, dyes, chemicals and manufacturing
processes. Guilford introduced a total of 67 new products in 1994, nearly
double the number launched in 1993.
Guilford anticipates that future growth opportunities will arise from
the emerging market for refurbishing services, where Guilford's fabrics are
used to re-cover existing panels, and the increased importance being placed on
the aesthetic design of the office, with upholstery fabric being the segment of
Guilford's non-panel business with the greatest anticipated growth potential.
Management also believes that significant growth opportunities exist in
international sales, domestic health care markets and in providing textile
processing services such as the lamination of fabrics onto substrates for
pre-formed panels.
Marketing and Sales. Guilford's principal customers are original
equipment manufacturers (OEM's). Guilford sells to essentially all of the
major office furniture manufacturers, with the majority of its sales being made
to a small number of companies located in the Grand Rapids, Michigan area
(where domestic office furniture manufacturing is concentrated). Guilford also
sells to manufacturers and distributors of wallcovering, vertical blinds,
acoustical wallboards, ceiling tiles, and residential furniture manufacturers.
Guilford's panel fabrics are sold to OEM customers through Guilford's
own sales force. Since 1990, when Guilford acquired the company that had been
the exclusive U.S. distributor of its open line panel and upholstery products,
Guilford has conducted all sales of open line products through its own sales
force under the trade name Guilford of Maine Textile Resources. U.S. sales
offices are maintained in Saddle Brook, New Jersey and Grand Rapids, Michigan.
In the last several years, Guilford has aggressively sought to expand its
export business and international operations, both to accommodate the demand of
principal OEM customers that are expanding their overseas businesses, and to
facilitate additional coordinated marketing opportunities with respect to
multinational customers of the Company's carpet business. Guilford now has
marketing and distribution facilities in Canada and the United Kingdom, and
sales offices in Japan, Hong Kong and Singapore. Guilford's international
sales increased by 50% in 1994.
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<PAGE> 6
Guilford works closely with designers, architects and facility
planners, who influence the purchasing decisions of buyers in the office
interiors industry and also provide Guilford with market and design ideas that
are incorporated into its current and future product offerings. Guilford
maintains a design studio in Dudley, Massachusetts, which was relocated from
New York City at the end of 1993, to accommodate its design team and facilitate
coordination between its in-house designers and the design staffs of major
customers. The Company plans for David Oakey to expand his design services to
the fabric business as well.
Manufacturing. Guilford's manufacturing facilities are located in
Maine and Massachusetts. The production of synthetic and wool blended fabrics
is relatively intricate and requires many steps. Raw fiber is placed in
pressurized vats, and dyes and flame retardants are then forced into the fiber.
Particular attention is devoted to the dyeing process which requires a high
degree of expertise in order to achieve color consistency. Following dyeing,
the fiber is blended and proceeds through numerous steps, including carding,
spinning, cone winding, twisting, dressing, weaving and finishing. All raw
materials used by Guilford are readily available from a number of sources.
For three years, Guilford had seen its panel fabric market move toward
lighter weight, less expensive products, often beyond Guilford's effective
manufacturing range. In response, Guilford began a major capital investment
program in 1994, the largest in its history, to modernize its yarn
manufacturing processes. The program is designed to enhance Guilford's cost
effectiveness, reduce manufacturing cycle time, and enable Guilford to
reinforce its product leadership position with its OEM customers.
Guilford offers textile processing services through its Component
Technologies division in Grand Rapids, Michigan. Such services include the
lamination of fabrics onto substrates for pre-formed office furniture system
panels, facilitating the easy (and more cost effective) assembly of the system
components by Guilford's OEM customers.
Competition. Guilford competes in its markets on the basis of product
design, quality, reliability, price and service. By electing to concentrate on
the open plan office furniture systems market (and, more recently, the broader
commercial interiors markets), Guilford has been able to specialize its
manufacturing capabilities, product offerings and service functions, resulting
in a leading market position. Management believes that Guilford is one of the
world's largest manufacturers of panel fabric for use in open plan office
furniture systems.
Guilford has diversified its product offerings for the commercial
interiors markets to include a variety of non-panel fabrics, including
upholstery, wall coverings, ceiling fabrics and window treatments. The
competition in these markets is highly fragmented and includes both large,
diversified textile companies, many of which have greater financial resources
than the Company, as well as smaller, non-integrated specialty manufacturers.
CHEMICALS AND SPECIALTY PRODUCTS
Two closely related subsidiaries -- Interface Research Corporation and
Rockland React-Rite, Inc. -- are involved in the research, development,
manufacture, marketing and licensing of specialty chemical products. A third
subsidiary in this group, Pandel, Inc., produces vinyl carpet tile backing and
specialty mat and foam products. These subsidiaries also serve as the research
and development arm of the Company. While the chemicals and specialty products
group's revenues represent a relatively small portion of total Company
revenues, the group has the highest profit margins of any division.
The Company's leading chemical product is its antimicrobial chemical
compound, sold under the registered trademark Intersept. More recent product
development efforts by the group have focused on soil-resistant and
stain-inhibiting additives, with two products being brought to market.
Protekt(2)(TM) is a proprietary soil and stain retardant treatment that
protects the appearance of carpet for its effective service life. (In 1994, a
new chemical was developed by Rockland to enhance the power of Protekt(2).) A
companion product, Coffee Breaker(R), is a highly effective stain remover for
coffee and a number of other tough stains that are frequently encountered in
the workplace. In 1994, the group developed a water-proofing sheath for the
fiber optic cable industry, constructed from a super-absorbent polymer capable
of absorbing 500 times its weight in water. Management believes that the super
absorbent polymer will prove useful in a wide variety of applications.
Rockland manufactures the chemicals used and sold by the Company. The
Company's chemical manufacturing facilities are located in Georgia and Alabama.
Rockland produces Intersept both to fulfill the Company's obligations to
licensees and to meet the internal requirements of the Company's carpet and
interior fabrics operations. Rockland also enjoys a leading U.S. market share
in acrylic monomers, which provide much of the special resilient and
performance properties of golf balls as well as a host of other industrial
products. Rockland also produces a series of accelerators that speed the
curing process for rubber used in tires, hoses and other products.
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<PAGE> 7
The Company presently markets throughout the world carpet products
incorporating Intersept. IRC has granted licenses to other companies for the
use of Intersept in products that are noncompetitive with products produced by
the Company. Intersept is now being used in more than a dozen product
categories. Porter Paints, a division of Courtaulds Coatings, Inc., has a line
of Portersept(R) brand paints and sealers containing Intersept, and has added
an antimicrobial adhesive for vinyl wall coverings to its product offerings.
General Polymers Corporation incorporates Intersept into certain of its epoxy
and terrazzo flooring systems. AAF-McQuay, Inc. (formerly SnyderGeneral
Corporation) uses Intersept in its air filter products. In 1994, USG
Interiors, Inc. renewed its license to utilize Intersept in ceiling tile
products, and Rockland granted similar license rights to Armstrong World
Industries, Inc. The licensing arrangements are a component of the Company's
Envirosense program, a program designed, in part, to bring the proprietary
characteristics of Intersept to bear on a group of closely related workplace
environmental issues: Indoor Air Quality (IAQ), Sick Building Syndrome (SBS)
and Building Related Illness (BRI). Through a growing consortium of partners,
some marketing their own Intersept-enhanced products, the Company hopes to
contribute substantially to the resolution of these workplace concerns for the
benefit of its customers.
Experience to date indicates that Intersept provides residual
antimicrobial protection at a high level of effectiveness over long periods of
time with relatively moderate toxicity and, consequently, has commercial
potential in foreign and domestic markets for many applications other than the
products now being sold. Successful commercial development of Intersept in
other products is subject, however, not only to the usual competitive and
marketing factors involved in new product development, but also to registration
requirements under domestic and foreign laws, including the Federal
Insecticide, Fungicide and Rodenticide Act (FIFRA); and the various uses and
claims for each product utilizing Intersept are subject to review and approval
by governmental agencies before marketing. Intersept is registered with the
U.S. Environmental Protection Agency (EPA) for a variety of uses and certain
specific product claims. However, a number of proposed uses and claims have
not been registered, and the Company cannot predict with certainty whether
these uses and claims will be accepted by the EPA. Intersept has been approved
by regulatory authorities in the United Kingdom for incorporation into carpet
and other products, products which can then be marketed and distributed
throughout the European Union. In 1993, the company obtained approval to sell
Intersept in its additive form in Australia and Japan. The Company continues
to seek approvals in various other countries.
Pandel, which experienced strong growth in 1994, manufactures vinyl
carpet tile backing for certain of the Company's products as well as on a
contract basis for third party producers. Another leading product produced by
Pandel is Fatigue Fighter(R), an impact-absorbing modular flooring system
designed for use in places where people stand for extended periods. Pandel
also makes entrance mats, used to remove dirt and debris from footwear, and
static dissipative mats. Most of Pandel's products are sold through
independent dealers.
In the last two years, the Company has expanded its product offerings
to include cable management access flooring systems, which the Company now
produces and markets through a business unit called Interface Architectural
Resources. The initial product offering, marketed under the name Intercell(R),
is a low-profile (total height of less than three inches) cable management
flooring system, uniquely suited for use in the renovation of existing
buildings. In early 1995, the Company acquired the rights to the Interstitial
Systems(TM) access flooring product -- a patented, multiple plenum system that
serves to separate pressurized, climate-controlled air flow from the
electrical and telecommunications cables included within the same access
flooring system.
BACKLOG
The Company's backlog of unshipped orders was approximately
$78,500,000 at January 1, 1995, compared to approximately $65,400,000 at
January 2, 1994. Backlog, historically, is subject to significant fluctuations
due primarily to the timing of orders for individual large projects and
currency fluctuations. All of the backlog of orders at January 1, 1995 is
expected to be shipped during the current fiscal year.
PATENTS AND TRADEMARKS
The Company owns numerous patents in the United States and abroad on
its modular carpet and manufacturing processes and on the use of its Intersept
antimicrobial chemical agent in various products. The Company also holds
numerous United States and foreign patent applications relating to its
manufacturing processes and the use of Intersept. The duration of United
States patents is 17 years from issuance; the duration of patents issued in
other countries varies from country to country. The Company considers its
know-how and technology more important to its current business than patents
and, accordingly, believes that expiration of existing patents or nonissuance
of patents under pending applications would not have a material adverse effect
on its operations. However, the Company maintains an active patent and trade
secret program in order to protect its proprietary technology, know-how and
trade secrets.
- 6 -
<PAGE> 8
The Company also owns numerous trademarks in the United States and
abroad. Some of the more prominent registered trademarks of the Company
include: Interface, Heuga, Intersept, GlasBac, System Six, Guilford of Maine,
Bentley and Prince St. Technologies. Trademark registrations in the United
States are valid for a period of 10 years and are renewable for additional 10-
year periods as long as the mark remains in actual use. The duration of
trademarks registered in other countries varies from country to country.
RESEARCH, DEVELOPMENT AND DESIGN
The Company maintains an active research, development and design staff
of approximately 80 persons to improve products currently offered and to
develop and design new products in all areas of its business. The Company also
relies on the research and development efforts of its suppliers, particularly
in the areas of fibers, yarns and modular carpet backing materials.
FINANCIAL INFORMATION BY GEOGRAPHIC AREAS
Note 15 of the Company's Consolidated Financial Statements sets forth
information concerning the Company's sales, income and assets by geographic
areas. See Item 8.
EMPLOYEES
At March 15, 1995, the Company employed a total of approximately 4,660
employees. Of such employees, approximately 1,950 were clerical, sales,
supervisory and management personnel and the balance were manufacturing
personnel.
Certain of the Company's production employees in Australia and the
United Kingdom are represented by unions. As required by the laws of the
Netherlands, a Works Council, the members of which are Company employees, is
required to be consulted by management with respect to certain matters relating
to the Company's operations in that country, such as a change in control of
Interface Europe B.V., and the approval of such Council is required for certain
actions, including changes in compensation scales or employee benefits.
Management believes that its relations with the Works Council and all of its
employees are good.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, their ages as of March 15,
1995, and principal positions with the Company are as follows. Executive
officers serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL POSITION(S)
---- --- ---------------------
<S> <C> <C>
Ray C. Anderson 60 Chairman of the Board, President and Chief Executive Officer
Charles R. Eitel 45 Executive Vice President (President and CEO,
Floorcoverings Group) and Director
Brian L. DeMoura 49 Senior Vice President and Director
David Milton 59 Senior Vice President and Director
Royce R. Renfroe 48 Senior Vice President and Director
Don E. Russell 57 Senior Vice President and Director
C. Edward Terry 60 Senior Vice President and Director
Gordon D. Whitener 32 Senior Vice President
F. Colville Harrell 60 Vice President - Planning & Analysis
Daniel T. Hendrix 40 Vice President - Finance, Chief Financial Officer and Treasurer
David W. Porter 48 Vice President, General Counsel and Secretary
</TABLE>
Mr. Anderson founded the Company in 1973, and has served as the
Company's Chairman and Chief Executive Officer since its founding.
Mr. Eitel joined the Company in November 1993 as President of IFS and
Interface Americas, Inc. (a wholly-owned U.S. holding company), with
responsibility for the Company's modular carpet operations throughout the
Americas. He became a Senior Vice President of the Company in February 1994.
In October 1994, Mr. Eitel was appointed to the newly
- 7 -
<PAGE> 9
created position of Executive Vice President (President and CEO, Floorcoverings
Group), thereby assuming overall responsibility for the Company's worldwide
carpet business. From July 1987 until joining the Company, Mr. Eitel served as
President of the Floorcoverings Division (based in Dalton, Georgia) of Collins
& Aikman Corporation. Collins & Aikman is a diversified textile producer,
headquartered in New York.
Mr. DeMoura became a Senior Vice President of the Company and
President and Chief Executive Officer of Guilford in March 1994. From August
1990 until joining the Company, Mr. DeMoura served as President and CEO of
Fashion Fabrics of America, Inc., an Orangeburg, South Carolina based producer
of fabrics for the upscale men's and women's apparel markets. From December
1988 until January 1990, he served as Vice President and General Manager of the
Yarn Sales Division of Doran Textiles, Inc., a Shelby, North Carolina based
producer of novelty yarns for the apparel and home furnishing markets.
Mr. Milton joined the Company in January 1992 as a Senior Vice
President. Upon joining the Company, he also became President of Interface
Asia-Pacific, Inc. (a wholly-owned U.S. holding company) and assumed
responsibility for the Company's operations in Japan, China, Southeast Asia,
Australia, New Zealand and the Pacific Islands. Prior to joining the Company,
Mr. Milton was an independent management consultant.
Mr. Renfroe has served, for the past five years, as President and
Chief Executive Officer of Bentley Mills, which was acquired by the Company in
June 1993. Mr. Renfroe became a Senior Vice President of the Company in
February 1994.
Mr. Russell, a co-founder of the Company, has served in various
executive capacities since 1973. He became a Senior Vice President in 1986.
Mr. Russell assumed responsibility for the Company's European operations in
1991 when he became President of Interface Europe, Inc. (the Company's U.S.
holding company for its subsidiaries in Europe). Mr. Russell has served as
Managing Director of the Company's U.K. modular carpet subsidiary, Interface
Europe Ltd. (formerly Interface Flooring Systems, Ltd.), since 1989, and as
President and Chief Executive Officer of Interface Europe B.V. since November
1991.
Mr. Terry has been a Senior Vice President since joining the Company
in 1987. He has served as President of Rockland, IRC and Pandel since 1987,
1988 and 1990, respectively. He served as President of IFS and Interface
Americas, Inc. from February 1991 until November 1993.
Mr. Whitener jointed the Company in November 1993 as Senior Vice
President - Sales & Marketing of IFS. In October 1994, he became President and
Chief Executive Officer of IFS and Interface Americas, Inc., and assumed
responsibility for the Company's modular carpet operations throughout the
Americas. From April 1988 until joining the Company, Mr. Whitener served in
various sales management capacities with Collins & Aikman (Floorcoverings
Division), becoming Vice President - Marketing in March 1993.
Mr. Harrell joined the Company as a planning analyst in 1984, and
became Vice President - Planning and Analysis in 1986. He served as Senor Vice
President - Operations of IFS from September 1992 until October 1994, at which
time he resumed his current position with the parent Company.
Mr. Hendrix joined the Company as Financial Manager in 1983. He
became Treasurer of the Company in 1984, Chief Financial Officer in 1985 and
Vice President - Finance in 1986.
Mr. Porter has served as Vice President and General Counsel since
joining the Company in 1986, and as Secretary since 1987.
ITEM 2. PROPERTIES
The Company now maintains its corporate headquarters in Atlanta,
Georgia. The Company's modular and broadloom carpet manufacturing facilities
are located in Atlanta, LaGrange and West Point, Georgia; City of Industry,
California; Athens, Tennessee; Scherpenzeel, the Netherlands; Shelf, England;
Sanquhar, Scotland; Craigavon, Northern Ireland; Ontario (Belleville), Canada;
and Picton, Australia. The Atlanta manufacturing facility is leased by Prince
Street. Prince Street is building a new plant in Cartersville, Georgia, and
expects to relocate from the leased facility by late 1995. The Company is also
building a new carpet tile plant in close proximity to Bangkok, Thailand, which
should be operational by early 1996.
The Company's interior fabrics production facilities are located in
Maine (Guilford, Eastport and Newport), Massachusetts (Dudley and East Douglas)
and Michigan (Grand Rapids), and the Company's chemical and specialty products
manufacturing plants are located in Georgia (Cartersville and Rockmart) and
Alabama (Chatom).
- 8 -
<PAGE> 10
The Company owns all of its manufacturing facilities, except
Guilford's facility in Grand Rapids, Michigan, the Prince Street and Pandel
facilities in Atlanta and Cartersville, Georgia, respectively, and Bentley
Mills' facility in City of Industry, California, which are leased. The Company
believes that its manufacturing facilities are sufficient for its present
operations.
The Company maintains marketing offices in 82 locations in 42
countries and distribution facilities in 19 locations in nine countries. Most
of the marketing locations and many of the distribution facilities are leased.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any material pending legal proceedings
involving it or any of its property.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
The information concerning the market prices for the Company's Class A
Common Stock and dividends on the Company's Common Stock included in Notes 10
and 16 of the Notes to the Company's Consolidated Financial Statements in the
Company's 1994 Annual Report to Shareholders is incorporated herein by
reference. As of March 22, 1995, the Company had 569 holders of record of its
Class A Common Stock and 53 holders of record of its Class B Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Information on page 55 of the Company's 1994 Annual
Report to Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and
Results of Operations on pages 35 through 38 of the Company's 1994 Annual
Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The Consolidated Financial Statements and the Report of Independent
Certified Public Accountants included on pages 39 through 54 of the Company's
1994 Annual Report to Shareholders are incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
- 9 -
<PAGE> 11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the caption "Nomination and Election
of Directors" in the Company's definitive Proxy Statement for the Company's
1995 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A not later than 120 days after
the end of the Company's 1994 fiscal year, is incorporated herein by reference.
Pursuant to Instruction 3 to Paragraph (b) of Item 401 of Regulation S-K,
information relating to the executive officers of the Company is included in
Item 1 of this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption "Executive Compensation
and Related Items" in the Company's definitive Proxy Statement for the
Company's 1995 Annual Meeting of Shareholders, to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days
after the end of the Company's 1994 fiscal year, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the caption "Principal Shareholders
and Management Stock Ownership" in the Company's definitive Proxy Statement for
the Company's 1995 Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A not later than
120 days after the end of the Company's 1994 fiscal year, is incorporated
herein by reference.
For purposes of determining the aggregate market value of the
Company's voting stock held by non-affiliates, shares held of record by
directors and executive officers of the Company have been excluded. The
exclusion of such shares is not intended to, and shall not, constitute a
determination as to which persons or entities may be "affiliates" of the
Company as that term is defined under federal securities laws.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the captions "Compensation Committee
Interlocks and Insider Participation" (second paragraph only) and "Certain
Relationships and Related Transactions" in the Company's definitive Proxy
Statement for the Company's 1995 Annual Meeting of Shareholders, to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A not
later than 120 days after the end of the Company's 1994 fiscal year, is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following Consolidated Financial Statements and Notes thereto of
Interface, Inc. and subsidiaries and related Report of Independent Certified
Public Accountants contained in the Company's 1994 Annual Report to
Shareholders, are incorporated by reference in Item 8 of this Report:
Consolidated Balance Sheets -- January 1, 1995 and January 2, 1994
Consolidated Statements of Income -- years ended January 1, 1995,
January 2, 1994 and January 3, 1993
Consolidated Statements of Shareholders' Equity -- years ended January
1, 1995, January 2, 1994 and January 3, 1993
Consolidated Statements of Cash Flows -- years ended January 1, 1995,
January 2, 1994 and January 3, 1993
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
- 10 -
<PAGE> 12
2. FINANCIAL STATEMENT SCHEDULES
The following Consolidated Financial Statement Schedules of
Interface, Inc. and subsidiaries and related Report of Independent Certified
Public Accountants are included as part of this Report (see page 14):
Report of Independent Certified Public Accountants
Schedule II -- Valuation and Qualifying Accounts and Reserves
3. EXHIBITS
The following exhibits are included as part of this Report:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
2.1 Acquisition Agreement dated December 3, 1993, by and among the
Company, Robert S. Weiner, Randall J. Hatch, Nancy O'Donnell,
John O'Donnell, Jacqueline A. Colando, Traccton Corp., Prince
Street Holding Company, Steven C. Andrade and Robert D.
Williams (included as Exhibit 99(a) to the Company's
registration statement on Form S-3, File No. 33-74076,
previously filed with the Commission and incorporated herein by
reference).
2.2 Agreement for Purchase of Capital Stock of Bentley Mills, Inc.,
dated June 8, 1993 (included as Exhibit 2.1 to the Company's
current report on Form 8-K, filed with the Commission on July
7, 1993 and incorporated herein by reference).
3.1 Articles of Incorporation (composite as of September 8, 1988)
(included as Exhibit 3.1 to the Company's annual report on Form
10-K for the year ended January 3, 1993 (the "1992 10-K")
previously filed with the Commission and incorporated herein by
reference) and Articles of Amendment (Series A Preferred Stock
Designation), dated June 17, 1993 (included as Exhibit 4.1 to
the Company's current report on Form 8-K, filed with the
Commission on July 7, 1993 and incorporated herein by
reference).
3.2 Bylaws, as amended (included as Exhibit 3.2 to the Company's
quarterly report on Form 10-Q for the quarter ended April 1,
1990, previously filed with the Commission and incorporated
herein by reference).
4.1 See Exhibits 3.1 and 3.2 for provisions in the Company's
Articles of Incorporation, as amended, and Bylaws defining the
rights of holders of Common Stock of the Company.
4.2 Form of Indenture between the Company and The Citizens &
Southern National Bank (now known as NationsBank of Georgia,
N.A.), as Trustee (including Specimen Debenture as Exhibit A)
(included as Exhibit 4(a) to the Company's registration
statement on Form S-3, File No. 33-23903, previously filed with
the Commission and incorporated herein by reference).
4.3 Registration Rights Agreement (holders of Series A Preferred
Stock), dated June 22, 1993 (included as Exhibit 4.2 to the
Company's current report on Form 8-K, filed with the Commission
on July 7, 1993 and incorporated herein by reference).
10.1 Factoring Agreement, dated April 19, 1989, between BancBoston
Financial Company and Interface Flooring Systems, Inc.
(included as Exhibit 10.1 to the Company's annual report on
Form 10-K for the year ended December 30, 1990, previously
filed with the Commission and incorporated herein by
reference).
10.2 Promissory Note of the Company and Interface Flooring Systems,
Inc., dated March 15, 1989, payable to the order of BancBoston
Financial Company (included as exhibit 10.2 to the Company's
annual report on Form 10-K for the year ended January 1, 1989
(the "1988 10-K"), previously filed with the Commission and
incorporated herein by reference), and First Amendment, dated
January 4, 1990, Second Amendment, dated June 13, 1991, and
Third Amendment, dated June 15, 1992, to Promissory Note of the
Company and Interface Flooring Systems, Inc., dated March 15,
1989, payable to BancBoston Financial Company (included as
Exhibit 10.2 to the Company's quarterly report on Form 10-Q for
the quarter ended July 4, 1993 previously filed with the
Commission and incorporated herein by reference).
- 11 -
<PAGE> 13
10.3 Plan for Reimbursement of Medical and Dental Care Expenses,
dated May 3, 1978 (included as Exhibit 10.19 to the Company's
registration statement on Form S-1, File No. 2-82188,
previously filed with the Commission and incorporated herein by
reference).*
10.4 Salary Continuation Plan, dated May 7, 1982 (included as
Exhibit 10.20 to the Company's registration statement on Form
S-1, File No. 2-82188, previously filed with the Commission and
incorporated herein by reference).*
10.5 Salary Continuation Agreement (included as Exhibit 10.23 to the
Company's registration statement on Form S-1, File No. 2-82188,
previously filed with the Commission and incorporated herein by
reference).*
10.6 Amendment No. 3, dated July 28, 1992, to Interface, Inc. Key
Employee Stock Option Plan dated March 1, 1983 (included as
Exhibit 10.6 to the 1992 10-K, previously filed with the
Commission and incorporated herein by reference).*
10.7 Interface, Inc. Key Employee Stock Option Plan (1993),
effective as of March 1, 1993 (included as Exhibit 10.7 to the
1992 10-K, previously filed with the Commission and
incorporated herein by reference), and Amendment No. 1 thereto,
as approved by the Company on February 22, 1994.*
10.8 Interface, Inc. Offshore Stock Option Plan (included as Exhibit
10.15 to the Company's 1988 10-K, previously filed with the
Commission and incorporated herein by reference), and Amendment
No. 1 thereto (included as Exhibit 10.11 to the Company's
annual report on Form 10-K for the year ended December 29,
1991, previously filed with the Commission and incorporated
herein by reference).*
10.9 Voting Agreement, dated April 13, 1993, among certain
shareholders of the Company (included as Exhibit 10.1 to the
Company's quarterly report on Form 10-Q for the quarter ended
April 4, 1993, previously filed with the Commission and
incorporated herein by reference).
10.10(a) Second Amended and Restated Credit Agreement, dated as of June
11, 1993, among the Company (and certain of its direct and
indirect subsidiaries), Trust Company Bank and The First
National Bank of Chicago (included as Exhibit 10.1 to the
Company's quarterly report on Form 10-Q for the quarter ended
July 4, 1993, previously filed with the Commission and
incorporated herein by reference); First Amendment to Second
Amended and Restated Credit Agreement, dated as of December 1,
1993 (included as Exhibit 99(b) to the Company's registration
statement on Form S-3, File No. 33-74076, previously filed with
the Commission and incorporated herein by reference); and
Second Amendment to Second Amended and Restated Credit
Agreement, dated June 13, 1994 (included as Exhibit 10.1 to the
Company's quarterly report on Form 10-Q for the quarter ended
July 3, 1994, previously filed with the Commission and
incorporated herein by reference).
(b) Credit Agreement, dated as of January 9, 1995, among the
Company (and certain direct and indirect subsidiaries), Trust
Company Bank and the First National Bank of Chicago.
10.11(a) Loan Agreement, dated as of November 1, 1989, between Interface
Flooring Systems, Inc. and West Point Development Authority
(included as Exhibit 10.24(a) to the Company's annual report on
Form 10-K for the year ended December 31, 1989 (the "1989
10-K"), previously filed with the Commission and incorporated
herein by reference).
(b) Indenture of Trust, dated as of November 1, 1989, between West
Point Development Authority and Trust Company Bank, as Trustee
(included as Exhibit 10.24(b) to the Company's 1989 10-K,
previously filed with the Commission and incorporated herein by
reference).
(c) Letter of Credit Agreement, dated as of November 1, 1989, among
Interface Flooring Systems, Inc., the Company and Trust Company
Bank (included as Exhibit 10.24(c) to the Company's 1989 10-K,
previously filed with the Commission and incorporated herein by
reference).
(d) Irrevocable Letter of Credit, dated November 2, 1989,
established by Trust Company Bank in favor of Trust Company
Bank, as Trustee, in the initial principal amount of $4,000,000
(included as Exhibit 10.24(d) to the Company's 1989 10-K,
previously filed with the Commission and incorporated herein by
reference).
(e) Pledge and Security Agreement, dated as of November 1, 1989, by
Interface Flooring Systems, Inc. in favor of Trust Company Bank
(included as Exhibit 10.24(e) to the Company's 1989 10-K,
previously filed with the Commission and incorporated herein by
reference).
- 12 -
<PAGE> 14
(f) Security Deed and Security Agreement, dated as of November 1,
1989, between Interface Flooring Systems, Inc. and Trust
Company Bank, as Credit Bank (included as Exhibit 10.24(f) to
the Company's 1989 10-K, previously filed with the Commission
and incorporated herein by reference).
10.12 Revolving Credit Loan Agreement, dated as of August 5, 1991,
between Interface Flooring Systems, Inc. and Trust Company Bank
(included as Exhibit 10.2 to the Company's quarterly report on
Form 10-Q for the quarter ended September 29, 1991, previously
filed with the Commission and incorporated herein by
reference); Amendment No. 1 thereto dated June 30, 1992
(included as Exhibit 10.19 to the Company's 1992 10-K,
previously filed with the Commission and incorporated herein by
reference); Second Amendment, dated August 5, 1993 (included as
Exhibit 10.1 to the Company's quarterly report on Form 10-Q for
the quarter ended October 3, 1993, previously filed with the
Commission and incorporated herein by reference); Third
Amendment, dated June 15, 1994 (included as Exhibit 10.2 to the
Company's quarterly report on Form 10-Q for the quarter ended
July 3, 1994, previously filed with the Commission and
incorporated herein by reference; and Fourth Amendment, dated
August 5, 1994 (included as Exhibit 10.1 to the Company's
quarterly report on Form 10-Q for the quarter ended October 2,
1994, previously filed with the Commission and incorporated
herein by reference).
10.13 Employment Agreement of Charles R. Eitel (included as Exhibit
10.1 to the Company's quarterly report on Form 10-Q for the
quarter ended April 3, 1994, previously filed with the
Commission and incorporated herein by reference).*
10.14 Employment Agreement of Royce R. Renfroe (included as Exhibit
10.2 to the Company's quarterly report on Form 10-Q for the
quarter ended April 3, 1994, previously filed with the
Commission and incorporated herein by reference).*
10.15 Employment Agreement of David Milton (included as Exhibit 10.3
to the Company's quarterly report on Form 10-Q for the quarter
ended July 3, 1994, previously filed with the Commission and
incorporated herein by reference).*
10.16 Employment Agreement of Brian L. DeMoura (included as Exhibit
10.4 to the Company's quarterly report on Form 10-Q for the
quarter ended July 3, 1994, previously filed with the
Commission and incorporated herein by reference).*
10.17 Employment Agreement of Donald E. Russell.*
13 Printer's Proof of Annual Report to Shareholders for the year
ended January 1, 1995, which contains the manually executed
accountants' report covering the financial statements in such
Annual Report that are incorporated into this annual report on
Form 10-K by reference. With the exception of information
expressly incorporated herein by direct reference thereto, the
Annual Report to Shareholders for the year ended January 1,
1995 is not deemed to be filed as part of this Report.
21 Subsidiaries of the Company.
23 Consent of BDO Seidman to the incorporation by reference of
certain reports dated February 22, 1995 into the prospectuses
constituting parts of the Company's registration statements on
Form S-8 (File Numbers 33-28305 and 33-28307) and on Form S-3
(File No. 33-74076).
27 Financial Data Schedule.
_______________________________
* Management contract or compensatory plan or agreement required to be
filed pursuant to Item 14(c) of this Report.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the fourth
quarter of the fiscal year covered by this Report.
- 13 -
<PAGE> 15
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Interface, Inc.
LaGrange, Georgia
The audits referred to in our Report dated February 22, 1995 relating to
the Consolidated Financial Statements of Interface, Inc. and subsidiaries,
incorporated in Item 8 of the Form 10-K by reference to the Annual Report to
Shareholders for the fiscal year ended January 1, 1995, included the audit of
Financial Statement Schedule II (Valuation and Qualifying Accounts and
Reserves) set forth in the Form 10-K. The Financial Statement Schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion on the Financial Statement Schedule.
In our opinion, such Schedule presents fairly, in all material respects,
the information set forth therein.
BDO SEIDMAN
Atlanta, Georgia
February 22, 1995
INTERFACE, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
------------------------------------------------------------------------------------------------------------------------------------
Balance at Charged to Charged to Balance at
beginning costs and other Deductions end of
of year expenses(a) accounts (describe) year
------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended:
January 1, 1995 $5,771 $3,562(b) $ -- $2,832(d) $6,501
====== ====== ======= ====== ======
January 2, 1994 $3,386 $4,026(c) $ -- $1,641(d) $5,771
====== ====== ======= ====== ======
January 3, 1993 $4,241 $2,120 $ -- $2,975(d) $3,386
====== ====== ======= ====== ======
</TABLE>
_________________________________
(a) Includes changes in foreign currency exchange rates.
(b) Includes Prince Street allowance of $780 at acquisiton date.
(c) Includes Bentley Mills allowance of $1,300 at acquisition date.
(d) Write off bad debt.
(All other Schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are omitted because they
are either not applicable or the required information is shown in the Company's
Consolidated Financial Statements or the Notes thereto.)
- 14 -
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
INTERFACE, INC.
By: /s/ Ray C. Anderson
-----------------------------------------------------------------
Ray C. Anderson
Chairman of the Board,
President and Chief
Executive Officer
</TABLE>
Date: March 29, 1995
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Ray C. Anderson as attorney-in-fact, with power
of substitution, for him in any and all capacities, to sign any amendments to
this Report on Form 10-K, and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Ray C. Anderson Chairman of the Board, President and Chief March 29, 1995
--------------------------------------- Executive Officer (Principal Executive Officer)
Ray C. Anderson
/s/ Daniel T. Hendrix Vice President - Finance, Chief Financial Officer and
---------------------------------------- Treasurer (Principal Financial and Accounting Officer) March 29, 1995
Daniel T. Hendrix
/s/ Brian L. DeMoura Director March 29, 1995
----------------------------------------
Brian L. DeMoura
/s/ Charlie R. Eitel Director March 29, 1995
-------------------------------------------
Charles R. Eitel
/s/ David Milton Director March 29, 1995
------------------------------------------
David Milton
/s/ Royce R. Renfroe Director March 29, 1995
------------------------------------------
Royce R. Renfroe
/s/ Donald E. Russell Director March 29, 1995
------------------------------------------
Donald E. Russell
/s/ C. Edward Terry Director March 29, 1995
------------------------------------------
C. Edward Terry
/s/ Carl I. Gable Director March 29, 1995
--------------------------------------------
Carl I. Gable
/s/ June M. Henton Director March 29, 1995
----------------------------------------
June M. Henton
/s/ J. Smith Lanier, II Director March 29, 1995
------------------------------------------
J. Smith Lanier, II
/s/ Leonard G. Saulter Director March 29, 1995
--------------------------------------
Leonard G. Saulter
/s/ David G. Thomas Director March 29, 1995
----------------------------------------
David G. Thomas
/s/ Clarinus C.Th. van Andel Director March 29, 1995
--------------------------------------
Clarinus C.Th. van Andel
</TABLE>
- 15 -
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBER
------ ---------------------- ------
<S> <C>
10.10(b) Credit Agreement, dated as of January 9, 1995, among the Company (and certain
direct and indirect subsidiaries), Trust Company Bank and the First National Bank
of Chicago.
10.17 Employment Agreement of Donald E. Russell.*
13 Printer's Proof of Annual Report to Shareholders for the year ended January 1,
1995, which contains the manually executed accountants' report covering the
financial statements in such Annual Report that are incorporated into this annual
report on Form 10-K by reference. With the exception of information expressly
incorporated herein by direct reference thereto, the Annual Report to Shareholders
for the year ended January 1, 1995 is not deemed to be filed as part of this Report.
21 Subsidiaries of the Company.
23 Consent of BDO Seidman to the incorporation by reference of certain reports
dated February 22, 1995 into the prospectuses constituting parts of the Company's
registration statements on Form S-8 (File Numbers 33-28305 and 33-28307) and on
Form S-3 (File No. 33-74076).
27 Financial Data Schedule. (for SEC use only)
</TABLE>
_______________________________
* Management contract or compensatory plan or agreement required to be filed
pursuant to Item 14(c) of this Report.
<PAGE> 1
EXHIBIT 10.10(B)
================================================================================
CREDIT AGREEMENT
dated as of JANUARY 9, 1995
among
INTERFACE, INC.,
INTERFACE SCHERPENZEEL B.V.,
INTERFACE EUROPE LIMITED,
THE LENDERS LISTED HEREIN,
TRUST COMPANY BANK
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Agents,
and
TRUST COMPANY BANK,
as Collateral Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
====
<S> <C> <C>
ARTICLE I. DEFINITIONS; CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Accounting Terms and Determination . . . . . . . . . . . . . . . . . . . . . . . 31
Section 1.03. Other Definitional Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 1.04. Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE II. TERM LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.01. Amount of Term Loans; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 32
Section 2.02. Notes; Repayment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.03. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE III. REVOLVING LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.01. Commitment; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.02. Notes; Repayment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.03. Voluntary Reduction of Revolving Loan
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.04. Mandatory Reductions of Revolving Loan
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IV. MULTICURRENCY LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.01. Multicurrency Loan Commitments; Use of
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.02. Notes; Repayment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.03. Voluntary Reduction of Multicurrency
Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.04. Mandatory Reduction of Multicurrency
Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V. GENERAL LOAN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.01. Funding Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.02. Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.03. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.04. Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.06. Voluntary Prepayments of Borrowings . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.07. Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.08. Interest Rate Not Ascertainable, etc. . . . . . . . . . . . . . . . . . . . . . 56
Section 5.09. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 5.10. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
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Section 5.11. Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 5.12. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 5.13. Failure to Pay in Appropriate Currency . . . . . . . . . . . . . . . . . . . . . 60
Section 5.14. Assumptions Concerning Funding of
Fixed Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.15. Apportionment of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.16. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.17. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.18. Benefits to Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.19. Limitation on Certain Payment
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VI. CONDITIONS TO BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.01. Conditions Precedent to Initial Loans . . . . . . . . . . . . . . . . . . . . . 63
Section 6.02. Conditions to Initial Loans to
Europe Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.03. Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE VII. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.01. Corporate Existence; Compliance with
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.02. Corporate Power; Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.03. Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.04. No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.05. No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.06. Investment Company Act, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.07. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.08. Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.09. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.10. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.11. No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.13. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.14. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 7.15. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 7.16. Patents, Trademarks, Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.17. Ownership of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.18. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.19. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.20. Intercompany Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.21. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.22. Payment or Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 7.23. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE VIII. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.01. Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.02. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.03. Payment of Taxes and Claims, Etc. . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.04. Keeping of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.05. Visitation, Inspection, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.06. Insurance; Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.07. Reporting Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 8.08. Currency Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
ii
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<TABLE>
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Section 8.09. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 8.10. Notices Under Certain Other Indebtedness . . . . . . . . . . . . . . . . . . . . 86
Section 8.11. Additional Credit Parties and Collateral . . . . . . . . . . . . . . . . . . . . 87
Section 8.12. Closing of Accounts Receivable Facility . . . . . . . . . . . . . . . . . . . . 87
ARTICLE IX. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 9.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 9.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.03. Mergers, Acquisitions, Sales, Etc. . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.04. Dividends, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 9.05. Investments, Loans, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 9.06. Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 9.07. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 9.08. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 9.09. Changes in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 9.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 9.11. Additional Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 9.12. Limitation on Payment Restrictions
Affecting Consolidated Companies . . . . . . . . . . . . . . . . . . . . . 96
Section 9.13. Actions Under Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE X. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 10.01. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 10.02. Covenants Without Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 10.03. Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 10.04. Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 10.05. Non-Payments of Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 97
Section 10.06. Defaults Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 10.07. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 10.08. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 10.09. Money Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 10.10. Ownership of Credit Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 10.11. Change in Control of Interface . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 10.12. Default Under Other Credit Documents . . . . . . . . . . . . . . . . . . . . . . 100
Section 10.13. Default Under Interest Rate Contract
or Currency Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 10.14. Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 10.15. Accounts Receivable Facility . . . . . . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE XI. THE CO-AGENTS; COLLATERAL AGENT . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 11.01. Appointment of Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 11.02. Appointment of Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 11.03. Nature of Duties of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 11.04. Lack of Reliance on the Agents . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 11.05. Certain Rights of the Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 11.06. Reliance by Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 11.07. Indemnification of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 11.08. The Agents in their Individual
Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
</TABLE>
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<TABLE>
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Section 11.09. Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 11.10. Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 11.11. Interests of FNBC and its Affiliates . . . . . . . . . . . . . . . . . . . . . . 106
ARTICLE XII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 12.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 12.02. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 12.03. No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 12.04. Payment of Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 12.05. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.06. Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.07. Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 12.08. Independent Nature of Lenders' Rights . . . . . . . . . . . . . . . . . . . . . 115
Section 12.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 12.10. Effectiveness; Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 12.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 12.12. Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 12.13. Change in Accounting Principles,
Fiscal Year or Tax Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 12.14. Headings Descriptive; Entire Agreement . . . . . . . . . . . . . . . . . . . . . 116
Section 12.15. Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 12.16. Dollar Equivalent Computations . . . . . . . . . . . . . . . . . . . . . . . . . 117
Section 12.17. Refinancing of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 118
SCHEDULES
=========
SCHEDULE 4.01 List of Payment Offices/FBC Accounts
SCHEDULE 7.01 Organization and Ownership of
Subsidiaries
SCHEDULE 7.05 Certain Pending and Threatened
Litigation
SCHEDULE 7.08(A) Environmental Compliance
SCHEDULE 7.08(B) Environmental Notices
SCHEDULE 7.11 Burdensome Restrictions
SCHEDULE 7.12 Tax Filings and Payments
SCHEDULE 7.13 Material Subsidiaries
SCHEDULE 7.15 Employee Benefit Matters
SCHEDULE 7.16 Patent, Trademark, License, and
Other Intellectual Property
Matters
SCHEDULE 7.17 Ownership of Properties
SCHEDULE 7.18 Refinanced Indebtedness
SCHEDULE 7.20 Intercompany Loans
SCHEDULE 7.21 Labor and Employment Matters
SCHEDULE 7.22 Dividend Restrictions
SCHEDULE 8.09 Financial Covenant Calculations
First Quarter 1992
SCHEDULE 9.01(B) Existing Term Indebtedness
SCHEDULE 9.01(J) Existing Lines of Credit, Revolvers,
and Overdraft Facilities
SCHEDULE 9.02 Existing Liens
SCHEDULE 10.11 Existing Shareholder Group
</TABLE>
iv
<PAGE> 6
EXHIBITS
========
<TABLE>
<S> <C> <C>
EXHIBIT A - Form of Term Note
EXHIBIT B - Form of Domestic Revolver Note
EXHIBIT C-1 - Form of Multicurrency Note
(Scherpenzeel B.V.)
EXHIBIT C-2 - Form of Multicurrency Note
(Europe Limited)
EXHIBIT D-1 - Form of Interface Guaranty Agreement
EXHIBIT D-2 - Form of Subsidiary Guaranty Agreement
EXHIBIT E-1 - Form of Interface Pledge Agreement
EXHIBIT E-2 - Form of Guilford Pledge Agreement
EXHIBIT E-3 - Form of Interface Europe Inc. Pledge
Agreement Interface Scherpenzeel
B.V.)
EXHIBIT E-4 - Form of Interface Europe Inc. Pledge
Agreement (Interface Europe Limited)
EXHIBIT E-5 - Form of Interface Asia-Pacific
Pledge Agreement
EXHIBIT E-6 - Form of Interface Asia-Pacific
Pledge Agreement (Interface
Heuga Australia Pty Limited)
EXHIBIT F - Form of Closing Certificate
EXHIBIT G-1 - Form of Opinion of Kilpatrick & Cody
EXHIBIT G-2 - Form of Opinion of English Counsel to
Interface
EXHIBIT G-3 - Form of Opinion of Dutch Counsel to
Interface
EXHIBIT H - Form of Assignment and Acceptance
EXHIBIT I - Form of Contribution Agreement
EXHIBIT J - Form of Escrow Letter and Security
Agreement
</TABLE>
-v-
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT made and entered into as of January 9,
1995, by and among INTERFACE, INC., a Georgia corporation ("Interface"),
INTERFACE SCHERPENZEEL B.V., a "besloten vennootschap met beperkte
aansprakelijkheid" (private company with limited liability) incorporated and
existing under the laws of The Netherlands with its registered seat in
Scherpenzeel, Gld., The Netherlands ("Scherpenzeel B.V."), INTERFACE EUROPE
LIMITED, a private company limited by shares organized and existing under the
laws of England and Wales ("Europe Limited"; Interface, Scherpenzeel B.V. and
Europe Limited referred to collectively herein as the "Borrowers"), TRUST
COMPANY BANK, a banking corporation organized under the laws of the State of
Georgia ("TCB"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association ("FNBC"), the other banks and lending institutions listed on the
signature pages hereof, and any assignees of TCB, FNBC, or such other banks and
lending institutions which become "Lenders" as provided herein (TCB, FNBC, and
such other banks, lending institutions, and assignees referred to collectively
herein as the "Lenders"), TRUST COMPANY BANK, in its capacity as agent for
those Lenders having Revolving Loan Commitments or Term Loan Commitments, or
both, or having outstanding Revolving Loans or Term Loans, or both, as provided
herein, and each successor agent for such Lenders as may be appointed from time
to time pursuant to Article XI hereof (the "Domestic Agent"), THE FIRST
NATIONAL BANK OF CHICAGO, in its capacity as agent for those Lenders having
outstanding Multicurrency Loan Commitments or having outstanding Multicurrency
Loans as provided herein, and each successor agent for such Lenders as may be
appointed from time to time pursuant to Article XI hereof (the "Multicurrency
Agent"; the Domestic Agent and the Multicurrency Agent referred to collectively
herein as the "Co-Agents"), and TRUST COMPANY BANK, in its capacity as
collateral agent for the Co-Agents and Lenders and each successor collateral
agent as may be appointed from time to time pursuant to Article XI hereof (the
"Collateral Agent");
W I T N E S S E T H:
WHEREAS, Interface, Heuga Nederland B.V. (now Scherpenzeel
B.V.), Heuga UK Limited, Interface Flooring Systems Limited (now Europe
Limited), the Lenders listed therein, Trust Company Bank and The First National
Bank of Chicago, as Co-Agents, and Trust Company Bank, as Collateral Agent, are
parties to that certain Second Amended and Restated Credit Agreement dated as
of June 11, 1993, as amended by that certain First Amendment to Second Amended
and Restated Credit Agreement dated as of December 1, 1993, and by that certain
Second Amendment to Second Amended and Restated Credit Agreement dated as of
June 13, 1994 (as so amended, the "1993 Credit Agreement");
<PAGE> 8
WHEREAS, Interface, Scherpenzeel B.V., and Europe Limited
desire to restructure the credit facilities outstanding under the 1993 Credit
Agreement by (i) increasing the Revolving Loan Commitments thereunder from
$95,000,000 to $140,000,000, (ii) increasing the Multicurrency Loan Commitments
thereunder from $50,000,000 to $60,000,000, (iii) reducing and consolidating
the Series A Term Loans and Series B Term Loans thereunder with term loans
aggregating $50,000,000, and (iv) providing for a letter of credit facility in
the amount of $40,000,000 as a sub-facility of the $140,000,000 revolving
credit facility;
WHEREAS, the Lenders, the Co-Agents, and the Collateral Agent
have agreed to restructure the existing credit facilities and provide the new
letter of credit facility as aforesaid, subject to the terms, conditions and
requirements set forth in this Agreement;
WHEREAS, the parties desire to amend certain other provisions
of the 1993 Credit Agreement as more particularly set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Interface, Scherpenzeel B.V., Europe Limited, the
Lenders, the Co-Agents and the Collateral Agent agree as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
SECTION 1.01. DEFINITIONS. In addition to the other terms
defined herein, the following terms used herein shall have the meanings herein
specified (to be equally applicable to both the singular and plural forms of
the terms defined):
"Accounts Receivable Facility" shall mean the receivables
financing facility evidenced by the Receivables Transfer Agreements, the
Receivables Sale Agreement and the Receivables Backup Purchase Agreement
pursuant to which certain of the Consolidated Companies shall sell accounts
receivable to Interface, Interface SPC, SPARCC and, under certain
circumstances, to the Lenders.
"Adjusted Working Capital" shall mean, as of the date of any
determination (i) the sum of all inventory, prepaid expenses and accounts
receivable of the Consolidated Companies, plus (ii) the aggregate outstanding
balance of those accounts receivable previously sold by Interface SPC pursuant
to the Accounts Receivable Facility, minus (iii) the sum of all accounts
payable and accrued expenses of the Consolidated Companies, in each case,
determined on a consolidated basis in conformity with GAAP.
"Adjusted LIBO Rate" shall mean, with respect to each Interest
Period for a Euro Advance, the sum of (i) the rate obtained by dividing (a)
LIBOR for such Interest Period by (b) a percentage equal to 1 minus the then
stated maximum rate (stated as
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<PAGE> 9
a decimal) of all reserves requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or against any successor category of
liabilities as defined in Regulation D), plus (ii) if the relevant Eurocurrency
Advance is in British pounds sterling, a percentage sufficient to compensate
the Multicurrency Lenders for the cost of complying with any reserves,
liquidity and/or special deposit requirements of the Bank of England directly
or indirectly affecting the maintenance or funding of such Advances.
"Administrative Office" shall mean that office of the
Multicurrency Agent designated as its "Administrative Office" on the signature
page for such Multicurrency Agent, or such other office as may hereafter be
designated in writing by the Multicurrency Agent to Interface as being the
"Administrative Office" for purposes of this Agreement.
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under (i) the Term Loans or Revolving Credit Loans,
which Advance shall be made or outstanding as a Base Rate Advance, CD Rate
Advance or Eurodollar Advance, as the case may be, or (ii) the Multicurrency
Loans, which Advance shall be made or outstanding as a Base Rate Advance
(which Advance shall be made in U.S. Dollars) or Eurocurrency Advance (which
Advance may be made in any Currency), as the case may be.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person.
"Aggregate L/C Outstandings" shall mean, at any time with respect
to all outstanding Letters of Credit, the sum of the L/C Outstandings for each
Letter of Credit.
"Agents" shall mean, collectively, the Co-Agents and the
Collateral Agent.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, restated, or supplemented from time to time.
"Applicable Margin" shall mean:
(i) with respect to all outstanding Revolving Loans and
Multicurrency Loans during any of Interface's fiscal quarters from and
after the Closing Date, the percentage determined for such fiscal quarter
from the chart set forth below based on
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<PAGE> 10
Interface's Interest Coverage Ratio and Leverage Ratio determined as
of the last day of the second fiscal quarter immediately preceding the
then current fiscal quarter:
INTEREST COVERAGE RATIO
<TABLE>
<CAPTION>
LESS THAN GREATER THAN GREATER THAN
OR EQUAL 3.0:1.00 AND LESS OR EQUAL
LEVERAGE RATIO TO 3.0:1.0 THAN 5.0:1.0 TO 5.0:1.0
============== ========== ================= ============
<S> <C> <C> <C>
Greater than or
equal to 50% 1.000% 0.875% 0.750%
Greater than 35%
and less than
50% 0.875% 0.750% 0.500%
Less than or
equal to 35% 0.750% 0.500% 0.375%
</TABLE>
and (ii) with respect to all outstanding Term Loans during any of
Interface's fiscal quarters from and after the Closing Date, the
percentage determined for such fiscal quarter from the chart set forth
below based on Interface's Interest Coverage Ratio and Leverage Ratio
determined as of the last day of the second fiscal quarter immediately
preceding the then current fiscal quarter:
INTEREST COVERAGE RATIO
<TABLE>
<CAPTION>
LESS THAN GREATER THAN GREATER THAN
OR EQUAL 3.0:1.00 AND LESS OR EQUAL
LEVERAGE RATIO TO 3.0:1.0 THAN 5.0:1.0 TO 5.0:1.0
============== ========== ================= ============
<S> <C> <C> <C>
Greater than or
equal to 50% 1.250% 1.125% 1.000%
Greater than 35%
and less than
50% 1.125% 1.000% 0.750%
Less than or
equal to 35% 1.000% 0.750% 0.625%
</TABLE>
provided, however, if Interface fails to deliver its financial statements
for such second preceding fiscal quarter pursuant to Section 8.07 prior to
the first day of the then-current fiscal quarter, the Applicable Margin with
respect to Loans outstanding during such current fiscal quarter shall be (i)
1.000% with respect to Revolving Loans and Multicurrency Loans, and (ii)
1.25% with respect to Term Loans.
"Appropriate Co-Agent" shall mean, (i) with respect to matters
relating to the Multicurrency Loans, the Multicurrency
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<PAGE> 11
Agent, and (ii) with respect to matters relating to the Revolving Loans and the
Term Loans, the Domestic Agent.
"Asset Sale" shall mean any sale or other disposition (or a
series of related sales or other dispositions), including without limitation,
loss, damage, destruction or taking, by any Consolidated Company to any Person
other than a Consolidated Company, of any property or asset (including capital
stock but excluding the issuance and sale by Interface of its own capital
stock) having an aggregate Asset Value in excess of $100,000, other than (i)
sales made in the ordinary course of business of any Consolidated Company and
(ii) sales of accounts receivable of a Consolidated Company pursuant to the
Accounts Receivable Facility.
"Asset Value" shall mean, with respect to any property or asset
of any Consolidated Company, an amount equal to the greater of (i) the book
value of such property or asset as established in accordance with GAAP, and
(ii) the fair market value of such property or asset as determined in good
faith by the board of directors (or equivalent governing body in the case of
any Foreign Subsidiary) of such Consolidated Company.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an Eligible Assignee in accordance with
the terms of this Agreement and substantially in the form of Exhibit H.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as
amended and in effect from time to time (11 U.S.C. Section 101 et seq.).
"Base Rate" shall mean the average of the following two rates
(with any change in the Base Rate to be effective as of the date of change of
either of the following rates):
(i) the higher of (a) the rate which the Multicurrency Agent
publicly announces from time to time as its corporate base rate, as in
effect from time to time, and (b) the Federal Funds Rate, as in effect
from time to time, plus one-half of one percent (0.50%) per annum. The
Multicurrency Agent's corporate base rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any
customer; the Multicurrency Agent may make commercial loans or other loans
at rates of interest at, above or below the Multicurrency Agent's
corporate base rate; and
(ii) the higher of (a) the rate which the Domestic Agent
publicly announces from time to time to be its prime lending rate, as in
effect from time to time, and (b) the Federal Funds Rate, as in effect
from time to time, plus one-half of one percent (0.50%) per annum. The
Domestic Agent's prime lending rate is a reference rate and does not
necessarily represent the lowest or
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<PAGE> 12
best rate charged to customers; the Domestic Agent may make commercial
loans or other loans at rates of interest at, above or below the
Domestic Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or outstanding
as (i) a Revolving Loan or a portion of the Term Loans, as the case may be,
bearing interest based on the Base Rate as provided in Section 5.03(a)(i), or
(ii) a Multicurrency Loan made in U.S. Dollars bearing interest based on the
Base Rate as provided in Section 5.03(b)(i).
"Bentley" shall mean Bentley Mills, Inc., a Delaware corporation.
"Bentley Acquisition" shall mean the acquisition by Interface
of all the capital stock of Bentley through the consummation of the
transactions described in the Bentley Purchase Agreement, other purchases of
the capital stock of Bentley and, if necessary, the merger of a Consolidated
Company with and into Bentley.
"Bentley Acquisition Costs" shall mean the total consideration
(including, without limitation, the liquidation value of the preferred stock
described in Section 6.04(z) and all payments made to retire Indebtedness of
Bentley) paid by Interface and each other Consolidated Company to effect the
Bentley Acquisition.
"Bentley Purchase Agreement" shall mean that certain Agreement
for Purchase of Capital Stock dated as of June 8, 1993, among Interface,
Bentley, First Capital Corporation of Chicago, Madison Dearborn Partners IV,
Chrysler Capital Corporation, and Royce Renfroe, as the same may hereafter be
amended, restated, or supplemented from time to time as permitted by Section
9.13(b), providing for the purchase by Interface of capital stock of Bentley,
as follows: (i) 32,700 shares (representing 85.7%) of the issued and
outstanding shares of Bentley's Senior Preferred Stock, (ii) 15,621.5 shares
(representing 78.5%) of the issued and outstanding shares of Bentley's Junior
Preferred Stock, (iii) 826,920 shares (representing 76.2%) of the issued and
outstanding shares of Bentley's Class A Common Stock, and (iv) 490,453 shares
(representing 85.8%) of the issued and outstanding shares of Bentley's Class B
Common Stock, together with all additional shares of such capital stock of each
other shareholder of Bentley that subsequently becomes a party to such
Agreement.
"Borrowers" shall mean, (i) with respect to the Term Loans and
Revolving Loans, Interface, and (ii) collectively, with respect to the
Multicurrency Loans, Scherpenzeel B.V. and Europe Limited, and their respective
successors and permitted assigns.
"Borrowing" shall mean the incurrence by any Borrower under
any Facility of Advances of one Type concurrently having the same Interest
Period (except as otherwise provided in Sections 5.09 and 5.10) or the
continuation or conversion of an existing Borrowing or Borrowings in whole or
in part.
- 6 -
<PAGE> 13
"Business Day" shall mean any day excluding Saturday, Sunday
and any other day on which banks are required or authorized to close in
Atlanta, Georgia, New York, New York or Chicago, Illinois and, if the
applicable Business Day relates to Euro Advances, on which trading is not
carried on by and between banks in deposits of the applicable Currencies in the
applicable interbank Eurocurrency market.
"CD Rate Advance" shall mean an Advance made or outstanding as
a Revolving Loan or a portion of the Term Loans, as the case may be, bearing
interest based on the Fixed CD Rate as provided in Section 5.03(a)(ii).
"Capital Expenditures" shall mean, for any period, the sum of
(i) expenditures (whether paid in cash or accrued as a liability, including the
portion of capital leases originally incurred during such period that is
capitalized on the consolidated balance sheet of the Consolidated Companies) by
the Consolidated Companies during that period that, in conformity with GAAP,
are included in "capital expenditures", "additions to property, plant or
equipment" or comparable items in the financial statements of the Consolidated
Companies, and (ii) to the extent not included in clause (i) above,
expenditures for all net non-current assets of businesses acquired by the
Consolidated Companies during that period, including all purchase price
adjustments, other than such assets acquired in transactions where all or
substantially all of the consideration paid for such assets consisted of
capital stock of a Consolidated Company.
"Cash Taxes Paid" shall mean, for any fiscal period of Interface,
the provision of the Consolidated Companies for taxes paid as shown on the
income statement of Interface for such period minus any increase (or plus any
decrease) in the provision for deferred taxes of the Consolidated Companies as
included in the long-term liabilities of Interface, determined on a
consolidated basis in accordance with GAAP.
"Certificate of Deposit Rate" shall mean, with respect to each
Interest Period for a CD Rate Advance, the rate (rounded, if necessary, to the
next higher 1/16 of 1.0%, if the rate is not such a multiple), as determined by
the Domestic Agent at approximately 9:00 A.M. (Atlanta, Georgia time) on the
first day of the Interest Period for which such Certificate of Deposit Rate is
to be applicable, identified on Telerate as the consensus bid rate for
secondary certificates of deposit in an aggregate amount approximately
comparable to the CD Rate Advance to which such Certificate of Deposit Rate is
to be applicable and with a maturity equal to such Interest Period. As of the
date of the execution of this Agreement, such consensus bid rate appears on
page 5 of Telerate. If the foregoing rate is unavailable on Telerate for any
reason, then such rate shall be determined by the Domestic Agent from the
comparable rate quoted on another interest rate reporting service of recognized
standing as designated by the Domestic Agent to Interface and the Lenders.
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<PAGE> 14
"Change in Control Provision" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Interface Control Debt which requires, or permits the
holder(s) of such Interface Control Debt to require, that such Interface
Control Debt be redeemed, repurchased, defeased, prepaid or repaid, either in
whole or in part, or the maturity of such Interface Control Debt to be
accelerated in any respect, as a result of a change in ownership of the capital
stock of Interface or voting rights with respect thereto.
"Class B Shareholders' Agreement" shall mean that certain Voting
Agreement for Interface, Inc. Class B Common Stock Shareholders dated as of
April 13, 1993, by and among Ray C. Anderson and approximately 38 other
holders of Class B common stock of Interface, pursuant to which Ray C. Anderson
is entitled to direct the voting of the shares of Class B common stock subject
thereto.
"Closing Date" shall mean the date on or before January 10, 1995,
on which the initial Loans are made and the conditions set forth in Section
6.01 are satisfied or waived in accordance with Section 12.02.
"Collateral Agent" shall mean TCB acting in the capacity as
collateral agent, collateral trustee, pledgee, secured party, or any similar
capacity under any Security Document, any nominee or designee of TCB acting in
such capacity, and any successor collateral agent appointed from time to time
pursuant to Article XI.
"Commitment" shall mean, for any Lender at any time, any of its
Term Loan Commitment, Revolving Loan Commitment, or Multicurrency Loan
Commitment, as the context may require.
"Consolidated Companies" shall mean, collectively, Interface and
all of its Subsidiaries.
"Consolidated EBITA" shall mean, for any fiscal period of
Interface, an amount equal to (A) the sum for such fiscal period of
Consolidated Net Income (Loss) plus, to the extent subtracted in determining
such Consolidated Net Income (Loss), provisions for taxes based on income,
Consolidated Interest Expense, and amortization of good will and deferred
financing costs, minus (B) any items of gain (or plus any items of loss) which
were included in determining such Consolidated Net Income (Loss) and were (x)
not realized in the ordinary course of business or (y) the result of any sale
of assets.
"Consolidated EBITDA" shall mean, for any fiscal period of
Interface, an amount equal to (i) Consolidated EBITA for such period, plus (ii)
to the extent subtracted in determining Consolidated Net Income (Loss) for such
period, depreciation expense of the Consolidated Companies determined for such
period in conformity with GAAP.
- 8 -
<PAGE> 15
"Consolidated Interest Expense" shall mean, for any fiscal period
of Interface, total interest expense of the Consolidated Companies (including
without limitation, interest expense attributable to capitalized leases in
accordance with GAAP, all capitalized interest, all commissions, discounts and
other fees and charges owed with respect to bankers acceptance financing, and
total interest expense (whether shown as interest expense, other expense, or
as loss and expenses on sale of receivables) under a receivables purchase
facility) determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any fiscal
period of Interface, the net income (or loss) of the Consolidated Companies on
a consolidated basis for such period (taken as a single accounting period)
determined in conformity with GAAP, but excluding therefrom (to the extent
otherwise included therein) (i) any gains or losses, together with any related
provision for taxes, realized upon any sale of assets other than in the
ordinary course of business, (ii) any income or loss of any Person accrued
prior to the date such Person becomes a Subsidiary of Interface or is merged
into or consolidated with any Consolidated Company or all or substantially all
of such Person's assets are acquired by any Consolidated Company, and (iii) the
income of any Consolidated Company to the extent that the declaration or
payment of dividends or similar distributions by such Consolidated Company of
that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation.
"Consolidated Net Worth" shall mean, as of any date of
determination, Shareholders' Equity of Interface, excluding (i) the effects of
foreign currency translation adjustments under Financial Accounting Standards
Board Statement No. 52 as in effect on the date hereof, and (ii) after-tax
gains on the sales of assets outside the ordinary course of business of the
Consolidated Companies and any after-tax gains with respect to pension
reversions, in any case with respect to (i) and (ii) above, as such adjustments
or gains occur subsequent to December 29, 1991.
"Consolidated Total Liabilities" shall mean, as at any date of
determination, total liabilities of the Consolidated Companies determined on a
consolidated basis in accordance with GAAP.
"Contractual Obligation" of any Person shall mean any provision
of any security issued by such Person or of any agreement, instrument or
undertaking under which such Person is obligated or by which it or any of the
property owned by it is bound.
"Contribution Agreement" shall mean the Contribution Agreement
executed by each of the Guarantors, substantially in the form of Exhibit I
attached hereto, as the same may be amended, restated or supplemented from time
to time.
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<PAGE> 16
"Conversion Amount" shall mean, at any time, the aggregate
principal amount of outstanding Subordinated Debentures of Interface which has
been previously converted into common stock of Interface subsequent to
September 1, 1988 and which, under GAAP, has been added to Shareholders' Equity
of Interface.
"Convertible Preferred Stock" shall mean Interface's Series A
Cumulative Convertible Preferred Stock having an aggregate liquidation value of
$25,000,000 and 7.0% cumulative dividend, being convertible into shares of
Interface's Class A common stock at the rate of one share of Class A common
stock for each $14.7875 of "conversion value" of such Preferred Stock (as
defined in the Articles of Amendment of Interface executed with respect to such
Preferred Stock and subject to adjustments as provided therein), and being
subject to redemption at the option of the holders thereof not earlier than
June 1, 2003, on the terms and conditions set forth in such Articles of
Amendment.
"Credit Documents" shall mean, collectively, this Agreement,
the Notes, the Letter of Credit Agreement, the Guaranty Agreements, the Pledge
Agreements, the L/C Cash Collateral Assignment, the IRB Collateral Documents,
and all other Security Documents.
"Credit Parties" shall mean, collectively, each of the Borrowers,
the Guarantors, the L/C Account Parties, and every other Person who from time
to time executes a Security Document with respect to all or any portion of the
Obligations.
"Currency" shall mean, with respect to the Multicurrency Loan
Commitments, Dollars, British pounds sterling, Dutch guilders, French francs,
German marks and Japanese yen, as selected by the applicable Borrower.
"Currency Contracts" shall mean any forward contracts, futures
contracts, foreign exchange contracts, currency swap agreements, and other
similar agreements and arrangements entered into by any Consolidated Company
designed to protect any Consolidated Company against fluctuations in foreign
exchange rates.
"Default" shall mean any condition or event which, with notice
or lapse of time or both, would constitute an Event of Default.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful
money of the United States of America.
"Dollar Equivalent" shall mean, with respect to any monetary
amount in a currency other than U.S. Dollars, at any time for the determination
thereof, the amount of U.S. Dollars obtained by converting such currency
involved in such computation into U.S. Dollars at the spot rate for the
purchase of U.S. Dollars with the applicable currency as quoted by the
Multicurrency Agent as of the close of business on the date of determination
thereof specified herein or, if the date of determination thereof is not
otherwise
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<PAGE> 17
specified herein, on the date two applicable Business Days prior to such
determination.
"Domestic Agent" shall mean TCB, acting in the manner and to
the extent described in Article XI, and any successor domestic agent appointed
pursuant to Article XI hereof.
"Eligible Assignee" shall mean any financial institution
reasonably acceptable to Interface and the Co-Agents.
"Environmental Laws" shall mean all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, those with respect to asbestos or asbestos containing
material or exposure to asbestos or asbestos containing material), relating to
pollution or protection of the environment and relating to public health and
safety, relating to (i) emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals or industrial toxic or hazardous
constituents, substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law into the environment (including without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), or (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of any Hazardous Substance, petroleum including
crude oil or any fraction thereof, any petroleum product or other waste,
chemicals or substances regulated by any Environmental Law, and (iii)
underground storage tanks and related piping, and emissions, discharges and
releases or threatened releases therefrom, such Environmental Laws to include,
without limitation (i) the Clean Air Act (42 U.S.C. Section 7401 et seq.),
(ii) the Clean Water Act (33 U.S.C. Section 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), (v) the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. Section 9601 et seq.),
and (vi) all applicable national and local hindrance laws (including, without
limitation "hinderwet") or regulations and the specific terms of hindrance
licenses granted to the Heuga Entities and with all national and local
building, zoning, environmental control or other similar laws or regulations
under specific terms of construction licenses (including, without limitation,
"bouwvergunningen").
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each
trade or business (whether or not incorporated) which is a member of a group of
which that Person is a member and which is under common control within the
meaning of the regulations promulgated under Section 414 of the Tax Code.
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<PAGE> 18
"Escrow Letter" shall mean a letter agreement between Interface
and the Collateral Agent substantially in the form of Exhibit J hereto.
"Euro Advance" shall mean (i) a Eurodollar Advance, or (ii) a
Eurocurrency Advance.
"Eurocurrency Advance" shall mean an Advance made or outstanding
as a Multicurrency Loan bearing interest based on the Adjusted LIBO Rate or
Special Adjusted LIBO Rate as provided in Section 5.03(b)(ii).
"Eurodollar Advance" shall mean an Advance made or outstanding
in U.S. Dollars as a Revolving Loan or a portion of the Term Loans, as the case
may be, bearing interest based on the Adjusted LIBO Rate as provided in Section
5.03(a)(iii).
"Europe Limited" shall mean Interface Europe Limited (formerly
Interface Flooring Systems Limited), a private company limited by shares
organized and existing under the laws of England and Wales, its successors and
permitted assigns.
"Event of Default" shall have the meaning provided in Article X.
"Excess Cash Flow" shall mean, for any fiscal year of Interface
(A) the sum of the amounts for such fiscal year of Consolidated Net Income
(Loss), plus (to the extent subtracted in determining such Consolidated Net
Income (Loss)) depreciation expense, amortization expense, provisions for
deferred tax expense based on income (or minus provisions for deferred tax
credit, as the case may be), and other non-cash items reducing Consolidated
Net Income (Loss) (or minus other non-cash items increasing Consolidated Net
Income (Loss)), as determined in accordance with GAAP, all as determined on a
consolidated basis for the Consolidated Companies, minus (B) the sum of (i)
Capital Expenditures for such fiscal year, (ii) the amount by which Adjusted
Working Capital as determined on the last day of such fiscal year exceeds (or
minus the amount by which such Adjusted Working Capital is less than) Adjusted
Working Capital as determined on the last day of the preceding fiscal year
(such changes in Adjusted Working Capital caused by currency fluctuations to be
calculated in accordance with FASB-52), (iii) required principal payments on
the Term Loans pursuant to Section 2.02(b) during such fiscal year, (iv)
regularly scheduled principal payments on other Indebtedness of the
Consolidated Companies as permitted under Section 9.01 during such fiscal year,
and (v) the total amount of regularly scheduled cash dividends with respect to
capital stock paid by Interface during such fiscal year as permitted under
Section 9.04.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute thereto.
"Existing Shareholder Group" shall mean (i) for so long as Ray
C. Anderson shall be living and is performing the duties of
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<PAGE> 19
chairman and chief executive officer of Interface, Ray C. Anderson and each
other party to the Class B Shareholders' Agreement, David Milton, Daniel T.
Hendrix, Charles R. Eitel, Royce R. Renfroe, Brian L. DeMoura, and David W.
Porter, and (ii) at all times thereafter, the individuals listed on Schedule
10.11; provided that in the case of each individual referred to in the
preceding clauses (i) and (ii), for purposes of this definition the reference
to such individual shall be deemed to include the members of such individual's
immediate family, such individual's estate, and any trusts established by such
individual (whether inter vivos or testamentary) for the benefit of members of
such individual's immediate family.
"FASB-52" shall mean Financial Accounting Standards Board
Statement No. 52, as in effect on the date of this Agreement, specifying
applicable accounting principles with respect to translation of foreign
currencies.
"FCB Account" shall mean, with respect to Advances made in each
Currency other than Dollars under the Multicurrency Loan Commitment, the
account maintained by the Multicurrency Agent for disbursements to, and
payments from, the respective Borrower in such Currency, as more particularly
described on Schedule 4.01.
"FC Bank" shall mean, for each FCB Account, the bank at which
such FCB Account shall be maintained, as more particularly described on
Schedule 4.01.
"Facility" or "Facilities" shall mean the credit facilities
made available to the Borrowers pursuant to the Revolving Loan Commitments, the
Term Loans, or the Multicurrency Loan Commitments, as the context may indicate.
"Facility Fees" has the meaning ascribed to it in Section 5.05(a).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with member banks
of the Federal Reserve System arranged by Federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by the Domestic Agent from three
Federal funds brokers of recognized standing selected by the Domestic Agent.
"FNBC Currency Contract" shall mean the Interest Rate and
Currency Exchange Agreement dated as of June 30, 1992, between Heuga Nederland
B.V. (now Scherpenzeel B.V.) and The First National Bank of Chicago (acting
through its London Branch), together with all exhibits and schedules thereto
and all confirmations of transactions executed thereunder, as amended by the
Amendment to
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<PAGE> 20
Interest Rate and Currency Exchange Agreement dated as of January 9, 1995, and
as the same have been or hereafter may be amended, restated or supplemented
from time to time.
"Fixed CD Rate" shall mean, with respect to each Interest Period,
the sum of (i) the rate obtained by dividing (x) the Certificate of Deposit
Rate for such Interest Period by (y) a percentage equal to 1 minus the stated
maximum rate (stated as a decimal) of all reserve requirements as specified in
Regulation D (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable during such Interest
Period to new nonpersonal time deposits in the United States in an amount
equal to or in excess of $100,000 with a maturity comparable to such Interest
Period of any member bank of the Federal Reserve System, plus (ii) the then
daily net annual assessment rate as estimated by the Domestic Agent for
determining the then current annual assessment payable to the Federal Deposit
Insurance Corporation for insuring time deposits of the Domestic Agent in the
United States.
"Fixed Rate Advance" shall mean any CD Rate Advance and any Euro
Advance.
"Foreign Plan" shall mean any pension, profit sharing, deferred
compensation, or other employee benefit plan, program or arrangement
maintained by any Foreign Subsidiary which, under applicable local law, is
required to be funded through a trust or other funding vehicle.
"Foreign Subsidiary" shall mean each Consolidated Company that
is organized under the laws of a jurisdiction other than the United States of
America or any State thereof.
"Funded Debt" shall mean all Indebtedness for money borrowed,
Indebtedness evidenced or secured by purchase money Liens, capitalized leases,
conditional sales contracts and similar title retention debt instruments, and
Indebtedness evidenced by bonds, debentures, notes or other similar
instruments, including all current maturities of such Indebtedness. The
calculation of Funded Debt shall include all Funded Debt of the Consolidated
Companies, plus (i) all Funded Debt of other Persons to the extent guaranteed
by a Consolidated Company, to the extent supported by a letter of credit issued
for the account of a Consolidated Company, or as to which and to the extent
which a Consolidated Company or its assets otherwise have become liable for
payment thereof, (ii) the aggregate outstanding principal amount of all
commercial paper issued in respect of, and allocable to, accounts receivable
sold by Interface SPC pursuant to the Accounts Receivable Facility (such
allocable amount to be determined based on the net investment amount of SPARCC
in such accounts receivable), (iii) the aggregate outstanding balance of those
accounts receivable sold by Interface SPC pursuant to the Receivables Backup
Purchase Agreement plus (iv) any other amounts due and owing to the Lenders
under the Receivables Backup Purchase Agreement.
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<PAGE> 21
"Funded Debt Coverage Ratio" shall mean, as of the last day of
any fiscal quarter of Interface, the ratio of (A) Funded Debt as of such day,
to (B) the sum of Consolidated EBITDA for the fiscal quarter then ending and
the immediately preceding three fiscal quarters.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Finan cial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Guarantors" shall mean, collectively, Interface, Guilford of
Maine, Inc., Guilford (Delaware) Inc., Interface Flooring Systems, Inc.,
Rockland React-Rite Inc., Interface Research Corporation, Interface Europe,
Inc., Pandel, Inc., Interface Asia-Pacific, Inc., Bentley, Prince Street, and
all other Material Subsidiaries (excluding Interface SPC) that are not Foreign
Subsidiaries, and their respective successors and permitted assigns.
"Guaranty" shall mean any contractual obligation, contingent
or otherwise, of a Person with respect to any Indebtedness or other obligation
or liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Guaranty Agreements" shall mean, collectively, the Guaranty
Agreements executed by each of the Guarantors in favor of the Lenders and the
Co-Agents, substantially in the form of Exhibits D-1 and D-2, as the same may
be amended, restated or supplemented from time to time.
"Hazardous Substances" shall have the meaning assigned to that
term in the Comprehensive Environmental Response Compensation
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<PAGE> 22
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Acts of 1986.
"Heuga Entities" shall mean Interface Europe B.V. (formerly
Interface Heuga B.V.) and all Subsidiaries of Interface Europe B.V.
"IRB Collateral Documents" shall mean, collectively, the
mortgages, deeds of trust, deeds to secure debt, assignments of leases,
security agreements, pledge agreements, and other security and collateral
documents securing the obligations of any L/C Account Parties in respect of
Letters of Credit issued by the L/C Issuer for the account of such parties in
support of industrial development revenue bonds.
"Indebtedness" of any Person shall mean, without duplication
(i) all obligations of such Person which in accordance with GAAP would be shown
on the balance sheet of such Person as a liability (including, without
limitation, obligations for borrowed money and for the deferred purchase price
of property or services, and obligations evidenced by bonds, debentures, notes
or other similar instruments); (ii) all rental obligations under leases
required to be capitalized under GAAP; (iii) all Guaranties of such Person
(including contingent reimbursement obligations under undrawn letters of
credit); (iv) Indebtedness of others secured by any Lien upon property owned by
such Person, whether or not assumed; and (v) obligations or other liabilities
under Currency Contracts, Interest Rate Contracts, or similar agreements or
combinations thereof.
"Indemnity Agreement" shall mean the Indemnification Agreement
dated as of January 9, 1995, executed by Interface in favor of the Lenders and
the Co-Agents, as the same may be amended, restated, or supplemented from time
to time.
"Intercompany Loan Documents" shall mean, collectively, the
promissory notes and all related loan, subordination, and other agreements
relating in any manner to the Intercompany Loans.
"Intercompany Loans" shall mean, collectively, (i) the loans
more particularly described on Schedule 7.20 and (ii) those loans or other
extensions of credit made by any Consolidated Company to another Consolidated
Company satisfying the terms and conditions set forth in Section 9.01(h) or as
may otherwise be approved in writing by the Co-Agents.
"Interest Coverage Ratio" shall mean the ratio of Consolidated
EBITA to Consolidated Interest Expense.
"Interest Period" shall have the meaning set forth in Section 5.04.
"Interest Rate Contracts" shall mean any forward contracts,
futures contracts, interest rate exchange agreements, interest rate cap
agreements, interest rate collar agreements, and other similar agreements and
arrangements entered into by any Con-
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<PAGE> 23
solidated Company designed to protect any Consolidated Company against
fluctuations in interest rates.
"Interface" shall mean Interface, Inc., a Georgia corporation,
its successors and permitted assigns.
"Interface SPC" shall mean the Consolidated Company organized
as a special purpose corporation to acquire accounts receivable from Interface
and to sell such accounts receivable to SPARCC pursuant to the terms of the
Receivables Sale Agreement, and such Consolidated Company's successors and
permitted assigns.
"Interface Control Debt" shall mean, at any time, debt of
Interface for borrowed money in an aggregate principal amount outstanding at
such time in excess of $10,000,000 which is subject to Change in Control
Provisions, excluding debt of Interface arising under this Agreement or any
Guaranty or Security Document of Interface delivered pursuant to this
Agreement.
"Investment" shall mean, when used with respect to any Person,
any direct or indirect advance, loan or other extension of credit (other than
the creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, capital stock,
partnership interests, bonds, notes, debentures or other securities issued by
any other Person.
"L/C Account Party" shall mean any Consolidated Company for
whose account a Letter of Credit has been issued pursuant to the Letter of
Credit Agreement.
"L/C Cash Collateral Account" shall mean the cash collateral
account established pursuant to the L/C Cash Collateral Assignment Agreement
(and designated thereunder as the L/C Cash Collateral Account) in favor of the
Collateral Agent.
"L/C Cash Collateral Assignment" shall mean the L/C Cash
Collateral Assignment Agreement dated as of January 9, 1995, among those
Consolidated Companies that are parties to the Letter of Credit Agreement and
the Collateral Agent, as the same may be amended, restated or supplemented from
time to time.
"L/C Exposure" shall mean, for each Lender, and with respect
to all Letters of Credit as to which it was a Participating Lender, the sum,
for all such Letters of Credit, of the product of (i) the L/C Outstandings for
each Letter of Credit, multiplied by (ii) such Lender's applicable L/C Pro Rata
Share for such Letter of Credit.
"L/C Issuer" shall mean Trust Company Bank, a Georgia banking
corporation, and each other issuer of a Letter of Credit
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<PAGE> 24
pursuant to the Letter of Credit Agreement, and their respective successors and
assigns.
"L/C Outstandings" shall mean, as at any date of determination
with respect to an outstanding Letter of Credit, the sum of (i) the maximum
aggregate amount which at such date of determination is available to be drawn
(assuming conditions for drawing thereunder have been met) under such Letter of
Credit then outstanding, plus (ii) the aggregate amount of all drawings under
such Letter of Credit and honored by the L/C Issuer not theretofore reimbursed
by or on behalf of the L/C Account Party.
"L/C Pro Rata Share" shall mean, at any time, for each
Participating Lender in respect of a Letter of Credit, the percentage
designated in the Letter of Credit Agreement as such Lender's L/C Pro Rata
Share under the name of such Lender on the respective signature page for such
Lender, in each case as such L/C Pro Rata Share may have been adjusted pursuant
to the terms of the Letter of Credit Agreement as of the date of issuance of
such Letter of Credit.
"L/C Subcommitment" shall mean, at any time for any Revolving
Lender, the amount of the Letter of Credit Subcommitment set forth opposite
such Revolving Lender's name on the signature page of the Letter of Credit
Agreement, as the same may be adjusted from time to time pursuant to the terms
of the Letter of Credit Agreement.
"Lender" or "Lenders" shall mean TCB, FNBC, the other banks and
lending institutions listed on the signature pages hereof, and each assignee
thereof, if any, pursuant to Section 12.06(c).
"Lending Office" shall mean for each Lender the office such
Lender may designate in writing from time to time to the Borrowers and the
Co-Agents with respect to each Type of Loan.
"Letter of Credit" shall mean any letter of credit issued by
the L/C Issuer for the account of an L/C Account Party pursuant to the Letter
of Credit Agreement, as the same may be amended, extended or re-issued from
time to time.
"Letter of Credit Agreement" shall mean the Letter of Credit
Agreement dated as of January 9, 1995, among Interface, Guilford of Maine,
Inc., Interface Flooring Systems, Inc., Bentley, Prince Street, Pandel, Inc.,
Interface Research Corporation, and Rockland React-Rite, Inc., Trust Company
Bank, as L/C Issuer, the Revolving Lenders, the Domestic Agent, and the
Collateral Agent, as the same may be amended, restated or supplemented from
time to time.
"Leverage Ratio" shall mean the ratio, expressed as a
percentage, of Funded Debt to Total Capitalization for the Consolidated
Companies.
"LIBOR" shall mean, for any Interest Period:
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<PAGE> 25
(i) with respect to Eurodollar Advances under the Revolving Loan
Commitments or the Term Loan Commitments, the offered rate for deposits in
Dollars, for a period comparable to the Interest Period and in an amount
comparable to the Domestic Agent's portion of such Advances, appearing on
the Reuters Screen LIBO Page as of 11:00 A.M. (London, England time) on
the day that is two Business Days prior to the first day of the Interest
Period. If two or more of such rates appear on the Reuters Screen LIBO
Page, the rate shall be the arithmetic mean of such rates. If the
foregoing rate is unavailable from the Reuters Screen for any reason, then
such rate shall be determined by the Domestic Agent from Telerate Page
3750 or, if such rate is also unavailable on such service, then on any
other interest rate reporting service of recognized standing designated in
writing by the Domestic Agent to Interface and the other Lenders;
(ii) with respect to Eurocurrency Advances under the
Multicurrency Loan Commitments, the offered rate for deposits in the
applicable Currency, for a period comparable to the Interest Period and in
an amount comparable to the Multicurrency Agent's portion of such Advances,
appearing on Telerate Page 3750 as of 11:00 A.M. (London, England time) on
the day that is two Business Days prior to the first day of the Interest
Period. If the foregoing rate is unavailable from Telerate for any reason,
then such rate shall be determined by the Multicurrency Agent from any
other interest rate reporting service of recognized standing designated in
writing by the Multicurrency Agent to Interface and the other Lenders;
in any such case rounded, if necessary, to the next higher 1/16 of 1.0%, if the
rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security interest, lien,
charge, hypothecation, assignment, deposit arrangement, title retention,
preferential right, trust or other arrangement having the practical effect of
the foregoing and shall include the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title retention
agreement.
"Loans" shall mean, collectively, the Revolving Loans, the Term
Loans, and the Multicurrency Loans.
"Margin Regulations" shall mean Regulation G, Regulation T,
Regulation U and Regulation X of the Board of Governors of the Federal Reserve
System, as the same may be in effect from time to time.
"Material Company" shall mean (i) Interface, (ii) each
Material Subsidiary, and (iii) each joint venture, general partnership,
association, or other business entity in which one or more of the Consolidated
Companies is a general partner, party, or member, and as to which such
Consolidated Company or Companies has become liable, either by agreement, by
operation of law, or other-
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<PAGE> 26
wise, for obligations and liabilities thereof in an aggregate amount greater
than $10,000,000.
"Material Subsidiary" shall mean (i) each Credit Party other
than Interface, (ii) each other Consolidated Company listed in the definition
of the term "Pledged Stock" in this Section 1.01, but excluding Guilford of
Maine (Canada), Inc., Interface Heuga Singapore Pte Ltd., Interface Heuga Hong
Kong Ltd., and Interface Heuga Australia Pty Ltd., and (iii) each other
Subsidiary of Interface, now existing or hereinafter established or acquired,
that at any time prior to the Term Loan Final Maturity Date or
Revolver/Multicurrency Maturity Date (whichever is last to occur), has or
acquires total assets in excess of $10,000,000, or that holds any fixed assets
material to the operations or business of another Material Subsidiary
(including, without limitation, each of Guilford of Maine (U.K.) Ltd., Guilford
of Maine (Canada), Inc., Interface Heuga Singapore Pte Ltd., Interface Heuga
Hong Kong Ltd., and Interface Heuga Australia Pty Ltd., at such time, if any,
as any of them acquires total assets in excess of $10,000,000 or holds such
material fixed assets).
"Materially Adverse Effect" shall mean any materially adverse
change in (i) the business, results of operations, financial condition, assets
or prospects of the Consolidated Companies, taken as a whole, or (ii) the
ability of Interface to perform its respective obligations under the Credit
Documents.
"Multicurrency Agent" shall mean FNBC, acting in the manner and
to the extent described in Article XI, and any successor multicurrency agent
appointed from time to time pursuant to Article XI hereof.
"Multicurrency Lenders" shall mean, collectively, the Lenders
extending the Multicurrency Loan Commitments to the Borrowers pursuant to
Section 4.01.
"Multicurrency Loan Commitment" shall mean, at any time for any
Multicurrency Lender, the amount of such commitment set forth opposite such
Multicurrency Lender's name on the signature pages hereof, as the same may be
increased or decreased from time to time as a result of any reduction thereof
pursuant to Section 4.03 or 4.04, any assignment thereof pursuant to Section
12.06, or any amendment thereof pursuant to Section 12.02.
"Multicurrency Loans" shall mean, collectively, the multicurrency
loans made by the Multicurrency Lenders pursuant to Section 4.01.
"Multicurrency Notes" shall mean, collectively, the promissory
notes evidencing the Multicurrency Loans in the forms attached hereto as
Exhibit C-1 and Exhibit C-2, respectively.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
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<PAGE> 27
"Net Proceeds" shall mean, with respect to any Asset Sale, all
cash, including (i) cash receivables (when received) by way of deferred
payment pursuant to a promissory note, a receivable or otherwise (other than
interest payable thereon), and (ii) with respect to Asset Sales resulting from
the loss, damage, destruction or taking of property, the proceeds of insurance
settlements and condemnation awards (other than the portion of the proceeds of
such settlements and such awards that are used to repair, replace, improve or
restore the item of property in respect of which such settlement or award was
paid provided that the recipient of such proceeds enters into a binding
contractual obligation to effect such repair, replacement, improvement or
restoration within eighteen (18) months of such loss, damage or destruction
and completes such repair, replacement, improvement or restoration within
thirty-six (36) months of such loss, damage, destruction or taking) as and
when received in cash, in either case, received by any Consolidated Company as
a result of or in connection with such transaction, net of reasonable sale
expenses, fees and commissions incurred, and taxes paid or expected to be
payable within the succeeding 36-month period in connection therewith, and net
of any payment required to be made with respect to the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) secured by a Lien (to the extent permitted by Section 9.02)
upon the asset sold in such Asset Sale.
"1993 Credit Agreement" shall have the meaning provided in the
recitals at the beginning of this Agreement.
"Notes" shall mean, collectively, the Revolving Credit Notes,
the Term Notes, and the Multicurrency Notes.
"Notice of Borrowing" shall have the meaning provided in Section
5.01(a)(i).
"Notice of Continuation/Conversion" shall have the meaning
provided in Section 5.01(b)(i).
"Notice of Multicurrency Borrowing" shall have the meaning
provided in Section 5.01(a)(ii).
"Notice of Multicurrency Continuation/Conversion" shall have the
meaning provided in Section 5.01(b)(ii).
"Obligations" shall mean all amounts owing to any Co-Agent,
Lender, L/C Issuer, or Collateral Agent pursuant to the terms of this
Agreement, the Letter of Credit Agreement, or any other Credit Document,
including without limitation, all Loans (including all principal and interest
payments due thereunder), fees, expenses, indemnification and reimbursement
payments, indebtedness, liabilities, and obligations of the Credit Parties,
direct or indirect, absolute or contingent, liquidated or unliquidated, now
existing or hereafter arising, together with all renewals, extensions,
modifications or refinancings thereof.
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<PAGE> 28
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Participating Lender" shall have the meaning specified for
such term in the Letter of Credit Agreement.
"Payment Office" shall mean (i) with respect to payments of
principal and interest relating to Multicurrency Loans outstanding in
Currencies other than Dollars, the respective FCB Accounts designated for such
Currencies, (ii) with respect to payments of all other principal, interest,
fees or other amounts relating to the Multicurrency Loans, the office specified
as the "Payment Office" for the Multicurrency Agent on the signature page of
the Multicurrency Agent, or such other location as to which the Multicurrency
Agent shall have given written notice to the Borrowers and its Co-Agent, and
(iii) with respect to payments of principal, interest, fees or other amounts
relating to the Revolving Credit Loans, the Term Loans, and all other
Obligations not described in the preceding clauses (i) and (ii), the office
specified as the "Payment Office" for the Domestic Agent on the signature page
of the Domestic Agent, or such other location as to which the Domestic Agent
shall have given written notice to Interface and its Co-Agent.
"Permitted Liens" shall mean those Liens expressly permitted by
Section 9.02.
"Person" shall mean any individual, partnership, firm,
corporation, association, joint venture, trust or other entity, or any
government or political subdivision or agency, department or instrumentality
thereof.
"Plan" shall mean any "employee benefit plan" (as defined in
Section 3(3) of ERISA), including, but not limited to, any defined benefit
pension plan, profit sharing plan, money purchase pension plan, savings or
thrift plan, stock bonus plan, employee stock ownership plan, Multiemployer
Plan, or any plan, fund, program, arrangement or practice providing for medical
(including post-retirement medical), hospitalization, accident, sickness,
disability, or life insurance benefits, but shall exclude any Foreign Plan.
"Pledge Agreements" shall mean, collectively, those certain
Pledge and Security Agreements, Agreement of Pledge, and Deed of Pledge,
executed in favor of the Collateral Agent, substantially in the form of
Exhibits E-1 through E-6, providing for the grant of first-priority Liens on
the Pledged Stock, as the same may be amended, restated or supplemented from
time to time.
"Pledged Stock" shall mean, collectively, (i) all issued and
outstanding capital stock, together with all warrants, stock options, and other
purchase and conversion rights with respect to such capital stock, of each of
Guilford of Maine, Inc., Guilford (Delaware) Inc., Interface Flooring Systems,
Inc., Interface Research Corporation, Rockland React-Rite, Inc., Pandel, Inc.,
Interface Europe, Inc., Interface Asia-Pacific, Inc., Bentley, Prince
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<PAGE> 29
Street, and all other Material Subsidiaries of Interface organized in the
United States, and (ii) 66% of all issued and outstanding capital stock,
together with 66% of all warrants, stock options, and other purchase and
conversion rights with respect to such capital stock, of Europe Limited,
Interface Europe B.V., Interface Heuga Singapore Pte Ltd., Guilford of Maine
(Canada), Inc., Interface Flooring Systems (Canada), Inc., Interface Heuga
Japan Ltd., Interface Heuga Hong Kong Ltd., Interface Heuga Australia Pty
Limited, and all other Material Subsidiaries that are Foreign Subsidiaries
directly owned by Interface and/or one or more other Subsidiaries organized in
the United States.
"Prince Street" shall mean Prince Street Technologies, Ltd., a
Georgia corporation.
"Prince Street Acquisition" shall mean the acquisition by
Interface of Prince Street through the consummation of the transactions
described in the Prince Street Acquisition Agreement.
"Prince Street Acquisition Agreement" shall mean the Acquisition
Agreement dated as of December 3, 1993, among Interface, Robert S. Weiner,
Randall J. Hatch, Nancy O'Donnell, John O'Donnell, Jacqueline A. Colando,
Traccton Corp., Prince Street Holding Company, Steven C. Andrade, and Robert
D. Williams, as amended.
"Prince Street Acquisition Costs" shall mean the total
consideration paid by Interface and each other Consolidated Company to effect
the Prince Street Acquisition (including cash payments made by Interface to
repurchase any shares of Class A Common Stock of Interface previously delivered
as a portion of the consideration paid in the Prince Street Acquisition, as may
be provided in the Prince Street Acquisition Agreement).
"Pro Rata Share" shall mean, with respect to each of the
Commitments of each Lender and each Loan to be made by and each payment
(including, without limitation, any payment of principal, interest or fees) to
be made to each Lender, the percentage designated as such Lender's Pro Rata
Share of such Commitments, such Loans or such payments, as applicable, set
forth under the name of such Lender on the respective signature page for such
Lender, in each case as such Pro Rata Share may change from time to time as a
result of assignments, amendments, or reductions made pursuant to this
Agreement.
"Receivables Backup Purchase Agreement" shall mean the agreement
among Interface SPC, as seller and servicer, Interface, as guarantor, the
Lenders, as purchasers, TCB and FNBC, as co-agents, and FNBC, as collateral
agent, providing for the purchase by the Lenders of accounts receivable from
Interface SPC or, under certain circumstances, from SPARCC.
"Receivables Sale Agreement" shall mean the agreement among
Interface SPC, as seller, Interface, as collection agent,
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<PAGE> 30
SPARCC, as purchaser, and Canadian Imperial Bank of Commerce, as servicing
agent, providing for the sale by Interface SPC, and the purchase by SPARCC, of
accounts receivable originated by certain of the Consolidated Companies.
"Receivables Transfer Agreements" shall mean, collectively,
(i) the agreements between Interface and certain other Consolidated Companies
providing for the sale by such Consolidated Companies, and the purchase by
Interface, of accounts receivable originated by such Consolidated Companies,
and (ii) the agreement(s) between Interface, certain other Consolidated
Companies, and Interface SPC providing for the sale by such Consolidated
Companies, and the purchase by Interface SPC, of accounts receivable originated
by such Consolidated Companies.
"Refinanced Indebtedness" shall mean the Indebtedness of the
Consolidated Companies outstanding pursuant to the 1993 Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean at any time Lenders holding at
least 66-2/3% of the then aggregate amount of the Revolving Loan Commitments,
Multicurrency Loan Commitments and Term Loans; provided, however, that in
connection with any proposed amendment or waiver of any of the following
provisions, "Required Lenders" shall mean both the Lenders holding at least
66-2/3% of the then aggregate amount of the Revolving Loan Commitments,
Multicurrency Loan Commitments, and Term Loans, and Multicurrency Lenders
holding at least 66-2/3% of the then aggregate amount of the Multicurrency Loan
Commitments: (i) Article IV, (ii) Section 5.01(a)(ii), Section 5.01(b)(ii),
Section 5.02(a) (as the same relates to funding of the Multicurrency Loans),
Section 5.03(b), Section 5.07(b)(v) and (viii), and Section 5.13, or (iii) the
definitions of the terms Currency, Payment Office, FCB Account or FC Bank.
"Required Multicurrency Lenders" shall have the meaning provided
in Section 12.02.
"Requirement of Law" for any person shall mean the articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuter Monitor
Money Rates Service (or such other page as may replace that page on that
service for the purpose of displaying rates comparable to LIBOR).
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<PAGE> 31
"Revolver/Multicurrency Maturity Date" shall mean the earlier
of (i) June 30, 1999, and (ii) the date on which all amounts outstanding under
this Agreement have been declared or have automatically become due and payable
pursuant to the provisions of Article X.
"Revolving Credit Notes" shall mean, collectively, the
promissory notes evidencing the Revolving Loans in the form attached hereto as
Exhibit B.
"Revolving Lenders" shall mean, collectively, the Lenders
extending the Revolving Loan Commitments to Interface pursuant to Section 3.01.
"Revolving Loans" shall mean, collectively, the revolving credit
loans made to Interface by the Revolving Lenders pursuant to Section 3.01.
"Revolving Loan Commitment" shall mean, at any time for any
Lender, the amount of such commitment set forth opposite such Lender's name on
the signature pages hereof, as the same may be increased or decreased from time
to time as a result of any reduction thereof pursuant to Section 3.03 or 3.04,
any assignment thereof pursuant to Section 12.06, or any amendment thereof
pursuant to Section 12.02, such commitment including, without limitation, such
Lender's L/C Subcommitment.
"SPARCC" shall mean Special Purpose Accounts Receivable
Cooperative Corporation, its successors and permitted assigns.
"Scherpenzeel B.V." shall mean Interface Scherpenzeel B.V.
(formerly Heuga Nederland B.V.), a "besloten vennootschap met beperkte
aansprakelijkheid" (private company with limited liability) incorporated and
existing under the laws of The Netherlands with its registered seat in
Scherpenzeel, Gld., The Netherlands, its successors and permitted assigns.
"Security Documents" shall mean, collectively, the Guaranty
Agreements, the Pledge Agreements, the L/C Cash Collateral Assignment, the IRB
Collateral Documents, the Indemnity Agreement, and each other guaranty
agreement, mortgage, deed of trust, security agreement, pledge agreement, or
other security or collateral document guaranteeing or securing the Obligations,
as the same may be amended, restated, or supplemented from time to time.
"Senior Funded Debt" shall mean Funded Debt minus Subordinated
Debt.
"Shareholders' Equity" shall mean, with respect to any Person
as at any date of determination, shareholders' equity of such Person determined
on a consolidated basis in conformity with GAAP.
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<PAGE> 32
"Special Adjusted LIBO Rate" shall mean the sum of (i) the rate
obtained by dividing (A) Special LIBOR as in effect from time to time by (B) a
percentage equal to 1 minus the then stated maximum rate (stated as a decimal)
of all reserves requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or against any successor category of liabilities as
defined in Regulation D), plus (ii) if the relevant Eurocurrency Advance is in
British pounds sterling, a percentage sufficient to compensate the
Multicurrency Lenders for the cost of complying with any reserves,
liquidity and/or special deposit requirements of the Bank of England directly
or indirectly affecting the maintenance or funding of such Advances.
"Special LIBOR" shall mean the rate of interest per annum as
determined by the Multicurrency Agent (rounded, if necessary, to the next
higher multiple of 1/16%) at which overnight or weekend deposits of the
appropriate Currency (or if such amount remains unpaid for more than three
Business Days, then for such other period of time not longer than three months
as the Multicurrency Agent may select in its absolute discretion) for delivery
in immediately available and transferable funds would be offered by the
Multicurrency Agent to major banks in the London interbank market upon request
of such major banks for the applicable period as determined above and in an
amount comparable to the Multicurrency Agent's portion of the unpaid
Obligations bearing interest at such rate (or, if the Multicurrency Agent is
not placing such deposits in such Currency in the London interbank market, then
the Multicurrency Agent's cost of funds in such Currency for such period).
"Subordinated Debentures" shall mean Interface's 8% Convertible
Subordinated Debentures due 2013 issued pursuant to that certain Indenture
dated as of September 15, 1988 by and between Interface and The Citizens and
Southern National Bank, as Trustee (such bank having now been succeeded by
NationsBank of Georgia, N.A., as Trustee thereunder).
"Subordinated Debt" shall mean (i) Indebtedness outstanding
pursuant to the Subordinated Debentures, and (ii) other Indebtedness of
Interface subordinated to all obligations of Interface or any other Credit
Party arising under this Agreement, the Notes, and the Guaranty Agreements on
terms and conditions satisfactory in all respects to the Co-Agents and the
Required Lenders, including without limitation, with respect to interest rates,
payment terms, maturities, amortization schedules, covenants, defaults,
remedies, and subordination provisions, as evidenced by the written approval of
the Co-Agents and Required Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships, joint
ventures, and associations) regardless of its jurisdiction of organization or
formation, at least a majority of the total combined voting power of all
classes of voting stock or other
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<PAGE> 33
ownership interests of which shall, at the time as of which any determination
is being made, be owned by such Person, either directly or indirectly through
one or more other Subsidiaries.
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social security and
franchise taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all interest,
penalties, additions to tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and the Certificate of Deposit Rate or LIBOR, the display page
so designated on the Dow Jones Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying rates
comparable to the Certificate of Deposit Rate or LIBOR).
"Term Lenders" shall mean, collectively, those Lenders extending
the Term Loans to Interface pursuant to Section 2.01(a).
"Term Loan Commitment" shall mean, at any time for any Term
Lender, the amount of such commitment set forth opposite such Lender's name on
the signature pages hereof, as the same may be increased or decreased from time
to time as a result of any repayment of the Term Loans, any assignment thereof
pursuant to Section 12.06, or any amendment thereof pursuant to Section 12.02.
"Term Loan Final Maturity Date" shall mean the earlier of (i)
December 31, 2001, and (ii) the date on which all amounts outstanding under
this Agreement have been declared or have automatically become due and payable
pursuant to the provisions of Article X.
"Term Loans" shall mean, collectively, the term loans in the
aggregate principal amount of $50,000,000 made to Interface by the Term Lenders
on the Closing Date pursuant to Section 2.01(a).
"Term Notes" shall mean, collectively, the promissory notes
evidencing the Term Loans substantially in the form of Exhibit A.
"Total Capitalization" shall mean the sum of Funded Debt and
Consolidated Net Worth for the Consolidated Companies.
"Total Commitment" shall mean, for any Lender at any time, the
sum of such Lender's Term Loan Commitment, Revolving Loan
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<PAGE> 34
Commitment, and Multicurrency Loan Commitment; and "Total Commitments" shall
mean, for all Lenders at any time, the sum of the Total Commitment of all
Lenders.
"Type" of Borrowing shall mean a Borrowing consisting of Base
Rate Advances, CD Rate Advances or Euro Advances.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATION. Unless
otherwise defined or specified herein, all accounting terms shall be construed
herein, all accounting determinations hereunder shall be made, all financial
statements required to be delivered hereunder shall be prepared, and all
financial records shall be maintained in accordance with, GAAP, except that
financial records of Foreign Subsidiaries may be maintained in accordance with
generally accepted accounting principles in effect from time to time in the
jurisdiction of organization of such Foreign Subsidiary; provided, however,
that compliance with the financial covenants and calculations set forth in
Section 8.09, Article IX, and elsewhere herein, and in the definitions used in
such covenants and calculations, shall be calculated, made and applied in
accordance with GAAP and such generally accepted accounting principles in such
foreign jurisdictions, as the case may be, as in effect on the date of this
Agreement applied on a basis consistent with the preparation of the financial
statements referred to in Section 7.14 unless and until the parties enter into
an agreement with respect thereto in accordance with Section 12.13; and
provided, further, that for purposes of such financial covenants and
calculations, the Convertible Preferred Stock shall be considered as capital
stock of Interface and not as Funded Debt.
SECTION 1.03. OTHER DEFINITIONAL TERMS. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, Section, Schedule, Exhibit and like
references are to this Agreement unless otherwise specified.
SECTION 1.04. EXHIBITS AND SCHEDULES. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
ARTICLE II.
TERM LOANS
SECTION 2.01. AMOUNT OF TERM LOANS; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set
forth, each Term Lender severally agrees to make to Interface on the Closing
Date a Term Loan in an amount equal to its Term Loan Commitment, such Term
Loans to be repaid as set forth in Section 2.02(b). Interface shall not
be entitled to reborrow any amounts repaid with respect to the Term Loans.
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<PAGE> 35
(b) Each Term Loan shall, at the option of Interface, be made or
continued as, or converted into, part of one or more Borrowings that shall
consist entirely of Base Rate Advances, CD Rate Advances, or Eurodollar
Advances. The aggregate principal amount of each Borrowing of Term Loans
consisting of CD Rate Advances or Eurodollar Advances shall be not less than
$1,000,000 or a greater integral multiple of $100,000, and the aggregate
principal amount of each Borrowing of Term Loans consisting of Base Rate
Advances shall not be less than $300,000 or a greater integral multiple of
$100,000. At no time shall the number of Borrowings outstanding under the Term
Loans exceed eight in either case; provided that, for the purpose of
determining the number of Borrowings outstanding and the minimum amount for
Borrowings resulting from conversions or continuations, all Borrowings under
the Term Loans comprised of Base Rate Advances shall be considered in each case
as one Borrowing.
(c) Interface shall use the proceeds of the Term Loans solely
for the purpose of refinancing the outstanding "Series B Term Loans" under the
1993 Credit Agreement.
SECTION 2.02. NOTES; REPAYMENT OF PRINCIPAL.
(a) Interface's obligations to pay the principal of, and
interest on, the Term Loans to each Lender shall be evidenced by the records of
the Domestic Agent and such Lender and by the respective Term Note payable to
such Lender (or the assignor of such Lender) completed in conformity with this
Agreement.
(b) Interface shall repay the Term Loans in two equal
annual installments, each in the principal amount of $25,000,000, on December
29, 2000, and December 31, 2001. All Term Loans, if not sooner paid, shall be
due and payable in full on the Term Loan Final Maturity Date.
SECTION 2.03. MANDATORY PREPAYMENTS.
(a) No mandatory prepayment shall be required pursuant to this
Section 2.03(a) until the aggregate amount of Asset Sales occurring after
October 2, 1994 exceeds $10,000,000 (based on the Asset Values thereof, but
excluding in the foregoing computation (i) Asset Sales resulting from loss,
damage, destruction, or taking where the proceeds thereof are utilized so as to
be excluded from the definition of Net Proceeds, and (ii) Asset Sales occurring
as part of any sale and leaseback transactions permitted pursuant to Section
9.06)). Whenever such Asset Values shall have equaled or exceeded such amount,
within ten (10) Business Days after each date on which any Consolidated Company
receives any Net Proceeds as a result of or in connection with an Asset Sale by
any Consolidated Company, the Term Loans outstanding under Section 2.01 shall
be prepaid by an amount equal to 40% of such Net Proceeds (such amount being
subject to adjustment pursuant to paragraph (c) of this Section 2.03) plus
interest accrued and unpaid on the amount of such prepayment. If immediately
prior to any Asset Sale the
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<PAGE> 36
aggregate amount of prior Asset Sales (determined as aforesaid) is less than
$10,000,000, but such Asset Sale causes the $10,000,000 threshold amount to be
exceeded, then 40% of a pro rata portion of the Net Proceeds of such Asset
Sale, based upon the ratio of the amount of the Asset Value of such Asset Sale
in excess of the $10,000,000 threshold to the total Asset Value of such Asset
Sale, shall be applied as set forth in the preceding sentence. All such
prepayments under this Section 2.03(a) shall be applied in each case against
all remaining scheduled amortization payments on a pro rata basis, without
prejudice, however, to the provisions of Section 2.03(c).
(b) On the date occurring ninety (90) days after the last
day of each fiscal year of Interface, the Term Loans outstanding under Section
2.01 shall be prepaid by an amount equal to 25% of the Excess Cash Flow, if
any, for such fiscal year (such amount being subject to adjustment pursuant to
paragraph (c) of this Section 2.03) plus interest accrued and unpaid on the
amount of such prepayment. Such prepayment shall be applied in each case to
principal installment payments of the Term Loans in the inverse order of their
respective maturities, without prejudice, however, to the provisions of Section
2.03(c).
(c) Notwithstanding the provisions of paragraphs (a) and
(b) of this Section 2.03, (i) no mandatory prepayment shall be required to be
made under paragraph (a) or (b) of this Section 2.03 if the amount under
paragraph (a) or (b) is less than $100,000 in any instance, and (ii) mandatory
prepayment amounts otherwise required under said paragraphs (a) and (b) shall
be rounded to nearest multiple of $100,000 (such that, for example, if the
portion of Net Proceeds required to be prepaid pursuant to paragraph (a) is
$250,000 or more, but less than $350,000, the mandatory prepayment amount under
this Section 2.03 shall equal $300,000 plus interest accrued and unpaid on such
amount).
(d) Each mandatory prepayment of Term Loans pursuant to
this Section 2.03 shall be applied on a pro rata basis first to Base Rate
Advances outstanding under each such series of Term Loans to the full extent
thereof before application to Fixed Rate Advances outstanding under such
series; provided, however, that, so long as no Default or Event of Default has
occurred and is continuing, in lieu of application of such prepayment to Fixed
Rate Advances prior to the expiration of the respective Interest Periods with
respect thereto, Interface, at its option, may execute an Escrow Letter with
respect to such prepayments and deposit with the Collateral Agent funds equal
to such prepayments for application in accordance with the terms of such Escrow
Letter.
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<PAGE> 37
ARTICLE III.
REVOLVING LOANS
SECTION 3.01. COMMITMENT; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set
forth, each Revolving Lender severally agrees to make to Interface from time
to time on and after the Closing Date, but prior to the Revolver/Multicurrency
Maturity Date, Revolving Loans in an aggregate amount outstanding at any time
not to exceed an amount equal to (i) such Lender's Revolving Loan Commitment,
minus (ii) such Lender's L/C Exposure; provided, however, that the Revolving
Loans outstanding at any time shall in no event be permitted to exceed an
amount equal to (i) the total Revolving Loan Commitments for all Lenders,
minus (ii) the Aggregate L/C Outstandings. Interface shall be entitled to
repay and reborrow Revolving Loans in accordance with the provisions hereof.
(b) Each Revolving Loan shall, at the option of Interface, be
made or continued as, or converted into, part of one or more Borrowings that
shall consist entirely of Base Rate Advances, CD Rate Advances, or Eurodollar
Advances. The aggregate principal amount of each Borrowing of Revolving Loans
shall be not less than $1,000,000 or a greater integral multiple of $100,000,
provided that each Borrowing of Revolving Loans comprised of Base Rate
Advances shall be not less than $250,000 or a greater integral multiple of
$1000, except to the extent otherwise provided with respect to Revolving Loans
made pursuant to Section 5.01(a)(iii). At no time shall the number of
Borrowings outstanding under this Article III exceed eight; provided that,
for the purpose of determining the number of Borrowings outstanding and the
minimum amount for Borrowings resulting from conversions or continuations, all
Borrowings of Base Rate Advances under this Facility shall be considered as
one Borrowing.
(c) The proceeds of Revolving Loans shall be used solely
for the following purposes:
(i) Approximately $__________ shall be used initially to
refinance the existing Indebtedness of Interface outstanding as "Revolving
Loans" and "Series A Term Loans" under the 1993 Credit Agreement; and
(ii) All other amounts shall be used as working capital and for
other general corporate purposes.
SECTION 3.02. NOTES; REPAYMENT OF PRINCIPAL.
(a) Interface's obligations to pay the principal of, and
interest on, the Revolving Loans to each Revolving Lender shall be evidenced by
the records of the Domestic Agent and such Lender and by the Revolving Credit
Note payable to such Lender (or the
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<PAGE> 38
assignor of such Lender) completed in conformity with this Agreement.
(b) All outstanding principal amounts under the Revolving Loans
shall be due and payable in full on the Revolver/Multicurrency Maturity Date.
SECTION 3.03. VOLUNTARY REDUCTION OF REVOLVING LOAN COMMITMENTS.
Upon at least three (3) Business Days' prior telephonic notice (promptly
confirmed in writing) to the Domestic Agent, Interface shall have the right,
without premium or penalty, to terminate the Revolving Loan Commitments, in
part or in whole, provided that (i) any such termination shall apply to
proportionately and permanently reduce the Revolving Loan Commitments of each
of the Revolving Lenders, (ii) any partial termination pursuant to this Section
3.03 shall be in an amount of at least $1,000,000 and integral multiples of
$100,000, and (iii) no such reduction shall be permitted which would (x)
require a prepayment that is not permitted by Section 5.06, or (y) reduce the
Revolving Loan Commitments to an amount less than the Aggregate L/C
Outstandings. If the aggregate outstanding amount of the Revolving Loans and
the Aggregate L/C Outstandings exceed the amount of the Revolving Loan
Commitments as so reduced, Interface shall immediately repay the Revolving
Loans by an amount equal to such excess, together with all accrued but unpaid
interest on such excess amount.
SECTION 3.04. MANDATORY REDUCTIONS OF REVOLVING LOAN COMMITMENTS.
If any mandatory prepayment shall be due with respect to the Term Loans
pursuant to Section 2.03, but such prepayment cannot be applied, or an escrow
for such prepayment is established as provided in Section 2.03(d) for
application, against the Term Loans, in whole or in part, because the Term
Loans have been, or are then being, paid (currently or pursuant to such escrow
arrangement) in full, then the Revolving Loan Commitments and the Multicurrency
Loan Commitments shall automatically and ratably be reduced by an amount equal
to such prepayment or portion thereof which cannot be so applied; provided,
however, that no such reduction pursuant to this Section 3.04 shall be required
to the extent that the Revolving Loan Commitments and the Multicurrency Loan
Commitments would be less than $135,000,000 in the aggregate. Any such
reduction of the Revolving Loan Commitments and the Multicurrency Loan
Commitments shall apply as a proportional and permanent reduction with respect
to the Revolving Loan Commitments and the Multicurrency Loan Commitments of
each of the Revolving Lenders and Multicurrency Lenders, respectively. If the
aggregate outstanding amount of the Revolving Loans and the Aggregate L/C
Outstandings exceed the amount of the Revolving Loan Commitments as so reduced,
Interface shall immediately repay the Revolving Loans by an amount equal to
such excess. Each mandatory prepayment of Revolving Loans pursuant to this
Section 3.04 shall be applied first to Base Rate Advances to the full extent
thereof before application to Fixed Rate Advances; provided, however, that, so
long as no Default or Event of Default has occurred and is continuing, in lieu
of application of such prepayment to Fixed Rate Advances prior to the
expiration of the respective Interest Periods with respect thereto, Interface,
at its option, may execute an
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Escrow Letter with respect to such prepayment and deposit with the Collateral
Agent funds equal to the amount of such prepayment for application in
accordance with the terms of such Escrow Letter.
ARTICLE IV
MULTICURRENCY LOANS
SECTION 4.01. MULTICURRENCY LOAN COMMITMENTS; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set
forth (including, without limitation, the conditions set forth in Section 6.02
with respect to Multicurrency Loans to Europe Limited, each Multicurrency
Lender severally agrees to make to the applicable Borrower from time to time on
and after the Closing Date, but prior to the Revolver/Multicurrency Maturity
Date, Multicurrency Loans in an aggregate amount outstanding at any time not
to exceed its Multicurrency Loan Commitment. For the purpose of determining
the unutilized portion of the Multicurrency Loan Commitment of each
Multicurrency Lender on the date of a requested Borrowing under the
Multicurrency Loan Commitments, the Dollar Equivalent of the Borrowing then
being requested shall be aggregated with the Dollar Equivalents of all
Multicurrency Loans then outstanding (the Dollar Equivalent of each such
outstanding Loan to be calculated as of the date of the most recent conversion
or continuation of such Loan pursuant to Section 5.01(b)(ii) or, if not
previously continued or converted, the date of the initial Borrowing of such
Loan pursuant to Section 5.01(a)(ii)). The Borrowers shall be entitled to
repay and reborrow Multicurrency Loans in accordance with the provisions
hereof.
(b) Each Multicurrency Loan shall, at the option of the
Borrower requesting such Loan, be made or continued as, or converted into, part
of one or more Borrowings, that, unless otherwise specifically provided herein,
shall consist entirely of Base Rate Advances (if selected by Scherpenzeel B.V.
with respect to Multicurrency Loans made in U.S. Dollars) or Eurocurrency
Advances. The aggregate principal amount of each Borrowing of Multicurrency
Loans shall be in the minimum amounts and multiples indicated below for a
Borrowing in the specified Currency, provided that Multicurrency Loans
comprised of Base Rate Advances shall not be less than $250,000 or a greater
integral multiple of $1,000:
<TABLE>
<CAPTION>
MINIMUM
CURRENCY BORROWING MULTIPLE
======== ========= ========
<S> <C> <C>
U.S. Dollars 1,000,000 100,000
Dutch Guilders 2,000,000 200,000
German Marks 1,500,000 150,000
French Francs 5,500,000 550,000
British Pounds 550,000 55,000
Japanese Yen 130,000,000 13,000,000
</TABLE>
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<PAGE> 40
At no time shall the number of Borrowings outstanding under this Article IV
exceed eight; provided that, for the purpose of determining the number of
Borrowings outstanding and the minimum amount for Borrowings resulting from
conversions or continuations, all Borrowings comprised of Base Rate Advances
under this Facility shall be considered as one Borrowing.
(c) The Borrowers shall use the proceeds of the
Multicurrency Loans for the following purposes:
(i) Approximately $__________ shall be used initially to
refinance the existing Indebtedness of Interface outstanding as
"Multicurrency Loans" under the 1993 Credit Agreement; and
(ii) All other amounts shall be used as working capital and for
other general corporate purposes, provided that all Advances to any
Borrower shall be used solely as working capital and for other general
corporate purposes of such Borrower and other Foreign Subsidiaries.
SECTION 4.02 NOTES; REPAYMENT OF PRINCIPAL.
(a) The Borrowers' obligation to pay the principal of, and
interest on, the Multicurrency Loans to each Multicurrency Lender shall be
evidenced by the records of the Multicurrency Agent and such Lender and by the
Multicurrency Note payable to such Lender (or the assignor of such Lender)
completed in conformity with this Agreement.
(b) All outstanding principal amounts under the Multicurrency
Loans shall be due and payable in full on the Revolver/Multicurrency Maturity
Date.
SECTION 4.03 VOLUNTARY REDUCTION OF MULTICURRENCY LOAN
COMMITMENTS.
(a) Upon at least three (3) Business Days' prior telephonic
notice (promptly confirmed in writing) to the Multicurrency Agent, the
Borrowers shall have the right, without premium or penalty, to terminate the
Multicurrency Loan Commitments, in part or in whole, provided that (i) any
such termination shall apply to proportionately and permanently reduce the
Multicurrency Loan Commitments of the Multicurrency Lenders, (ii) any partial
termination pursuant to this Section 4.03 shall be in an amount of at least
$1,000,000 and integral multiples of $100,000, and (iii) no such reduction
shall be permitted which would require a prepayment that is not permitted by
Section 5.06. If the Dollar Equivalent of the aggregate outstanding
Multicurrency Loans (calculated in the manner set forth in the second sentence
of Section 4.01(a)) exceeds the amount of the Multicurrency Loan Commitments as
so reduced, the Borrowers shall immediately repay the Multicurrency Loans by a
Dollar Equivalent amount equal to such excess.
(b) If any Multicurrency Lender fails to deliver to Interface by
June __, 1995, the certificate or other document from the United Kingdom
Inland Revenue as specified in
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<PAGE> 41
Section 5.07(b)(v)(B) or otherwise fails to establish to the satisfaction of
Interface, that it is exempt from withholding taxes imposed by the United
Kingdom, and such Multicurrency Lender's Multicurrency Loan Commitment has not
been assigned to another Multicurrency Lender or an Eligible Assignee pursuant
to Section 12.06(g), then upon at least five (5) Business Days' prior written
notice to the Multicurrency Agent and such Multicurrency Lender, the Borrowers
shall have the right to terminate the Multicurrency Loan Commitment of such
Multicurrency Lender, and the aggregate amount of Multicurrency Loan
Commitments shall be reduced by such amount (but without any effect on the
amount of the Multicurrency Loan Commitment of any other Multicurrency Lender).
SECTION 4.04 MANDATORY REDUCTION OF MULTICURRENCY LOAN
COMMITMENTS.
(a) If any mandatory prepayment shall be due with respect to the
Term Loans pursuant to Section 2.03, but such prepayment cannot be applied, or
an escrow for such prepayment established as provided in Section 2.03(d) for
application, against the Term Loans, in whole or in part, because the Term
Loans have been, or are then being, paid (currently or pursuant to such escrow
arrangement) in full, then the Multicurrency Loan Commitments and the
Revolving Loan Commitments shall automatically and ratably be reduced by an
amount equal to such prepayment or portion thereof which cannot be so applied;
provided, however, that no such reduction pursuant to this Section 4.04 shall
be required to the extent that the Multicurrency Loan Commitments and the
Revolving Loan Commitments would be less than $135,000,000 in the aggregate.
Any such reduction of the Multicurrency Loan Commitments and the Revolving Loan
Commitments shall apply as a proportional and permanent reduction of the
Multicurrency Loan Commitments and Revolving Loan Commitments of each of the
Multicurrency Lenders and Revolving Lenders, respectively. If the Dollar
Equivalent of the aggregate outstanding Multicurrency Loans (calculated in the
manner set forth in the second sentence of Section 4.01(a)) exceeds the amount
of the Multicurrency Loan Commitments as so reduced, the Borrowers shall
immediately repay the Multicurrency Loans by a Dollar Equivalent amount equal
to such excess.
(b) If at any time the Multicurrency Agent shall determine that
the aggregate principal amount of Multicurrency Loans (after converting all
Eurocurrency Advances to their Dollar Equivalent on the date of calculation)
is equal to or greater than 110% of aggregate Multicurrency Loan Commitments
then in effect, the Borrowers shall, upon three (3) Business Days' written
notice to Interface from the Multicurrency Agent, prepay an aggregate
principal amount of Multicurrency Loans such that the Dollar Equivalent of the
outstanding principal amount of the Multicurrency Loans does not exceed the
aggregate Multicurrency Loan Commitments.
(c) Each mandatory prepayment of Multicurrency Loans pursuant to
this Section 4.04 shall be applied first to Base Rate Advances to the full
extent thereof before application to Fixed
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<PAGE> 42
Rate Advances; provided, however, that, so long as no Default or Event of
Default has occurred and is continuing, in lieu of application of such
prepayment to Fixed Rate Advances prior to the expiration of the respective
Interest Periods with respect thereto, the respective Borrower, at its option,
may execute an Escrow Letter with respect to such prepayment and deposit with
the Collateral Agent funds equal to the amount of such prepayment for
application in accordance with the terms of such Escrow Letter.
ARTICLE V.
GENERAL LOAN TERMS
SECTION 5.01. FUNDING NOTICES.
(a) (i) Whenever Interface desires to make a Borrowing with
respect to the Term Loans or under the Revolving Loan Commitments (other than
one resulting from a conversion or continuation pursuant to Section
5.01(b)(i)), it shall give the Domestic Agent prior written notice (or
telephonic notice promptly confirmed in writing) of such Borrowing (a "Notice
of Borrowing"), such Notice of Borrowing to be given prior to 11:00 A.M. (local
time for such Agent) at its Payment Office (x) one Business Day prior to the
requested date of such Borrowing in the case of Base Rate Advances, (y) two
Business Days prior to the requested date of such Borrowing in the case of CD
Rate Advances, and (z) three Business Days prior to the requested date of such
Borrowing in the case of Eurodollar Advances. Notices received after 11:00
A.M. shall be deemed received on the next Business Day. Each Notice of
Borrowing shall be irrevocable and shall specify the aggregate principal amount
of the Borrowing, the date of Borrowing (which shall be a Business Day), and
whether the Borrowing is to consist of Base Rate Advances, CD Rate Advances or
Eurodollar Advances and (in the case of Fixed Rate Advances) the Interest
Period to be applicable thereto.
(ii) Whenever any Borrower desires to make a Borrowing under
the Multicurrency Loan Commitments (other than one resulting from a conversion
or continuation pursuant to Section 5.01(b)(ii)), it shall give the
Multicurrency Agent prior written notice (or telephonic notice promptly
confirmed in writing) of such Borrowing (a "Notice of Multicurrency
Borrowing"), such Notice of Multicurrency Borrowing to be given prior to 10:00
A.M. (local time for such Agent) at its Administrative Office (x) one Business
Day prior to the requested date of such Borrowing in the case of Base Rate
Advances (available only with respect to Multicurrency Loans made in U.S.
Dollars), and (y) three Business Days prior to the requested date of such
Borrowing in the case of Eurocurrency Advances. Notices received after 10:00
A.M. shall be deemed received on the next Business Day. Each Notice of
Multicurrency Borrowing shall be irrevocable and shall specify the aggregate
principal amount of the Borrowing, the date of Borrowing (which shall be a
Business Day), whether the Borrowing is to consist of Base Rate Advances or
Eurocurrency Advances and (in the case of
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Eurocurrency Advances) the Currency in which such Advances are to be made and
the Interest Period applicable thereto.
(iii) Whenever there occurs any request or demand for payment
under any Letter of Credit by the beneficiary thereof, and Interface shall not
have notified the Domestic Agent and the L/C Issuer prior to 11:00 A.M.
(Atlanta, Georgia time) on the Business Day immediately prior to the date on
which such drawing is to be honored that the L/C Account Party or Interface,
on behalf of such L/C Account Party, intends to reimburse the L/C Issuer for
the amount of such drawing with funds other than the proceeds of Revolving
Loans, (x) Interface shall be deemed to have given a Notice of Borrowing to the
Domestic Agent requesting a Borrowing of Revolving Loans which are Base Rate
Loans on the date on which such drawing is to be honored in an amount equal to
the amount of such drawing, and (y) each Revolving Lender shall, by 1:00 P.M.
(Atlanta, Georgia time) on the date of the honoring of such drawing, make a
Revolving Loan to Interface which is a Base Rate Loan in an amount equal to the
product of the amount of such drawing and such Revolving Lender's Pro Rata
Share, the proceeds of which shall be applied directly by the Domestic Agent to
reimburse the L/C Issuer for the amount of such drawing (provided that, solely
for purposes of such Borrowing, the conditions precedent set forth in Section
6.03 shall not be applicable to such Borrowing).
(b) (i) Whenever Interface desires to convert all or a portion
of an outstanding Borrowing under the Revolving Credit Commitments or
constituting a portion of the Term Loans, which Borrowing consists of Base Rate
Advances, CD Rate Advances or Eurodollar Advances, into one or more Borrowings
consisting of Advances of another Type, or to continue outstanding a Borrowing
consisting of CD Rate Advances or Eurodollar Advances for a new Interest
Period, it shall give the Domestic Agent at least two Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
such Borrowing being converted into or continued as CD Rate Advances, and at
least three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each such Borrowing to be converted into or continued
as Eurodollar Advances. Such notice (a "Notice of Conversion/Continuation")
shall be given prior to 11:00 A.M. (local time for such Agent) on the date
specified. Each such Notice of Conversion/Continuation shall be irrevocable
and shall specify the aggregate principal amount of the Advances to be
converted or continued, the date of such conversion or continuation, whether
the Advances are being converted into or continued as CD Rate Advances or
Eurodollar Advances and (in the case of Fixed Rate Advances) the Interest
Period applicable thereto. If, upon the expiration of any Interest Period in
respect of any Borrowing, Interface shall have failed, or pursuant to the
following sentence be unable, to deliver the Notice of Conversion/Continuation,
Interface shall be deemed to have elected to convert or continue such Borrowing
to a Borrowing consisting of Base Rate Advances. So long as any Default or
Event of Default shall have occurred and be continuing, no Borrowing may be
converted into or continued as (upon expiration of the current
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Interest Period) Fixed Rate Advances. No conversion of any Borrowing of Fixed
Rate Advances shall be permitted except on the last day of the Interest Period
in respect thereof.
(ii) Whenever any Borrower desires to convert all or a portion
of an outstanding Borrowing under the Multicurrency Loan Commitments, which
Borrowing consists of Base Rate Advances or Eurocurrency Advances, into one or
more Borrowings in the same Currency consisting of Advances of another Type,
or to continue outstanding a Borrowing consisting of Eurocurrency Advances in
the same Currency for a new Interest Period, it shall give the Multicurrency
Agent at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each such Borrowing to be converted into or
continued as Eurocurrency Advances. Such notice (a "Notice of Multicurrency
Conversion/Continuation") shall be given prior to 10:00 A.M. (local time for
such Agent) at its Administrative Office on the date specified. Each such
Notice of Multicurrency Conversion/Continuation shall be irrevocable and shall
specify the aggregate principal amount of the Advances to be converted or
continued, the date of such conversion or continuation, whether the Advances
are being converted into or continued as Eurocurrency Advances, and the
Interest Period to be applicable thereto. If, upon the expiration of any
Interest Period in respect of any Eurocurrency Advance, the Borrower shall
have failed, or pursuant to the following sentence be unable, to deliver the
Notice of Multicurrency Conversion/Continuation, such Borrowing shall, until
repaid or until subsequently converted or continued when the applicable
condition set forth in the following sentence shall no longer exist, continue
outstanding in the same Currency and shall bear interest at the Special
Adjusted LIBO Rate plus the Applicable Margin. Notwithstanding the first
sentence of this paragraph (ii), no Notice of Multicurrency
Conversion/Continuation may be given if, on the date of the requested
conversion or continuation, the Dollar Equivalent of the aggregate outstanding
Multicurrency Loans (calculated in the manner set forth in the second sentence
of Section 4.01(a)), exceeds the amount of the Multicurrency Loan Commitments
in effect on such date, and the Borrower shall repay the Multicurrency Loans by
an amount equal to such excess together with all accrued interest on such
excess amount. No conversion of any Borrowing into Eurocurrency Advances shall
be permitted except on the last day of the Interest Period in respect thereof;
and no conversion into or continuation of any Eurocurrency Advances shall be
permitted so long as any Default or Event of Default shall have occurred and
then be continuing.
(c) Without in any way limiting each Borrower's obligation to
confirm in writing any telephonic notice, the Co-Agents may act without
liability upon the basis of telephonic notice believed by the Appropriate
Co-Agent in good faith to be from the respective Borrower prior to receipt of
written confirmation. In each such case, each Borrower hereby waives the right
to dispute the Appropriate Co-Agent's record of the terms of such telephonic
notice.
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<PAGE> 45
(d) The Appropriate Co-Agent shall promptly give each Lender
participating in the respective Facility notice by telephone (confirmed in
writing) or by telex, telecopy or facsimile transmission of the matters covered
by the notices given to such Co-Agent pursuant to this Section 5.01.
SECTION 5.02. DISBURSEMENT OF FUNDS.
(a) No later than 11:00 A.M. (local time for the Domestic
Agent) on the date of each Borrowing with respect to the Term Loans or pursuant
to the Revolving Loan Commitments (other than one resulting from a conversion
or continuation pursuant to Section 5.01(b)(i)), and no later than 10:00 A.M.
(local time for the Multicurrency Agent or the applicable FC Bank, as the case
may be), on the date of each Borrowing pursuant to the Multicurrency Loan
Commitments (other than one resulting from a conversion or continuation
pursuant to Section 5.01(b)(ii)), each Lender participating in the respective
Facility for which a Borrowing has been requested will make available its Pro
Rata Share of the amount of such Borrowing in the applicable Currency, and, in
each case, in immediately available funds at the applicable Payment Office.
The Appropriate Co-Agent will make available to the respective Borrower the
aggregate of the amounts (if any) so made available by the Lenders to the Agent
in a timely manner by crediting such amounts to such Borrower's demand deposit
account maintained with the Appropriate Co-Agent or, in the case of
Eurocurrency Advances in Currencies other than Dollars under the Multicurrency
Loan Commitments, by instructing the FC Bank to credit such amounts to such
Borrower's demand deposit account maintained with such FC Bank or, at the
respective Borrower's option, to effect a wire transfer of such amounts to the
Borrower's account specified by the Appropriate Co-Agent, by the close of
business on such Business Day. In the event that the Lenders do not make such
amounts available to the Appropriate Co-Agent by the time prescribed above, but
such amount is received later that day, such amount may be credited to the
applicable Borrower in the manner described in the preceding sentence on the
next Business Day (with interest on such amount to begin accruing hereunder on
such next Business Day).
(b) Unless the Appropriate Co-Agent shall have been notified
by any Lender prior to the date of a Borrowing that such Lender does not intend
to make available to the Appropriate Co-Agent such Lender's portion of the
Borrowing to be made on such date, the Appropriate Co-Agent may assume that
such Lender has made such amount available to the such Co-Agent on such date
and such Co-Agent may make available to the respective Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Appropriate Co-Agent by such Lender on the date of Borrowing, the Appropriate
Co-Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest at the customary rate set by the Appropriate
Co-Agent for the correction of errors among banks in the applicable Currency.
If such Lender does not pay such corresponding amount forthwith upon the
Appropriate Co-Agent's demand therefor, the
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<PAGE> 46
Appropriate Co-Agent shall promptly notify the respective Borrower, and such
Borrower shall immediately pay such corresponding amount to the Appropriate
Co-Agent together with interest at the rate specified for the Borrowing which
includes such amount paid. Nothing in this subsection shall be deemed to
relieve any Lender from its obligation to fund its Commitments hereunder or to
prejudice any rights which any Borrower may have against any Lender as a result
of any default by such Lender hereunder.
(c) All Borrowings under each Facility shall be loaned by those
Lenders participating in such Facility on the basis of their Pro Rata Share of
the Term Loan Commitments, Revolving Loan Commitments, or Multicurrency Loan
Commitments, as the case may be. No Lender shall be responsible for any
default by any other Lender in its obligations hereunder, and each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fund its Commitments hereunder.
SECTION 5.03. INTEREST.
(a) Interface agrees to pay interest in respect of all unpaid
principal amounts of the Revolving Loans and Term Loans from the respective
dates such principal amounts were advanced to maturity (whether by
acceleration, notice of prepayment or otherwise) at rates per annum equal to
the applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from time
to time;
(ii) For CD Rate Advances--The relevant Fixed CD Rate plus the
Applicable Margin; and
(iii) For Eurodollar Advances--The relevant Adjusted LIBO Rate
plus the Applicable Margin.
(b) Each Borrower agrees to pay interest in respect of all
unpaid principal amounts of the Multicurrency Loans made to such Borrower from
the respective dates such principal amounts were advanced to maturity (whether
by acceleration, notice of prepayment or otherwise) at rates per annum equal
to the applicable rates indicated below:
(i) For Base Rate Advances--the Base Rate in effect from time
to time;
(ii) For Eurocurrency Advances--The relevant Adjusted LIBO Rate
(or Special Adjusted LIBO Rate in the case of Eurocurrency Advances not
being repaid, continued or converted at the expiration of an Interest
Period as provided in Section 5.01(b)(ii)) plus the Applicable Margin.
(c) Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Revolving Loans, Term
Loans, and Multicurrency Loans, and all other overdue
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<PAGE> 47
amounts owing hereunder, shall bear interest from each date that such amounts
are overdue:
(i) in the case of overdue principal and interest with respect to
Multicurrency Loans outstanding as Eurocurrency Advances (other than in
Dollars), at the Special Adjusted LIBO Rate plus the Applicable Margin and
an additional one and one-half percent (1 1/2%) per annum;
(ii) in the case of overdue principal and interest with respect to
all other Loans outstanding as Euro Advances (in Dollars) or CD Rate
Advances, at the rate otherwise applicable for the then-current Interest
Period plus an additional one and one-half percent (1 1/2%) per annum;
thereafter at the rate in effect for Base Rate Advances pursuant to
Section 5.03(b)(i) (in the case of Eurocurrency Advances (in Dollars)
under the Multicurrency Loans) or Section 5.03(a)(i) (in the case of
Eurodollar Advances and CD Rate Advances) plus an additional one and
one-half percent (1 1/2%) per annum; and
(iii) in the case of overdue principal and interest with respect to
all other Loans outstanding as Base Rate Advances, and all other
Obligations hereunder (other than Loans), at a rate equal to the
applicable Base Rate plus an additional one and one-half percent (1 1/2%)
per annum;
provided that no Loan shall bear interest after maturity (whether by
acceleration, notice of prepayment or otherwise) at a rate per annum less than
one and one-half percent (1 1/2%) per annum in excess of the rate of interest
applicable thereto at maturity.
(d) Interest on each Loan shall accrue from and including the
date of such Loan to but excluding the date of any repayment thereof;
provided that, if a Loan is repaid on the same day made, one day's
interest shall be paid on such Loan. Interest on all outstanding Base Rate
Advances shall be payable quarterly in arrears on the last calendar day of
each fiscal quarter of Interface in each year. Interest on all
outstanding Fixed Rate Advances shall be payable on the last day of each
Interest Period applicable thereto, and, in the case of Fixed Rate
Advances having an Interest Period in excess of 90 days (in the case of CD
Rate Advances) or three months (in the case of Euro Advances), on each day
which occurs every 90 days or 3 months, as the case may be, after the
initial date of such Interest Period. Interest on all Loans shall be
payable on any conversion of any Advances comprising such Loans into
Advances of another Type, prepayment (on the amount prepaid), at maturity
(whether by acceleration, notice of prepayment or otherwise) and, after
maturity, on demand.
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<PAGE> 48
(e) The Appropriate Co-Agent, upon determining the Fixed CD
Rate, Adjusted LIBO Rate or Special Adjusted LIBO Rate for any Interest
Period, shall promptly notify by telephone (confirmed in writing) or in
writing the respective Borrower and the other Lenders participating in the
respective Facility thereof. Any such determination shall, absent
manifest error, be final, conclusive and binding for all purposes.
SECTION 5.04. INTEREST PERIODS. In connection with the making
or continuation of, or conversion into, each Borrowing of Fixed Rate Advances,
the respective Borrower shall select an interest period (each an "Interest
Period") to be applicable to such Fixed Rate Advances, which Interest Period
shall (x) in the case of CD Rate Advances, be either a 30, 60, 90 or 180 day
period, and (y) in the case of Euro Advances, be either a 1, 2, 3 or 6 month
period; provided that:
(i) The initial Interest Period for any Borrowing of Fixed Rate
Advances shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing consisting of Advances of another Type)
and each Interest Period occurring thereafter in respect of such Borrowing
shall commence on the day on which the next preceding Interest Period
expires;
(ii) If any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in respect
of Euro Advances would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further Business Day occurs
in such month, such Interest Period shall expire on the next preceding
Business Day;
(iii) Any Interest Period in respect of Euro Advances which begins on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period shall, subject to part (iv) below,
expire on the last Business Day of such calendar month;
(iv) No Interest Period shall extend beyond any date upon which any
principal payment is due with respect to the Term Loans, or a prepayment
is required to be made in the Revolving Loans or Multicurrency Loans,
unless the aggregate principal amount of Term Loans, Multicurrency Loans,
or Revolving Loans, as the case may be, that are Base Rate Advances, or
that have Interest Periods which will expire on or before the date of the
respective payment or prepayment, is equal to or in excess of the amount
of any principal payment or prepayment to be made;
(v) The Interest Period for a Fixed Rate Advance which is converted
pursuant to Section 5.09(b) shall
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<PAGE> 49
commence on the date of such conversion and shall expire on the date on
which the Interest Periods for the Fixed Rate Advances of the other
Lenders which were not converted expires; and
(vi) No Interest Period with respect to the Loans shall extend beyond
the Revolver/Multicurrency Maturity Date or Term Loan Final Maturity Date,
as applicable.
SECTION 5.05. FEES.
(a) On the Closing Date, Interface shall pay to the
Domestic Agent, for the benefit of each Term Lender a facility fee
(collectively, the "Facility Fees") in an amount equal to one-quarter of one
percent (.25%) of the amount of such Term Lender's Term Loan Commitment.
(b) [Intentionally omitted.]
(c) Interface shall pay to the Domestic Agent, for the account
of and distribution of the respective Pro Rata Share to each Revolving Lender,
a commitment fee for the period commencing on the Closing Date to and
including the Revolver/Multicurrency Maturity Date computed at a rate equal to
three-eighths of one percent (0.375%) per annum, calculated on the average
daily unused portion of the Revolving Loan Commitments of such Lenders, such
fee being payable quarterly in arrears on the last calendar day of each fiscal
quarter of Interface, and on the Revolver/Multicurrency Maturity Date. If any
Letters of Credit are or were outstanding at any time during such fiscal
quarter, the average daily Aggregate L/C Outstandings thereunder shall
constitute a usage of the Revolving Loan Commitments (thereby reducing the
unused portion of the Revolving Loan Commitments by a corresponding amount) for
purposes of calculating such commitment fee.
(d) The Borrowers shall pay to the Multicurrency Agent, for the
account of and distribution of the respective Pro Rata Share to the
Multicurrency Lenders, a commitment fee for the period commencing on the
Closing Date to and including the Revolver/Multicurrency Maturity Date computed
at a rate equal to three-eighths of one percent (0.375%) per annum, calculated
on the average daily unused portion of the Multicurrency Loan Commitments of
such Multicurrency Lenders (based on the Dollar Equivalent of such unused
portion and calculated in the manner set forth in the second sentence of
Section 4.01(a)), such fee being payable quarterly in arrears on the last
calendar day of each fiscal quarter of Interface, and on the
Revolver/MultiMaturity Date.
(e) [Intentionally omitted.]
(f) Interface and the other Borrowers shall pay to each
Co-Agent a quarterly administrative fee, payable in advance, com-
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mencing on the first calendar day of Interface's third fiscal quarter of 1995,
and continuing on the first calendar day of each fiscal quarter thereafter, in
the respective amount previously agreed in writing by Interface with respect to
such Co-Agent.
SECTION 5.06. VOLUNTARY PREPAYMENTS OF BORROWINGS.
(a) The Borrowers may, at their option, prepay Borrowings
consisting of Base Rate Advances at any time in whole, or from time to time in
part, in amounts aggregating $250,000 or any greater integral multiple of
$1000, by paying the principal amount to be prepaid together with interest
accrued and unpaid thereon to the date of prepayment. Those Borrowings
consisting of Fixed Rate Advances may be prepaid, at the Borrowers' option, in
whole, or from time to time in part, in the respective minimum amounts and
multiples set forth in Section 4.01(b), by paying the principal amount to be
prepaid, together with interest accrued and unpaid thereon to the date of
prepayment, and all compensation payments pursuant to Section 5.12 if such
prepayment is made on a date other than the last day of an Interest Period
applicable thereto. Each such optional prepayment shall be applied in
accordance with Section 5.06(c) below.
(b) Each Borrower shall give written notice (or telephonic
notice confirmed in writing) to the Appropriate Co-Agent of any intended
prepayment (i) not less than one Business Day prior to any prepayment of Base
Rate Advances, (ii) not less than two Business Days prior to any prepayment of
CD Rate Advances, and (iii) not less than three Business Days prior to any
prepayment of Euro Advances. Such notice, once given, shall be irrevocable.
Upon receipt of such notice of prepayment, the Appropriate Co-Agent shall
promptly notify each Lender whose Advance constitutes a portion of such
Borrowing of the contents of such notice and of such Lender's share of such
prepayment.
(c) Each Borrower providing notice of prepayment pursuant
to Section 5.06(b) may designate the Types of Advances and the specific
Borrowing or Borrowings which are to be prepaid, provided that (i) if any
prepayment of Fixed Rate Advances of such Borrower made pursuant to a single
Borrowing shall reduce the outstanding Advances made pursuant to such Borrowing
to an amount less than $1,000,000, such Borrowing shall immediately be
converted into Base Rate Advances; and (ii) each prepayment made pursuant to a
single Borrowing shall be applied pro rata among the Loans comprising such
Borrowing. In the absence of a designation by the Borrower, the Co-Agents
shall, subject to the foregoing, make such designation in their sole
discretion. All voluntary prepayments shall be applied to the payment of
interest before application to principal and shall be applied against scheduled
amortization payments in the inverse order of maturity.
SECTION 5.07. PAYMENTS, ETC.
(a) (i) Except as otherwise specifically provided herein,
all payments under this Agreement, the Letter of Credit Agreement, and the
other Credit Documents, other than the payments
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<PAGE> 51
specified in clause (ii) below, shall be made without defense, set-off or
counterclaim to the Domestic Agent not later than 11:00 A.M. (local time for
such Agent) on the date when due and shall be made in Dollars in immediately
available funds at its Payment Office.
(ii) Except as otherwise specifically provided herein, all
payments under this Agreement with respect to the Multicurrency Loans and the
Multicurrency Notes shall be made without defense, set-off or counterclaim to
the Multicurrency Agent at the applicable Payment Office not later than 10:00
A.M. (local time for such Agent or the applicable FC Bank, as the case may be)
on the date when due and in immediately available funds in the applicable
Currency, or at any other location of the Multicurrency Agent as the
Multicurrency Agent may specify in writing to the Borrowers not later than Noon
(local time for such Agent) on the Business Day prior to the Business Day such
payment is due. All payments of principal and interest with respect to the
Multicurrency Loans shall be made in the Currency in which the related
Borrowing was made.
(b)(i) Any and all payments by the Borrowers hereunder or under
the Notes or the Letter of Credit Agreement shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender, taxes imposed on or measured by its net
income, and franchise taxes and branch profit taxes imposed on it (a) by the
jurisdiction under the laws of which such Lender is organized or any political
subdivision thereof and, in the case of each Lender, taxes imposed on or
measured by its net income, and franchise taxes and branch profit taxes
imposed on it, by the jurisdiction of such Lender's appropriate Lending Office
or any political subdivision thereof, and (b) by a jurisdiction in which any
payments are to be made by any Borrower hereunder, other than the United States
of America, the United Kingdom, or The Netherlands or any political
subdivision of any thereof, and that would not have been imposed but for the
existence of a connection between such Lender and the jurisdiction imposing
such taxes (other than a connection arising as a result of this Agreement or
the transactions contemplated by this Agreement), except in the case of taxes
described in this clause (B), to the extent such taxes are imposed as a result
of a change in the law or regulations of any jurisdiction or any applicable
treaty or regulations or in the official interpretation of any such law, treaty
or regulations by any governmental authority charged with the interpretation or
administration thereof after the date of this Agreement (all such excluded net
income taxes, franchise taxes and branch profit taxes collectively referred to
as the "Excluded Taxes"; all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being collectively referred
to in this Section 5.07(b) as "Taxes"). If any Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or
under any Note or the Letter of Credit Agreement to any Lender, (x) the sum so
payable
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shall be increased as may be necessary so that after making all required
deductions (including deductions with respect to Taxes or Excluded Taxes owed
by such Lender applicable to additional sums payable under this Section
5.07(b)(i)) such Lender receives an amount equal to the sum it would have
received had no such deductions been made, (y) such Borrower shall make such
deductions, and (z) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(ii) Each Borrower will indemnify each Lender for the full amount
of Taxes (together with any Taxes or Excluded Taxes owed by such Lender
applicable to the increased amounts payable under clause (x) of Section
5.07(b)(i) or on the indemnification payments made by a Borrower under this
Section 5.07(b)(ii), but without duplication thereof), and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or such Excluded Taxes were correctly or
legally asserted. Payment pursuant to such indemnification shall be made
within 10 Business Days from the date such Lender makes written demand
therefor.
(iii) Within 30 days after the date of any Borrower's payment of
Taxes, such Borrower will furnish to the relevant Lender, at its appropriate
Lending Office, the original or a certified copy of a receipt evidencing
payment thereof.
(iv) Each Lender that is a foreign Person (i.e., a Person other than
a United States Person as defined in the Internal Revenue Code of 1986, as
amended) hereby agrees that:
(A) it shall, prior to the time it becomes a Lender hereunder,
deliver to Interface:
(1) for each Lending Office located in the United States of
America, three (3) accurate and complete signed originals of
Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"), and/or
(2) for each Lending Office located outside the United
States of America, three (3) accurate and complete signed
originals of Internal Revenue Service Form 1001 or any successor
thereto ("Form 1001");
in each case indicating that such Lender, on the date of delivery thereof,
is entitled to receive payments of principal, interest and fees for the
account of such Lending Office under this Agreement, the Notes, and the
Letter of Credit Agreement free from withholding of United States Federal
income tax; provided, that if the Form 4224 or Form 1001, as the case may
be, supplied by a Lender fails to establish a complete exemption from
United States withholding tax as of the date such Lender becomes a Lender,
such Lender shall, within 15 days after a written request from Interface,
deliver to Interface the forms or other documents necessary to establish
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<PAGE> 53
a complete exemption from United States withholding tax as of such date;
(B) if at any time such Lender changes its Lending Office or
selects an additional Lending Office, it shall, at the same time or
reasonably promptly thereafter (but only to the extent the forms
previously delivered by it hereunder are no longer effective) deliver to
Interface in replacement for the forms previously delivered by it hereunder:
(1) for such changed or additional Applicable Lending
Office located in the United States of America, three (3) accurate
and complete signed originals of Form 4224; or
(2) otherwise, three (3) accurate and complete signed
originals of Form 1001;
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees for
the account of such changed or additional Lending Office under this
Agreement, the Notes, and the Letter of Credit Agreement free from
withholding of United States Federal income tax.
(v) Each Multicurrency Lender hereby agrees that:
(A) it shall, prior to the time it becomes a Multicurrency
Lender hereunder, deliver to Interface with respect to each of its Lending
Offices, duly completed forms, or other evidence reasonably satisfactory
to Interface, establishing that such Multicurrency Lender, on the date of
delivery thereof, is entitled to receive (i) payments of principal,
interest and fees for the account of such Lending Office under this
Agreement and the Notes without deduction and free from withholding of any
income taxes imposed by The Netherlands, and (ii) payments of fees for the
account of such Lending Office under this Agreement without deduction and
free from withholding of any income taxes imposed by the United Kingdom;
provided that if the forms or other evidence supplied by the Multicurrency
Lender fail to establish such a complete exemption from withholding tax of
The Netherlands, or such a complete exemption from withholding tax of the
United Kingdom with respect to payment of fees hereunder, as of the date
such Multicurrency Lender becomes a Multicurrency Lender, such
Multicurrency Lender shall, within fifteen (15) days after a written
request from Interface, deliver to Interface the forms or other documents
necessary to establish such complete exemption from withholding tax as of
such date;
(B) it shall, as soon as practicable after the date of this
Agreement, file all appropriate forms and take other appropriate action to
obtain a certificate or other appropriate document from the United Kingdom
Inland Revenue estab-
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lishing that such Multicurrency Lender, on the date of delivery thereof, is
entitled to receive payments of principal and interest for the account of
its Lending Office under this Agreement and the Notes without deduction
and free from withholding of any income taxes imposed by the United
Kingdom; provided that if the forms supplied by the Multicurrency Lender
fail to establish a complete exemption from withholding tax of the United
Kingdom as of the date of delivery thereof, such Multicurrency Lender
shall, within fifteen (15) days after a written request from Interface,
deliver to Interface the forms or other evidence reasonably satisfactory
to Interface to establish a complete exemption from withholding tax of the
United Kingdom as of such date; and
(C) if at any time the Multicurrency Lender changes its Lending
Office or selects an additional Lending Office, it shall, at the same time
or reasonably promptly thereafter (but only to the extent the forms
previously delivered by it hereunder are no longer effective), deliver to
Interface in replacement for the forms previously delivered by it
hereunder, such additional duly completed forms establishing that such
Multicurrency Lender is on the date of delivery thereof entitled to
receive payments of principal, interest and fees for the account of such
changed or additional Lending Office under this Agreement free from
withholding of United Kingdom or The Netherlands income tax (to the extent
such forms are required under the laws of the relevant jurisdiction to
establish such exemption).
(vi) In addition to the documents to be furnished pursuant to Section
5.07(b)(iv) and (v), each Lender shall, promptly upon the reasonable written
request of Interface to that effect, deliver to Interface such other accurate
and complete forms or similar documentation as such Lender is legally able to
provide and as may be required from time to time by any applicable law, treaty,
rule or regulation of any jurisdiction in order to establish such Lender's tax
status for withholding purposes or as may otherwise be appropriate to eliminate
or minimize any Taxes on payments under this Agreement, the Notes, or the
Letter of Credit Agreement. Each Lender furnishing forms to Interface
pursuant to the requirements of Section 5.07(b)(iv) and (v), and this clause
(vi), shall furnish copies of such forms to the Appropriate Co-Agent at the
same time delivery of such forms is made to Interface.
(vii) No Borrower shall be required to pay any amounts pursuant to Section
5.07(b)(i) or (ii) to any Lender for the account of any Lending Office of such
Lender in respect of any United States withholding taxes payable hereunder
(and a Borrower, if required by law to do so, shall be entitled to withhold
such amounts and pay such amounts to the United States Government) if the
obligation to pay such additional amounts would not have arisen but for a
failure by such Lender to comply with its obligations under Section
5.07(b)(iv), and such Lender shall not be entitled to exemption from deduction
or withholding of United States Federal income tax in respect of the payment of
such sum by any Borrower hereunder for the account of such Lending Office for,
in each case,
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any reason other than a change in United States law or regulations or any
applicable tax treaty or regulations or in the official interpretation of any
such law, treaty or regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) after the date such Lender became a Lender hereunder.
(viii) No Borrower shall be required to pay any amounts pursuant to
Section 5.07(b)(i) or (ii) to any Multicurrency Lender for the account of any
Lending Office of such Lender in respect of any United Kingdom or The
Netherlands withholding taxes payable hereunder (and a Borrower, if required by
law to do so, shall be entitled to withhold such amounts and pay such amounts
to the governments of the United Kingdom or The Netherlands, as the case may
be) if the obligation to pay such additional amounts would not have arisen but
for a failure by such Multicurrency Lender to comply with its obligations under
Section 5.07(b)(v), and such Multicurrency Lender shall not be entitled to
exemption from deduction or withholding of United Kingdom or The Netherlands
income tax in respect of the payment of such sum by any Borrower hereunder for
the account of such Lending Office for, in each case, any reason other than a
change in United Kingdom or The Netherlands law or regulations or any
applicable tax treaty or regulations or in the official interpretation of any
such law, treaty or regulations, by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) after the date such Multicurrency Lender became a Multicurrency Lender
hereunder.
(ix) Within sixty (60) days of the written request of Interface, each
Lender shall execute and deliver such certificates, forms or other documents,
which can be reasonably furnished consistent with the facts and which are
reasonably necessary to assist in applying for refunds of Taxes remitted
hereunder.
(x) Each Lender shall use reasonable efforts to avoid or minimize any
amounts which might otherwise be payable by Borrowers pursuant to this Section
5.07(b), except to the extent that a Lender determines that such efforts would
be disadvantageous to such Lender, as determined by such Lender and which
determination, if made in good faith, shall be binding and conclusive on all
parties hereto.
(xi) To the extent that the payment of any Lender's Taxes by any
Borrower gives rise from time to time to a Tax Benefit (as hereinafter defined)
to such Lender in any jurisdiction other than the jurisdiction which imposed
such Taxes, such Lender shall pay to such Borrower the amount of each such Tax
Benefit so recognized or received. The amount of each Tax Benefit and,
therefore, payment to such Borrower will be determined from time to time by the
relevant Lender in its sole discretion, which determination shall be binding
and conclusive on all parties hereto. Each such payment will be due and
payable by such Lender to such Borrower within a reasonable time after the
filing of the income tax return in which
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such Tax Benefit is recognized or, in the case of any tax refund, after the
refund is received; provided, however, if at any time thereafter such Lender is
required to rescind such Tax Benefit or such Tax Benefit is otherwise
disallowed or nullified, the Borrower shall promptly, after notice thereof from
such Lender, repay to Lender the amount of such Tax Benefit previously paid to
the Borrower and rescinded, disallowed or nullified. For purposes of this
section, "Tax Benefit" shall mean the amount by which any Lender's income tax
liability for the taxable period in question is reduced below what would have
been payable had the Borrower not been required to pay the Lender's Taxes. In
case of any dispute with respect to the amount of any payment the Borrowers
shall have no right to any offset or withholding of payments with respect to
future payments due to any Lender under this Agreement, the Notes, or the
Letter of Credit Agreement.
(xii) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers and the
Lenders contained in this Section 5.07(b) shall survive the termination of this
Agreement and the payment in full of the principal of, premium, if any,
interest, and fees hereunder and under the Notes and the Letter of Credit
Agreement.
(c) Subject to Section 5.04(ii), whenever any payment to be
made hereunder or under any Note or the Letter of Credit Agreement shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension.
(d) All computations of interest and fees hereunder and under
the Notes and the Letter of Credit Agreement shall be made on the basis of a
year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable (to the extent computed on the basis of days elapsed), except that
interest on Eurocurrency Advances outstanding in British pounds sterling shall
be computed on the basis of a year of 365 days for the actual number of days.
Interest on Base Rate Advances shall be calculated based on the Base Rate from
and including the date of such Loan to but excluding the date of the repayment
or conversion thereof. Interest on Fixed Rate Advances shall be calculated as
to each Interest Period from and including the first day thereof to but
excluding the last day thereof. Each determination by either Co-Agent of an
interest rate or fee hereunder shall be made in good faith and, except for
manifest error, shall be final, conclusive and binding for all purposes.
(e) Payment by any Borrower to the Appropriate Co-Agent
in accordance with the terms of this Agreement or the Letter of Credit
Agreement shall, as to such Borrower, constitute payment to the applicable
Lenders under this Agreement or the Letter of Credit Agreement, as the case may
be.
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SECTION 5.08. INTEREST RATE NOT ASCERTAINABLE, ETC. In the
event that the Appropriate Co-Agent shall have determined (which determination
shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted LIBO Rate, Special Adjusted LIBO Rate or the Fixed CD Rate for any
Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market or the United States secondary
certificate of deposit market, as the case may be, or the Appropriate
Co-Agent's position in such markets, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted LIBO Rate, Special Adjusted LIBO Rate or Fixed CD Rate,
as the case may be, then, and in any such event, the Appropriate Co-Agent shall
forthwith give notice (by telephone confirmed in writing) to Interface and to
the Lenders of such determination and a summary of the basis for such
determination. Until the Appropriate Co-Agent notifies Interface that the
circumstances giving rise to the suspension described herein no longer exist,
the obligations of the Lenders to make or permit portions of the Revolving
Loans, Term Loans, or Multicurrency Loans to remain outstanding as CD Rate
Advances, Special Adjusted LIBO Rate or Euro Advances as the case may be, shall
be suspended, and such affected Advances shall bear the same interest as Base
Rate Advances.
SECTION 5.09. ILLEGALITY.
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error, shall be
final, conclusive and binding upon all parties) at any time that the making or
continuance of any Fixed Rate Advance has become unlawful by compliance by such
Lender in good faith with any applicable law, governmental rule, regulation,
guideline or order (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful), then, in any such event, the
Lender shall give prompt notice (by telephone confirmed in writing) to
Interface and to the Appropriate Co-Agent of such determination and a summary
of the basis for such determination (which notice the Appropriate Co-Agent
shall promptly transmit to the other Lenders).
(b) Upon the giving of the notice to Interface referred to in
subsection (a) above, (i) the Borrowers' right to request and such Lender's
obligation to make CD Rate Advances or Euro Advances as the case may be, shall
be immediately suspended, and such Lender shall make an Advance as part of the
requested Borrowing of CD Rate Advances or Euro Advances as the case may be, as
a Base Rate Advance, which Base Rate Advance shall, for all other purposes, be
considered part of such Borrowing, and (ii) if the affected Fixed Rate Advance
or Advances are then outstanding, the Borrowers shall immediately, or if
permitted by applicable law, no later than the date permitted thereby, upon at
least one Business Day's written notice to the Appropriate Co-Agent and the
affected Lender, convert each such Advance into an Advance or Advances of a
different Type
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with an Interest Period ending on the date on which the Interest Period
applicable to the affected Fixed Rate Advances expires, provided that if more
than one Lender is affected at any time, then all affected Lenders must be
treated the same pursuant to this Section 5.09(b).
SECTION 5.10. INCREASED COSTS.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
of any law or regulation, or (y) the compliance with any guideline or request
from any central bank or other governmental authority or quasi-governmental
authority exercising control over banks or financial institutions generally
(whether or not having the force of law):
(i) any Lender (or its applicable Lending Office) shall be
subject to any tax, duty or other charge with respect to its Fixed Rate
Advances or its obligation to make Fixed Rate Advances, or the basis of
taxation of payments to any Lender of the principal of or interest on its
Fixed Rate Advances or its obligation to make Fixed Rate Advances shall
have changed (except for changes in the tax on the overall net income of
such Lender or its applicable Lending Office imposed by the jurisdiction
in which such Lender's principal executive office or applicable Lending
Office is located); or
(ii) any reserve (including, without limitation, any imposed by
the Board of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender's applicable Lending Office shall be
imposed or deemed applicable or any other condition affecting its Fixed
Rate Advances or its obligation to make Fixed Rate Advances shall be
imposed on any Lender or its applicable Lending Office or the London
interbank market or the United States secondary certificate of deposit
market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Fixed Rate Advances
(except to the extent already included in the determination of the applicable
Fixed CD Rate for CD Rate Advances, the applicable Adjusted LIBO Rate for Euro
Advances, or the applicable Special Adjusted LIBO Rate for Eurocurrency
Advances), or there shall be a reduction in the amount received or receivable
by such Lender or its applicable Lending Office, then the Borrowers shall from
time to time (subject, in the case of certain Taxes, to the applicable
provisions of Section 5.07(b)), upon written notice from and demand by such
Lender on Interface (with a copy of such notice and demand to the Appropriate
Co-Agent), pay to the Appropriate Co-Agent for the account of such Lender,
within five Business Days after the date of such notice and demand, additional
amounts sufficient to indemnify such Lender against such increased
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cost. A certificate as to the amount of such increased cost, submitted to
Interface and the Appropriate Co-Agent by such Lender in good faith and
accompanied by a statement prepared by such Lender describing in reasonable
detail the basis for and calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all purposes.
(b) If any Lender shall advise either Co-Agent that at any
time, because of the circumstances described in clauses (x) or (y) in Section
5.10(a) or any other circumstances beyond such Lender's reasonable control
arising after the date of this Agreement affecting such Lender or the London
interbank market or the United States secondary certificate of deposit market
or such Lender's position in such markets, the Adjusted LIBO Rate, the Special
Adjusted LIBO Rate or the Fixed CD Rate, as the case may be, as determined by
the Appropriate Co-Agent, will not adequately and fairly reflect the cost to
such Lender of funding its Fixed Rate Advances, then, and in any such event:
(i) the Appropriate Co-Agent shall forthwith give notice (by
telephone confirmed in writing) to Interface and to the other Lenders of
such advice;
(ii) the Borrowers' right to request and such Lender's obligation
to make or permit portions of the Loans to remain outstanding as CD Rate
Advances or Eurocurrency Advances, as the case may be, shall be
immediately suspended; and
(iii) such Lender shall make a Loan as part of the requested
Borrowing of CD Rate Advances or Euro Advances, as the case may be, as a
Base Rate Advance, which such Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing; provided however, in the
event that any Lender determines with respect to a Eurocurrency Advance
that while the Adjusted LIBO Rate will not adequately and fairly reflect
the costs of such Lender but the Special Adjusted LIBO Rate would
adequately and fairly reflect such costs, then such Lender's portion of
such requested Borrowing shall bear interest based upon the Special
Adjusted LIBO Rate, if available.
SECTION 5.11. LENDING OFFICES.
(a) Each Lender agrees that, if requested by the Borrowers, it
will use reasonable efforts (subject to overall policy considerations of such
Lender) to designate an alternate Lending Office with respect to any of its
Fixed Rate Advances affected by the matters or circumstances described in
Sections 5.07(b), 5.08, 5.09 or 5.10 to reduce the liability of the Borrowers
or avoid the results provided thereunder, so long as such designation is not
disadvantageous to such Lender as determined by such Lender, which
determination if made in good faith, shall be conclusive and binding on all
parties hereto. Nothing in this Section 5.11 shall
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affect or postpone any of the obligations of any Borrower or any right of any
Lender provided hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) issues a public announcement with respect
to the closing of its lending offices in the United States such that any
withholdings or deductions and additional payments with respect to Taxes may be
required to be made by any Borrower thereafter pursuant to Section 5.07(b),
such Lender shall use reasonable efforts to furnish Interface notice thereof as
soon as practicable thereafter; provided, however, that no delay or failure to
furnish such notice shall in any event release or discharge the Borrowers from
their obligations to such Lender pursuant to Section 5.07(b) or otherwise
result in any liability of such Lender.
SECTION 5.12. FUNDING LOSSES. Each Borrower shall compensate
each Lender, upon its written request to Interface (which request shall set
forth the basis for requesting such amounts in reasonable detail and which
request shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all of the parties hereto), for all losses,
expenses and liabilities (including, without limitation, any interest paid by
such Lender to lenders of funds borrowed by it to make or carry its Fixed Rate
Advances, and any amounts required to be paid by any Multicurrency Lender as a
result of currency fluctuations of Currencies borrowed by it to make or carry
Multicurrency Loans, in either case to the extent not recovered by such Lender
in connection with the re-employment of such funds or Currencies and including
loss of anticipated profits), which the Lender may sustain: (i) if for any
reason (other than a default by such Lender) a borrowing of, or conversion to
or continuation of, Fixed Rate Advances to such Borrower does not occur on the
date specified therefor in a Notice of Borrowing, Notice of Multicurrency
Borrowing, Notice of Conversion/Continuation, or Notice of Multicurrency
Conversion/Continuation (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to Section
5.09(b)) of any Fixed Rate Advances to such Borrower occurs on a date which is
not the last day of an Interest Period applicable thereto, or (iii), if, for
any reason, such Borrower defaults in its obligation to repay its Fixed Rate
Advances when required by the terms of this Agreement.
SECTION 5.13. FAILURE TO PAY IN APPROPRIATE CURRENCY. If any
Borrower is unable for any reason to effect payment of a Multicurrency Loan in
the appropriate Currency as required by Section 5.07(a)(ii) or if any Borrower
shall default in the payment when due of any payment in the appropriate
Currency, the Multicurrency Lenders may, at their option, require such payment
to be made to the Multicurrency Agent in the Dollar Equivalent of such Currency
at the Multicurrency Agent's Payment Office specified for payments of
Eurocurrency Advances outstanding in Dollars. In any such case, each Borrower
agrees to hold the Multicurrency Lenders harmless from any loss incurred by the
Multicurrency Lenders arising from any change in the value of Dollars in
relation to such
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Currency between the date such payment became due and the date of payment
thereof.
SECTION 5.14. ASSUMPTIONS CONCERNING FUNDING OF FIXED RATE
ADVANCES. Calculation of all amounts payable to a Lender under this Article V
shall be made as though that Lender had actually funded its relevant Fixed Rate
Advances through the purchase of deposits in the relevant market and Currency,
as the case may be, bearing interest at the rate applicable to such Fixed Rate
Advances in an amount equal to the amount of the Fixed Rate Advances and having
a maturity comparable to the relevant Interest Period and, in the case of
Eurocurrency Advances, through the transfer of such Eurocurrency Advances from
an offshore office of that Lender to a domestic office of that Lender in the
United States of America; provided however, that each Lender may fund each of
its Fixed Rate Advances in any manner it sees fit and the foregoing assumption
shall be used only for calculation of amounts payable under this Article V.
SECTION 5.15. APPORTIONMENT OF PAYMENTS. Aggregate principal
and interest payments in respect of Loans and payments in respect of Letters of
Credit, facility fees, commitment fees, and Letter of Credit fees shall be
apportioned among all outstanding Commitments, Loans and Letters of Credit to
which such payments relate, proportionately to the Lenders' respective Pro Rata
Shares of such Commitments and outstanding Loans and Letters of Credit. The
Appropriate Co-Agent shall promptly distribute to each Lender at its primary
address set forth beside its name on the appropriate signature page hereof or
such other address as any Lender may request its share of all such payments
received by the Appropriate Co-Agent.
SECTION 5.16. SHARING OF PAYMENTS, ETC. If any Lender shall
obtain any payment or reduction (including, without limitation, any amounts
received as adequate protection of a deposit treated as cash collateral under
the Bankruptcy Code) of any obligation of any Borrower hereunder or under the
Letter of Credit Agreement (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share
or L/C Pro Rata Share, as the case may be, of payments or reductions on account
of such obligations obtained by all the Lenders, such Lender shall forthwith
(i) notify each of the other Lenders and the Co-Agents of such receipt, and
(ii) purchase from the other Lenders such participations in the affected
obligations as shall be necessary to cause such purchasing Lender to share the
excess payment or reduction, net of costs incurred in connection therewith,
ratably with each of them, provided that if all or any portion of such excess
payment or reduction is thereafter recovered from such purchasing Lender or
additional costs are incurred, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery or such additional costs, but
without interest unless the Lender obligated to return such funds is required
to pay interest on such funds. Each Borrower agrees that any Lender so
purchasing a participation from another Lender pur-
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suant to this Section 5.16 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of such Borrower in the amount of such participation.
SECTION 5.17. CAPITAL ADEQUACY. Without limiting any other
provision of this Agreement or the Letter of Credit Agreement, in the event
that any Lender shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy not currently in effect or fully applicable as of the Closing Date, or
any change therein or in the interpretation or application thereof, or
compliance by such Lender with any request or directive regarding capital
adequacy not currently in effect or fully applicable as of the Closing Date
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) from a central bank or governmental authority or
body having jurisdiction, does or shall have the effect of reducing the rate of
return on such Lender's capital as a consequence of its obligations hereunder
or under the Letter of Credit Agreement to a level below that which such Lender
could have achieved but for such law, treaty, rule, regulation, guideline or
order, or such change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then within ten Business Days after written notice and demand
by such Lender (with copies thereof to the Co-Agents), each Borrower shall from
time to time pay to such Lender additional amounts sufficient to compensate
such Lender for such reduction (but, in the case of outstanding Base Rate
Advances, without duplication of any amounts already recovered by such Lender
by reason of an adjustment in the applicable Base Rate). Each certificate as
to the amount payable under this Section 5.17 (which certificate shall set
forth the basis for requesting such amounts in reasonable detail), submitted to
Interface by any Lender in good faith, shall, absent manifest error, be final,
conclusive and binding for all purposes.
SECTION 5.18. BENEFITS TO GUARANTORS. In consideration for
the execution and delivery by the Guarantors (other than Interface) of their
Guaranty Agreement, the Borrowers agree to make the benefit of extensions of
credit hereunder available to the Guarantors.
SECTION 5.19. LIMITATION ON CERTAIN PAYMENT OBLIGATIONS.
(a) Each Lender or Agent shall make written demand on Interface
for indemnification or compensation pursuant to Section 5.07 no later than 90
days after the earlier of (i) the date on which such Lender or Agent makes
payment of such Taxes, and (ii) the date on which the relevant taxing
authority or other governmental authority makes written demand upon such
Lender or Agent for payment of such Taxes.
(b) Each Lender or Agent shall make written demand on Interface
for indemnification or compensation pursuant to Sec-
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tions 5.12 and 5.13 no later than 90 days after the event giving rise to the
claim for indemnification or compensation occurs.
(c) Each Lender or Agent shall make written demand on
Interface for indemnification or compensation pursuant to Sections 5.09 and
5.17 no later than 90 days after such Lender or Agent receives actual notice or
obtains actual knowledge of the promulgation of a law, rule, order or
interpretation or occurrence of another event giving rise to a claim pursuant
to such sections.
(d) In the event that the Lenders or Agents fail to give
Interface notice within the time limitations prescribed in (a) or (b) above,
neither Interface nor any other Borrower shall have any obligation to pay such
claim for compensation or indemnification. In the event that the Lender or
Agents fail to give Interface notice within the time limitation prescribed in
(c) above, neither Interface nor any other Borrower shall have any obligation
to pay any amount with respect to claims accruing prior to the ninetieth day
preceding such written demand.
ARTICLE VI.
CONDITIONS TO BORROWINGS
The obligation of each Lender to make Advances to the
Borrowers hereunder is subject to the satisfaction of the following conditions:
SECTION 6.01. CONDITIONS PRECEDENT TO INITIAL LOANS. At the
time of the making of the initial Loans hereunder on the Closing Date, all
obligations of the Borrowers hereunder incurred prior to the initial Loans
(including, without limitation, the Borrowers' obligations to reimburse the
reasonable fees and expenses of counsel to the Co-Agents and any fees and
expenses payable to the Co-Agents and the Lenders as previously agreed with
Interface), shall have been paid in full, and the Co-Agents shall have
received the following, in form and substance satisfactory in all respects to
the Co-Agents:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Notes;
(c) the Guaranty Agreements, Contribution Agreement, and the
Indemnity Agreement;
(d) the Pledge Agreements accompanied, to the extent relevant
under applicable law, by (i) all stock certificates representing the
Pledged Stock, (ii) stock powers for those shares duly executed in blank,
(iii) Uniform Commercial Code financing statements relating thereto, and
(iv) any other documentation requested by the Collateral Agent in order to
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assure the perfection of a first priority lien in such Pledged Stock in
favor of the Collateral Agent for the benefit of the Lenders;
(e) certificate of the Borrowers in substantially the form of
Exhibit F attached hereto and appropriately completed;
(f) certificates of the Secretary or Assistant Secretary of each
of the Credit Parties (or, in the case of any Foreign Subsidiary, a
comparable company officer) attaching and certifying copies of the
resolutions of the boards of directors (or, in the case of any Foreign
Subsidiary, the comparable governing body of such entity) of the Credit
Parties, authorizing as applicable (i) the execution, delivery and
performance of the Credit Documents, and (ii) the granting of the pledges
and security interests granted pursuant to the Pledge Agreements and the
L/C Cash Collateral Assignment;
(g) certificates of the Secretary or an Assistant Secretary
of each of the Credit Parties (or, in the case of any Foreign Subsidiary,
a comparable company officer) certifying (i) the name, title and true
signature of each officer of such entities executing the Credit Documents,
and (ii) the bylaws or comparable governing documents of such entities;
(h) certified copies of the certificate or articles of
incorporation of each Credit Party (or comparable organizational document
of each Foreign Subsidiary), together with certificates of good standing
or existence, as may be available from the Secretary of State (or
comparable office or registry for each Foreign Subsidiary) of the
jurisdiction of incorporation or organization of such Credit Party;
(i) examination reports from the Uniform Commercial Code records
of Cobb County and Troup County, Georgia, showing no outstanding liens or
security interests granted by any Credit Party other than (x) Liens
permitted by Section 9.02, and (y) Liens in favor of the Collateral Agent;
(j) copies of all documents and instruments, including all
consents, authorizations and filings, required or advisable under any
Requirement of Law or by any material Contractual Obligation of the
Credit Parties, in connection with the execution, delivery, performance,
validity and enforceability of the Credit Documents and the other
documents to be executed and delivered hereunder, and such consents,
authorizations, filings and orders shall be in full force and effect and
all applicable waiting periods shall have expired;
(k) certified copies of the Intercompany Loan Documents;
(l) acknowledgments from each of G. Kimbrough Taylor, Jr. and
Kilpatrick & Cody as to their appointment as agent for service of process
for the various Credit Parties;
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(m) the Letter of Credit Agreement, the L/C Cash Collateral
Assignment, the IRB Collateral Documents, together with all certificates,
opinions, documents and instruments required to be furnished to the L/C
Issuer pursuant to Section 3.1 of the Letter of Credit Agreement;
(n) certified copies of indentures, credit agreements,
instruments, and other documents evidencing or securing Indebtedness of
any Consolidated Company described on Schedule 9.01(b) or Schedule 9.01(j),
in any single case in an amount not less than $2,000,000 (or the Dollar
Equivalent thereof);
(o) [Intentionally omitted];
(p) certificates, reports and other information as the Co-Agents
may request from any Consolidated Company in order to satisfy the Lenders
as to the absence of any material liabilities or obligations arising from
matters relating to employees of the Consolidated Companies, including
employee relations, collective bargaining agreements, Plans, Foreign Plans,
and other compensation and employee benefit plans;
(q) certificates, reports, environmental audits and
investigations, and other information as the Co-Agents may request from
any Consolidated Company in order to satisfy the Lenders as to the
absence of any material liabilities or obligations arising from
environmental and employee health and safety exposures to which the
Consolidated Companies may be subject, and the plans of the Consolidated
Companies with respect thereto;
(r) certificates, reports and other information as the
Co-Agents may request from any Consolidated Company in order to satisfy
the Lenders as to the absence of any material liabilities or obligations
arising from litigation (including without limitation, products liability
and patent infringement claims) pending or threatened against the
Consolidated Companies;
(s) a summary, set forth in format and detail acceptable to the
Co-Agents, of the types and amounts of insurance (property and liability)
maintained by the Consolidated Companies;
(t) the favorable opinions of (i) Kilpatrick & Cody, United
States counsel to the Credit Parties, substantially in the form of
Exhibit G-1, (ii) Paisner & Co., United Kingdom counsel to Europe Limited
substantially in the form of Exhibit G-2, and (iii) Nauta Dutilh,
Netherlands counsel to Scherpenzeel B.V. substantially in the form of
Exhibit G-3, in each case addressed to the Co-Agents and each of the
Lenders, and covering such other matters as either Co-Agent or any Lender
may reasonably request;
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(u) the favorable opinions of Clifford Chance, special counsel
to the Co-Agents and the Lenders, as to certain matters relating to the
Credit Documents under the laws of the United Kingdom and the Netherlands;
(v) the favorable opinion of Allen, Allen & Hemsley, special
Australian counsel to the Co-Agents and the Lenders, as to certain matters
relating to the Credit Documents arising under Australian law; and
(w) the favorable opinion of McCarthy Tetrault, special
Canadian counsel to the Co-Agents and the Lenders, as to certain matters
relating to the Credit Documents arising under Canadian law.
In addition to the foregoing, the following conditions shall have been
satisfied or shall exist, all to the satisfaction of the Co-Agents, as of the
time the initial Loans are made hereunder:
(x) the Loans to be made on the Closing Date and the use of
proceeds thereof shall not contravene, violate or conflict with, or
involve the Co-Agents or any Lender in a violation of, any law, rule,
injunction, or regulation, or determination of any court of law or
other governmental authority; and
(y) all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and enforceability
of the Credit Documents shall be reasonably satisfactory in form and
substance to the Required Lenders.
SECTION 6.02. CONDITIONS TO INITIAL LOANS TO EUROPE LIMITED
Prior to the making of the initial Multicurrency Loans to Europe Limited,
Interface and the Multicurrency Agent shall have received with respect to
Europe Limited the forms required to be furnished by the Multicurrrency Lenders
pursuant to Section 5.07(b)(v)(B) or such other satisfactory evidence, in each
case, establishing a complete exemption for such Multicurrency Lender from
United Kingdom withholding tax for payments of all principal and interest from
Europe Limited.
SECTION 6.03. CONDITIONS TO ALL LOANS. At the time of the
making of all Loans (before as well as after giving effect to such Loans and
the proposed use of the proceeds thereof), the following conditions shall have
been satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Interface contained
herein, and all representations and warranties by the other Borrowers
contained herein, shall be true and correct in all material respects
with the same effect as though such representations and warranties had
been made on and as of the date of such Loans (except that the
representation and warranty set forth in Section 7.19 shall not be deemed
to
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relate to any time subsequent to the date of the initial Loans
hereunder);
(c) since the date of the most recent financial statements of
the Consolidated Companies described in Section 7.14(a), there shall
have been no change which has had or could reasonably be expected to
have a Materially Adverse Effect (whether or not any notice with
respect to such change has been furnished to the Lenders pursuant to
Section 8.07);
(d) there shall be no action or proceeding instituted or
pending before any court or other governmental authority or, to the
knowledge of any Borrower, threatened (i) which reasonably could be
expected to have a Materially Adverse Effect, or (ii) seeking to
prohibit or restrict one or more Credit Party's ownership or operation
of any portion of its business or assets, or to compel one or more
Credit Party to dispose of or hold separate all or any portion of its
businesses or assets, where such portion or portions of such
business(es) or assets, as the case may be, constitute a material
portion of the total businesses or assets of the Consolidated
Companies;
(e) the Loans to be made and the use of proceeds thereof
shall not contravene, violate or conflict with, or involve the
Co-Agents or any Lender in a violation of, any law, rule, injunction,
or regulation, or determination of any court of law or other
governmental authority applicable to any of the Borrowers; and
(f) the Co-Agents shall have received such other documents or
legal opinions as the Co-Agents or any Lender may reasonably request,
all in form and substance reasonably satisfactory to the Co-Agents.
Each request for a Borrowing and the acceptance by each
Borrower of the proceeds thereof shall constitute a representation and warranty
by such Borrower, as of the date of the Loans comprising such Borrowing, that
the applicable conditions specified in Sections 6.01 and 6.03 have been
satisfied.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
Each of Interface (as to itself and all other Consolidated
Companies, whether or not Interface is a Borrower hereunder) and each of the
other Borrowers (as to itself and all of its Subsidiaries) represents and
warrants as follows:
SECTION 7.01. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each
of the Consolidated Companies is a corporation duly organized, validly
existing, and in good standing under the laws of the
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jurisdiction of its incorporation, and each of the Credit Parties has
the corporate power and authority and the legal right to own and operate its
property and to conduct its business. Each of the Consolidated Companies (i)
other than the Credit Parties, has the corporate power and authority and the
legal right to own and operate its property and to conduct its business, (ii)
is duly qualified as a foreign corporation and in good standing under the laws
of each jurisdiction where its ownership of property or the conduct of its
business requires such qualification, and (iii) is in compliance with all
Requirements of Law, where (a) with respect to those Consolidated Companies
that are not Credit Parties, the failure to have such power, authority and
legal right as set forth in clause (i), (b) the failure to be so qualified or
in good standing as set forth in clause (ii), or (c) the failure to comply with
Requirements of Law as set forth in clause (iii), would reasonably be expected,
in the aggregate, to have a Materially Adverse Effect. The jurisdiction of
incorporation or organization, and the ownership of all issued and outstanding
capital stock, for each Subsidiary as of the date of this Agreement is
accurately described on Schedule 7.01.
SECTION 7.02. CORPORATE POWER; AUTHORIZATION. Each of the
Credit Parties has the corporate power and authority to make, deliver and
perform the Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of such
Credit Documents. No consent or authorization of, or filing with, any Person
(including, without limitation, any governmental authority), is required in
connection with the execution, delivery or performance by any Credit Party, or
the validity or enforceability against any Credit Party, of the Credit
Documents, other than (i) such consents, authorizations or filings which have
been made or obtained (including without limitation, any necessary
consultations with any Credit Party's supervisory board, works council
("Ondernemingsraad") or similar body), and (ii) customary filings to perfect
the Liens in favor of the Collateral Agent granted in the IRB Collateral
Documents.
SECTION 7.03. ENFORCEABLE OBLIGATIONS. This Agreement has
been duly executed and delivered, and each other Credit Document will be duly
executed and delivered, by the respective Credit Parties, and this Agreement
constitutes, and each other Credit Document when executed and delivered will
constitute, legal, valid and binding obligations of the Credit Parties,
respectively, enforceable against the Credit Parties in accordance with their
respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
SECTION 7.04. NO LEGAL BAR. The execution, delivery and
performance by the Credit Parties of the Credit Documents will not violate any
Requirement of Law or cause a breach or default under any of their respective
Contractual Obligations.
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SECTION 7.05. NO MATERIAL LITIGATION. Except as set forth on
Schedule 7.05 or in any notice furnished to the Lenders pursuant to Section
8.07(h) at or prior to the respective times the representations and warranties
set forth in this Section 7.05 are made or deemed to be made hereunder, no
litigation, investigations or proceedings of or before any courts, tribunals,
arbitrators or governmental authorities are pending or, to the knowledge of any
Borrower, threatened by or against any of the Consolidated Companies, or
against any of their respective properties or revenues, existing or future (a)
with respect to any Credit Document, or any of the transactions contemplated
hereby or thereby, or (b) which, if adversely determined, would reasonably be
expected to have a Materially Adverse Effect.
SECTION 7.06. INVESTMENT COMPANY ACT, ETC. None of the
Credit Parties is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). None of the Credit Parties is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed, guarantee such
indebtedness, or pledge its assets to secure such indebtedness, as contemplated
hereby or by any other Credit Document.
SECTION 7.07. MARGIN REGULATIONS. No part of the proceeds of
any of the Loans will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the applicable Margin
Regulations.
SECTION 7.08. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The Consolidated Companies have received no notices of
claims or potential liability under, and are in compliance with, all applicable
Environmental Laws, where such claims and liabilities under, and failures to
comply with, such statutes, regulations, rules, ordinances, laws or licenses,
would reasonably be expected to result in penalties, fines, claims or other
liabilities (including, without limitation, remediation costs and expenses) to
the Consolidated Companies in amounts in excess of $4,500,000, either
individually or in the aggregate (including any such penalties, fines, claims,
or liabilities relating to the matters set forth on Schedule 7.08(a)), except
as set forth on Schedule 7.08(a) or in any notice furnished to the Lenders
pursuant to Section 8.07(i) at or prior to the respective times the
representations and warranties set forth in this Section 7.08(a) are made or
deemed to be made hereunder.
(b) Except as set forth on Schedule 7.08(b) or in any notice
furnished to the Lenders pursuant to Section 8.07(i) at or prior to the
respective times the representations and warranties set forth in this Section
7.08(b) are made or deemed to be made hereunder, none of the Consolidated
Companies has received during the period from January 1, 1983 through the date
of this Agreement,
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any notice of violation, or notice of any action, either judicial or
administrative, from any governmental authority (whether United States or
foreign) relating to the actual or alleged violation of any Environmental Law,
including, without limitation, any notice of any actual or alleged spill, leak,
or other release of any Hazardous Substance, waste or hazardous waste by any
Consolidated Company or its employees or agents, or as to the existence of any
contamination on any properties owned by any Consolidated Company, where any
such violation, spill, leak, release or contamination would reasonably be
expected to result in penalties, fines, claims or other liabilities (including,
without limitation, remediation costs and expenses) to the Consolidated
Companies in amounts in excess of $4,500,000, either individually or in the
aggregate (including any such penalties, fines, claims or liabilities relating
to the matters set forth on Schedule 7.08(a)); provided, however, that with
respect to the period from January 1, 1983, through December 31, 1986, such
representation and warranty shall be deemed to be made only with respect to
notices known to and disclosed by the Consolidated Companies in this Agreement
and any additional notices of which any Credit Party has actual knowledge as of
the date of this Agreement or hereafter.
(c) The Consolidated Companies have obtained all necessary
governmental permits, licenses and approvals which are material to the
operations conducted on their respective properties, including without
limitation, all required material permits, licenses and approvals for (i) the
emission of air pollutants or contaminates, (ii) the treatment or pretreatment
and discharge of waste water or storm water, (iii) the treatment, storage,
disposal or generation of hazardous wastes, (iv) the withdrawal and usage of
ground water or surface water, and (v) the disposal of solid wastes.
SECTION 7.09. INSURANCE. The Consolidated Companies
currently maintain insurance with respect to their respective properties and
businesses, with financially sound and reputable insurers, having coverages
against losses or damages of the kinds customarily insured against by reputable
companies in the same or similar businesses, such insurance being in amounts no
less than those amounts which are customary for such companies under similar
circumstances. The Consolidated Companies have paid all material amounts of
insurance premiums now due and owing with respect to such insurance policies
and coverages, and such policies and coverages are in full force and effect.
SECTION 7.10. NO DEFAULT. None of the Consolidated Companies
is in default under or with respect to any Contractual Obligation in any
respect which has had or is reasonably expected to have a Materially Adverse
Effect.
SECTION 7.11. NO BURDENSOME RESTRICTIONS. Except as set
forth on Schedule 7.11 or in any notice furnished to the Lenders pursuant to
Section 8.07(o) at or prior to the respective times the representations and
warranties set forth in this Section 7.11 are made or deemed to be made
hereunder, none of the Consolidated Companies is a party to or bound by any
Contractual Obligation or
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Requirement of Law which has had or would reasonably be expected to have a
Materially Adverse Effect.
SECTION 7.12. TAXES. Except as set forth on Schedule 7.12,
each of the Consolidated Companies have filed or caused to be filed all
declarations, reports and tax returns which are required to have been filed,
and has paid all taxes, custom duties, levies, charges and similar
contributions ("taxes" in this Section 7.12) shown to be due and payable on
said returns or on any assessments made against it or its properties, and all
other taxes, fees or other charges imposed on it or any of its properties by
any governmental authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided in its
books); and no tax liens have been filed and, to the knowledge of Interface or
any other Borrower, no claims are being asserted with respect to any such
taxes, fees or other charges; excluding, however, for purposes of the foregoing
portions of this Section, tax returns not filed or taxes not paid where the
aggregate amount of taxes involved does not exceed $2,500,000 in the aggregate
and the failure to file such returns or pay such taxes has resulted from the
Consolidated Companies being without knowledge that the respective tax
authorities are claiming such taxes to be due.
SECTION 7.13. SUBSIDIARIES. Except as disclosed on Schedule
7.01, on the date of this Agreement, Interface has no Subsidiaries and neither
Interface nor any Subsidiary is a joint venture partner or general partner in
any partnership. After the date of this Agreement, except as disclosed on
Schedule 7.13 or in any notice furnished pursuant to Section 8.07(p) at or
prior to the respective times the representations and warranties set forth in
this Section 7.13 are made or deemed to be made hereunder, Interface has no
Material Subsidiaries.
SECTION 7.14. FINANCIAL STATEMENTS. The Borrowers have
furnished to the Co-Agents and the Lenders (i) the audited consolidated balance
sheet of the Consolidated Companies (excluding Prince Street) as at January 2,
1994 and the related consolidated statements of income, shareholders' equity
and cash flows for the 52-week period then ended, including in each case the
related schedules and notes, and (ii) the unaudited balance sheet of the
Consolidated Companies as at the end of the third fiscal quarter of 1994, and
the related unaudited consolidated statements of income, shareholders' equity,
and cash flows for the period then ended, setting forth in each case in
comparative form the figures for the previous fiscal year and third fiscal
quarter, as the case may be. The foregoing financial statements fairly present
in all material respects the consolidated financial condition of such
Consolidated Companies as at the dates thereof and results of operations for
such periods in conformity with GAAP consistently applied. Such Consolidated
Companies taken as a whole do not have any material contingent obligations,
contingent liabilities, or material liabilities for known taxes, long-term
leases or unusual forward or
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long-term commitments not reflected in the foregoing financial statements or
the notes thereto. Since January 2, 1994, there have been no changes with
respect to such Consolidated Companies which has had or would reasonably be
expected to have a Materially Adverse Effect.
SECTION 7.15. ERISA. Except as disclosed on Schedule 7.15 or
in any notice furnished to the Lenders pursuant to Section 8.07(j) at or prior
to the respective times the representations and warranties set forth in this
Section 7.15 are made or deemed to be made hereunder:
(a)(1) Identification of Plans. (A) None of the Consolidated
Companies nor any of their respective ERISA Affiliates maintains or contributes
to, or has during the past two years maintained or contributed to, any Plan
that is subject to Title IV of ERISA, and (B) none of the Consolidated
Companies maintains or contributes to any Foreign Plan;
(2) Compliance. Each Plan and each Foreign Plan maintained
by the Consolidated Companies have at all times been maintained, by their terms
and in operation, in compliance with all applicable laws, and the Consolidated
Companies are subject to no tax or penalty with respect to any Plan of such
Consolidated Company or any ERISA Affiliate thereof, including without
limitation, any tax or penalty under Title I or Title IV of ERISA or under
Chapter 43 of the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404, or 419 of the Tax Code, where the failure to
comply with such laws, and such taxes and penalties, together with all other
liabilities referred to in this Section 7.15 (taken as a whole), would in the
aggregate have a Materially Adverse Effect;
(3) Liabilities. The Consolidated Companies are subject to
no liabilities (including withdrawal liabilities) with respect to any Plans or
Foreign Plans of such Consolidated Companies or any of their ERISA Affiliates,
including without limitation, any liabilities arising from Titles I or IV of
ERISA, other than obligations to fund benefits under an ongoing Plan and to pay
current contributions, expenses and premiums with respect to such Plans or
Foreign Plans, where such liabilities, together with all other liabilities
referred to in this Section 7.15 (taken as a whole), would in the aggregate
have a Materially Adverse Effect;
(4) Funding. The Consolidated Companies and, with respect to
any Plan which is subject to Title IV of ERISA, each of their respective ERISA
Affiliates, have made full and timely payment of all amounts (A) required to be
contributed under the terms of each Plan and applicable law, and (B) required
to be paid as expenses (including PBGC or other premiums) of each Plan, where
the failure to pay such amounts (when taken as a whole, including any penalties
attributable to such amounts) would have a Materially Adverse Effect. No Plan
subject to Title IV of ERISA has an "amount of unfunded benefit liabilities"
(as defined in Section 4001(a)(18) of ERISA), determined as if such Plan
terminated on any date on which this representation and warranty is
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deemed made, in any amount which, together with all other liabilities referred
to in this Section 7.15 (taken as a whole), would have a Materially Adverse
Effect if such amount were then due and payable. The Consolidated Companies
are subject to no liabilities with respect to post-retirement medical benefits
in any amounts which, together with all other liabilities referred to in this
Section 7.15 (taken as a whole), would have a Materially Adverse Effect if such
amounts were then due and payable.
(b) With respect to any Foreign Plan, reasonable reserves
have been established in accordance with prudent business practice or where
required by ordinary accounting practices in the jurisdiction where the Foreign
Subsidiary maintains its principal place of business or in which the Foreign
Plan is maintained. The aggregate unfunded liabilities, after giving effect to
any reserves for such liabilities, with respect to such Foreign Plans, together
with all other liabilities referred to in this Section 7.15 (taken as a whole),
would not have a Materially Adverse Effect.
SECTION 7.16. PATENTS, TRADEMARKS, LICENSES, ETC. Except
as set forth on Schedule 7.16 or in any notice furnished to the Lenders
pursuant to Section 8.07(o) at or prior to the respective times the
representations and warranties set forth in this Section 7.16 are made or
deemed to be made hereunder, (i) the Consolidated Companies have obtained and
hold in full force and effect all material patents, trademarks, service marks,
trade names, copyrights, licenses and other such rights, free from burdensome
restrictions, which are necessary for the operation of their respective
businesses as presently conducted, and (ii) to the best of the Borrowers'
knowledge, no product, process, method, service or other item presently sold by
or employed by any Consolidated Company in connection with such business
infringes any patents, trademark, service mark, trade name, copyright, license
or other right owned by any other person and there is not presently pending, or
to the knowledge of the Borrowers, threatened, any claim or litigation against
or affecting any Consolidated Company contesting such Person's right to sell or
use any such product, process, method, substance or other item where the result
of such failure to obtain and hold such benefits or such infringement would
have a Materially Adverse Effect.
SECTION 7.17. OWNERSHIP OF PROPERTY. Except as set forth
on Schedule 7.17, (i) each Consolidated Company that is not a Foreign
Subsidiary has good and marketable fee simple title to or a valid leasehold
interest in all of its real property and good title to, or a valid leasehold
interest in, all of its other property, and (ii) each Foreign Subsidiary owns
or has a valid leasehold interest in all of its real property and owns or has a
valid leasehold interest in, all of its other properties, in the case of
clauses (i) and (ii) as such properties are reflected in the consolidated
balance sheet of the Consolidated Companies as of January 2, 1994, referred to
in Section 7.14, other than properties disposed of in the ordinary course of
business since such date or as otherwise permitted by the terms of this
Agreement, subject to
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no Lien or title defect of any kind, except Liens permitted hereby and title
defects not constituting material impairments in the intended use for such
properties. The Consolidated Companies enjoy peaceful and undisturbed
possession under all of their respective leases.
SECTION 7.18. INDEBTEDNESS. Except for the 1993 Credit
Agreement and as set forth on Schedules 7.18 and 9.01, none of the Consolidated
Companies is an obligor in respect of any Indebtedness for borrowed money, or
any commitment to create or incur any Indebtedness for borrowed money, in an
amount not less than $1,000,000 in any single case, and such Indebtedness and
commitments for amounts less than $1,000,000 do not exceed $5,000,000 in the
aggregate for all such Indebtedness and commitments of the Consolidated
Companies.
SECTION 7.19. FINANCIAL CONDITION. On the Closing Date and
after giving effect to the transactions contemplated by this Agreement, the
Letter of Credit Agreement, and the other Credit Documents, including without
limitation, the use of the proceeds of the Term Loans, Multicurrency Loans, and
Revolving Loans as provided in Sections 2.01, 3.01 and 4.01 (i) the assets of
each Credit Party at fair valuation and based on their present fair saleable
value (including, without limitation, the fair and realistic value of (x) any
contribution or subrogation rights in respect of any Guaranty Agreement given
by such Credit Party, and (y) any Intercompany Loan owed to such Credit Party)
will exceed such Credit Party's debts, including contingent liabilities (as
such liabilities may be limited under the express terms of any Guaranty
Agreement of such Credit Party), (ii) the remaining capital of such Credit
Party will not be unreasonably small to conduct the Credit Party's business,
and (iii) such Credit Party will not have incurred debts, or have intended to
incur debts, beyond the Credit Party's ability to pay such debts as they
mature. For purposes of this Section 7.19, "debt" means any liability on a
claim, and "claim" means (a) the right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (b)
the right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
SECTION 7.20. INTERCOMPANY LOANS. The Intercompany Loans and
the Intercompany Loan Documents have been duly authorized and approved by all
necessary corporate and shareholder action on the part of the parties thereto,
and constitute the legal, valid and binding obligations of the parties thereto,
enforceable against each of them in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally, and by
general principles of equity.
SECTION 7.21. LABOR MATTERS. Except as set forth in Schedule
7.21 or in any notice furnished to the Lenders pursuant to
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Section 8.07(o) at or prior to the respective times the representations and
warranties set forth in this Section 7.21 are made or deemed to be made
hereunder, the Consolidated Companies have experienced no strikes, labor
disputes, slow downs or work stoppages due to labor disagreements which have
had, or would reasonably be expected to have, a Materially Adverse Effect, and,
to the best knowledge of the Borrowers, there are no such strikes, disputes,
slow downs or work stoppages threatened against any Consolidated Company. The
hours worked and payment made to employees of the Consolidated Companies have
not been in violation in any material respect of the Fair Labor Standards Act
(in the case of Consolidated Companies that are not Foreign Subsidiaries) or
any other applicable law dealing with such matters. All payments due from the
Consolidated Companies, or for which any claim may be made against the
Consolidated Companies, on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as liabilities on the
books of the Consolidated Companies where the failure to pay or accrue such
liabilities would reasonably be expected to have a Materially Adverse Effect.
SECTION 7.22. PAYMENT OR DIVIDEND RESTRICTIONS. Except as
set forth in Section 9.04 or described on Schedule 7.22, none of the
Consolidated Companies is party to or subject to any agreement or understanding
restricting or limiting the payment of any dividends or other distributions by
any such Consolidated Company.
SECTION 7.23. DISCLOSURE. No representation or warranty
contained in this Agreement (including the Schedules attached hereto) or in any
other document furnished from time to time pursuant to the terms of this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein not misleading as of the date made or deemed to be made.
Except as may be set forth herein (including the Schedules attached hereto) or
in any notice furnished to the Lenders pursuant to Section 8.07 at or prior to
the respective times the representations and warranties set forth in this
Section 7.23 are made or deemed to be made hereunder, there is no fact known to
the Borrowers which has had, or is reasonably expected to have, a Materially
Adverse Effect.
ARTICLE VIII.
AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any
Note shall remain unpaid, Interface (whether or not it is a Borrower hereunder)
and each other Borrower will:
SECTION 8.01. CORPORATE EXISTENCE, ETC. Preserve and maintain,
and cause each of its Material Subsidiaries to preserve and maintain, its
corporate existence, its material rights, franchises, and licenses, and its
material patents and copyrights (for the scheduled duration thereof),
trademarks, trade names, and ser-
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vice marks, necessary or desirable in the normal conduct of its business, and
its qualification to do business as a foreign corporation in all jurisdictions
where it conducts business or other activities making such qualification
necessary, where the failure to be so qualified would reasonably be expected to
have a Materially Adverse Effect.
SECTION 8.02. COMPLIANCE WITH LAWS, ETC. Comply, and cause
each of its Subsidiaries to comply with all Requirements of Law (including,
without limitation, the Environmental Laws subject to the exception set forth
in Section 7.08(a) where the penalties, claims, fines, and other liabilities
resulting from noncompliance with such Environmental Laws do not involve
amounts in excess of $10,000,000 in the aggregate) and Contractual Obligations
applicable to or binding on any of them where the failure to comply with such
Requirements of Law and Contractual Obligations would reasonably be expected to
have a Materially Adverse Effect.
SECTION 8.03. PAYMENT OF TAXES AND CLAIMS, ETC. Pay, and
cause each of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its property, and (ii) all claims
(including, without limitation, claims for labor, materials, supplies or
services) which might, if unpaid, become a Lien upon its property, unless, in
each case, the validity or amount thereof is being contested in good faith by
appropriate proceedings and adequate reserves are maintained with respect
thereto.
SECTION 8.04. KEEPING OF BOOKS. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, containing complete
and accurate entries of all their respective financial and business
transactions which are required to be maintained in order to prepare the
consolidated financial statements of Interface in conformity with GAAP.
SECTION 8.05. VISITATION, INSPECTION, ETC. Permit, and cause
each of its Subsidiaries to permit, any representative of any Co-Agent or
Lender to visit and inspect any of its property, to examine its books and
records and to make copies and take extracts therefrom, and to discuss its
affairs, finances and accounts with its officers, all at such reasonable times
and as often as such Co-Agent or Lender may reasonably request after reasonable
prior notice to Interface; provided, however, that at any time following the
occurrence and during the continuance of a Default or an Event of Default, no
prior notice to Interface shall be required. To the extent that any Co-Agent
or Lender thereby obtains possession of non-public information constituting
trade secrets, technology or other similar proprietary information identified
to the Co-Agent or Lender in writing by Interface as being subject to
confidential treatment under this Agreement, such party shall treat such
information as confidential. In any event, such Co-Agent or Lender may,
subject to Section 12.06(e), make disclosure to any assignee or participant, or
to any prospective assignee or participant, in connection with an assignment or
participation permitted thereby, or as required or requested by any
governmental agency or representative thereof, or as required to defend any
legal action
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or to exercise any rights, remedies or powers available to the Agents or
Lender under the Credit Documents or as otherwise required by law or pursuant
to legal process; provided, that, unless prohibited by applicable law or court
order, such Co-Agent or Lender shall notify Interface as promptly as
practicable after receipt thereof of any governmental request, subpoena or
court order (other than any such request, subpoena or court order in connection
with an examination of the financial condition of such Co-Agent or Lender by
any governmental agency) for disclosure of any such non-public information;
provided, however, that no delay or failure to provide such notice shall give
rise to any claim, defense or right of offset against such Lender or Co-Agent
hereunder. The foregoing shall not prohibit disclosure of such information to
the extent it has become public information other than through a disclosure by
a Co-Agent or Lender not otherwise permitted herein.
SECTION 8.06. INSURANCE; MAINTENANCE OF PROPERTIES.
(a) Maintain or cause to be maintained with financially sound
and reputable insurers, insurance with respect to its properties and business,
and the properties and business of its Subsidiaries, against loss or damage of
the kinds customarily insured against by reputable companies in the same or
similar businesses, such insurance to be of such types and in such amounts as
is customary for such companies under similar circumstances; provided, however,
that in any event Interface and each other Borrower shall use their best
efforts to maintain, or cause to be maintained, insurance in amounts and with
coverages not materially less favorable to any Consolidated Company as in
effect on the date of this Agreement, except where the costs of maintaining
such insurance would, in the judgment of both Interface and the Co-Agents, be
excessive.
(b) Cause, and cause each of the Consolidated Companies to
cause, all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, settlements and improvements thereof, all as in the
judgment of Interface may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent Interface from
discontinuing the operation or maintenance of any such properties if such
discontinuance is, in the judgment of Interface, desirable in the conduct of
its business or the business of any Consolidated Company.
SECTION 8.07. REPORTING COVENANTS. Furnish to each
Lender:
(a) Annual Financial Statements. As soon as available and in
any event within 120 days after the end of each fiscal year of Interface,
balance sheets of the Consolidated Compa-
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nies as at the end of such year, presented on a consolidated and a "line
of business" basis, and the related statements of income, shareholders'
equity, and cash flows of the Consolidated Companies for such fiscal year,
presented on a consolidated and a "line of business" basis, setting forth
in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and, except with respect to the financial
statements prepared on a "line of business" basis, accompanied by a
report thereon of BDO Seidman or other independent public accountants of
comparable recognized national standing, which such report shall be
unqualified as to going concern and scope of audit and shall state that
such financial statements present fairly in all material respects the
financial condition as at the end of such fiscal year on a consolidated
basis, and the results of operations and statements of cash flows of the
Consolidated Companies for such fiscal year in accordance with GAAP and
that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(b) Quarterly Financial Statements. As soon as available and
in any event within 60 days after the end of each fiscal quarter of
Interface (other than the fourth fiscal quarter), balance sheets of the
Consolidated Companies as at the end of such quarter presented on a
consolidated and a "line of business" basis and the related statements of
income, shareholders' equity, and cash flows of the Consolidated Companies
for such fiscal quarter and for the portion of Interface's fiscal year
ended at the end of such quarter, presented on a consolidated and a "line
of business" basis setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
Interface's previous fiscal year, all in reasonable detail and certified
by the chief financial officer or principal accounting officer of
Interface that such financial statements fairly present in all material
respects the financial condition of the Consolidated Companies as at the
end of such fiscal quarter on a consolidated and "line of business" basis,
and the results of operations and statements of cash flows of the
Consolidated Companies for such fiscal quarter and such portion of
Interface's fiscal year, in accordance with GAAP consistently applied
(subject to normal year-end audit adjustments and the absence of certain
footnotes);
(c) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (a) and (b)
above, a certificate of the president, chief financial officer or
principal accounting officer of Interface (i) to the effect that, based
upon a review of the activities of the Consolidated Companies and such
financial statements during the period covered thereby, there exists no
Event of Default and no Default under this Agreement, or if there exists
an Event of Default or a Default hereunder, specifying the nature thereof
and the proposed response thereto, and (ii) demonstrating in reasonable
detail compliance as at the
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end of such fiscal year or such fiscal quarter with Section 8.09 and
Sections 9.01 through 9.05;
(d) Auditor's No Default Certificate. Together with the
financial statements required pursuant to subsection (a) above, a
certificate of the accountants who prepared the report referred to
therein, to the effect that, based upon their audit, there exists no
Default or Event of Default under this Agreement, or if there exists a
Default or Event of Default hereunder, specifying the nature thereof;
(e) Annual Budget. Within 90 days after the beginning of each
fiscal year, an annual financial plan and forecasted balance sheets and
statements of income, shareholders' equity, and cash flows for such fiscal
year for the Consolidated Companies presented on a consolidated and "line
of business" basis;
(f) Notice of Default. Promptly after any officer of Interface
or any other Borrower has notice or knowledge of the occurrence of an
Event of Default or a Default, a certificate of the chief financial
officer or principal accounting officer of Interface specifying the
nature thereof and the proposed response thereto;
(g) Asset Sales. Together with the financial statements required
pursuant to subsection (a) above, a certificate of the chief financial
officer or principal accounting officer of Interface reporting all Asset
Sales effected by the Consolidated Companies during the fiscal year
covered by such financial statements which involved Asset Values in excess
of $1,000,000 in any single transaction or related series of transactions,
including the Asset Value of such assets and the amounts received by the
Consolidated Companies with respect to such sales, and such other
information regarding such transactions as any Co-Agent or Lender may
reasonably request;
(h) Litigation. Promptly after (i) the occurrence thereof,
notice of the institution of or any material adverse development in any
material action, suit or proceeding or any governmental investigation or
any arbitration, before any court or arbitrator or any governmental or
administrative body, agency or official, against any Consolidated Company,
or any material property of any thereof, or (ii) actual knowledge thereof,
notice of the threat of any such action, suit, proceeding, investigation
or arbitration;
(i) Environmental Notices. Promptly after receipt thereof, notice
of any actual or alleged violation, or notice of any action, claim or
request for information, either judicial or administrative, from any
governmental authority relating to any actual or alleged claim, notice of
potential responsibility under or violation of any Environmental Law, or
any actual or alleged spill, leak, disposal or other release
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of any waste, petroleum product, or hazardous waste or Hazardous
Substance by any Consolidated Company which could result in penalties,
fines, claims or other liabilities to any Consolidated Company in amounts
in excess of $1,000,000;
(j) ERISA. (A)(i) Promptly after the occurrence thereof with
respect to any Plan of any Consolidated Company or any ERISA Affiliate
thereof, or any trust established thereunder, notice of (A) a "reportable
event" described in Section 4043 of ERISA and the regulations issued from
time to time thereunder (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under such regulations), or (B)
any other event which could subject any Consolidated Company to any tax,
penalty or liability under Title I or Title IV of ERISA or Chapter 43 of
the Tax Code, or any tax or penalty resulting from a loss of deduction
under Sections 162, 404 or 419 of the Tax Code, or any tax, penalty or
liability under any Requirement of Law applicable to any Foreign Plan,
where any such taxes, penalties or liabilities exceed or could exceed
$1,000,000 in the aggregate;
(ii) Promptly after such notice must be provided to the PBGC, or
to a Plan participant, beneficiary or alternative payee, any notice
required under Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or
4041(c)(1)(A) of ERISA or under Section 401(a)(29) or 412 of the Tax Code
with respect to any Plan of any Consolidated Company or any ERISA
Affiliate thereof;
(iii) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the intent
of the PBGC or any other governmental authority to terminate a Plan of
such Company or ERISA Affiliate thereof which is subject to Title IV of
ERISA, to impose any liability on such Company or ERISA Affiliate under
Title IV of ERISA or Chapter 43 of the Tax Code;
(iv) Promptly upon the filing thereof with the Internal Revenue
Service ("IRS") or the Department of Labor ("DOL"), a copy of IRS Form
5500 or annual report for each Plan of any Consolidated Company or ERISA
Affiliate thereof which is subject to Title IV of ERISA;
(v) Upon the request of the Co-Agents, (A) true and complete
copies of any and all documents, government reports and IRS determination
or opinion letters or rulings for any Plan of any Consolidated Company
from the IRS, PBGC or DOL, (B) any reports filed with the IRS, PBGC or
DOL with respect to a Plan of the Consolidated Companies or any ERISA
Affiliate thereof, or (C) a current statement of withdrawal liability for
each Multiemployer Plan of any Consolidated Company or any ERISA Affiliate
thereof;
(B) Promptly upon any Consolidated Company becoming aware
thereof, notice that (i) any material contributions to any Foreign Plan
have not been made by the required due date
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for such contribution and such default cannot immediately be remedied,
(ii) any Foreign Plan is not funded to the extent required by the law of
the jurisdiction whose law governs such Foreign Plan based on the
actuarial assumptions reasonably used at any time, or (iii) a material
change is anticipated to any Foreign Plan that may have a Materially
Adverse Effect.
(k) Liens. Promptly upon any Consolidated Company becoming aware
thereof, notice of the filing of any federal statutory Lien, tax or other
state or local government Lien or any other Lien affecting their
respective properties, other than those Liens expressly permitted by
Section 9.02;
(l) Domestication of Subsidiaries. Not less than 30 days prior
thereto, notice of any intended domestication of any Foreign Subsidiary as
a United States corporation, whether by merger, stock transfer or
otherwise;
(m) Public Filings, Etc. Promptly upon the filing thereof or
otherwise becoming available, copies of all financial statements, annual,
quarterly and special reports, proxy statements and notices sent or made
available generally by Interface to its public security holders, of all
regular and periodic reports and all registration statements and
prospectuses, if any, filed by any of them with any securities exchange,
and of all press releases and other statements made available generally to
the public containing material developments in the business or financial
condition of Interface and the other Consolidated Companies;
(n) Accountants' Reports. Promptly upon receipt thereof, copies
of all financial statements of, and all reports submitted by, independent
public accountants to Interface in connection with each annual, interim, or
special audit of Interface's financial statements, including without
limitation, the comment letter submitted by such accountants to management
in connection with their annual audit;
(o) Burdensome Restrictions, Etc. Promptly upon the existence or
occurrence thereof, notice of the existence or occurrence of (i) any
Contractual Obligation or Requirement of Law described in Section 7.11,
(ii) failure of any Consolidated Company to hold in full force and effect
those trademarks, service marks, patents, trade names, copyrights,
licenses and similar rights necessary in the normal conduct of its
business, the loss or absence of which could have a Materially Adverse
Effect, and (iii) any strike, labor dispute, slow down or work stoppage as
described in Section 7.21;
(p) New Material Subsidiaries. Within 30 days after the formation
or acquisition of any Material Subsidiary, or any other event resulting in
the creation of a new Material Subsidiary, notice of the formation or
acquisition of such Material Subsidiary or such occurrence, including a
descrip-
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tion of the assets of such entity, the activities in which it will be
engaged, and such other information as the Co-Agents may request;
(q) Intercompany Asset Transfers. Promptly upon the occurrence
thereof, notice of the transfer of any assets from any Credit Party to any
other Consolidated Company that is not a Credit Party (in any transaction
or series of related transactions), excluding sales or other transfers of
assets in the ordinary course of business, where the Asset Value of such
assets is greater than $5,000,000;
(r) Asset Sales. At any time that the aggregate amount of Asset
Sales made by the Consolidated Companies after October 2, 1994 exceeds
$10,000,000 (based on the Asset Values), prompt notice of any additional
Asset Sale or related series of Asset Sales involving Asset Values of
$1,000,000 or more; and
(s) Other Information. With reasonable promptness, such other
information about the Consolidated Companies as any Co-Agent or Lender may
reasonably request from time to time.
SECTION 8.08. CURRENCY CONTRACT.
The Borrowers shall maintain in full force and effect Currency
Contracts and Interest Rate Contracts pursuant to the FNBC Currency Contract,
subject to no changes of material terms or conditions except as may be approved
in writing by the Co-Agents, and/or additional Currency Contracts and Interest
Rate Contracts pursuant to other interest rate and currency exchange
agreements, and in any event sufficient to protect the Borrowers against
fluctuations in interest and currency exchange rates with respect to principal
and interest payments on an aggregate notional amount equal to $80,000,000 (or
such lesser amount as shall have been consented to in writing by the Co-Agents,
such consent not to be unreasonably withheld so long as such lesser amount is
at least $40,000,000) for an initial average maturity of five (5) years (or
such lesser initial average maturity as shall have been consented to in writing
by the Co-Agents, such consent not to be unreasonably withheld so long as such
lesser initial average maturity is at least three years). Notwithstanding the
foregoing, the Consolidated Companies shall determine to their own satisfaction
whether Currency Contracts and Interest Rate Contracts to which they are
respective parties are sufficient to provide protection against fluctuations in
interest rates and currency exchange rates, and to meet their respective needs
and (notwithstanding any approval, or failure to approve, by the Co-Agents)
neither the Co-Agents nor any Lender shall have any obligation or
accountability with respect thereto or any obligation to propose, quote or
enter into any Interest Rate Contract or Currency Contract.
SECTION 8.09. FINANCIAL COVENANTS.
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(a) Working Capital. Maintain as of the last day of each
fiscal quarter Adjusted Working Capital of at least $110,000,000.
(b) Interest Coverage. Maintain as of the last day of each
fiscal quarter, calculated with respect to the immediately preceding four
fiscal quarters, a minimum Interest Coverage Ratio as shown below for each
fiscal quarter ending during the periods indicated:
<TABLE>
<CAPTION>
Minimum Interest Coverage
Period Ratio
====== =========================
<S> <C>
Closing Date through March 31,
1996 2.00:1.00
April 1, 1996 and thereafter 2.25:1.00
</TABLE>
(c) Funded Debt Coverage. Maintain as of the last day of each
fiscal quarter, a maximum Funded Debt Coverage Ratio as shown below for each
fiscal quarter ending during the periods indicated:
<TABLE>
<CAPTION>
Maximum Funded
Debt Coverage
Period Ratio
====== ==============
<S> <C>
Closing Date through
March 31, 1996 4.75:1.00
April 1, 1996 and
thereafter 4.25:1.00
</TABLE>
(d) Senior Funded Debt to Total Capitalization. Maintain
as of the last day of each fiscal quarter a maximum ratio of Senior Funded Debt
to Total Capitalization, expressed as a percentage, of no more than 50%.
(e) Leverage Ratio. Maintain as of the last day of each fiscal
quarter a maximum Leverage Ratio as shown below for each fiscal quarter ending
during the periods indicated:
<TABLE>
<CAPTION>
Period Maximum Percentage
====== ==================
<S> <C>
Closing Date through March 31,
1996 60%
April 1, 1996
and thereafter 55%
</TABLE>
(f) Third Fiscal Quarter 1994 Calculations. Schedule 8.09 sets
forth the calculation of the financial covenant
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amounts, ratios, and percentages required by paragraphs (a) through (e) of this
Section 8.09 calculated as of October 2, 1994.
SECTION 8.10. NOTICES UNDER CERTAIN OTHER INDEBTEDNESS.
Immediately upon its receipt thereof, Interface shall furnish the Co-Agents a
copy of any notice received by it or any other Consolidated Company from the
holder(s) of Indebtedness referred to in Section 9.01(b), (c), (e), (g), (i),
(j) or (k) (or from any trustee, agent, attorney, or other party acting on
behalf of such holder(s)) in an amount which, in the aggregate, exceeds
$500,000, where such notice states or claims (i) the existence or occurrence of
any default or event of default with respect to such Indebtedness under the
terms of any indenture, loan or credit agreement, debenture, note, or other
document evidencing or governing such Indebtedness, or (ii) with respect to any
Interface Control Debt, the existence or occurrence of any event or condition
which requires or permits such holder(s) to exercise rights under any Change in
Control Provision. Interface agrees to take such actions as may be necessary
to require the holder(s) of Interface Control Debt (or any trustee or agent
acting on their behalf) to furnish copies of all such notices directly to the
Co- Agents simultaneously with the furnishing thereof to Interface, and that
such requirement may not be altered or rescinded without the prior written
consent of the Co-Agents.
SECTION 8.11. ADDITIONAL CREDIT PARTIES AND COLLATERAL.
Promptly after (i) the formation or acquisition of any Material Subsidiary not
listed on Schedule 7.13, (ii) the transfer of assets to any Consolidated
Company if notice thereof is required to be given pursuant to Section 8.07(q)
and as a result thereof the recipient of such assets becomes a Material
Subsidiary, (iii) the domestication of any Foreign Subsidiary that is a
Material Subsidiary, or (iv) the occurrence of any other event creating a new
Material Subsidiary, Interface shall execute and deliver, and cause to be
executed and delivered (x) a Pledge Agreement (or, in the case of Interface
Heuga Singapore Pte Ltd., Interface Heuga Hong Kong Ltd., or Interface Heuga
Japan, Ltd., amendments or supplements to the existing Pledge Agreement with
respect to the shares of such Subsidiary, or a new Pledge Agreement with
respect to such shares, as the Co-Agents may require pursuant to the advice of
their counsel) with respect to all capital stock of such Material Subsidiary if
it is not a Foreign Subsidiary, or 66% of the capital stock of such Material
Subsidiary if it is a Foreign Subsidiary directly owned by Interface or a
Subsidiary that is not, and is not directly or indirectly controlled by, a
Foreign Subsidiary, and (y) a Guaranty Agreement from each such Material
Subsidiary that is not a Foreign Subsidiary, together with related documents of
the kind described in Section 6.01(c), (d), (f), (g), (h), and (t), all in form
and substance satisfactory to the Co-Agents.
SECTION 8.12. CLOSING OF ACCOUNTS RECEIVABLE FACILITY. On or
before June 30, 1995, the Receivables Sale Agreement, Receivables Backup
Purchase Agreement, and Receivables Transfer Agreements shall have been
executed and delivered by the respective parties thereto, and the Accounts
Receivable Facility shall be in
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full force and effect providing to Interface and those Subsidiaries that are
parties to the Receivables Transfer Agreements financing for accounts
receivable up to an aggregate amount outstanding at any time of $100,000,000.
Within five (5) Business Days after the closing of the Accounts Receivable
Facility, Interface shall deliver or cause to be delivered to the Domestic
Agent certified copies of the Receivables Sale Agreement, Receivables Backup
Purchase Agreement, Receivables Transfer Agreements and other certificates,
opinions, documents and instruments required to be furnished by or on behalf of
any Consolidated Company thereunder as a condition precedent to consummation of
the transactions contemplated therein.
ARTICLE IX.
NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any
Note shall remain unpaid, neither Interface (whether or not it is a Borrower
hereunder) nor any other Borrower will or will permit any Subsidiary to:
SECTION 9.01. INDEBTEDNESS. Create, incur, assume or suffer
to exist any Indebtedness, other than:
(a) Indebtedness under this Agreement;
(b) the Subordinated Debentures and other Indebtedness
outstanding on the date hereof and described on Schedule 9.01(b)
(excluding Refinanced Indebtedness);
(c) purchase money Indebtedness to the extent secured by a
Lien permitted by Section 9.02(b) or 9.02(f);
(d) unsecured current liabilities (other than liabilities for
borrowed money or liabilities evidenced by promissory notes, bonds or
similar instruments) incurred in the ordinary course of business and
either (i) not more than 90 days past due, or (ii) being disputed in good
faith by appropriate proceedings with reserves for such disputed
liability maintained in conformity with GAAP;
(e) Indebtedness incurred with respect to (i) the Letters of
Credit issued for the account of any Consolidated Company pursuant to
the Letter of Credit Agreement, and (ii) unsecured letters of credit
issued for the account of any Consolidated Subsidiary in the ordinary
course of business in aggregate outstanding stated amounts not to
exceed $5,000,000;
(f) Indebtedness (other than liabilities for borrowed money or
liabilities evidenced by promissory notes, bonds or similar instruments)
permitted under Section 9.02(c) or (d) or
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Section 9.06, or permitted under Section 9.03 in connection with the
purchase, lease or other acquisition of property or assets where such
Indebtedness is to the seller of such property or assets and represents a
deferral of payment for such property or assets for a period not to exceed
the lesser of (i) normal trade terms for such property or asset, or (ii)
180 days (commencing from the date of delivery or, if applicable, the date
of installation of such property or asset);
(g) Subordinated Debt (other than the Subordinated Debentures) in
an aggregate principal amount not to exceed $50,000,000;
(h) the Intercompany Loans described on Schedule 7.20 and any
other loans between Consolidated Companies provided that (i) each loan
or other extension of credit made by a Guarantor to another Consolidated
Company that is not a Guarantor hereunder shall be made payable on demand
and shall not be subordinated to other obligations of such Consolidated
Company and all such loans and extensions of credit shall not exceed
$35,000,000 in the aggregate at any one time outstanding (excluding
Intercompany Loans listed on Schedule 7.20 and other Intercompany Loans
made for the purpose of and used reasonably concurrently for acquisitions
permitted by Section 9.03) unless otherwise agreed in writing by the
Required Lenders, (ii) each loan or other extension of credit made to a
Guarantor by another Consolidated Company that is not a Guarantor
hereunder shall be made on a subordinated basis consistent with the
subordinated Intercompany Loans in existence on the date of this Agreement
and no portion of the principal amount thereof shall be payable prior to
the Term Loan Final Maturity Date or Revolver/Multicurrency Maturity Date
(whichever is last to occur), and (iii) such loans or other extensions of
credit are otherwise permitted pursuant to the limitations of Section
9.05(c);
(i) Indebtedness under the Interest Rate Contract(s) and Currency
Contract(s) required to be maintained pursuant to Section 8.08, or other
Currency Contracts entered into in the ordinary course of business
consistent with past practices;
(j) Unsecured lines of credit, revolving credit, and overdraft
credit facilities described on Schedule 9.01(j), and each extension,
renewal, and replacement of such credit facilities for principal amounts
not in excess of the respective principal amounts shown on Schedule
9.01(j), and having maturities in each case not longer than two (2) years
with annual renewals thereafter;
(k) Indebtedness, if any, owing by Interface or Interface
SPC under the Receivables Sale Agreement or Receivables Backup Purchase
Agreement; and
(l) Other Indebtedness not to exceed $5,000,000 at any one time
outstanding.
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SECTION 9.02. LIENS. Create, incur, assume or suffer to exist
any Lien on any of its property now owned or hereafter acquired to secure any
Indebtedness other than:
(a) Liens existing on the date hereof disclosed on Schedule
9.02 (excluding Liens securing Refinanced Indebtedness);
(b) any Lien on any property securing Indebtedness incurred
or assumed for the purpose of financing all or any part of the acquisition
cost of such property, provided that such Lien does not extend to any
other property, and provided further that the aggregate amount of
Indebtedness secured by all such Liens at any time does not exceed
$10,000,000;
(c) Liens for taxes not yet due, and Liens for taxes or Liens
imposed by ERISA which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being
maintained;
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained;
(e) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(f) Liens (other than those permitted by paragraphs (a)
through (e) of this Section 9.02) encumbering assets having an Asset
Value not greater than $2,000,000 in the aggregate;
(g) (i) Liens in favor of the Collateral Agent securing the
Obligations hereunder, and (ii) Liens securing Indebtedness under the
Interest Rate Contract and Currency Contract required to be maintained
pursuant to Section 8.08 (which Liens may be pari passu with the Liens in
favor of the Co-Agents and Lenders securing the Obligations hereunder,
provided that the properties and assets subject to such Liens, and the
terms and conditions of all agreements and instruments granting or
relating to such Liens, shall be subject to the prior written approval of
the Co-Agents);
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(h) Liens on any property included in the IRB Collateral as may
be approved by the Collateral Agent pursuant to the terms of the Letter
of Credit Agreement; and
(i) Liens, if any, that may be deemed to have been granted in
favor of SPARCC or the Lenders on accounts receivable or on interests in
accounts receivable of any of the Consolidated Companies as a result of
the assignment thereof to SPARCC or the Lenders pursuant to the Accounts
Receivable Facility.
SECTION 9.03. MERGERS, ACQUISITIONS, SALES, ETC. Merge or
consolidate with any other Person, or sell, lease, or otherwise dispose of its
accounts, property or other assets (including capital stock of Subsidiaries),
or purchase, lease or otherwise acquire all or any substantial portion of the
property or assets (including capital stock) of any Person; provided, however,
that the foregoing restrictions shall not be applicable to (i) sales of
equipment or other personal property being replaced by other equipment or other
personal property purchased as a Capital Expenditure item, (ii) other Asset
Sales (but excluding Asset Sales occurring as part of any sale and leaseback
transactions permitted by Section 9.06) where, on the date of execution of a
binding obligation to make such Asset Sale (provided that if the Asset Sale is
not consummated within six (6) months of such execution, then on the date of
consummation of such Asset Sale rather than on the date of execution of such
binding obligation), the Asset Value of Asset Sales occurring after October 2,
1994, taking into account the Asset Value of the proposed Asset Sale, would
not exceed (A) during any fiscal quarter where Interface's Leverage Ratio for
the preceding fiscal quarter is equal to or greater than 50%, $25,000,000 in
the aggregate, (B) during any fiscal quarter where Interface's Leverage Ratio
for the preceding fiscal quarter is less than 50% but equal to or greater than
35%, $50,000,000 in the aggregate, and (C) during any fiscal quarter where
Interface's Leverage Ratio for the preceding fiscal quarter is less than 35%,
an unlimited amount, and in any such case where the Net Proceeds of any such
Asset Sale are applied to the extent required by Section 2.03, Section 3.04 and
Section 4.04, (iii) sales of inventory in the ordinary course of business, (iv)
sales of accounts receivable or of interests in accounts receivable pursuant to
the Accounts Receivable Facility not to exceed $100,000,000 in aggregate amount
outstanding at any time, (v) purchases or other acquisitions of all or any
substantial portion of the property or assets of any Person (including capital
stock) during any fiscal year, provided that such transactions (x) have been
approved in advance by a majority of the board of directors of the seller, and
(y) have been demonstrated to the satisfaction of the Co-Agents, through the
preparation and delivery by Interface to the Lenders prior to the execution of
a contractual obligation to make such purchase, of pro forma financial
statements demonstrating the effect of such transaction (in such detail and
using such form of presentation of historical and forecasted financial
information as may be satisfactory to the Co-Agents), not to adversely affect
the continued compliance of the Consolidated Companies with the terms of this
Agreement, or (vi) Asset Sales occurring as part of any
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sale and leaseback transactions permitted pursuant to Section 9.06;
provided, however, that no transaction pursuant to clauses (i), (ii), (v) or
(vi) above shall be permitted if any Default or Event of Default otherwise
exists at the time of such transaction or would otherwise exist as a result of
such transaction.
SECTION 9.04. DIVIDENDS, ETC. Interface shall not declare or
pay any dividend on its capital stock, or make any payment to purchase, redeem,
retire or acquire any of its Subordinated Debentures or capital stock or any
option, warrant, or other right to acquire such Subordinated Debentures or
capital stock, other than:
(i) dividends payable solely in shares of capital stock;
(ii) payments made by Interface to repurchase any shares of Class
A Common Stock of Interface previously delivered as a portion of the
consideration paid in the Prince Street Acquisition, as may be provided
in the Prince Street Acquisition Agreement; and
(iii) cash dividends declared and paid, and all other such
payments made, after December 29, 1991 (but excluding any payments made
pursuant to clause (ii) above) in an aggregate amount at any time not to
exceed (x) $10,000,000 fifty percent (50%) of Consolidated Net Income (or
minus one hundred percent (100%) of Consolidated Net Loss) earned during
Interface's 1992 fiscal year and thereafter (such period to be treated as
one accounting period);
provided, however, no such payment may be made pursuant to clause (ii) above,
and no such dividend or other payment may be paid or made pursuant to clause
(iii) above, unless (x) the full amount of the mandatory prepayment required by
Section 2.03(b), Section 3.04 or Section 4.04 has been made, and (y) no Default
or Event of Default exists at the time of such declaration or payment, or would
exist as a result of such declaration or payment. Nothing in this Section 9.04
shall prevent the conversion of the Convertible Preferred Stock or the
Subordinated Debentures into the common stock of Interface.
SECTION 9.05. INVESTMENTS, LOANS, ETC. Make, permit or hold
any Investments in any Person, or otherwise acquire or hold any Subsidiaries,
other than:
(a) Investments in Subsidiaries that are Guarantors under this
Agreement;
(b) Investments made and simultaneously used for the acquisition
of the capital stock of any Person, or all or any substantial portion of
the property or assets of any Person, in an acquisition permitted
pursuant to Section 9.03;
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(c) Investments in Subsidiaries, other than those Subsidiaries
that are Guarantors under this Agreement, made after October 2, 1994, in
an aggregate amount not to exceed $35,000,000 unless otherwise consented
to in writing by the Required Lenders; provided, however, that no
Investment may be made at any time that a Default or Event of Default
has occurred and is continuing or would exist as a result of such
Investment;
(d) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case supported by the full faith and credit of the United
States and maturing within one year from the date of creation thereof;
(e) commercial paper maturing within one year from the date
of creation thereof rated in the highest grade by a nationally recognized
credit rating agency;
(f) time deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000,
including without limitation, any such deposits in Eurodollars issued by a
foreign branch of any such bank or trust company;
(g) Investments made by Plans and Foreign Plans; and
(h) Investments (other than those permitted by paragraphs
(a) through (g) above) in an aggregate amount not to exceed an amount
equal to 15% of Interface's Consolidated Net Worth (excluding therefrom
the Conversion Amount as of any date of determination).
SECTION 9.06 SALE AND LEASEBACK TRANSACTIONS. Sell or transfer
any property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which any Consolidated
Company intends to use for substantially the same purpose or purposes as the
property being sold or transferred, except for such transactions occurring
after the date of this Agreement (i) with respect to properties first acquired
by any of the Consolidated Companies after the date of this Agreement with the
intent at the time of such acquisition that such properties be the subjects of
such transactions, and such transactions are actually consummated within 60
days after the initial acquisition of such properties, so long as the Asset
Values of such properties do not exceed $25,000,000 in the aggregate, and
(ii) with respect to all other properties in all such transactions, so long as
the Asset Values of such other properties do not exceed $5,000,000 in the
aggregate.
SECTION 9.07. TRANSACTIONS WITH AFFILIATES.
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(a) Enter into any material transaction or series of related
transactions which in the aggregate would be material, whether or not in the
ordinary course of business, with any Affiliate of any Consolidated Company
(but excluding any Affiliate which is also a Consolidated Company), other than
on terms and conditions substantially as favorable to such Consolidated Company
as would be obtained by such Consolidated Company at the time in a comparable
arm's-length transaction with a Person other than an Affiliate.
(b) Convey or transfer to any other Person (including any other
Consolidated Company) any real property, buildings, or fixtures used in the
manufacturing or production operations of any Consolidated Company, or convey
or transfer to any other Consolidated Company any other assets (excluding
conveyances or transfers in the ordinary course of business) if at the time of
such conveyance or transfer any Default or Event of Default exists or would
exist as a result of such conveyance or transfer.
SECTION 9.08. OPTIONAL PREPAYMENTS. Directly or indirectly,
prepay, purchase, redeem, retire, defease or otherwise acquire, or make any
optional payment on account of any principal of, interest on, or premium
payable in connection with the optional prepayment, redemption or retirement
of, any of its Indebtedness, or give a notice of redemption with respect to any
such Indebtedness, or make any payment in violation of the subordination
provisions of any Subordinated Debt, except with respect to (i) the Obligations
under this Agreement and the Notes, (ii) redemptions, purchases or other
acquisition of the Subordinated Debentures as permitted by Section 9.04, (iii)
acquisition by Interface of its Subordinated Debentures pursuant to the
conversion thereof to common stock of Interface where no prior notice of
redemption has been given, (iv) prepayments of Indebtedness outstanding
pursuant to revolving credit, overdraft and line of credit facilities permitted
pursuant to Section 9.01, (v) permitted prepayments of Indebtedness incurred in
connection with industrial revenue bonds upon the occurrence of a determination
of an event of taxability entitling the holder(s) thereof to receive a higher
rate of interest, (vi) Intercompany Loans made or outstanding pursuant to
Section 9.01(h)(i) where demand for payment has been made in accordance with
Section 9.13, and (vii) Intercompany Loans made or outstanding pursuant to
Section 9.01(h)(ii) upon the prior written consent of the Co-Agents.
SECTION 9.09. CHANGES IN BUSINESS. Enter into any business
which is substantially different from that presently conducted by the
Consolidated Companies taken as a whole, except where the aggregate Investment
made, and other funds expended or committed, with respect to such business does
not exceed $7,500,000.
SECTION 9.10. ERISA. Take or fail to take any action with
respect to any Plan or Foreign Plan of any Consolidated Company or, with
respect to its ERISA Affiliates, any Plans which are
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subject to Title IV of ERISA or to continuation health care requirements for
group health plans under the Tax Code, including without limitation (i)
establishing any such Plan, (ii) amending any such Plan (except where required
to comply with applicable law), (iii) terminating or withdrawing from any such
Plan, or (iv) incurring an amount of unfunded benefit liabilities, as defined
in Section 4001(a)(18) of ERISA, or any withdrawal liability under Title IV of
ERISA with respect to any such Plan, or any unfunded liabilities under any
Foreign Plan, without first obtaining the written approval of the Required
Lenders, where such actions or failures could result in a Material Adverse
Effect.
SECTION 9.11. ADDITIONAL NEGATIVE PLEDGES. Create or
otherwise cause or suffer to exist or become effective, directly or indirectly,
any prohibition or restriction on the creation or existence of any Lien upon
any asset of any Consolidated Company, other than pursuant to (i) Section 9.02,
(ii) the terms of any agreement, instrument or other document pursuant to which
any Indebtedness permitted by Section 9.02(b) or 9.02(g) is incurred by any
Consolidated Company, so long as such prohibition or restriction applies only
to the property or asset being financed by such Indebtedness, and (iii) any
requirement of applicable law or any regulatory authority having jurisdiction
over any of the Consolidated Companies.
SECTION 9.12. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING
CONSOLIDATED COMPANIES. Create or otherwise cause or suffer to exist or become
effective, any consensual encumbrance or restriction on the ability of any
Consolidated Company to (i) pay dividends or make any other distributions on
such Consolidated Company's stock, other than the restrictions on payment of
dividends on Interface's common stock imposed in connection with the
Convertible Preferred Stock, or (ii) pay any indebtedness owed to Interface or
any other Consolidated Company, or (iii) transfer any of its property or assets
to Interface or any other Consolidated Company, except any consensual
encumbrance or restriction existing under the Credit Documents.
SECTION 9.13. ACTIONS UNDER CERTAIN DOCUMENTS. Without the
prior written consent of the Co-Agents (which consent shall not be unreasonably
withheld), modify, amend, cancel or rescind the Intercompany Loans or
Intercompany Loan Documents, or Subordinated Debt or any agreements or
documents evidencing or governing Subordinated Debt (except that a loan between
Consolidated Companies as permitted by Section 9.01(h) may be modified or
amended so long as it otherwise satisfies the requirements of clause (ii) of
Section 9.01(h)), or make demand of payment or accept payment on any
Intercompany Loans permitted by Section 9.01(h)(ii), except that current
interest accrued thereon as of the date of this Agreement and all interest
subsequently accruing thereon (whether or not paid currently) may be paid
unless an Event of Default has occurred and is continuing.
ARTICLE X.
EVENTS OF DEFAULT
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Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
SECTION 10.01. PAYMENTS. Any Borrower shall fail to make
promptly when due (including, without limitation, by mandatory prepayment) any
principal payment with respect to the Loans, or any Borrower shall fail to make
within five (5) days after the due date thereof any payment of interest, fee or
other amount payable hereunder;
SECTION 10.02. COVENANTS WITHOUT NOTICE. Interface or any
Borrower shall fail to observe or perform any covenant or agreement contained
in Sections 8.07(f), 8.09, 8.12, 9.01 through 9.06, 9.08, 9.09, and 9.11
through 9.13;
SECTION 10.03. OTHER COVENANTS. Interface or any Borrower
shall fail to observe or perform any covenant or agreement contained in this
Agreement, other than those referred to in Sections 10.01 and 10.02, and, if
capable of being remedied, such failure shall remain unremedied for 25 days
after the earlier of (i) Interface's or any Borrower's obtaining knowledge
thereof, or (ii) written notice thereof shall have been given to Interface by
any Co-Agent or Lender;
SECTION 10.04. REPRESENTATIONS. Any representation or
warranty made or deemed to be made by Interface, any other Borrower or any
other Credit Party or by any of its officers under this Agreement or any other
Credit Document (including the Schedules attached thereto), or any certificate
or other document submitted to the Agents or the Lenders by any such Person
pursuant to the terms of this Agreement or any other Credit Document, shall be
incorrect in any material respect when made or deemed to be made or submitted;
SECTION 10.05. NON-PAYMENTS OF OTHER INDEBTEDNESS. Any
Consolidated Company shall fail to make when due (whether at stated maturity,
by acceleration, on demand or otherwise, and after giving effect to any
applicable grace period) any payment of principal of or interest on any
Indebtedness (other than the Obligations) exceeding $2,500,000 in the
aggregate;
SECTION 10.06. DEFAULTS UNDER OTHER AGREEMENTS. Any
Consolidated Company shall fail to observe or perform within any applicable
grace period any covenants or agreements contained in any agreements or
instruments relating to any of its Indebtedness exceeding $2,500,000 in the
aggregate, or any other event shall occur if the effect of such failure or
other event is to accelerate, or to permit the holder of such Indebtedness or
any other Person to accelerate, the maturity of such Indebtedness; or any such
Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment) in whole or in part prior to its stated
maturity;
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SECTION 10.07. BANKRUPTCY. Interface or any other Material
Company shall commence a voluntary case concerning itself under the Bankruptcy
Code or applicable foreign bankruptcy laws; or an involuntary case for
bankruptcy is commenced against any Material Company and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) or
similar official under applicable foreign bankruptcy laws is appointed for, or
takes charge of, all or any substantial part of the property of any Material
Company; or any Material Company commences proceedings of its own bankruptcy or
to be granted a suspension of payments or any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction,
whether now or hereafter in effect, relating to any Material Company or there
is commenced against any Material Company any such proceeding which remains
undismissed for a period of 60 days; or any Material Company is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or any Material Company suffers any appointment
of any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or any Material
Company makes a general assignment for the benefit of creditors; or any
Material Company shall fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or any Material
Company shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or any Material Company shall by any
act or failure to act indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate action is taken by any Material Company
for the purpose of effecting any of the foregoing;
SECTION 10.08. ERISA. A Plan or Foreign Plan of a
Consolidated Company or a Plan subject to Title IV of ERISA of any of its ERISA
Affiliates
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of such Plan or
Foreign Plan, Section 412 of the Tax Code or Section 302 of ERISA for any
plan year or a waiver of such standard is sought or granted with respect
to such Plan or Foreign Plan under applicable law, the terms of such Plan
or Foreign Plan or Section 412 of the Tax Code or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of such Plan or
Foreign Plan; or
(iii) shall require a Consolidated Company to provide security
under applicable law, the terms of such Plan or Foreign Plan, Section 401 or
412 of the Tax Code or Section 306 or 307 of ERISA; or
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(iv) results in a liability to a Consolidated Company under
applicable law, the terms of such Plan or Foreign Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or other
event a liability to the PBGC (or any similar Person with respect to any
Foreign Plan) or a Plan that would have a Materially Adverse Effect.
SECTION 10.09. MONEY JUDGMENT. A judgment or order for the
payment of money in excess of $2,500,000 or otherwise having a Materially
Adverse Effect shall be rendered against Interface or any other Material
Company and such judgment or order shall continue unsatisfied (in the case of a
money judgment) and in effect for a period of 30 days during which execution
shall not be effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
SECTION 10.10. OWNERSHIP OF CREDIT PARTIES. If any Borrower
(other than Interface) shall at any time fail to be a wholly owned Subsidiary
of Interface, either directly or indirectly through another wholly owned
Subsidiary of Interface, except where all outstanding Loans made to such
Borrower have been paid in full and the Lenders shall have no further
obligation to extend additional credit to such Borrower;
SECTION 10.11. CHANGE IN CONTROL OF INTERFACE. (i) So long
as the holders of Interface's Class B common stock are entitled to elect a
majority of Interface's board of directors, the Existing Shareholder Group
shall at any time fail to be the "beneficial owners" (as defined in Rule 13d-3
under the Exchange Act) of a majority of the issued and outstanding shares of
Interface's Class B common stock; or (ii) at any time during which the holders
of Interface's Class B common stock have ceased to be entitled to elect a
majority of Interface's board of directors (A) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than the
Existing Shareholder Group, shall become the "beneficial owner(s)" (as defined
in said Rule 13d-3) of sufficient shares of the then outstanding common stock
of Interface entitled to vote for members of Interface's board of directors so
as to possess effective control (as such term is defined in the second sentence
of the definition of "Affiliate" in Section 1.01) of Interface, or (B) during
any period of twenty-four (24) consecutive calendar months, individuals who at
the beginning of such period constituted Interface's board of directors
(together with any new directors whose election by Interface's board of
directors or whose nomination for election by Interface's shareholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors then in office; or (iii) any event or
condition shall occur or exist which, pursuant to the terms of any Change in
Control Provision, requires or permits the holder(s) of
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Interface Control Debt to require that such Interface Control Debt be redeemed,
repurchased, defeased, prepaid or repaid, in whole or in part, or the maturity
of such Interface Control Debt to be accelerated in any respect; provided,
however, that no Event of Default hereunder shall be deemed to exist upon the
occurrence of any event or condition described in the foregoing clauses (i),
(ii) or (iii) until ninety (90) days after the first occurrence or existence of
such event or condition;
SECTION 10.12. DEFAULT UNDER OTHER CREDIT DOCUMENTS. There
shall exist or occur any "Event of Default" as provided under the terms of any
other Credit Document (excluding the IRB Collateral Documents), or any Credit
Document (including the IRB Collateral Documents) ceases to be in full force
and effect or the validity or enforceability thereof is disaffirmed by or on
behalf of Interface or any other Credit Party, or at any time it is or becomes
unlawful for Interface or any other Credit Party to perform or comply with its
obligations under any Credit Document (including the IRB Collateral Documents),
or the obligations of Interface or any other Credit Party under any Credit
Document (including the IRB Collateral Documents) are not or cease to be legal,
valid and binding on Interface or any such Credit Party;
SECTION 10.13. DEFAULT UNDER INTEREST RATE CONTRACT OR
CURRENCY CONTRACT. Any event or condition shall occur or exist which causes,
or permits any party thereto (other than the Consolidated Company or Companies
party thereto) to cause, the termination or cancellation of the FNBC Currency
Contract or any other Interest Rate Contract or Currency Contract (excluding
any termination or cancellation effected at the option of Interface in the
exercise of Interface's business judgment or any other termination or
cancellation of such Interest Rate Contract or Currency Contract not resulting
from any breach of such agreement or default thereunder by any Consolidated
Company or Companies), and as a result of such cancellation or termination, any
of the Consolidated Companies would be required to make net payments thereunder
in excess of $2,500,000 in the aggregate;
SECTION 10.14. ATTACHMENTS. An attachment or similar action
shall be made on or taken against any of the assets of any Consolidated
Company with an Asset Value exceeding $5,000,000 in aggregate and is not
removed within 90 days of the same being made; or
SECTION 10.15. ACCOUNTS RECEIVABLE FACILITY. There shall
exist or occur (i) any "Event of Default" as provided under the terms of the
Receivables Backup Purchase Agreement, or (ii) any "Event of Termination" as
provided under the terms of the Receivables Sale Agreement;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Co-Agents may, and upon the written or telex
request of the Required Lenders, shall, by written notice to the Borrowers,
take any or all of the following actions, without prejudice to the rights of
the Co-Agents, any Lender or the holder of any Note to enforce its claims
against the
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Borrowers or any other Credit Party: (i) declare all Commitments terminated,
whereupon the pro rata Commitments of each Lender shall terminate immediately
and any commitment fee shall forthwith become due and payable without any other
notice of any kind; and (ii) declare the principal of and any accrued interest
on the Loans, and all other Obligations owing hereunder, to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
Interface and each other Borrower; provided, that, if an Event of Default
specified in Section 10.07 shall occur, the result which would occur upon the
giving of written notice by the Co-Agents to any Credit Party, as specified in
clauses (i) and (ii) above, shall occur automatically without the giving of any
such notice.
ARTICLE XI.
THE CO-AGENTS; COLLATERAL AGENT
SECTION 11.01. APPOINTMENT OF CO-AGENTS. Each Multicurrency
Lender hereby designates FNBC as Multicurrency Agent to administer all matters
concerning the Multicurrency Loan Commitments and to act as herein specified.
Each Revolving Lender and Term Lender hereby designates TCB as Domestic Agent
to administer all matters concerning the Revolving Loan Commitments
(including, without limitation, the L/C Subcommitments) and the Term Loans and
to act as herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Note by the acceptance of a Note shall be deemed irrevocably
to authorize, the Appropriate Co-Agent to take such actions on its behalf
under the provisions of this Agreement, the Letter of Credit Agreement, the
other Credit Documents, and all other instruments and agreements referred to
herein or therein, and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Appropriate Co-Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Co-Agents may perform any of their
duties hereunder by or through their agents or employees.
SECTION 11.02. APPOINTMENT OF COLLATERAL AGENT. (a) Each
Co-Agent and each Lender hereby designates TCB as Collateral Agent and hereby
authorizes the Collateral Agent to enter into each of the Security Documents
substantially in the form attached hereto and to the Letter of Credit
Agreement, and to take all action contemplated thereby. All rights and
remedies under the Security Documents may be exercised by the Collateral Agent
for the benefit of the Co-Agents and the Lenders and the other beneficiaries
thereof upon the terms thereof. The Co-Agents and the Lenders further agree
that the Collateral Agent may assign its rights and obligations as Collateral
Agent under any of the Security Documents to any affiliate of the Collateral
Agent or to any trustee, which assignee in each such case shall (subject to
com-
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pliance with any requirements of applicable law governing the assignment of
such Security Documents) be entitled to all the rights of the Collateral Agent
under and with respect to the applicable Security Document.
(b) In each circumstance where, under any provision of
any Security Document, the Collateral Agent shall have the right to grant or
withhold any consent, exercise any remedy, make any determination or direct any
action by the Collateral Agent under such Security Document, the Collateral
Agent shall act in respect of such consent, exercise of remedies, determination
or action, as the case may be, with the consent of and at the direction of the
Required Lenders; provided, however, that no such consent of the Required
Lenders shall be required with respect to any consent, determination or other
matter that is, in the Collateral Agent's judgment, ministerial or
administrative in nature; provided, further, that in no event shall the
Collateral Agent be required, and in all cases shall be fully justified in
failing or refusing, to take any action under or pursuant to any Security
Document which, in the reasonable opinion of the Collateral Agent, (a) would be
contrary to the terms of any Security Document or would subject it or its
officers, employees, or directors to liability, unless and until the Collateral
Agent shall be indemnified or tendered security to its satisfaction by the
Lenders against any and all loss, cost, expense or liability in connection
therewith, or (b) would be contrary to law, in each case anything herein or
elsewhere contained to the contrary notwithstanding. In each circumstance
where any consent of or direction from the Required Lenders is required, the
Collateral Agent shall send to the Lenders a notice setting forth a description
in reasonable detail of the matter as to which consent or direction is
requested and the Collateral Agent's proposed course of action with respect
thereto. In the event the Collateral Agent shall not have received a response
from any Lender within five (5) Business Days after such Lender's receipt of
such notice, such Lender shall be deemed to have agreed to the course of action
proposed by the Collateral Agent.
SECTION 11.03. NATURE OF DUTIES OF AGENTS. The Agents shall
have no duties or responsibilities except those expressly set forth in this
Agreement, the Letter of Credit Agreement, and the other Credit Documents.
None of the Agents nor any of their respective officers, directors, employees
or agents shall be liable for any action taken or omitted by it as such
hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agents shall be
ministerial and administrative in nature; the Agents shall not have by reason
of this Agreement or the Letter of Credit Agreement a fiduciary relationship in
respect of any Lender; and nothing in this Agreement, express or implied, is
intended to or shall be so construed as to impose upon the Agents any
obligations in respect of this Agreement, the Letter of Credit Agreement, or
the other Credit Documents except as expressly set forth herein.
SECTION 11.04. LACK OF RELIANCE ON THE AGENTS.
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(a) Independently and without reliance upon the Agents, each
Lender, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
the Credit Parties in connection with the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the creditworthiness of the
Credit Parties, and, except as expressly provided in this Agreement or the
Letter of Credit Agreement, the Agents shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any
credit or other information with respect thereto, whether coming into its
possession before the making of any Loans, or the issuance of any Letters of
Credit, or at any time or times thereafter.
(b) The Agents shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, the
Guaranty Agreements, the Pledge Agreements, the Letter of Credit Agreement, the
L/C Cash Collateral Assignment, the IRB Collateral Documents, or any other
documents contemplated hereby or thereby, or the financial condition of the
Credit Parties, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of
this Agreement, the Notes, the Guaranty Agreements, the Pledge Agreements, the
Letter of Credit Agreement, the L/C Cash Collateral Assignment, the IRB
Collateral Documents, or the other documents contemplated hereby or thereby, or
the financial condition of the Credit Parties, or the existence or possible
existence of any Default or Event of Default; provided, however, to the extent
the Agents have been advised that a Lender has not received any information
formally delivered to the Agents pursuant to Section 8.07, the Agents shall
deliver or cause to be delivered such information to such Lender.
SECTION 11.05. CERTAIN RIGHTS OF THE AGENTS. If any Agent
shall request instructions from the Required Lenders or the Required
Multicurrency Lenders with respect to any action or actions (including the
failure to act) in connection with this Agreement or the Letter of Credit
Agreement, such Agent shall be entitled to refrain from such act or taking such
act, unless and until the Agent shall have received instructions from such
Lenders; and the Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against any Agent as a result of such Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders or the Required Multicurrency Lenders where required by the
terms of this Agreement or the Letter of Credit Agreement.
SECTION 11.06. RELIANCE BY AGENTS. The Agents shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex,
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teletype or telecopier message, cable gram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person. The
Agents may consult with legal counsel (including counsel for any Credit Party),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
SECTION 11.07. INDEMNIFICATION OF AGENTS. To the extent the
Agents are not reimbursed and indemnified by the Credit Parties, each Lender
will reimburse and indemnify (i) each Appropriate Co-Agent, ratably according
to the respective principal amounts of the Loans and participations in Letters
of Credit outstanding by each Lender under the Facilities administered by such
Agent of which such Lender is a part (or if no amounts are outstanding, ratably
in accordance with their respective Commitments under the Facilities
administered by such Agent of which such Lender is a part), and (ii) the
Collateral Agent, ratably according to the respective amounts of the Loans and
Letters of Credit outstanding under all Facilities (or if no amounts are
outstanding, ratably in accordance with the Total Commitments), in either case,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against such Agent in performing its
duties hereunder, in any way relating to or arising out of this Agreement or
the other Credit Documents; provided that no Lender shall be liable to any
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct.
SECTION 11.08. THE AGENTS IN THEIR INDIVIDUAL CAPACITY. With
respect to its obligation to lend under this Agreement, the Loans made by it
and the Notes issued to it, and its obligations pursuant to the Letter of
Credit Agreement and the reimbursement obligations to it thereunder, each Agent
shall have the same rights and powers hereunder as any other Lender or holder
of a Note and may exercise the same as though it were not performing the duties
specified herein; and the terms "Lenders", "Required Lenders", "holders of
Notes", or any similar terms shall, unless the context clearly otherwise
indicates, include each of the Agents in its individual capacity. The Agents
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with the Consolidated
Companies or any affiliate of the Consolidated Companies as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Consolidated Companies for services in connection with
this Agreement, the Letter of Credit Agreement, and otherwise without having to
account for the same to the Lenders.
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SECTION 11.09. HOLDERS OF NOTES. The Agents may deem and
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have
been filed with the Agents. Any request, authority or consent of any Person
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Note or of any Note or Notes issued in
exchange therefor.
SECTION 11.10. SUCCESSOR AGENTS.
(a) Any Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrowers and may be removed at any time with or
without cause by the Required Lenders; provided, however, the Collateral Agent
may not resign or be removed until a successor Collateral Agent has been
appointed and shall have accepted such appointment. Upon any such resignation
or removal, the Required Lenders shall have the right, upon five days' notice
to the Borrowers, to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then, upon
five days' notice to the Borrowers, the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a bank which maintains an
office in the United States, or a commercial bank organized under the laws of
the United States of America or any State thereof, or any Affiliate of such
bank, having a combined capital and surplus of at least $100,000,000.
(b) Upon the acceptance of any appointment as an Agent
hereunder and under the Letter of Credit Agreement by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article XI shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was an Agent under this Agreement
or the Letter of Credit Agreement.
SECTION 11.11. INTERESTS OF FNBC AND ITS AFFILIATES. Each of
the Lenders confirms and acknowledges that FNBC has advised it that FNBC has
engaged in other transactions with, and performed financial advisory services
for, Interface, and further that certain affiliates of FNBC and a partnership
comprised of employees of an FNBC affiliate maintain ownership interests in
Bentley, as follows: (i) FNBC is party to certain interest rate and currency
exchange swap agreements and forward rate agreements with one or more of the
Consolidated Companies, (ii) FNBC, through its Mergers and Acquisitions Group,
served as financial advisor to Interface in connection with the Bentley
Acquisition, (iii) prior to the Bentley Acquisition, First Chicago Investment
Corporation, First Capital
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Corporation of Chicago, and a partnership comprised of certain employees of
First Capital Corporation of Chicago (collectively, the "FNBC Affiliates")
owned, in the aggregate, a majority of the capital stock of Bentley, and (iv)
prior to the Bentley Acquisition, the FNBC Affiliates elected a majority of the
members of the Bentley board of directors, including the member designated by
the Bentley board of directors to negotiate the sale of Bentley to Interface.
The FNBC Affiliates own a majority of the preferred stock issued by Interface
as a portion of the purchase price for Bentley, and FNBC may continue to engage
in other transactions with, and perform financial advisory services for,
Interface and other Consolidated Companies. None of the foregoing
relationships or ownership interests shall preclude FNBC from serving as
Multicurrency Agent or Co-Agent hereunder or from exercising all rights,
privileges and remedies of a Lender under this Agreement without regard to such
relationships or ownership interests.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopy or similar teletransmission or writing) and shall be given to
such party at its address or applicable teletransmission number set forth on
the signature pages hereof, or such other address or applicable
teletransmission number as such party may hereafter specify by notice to the
Co-Agents and the Borrowers. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answerback is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid, (iii) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section and the appropriate confirmation is received, or (iv)
if given by any other means (including, without limitation, by air courier),
when delivered or received at the address specified in this Section; provided
that notices to the Co-Agents shall not be effective until received.
SECTION 12.02. AMENDMENTS, ETC. No amendment or waiver of
any provision of this Agreement or the other Credit Documents, nor consent to
any departure by any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment,
waiver or consent shall, unless in writing and signed by all the Lenders (or,
in the case of any amendment or waiver of Section 6.02, all the Multicurrency
Lenders) do any of the following: (i) waive any of the conditions specified in
Sections 6.01 or 6.02, or in Sections 3.1 or 3.2 of the Letter of Credit
Agreement, (ii) increase
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the Commitments or other contractual obligations to the Borrowers under this
Agreement or the Letter of Credit Agreement, (iii) reduce the principal of, or
interest on, the Notes or any fees hereunder or under the Letter of Credit
Agreement, (iv) postpone any date fixed for the payment in respect of principal
of, or interest on, the Notes or any fees hereunder or under the Letter of
Credit Agreement, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number or identity of
Lenders which shall be required for the Lenders or any of them to take any
action hereunder or under the Letter of Credit Agreement, (vi) agree to release
any of the Pledged Stock from the Lien of the Security Documents, any funds in
the L/C Cash Collateral Account, or any collateral described in the IRB
Collateral Documents, to the extent securing the Obligations or to release any
Guarantor from its obligations under any Guaranty Agreement (provided, that no
agreement to any such release shall be required from any Lenders in connection
with a sale of Pledged Stock that is made at a time when Interface has
satisfied the requirements set forth in Section 9.03(ii)(C) with respect to
such sale), or (vii) amend this Section 12.02 or Section 12.06. Furthermore,
no amendment or waiver of any provision of this Agreement or consent to any
departure by any Credit Party therefrom as set forth in Section 4.01 hereof, to
the definition of Currency or Payment Office, FCB Account or FC Bank, Section
5.01(a)(ii), Section 5.01(b)(ii), Section 5.02 or Section 5.13 shall be
effective unless in writing and signed by at least Multicurrency Lenders
holding at least 66 2/3% of the Multicurrency Loan Commitments and signed by
the Appropriate Co-Agent (the "Required Multicurrency Lenders").
Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in
writing and signed by the Co-Agents or the Collateral Agent, as the case may
be, in addition to the Lenders required hereinabove to take such action, affect
the rights or duties of the Co-Agents or the Collateral Agent, as the case may
be, under this Agreement, the Letter of Credit Agreement, or under any other
Credit Document.
SECTION 12.03. NO WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of the Co-Agents, the Collateral Agent, any Lender or any
holder of a Note in exercising any right or remedy hereunder or under the
Letter of Credit Agreement or any other Credit Document, and no course of
dealing between any Credit Party and the Co-Agents, the Collateral Agent, any
Lender or the holder of any Note shall operate as a waiver thereof, nor shall
any single or partial exercise of any right or remedy hereunder or under the
Letter of Credit Agreement or any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right or remedy hereunder
or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Co-Agents, the
Collateral Agent, any Lender or the holder of any Note would otherwise have.
No notice to or demand on any Credit Party not required hereunder or under the
Letter of Credit Agreement or any other Credit Document in any case shall
entitle any Credit Party to any other or further notice or demand in similar or
other circumstances or con-
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stitute a waiver of the rights of the Co-Agents, the Collateral Agent, the
Lenders or the holder of any Note to any other or further action in any
circumstances without notice or demand.
SECTION 12.04. PAYMENT OF EXPENSES, ETC. Each of Interface
and each other Borrower shall:
(i) whether or not the transactions hereby contemplated
are consummated, pay all reasonable, out-of-pocket costs and expenses
of the Agents in the administration (both before and after the execution
hereof and including advice of counsel as to the rights and duties of the
Agents and the Lenders with respect thereto) of, and in connection with
the preparation, execution and delivery of, preservation of rights under,
enforcement of, and, after a Default or Event of Default, refinancing,
renegotiation or restructuring of, this Agreement, the Letter of Credit
Agreement, and the other Credit Documents and the documents and
instruments referred to therein, and any amendment, waiver or consent
relating thereto (including, without limitation, the reasonable fees and
disbursements of counsel for the Agents), and in the case of enforcement
of this Agreement, the Letter of Credit Agreement, or any Credit Document
after an Event of Default, all such reasonable, out-of-pocket costs and
expenses (including, without limitation, the reasonable fees and
disbursements of counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the applicable
provisions of Section 5.07(b), pay and hold each of the Lenders harmless
from and against any and all present and future stamp, documentary, and
other similar Taxes with respect to this Agreement, the Notes, the Letter
of Credit Agreement, and any other Credit Documents, any collateral
described therein, or any payments due thereunder, and save each Lender
harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such Taxes;
(iii) indemnify each Agent and Lender, and their respective
officers, directors, employees, representatives and agents from, and
hold each of them harmless against, any and all costs, losses,
liabilities, claims, damages or expenses incurred by any of them (whether
or not any of them is designated a party thereto) (an "Indemnitee")
arising out of or by reason of any investigation, litigation or other
proceeding related to any actual or proposed use of the proceeds of any of
the Loans or the Letters of Credit, or any Credit Party's entering into
and performing of the Agreement, the Notes, the Letter of Credit
Agreement, or the other Credit Documents, including, without limitation,
the reasonable fees and disbursements of counsel (including foreign
counsel) incurred in connection with any such investigation, litigation or
other proceeding; provided, however, the Borrowers shall not be obligated
to indemnify any Indemnitee for any of the foregoing arising out of such
Indemnitee's gross negligence or willful misconduct, or the violation by
such Indemnitee of any law,
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rule or regulation, unless such violation occurs directly or indirectly
as a result of an action, inaction, representation or misrepresentation by
or on behalf of any Credit Party or other Consolidated Company; and
(iv) without limiting the indemnities set forth in subsection
(iii) above, indemnify each Indemnitee for any and all expenses and costs
(including without limitation, remedial, removal, response, abatement,
cleanup, investigative, closure and monitoring costs), losses, claims
(including claims for contribution or indemnity and including the cost of
investigating or defending any claim and whether or not such claim is
ultimately defeated, and whether such claim arose before, during or after
any Credit Party's ownership, operation, possession or control of its
business, property or facilities or before, on or after the date hereof,
and including also any amounts paid incidental to any compromise or
settlement by the Indemnitee or Indemnitees to the holders of any such
claim), lawsuits, liabilities, obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages (including without limitation
damages for contamination or destruction of natural resources), penalties
and fines of any kind or nature whatsoever (including without limitation
in all cases the reasonable fees, other charges and disbursements of
counsel in connection therewith) incurred, suffered or sustained by that
Indemnitee based upon, arising under or relating to Environmental Laws
based on, arising out of or relating to in whole or in part, the existence
or exercise of any rights or remedies by any Indemnitee under this
Agreement, the Letter of Credit Agreement, any other Credit Document or
any related documents (but excluding those incurred, suffered or
sustained by any Indemnitee as a result of any action taken by or on
behalf of the Lenders with respect to any Subsidiary of Interface owned
or controlled by the Lenders, the Collateral Agent, or their nominees or
designees, as a result of their acquisition of Pledged Stock pursuant to
exercise of remedies under the Pledge Agreements).
If and to the extent that the obligations of Interface and each other
Borrower under this Section 12.04 are unenforceable for any reason,
Interface and each other Borrower hereby agree to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
SECTION 12.05. RIGHT OF SETOFF. In addition to and not in
limitation of all rights of offset that any Lender or other holder of a
Note may have under applicable law, each Lender or other holder of a Note
shall, upon the occurrence of any Event of Default and whether or not
such Lender or such holder has made any demand or any Credit Party's
obligations are matured, have the right to appropriate and apply to the
payment of any Credit Party's obligations hereunder and under the Letter
of Credit Agreement and the other Credit Documents,
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all deposits of any Credit Party (general or special, time or demand,
provisional or final) then or thereafter held by and other indebtedness or
property then or thereafter owing by such Lender or other holder to any
Credit Party, whether or not related to this Agreement or any transaction
hereunder.
SECTION 12.06. BENEFIT OF AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the
parties hereto, provided that the Borrowers may not assign or transfer any
of its interest hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for
the account of, any of its branch offices or the office of an Affiliate
of such Lender.
(c) Each Lender may assign all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion
of any of its Commitments and the Loans at the time owing to it and the
Notes held by it) and the Letter of Credit Agreement to any Eligible
Assignee; provided, however, that (i) the Co-Agents and Interface
must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld; it being agreed that, in the case of
any assignment of an L/C Subcommitment or other obligations under the
Letter of Credit Agreement, such consent will be properly withheld if such
assignee does not then possess the "Minimum Required Rating" as provided
in the Letter of Credit Agreement and has not been approved by the L/C
Issuer in its sole discretion), (ii) the amount of the Commitments, in the
case of the Revolving Loan Commitments and the Multicurrency Loan
Commitments, or Loans, in the case of assignment of Term Loans, of the
assigning Lender subject to each assignment (determined as of the date the
assignment and acceptance with respect to such assignment is delivered to
the Co-Agents) shall not be less than $5,000,000, and (iii) the parties to
each such assignment shall execute and deliver to the Co-Agents an
Assignment and Acceptance, together with a Note or Notes subject to such
assignment and a processing and recordation fee of $2500. From and after
the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the
execution thereof, the assignee thereunder shall be a party hereto and to
the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement and the
Letter of Credit Agreement. Notwithstanding the foregoing, the assigning
Lender must retain after the consummation of such Assignment and
Acceptance, a minimum aggregate amount of Commitments and Term Loans of
$10,000,000; provided, however, no such minimum amount shall be required
with respect to any such assignment made at any time there exists an Event
of Default hereunder. Within five (5) Business Days after receipt of the
notice and the Assignment and Acceptance, Interface and each of the other
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Borrowers, at its own expense, shall execute and deliver to the
Appropriate Co-Agent, in exchange for the surrendered Note or Notes, a new
Note or Notes to the order of such assignee in a principal amount equal to
the applicable Commitments or Term Loans assumed by it pursuant to such
Assignment and Acceptance and new Note or Notes to the assigning Lender in
the amount of its retained Commitment or Commitments or amount of its
retained Term Loans. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the date of the surrendered Note
or Notes which they replace, and shall otherwise be in substantially the
form attached hereto.
(d) Each Lender may, without the consent of Interface, any other
Borrower or the Agents, sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments in the Loans
owing to it and the Notes held by it) and the Letter of Credit Agreement,
provided, however, that (i) no Lender may sell a participation in its
aggregate Commitments and Term Loans (after giving effect to any permitted
assignment hereof) in an amount in excess of fifty percent (50%) of such
aggregate Commitments and Term Loans, except that no such maximum amount
shall be applicable to any such participation sold at any time there
exists an Event of Default hereunder, (ii) such Lender's obligations under
this Agreement and the Letter of Credit Agreement shall remain unchanged,
(iii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and (iv) the participating
bank or other entity shall not be entitled to the benefit (except through
its selling Lender) of the cost protection provisions contained in Article
V of this Agreement, and (v) Interface, the other Borrowers and the Agents
and other Lenders shall continue to deal solely and directly with each
Lender in connection with such Lender's rights and obligations under this
Agreement, the Letter of Credit Agreement, and the other Credit Documents,
and such Lender shall retain the sole right to enforce the obligations of
Interface and the other Borrowers relating to the Loans and the Letters
of Credit, and to approve any amendment, modification or waiver of any
provisions of this Agreement and the Letter of Credit Agreement.
(e) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation,
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant any information relating to Interface or
the other Consolidated Companies furnished to such Lender by or on behalf
of Interface or any other Consolidated Company; provided that, prior to
any such disclosure of information designated by Interface as
confidential, the Lender proposing to make such assignment or sell such
participation shall
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obtain from such prospective assignee or participant an agreement
whereby such prospective assignee or participant shall agree to preserve
the confidentiality of such confidential information consistent with the
provisions of Section 8.05.
(f) Any Lender may at any time assign all or any portion of its
rights in this Agreement and the Notes issued to it to a Federal
Reserve Bank; provided that no such assignment shall release the Lender
from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 5.07(b) have been
levied or imposed so as to require withholdings or deductions by any
Borrower and payment by such Borrower of additional amounts to any Lender
as a result thereof, (ii) any Lender shall make demand for payment of any
material additional amounts as compensation for increased costs or for its
reduced rate of return pursuant to Section 5.10 or 5.17 hereof or Section
2.6(a) of the Letter of Credit Agreement, (iii) any Lender shall decline
to consent to a modification or waiver of the terms of this Agreement, the
Letter of Credit Agreement, or the other Credit Documents requested by
Interface, or (iv) any Multicurrency Lender shall fail to have delivered
to Interface by June __, 1995, the certificate or other document from the
United Kingdom Inland Revenue as specified in Section 5.07(b)(v)(B) unless
such Multicurrency Lender shall otherwise establish, to the satisfaction
of Interface, that it is exempt from withholding taxes imposed by the
United Kingdom, then and in such event, upon request from Interface
delivered to such Lender and the Co-Agents, such Lender shall assign, in
accordance with the provisions of Section 12.06(c), all of its rights and
obligations under this Agreement and the other Credit Documents to another
Lender or an Eligible Assignee selected by Interface, in consideration for
the payment by such assignee to the Lender of the principal of, and
interest on, the outstanding Loans accrued to the date of such assignment,
and the assumption of such Lender's Total Commitment hereunder, together
with any and all other amounts owing to such Lender under any provisions
of this Agreement, the Letter of Credit Agreement, or the other Credit
Documents accrued to the date of such assignment.
SECTION 12.07. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTES, THE LETTER OF CREDIT AGREEMENT, OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY,
GEORGIA, OR THE SUPERIOR COURT OF COBB
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COUNTY, GEORGIA, OR IN ANY COURT OF THE UNITED STATES OF AMERICA FOR
THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND
EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(c) EACH BORROWER HEREBY IRREVOCABLY DESIGNATES EACH OF G.
KIMBROUGH TAYLOR, JR. AND KILPATRICK & CODY, EACH OF ATLANTA, GEORGIA,
AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON BEHALF
OF SUCH BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES
OR ANY DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON EITHER SUCH LOCAL AGENT WILL BE PROMPTLY FORWARDED BY
MAIL TO THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE
BELOW, BUT THE FAILURE OF THE BORROWER TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. IF FOR ANY REASON SERVICE
OF PROCESS CANNOT PROMPTLY BE MADE ON EITHER SUCH LOCAL AGENT, EACH
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the Agents, any
Lender, any holder of a Note or any Credit Party to serve process in
any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Borrowers in any other jurisdiction.
SECTION 12.08. INDEPENDENT NATURE OF LENDERS' RIGHTS. The
amounts payable at any time hereunder to each Lender shall be a separate
and independent debt, and each Lender shall be entitled to protect and
enforce its rights pursuant to this Agreement and its Notes, and it shall
not be necessary for any other Lender to be joined as an additional party
in any proceeding for such purpose.
SECTION 12.09. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
SECTION 12.10. EFFECTIVENESS; SURVIVAL.
- 103 -
<PAGE> 110
(a) This Agreement shall become effective on the date (the
"Effective Date") on which all of the parties hereto shall have signed
a copy hereof (whether the same or different copies) and shall have
delivered the same to the Co-Agent pursuant to Section 12.01 or, in the
case of the Lenders, shall have given to the Co-Agents written or telex
notice (actually received) that the same has been signed and mailed to
them.
(b) The obligations of the Borrowers under Sections 5.07(b),
5.10, 5.12, 5.13, 5.17, 12.04 and 12.15 hereof shall survive the
payment in full of the Notes after the Revolver/Multicurrency Maturity
Date and the Term Loan Final Maturity Date. All representations and
warranties made herein, in the certificates, reports, notices, and other
documents delivered pursuant to this Agreement and the Letter of Credit
Agreement shall survive the execution and delivery of this Agreement, the
Letter of Credit Agreement, the other Credit Documents, and such other
agreements and documents, the making of the Loans hereunder, the execution
and delivery of the Notes, and the issuance of the Letters of Credit.
(c) The obligations of the Co-Agents, the Lenders, their
assignees and participants under Sections 5.07(b), 8.05 and 12.06(e)
hereof shall survive the payment in full of the Notes after the
Revolver/Multicurrency Maturity Date and the Term Loan Maturity Date.
SECTION 12.11. SEVERABILITY. In case any provision in or
obligation under this Agreement, the Letter of Credit Agreement, or the
other Credit Documents shall be invalid, illegal or unenforceable, in
whole or in part, in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 12.12. INDEPENDENCE OF COVENANTS. All covenants
hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact
that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a
Default or an Event of Default if such action is taken or condition
exists.
SECTION 12.13. CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR OR
TAX LAWS. If (i) any preparation of the financial statements referred to
in Section 8.07 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions)
result in a material change in the method of calculation of financial
covenants, standards or terms found in this Agreement, (ii) there is any
change in
- 104 -
<PAGE> 111
Interface's fiscal quarter or fiscal year, or (iii) there is a material
change in federal tax laws which materially affects any of the
Consolidated Companies' ability to comply with the financial covenants,
standards or terms found in this Agreement, the parties agree to enter
into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for
evaluating any of the Consolidated Companies' financial condition shall be
the same after such changes as if such changes had not been made. Unless
and until such provisions have been so amended, the provisions of this
Agreement shall govern.
SECTION 12.14. HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT. The
headings of the several sections and subsections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement. This Agreement, the
Letter of Credit Agreement, the other Credit Documents, and the agreements
and documents required to be delivered pursuant to the terms of this
Agreement and the Letter of Credit Agreement constitute the entire
agreement among the parties hereto and thereto regarding the subject
matters hereof and thereof and supersede all prior agreements,
representations and understandings related to such subject matters.
SECTION 12.15. JUDGMENT CURRENCY.
(a) The Credit Parties' obligations hereunder and under the
Letter of Credit Agreement and the other Credit Documents to make
payments in a particular Currency (the "Obligation Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation
Currency, except to the extent that such tender or recovery actually
results in the effective receipt by the Co-Agents, the Collateral Agent
or a Lender of the full amount of the Obligation Currency expressed to be
payable to the Co-Agents, the Collateral Agent or such Lender under this
Agreement, the Letter of Credit Agreement, or the other Credit Documents.
If for the purpose of obtaining or enforcing judgment against any Borrower
or other Credit Party in any court or in any jurisdiction, it becomes
necessary to convert into or from any currency other than the Obligation
Currency (such other currency being hereinafter referred to as the
"Judgment Currency") an amount due in the Obligation Currency, the
conversion shall be made, and the Currency equivalent determined, in each
case, as on the day immediately preceding the day on which the judgment is
given (such Business Day being hereafter referred to as the "Judgment
Currency Conversion Date").
- 105 -
<PAGE> 112
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual
payment of the amount due, the Credit Parties covenant and agree to
pay, or cause to be paid, such additional amounts, if any (but in any
event not a lesser amount), as may be necessary to ensure that the amount
paid in the Judgment Currency, when converted at the rate of exchange
quoted by the Multicurrency Agent at its prevailing rate for such Currency
exchange on the date of payment, will produce the amount of the Obligation
Currency which could have been purchased with the amount of Judgment
Currency stipulated in the judgment or judicial award at the rate of
exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the Currency equivalent for
this Section, such amounts shall include any premium and costs payable
in connection with the purchase of the Obligation Currency.
SECTION 12.16. DOLLAR EQUIVALENT COMPUTATIONS.
Unless otherwise provided herein, to the extent that the determination
of compliance with any requirement of this Agreement requires the
conversion to U.S. Dollars of foreign currency amounts, such U.S. Dollar
amount shall be computed using the Dollar Equivalent of the amount of such
foreign currency at the time such item is to be calculated or is to be or
was incurred, created or suffered or permitted to exist, or assumed or
transferred or sold for purposes of this Agreement (except if such item
was incurred, created or assumed, or suffered or permitted to exist or
transferred or sold prior to the date hereof, such conversion shall be
made based on the Dollar Equivalent of the amounts of such foreign
currency at the date hereof).
SECTION 12.17. REFINANCING OF INDEBTEDNESS. This Agreement and
the Notes being made and delivered by the Borrowers hereunder, represent
a refinancing of the existing indebtedness and credit facilities under
the 1993 Credit Agreement effective from and after the date of this
Agreement. The execution and delivery of this Agreement and the Notes
shall not constitute payment or satisfaction of any existing indebtedness
under the 1993 Credit Agreement or operate as a novation with respect
thereto, nor shall the execution or delivery thereof operate to release,
discharge, or otherwise limit any liability or obligations of the
Borrowers under the 1993 Credit Agreement based on facts or events
occurring or existing prior to the execution and delivery of this
Agreement and the Notes.
- 106 -
<PAGE> 113
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in Atlanta, Georgia, by their duly
authorized officers as of the day and year first above written.
Address for Notices: INTERFACE, INC.
===================
2859 Paces Ferry Road By:
Suite 2000 ==========================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No: 404/956-9764
- 107 -
<PAGE> 114
Address for Notices: INTERFACE SCHERPENZEEL B.V.
===================
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
Atlanta, GA 30339 ==========================
Attention: Daniel T. Hendrix Name:
Attorney-in-Fact
Telex No.:
Answerback:
Telecopy No: 404/956-9764
- 108 -
<PAGE> 115
<TABLE>
<S> <C>
Address for Notices: INTERFACE EUROPE LIMITED
===================
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
Atlanta, GA 30339 ==========================
Attention: Daniel T. Hendrix Name:
Attorney-in-Fact
Telex No.:
Answerback:
Telecopy No: 404/956-9764
</TABLE>
- 109 -
<PAGE> 116
<TABLE>
<S> <C>
Address for Notices: TRUST COMPANY BANK,
===================
AS DOMESTIC AGENT AND
COLLATERAL AGENT
One Park Place, N.E.
Atlanta, Georgia 30303 By:
Attention: John K. Shoffner =========================
Name:
========================
Title:
========================
Telex No.: 542210
Answerback: TRUSCO INT ATL
Telecopy No.: 404/588-8833 By:
=========================
Name:
========================
Title:
========================
Payment Office:
==============
One Park Place, N.E.
Atlanta, Georgia 30303
</TABLE>
- 110 -
<PAGE> 117
<TABLE>
<S> <C> <C>
Address for Notices: THE FIRST NATIONAL BANK
=================== OF CHICAGO, AS Mail
Suite 0374 MULTICURRENCY AGENT
One First National Plaza
Chicago, Illinois 60670-0374
Attention: Al R. Chircop
By:
---------------------------
Name:
================================
Title:
================================
Telex No.:
Answerback:
Telecopy No.: 312/732-3885
Administrative Office:
=====================
One First National Plaza
Chicago, Illinois 60670
Attention:
-------------------
Payment Offices:
===============
(See Schedule 4.01)
==============
</TABLE>
- 111 -
<PAGE> 118
<TABLE>
<S> <C>
Address for Notices: TRUST COMPANY BANK
===================
One Park Place, N.E.
Atlanta, Georgia 30303
Attn: John K. Shoffner By:
---------------------------------------
Name:
================================
Title:
================================
Telex No.: 542210
Answerback: TRUSCO INT ATL
By:
---------------------------------------
Name:
================================
Title:
================================
Domestic Lending Office:
=======================
One Park Place, N.E.
Atlanta, Georgia 30303
Telex No.: 542210
Answerback: TRUSCO INT ATL
Eurocurrency Lending Office:
===========================
One Park Place, N.E.
Atlanta, Georgia 30303
Telex No.: 542210
Answerback: TRUSCO INT ATL
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,500,000.00 9.0000%
REVOLVING LOAN COMMITMENT: $ 11,400,000.00 8.1429%
L/C SUBCOMMITMENT: $ 3,257,142.86 8.1429%
MULTICURRENCY LOAN COMMITMENT: $ 6,600,000.00 11.0000%
TOTAL COMMITMENT: $ 22,500,000.00 9.0000%
</TABLE>
- 112 -
<PAGE> 119
<TABLE>
<S> <C>
Address for Notices: THE FIRST NATIONAL BANK
=================== OF CHICAGO
Mail Suite 0374
One First National Plaza
Chicago, Illinois 60670-0374
Attention: Al R. Chircop
By:
---------------------------------------
Name:
================================
Telex No.: 4330253 Title:
Answerback: FNBC UI ================================
Telecopy No.: 312/732-3885
Administrative Office:
=====================
One First National Plaza
Chicago, Illinois 60670
Attention: Al R. Chircop
Payment Offices:
===============
(See Schedule 4.01)
==============
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,500,000.00 9.0000%
REVOLVING LOAN COMMITMENT: $ 3,000,000.00 2.1429%
L/C SUBCOMMITMENT: $ 857,142.86 2.1429%
MULTICURRENCY LOAN COMMITMENT: $ 15,000,000.00 25.0000%
TOTAL COMMITMENT: $ 22,500,000.00 9.0000%
</TABLE>
- 113 -
<PAGE> 120
<TABLE>
<S> <C>
Address for Notices: ABN AMRO BANK N.V.
===================
Suite 1200, One Ravinia Drive
Atlanta, Georgia 30346
Attn: Patrick Thom By:
---------------------------------------
Name:
================================
Telephone: 404/396-0066 Title:
Telecopy: 404/395-9188 ================================
Telex: 682 7258 By:
Answerback: ABNBANKATL ---------------------------------------
Name:
================================
Title:
================================
Domestic Lending Office:
=======================
ABN AMRO Bank N.V., Atlanta Agency
Suite 1200, One Ravinia Drive
Atlanta, GA 30346
Eurocurrency Lending Office:
===========================
ABN AMRO Bank N.V., Atlanta Agency
Suite 1200, One Ravinia Drive
Atlanta, GA 30346
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,200,000.00 8.4000%
REVOLVING LOAN COMMITMENT: $ 1,800,000.00 1.2857%
L/C SUBCOMMITMENT: $ 514,285.71 1.2857%
MULTICURRENCY LOAN COMMITMENT: $ 15,000,000.00 25.0000%
TOTAL COMMITMENT: $ 21,000,000.00 8.4000%
</TABLE>
- 114 -
<PAGE> 121
<TABLE>
<S> <C>
Address for Notices: BANK SOUTH, N.A.
===================
P. O. Box 4387, MC71
Atlanta, Georgia 30302
Attn: George Hodges
Corporate Banking Officer By:
---------------------------------------
Name:
================================
55 Marietta Street, MC71 Title:
Atlanta, Georgia 30303 ================================
Attn: George Hodges
Corporate Banking Officer By:
---------------------------------------
Name:
================================
Title:
================================
Telephone: 404/529-4810
Telecopy: 404/521-7309
Domestic Lending Office:
=======================
55 Marietta Street, MC71
Atlanta, Georgia 30303
Eurocurrency Lending Office:
===========================
55 Marietta Street, MC71
Atlanta, Georgia 30303
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,000,000.00 8.0000%
REVOLVING LOAN COMMITMENT: $ 16,000,000.00 11.4286%
L/C SUBCOMMITMENT: $ 4,571,428.57 11.4286%
MULTICURRENCY LOAN COMMITMENT: $ 0.00 0.0000%
TOTAL COMMITMENT: $ 20,000,000.00 8.0000%
</TABLE>
- 115 -
<PAGE> 122
<TABLE>
<S> <C>
Address for Notices: THE BANK OF TOKYO LTD.,
=================== ATLANTA AGENCY
5050 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303 By:
Attn: Richard Davis ---------------------------------------
Name:
================================
Title:
Telephone: 404/577-2960 ================================
Telecopy: 404/577-1155
Telex No.: 6827300
Answerback: 6827300BOT ATL
Domestic Lending Office:
=======================
5050 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Eurocurrency Lending Office:
===========================
5050 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 3,200,000.00 6.4000%
REVOLVING LOAN COMMITMENT: $ 12,800,000.00 9.1429%
L/C SUBCOMMITMENT: $ 3,657,142.86 9.1429%
MULTICURRENCY LOAN COMMITMENT: $ 0.00 0.0000%
TOTAL COMMITMENT: $ 16,000,000.00 6.4000%
</TABLE>
- 116 -
<PAGE> 123
<TABLE>
<S> <C>
Address for Notices: CIBC, INC.
===================
Canadian Imperial Bank of
Commerce
Two Paces West By:
2727 Paces Ferry Road ---------------------------------------
Suite 1200 Name:
Atlanta, Georgia 30339 ================================
Attn: William C. Humphries Title:
Vice President ================================
Telephone: 404/319-4999
Telecopy: 404/319-4950
Domestic Lending Office:
=======================
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Eurocurrency Lending Office:
===========================
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,200,000.00 8.4000%
REVOLVING LOAN COMMITMENT: $ 9,000,000.00 6.4286%
L/C SUBCOMMITMENT: $ 2,571,428.57 6.4286%
MULTICURRENCY LOAN COMMITMENT: $ 7,800,000.00 13.0000%
TOTAL COMMITMENT: $ 21,000,000.00 8.4000%
</TABLE>
- 117 -
<PAGE> 124
<TABLE>
<S> <C>
Address for Notices: CREDITANSTALT-BANKVERIEN
===================
Two Ravinia Drive, Suite 1680
Atlanta, Georgia 30346
Attention: Dan Lensgraf By:
---------------------------------------
Name:
Telephone: 404/390-1850 ================================
Telecopy: 404/389-1851 Title:
================================
By:
---------------------------------------
Name:
================================
Title:
================================
Domestic Lending Office:
=======================
245 Park Avenue
New York, New York 10167
Eurocurrency Lending Office:
===========================
245 Park Avenue
New York, New York 10167
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,000,000.00 8.0000%
REVOLVING LOAN COMMITMENT: $ 16,000,000.00 11.4286%
L/C SUBCOMMITMENT: $ 4,571,428.57 11.4286%
MULTICURRENCY LOAN COMMITMENT: $ 0.00 0.0000%
TOTAL COMMITMENT: $ 20,000,000.00 8.0000%
</TABLE>
- 118 -
<PAGE> 125
<TABLE>
<S> <C>
Address for Notices: CREDIT LYONNAIS NEW YORK BRANCH
===================
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400 By:
Atlanta, GA 30303 ---------------------------------------
Attn: Rainer Zeck Name:
================================
Title:
================================
Telephone: 404/524-3700
Telecopy: 404/584-5249 CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:
---------------------------------------
Name:
================================
Title:
================================
Domestic Lending Office:
=======================
Credit Lyonnais New York
1301 Avenue of the Americas
New York, New York 10019
Eurocurrency Lending Office:
===========================
Credit Lyonnais Cayman Island
c/o 1301 Avenue of the Americas
New York, New York 10019
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 3,200,000.00 6.4000%
REVOLVING LOAN COMMITMENT: $ 12,800,000.00 9.1429%
L/C SUBCOMMITMENT: $ 3,657,142.86 9.1429%
MULTICURRENCY LOAN COMMITMENT: $ 0.00 0.0000%
TOTAL COMMITMENT: $ 16,000,000.00 6.4000%
</TABLE>
- 119 -
<PAGE> 126
<TABLE>
<S> <C>
Address for Notices: THE DAIWA BANK, LIMITED
===================
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606 By:
Attn: Operations Manager ---------------------------------------
Name:
================================
Title:
================================
Telephone: 312/876-0181
Telecopy: 312/876-1995
By:
---------------------------------------
Name:
================================
Title:
================================
Domestic Lending Office:
=======================
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
Eurocurrency Lending Office:
===========================
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 3,200,000.00 6.4000%
REVOLVING LOAN COMMITMENT: $ 12,800,000.00 9.1429%
L/C SUBCOMMITMENT: $ 3,657,142.86 9.1429%
MULTICURRENCY LOAN COMMITMENT: $ 0.00 0.0000%
TOTAL COMMITMENT: $ 16,000,000.00 6.4000%
</TABLE>
- 120 -
<PAGE> 127
<TABLE>
<S> <C>
Address for Notices: FIRST UNION NATIONAL
=================== BANK OF GEORGIA
999 Peachtree Street, N.E.
12th Floor
Atlanta, Georgia 30309
Attn: Michael S. Murphey By:
Senior Vice President ---------------------------------------
NAME: ================================
Title:
================================
Telephone: 404/225-4004
Telecopy: 404/225-4255
Domestic Lending Office:
=======================
999 Peachtree Street, N.E.
12th Floor
Atlanta, Georgia 30309
Eurocurrency Lending Office:
===========================
999 Peachtree Street, N.E.
12th Floor
Atlanta, Georgia 30309
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,200,000.00 8.4000%
REVOLVING LOAN COMMITMENT: $ 16,800,000.00 12.0000%
L/C SUBCOMMITMENT: $ 4,800,000.00 12.0000%
MULTICURRENCY LOAN COMMITMENT: $ 0.00 0.0000%
TOTAL COMMITMENT: $ 21,000,000.00 8.4000%
</TABLE>
- 121 -
<PAGE> 128
<TABLE>
<S> <C>
Address for Notices: FLEET BANK OF MAINE
===================
80 Exchange Street
Bangor, Maine 04401
Attn: Neil C. Buitenhuys By:
-------------------------
Name: Neil C. Buitenhuys
Title: Vice President
Telephone: 207/941-6140 or 6180
Telecopy: 207/941-6023
Domestic Lending Office:
=======================
511 Congress St., P.O. Box 1280
Portland, Maine 04104-5006
Eurocurrency Lending Office:
===========================
511 Congress St., P.O. Box 1280
Portland, Maine 04104-5006
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 2,400,000.00 4.8000%
REVOLVING LOAN COMMITMENT: $ 9,600,000.00 6.8571%
L/C SUBCOMMITMENT: $ 2,742,857.14 6.8571%
MULTICURRENCY LOAN COMMITMENT: $ 0.00 0.0000%
TOTAL COMMITMENT: $ 12,000,000.00 4.8000%
</TABLE>
- 122 -
<PAGE> 129
<TABLE>
<S> <C>
Address for Notices: NATIONSBANK OF NORTH CAROLINA,
=================== N.A.
100 North Tryon Street
Mail Code NC1-007-08-11
Charlotte, NC 28255 By:
Attention: Lance Walton ---------------------------
------------------------ Name:
----------------------
Title:
---------------------
Telephone: 704/386-6744
Telecopy: 704/386-1270
Domestic Lending Office:
=======================
One Independence Center
101 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, North Carolina 28255
Eurocurrency Lending Office:
===========================
One Independence Center
101 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, North Carolina 28255
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,200,000.00 8.4000%
REVOLVING LOAN COMMITMENT: $ 9,000,000.00 6.4286%
L/C SUBCOMMITMENT: $ 2,571,428.57 6.4286%
MULTICURRENCY LOAN COMMITMENT: $ 7,800,000.00 13.0000%
TOTAL COMMITMENT: $ 21,000,000.00 8.4000%
</TABLE>
- 123 -
<PAGE> 130
<TABLE>
<S> <C>
Address for Notices: WACHOVIA BANK OF GEORGIA, N.A.
===================
191 Peachtree Street, N.E.
30th Floor
Atlanta, Georgia 30383
Attn: Doug Strickland By:
---------------------------------------
Name:
================================
Title:
================================
By:
---------------------------------------
Name:
================================
Telecopy: 404/332-1382 Title:
Telex: 404/332-6920 ================================
Answerback: FNBAINTL
Domestic Lending Office:
=======================
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
Eurocurrency Lending Office:
===========================
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
</TABLE>
<TABLE>
<CAPTION>
PRO RATA
AMOUNT SHARE
====== ========
<S> <C> <C>
TERM LOAN COMMITMENT: $ 4,200,000.00 8.4000%
REVOLVING LOAN COMMITMENT: $ 9,000,000.00 6.4286%
L/C SUBCOMMITMENT: $ 2,571,428.57 6.4286%
MULTICURRENCY LOAN COMMITMENT: $ 7,800,000.00 13.0000%
TOTAL COMMITMENT: $ 21,000,000.00 8.4000%
</TABLE>
- 124 -
<PAGE> 131
EXHIBIT A
TERM NOTE
U.S. $ January , 1995
------------ --
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned INTERFACE, INC., a Georgia
corporation (herein called "Interface"), hereby promises to pay to the order of
[LENDER] (herein, together with any subsequent holder hereof, called "Lender")
for the account of its applicable Lending Office, the principal sum of
______________ in two equal annual installments, each in the principal amount
of $ ___________, on December 29, 2000, and December 31, 2001, together with
interest accrued thereon as provided herein. Interface agrees to make payments
and prepayments of principal on the dates and in the amounts specified in the
Credit Agreement referred to below, including, without limitation, Sections
2.02 and 2.03 of the Credit Agreement, in strict accordance with the terms
thereof. Interface likewise agrees to pay interest on the outstanding
principal amount hereof, at such interest rates, payable at such times, and
computed in such manner, as are specified in the Credit Agreement in strict
accordance with the terms thereof. All remaining principal and accrued
interest then outstanding under this Term Note shall be due and payable in full
on the earlier of (i) December 31, 2001, and (ii) the date on which all such
amounts have become due and payable pursuant to Article X of the Credit
Agreement.
The Lender shall record all payments of principal hereof, and, prior
to any transfer hereof, shall endorse such payments on the schedule annexed
hereto and made a part hereof, or on any continuation thereof which shall be
attached hereto and made a part hereof, which endorsement shall constitute
prima facie evidence of the accuracy of the information so endorsed; provided,
however, that delay or failure of the Lender to make any such endorsement or
recordation shall not affect the obligations of Interface hereunder or under
the Credit Agreement with respect to the Term Loan evidenced hereby.
Any principal or, to the extent not prohibited by law, interest due
under this Term Note that is not paid on the due date therefor, whether a
regularly scheduled payment date, on the maturity date, or resulting from the
acceleration of maturity upon the occurrence of an Event of Default, shall bear
interest from the date due to payment in full at a fluctuating rate as provided
in Section 5.03(c) of the Credit Agreement.
All payments of principal and interest shall be made in lawful money
of the United States of America in immediately available funds at the Payment
Office of the Domestic Agent specified in the Credit Agreement.
This Term Note is issued pursuant to, and is one of the Term Notes
referred to in, the Credit Agreement dated as of January __, 1995, among
Interface, Interface Scherpenzeel B.V., Interface Europe Limited, Trust Company
Bank and The First National Bank of Chicago as Co-Agents, Trust Company Bank as
Collateral Agent, and the banks and other lending institutions listed on the
signature
<PAGE> 132
pages of the Credit Agreement (as the same may be further amended, modified or
supplemented from time to time, the "Credit Agreement") and each assignee
thereof becoming a "Lender" as provided therein, and the Lender is and shall be
entitled to all benefits thereof and all Security Documents executed and
delivered to the Lenders or the Collateral Agent in connection therewith.
Terms defined in the Credit Agreement are used herein with the same meanings.
The Credit Agreement, among other things, contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events,
restrictions on prepayments on account of principal hereof prior to the
maturity hereof, and mandatory prepayments upon the occurrence of certain
events.
This Term Note is subject to mandatory prepayment as set forth in
Section 2.03 of the Credit Agreement and may be voluntarily prepaid as set
forth in Section 5.06 of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and all accrued interest on this Term Note may automatically
become, or be declared, due and payable in the manner and with the effect
provided in the Credit Agreement. Interface agrees to pay, and save the Lender
harmless against any liability for the payment of, all reasonable out-of-pocket
costs and expenses, including reasonable attorneys' fees, arising in connection
with the enforcement by the Lender of any of its rights under this Term Note or
the Credit Agreement.
This Term Note has been executed and delivered in Georgia and the
rights and obligations of the Lender and Interface hereunder shall be governed
by and construed in accordance with the laws (without giving effect to the
conflict of law principles thereof) of the State of Georgia.
Interface expressly waives any presentment, demand, protest or notice
in connection with this Term Note, now or hereafter required by applicable law.
TIME IS OF THE ESSENCE OF THIS TERM NOTE.
IN WITNESS WHEREOF, Interface has caused this Term Note to be executed
and delivered under seal by its duly authorized officers as of the date first
above written.
INTERFACE, INC.
By: _________________________
Daniel T. Hendrix
Vice President
Attest: ______________________
Name:_________________
Assistant Secretary
[CORPORATE SEAL]
- 2 -
<PAGE> 133
Term Note (cont'd)
PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Type of
Term Amount of Last Day of
Loan and Principal Applicable
Interest Repaid or Interest Notation
Date Rate Prepaid Period Made By
==========================================================================================================
<S> <C> <C> <C> <C>
</TABLE>
- 3 -
<PAGE> 134
EXHIBIT B
REVOLVING CREDIT NOTE
U.S. $ January , 1995
------------- --
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned INTERFACE, INC., a Georgia
corporation (herein called "Interface"), hereby promises to pay to the order of
[LENDER] (herein, together with any subsequent holder hereof, called the
"Lender"), for the account of its applicable Lending Office, the lesser of (i)
the principal sum of ___________________ and (ii) the outstanding principal
amount of the Advances made by Lender to Interface as Revolving Loans pursuant
to the terms of the Credit Agreement referred to below on the earlier of (x)
June 30, 1999 and (y) the date on which all amounts outstanding under this
Revolving Credit Note have become due and payable pursuant to the provisions of
Article X of the Credit Agreement. Interface likewise promises to pay interest
on the outstanding principal amount of each such Advance, at such interest
rates, payable at such times, and computed in such manner, as are specified for
such Advance in the Credit Agreement in strict accordance with the terms
thereof.
The Lender shall record all Advances made pursuant to its Revolving
Loan Commitment under the Credit Agreement and all payments of principal of
such Advances and, prior to any transfer hereof, shall endorse such Advances
and payments on the schedule annexed hereto and made a part hereof, or on any
continuation thereof which shall be attached hereto and made a part hereof,
which endorsement shall constitute prima facie evidence of the accuracy of the
information so endorsed; provided, however, that delay or failure of the Lender
to make any such endorsement or recordation shall not affect the obligations of
Interface hereunder or under the Credit Agreement with respect to the Advances
evidenced hereby.
Any principal or, to the extent not prohibited by applicable law,
interest due under this Revolving Credit Note that is not paid on the due date
therefor, whether on the Revolver/Multicurrency Maturity Date, or resulting
from the acceleration of maturity upon the occurrence of an Event of Default,
shall bear interest from the date due to payment in full at the rate as
provided in Section 5.03(c) of the Credit Agreement.
All payments of principal and interest shall be made in lawful money
of the United States of America in immediately available funds at the Payment
Office of the Domestic Agent specified in the Credit Agreement.
<PAGE> 135
This Revolving Credit Note is issued pursuant to, and is one of the
Revolving Credit Notes referred to in, the Credit Agreement dated as of January
__, 1995 among Interface, Interface Scherpenzeel B.V., Interface Europe
Limited, Trust Company Bank and The First National Bank of Chicago as
Co-Agents, Trust Company Bank as Collateral Agent, and the banks and other
lending institutions listed on the signature pages thereof (as the same may be
further amended, modified or supplemented from time to time, the "Credit
Agreement") and each assignee thereof becoming a "Lender" as provided therein,
and the Lender is and shall be entitled to all benefits thereof and all
Security Documents executed and delivered to the Lenders or the Collateral
Agent in connection therewith. Terms defined in the Credit Agreement are used
herein with the same meanings. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and for mandatory prepayments upon the occurrence of
certain events.
Interface agrees to make payments of principal on the Advances
outstanding hereunder on the dates and in the amounts specified in the Credit
Agreement for such Advances in strict accordance with the terms thereof.
This Revolving Credit Note may be prepaid in whole or in part, without
premium or penalty but with accrued interest on the principal amount prepaid to
the date of prepayment, and otherwise in accordance with the terms and
conditions of Section 5.06 of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and all accrued interest on this Revolving Credit Note may
automatically become, or be declared, due and payable in the manner and with
the effect provided in the Credit Agreement. Interface agrees to pay, and save
the Lender harmless against any liability for the payment of, all reasonable
out-of- pocket costs and expenses, including reasonable attorneys' fees,
arising in connection with the enforcement by the Lender of any of its rights
under this Revolving Credit Note or the Credit Agreement.
This Revolving Credit Note has been executed and delivered in Georgia
and the rights and obligations of the Lender and Interface hereunder shall be
governed by and construed in accordance with the laws (without giving effect to
the conflict of law principles thereof) of the State of Georgia.
Interface expressly waives any presentment, demand, protest or notice
in connection with this Revolving Credit Note, now or hereafter required by
applicable law. TIME IS OF THE ESSENCE OF THIS REVOLVING CREDIT NOTE.
- 2 -
<PAGE> 136
IN WITNESS WHEREOF, Interface has caused this Revolving Credit Note to
be executed and delivered under seal by its duly authorized officers as of the
date first above written.
INTERFACE, INC.
By:
==================================
Daniel T. Hendrix
Vice President
Attest:
=======================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
- 3 -
<PAGE> 137
Revolving Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
=======================================================================================================
<S> <C> <C> <C> <C> <C>
</TABLE>
- 4 -
<PAGE> 138
EXHIBIT C-1
MULTICURRENCY NOTE
Multicurrency Loan January , 1995
--
Commitment: U.S. $ Atlanta, Georgia
----------------
FOR VALUE RECEIVED, the undersigned INTERFACE SCHERPENZEEL B.V., a
"besloten vennootschap met beperkte aansprakelijkheid" (private company with
limited liability) incorporated and existing under the laws of the
Netherlandswith its registered seat in Scherpenzeel, Gld., the Netherlands
(herein called "Borrower"), hereby promises to pay to the order of [LENDER]
(herein, together with any subsequent holder hereof, called the "Multicurrency
Lender"), for the account of its applicable Lending Office, the outstanding
principal amount of the Advances made by the Multicurrency Lender to Borrower
as Multicurrency Loans pursuant to the terms of the Credit Agreement referred
to below on the earlier of (x) June 30, 1999 and (y) the date on which all
amounts outstanding under this Multicurrency Note have become due and payable
pursuant to the provisions of Article X of the Credit Agreement. Borrower
likewise promises to pay interest on the outstanding principal amount of each
such Advance, at such interest rates, payable at such times, and computed in
such manner, as are specified for such Advance in the Credit Agreement in
strict accordance with the terms thereof.
Borrower may request Advances hereunder in any Currency as provided in
the Credit Agreement. The Multicurrency Lender shall record all Advances made
pursuant to its Multicurrency Loan Commitment under the Credit Agreement and
all payments of principal of such Advances and, prior to any transfer hereof,
shall endorse such Advances and payments on the schedule annexed hereto and
made a part hereof, or on any continuation thereof which shall be attached
hereto and made a part hereof, which endorsement shall constitute prima facie
evidence of the accuracy of the information so endorsed; provided, however,
that delay or failure of the Multicurrency Lender to make any such endorsement
or recordation shall not affect the obligations of Borrower hereunder or under
the Credit Agreement with respect to the Advances evidenced hereby. The
outstanding amount of Advances pursuant to the Multicurrency Loan Commitments
shall be subject to conversion to the Dollar Equivalent of such amount at the
times and in the manner provided in Section 4.01(a) of the Credit Agreement for
purposes of determining the unutilized portion of the Multicurrency Loan
Commitment.
Any principal or, to the extent not prohibited by applicable law,
interest due under this Multicurrency Note that is not paid on the due date
therefor, whether on the Revolver/Multicurrency Maturity Date, or resulting
from the acceleration of maturity upon the occurrence of an Event of Default,
shall bear interest from the
<PAGE> 139
date due to payment in full at the rate as provided in Section 5.03(c) of the
Credit Agreement.
All payments of principal and interest shall be made in the Currency
in which the applicable Advance was made in immediately available funds at the
applicable Payment Office of the Multicurrency Agent specified in the Credit
Agreement for Advances in such Currency.
This Multicurrency Note is issued pursuant to, and is one of the
Multicurrency Notes referred to in, the Credit Agreement dated as of January __,
1995 among Interface, Inc., Interface Scherpenzeel B.V., Interface Europe
Limited, Trust Company Bank and The First National Bank of Chicago as Co-Agents,
Trust Company Bank as Collateral Agent, and the banks and other lending
institutions listed on the signature pages thereof (as the same may be further
amended, modified or supplemented from time to time, the "Credit Agreement") and
each assignee thereof becoming a "Lender" as provided therein, and the
Multicurrency Lender is and shall be entitled to all benefits thereof and all
Security Documents executed and delivered to the Lenders or the Collateral Agent
in connection therewith. Terms defined in the Credit Agreement are used herein
with the same meanings. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and for mandatory prepayments upon the occurrence of certain
events.
Borrower agrees to make payments of principal on the Advances
outstanding hereunder on the dates and in the amounts specified in the Credit
Agreement for such Advances in strict accordance with the terms thereof.
This Multicurrency Note may be prepaid in whole or in part, without
premium or penalty but with accrued interest on the principal amount prepaid to
the date of prepayment, and otherwise in accordance with the terms and
conditions of Section 5.06 of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and all accrued interest on this Multicurrency Note may
automatically become, or be declared, due and payable in the manner and with
the effect provided in the Credit Agreement. Borrower agrees to pay, and save
the Multicurrency Lender harmless against, any liability for the payment of,
all reasonable out- of-pocket costs and expenses, including reasonable
attorneys' fees, arising in connection with the enforcement by the
Multicurrency Lender of any of its rights under this Multicurrency Note or the
Credit Agreement.
This Multicurrency Note has been executed and delivered in the State
of Georgia, U.S.A., and the rights and obligations of the Multicurrency Lender
and Borrower hereunder shall be governed by and construed in accordance with
the laws (without giving effect to the conflict of law principles thereof) of
the State of Georgia, U.S.A.
- 2 -
<PAGE> 140
Borrower expressly waives any presentment, demand, protest or notice
in connection with this Multicurrency Note, now or hereafter required by
applicable law. TIME IS OF THE ESSENCE OF THIS MULTICURRENCY NOTE.
IN WITNESS WHEREOF, Borrower has caused this Multicurrency Note to be
executed and delivered under seal by its duly authorized signatory as of the
date first above written.
INTERFACE SCHERPENZEEL B.V.
By:
==========================================
Name:
=====================================
Title:
====================================
- 3 -
<PAGE> 141
Multicurrency Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount Interest Last Day of
of Rate Amount of Applicable
Advance Principal Interest Notation
Date And Currency Prepaid Period Made By
=============================================================================================
<S> <C> <C> <C> <C> <C>
</TABLE>
- 4 -
<PAGE> 142
EXHIBIT D-1
INTERFACE GUARANTY AGREEMENT
THIS INTERFACE GUARANTY AGREEMENT (this "Guaranty"), dated as
of January 9, 1995, made by INTERFACE, INC., a Georgia corporation (the
"Guarantor"), in favor of (i) the banks and other lending institutions that are
parties to the Credit Agreement (as hereinafter defined) and each assignee
thereof becoming a "Lender" as provided therein (collectively, the "Lenders"),
(ii) Trust Company Bank, in its capacities as Collateral Agent (the "Collateral
Agent") under the terms of the Credit Agreement and as L/C Issuer (the "L/C
Issuer") under the terms of the Letter of Credit Agreement (as hereinafter
defined), and (iii) The First National Bank of Chicago and Trust Company Bank,
as co-agents under the terms of the Credit Agreement (the "Co-Agents"; the
Lenders, the Collateral Agent, the L/C Issuer, and the Co-Agents being
collectively referred to herein as the "Guaranteed Parties");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Guarantor has entered into that certain Credit
Agreement dated as of January 9, 1995, by and among Guarantor, Interface
Scherpenzeel B.V., and Interface Europe Limited (collectively, the
"Borrowers"), the Lenders, the Co-Agents, and the Collateral Agent (as
hereafter amended, restated, or supplemented from time to time, the "Credit
Agreement"; all capitalized terms used herein without definition having the
respective meanings set forth for such terms in the Credit Agreement);
WHEREAS, Guarantor has entered into that certain Letter of
Credit Agreement dated as of January 9, 1995, by and among Guarantor, Interface
Flooring Systems, Inc., Guilford of Maine, Inc., Bentley Mills, Inc., Prince
Street Technologies, Ltd., Rockland React-Rite, Inc., Interface Research
Corporation, and Pandel, Inc. (collectively, the "L/C Credit Parties"), certain
of the Lenders, and Trust Company Bank, in its capacities as L/C Issuer,
Domestic Agent, and Collateral Agent (as hereafter amended, restated or
supplemented from time to time, the "Letter of Credit Agreement");
WHEREAS, Guarantor owns, directly or indirectly, all
outstanding capital stock of each of the other Borrowers and each of the other
L/C Credit Parties (collectively, the "Subsidiary Credit Parties");
<PAGE> 143
WHEREAS, the Subsidiary Credit Parties and Guarantor share an
identity of interest as members of a consolidated group of companies engaged in
substantially similar businesses with Guarantor providing certain centralized
financial, accounting and management services to each of the Subsidiary Credit
Parties;
WHEREAS, consummation of the transactions pursuant to the
Credit Agreement and Letter of Credit Agreement will facilitate expansion and
enhance the overall financial strength and stability of Guarantor's entire
corporate group; and
WHEREAS, it is a condition precedent to the Lenders'
obligations to enter into the Credit Agreement and Letter of Credit Agreement
and to make extensions of credit thereunder that Guarantor execute and deliver
this Guaranty, and Guarantor desires to execute and deliver this Guaranty to
satisfy such condition precedent;
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to enter into and perform their obligations under the
Credit Agreement and Letter of Credit Agreement, Guarantor hereby agrees as
follows:
SECTION i. GUARANTY. Guarantor hereby irrevocably
and unconditionally guarantees the
punctual payment when due, whether at
stated maturity, by acceleration or
otherwise, of all Loans, Letters of
Credit reimbursement obligations, and all
other Obligations owing by the Subsidiary
Credit Parties to the Lenders, the Co-
Agents, the Collateral Agent, the L/C
Issuer, or any of them, under the Credit
Agreement, the Notes, the Letter of
Credit Agreement, and the other Credit
Documents, including all renewals,
extensions, modifications and
refinancings thereof, now or hereafter
owing, whether for principal, interest,
fees, expenses or otherwise, and any and
all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and
expenses) incurred by the Lenders or the
Collateral Agent in enforcing any rights
under this Guaranty (collectively, the
"Guaranteed Obligations"), including
without limitation, all interest which,
but for the filing of a
- 2 -
<PAGE> 144
petition in bankruptcy, or the
equivalent filing under the laws of the
United Kingdom, The Netherlands, or other
jurisdictions, with respect to the
Subsidiary Credit Parties, would accrue
on any principal portion of the
Guaranteed Obligations. Any and all
payments by Guarantor hereunder shall be
made free and clear of and without
deduction for any set-off, counterclaim,
or withholding so that, in each case,
each Guaranteed Party will receive, after
giving effect to any Taxes (as such term
is defined in the Credit Agreement, but
excluding Taxes imposed on overall net
income of the Guaranteed Party to the
same extent as excluded pursuant to the
Credit Agreement), the full amount that
it would otherwise be entitled to receive
with respect to the Guaranteed
Obligations (but without duplication of
amounts for Taxes already included in the
Guaranteed Obligations). Guarantor
acknowledges and agrees that this is a
guarantee of payment when due, and not of
collection, and that this Guaranty may be
enforced up to the full amount of the
Guaranteed Obligations without proceeding
against any of the Subsidiary Credit
Parties, against any security for the
Guaranteed Obligations, against any other
Guarantor or under any other guaranty
covering any portion of the Guaranteed
Obligations.
SECTION ii. GUARANTY ABSOLUTE. Guarantor guarantees
that the Guaranteed Obligations will be
paid strictly in accordance with the
terms of the Credit Documents, regardless
of any law, regulation or order now or
hereafter in effect in any jurisdiction
affecting any of such terms or the rights
of any Guaranteed Party with respect
thereto. The liability of Guarantor
under this Guaranty shall be
- 3 -
<PAGE> 145
absolute and unconditional in accordance
with its terms and shall remain in full
force and effect without regard to, and
shall not be released, suspended,
discharged, terminated or otherwise
affected by, any circumstance or
occurrence whatsoever, including, without
limitation, the following (whether or not
Guarantor consents thereto or has notice
thereof):
(a) any change in the time, place or manner of payment of, or
in any other term of, all or any of the Guaranteed Obligations, any
waiver, indulgence, renewal, extension, amendment or modification of
or addition, consent or supplement to or deletion from or any other
action or inaction under or in respect of the Credit Agreement, the
Letter of Credit Agreement, or the other Credit Documents, or any
other documents, instruments or agreements relating to the Guaranteed
Obligations or any other instrument or agreement referred to therein
or any assignment or transfer of any thereof;
(b) any lack of validity or enforceability of the Credit
Agreement, the Letter of Credit Agreement, or the other Credit
Documents, or any other document, instrument or agreement referred to
therein or any assignment or transfer of any thereof;
(c) any furnishing to the Guaranteed Parties of any additional
security for the Guaranteed Obligations, or any sale, exchange,
release or surrender of, or realization on, any security for the
Guaranteed Obligations;
(d) any settlement or compromise of any of the Guaranteed
Obligations, any security therefor, or any liability of any other
party with respect to the Guaranteed Obligations, or any subordination
of the payment of the Guaranteed Obligations to the payment of any
other liability of the Subsidiary Credit Parties;
(e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to Guarantor, any Subsidiary Credit Party or any other Credit Party,
or any action taken with respect to this Guaranty by any trustee or
receiver, or by any court, in any such proceeding;
(f) any nonperfection of any security interest or lien on any
collateral, or any amendment or waiver of or consent to
- 4 -
<PAGE> 146
departure from any guaranty or security, for all or any of the
Guaranteed Obligations;
(g) any application of sums paid by the Subsidiary Credit
Parties or any other Person with respect to the liabilities of any of
the Subsidiary Credit Parties to the Guaranteed Parties, regardless of
what liabilities of the Subsidiary Credit Parties remain unpaid;
(h) any act or failure to act by any Guaranteed Party
which may adversely affect Guarantor's subrogation rights, if any,
against the Subsidiary Credit Parties or any of them to recover
payments made under this Guaranty; and
(i) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Guarantor, any Subsidiary
Credit Party or any other Credit Party.
If claim is ever made upon any of the Guaranteed Parties for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations, and any Guaranteed Party repays all or part of said
amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over the Guaranteed Party or any of its
property, or (b) any settlement or compromise of any such claim effected by the
Guaranteed Party with any such claimant (including any of the Subsidiary Credit
Parties or a trustee in bankruptcy for any of the Subsidiary Credit Parties),
then and in such event Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding on it, notwithstanding any revocation
hereof or the cancellation of the Credit Agreement, the Letter of Credit
Agreement, the other Credit Documents, or any other instrument evidencing any
liability of any of the Subsidiary Credit Parties, and Guarantor shall be and
remain liable to the Guaranteed Party for the amounts so repaid or recovered to
the same extent as if such amount had never originally been paid to the
Guaranteed Party.
SECTION III. WAIVER. Guarantor hereby waives notice
of acceptance of this Guaranty, notice of
any liability to which it may apply, and
further waives presentment, demand of
payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit
or taking of other action by the
Guaranteed Parties against, and any other
notice to, any of the Subsidiary Credit
Parties or any other party liable with
respect to the Guaranteed
- 5 -
<PAGE> 147
Obligations (including Guarantor or any
other Person executing a guaranty of the
obligations of any of the Subsidiary
Credit Parties).
SECTION IV. SUBROGATION. Guarantor will
not exercise any rights against any of
the Subsidiary Credit Parties which it
may acquire by way of subrogation or
contribution, by any payment made
hereunder or otherwise, until all the
Guaranteed Obligations shall have been
irrevocably paid in full and the Credit
Agreement and the Letter of Credit
Agreement shall have been irrevocably
terminated. If any amount shall be paid
to Guarantor on account of such
subrogation or contribution rights at any
time when all the Guaranteed Obligations
shall not have been paid in full, such
amount shall be held in trust for the
benefit of the Guaranteed Parties and
shall forthwith be paid to the Collateral
Agent to be credited and applied to the
Guaranteed Obligations, whether matured
or unmatured, in accordance with the
terms of the Credit Agreement and the
Letter of Credit Agreement. If (i)
Guarantor shall make payment to the
Guaranteed Parties of all or any part of
the Guaranteed Obligations and (ii) all
the Guaranteed Obligations shall be
irrevocably paid in full and the Credit
Agreement and the Letter of Credit
Agreement irrevocably terminated, the
Guaranteed Parties will, at Guarantor's
request, execute and deliver to Guarantor
appropriate documents, without recourse
and without representation or warranty,
necessary to evidence the transfer by
subrogation to Guarantor of an interest
in the Guaranteed Obligations resulting
from such payment by Guarantor.
SECTION 5. SEVERABILITY. Any provision of this Guaranty
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
- 6 -
<PAGE> 148
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by Guarantor therefrom
shall in any event be effective unless the same shall be in writing executed by
the Collateral Agent.
SECTION 7. NOTICES. All notices and other communications
provided for hereunder shall be given in the manner, and at the addresses for
Guarantor and the Collateral Agent, respectively, as specified in Section 12.01
of the Credit Agreement.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of
the Collateral Agent or the other Guaranteed Parties to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. No notice to or
demand on Guarantor in any case shall entitle Guarantor to any other further
notice or demand in any similar or other circumstances or constitute a waiver
of the rights of the Collateral Agent or other Guaranteed Parties to any other
or further action in any circumstances without notice or demand. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 9. RIGHT OF SET OFF. In addition to and not in
limitation of all rights of offset that the Collateral Agent or other
Guaranteed Parties may have under applicable law, the Collateral Agent or other
Guaranteed Parties shall, upon the occurrence of any Event of Default and
whether or not the Collateral Agent or other Guaranteed Parties have made any
demand or the Guaranteed Obligations are matured, have the right to appropriate
and apply to the payment of the Guaranteed Obligations, all deposits of
Guarantor (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter owing
by the Collateral Agent or the other Guaranteed Parties to Guarantor, whether
or not related to this Guaranty or any transaction hereunder.
SECTION 10. CONTINUING GUARANTY; TRANSFER OF OBLIGATIONS.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until payment in full of the Guaranteed Obligations and all other
amounts payable under this Guaranty and termination of the Total Commitments,
(ii) be binding upon Guarantor, its successors and assigns, and (iii) inure to
the benefit of and be enforceable by the Collateral Agent, its
- 7 -
<PAGE> 149
successors, transferees and assigns, for the benefit of the Guaranteed Parties.
SECTION 11. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE
OF PROCESS; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN THE SUPERIOR COURTS OF
FULTON COUNTY OR COBB COUNTY OF THE STATE OF GEORGIA OR IN ANY COURT OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY
EXECUTION AND DELIVERY OF THIS GUARANTY, GUARANTOR HEREBY CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID COURTS
SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE
COLLATERAL AGENT AND OTHER GUARANTEED PARTIES WITH RESPECT TO THIS GUARANTY OR
ANY DOCUMENT RELATED HERETO. GUARANTOR HEREBY IRREVOCABLY DESIGNATES EACH OF
G. KIMBROUGH TAYLOR, JR. AND KILPATRICK & CODY, EACH OF ATLANTA, GEORGIA, AS
THE DESIGNEE, APPOINTEE AND AGENT OF GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF
GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL BE DEEMED COMPLETED THIRTY DAYS AFTER MAILING THEREOF TO
SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT
WILL BE PROMPTLY FORWARDED BY MAIL TO GUARANTOR AT ITS ADDRESS SET FORTH
HEREIN, BUT THE FAILURE OF GUARANTOR TO RECEIVE SUCH COPY SHALL NOT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. IF FOR ANY REASON SERVICE OF PROCESS CANNOT PROMPTLY BE MADE ON
EITHER SUCH LOCAL AGENT, GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE
30 DAYS AFTER SUCH MAILING. GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN
RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
GUARANTOR IN ANY OTHER JURISDICTION.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR
HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
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PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY
OR ANY OTHER CREDIT DOCUMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER OR
THEREUNDER.
SECTION 12. SUBORDINATION OF SUBSIDIARY CREDIT PARTIES'
OBLIGATIONS TO GUARANTOR. As an independent covenant, Guarantor hereby
expressly covenants and agrees for the benefit of the Collateral Agent and
other Guaranteed Parties that all obligations and liabilities of each of the
Subsidiary Credit Parties to Guarantor of whatsoever description including,
without limitation, all intercompany receivables of Guarantor from each of the
Subsidiary Credit Parties ("Junior Claims") shall be subordinate and junior in
right of payment to all obligations of the Subsidiary Credit Parties to the
Collateral Agent and other Guaranteed Parties under the terms of the Credit
Agreement, the Letter of Credit Agreement, and the other Credit Documents
("Senior Claims").
If an Event of Default shall occur, then, unless and until
such Event of Default shall have been cured, or waived, or shall have ceased to
exist, no direct or indirect payment (in cash, property, securities by setoff
or otherwise) shall be made by any of the Subsidiary Credit Parties to
Guarantor on account of or in any manner in respect of any Junior Claim except
such payments and distributions the proceeds of which shall be applied to the
payment of Senior Claims.
In the event of a Proceeding (as hereinafter defined), all
Senior Claims shall first be paid in full before any direct or indirect payment
or distribution (in cash, property, securities by setoff or otherwise) shall be
made to Guarantor on account of or in any manner in respect of any Junior Claim
except such payments and distributions the proceeds of which shall be applied
to the payment of Senior Claims. For the purposes of the previous sentence,
"Proceeding" means any of the Subsidiary Credit Parties or Guarantor shall
commence a voluntary case concerning itself under the Bankruptcy Code; or any
involuntary case is commenced against any of the Subsidiary Credit Parties or
Guarantor; or a custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of, all or any substantial part of the property of any of the
Subsidiary Credit Parties or Guarantor, or any of the Subsidiary Credit Parties
or Guarantor commences any other proceedings under any reorganization
arrangement, adjustment of debt, relief of debtor, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to any of the Subsidiary Credit Parties or Guarantor, or any
such proceeding is commenced against any of the Subsidiary Credit Parties or
Guarantor, or any of the
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<PAGE> 151
Subsidiary Credit Parties or Guarantor is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or any of the Subsidiary Credit Parties or Guarantor suffers any
appointment of any custodian or the like for it or any substantial part of its
property; or any of the Subsidiary Credit Parties or Guarantor makes a general
assignment for the benefit of creditors; or any of the Subsidiary Credit
Parties or Guarantor shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or any
of the Subsidiary Credit Parties or Guarantor shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts; or
any of the Subsidiary Credit Parties or Guarantor shall by any act or failure
to act indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate action shall be taken by any of the Subsidiary
Credit Parties or Guarantor for the purpose of effecting any of the foregoing.
In the event any direct or indirect payment or distribution is
made to Guarantor in contravention of this Section 12, such payment or
distribution shall be deemed received in trust for the benefit of the
Collateral Agent and other Guaranteed Parties and shall be immediately paid
over to the Collateral Agent for application against the Guaranteed Obligations
in accordance with the terms of the Credit Agreement and the Letter of Credit
Agreement.
Guarantor agrees to execute such additional documents as the
Collateral Agent may reasonably request to evidence the subordination provided
for in this Section 12.
SECTION 13. JUDGMENT CURRENCY. (a) Guarantor's obligations
hereunder to make payments in a particular currency (the "Obligation Currency")
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than the Obligation
Currency, except to the extent that such tender or recovery results in the
effective receipt by the Guaranteed Parties of the full amount of the
Obligation Currency expressed to be payable under this Guaranty or the Credit
Agreement or Letter of Credit Agreement. If for the purpose of obtaining or
enforcing judgment against Guarantor in any court or in any jurisdiction, it
becomes necessary to convert into or from any currency other than the
Obligation Currency (such other currency being hereinafter referred to as the
"Judgment Currency") an amount due in the Obligation Currency, the conversion
shall be made, at the currency equivalent determined, in each case, as on the
day immediately preceding the day on which the judgment is given (such
Business Day being hereafter referred to as the "Judgment Currency Conversion
Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, Guarantor covenants and agrees to pay, or cause to be paid,
such additional amounts, if any (but in any event not a lesser amount), as may
be necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of
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payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of Judgment Currency stipulated in the judgment
or judicial award at the rate of exchange prevailing on the Judgment Currency
Conversion Date.
(c) For purposes of determining the currency equivalent for
this Section, such amounts shall include any premium and costs payable in
connection with the purchase of the Obligation Currency.
(d) If the Obligation Currency is U.S. Dollars, the
currency equivalent shall be the Dollar Equivalent and the "Dollar Equivalent"
shall mean, with respect to any monetary amount in a currency other than U.S.
Dollars, at any time for the determination thereof, the amount of U.S. Dollars
obtained by converting such foreign currency involved in such computation into
U.S. Dollars at the spot rate for the purchase of U.S. Dollars with the
applicable foreign currency as quoted by the Multicurrency Agent at
approximately 11:00 A.M. (Chicago, Illinois Time) on the date of determination
thereof specified herein or, if the date of determination thereof is not
otherwise specified herein, on the date two (2) Business Days prior to such
determination.
SECTION 14. AUTOMATIC ACCELERATION IN CERTAIN EVENTS.
Upon the occurrence of an Event of Default specified in Section 10.07 of the
Credit Agreement, all Guaranteed Obligations shall automatically become
immediately due and payable by Guarantor, without notice or other action on the
part of the Collateral Agent or other Guaranteed Parties, and regardless of
whether payment of the Guaranteed Obligations by the Subsidiary Credit Parties
has then been accelerated. In addition, if any event of the types described in
Section 10.07 of the Credit Agreement should occur with respect to Guarantor,
then the Guaranteed Obligations shall automatically become immediately due and
payable by Guarantor, without notice or other action on the part of the
Collateral Agent or other Guaranteed Parties, and regardless of whether payment
of the Guaranteed Obligations by any of the Subsidiary Credit Parties has then
been accelerated.
SECTION 15. INFORMATION. Guarantor assumes all
responsibility for being and keeping itself informed of the Subsidiary Credit
Parties' financial condition and assets, and of all other circumstances bearing
upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope
and extent of the risks that Guarantor assumes and incurs hereunder, and agrees
that none of the Guaranteed Parties will have any duty to advise Guarantor of
information known to it or any of them regarding such circumstances or risks.
SECTION 16. SURVIVAL OF AGREEMENT. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Guaranty, the Credit Agreement, and the Letter of Credit
Agreement, the making of the Borrowings, the
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issuance of the Letters of Credit, and the execution and delivery of the Notes
and the other Credit Documents.
SECTION 17. COUNTERPARTS. This Guaranty and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
SECTION 18. CURRENCY OF PAYMENT. All payments to be made
by Guarantor hereunder shall be made in the relevant Currency or Currencies in
which the Guaranteed Obligations are denominated in immediately available
funds. If Guarantor is unable for any reason to effect payment of any of the
Guaranteed Obligations in the Currency in which such Guaranteed Obligations are
denominated, the Guaranteed Parties may, at their option, require such payment
to be made in the Dollar Equivalent of such Currency. If in any case where
Guarantor shall make any such payment in the Dollar Equivalent, Guarantor
agrees to hold the Guaranteed Parties harmless from any loss incurred by the
Lenders arising from any change in the value of Dollars in relation to such
Currency between the date such payment became due and the date of actual
payment thereof.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed and delivered under seal by its duly authorized officers as of
the date first above written.
<TABLE>
<S> <C>
Address: INTERFACE, INC.
=======
(the "Guarantor")
Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===========================================
Atlanta, GA 30339 Daniel T. Hendrix
Attn: Daniel T. Hendrix Vice President
Attest:
===========================================
Name:____________________
Assistant Secretary
[CORPORATE SEAL]
</TABLE>
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<PAGE> 154
SECTION 12 OF THE
FOREGOING GUARANTY
ACKNOWLEDGED AND
AGREED TO:
INTERFACE SCHERPENZEEL B.V.
By:
================================================
Name:_____________________
Title:____________________
INTERFACE EUROPE LIMITED
By:
================================================
Name:_____________________
Title:____________________
INTERFACE FLOORING SYSTEMS, INC.
By:
===============================================
Daniel T. Hendrix
Vice President
GUILFORD OF MAINE, INC.
By:
================================================
Daniel T. Hendrix
Vice President
BENTLEY MILLS, INC.
By:
================================================
Daniel T. Hendrix
Vice President
PRINCE STREET TECHNOLOGIES, LTD.
By:
================================================
Daniel T. Hendrix
Vice President
ROCKLAND REACT-RITE, INC.
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<PAGE> 155
By:
================================================
Daniel T. Hendrix
Vice President
PANDEL, INC.
By:
================================================
Daniel T. Hendrix
Vice President
INTERFACE RESEARCH CORPORATION
By:
================================================
Daniel T. Hendrix
Vice President
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<PAGE> 156
EXHIBIT D-2
SUBSIDIARY GUARANTY AGREEMENT
THIS SUBSIDIARY GUARANTY AGREEMENT (this "Guaranty"), dated as
of January 9, 1995, made by GUILFORD OF MAINE, INC., a corporation organized
and existing under the laws of the State of Delaware, INTERFACE FLOORING
SYSTEMS, INC., a corporation organized and existing under the laws of the State
of Georgia, INTERFACE RESEARCH CORPORATION, a corporation organized and
existing under the laws of the State of Georgia, ROCKLAND REACT-RITE, INC., a
corporation organized and existing under the laws of the State of Georgia,
PANDEL, INC., a corporation organized and existing under the laws of the State
of Georgia, BENTLEY MILLS, INC., a corporation organized under the laws of the
State of Delaware, PRINCE STREET TECHNOLOGIES, LTD., a corporation organized
under the laws of the State of Georgia, INTERFACE EUROPE, INC., a corporation
organized and existing under the laws of the State of Delaware, INTERFACE
ASIA-PACIFIC, INC., a corporation organized and existing under the laws of the
State of Georgia, and GUILFORD (DELAWARE), INC., a corporation organized and
existing under the laws of Delaware (the foregoing corporations individually a
"Guarantor" and collectively the "Guarantors"), in favor of (i) the banks and
other lending institutions that are parties to the Credit Agreement (as
hereinafter defined) and each assignee thereof becoming a "Lender" as provided
therein (the "Lenders"), (ii) Trust Company Bank, in its capacities as
collateral agent (the "Collateral Agent") under the terms of the Credit
Agreement, and as L/C Issuer (the "L/C Issuer") under the terms of the Letter
of Credit Agreement (as hereinafter defined), and (iii) The First National Bank
of Chicago and Trust Company Bank, as co-agents under the terms of the Credit
Agreement (the "Co-Agents"; the Lenders, the Collateral Agent, the L/C Issuer,
and the Co-Agents being collectively referred to herein as the "Guaranteed
Parties");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Interface, Inc. ("Interface"), a corporation
organized and existing under the laws of the State of Georgia, Interface Europe
Limited, a private company limited by shares organized and existing under the
laws of England and Wales, and Interface Scherpenzeel B.V., a "besloten
vennootschap met beperkte aansprakelijkheid" (private company with limited
liability) organized and existing under the laws of The Netherlands
(collectively, the "Borrowers"), the Lenders, the Co-Agents, and the Collateral
Agent have entered into that certain Credit Agreement dated as of January 9,
1995 (as the same may hereafter be amended, restated, supplemented or otherwise
modified from time to
<PAGE> 157
time, and including all schedules, riders, and supplements thereto, the "Credit
Agreement"; terms defined therein and not otherwise defined herein being used
herein as therein defined);
WHEREAS, Interface, Interface Flooring Systems, Inc., Guilford
of Maine, Inc., Bentley Mills, Inc., Prince Street Technologies, Ltd., Rockland
React-Rite, Inc., and Pandel, Inc. (collectively, the "L/C Credit Parties"; the
Borrowers and L/C Credit Parties being herein collectively referred to as the
"Credit Parties"), certain of the Lenders, and Trust Company Bank, in its
capacities as L/C Issuer, Domestic Agent, and Collateral Agent, are parties to
a certain Letter of Credit Agreement dated as of January 9, 1995 (as hereafter
amended, restated or supplemented from time to time, the "Letter of Credit
Agreement");
WHEREAS, Interface owns, directly or indirectly, all
outstanding capital stock of each of the Guarantors;
WHEREAS, the Borrowers, L/C Credit Parties, and Guarantors
share an identity of interest as members of a consolidated group of companies
engaged in substantially similar businesses with Interface providing certain
centralized financial, accounting and management services to each of the other
Borrowers, L/C Credit Parties, and Guarantors;
WHEREAS, consummation of the transactions pursuant to the
Credit Agreement and the Letter of Credit Agreement will facilitate expansion
and enhance the overall financial strength and stability of Interface's entire
corporate group, including the Guarantors; and
WHEREAS, it is a condition precedent to the Lenders'
obligations to enter into the Credit Agreement and the Letter of Credit
Agreement and to make extensions of credit thereunder that Guarantors execute
and deliver this Guaranty, and Guarantors desire to execute and deliver this
Guaranty to satisfy such condition precedent;
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to enter into and perform their obligations under the
Credit Agreement and the Letter of Credit Agreement, the Guarantors hereby
jointly and severally agree as follows:
SECTION 1. GUARANTY. The Guarantors hereby jointly and
severally, irrevocably and unconditionally, guarantee the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all Loans,
Letter of Credit reimbursement obligations, and all other Obligations owing by
the Credit Parties to the Lenders, the Co-Agents, the L/C Issuer, or the
Collateral Agent, or any of them, under the Credit Agreement, the Notes, the
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<PAGE> 158
Letter of Credit Agreement, and the other Credit Documents, including all
renewals, extensions, modifications and refinancings thereof, now or hereafter
owing, whether for principal, interest, fees, expenses or otherwise, and any
and all reasonable out-of- pocket expenses (including reasonable attorneys'
fees and expenses) incurred by the Lenders, the L/C Issuer, or the Collateral
Agent in enforcing any rights under this Guaranty (collectively, the
"Guaranteed Obligations"), including without limitation, all interest which,
but for the filing of a petition in bankruptcy, or the equivalent filing under
the laws of the United Kingdom, The Netherlands, or any other jurisdictions,
with respect to the Credit Parties, would accrue on any principal portion of
the Guaranteed Obligations. Any and all payments by the Guarantors hereunder
shall be made free and clear of and without deduction for any set- off,
counterclaim, or withholding so that, in each case, each Guaranteed Party will
receive, after giving effect to any Taxes (as such term is defined in the
Credit Agreement, but excluding Taxes imposed on overall net income of the
Guaranteed Party to the same extent as excluded pursuant to the Credit
Agreement), the full amount that it would otherwise be entitled to receive with
respect to the Guaranteed Obligations (but without duplication of amounts for
Taxes already included in the Guaranteed Obligations). The Guarantors
acknowledge and agree that this is a guarantee of payment when due, and not of
collection, and that this Guaranty may be enforced up to the full amount of the
Guaranteed Obligations without proceeding against any of the Credit Parties,
against any security for the Guaranteed Obligations, against any other
Guarantor or under any other guaranty covering any portion of the Guaranteed
Obligations.
SECTION 2. GUARANTY ABSOLUTE. The Guarantors guarantee that
the Guaranteed Obligations will be paid strictly in accordance with the terms
of the Credit Documents, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Guaranteed Party with respect thereto. The liability of each
Guarantor under this Guaranty shall be absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation,
the following (whether or not such Guarantor consents thereto or has notice
thereof):
(a) any change in the time, place or manner of payment of, or
in any other term of, all or any of the Guaranteed Obligations, any
waiver, indulgence, renewal, extension, amendment or modification of
or addition, consent or supplement to or deletion from or any other
action or inaction under or in respect of the Credit Agreement, the
Letter of Credit Agreement, or the other Credit Documents, or any
other documents, instruments or agreements relating to the
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<PAGE> 159
Guaranteed Obligations or any other instrument or agreement referred
to therein or any assignment or transfer of any thereof;
(b) any lack of validity or enforceability of the Credit
Agreement, the Letter of Credit Agreement, or the other Credit
Documents, or any other document, instrument or agreement referred to
therein or any assignment or transfer of any thereof;
(c) any furnishing to the Guaranteed Parties of any additional
security for the Guaranteed Obligations, or any sale, exchange,
release or surrender of, or realization on, any security for the
Guaranteed Obligations;
(d) any settlement or compromise of any of the Guaranteed
Obligations, any security therefor, or any liability of any other
party with respect to the Guaranteed Obligations, or any subordination
of the payment of the Guaranteed Obligations to the payment of any
other liability of the Credit Parties;
(e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to any Guarantor or Credit Party, or any action taken with respect to
this Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(f) any nonperfection of any security interest or lien on any
collateral, or any amendment or waiver of or consent to departure from
any guaranty or security, for all or any of the Guaranteed
Obligations;
(g) any application of sums paid by the Credit Parties or
any other Person with respect to the liabilities of any of the Credit
Parties to the Guaranteed Parties, regardless of what liabilities of
the Credit Parties remain unpaid;
(h) any act or failure to act by any Guaranteed Party which
may adversely affect a Guarantor's subrogation rights, if any,
against the Credit Parties or any of them to recover payments made
under this Guaranty; and
(i) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Guarantor.
If claim is ever made upon any Guaranteed Party for repayment or recovery of
any amount or amounts received in payment or on account of any of the
Guaranteed Obligations, and any Guaranteed Party repays all or part of said
amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over the Guaranteed Party or any of its
property, or
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<PAGE> 160
(b) any settlement or compromise of any such claim effected by the Guaranteed
Party with any such claimant (including any of the Credit Parties or a trustee
in bankruptcy for any of the Credit Parties), then and in such event the
Guarantors agree that any such judgment, decree, order, settlement or
compromise shall be binding on it, notwithstanding any revocation hereof or the
cancellation of the Credit Agreement, the Letter of Credit Agreement, the other
Credit Documents, or any other instrument evidencing any liability of any of
the Credit Parties, and the Guarantors shall be and remain liable to the
Guaranteed Party for the amounts so repaid or recovered to the same extent as
if such amount had never originally been paid to the Guaranteed Party.
SECTION 3. WAIVER. The Guarantors hereby waive notice of
acceptance of this Guaranty, notice of any liability to which it may apply, and
further waive presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by the
Guaranteed Parties against, and any other notice to, any of the Credit Parties
or any other party liable with respect to the Guaranteed Obligations (including
the Guarantors or any other Person executing a guaranty of the obligations of
any of the Credit Parties).
SECTION 4. SUBROGATION. No Guarantor will exercise any
rights against any of the Credit Parties which it may acquire by way of
subrogation or contribution, by any payment made hereunder or otherwise, until
all the Guaranteed Obligations shall have been irrevocably paid in full and the
Credit Agreement and the Letter of Credit Agreement shall have been irrevocably
terminated. If any amount shall be paid to a Guarantor on account of such
subrogation or contribution rights at any time when all the Guaranteed
Obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Guaranteed Parties and shall forthwith be paid to
the Collateral Agent to be credited and applied to the Guaranteed Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement and the Letter of Credit Agreement. If (i) a Guarantor shall make
payment to the Guaranteed Parties of all or any part of the Guaranteed
Obligations and (ii) all the Guaranteed Obligations shall be irrevocably paid
in full and the Credit Agreement and the Letter of Credit Agreement irrevocably
terminated, the Guaranteed Parties will, at such Guarantor's request, execute
and deliver to such Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Guaranteed Obligations
resulting from such payment by such Guarantor.
SECTION 5. SEVERABILITY. Any provision of this Guaranty
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in
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<PAGE> 161
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by a Guarantor
therefrom shall in any event be effective unless the same shall be in writing
executed by the Collateral Agent.
SECTION 7. NOTICES. All notices and other communications
provided for hereunder shall be given in the manner specified in the Credit
Agreement (i) in the case of the Collateral Agent, at the address specified for
the Collateral Agent in the Credit Agreement, and (ii) in the case of the
Guarantors, at the respective addresses specified for such Guarantors in this
Guaranty.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of
the Collateral Agent or other Guaranteed Parties to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. No notice to or
demand on any Guarantor in any case shall entitle such Guarantor to any other
further notice or demand in any similar or other circumstances or constitute a
waiver of the rights of the Collateral Agent or other Guaranteed Parties to any
other or further action in any circumstances without notice or demand. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9. RIGHT OF SET OFF. In addition to and not in
limitation of all rights of offset that the Collateral Agent or other
Guaranteed Parties may have under applicable law, the Collateral Agent or
other Guaranteed Parties shall, upon the occurrence of any Event of Default and
whether or not the Collateral Agent or other Guaranteed Parties have made any
demand or the Guaranteed Obligations are matured, have the right to appropriate
and apply to the payment of the Guaranteed Obligations, all deposits of any
Guarantor (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter owing
by the Collateral Agent or other Guaranteed Parties to any Guarantor, whether
or not related to this Guaranty or any transaction hereunder.
SECTION 10. CONTINUING GUARANTY; TRANSFER OF OBLIGATIONS.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until payment in full of the Guaranteed Obligations and all other
amounts payable under this Guaranty and the termination of the Total
Commitments, (ii) be binding upon each Guarantor, its successors and assigns,
and (iii) inure to the benefit of and be enforceable by the Collateral Agent,
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<PAGE> 162
its successors, transferees and assigns, for the benefit of the Guaranteed
Parties.
SECTION 11. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE
OF PROCESS; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN THE SUPERIOR COURTS OF
FULTON COUNTY OR COBB COUNTY OF THE STATE OF GEORGIA OR OF THE UNITED STATES OF
AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF
THIS GUARANTY, EACH GUARANTOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF
ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE COLLATERAL AGENT AND OTHER
GUARANTEED PARTIES WITH RESPECT TO THIS GUARANTY OR ANY DOCUMENT RELATED
HERETO. EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES EACH OF G. KIMBROUGH
TAYLOR, JR. AND KILPATRICK & CODY, EACH OF ATLANTA, GEORGIA, AS THE DESIGNEE,
APPOINTEE AND AGENT OF SUCH GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF SUCH
GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY DOCUMENT RELATED HERETO AND
SUCH SERVICE SHALL BE DEEMED COMPLETED THIRTY DAYS AFTER MAILING THEREOF TO
SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT
WILL BE PROMPTLY FORWARDED BY MAIL TO THE RESPECTIVE GUARANTOR AT ITS ADDRESS
SET FORTH HEREIN, BUT THE FAILURE OF SUCH GUARANTOR TO RECEIVE SUCH COPY SHALL
NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE
OF SUCH PROCESS. IF FOR ANY REASON SERVICE OF PROCESS CANNOT PROMPTLY BE MADE
ON EITHER SUCH LOCAL AGENT, EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED THERETO.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY GUARANTOR IN ANY OTHER JURISDICTION.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN
- 7 -
<PAGE> 163
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH
THIS GUARANTY OR ANY OTHER CREDIT DOCUMENT OR ANY MATTER ARISING IN CONNECTION
HEREUNDER OR THEREUNDER.
SECTION 12. SUBORDINATION OF CREDIT PARTIES' OBLIGATIONS TO
THE GUARANTORS. As an independent covenant, each Guarantor hereby expressly
covenants and agrees for the benefit of the Collateral Agent and other
Guaranteed Parties that all obligations and liabilities of each of the Credit
Parties to such Guarantor of whatsoever description including, without
limitation, all intercompany receivables of such Guarantor from each of the
Credit Parties ("Junior Claims") shall be subordinate and junior in right of
payment to all obligations of the Credit Parties to the Collateral Agent and
other Guaranteed Parties under the terms of the Credit Agreement, the Letter of
Credit Agreement, and the other Credit Documents ("Senior Claims").
If an Event of Default shall occur, then, unless and until
such Event of Default shall have been cured, waived, or shall have ceased to
exist, no direct or indirect payment (in cash, property, securities by setoff
or otherwise) shall be made by any of the Credit Parties to any Guarantor on
account of or in any manner in respect of any Junior Claim except such payments
and distributions the proceeds of which shall be applied to the payment of
Senior Claims.
In the event of a Proceeding (as hereinafter defined), all
Senior Claims shall first be paid in full before any direct or indirect payment
or distribution (in cash, property, securities by setoff or otherwise) shall
be made to any Guarantor on account of or in any manner in respect of any
Junior Claim except such payments and distributions the proceeds of which shall
be applied to the payment of Senior Claims. For the purposes of the previous
sentence, "Proceeding" means any of the Credit Parties or any Guarantor shall
commence a voluntary case concerning itself under the Bankruptcy Code or any
other applicable bankruptcy laws; or any involuntary case is commenced against
any of the Credit Parties or any Guarantor; or a custodian (as defined in the
Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or
takes charge of, all or any substantial part of the property of any of the
Credit Parties or any Guarantor, or any of the
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<PAGE> 164
Credit Parties or any Guarantor commences any other proceedings under any
reorganization arrangement, adjustment of debt, relief of debtor, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to any of the Credit Parties or any Guarantor, or
any such proceeding is commenced against any of the Credit Parties or any
Guarantor, or any of the Credit Parties or any Guarantor is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or any of the Credit Parties or any Guarantor
suffers any appointment of any custodian or the like for it or any substantial
part of its property; or any of the Credit Parties or any Guarantor makes a
general assignment for the benefit of creditors; or any of the Credit Parties
or any Guarantor shall fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or any of the
Credit Parties or any Guarantor shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts; or any of the
Credit Parties or any Guarantor shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the foregoing; or any
corporate action shall be taken by any of the Credit Parties or any Guarantor
for the purpose of effecting any of the foregoing.
In the event any direct or indirect payment or distribution is
made to a Guarantor in contravention of this Section 12, such payment or
distribution shall be deemed received in trust for the benefit of the
Collateral Agent and other Guaranteed Parties and shall be immediately paid
over to the Collateral Agent for application against the Guaranteed Obligations
in accordance with the terms of the Credit Agreement and the Letter of Credit
Agreement.
Each Guarantor agrees to execute such additional documents as
the Collateral Agent may reasonably request to evidence the subordination
provided for in this Section 12.
SECTION 13. JUDGMENT CURRENCY. (a) The Guarantors'
obligations hereunder to make payments in a particular currency (the
"Obligation Currency") shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any currency
other than the Obligation Currency, except to the extent that such tender or
recovery results in the effective receipt by the Guaranteed Parties of the full
amount of the Obligation Currency expressed to be payable under this Guaranty
or the Credit Agreement and the Letter of Credit Agreement. If for the purpose
of obtaining or enforcing judgment against any Guarantor in any court or in any
jurisdiction, it becomes necessary to convert into or from any currency other
than the Obligation Currency (such other currency being hereinafter referred to
as the "Judgment Currency") an amount due in the Obligation Currency, the
conversion shall be made, at the currency equivalent determined, in each case,
as on the day immediately preceding the day on which the judgment is given
(such Business Day being hereafter referred to as the "Judgment Currency
Conversion Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, the Guarantors covenant and agree to pay, or cause to be paid,
such additional amounts, if any (but in any event not a lesser amount), as may
be necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which
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<PAGE> 165
could have been purchased with the amount of Judgment Currency stipulated in
the judgment or judicial award at the rate of exchange prevailing on the
Judgment Currency Conversion Date.
(c) For purposes of determining the currency equivalent for
this Section, such amounts shall include any premium and costs payable in
connection with the purchase of the Obligation Currency.
(d) If the Obligation Currency is U.S. Dollars, the
currency equivalent shall be the Dollar Equivalent and the "Dollar Equivalent"
shall mean, with respect to any monetary amount in a currency other than U.S.
Dollars, at any time for the determination thereof, the amount of U.S. Dollars
obtained by converting such foreign currency involved in such computation into
U.S. Dollars at the spot rate for the purchase of U.S. Dollars with the
applicable foreign currency as quoted by the Multicurrency Agent at
approximately 11:00 A.M. (Chicago, Illinois Time) on the date of determination
thereof specified herein or, if the date of determination thereof is not
otherwise specified herein, on the date two (2) Business Days prior to such
determination.
SECTION 14. AUTOMATIC ACCELERATION IN CERTAIN EVENTS.
Upon the occurrence of an Event of Default specified in Section 10.07 of the
Credit Agreement, all Guaranteed Obligations shall automatically become
immediately due and payable by the Guarantors, without notice or other action
on the part of the Collateral Agent or other Guaranteed Parties, and regardless
of whether payment of the Guaranteed Obligations by the Credit Parties has then
been accelerated. In addition, if any event of the types described in Section
10.07 of the Credit Agreement should occur with respect to any Guarantor, then
the Guaranteed Obligations shall automatically become immediately due and
payable by such Guarantor, without notice or other action on the part of the
Collateral Agent or other Guaranteed Parties, and regardless of whether payment
of the Guaranteed Obligations by any of the Credit Parties has then been
accelerated.
SECTION 15. SAVINGS CLAUSE. (a) It is the intent of
each Guarantor and the Guaranteed Parties that each Guarantor's maximum
obligations hereunder shall be in, but not in excess of:
(i) in a case or proceeding commenced by or against such
Guarantor under the Bankruptcy Code on or within one year from the
date on which any of the Guaranteed Obligations are incurred, the
maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of such Guarantor to the
Guaranteed Parties) to be avoidable or unenforceable against such
Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any
state fraudulent transfer or fraudulent conveyance act or statute
applied in such case or proceeding by virtue of Section 544 of the
Bankruptcy Code; or
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<PAGE> 166
(ii) in a case or proceeding commenced by or against such
Guarantor under the Bankruptcy Code subsequent to one year from the
date on which any of the Guaranteed Obligations are incurred, the
maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of the Guarantor to the
Guaranteed Parties) to be avoidable or unenforceable against such
Guarantor under any state fraudulent transfer or fraudulent conveyance
act or statute applied in any such case or proceeding by virtue of
Section 544 of the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against such
Guarantor under any law, statute or regulation other than the
Bankruptcy Code (including, without limitation, any other bankruptcy,
reorganization, arrangement, moratorium, readjustment of debt,
dissolution, liquidation or similar debtor relief laws), the maximum
amount which would not otherwise cause the Guaranteed Obligations (or
any other obligations of such Guarantor to the Guaranteed Parties) to
be avoidable or unenforceable against such Guarantor under such law,
statute or regulation including, without limitation, any state
fraudulent transfer or fraudulent conveyance act or statute applied in
any such case or proceeding.
(The substantive laws under which the possible avoidance or unenforceability of
the Guaranteed Obligations (or any other obligations of such Guarantor to the
Guaranteed Parties) shall be determined in any such case or proceeding shall
hereinafter be referred to as the "Avoidance Provisions").
(b) To the end set forth in Section 15(a), but only to
the extent that the Guaranteed Obligations would otherwise be subject
to avoidance under the Avoidance Provisions if such Guarantor is not
deemed to have received valuable consideration, fair value or
reasonably equivalent value for the Guaranteed Obligations, or if the
Guaranteed Obligations would render the Guarantor insolvent, or leave
the Guarantor with an unreasonably small capital to conduct its
business, or cause the Guarantor to have incurred debts (or to have
intended to have incurred debts) beyond its ability to pay such debts
as they mature, in each case as of the time any of the Guaranteed
Obligations are deemed to have been incurred under the Avoidance
Provisions and after giving effect to contribution as among
Guarantors, the maximum Guaranteed Obligations for which such
Guarantor shall be liable hereunder shall be reduced to that amount
which, after giving effect thereto, would not cause the Guaranteed
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<PAGE> 167
Obligations (or any other obligations of such Guarantor to the
Guaranteed Parties), as so reduced, to be subject to avoidance under
the Avoidance Provisions. This Section 15(b) is intended solely to
preserve the rights of the Guaranteed Parties hereunder to the maximum
extent that would not cause the Guaranteed Obligations of any
Guarantor to be subject to avoidance under the Avoidance Provisions,
and neither such Guarantor nor any other Person shall have any right
or claim under this Section 15 as against the Guaranteed Parties that
would not otherwise be available to such Person under the Avoidance
Provisions.
(c) None of the provisions of this Section 15 are
intended in any manner to alter the obligations of any holder of
Subordinated Debt or the rights of the holders of "senior
indebtedness" as provided by the terms of the Subordinated Debt.
Accordingly, it is the intent of each of the Guarantors that, in the
event that any payment or distribution is made with respect to the
Subordinated Debt prior to the payment in full of the Guaranteed
Obligations by virtue of the provisions of this Section 15, in any
case or proceeding of the kinds described in clauses (i)-(iii) of
Section 15(a), the holders of the Subordinated Debt shall be obligated
to pay or deliver such payment or distribution to or for the benefit
of the Guaranteed Parties. Furthermore, in respect of the Avoidance
Provisions, it is the intent of each Guarantor that the subrogation
rights of the holders of Subordinated Debt with respect to the
obligations of the Guarantor under this Guaranty, be subject in all
respects to the provisions of Section 15(b).
SECTION 16. INFORMATION. Each of the Guarantors assumes
all responsibility for being and keeping itself informed of the Credit Parties'
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Guaranteed Parties will have any duty to advise any of
the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 17. REPRESENTATIONS AND WARRANTIES. Each
Guarantor represents and warrants as to itself that all representations and
warranties relating to it contained in Sections 7.01 through 7.06 of the Credit
Agreement are true and correct.
SECTION 18. SURVIVAL OF AGREEMENT. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Guaranty, the Credit Agreement, and the Letter of Credit
Agreement, the making of the Borrowings, the issuance of the Letters of Credit,
and the execution and delivery of the Notes and the other Credit Documents.
SECTION 19. COUNTERPARTS. This Guaranty and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be
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<PAGE> 168
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
SECTION 20. CURRENCY OF PAYMENT. All payments to be made
by the Guarantors hereunder shall be made in the relevant Currency or
Currencies in which the Guaranteed Obligations are denominated in immediately
available funds. If any Guarantor is unable for any reason to effect payment
of any of the Guaranteed Obligations in the Currency in which such Guaranteed
Obligations are denominated, the Guaranteed Parties may, at their option,
require such payment to be made in the Dollar Equivalent of such Currency. If
in any case where any of the Guarantors shall make any such payment in the
Dollar Equivalent, the Guarantors agree to hold the Guaranteed Parties harmless
from any loss incurred by the Lenders arising from any change in the value of
Dollars in relation to such Currency between the date such payment became due
and the date of payment thereof.
SECTION 21. ADDITIONAL GUARANTORS. Upon execution and
delivery by any Subsidiary of Interface of an instrument in the form of Annex
1, such Subsidiary of Interface shall become a Guarantor hereunder with the
same force and effect as if originally named a Guarantor herein (each an
"Additional Guarantor"). The execution and delivery of any such instrument
shall not require the consent of any Guarantor hereunder. The rights and
obligations of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any Additional Guarantor as a party to this
Guaranty.
IN WITNESS WHEREOF, each Guarantor and the Collateral Agent
have caused this Guaranty to be duly executed and delivered by their respective
duly authorized officers as of the date first above written.
<TABLE>
<S> <C>
Address for Notices: GUILFORD OF MAINE, INC.
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
</TABLE>
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<PAGE> 169
<TABLE>
<S> <C>
Address for Notices: BENTLEY MILLS, INC.
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
Address for Notices: INTERFACE FLOORING SYSTEMS, INC.
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
Address for Notices: INTERFACE RESEARCH CORPORATION
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
Address for Notices: ROCKLAND REACT-RITE, INC.
====================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
</TABLE>
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<PAGE> 170
<TABLE>
<S> <C>
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
Address for Notices: PANDEL, INC.
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
Address for Notices: INTERFACE EUROPE, INC.
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
Address for Notices: INTERFACE ASIA-PACIFIC, INC.
====================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
</TABLE>
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<PAGE> 171
<TABLE>
<S> <C>
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
Address for Notices: PRINCE STREET TECHNOLOGIES, LTD.
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
Address for Notices: GUILFORD (DELAWARE), INC.
===================
(a "Guarantor")
c/o Interface, Inc.
2859 Paces Ferry Road
Suite 2000 By:
===================================================
Atlanta, GA 30339 Daniel T. Hendrix
Attention: Daniel T. Hendrix Vice President
Telex No.:
Answerback:
Telecopy No.: 404/956-9764 Attest:
===================================================
Name:_____________________
Assistant Secretary
[CORPORATE SEAL]
TRUST COMPANY BANK
("Collateral Agent")
By:
===================================================
Title:
==================================
By:
==============================================
Title:
==================================
</TABLE>
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<PAGE> 172
SECTION 12 OF THE
FOREGOING GUARANTY
ACKNOWLEDGED AND
AGREED TO:
INTERFACE, INC.
By:
==========================================
Daniel T. Hendrix
Vice President
INTERFACE SCHERPENZEEL B. V.
By:
==========================================
Name:
=================================
Title:
============================
INTERFACE EUROPE LIMITED
By:
======================================
Name:
=================================
Title:
============================
INTERFACE FLOORING SYSTEMS, INC.
By:
==========================================
Daniel T. Hendrix
Vice President
GUILFORD OF MAINE, INC.
By:
==========================================
Daniel T. Hendrix
Vice President
BENTLEY MILLS, INC.
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<PAGE> 173
By:
==========================================
Daniel T. Hendrix
Vice President
PRINCE STREET TECHNOLOGIES, LTD.
By:
==========================================
Daniel T. Hendrix
Vice President
ROCKLAND REACT-RITE, INC.
By:
==========================================
Daniel T. Hendrix
Vice President
PANDEL, INC.
By:
==========================================
Daniel T. Hendrix
Vice President
- 18 -
<PAGE> 174
ANNEX 1
SUPPLEMENT
TO
SUBSIDIARY GUARANTY AGREEMENT
THIS SUPPLEMENT TO SUBSIDIARY GUARANTY AGREEMENT (this
"Supplement to Guaranty Agreement"), dated as of _______________, made by
___________________ ____, a ________ corporation (the "Additional Guarantor"),
in favor of (i) the banks and other lending institutions that are parties to
the Credit Agreement (as hereinafter defined) and each assignee thereof
becoming a "Lender" as provided therein (collectively, the "Lenders"), (ii)
Trust Company Bank, in its capacities as Collateral Agent (the "Collateral
Agent") and Domestic Agent (the "Domestic Agent") under the terms of the
Credit Agreement and as L/C Issuer (the "L/C Issuer") under the terms of the
Letter of Credit Agreement (as hereinafter defined), and (iii) The First
National Bank of Chicago and Trust Company Bank, as co-agents under the terms
of the Credit Agreement (the "Co-Agents"; the Lenders, the Collateral Agent,
the L/C Issuer, and the Co-Agents being collectively referred to herein as the
"Guaranteed Parties").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Interface, Inc. ("Interface"), Interface Scherpenzeel
B.V., and Interface Europe Ltd. (collectively, the "Borrowers"), the Lenders,
the Co-Agents, and the Collateral Agent are parties to a Credit Agreement,
dated as of January 9, 1995 (as the same has been or may hereafter be amended,
restated, or supplemented from time to time, the "Credit Agreement") pursuant
to which the Lenders have made commitments to make loans to the Borrowers;
WHEREAS, Interface, Interface Flooring Systems, Inc., Guilford
of Maine, Inc., Bentley Mills, Inc., Prince Street Technologies, Ltd., Rockland
React-Rite, Inc., and Pandel, Inc. (collectively, the "L/C Credit Parties"; the
Borrowers and L/C Credit Parties being herein collectively referred to as the
"Credit Parties"), certain of the Lenders, and Trust Company Bank, in its
capacities as L/C Issuer, Domestic Agent, and Collateral Agent, are parties to
a certain Letter of Credit Agreement dated as of January 9, 1995 (as the same
has been or hereafter may be amended, restated or supplemented from time to
time, the "Letter of Credit Agreement");
WHEREAS, certain Subsidiaries (the "Subsidiary Guarantors") of
Interface have executed and delivered a Subsidiary Guaranty Agreement dated as
of January 9, 1995 (the "Subsidiary Guaranty") pursuant to which the Subsidiary
Guarantors have agreed to guarantee all of the obligations of the Borrowers
under the Credit Agreement, the Letter of Credit Agreement, and the other
Credit Documents (as defined in the Credit Agreement);
<PAGE> 175
WHEREAS, the Credit Parties, the Subsidiary Guarantors and the
Additional Guarantor share an identity of interests as members of a
consolidated group of companies engaged in substantially similar businesses;
Interface provides certain centralized financial, accounting and management
services to the Additional Guarantor; and the making of the Loans and issuance
of the Letters of Credit will facilitate expansion and enhance the overall
financial strength and stability of the Interface's corporate group, including
the Additional Guarantor;
WHEREAS, it is a condition subsequent to the Lenders'
obligation to make extensions of credit to or for the account of the Credit
Parties under the Credit Agreement and the Letter of Credit Agreement that the
Additional Guarantor execute and deliver to the Collateral Agent this
Supplement to Guaranty Agreement, and the Additional Guarantor desires to
execute and deliver this Supplement to Guaranty Agreement to satisfy such
condition subsequent;
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to make extensions of credit to or for the account of the
Credit Parties under the Credit Agreement and the Letter of Credit Agreement,
the Additional Guarantor hereby agrees as follows:
1. DEFINED TERMS. Capitalized terms not otherwise defined herein which
are used in the Subsidiary Guaranty are used herein with the meanings specified
for such terms in the Subsidiary Guaranty.
2. ADDITIONAL GUARANTOR. The Additional Guarantor agrees that it shall
be and become a Guarantor for all purposes of the Subsidiary Guaranty and shall
be fully liable thereunder to the Collateral Agent and other Guaranteed Parties
to the same extent and with the same effect as though the Additional Guarantor
had been one of the Guarantors originally executing and delivering the
Subsidiary Guaranty. Without limiting the foregoing, the Additional Guarantor
hereby jointly and severally (with respect to the guaranties made by the
Subsidiary Guarantors under the Subsidiary Guaranty), irrevocably and
unconditionally, guarantees the punctual payment when due, whether at stated
maturity by acceleration of otherwise, of the Borrowings and Letter of Credit
reimbursement obligations, and all other Obligations (as defined in the Credit
Agreement, and including all renewals, extensions, modifications and
refinancings thereof, now or hereafter existing, whether for principal,
interest, fees, expenses or otherwise, and any and all expenses (including
reasonable attorneys' fees and reasonable out-of-pocket expenses) incurred by
the Collateral Agent and other Guaranteed Parties in enforcing any rights under
the Subsidiary Guaranty (as supplemented hereby), subject, however, to the
limitations expressly provided in the Subsidiary Guaranty in Section 15
thereof. All references in the Subsidiary Guaranty to "Guarantors" or any
"Guarantor" shall be deemed to include and to refer to the Additional
Guarantor.
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<PAGE> 176
3. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS SUPPLEMENT TO GUARANTY AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
SUPPLEMENT TO GUARANTY AGREEMENT OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN
THE SUPERIOR COURTS OF FULTON COUNTY OR COBB COUNTY OF THE STATE OF GEORGIA OR
OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY
EXECUTION AND DELIVERY OF THIS SUPPLEMENT TO GUARANTY AGREEMENT, THE ADDITIONAL
GUARANTOR HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS
RIGHTS OR THE RIGHTS OF THE COLLATERAL AGENT OR OTHER GUARANTEED PARTIES WITH
RESPECT TO THIS SUPPLEMENT TO GUARANTY AGREEMENT OR ANY DOCUMENT RELATED
HERETO. THE ADDITIONAL GUARANTOR HEREBY IRREVOCABLY DESIGNATES EACH OF G.
KIMBROUGH TAYLOR, JR. AND KILPATRICK & CODY, EACH OF ATLANTA, GEORGIA, AS THE
DESIGNEE, APPOINTEE AND AGENT OF THE ADDITIONAL GUARANTOR TO RECEIVE, FOR AND
ON BEHALF OF THE ADDITIONAL GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION
IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUPPLEMENT TO GUARANTY
AGREEMENT OR ANY DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL BE DEEMED
COMPLETED THIRTY (30) DAYS AFTER MAILING THEREOF TO SAID AGENT. IT IS
UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY
FORWARDED BY MAIL TO THE ADDITIONAL GUARANTOR AT ITS ADDRESS SET FORTH HEREIN,
BUT THE FAILURE OF THE ADDITIONAL GUARANTOR TO RECEIVE SUCH COPY SHALL NOT, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS. IF FOR ANY REASON SERVICE OF PROCESS CANNOT PROMPTLY BE MADE ON
EITHER SUCH LOCAL AGENT, THE ADDITIONAL GUARANTOR FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE ADDITIONAL
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS
SUPPLEMENT TO GUARANTY AGREEMENT OR ANY DOCUMENT RELATED THERETO. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE ADDITIONAL GUARANTOR IN ANY OTHER JURISDICTION.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ADDITIONAL GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH
THIS SUPPLEMENT TO GUARANTY AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR ANY
MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER.
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4. CONSENT TO RIGHTS OF THE COLLATERAL AGENT. The Additional Guarantor
expressly consents to the rights of the Collateral Agent set forth in Clause 2
of the Agreement and Deed of Pledge from Interface Europe, Inc. in favor of the
Collateral Agent dated as of January 9, 1995, as amended, supplemented or
restated.
IN WITNESS WHEREOF, the Additional Guarantor has caused this
Supplement to Guaranty Agreement to be duly executed and delivered under seal
by its duly authorized officers as of the date first above written.
Address for Notices: ADDITIONAL GUARANTOR:
=================== ====================
c/o Interface, Inc.
====================================
2859 Paces Ferry Road
Suite 2000
Atlanta, GA 30339 By:
==========================================
Attention: Daniel T. Hendrix Title:
====================================
Attest:
======================================
Title:
====================================
[CORPORATE SEAL]
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<PAGE> 178
EXHIBIT E-1
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as
of January 9, 1995, made by INTERFACE, INC., a Georgia corporation (the
"Pledgor"), to TRUST COMPANY BANK, a Georgia banking corporation (the
"Pledgee"), in its capacity as Collateral Agent for (i) the banks and other
lending institutions that are parties to the Credit Agreement (as hereinafter
defined) and each assignee thereof becoming a "Lender" as provided therein (the
"Lenders"), (ii) The First National Bank of Chicago ("FNBC") and Trust Company
Bank, as co-agents under the terms of the Credit Agreement ("the Co-Agents"),
(iii) Trust Company Bank, as L/C Issuer (the "L/C Issuer"), and Domestic Agent
(the "Domestic Agent") under the terms of the Letter of Credit Agreement (as
hereinafter defined), and (iv) FNBC, as party to the FNBC Swap Agreement (as
hereinafter defined);
W I T N E S S E T H:
WHEREAS, the Pledgor has entered into that certain Credit
Agreement dated as of January 9, 1995 by and among the Pledgor, Interface
Scherpenzeel B.V., and Interface Europe Limited (collectively, the
"Borrowers"), the Lenders, the Co-Agents and the Pledgee (as hereafter amended,
restated, or supplemented from time to time, the "Credit Agreement"; all
capitalized terms used herein without definition shall have the meanings set
forth for such terms in the Credit Agreement);
WHEREAS, Pledgor, Interface Flooring Systems, Inc., Guilford of
Maine, Inc., Bentley Mills, Inc., Prince Street Technologies, Ltd., Rockland
React-Rite, Inc., and Pandel, Inc. (collectively, the "L/C Credit Parties"; the
Borrowers and L/C Credit Parties being herein collectively referred to as the
"Credit Parties"), certain of the Lenders, and Trust Company Bank, in its
capacities as L/C Issuer, Domestic Agent, and Collateral Agent, are parties to
a certain Letter of Credit Agreement dated as of January 9, 1995 (as hereafter
amended, restated or supplemented from time to time, the "Letter of Credit
Agreement");
WHEREAS, the Pledgor has executed in favor of the Pledgee that
certain Interface Guaranty Agreement dated as of January 9, 1995, pursuant to
which the Pledgor has guaranteed all obligations of the other Credit Parties
under the Credit Agreement, the Letter of Credit Agreement, and the other
Credit Documents (the "Credit Facilities Guaranty");
WHEREAS, FNBC has entered into an Interest Rate and Currency
Exchange Agreement with Heuga Nederland B.V. (now Interface Scherpenzeel B.V.)
dated as of June 30, 1992 (as the same has been or may hereafter be amended,
restated, or
<PAGE> 179
supplemented from time to time, the "FNBC Swap Agreement");
WHEREAS, the Pledgor has executed in favor of FNBC that certain
Amended and Restated Interface Guaranty Agreement dated as of June 30, 1992, as
supplemented by a First Supplement to Amended and Restated Subsidiary Currency
Guaranty Agreement dated as of July 31, 1992, executed by Guilford (Delaware),
Inc., a Second Supplement to Amended and Restated Subsidiary Currency Guaranty
Agreement dated as of June 22, 1993, executed by Bentley Mills, Inc., and a
Third Supplement to Amended and Restated Subsidiary Currency Guaranty Agreement
dated as of April 1, 1995, executed by Prince Street Technologies, Ltd.
pursuant to which the Pledgor has guaranteed all obligations of Interface
Scherpenzeel B.V. under the FNBC Swap Agreement (the "Swap Guaranty");
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of capital stock (the "Pledged Shares") of its Subsidiaries described
on Annex I hereto (the "Pledged Subsidiaries");
WHEREAS, the Pledgor wishes to pledge, charge, and grant security
interests in the Pledged Shares in favor of the Pledgee for the benefit of the
Lenders, the Co-Agents, the L/C Issuer, and FNBC to secure payment by the
Pledgor of all Secured Obligations (as defined below); and
WHEREAS, the Pledgee, on behalf of the Lenders, the Co-Agents,
the L/C Issuer, and FNBC, and pursuant to the Credit Agreement, shall hold and
administer the Collateral (as hereinafter defined);
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, and in
order to induce the Lenders to make the Loans under the Credit Agreement and
the L/C Issuer to issue the Letters of Credit under the Letter of Credit
Agreement, and to induce FNBC to perform its obligations under the FNBC Swap
Agreement, the Pledgor hereby makes the following representations and
warranties to the Pledgee and hereby covenants and agrees with the Pledgee as
follows:
1. SECURITY FOR OBLIGATIONS ETC. This Agreement is for the
benefit of the Lenders, the Co-Agents, the L/C Issuer, FNBC, and the Pledgee,
and their respective successors and assigns (collectively, the "Secured
Creditors") to secure the prompt payment in full when due, whether at stated
maturity, by acceleration or otherwise, of (i) the Term Loans, Revolving Loans,
Multicurrency Loans, the Letter of Credit reimbursement obligations, and all
other Obligations of the Pledgor now or hereafter existing under the Credit
Agreement, the Notes, the Letter of Credit Agreement, and the other Credit
Documents (whether for principal, interest, fees, expenses or otherwise), (ii)
the "Guaranteed Obligations" as such term is defined in the Credit Facilities
Guaranty and the Swap Guaranty, (iii) all obligations, and all renewals,
extensions, refinancings and modifications
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<PAGE> 180
thereof, of the Pledgor now or hereafter existing under this Agreement (whether
for principal, interest, fees, expenses or otherwise), and (iv) all reasonable
out-of-pocket costs and expenses incurred by the Pledgee in connection with the
exercise of its rights and remedies hereunder (including reasonable attorneys'
fees) (all such obligations collectively being the "Secured Obligations").
2. PLEDGED SHARES. The Pledgor represents and warrants that on
the date hereof (a) the Pledged Shares consist of the number and type of shares
of its Pledged Subsidiaries as described on Annex I attached hereto; (b) the
Pledgor is the holder of record and sole beneficial owner of such Pledged
Shares; and (c) the Pledged Shares constitute 100% of the issued and
outstanding shares of each of the Pledged Subsidiaries unless otherwise
indicated on Annex I attached hereto.
3. PLEDGE OF SECURITIES, ETC.
3.1 PLEDGE. To secure the Secured Obligations and for the
purposes set forth in Section 1, the Pledgor, as beneficial owner thereof,
hereby pledges, charges, and grants a security interest in and to the Pledged
Shares to Pledgee, together with (i) the certificates representing such Pledged
Shares accompanied by stock powers or other instruments of transfer duly
executed in blank by the Pledgor, and (ii) subject to the rights of the
Pledgor set forth in Section 6, all dividends (whether in cash, stock, shares,
warrants, options, or other securities), cash, instruments, securities, rights
to purchase securities (whether in the form of warrants, options, preemptive
rights, or otherwise), or other general intangibles from time to time received,
receivable or otherwise distributed in respect of or in exchange for any and
all of the Pledged Shares. The Pledgor agrees to deliver to the Pledgee all
certificates and instruments evidencing the items described in clause (ii)
above promptly upon the Pledgor's receipt thereof.
3.2 DEFINITION OF PLEDGED SECURITIES AND COLLATERAL. The
Pledged Shares and all items described in clause (ii) of Section 3.1 are
hereinafter called the "Pledged Securities," and the Pledged Securities,
together with all other securities and moneys received and at the time held by
the Pledgee hereunder (including, without limitation, the property described in
Section 6 hereof) and any proceeds of any of the foregoing, are hereinafter
called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Collateral, which may be held (if
applicable and in the discretion of the Pledgee) in the name of the Pledgor,
endorsed or assigned in blank or in favor of the Pledgee or any nominee or
nominees of the Pledgee or a sub-agent appointed by the Pledgee.
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<PAGE> 181
5. VOTING, ETC.
5.1 VOTING PRIOR TO DEFAULT. Unless and until an Event of
Default (such term to mean an Event of Default as defined herein) shall have
occurred and be continuing, the Pledgor shall be entitled to vote any and all
Pledged Shares owned by the Pledgor and to give consents, waivers or
ratifications in respect thereof; provided that no vote shall be cast or any
consent, waiver or ratification given or any action taken which would violate
or be inconsistent with any of the terms of this Agreement, the Credit
Documents, or any instrument or agreement relating to the Secured Obligations,
and; provided, further, that the Pledgor shall give the Pledgee at least five
Business Days' written notice of the manner in which it intends to exercise, or
the reasons for refraining from exercising, any such right if the exercise or
non-exercise of such right could reasonably be expected to violate or be
inconsistent with the aforementioned instruments or agreements. All such
rights of the Pledgor to vote and to give consents, waivers and ratifications
shall cease in case an Event of Default shall occur and be continuing, and
Section 7 hereof shall become applicable.
5.2 OTHER ACTIONS. The Pledgor shall not, without the prior
written consent of the Pledgee, by exercise of any voting rights or otherwise:
(a) permit or agree to any variation of the rights attaching to
or conferred by the Collateral or any part thereof; or
(b) create, consent to the creation of or permit to exist any
other class of share capital other than the class of share
capital which the Pledged Shares constitute all or part of.
6. DIVIDENDS AND OTHER DISTRIBUTIONS.
6.1 ADDITIONAL COLLATERAL. Unless an Event of Default shall
have occurred and be continuing, all cash dividends payable in respect of the
Pledged Securities shall be paid to the Pledgor. The Pledgee shall be entitled
to receive directly and to retain, as part of the Collateral, and there shall
be pledged and charged to the Pledgee hereunder:
(a) all other or additional stock, shares, or securities
or property (other than cash) paid or distributed by way of dividend
in respect of the Pledged Securities;
(b) all other or additional stock, shares, or other
securities or property (including cash) paid or distributed in respect
of the Pledged Securities by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement;
(c) all other or additional stock, shares, or other
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<PAGE> 182
securities or property which may be paid in respect of the Pledged
Securities by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate reorganization; and
(d) all other additional shares from time to time issued to the
Pledgor by any of the Pledged Subsidiaries.
6.2 ADDITIONAL SHARES. The Pledgor agrees and covenants that it
will cause the Pledged Subsidiaries not to issue or allot any stock, shares,
or other securities in addition to or in substitution for the Pledged
Securities except to the Pledgor, which stock or other securities shall be
delivered directly to the Pledgee pursuant to Section 6 above.
7. EVENTS OF DEFAULT.
7.1 DEFINITION OF EVENTS OF DEFAULT. The following specified
events shall constitute Events of Default under this Agreement:
(a) the existence or occurrence of any Event of Default as
provided under the terms of the Credit Agreement or the FNBC Swap
Agreement;
(b) any representation or warranty made by or on behalf of the
Pledgor under or pursuant to this Agreement shall have been incorrect in
any material respect when made;
(c) the Pledgor shall fail to observe or perform any covenant or
agreement set forth in Section 6 (including Section 6.1), Section 14 or
Section 16; and
(d) the Pledgor shall fail to observe or perform any covenant or
agreement set forth in this Agreement, other than those referred to in
paragraph (c) above, and if capable of being remedied, such failure shall
remain unremedied for 25 days after the earlier of (i) the Pledgor's
obtaining knowledge thereof, or (ii) written notice thereof shall have been
given to the Pledgor by any Lender, any Co-Agent, the L/C Issuer, FNBC,
or the Pledgee.
7.2 REMEDIES. In case an Event of Default shall have occurred
and be continuing, the Pledgee shall be entitled to exercise all of the rights,
powers and remedies (whether vested in it by this Agreement, any other Credit
Document, the FNBC Swap Agreement, the Swap Guaranty, or by law, and
including, without limitation, all rights and remedies of a secured party of a
debtor in default under the Uniform Commercial Code (the "Code") in effect in
the State of Georgia at that time) for the protection and enforcement of its
rights in respect of the Collateral, and the Pledgee shall be entitled, without
limitation, to exercise the following rights, which the Pledgor hereby agrees
to be
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<PAGE> 183
commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to the Pledgor and to enforce the
payment of the Pledged Securities and to exercise all of the rights,
powers, and remedies of the Pledgor thereunder;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof;
(d) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Collateral
in one or more parcels, or any interest therein, at any public or private
sale at any exchange, broker's board or at any of the Pledgee's offices
or elsewhere, without demand of performance, advertisement or notice of
intention to sell or of the time or place of sale or adjournment
thereof or to redeem or otherwise (all of which are hereby expressly and
irrevocably waived by the Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of
credit risk, and for such price or prices and on such terms as the
Pledgee in its sole discretion may determine. The Pledgor agrees that to
the extent that notice of sale shall be required by law that at least ten
(10) days' notice to the Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. The Pledgee shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The
Pledgee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and any such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if
any, of marshalling the Collateral and any other security for the
Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Pledgee, on behalf of the Secured Creditors or any
Secured Creditor, may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption.
Neither the Pledgee nor any Secured Creditor shall be liable for failure
to collect or realize upon any or all of the Collateral or for any delay
in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto;
(e) to settle, adjust, compromise and arrange all
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<PAGE> 184
accounts, controversies, questions, claims and
demands whatsoever in relation to all or any part of
the Collateral;
(f) to execute all such contracts, agreements, deeds, documents
and instruments; to bring, defend and abandon all such actions, suits and
proceedings; and to take all actions in relation to all or any part of
the Collateral as the Pledgee in its sole discretion may determine;
(g) to appoint managers, sub-agents, officers and servants for
any of the purposes mentioned in the foregoing provisions of this Section
7 and to dismiss the same, all as the Pledgee in its sole discretion may
determine; and
(h) generally, to take all such other action as the Pledgee in
its sole discretion may determine as incidental or conducive to any of the
matters or powers mentioned in the foregoing provisions of this Section 7
and which the Pledgee may or can do lawfully and to use the name of the
Pledgor for the purposes aforesaid and in any proceedings arising
therefrom.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy
of the Pledgee provided for in this Agreement, any other Credit Document, the
FNBC Swap Agreement, the Swap Guaranty, or now or hereafter existing at law or
in equity or by statute shall be cumulative andconcurrent and shall be in
addition to every other such right, power or remedy. The exercise or beginning
of the exercise by the Pledgee or any Secured Creditor of any one or more of
the rights, power or remedies provided for in this Agreement, any other Credit
Document, the FNBC Swap Agreement, the Swap Guaranty, or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any Secured Creditor of all
such other rights, powers or remedies, and no failure or delay on the part of
the Pledgee or any Secured Creditor to exercise any such right, power or
remedy shall operate as a waiver thereof.
9. APPLICATION OF PROCEEDS. All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral, together with
all other moneys received by the Pledgee hereunder, shall be applied as follows:
First, to the payment of the reasonable out-of-pocket costs and
expenses of such sale, collection or other realization, including, without
limitation, reasonable attorneys' fees and all other expenses,
liabilities and advances made or incurred by the Pledgee in connection
therewith;
Second, to the payment of the Secured Obligations then due
(applied on a pro rata basis to the Secured Obligations owing to FNBC
with respect to the FNBC Swap Agreement and Swap
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<PAGE> 185
Guaranty, on the one hand, and all other Secured Obligations owing to
the Co-Agents, the L/C Issuer, and Lenders, on the other hand);
Third, after payment in full of all Secured Obligations then due, to
the Pledgor, or its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct any surplus then remaining from such proceeds.
10. PURCHASERS OF COLLATERAL. Upon any sale of any of the
Collateral hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. The Pledgor shall: (i) whether or not the
transactions hereby contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Pledgee incurred in connection with the
administration (both before and after the execution hereof and including advice
of counsel as to the rights and duties of the Pledgee with respect thereto) of
and in connection with the preparation, execution and delivery of this
Agreement and of the Pledgee incurred in connection with the preservation of
rights under, and enforcement of, and, after an Event of Default, the
renegotiation or restructuring of this Agreement and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees
and disbursements of counsel for the Pledgee); (ii) pay and hold the Pledgee
harmless from and against any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to this Agreement and save the
Pledgee harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay any such taxes, charges or levies;
and (iii) indemnify the Pledgee, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all costs, losses, liabilities, claims, damages or expenses actually incurred
by any of them (whether or not any of them is designated a party thereto)
arising out of or by reason of any investigation, litigation or other
proceeding related to this Agreement or any transaction contemplated hereby,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding. Notwithstanding anything in this Agreement to the contrary, the
Pledgor shall not be responsible to the Pledgee or any officer, director,
employee, representative or agent of the foregoing (an "Indemnified Party") for
any losses, damages, liabilities or expenses which result from such Indemnified
Party's gross
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<PAGE> 186
negligence or willful misconduct, or the violation by such Indemnified Party of
any law, rule or regulation, unless such violation occurs directly or
indirectly as a result of an action, inaction, representation or
misrepresentation by or on behalf of the Pledgor or any other Consolidated
Company. If and to the extent that the obligations of the Pledgor under this
Section 11 are unenforceable for any reason, the Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law. It is understood that the Pledgor
shall not, in connection with any single action, suit, proceeding or claim or
separate but substantially similar or related actions, suits, proceedings or
claims, arising out of the same general allegations or circumstances, be liable
for the fees and expenses of more than one separate firm of attorneys at the
same time for the Indemnified Parties (which firm shall be designated by the
Pledgee) except that, if any Indemnified Party other than the Pledgee shall
determine, in good faith, that there may be a conflict in such firm
representing such Indemnified Party and the Pledgee or another Indemnified
Party, then the Pledgor also shall be liable for the reasonable fees and
expenses of an additional firm for such Indemnified Party whose interests may
be in conflict. The Pledgor's obligations under this Section 11 shall survive
any termination of this Agreement.
12. FURTHER ASSURANCES. The Pledgor agrees that it will join
with the Pledgee in executing and, at its own expense, file and refile under
the Code such financing statements, continuation statements and other
documents in such offices as the Pledgee may deem necessary or appropriate and
wherever required or permitted by law in order to perfect and preserve the
Pledgee's security interest in the Collateral and hereby authorizes the
Pledgee to file financing statements and amendments thereto relative to all or
any part of the Collateral without the signature of the Pledgor where permitted
by law, and agrees to do such further acts and things and to promptly execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments (including, without limitation, partially completed instruments
of transfer executed in blank) as the Pledgee may reasonably require or deem
advisable to carry into effect the purposes of this Agreement or to further
assure and confirm unto the Pledgee its rights, powers and remedies hereunder.
13. THE PLEDGEE AS AGENT.
(a) The Pledgee will hold in accordance with this Agreement,
the Credit Agreement, the Letter of Credit Agreement, and the FNBC Swap
Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of
the Pledgee as holder of the Collateral and interests therein and with respect
to the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement, the Credit Agreement,
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<PAGE> 187
the Letter of Credit Agreement, and other written agreement between the Pledgee
and FNBC.
(b) The Pledgee shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the Pledgee
accords its own property, it being understood that neither the Pledgee nor any
Secured Creditor shall have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not the Pledgee or any
Secured Creditor has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral.
14. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge,
charge, or otherwise encumber any of the Collateral or any interest therein,
except pursuant to this Agreement and except for sales of the Collateral
permitted by the express terms of the Credit Agreement.
15. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants that (i) it is the legal record and beneficial owner
of, and has good and valid title to, the Pledged Shares, subject to no pledge
lien, mortgage, hypothecation, security interest, charge, option or other
encumbrance whatsoever, except the liens and security interests created
by this Agreement or expressly permitted by this Agreement, and it has not
agreed to sell or otherwise dispose of the Pledged Shares to another party, or
entered into any shareholder agreement, voting agreement, voting trust, trust
deed, irrevocable proxy, or any similar agreement with respect to the Pledged
Shares that is now in effect; (ii) it has full power, authority and legal right
to pledge all the Pledged Shares pursuant to this Agreement; (iii) no consent
of any other party (including, without limitation, any stockholder or creditor
of the Pledgor or the Pledged Subsidiaries) and no order, consent, license,
permit, approval, validation or authorization of, exemption by, notice to or
registration, recording, filing or declaration with, any governmental or public
body or authority is required to be obtained by the Pledgor in connection with
the execution, delivery or performance of this Agreement or consummation of the
transactions contemplated hereby (other than such as have previously been
obtained or made), including, without limitation, the exercise by the Pledgee
of the voting or other rights provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement (except as may be required
in connection with the disposition of the Pledged Securities by laws affecting
the offering and sale of securities generally); (iv) all shares of Pledged
Shares have been duly and validly issued, are fully paid and nonassessable; and
(v) the pledge and delivery of the Pledged Securities pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Securities, and the proceeds thereof, which
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<PAGE> 188
security interest is not subject to any prior lien or encumbrance or any
agreement purporting to grant to any third party a lien or encumbrance on the
property or assets of the Pledgor which would include the Pledged Securities.
16. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees
that (i) the Pledgor will defend the Pledgee's right, title and security
interest in and to the Pledged Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; (ii) the Pledgor will have like
title to and right to pledge any other property at any time hereafter pledged
to the Pledgee as Collateral by it hereunder and will likewise defend the right
thereto and security interest therein of the Pledgee and the Secured Creditors;
and (iii) the Pledgor will not, with respect to any Collateral, enter into any
shareholder agreements, voting agreements, voting trusts, trust deeds,
irrevocable proxies or any other similar agreements or instruments.
17. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the
Pledgor under this Agreement shall be absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation:
(a) any change in the time, place or manner of payment of, or in any other
term of, all or any of the Secured Obligations, any waiver, indulgence,
renewal, extension, amendment or modification of or addition, consent or
supplement to or deletion from or any other action or inaction under or in
respect of the Credit Agreement, any Note, the Letter of Credit Agreement, any
other Credit Document, the FNBC Swap Agreement or Swap Guaranty, or any of the
other documents, instruments or agreements relating to the Secured Obligations
or any other instrument or agreement referred to therein or any assignment or
transfer of any thereof; (b) any lack of validity or enforceability of the
Credit Agreement, the Letter of Credit Agreement, any other Credit Document,
the FNBC Swap Agreement or Swap Guaranty, or any other documents, instruments
or agreement referred to therein or any assignment or transfer of any thereof;
(c) any furnishing of any additional security to the Pledgee, the Secured
Creditors or their assignees or any acceptance thereof or any release of any
security by the Pledgee, the Secured Creditors or their assignees; (d) any
limitation on any party's liability or obligations under any such instrument or
agreement or any invalidity or unenforceability, in whole or in part, of any
such instrument or agreement or any term thereof; (e) anybankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation
or other like proceeding relating to the Pledgor or the Pledged Subsidiaries,
or any action taken with respect to this Agreement by any trustee or receiver,
or by any court, in any such proceeding, whether or not the Pledgor shall have
notice or knowledge of any of the foregoing; (f) any exchange, release or
nonperfection of any other collateral, or any release, or amendment or waiver
of or consent to departure
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<PAGE> 189
from any guaranty or security, for all or any of the Secured Obligations; or
(g) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, the Pledgor.
18. REGISTRATION, ETC.
(a) If an Event of Default shall have occurred and be continuing
and the Pledgor shall have received from the Pledgee a written request or
requests that the Pledgor cause any registration, qualification or compliance
under any Federal or state securities law or laws to be effected with respect
to all or any part of the Pledged Securities, the Pledgor as soon as
practicable and at its own expense will use its best efforts to cause such
registration to be effected (and be kept effective) and will use its best
efforts to cause such qualification and compliance to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale
and distribution of such Pledged Securities, including, without limitation,
registration under the Securities Act of 1933 as then in effect (or any
similar statute then in effect), appropriate qualifications under applicable
blue sky or other state securities laws and appropriate compliance with any
other government requirements, and reasonably do or cause to be done all such
other acts and things as may be necessary to make such sale of the Pledged
Securities valid and binding in compliance with applicable laws; provided, that
the Pledgee shall furnish to the Pledgor such information regarding the Pledgee
as the Pledgor may reasonably request in writing and as shall be required in
connection with any such registration, qualification or compliance. The
Pledgor will cause the Pledgee to be kept reasonably advised in writing as to
the progress of each such registration, qualification or compliance and as to
the completion thereof, will furnish to the Pledgee such number of
prospectuses, offering circulars or other documents incident thereto as the
Pledgee from time to time may reasonably request, and will indemnify the
Pledgee and all others participating in the distribution of such Pledged
Securities against all claims, losses, damages and liabilities caused by any
untrue statement (or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification or the like) or
by any omission (or alleged omission) to state therein (or in any related
transaction statement, notification or the like) a material fact required to be
stated therein or necessary to make the statements not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to the Pledgor by the Pledgee
expressly for use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant
to Section 7, such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act
of 1933, as then in effect, the Pledgee may, in its sole discretion, sell such
Pledged Securities or part thereof by private sale in such manner and under
such circumstances as the Pledgee may deem necessary or advisable
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<PAGE> 190
in order that such sale may legally be effected without such registration.
Without limiting the generality of the foregoing, in any such event the
Pledgee, in its sole discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Securities or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single possible
purchaser to effect such sale, and (iii) may restrict such sale to a purchaser
or purchasers who will represent and agree that such purchaser is purchasing
for its own account, for investment, and not with a view to the distribution or
sale of such Pledged Securities or part thereof. In the event of any such
sale, the Pledgee shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price which the Pledgee, in its sole
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration as aforesaid.
19. NOTICES, ETC. All notices and other communications
hereunder shall be given in the manner specified in Section 12.01 of the
Credit Agreement (i) in the case of the Pledgee, at the address specified for
the Collateral Agent in the Credit Agreement, and (ii) in the case of the
Pledgor, at the address specified in this Agreement for the Pledgor.
20. POWER OF ATTORNEY. The Pledgor hereby absolutely and
irrevocably constitutes and appoints the Pledgee the Pledgor's true and lawful
agent and attorney-in-fact, with full power of substitution, in the name of the
Pledgor: (a) to execute and do all such assurances, acts and things which the
Pledgor ought to do but has failed to do under the covenants and provisions
contained in this Agreement; (b) to take any and all such action as the
Pledgee or any of its sub-agents or attorneys may, in its or their sole
discretion, determine as necessary or advisable for the purpose of maintaining,
preserving or protecting the security constituted by this Agreement or any of
the rights, remedies, powers or privileges of the Pledgee under this Agreement;
and (c) generally, in the name of the Pledgor exercise all or any of the
powers, authorities, and discretions conferred on or reserved to the Pledgee
by or pursuant to this Agreement, and (without prejudice to the generality of
any of the foregoing) to seal and deliver or otherwise perfect any instrument
or document of conveyance, agreement, or act as the Pledgee may deem proper in
or for the purpose of exercising any of such powers, authorities or
discretions. The Pledgor hereby ratifies and confirms, and hereby agrees to
ratify and confirm, whatever lawful acts the Pledgee or any of the Pledgee's
sub-agents or attorneys shall do or purport to do in the exercise of the power
of attorney granted to the Pledgee pursuant to this Section 20, which power of
attorney, being given for security, is coupled with an interest and irrevocable.
21. TERMINATION, RELEASE. After full payment and
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<PAGE> 191
performance of all of the Secured Obligations, other than Secured Obligations
which by their terms survive the repayment of the Loans and irrevocable
termination of the Total Commitments (under and as defined in the Credit
Agreement) and the FNBC Swap Agreement, this Agreement shall terminate, and the
Pledgee, at the request and expense of the Pledgor, will execute and deliver to
the Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, transfer and deliver
to the Pledgor (without recourse and without any representation or warranty)
such of the Collateral as may be in the possession of the Pledgee and as has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee hereunder.
22. MISCELLANEOUS. The Pledgor agrees with the Pledgee that each
of the obligations and liabilities of the Pledgor to the Pledgee under this
Agreement may be enforced against the Pledgor without the necessity of joining
the Borrowers, any other holders of pledges of or security interests in any of
the Collateral, or any other person as a party. This Agreement shall create a
continuing security interest in the Collateral and shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee, the Secured Creditors and their respective
successors and assigns. Without limiting the generality of the foregoing
sentence, any Secured Creditor may assign or otherwise transfer any Note held
by it to any other person or entity in accordance with the provisions of the
Credit Agreement, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Secured Creditor
herein or otherwise. This Agreement may be changed, waived, discharged or
terminated only in accordance with the provisions of the Credit Agreement and
the FNBC Swap Agreement. Unless otherwise defined herein or in the Credit
Agreement, terms defined in Section Section 11-9-101 et seq. of the Official
Code of Georgia Annotated are used herein as therein defined. The headings in
this Agreement are for purposes of reference only and shall not limit or define
the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to
be severable from the other provisions of this Agreement which shall remain
binding on all parties hereto.
23. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS;
SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN THE SUPERIOR COURTS OF
FULTON COUNTY OR COBB COUNTY OF THE STATE OF GEORGIA OR IN ANY COURT OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PLEDGOR HEREBY CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY,
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<PAGE> 192
TO THE JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF
ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE COLLATERAL AGENT OR THE SECURED
CREDITORS WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
PLEDGOR HEREBY IRREVOCABLY DESIGNATES EACH OF G. KIMBROUGH TAYLOR, JR. AND
KILPATRICK & CODY, EACH OF ATLANTA, GEORGIA, AS THE DESIGNEE, APPOINTEE AND
AGENT OF THE PLEDGOR, TO RECEIVE, FOR AND ON BEHALF OF THE PLEDGOR, SERVICE OF
PROCESS IN ANY PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO AND SUCH SERVICE SHALL BE DEEMED COMPLETED THIRTY DAYS AFTER
MAILING THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS
SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY MAIL TO THE PLEDGOR AT ITS
ADDRESS SET FORTH BELOW, BUT THE FAILURE OF THE PLEDGOR TO RECEIVE SUCH COPY
SHALL NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. IF FOR ANY REASON SERVICE OF PROCESS CANNOT PROMPTLY
BE MADE ON EITHER SUCH LOCAL AGENT, PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE PLEDGOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PLEDGEE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE PLEDGOR IN ANY OTHER JURISDICTION.
24. WAIVER OF TRIAL BY JURY. THE PLEDGOR HEREBY IRREVOCABLY
WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING IN
CONNECTION HEREUNDER.
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
Address for Notices: INTERFACE, INC.
===================
(the "Pledgor")
Interface, Inc.
2859 Paces Ferry Road By:
====================
Suite 2000 Daniel T. Hendrix
Atlanta, GA 30339 Vice President
Attention: Daniel T. Hendrix
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<PAGE> 193
Address for Notices: TRUST COMPANY BANK, As Collateral
===================
Agent (the "Pledgee")
Trust Company Bank
One Park Place
Atlanta, Georgia 30303 By:
===========================
Attention: John K. Shoffner Title:
========================
============================
By:
===============================
Title:
============================ ========================
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<PAGE> 194
ANNEX I
INTERFACE, INC.
<TABLE>
<CAPTION>
Name of
Pledged Class of Number of Number of Certificate
Subsidiaries Shares Shares Pledged Shares Nos.
============ ====== ========= ============== ==========
<S> <C> <C> <C> <C>
Guilford of Maine, Inc. Common 1,000 1,000 G.I. 6991
Guilford (Delaware), Common 1,000 1,000 002
Inc.
Interface Flooring
Systems, Inc. Common 500 500 1
Interface Research
Corporation Common 500 500 2
Rockland React-Rite,
Inc. Common 500 500 2
Pandel, Inc. Common 10 10 3
Interface Europe, Inc. Common 2,000 2,000 2
Interface Asia-Pacific,
Inc. Common 1,000 1,000 2
Bentley Mills, Inc. Common 100 100 1
Prince Street Class B 100 100 26
Technologies, Ltd. Common
Interface Flooring
Systems (Canada), Inc. Common 663,948 438,205 C-2
Preferred 249,500 164,670 P-2
Class A
Preference 1,193,183 787,500 AP-2
</TABLE>
[Note: The Pledged Shares of Interface Flooring Systems (Canada), Inc.
constitute approximately 66% of each class of the issued and
outstanding shares of such company.]
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<PAGE> 1
EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of the ______ day
of February, 1995, by and between INTERFACE, INC., a corporation organized
under the laws of the State of Georgia, U.S.A. (the "Company"), and DONALD E.
RUSSELL, a U.S. citizen currently residing in LaGrange, Georgia ("Executive").
For and in consideration of 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. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company as a Senior Vice
President of the Company and President of Interface Europe, Inc., and shall
perform such duties and functions for the Company and its subsidiaries and
affiliates as shall be specified from time to time by the Chief Executive
Officer or Board of Directors of the Company; Executive hereby accepts such
employment and agrees to perform such executive duties as may be assigned to
him. Executive also consents to serve, if elected, as a director of the
Company with such additional compensation, if any, which is payable to
directors similarly situated. Executive may be relocated, his title and duties
may be changed, and he may be promoted to a higher position than Senior Vice
President of the Company, but he may not be demoted or given a lesser title.
2. Duties. Executive shall devote his full business related time
and best efforts to accomplishing such executive duties at such locations as
may be requested by the Chief Executive Officer ("CEO") of the Company acting
under authorization from the Board of Directors of the Company.
3. Avoidance of Conflict of Interest. While employed by the
Company, Executive shall not engage in any other business without the prior
written consent of the Company. Without limiting the foregoing, Executive
shall not serve as a principal, partner, employee, officer or director of, or
consultant to, any other business or entity conducting business for profit
without the prior written approval of the Company. In addition, under no
circumstances will Executive have any financial interest in any competitor of
the Company; provided, however, that Executive may invest in no more than 2% of
the outstanding stock or securities of any competitor whose stock or securities
are traded on a national stock exchange of any country.
4. Term. The term of Executive's employment under this Agreement
shall commence on the date noted above and shall continue until Executive's
65th birthday (January 10, 2003) unless earlier terminated under Paragraph 5
below.
5. Termination. Executive's employment with the Company may be
terminated as follows:
(a) Executive may voluntarily terminate his employment hereunder at
any time, effective 60 days after delivery to the Company of his signed,
written resignation; provided, however, except in the case where a majority of
Company's stock or assets are acquired by a third party, Executive shall not
terminate his employment hereunder without Company's consent prior to January
11, 1998, unless Company has materially
<PAGE> 2
breached its obligations hereunder and has failed to cure or begin diligent
efforts to cure such breach within 30 days of receiving from Executive written
notice of such breach and a demand that it be cured.
(b) Subject to the terms of Paragraphs 5(c) and (d) below, the
Company may terminate Executive's employment hereunder, in its sole discretion,
whether with or without just cause, at any time upon written notice to
Executive.
(c) If prior to January 11, 1998, Company terminates Executive's
employment without just cause as defined in Paragraph 5(d) below, Executive
shall be entitled to continue to receive, less all applicable withholdings, all
salary, bonus or incentive compensation, and benefits payable to Executive
under this Agreement and under Executive's Interface, Inc. Key Employee Stock
Option Agreement (the "Stock Option Agreement"), and shall be entitled to
continued vesting of all rights under the Stock Option Agreement and any
Pension Plan and any Key Employee Stock Option Plan or other benefit plan or
plans in which Executive is a participant, from the effective date of
termination without cause through January 11, 1998. These payments shall be in
lieu of any and all other payments or compensation of any nature whatsoever to
which Executive might otherwise be entitled from Company, other than
Executive's vested rights under existing Company pension plans, stock option
plans and any other benefit plans in which Executive is a participant. To be
entitled to receive this compensation, Executive shall sign whatever additional
release of claims, confidentiality agreements and other documents Company may
reasonably request of Executive at the time of payment, and for so long as
Executive is entitled to the benefits of such compensation Executive shall
cooperate fully with and devote his reasonable best efforts to providing
assistance requested by the Company. The parties agree that one intention of
this provision is to insure that Executive vests fully in the Stock Option
Agreement, and any Pension Plan, Key Employee Stock Option Plan and other
benefit plans if he is terminated other than for "just cause" pursuant to
Paragraph 5(d) below or other than as a result of death or disability.
Executive hereby agrees and acknowledges that if he voluntarily resigns from
his employment, or is terminated for just cause, or, after January 11, 1998 is
terminated without just cause upon 60 days prior written notice from Company
(or with 60 days' pay and benefits in lieu of notice), then he shall be
entitled to no payment or compensation whatsoever from the Company other than
as may be due him through his last day of employment and from Company benefit
plans in which he continues to have a vested interest. If Executive's
employment is terminated due to Executive's death or disability (as defined in
the Company's long-term disability plan or insurance policy), Executive shall
be entitled to no payment or compensation other than as provided by the
Company's short and long-term disability plan or, in the case of death, its
life insurance payment policy in effect for executives of Executive's level;
provided however, Executive or his estate, as the case may be, shall not by
operation of this sentence forfeit any rights in which he is vested at the time
of his death or disability.
(d) The Company, for just cause, may immediately terminate
Executive's employment hereunder at any time upon delivery of written notice to
Executive. For purposes of this Agreement, the phrase "for just cause" shall
mean: (i)Executive's refusal or repeated failure to follow the reasonable
lawful directions of the Company, (ii) Executive's material fraud, malfeasance,
gross negligence, or willful misconduct with respect to business affairs of the
Company, (iii) Executive's refusal or repeated failure to
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<PAGE> 3
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 Executive receives from Company written notice of intent to terminate
and Company's description of the alleged cause, unless Executive shall, during
such 30-day period, remedy the events or circumstances constituting cause;
provided, however, that such termination shall take effect immediately upon
the giving of written notice of termination with cause under any 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).
Upon termination of Executive's employment for any reason whatsoever
(whether voluntary on the part of Executive, for just cause, or other reasons),
the obligations of Executive pursuant to Paragraphs 7 (including Exhibit "A")
and 8 hereof shall survive and remain in effect.
6. Compensation and Benefits. During the term of Executive's
employment with the Company hereunder:
(a) Continuity. Executive shall receive a minimum salary of
$250,000 per year and shall continue to receive his current benefits and such
bonus as the CEO or Board of Directors shall deem appropriate, subject to such
increases as are determined appropriate by the Compensation Committee of the
Company or the CEO;
(b) Other Benefits. Executive shall be entitled to vacation with
pay, life insurance, health insurance and such other employee benefits as he
may be entitled to receive in accordance with the established plans and
policies of the Company, as in effect from time to time; and
(c) Tax Equalization. In the event of Executive's relocation, the
Company and Executive will cooperate in good faith to agree on such adjustments
to Executive's compensation and benefits package as are appropriate to provide
consistent after tax income to Executive equivalent to that of a person
receiving Executive's pay and benefits taxable under the terms of the U.S.
Internal Revenue Code, while also acting in the best interests of the Company.
(d) Change of Control. If the Company grants to any Company Vice
President or Senior Vice President rights under an agreement activated by a
change in control of the Company, this Agreement shall be amended to
incorporate herein all terms of such an agreement, except to the extent they
conflict with the terms hereof.
7. Confidentiality and Work Product. Executive agrees to execute
and be bound by the terms and conditions of the Employee Agreement Regarding
Confidentiality and Work Product attached hereto as Exhibit "A", which is
acknowledged to have been effective since January 1, 1987, and is hereby made a
part of this Agreement.
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<PAGE> 4
8. Restrictions on Post-Employment Activities. Executive covenants
and agrees that in any circumstance in which Executive's employment ceases and
he is entitled to continue receiving benefits hereunder, then for the period he
is entitled to receive such benefits and for a period of 12 months thereafter,
he will not, directly or indirectly, on his own behalf or on behalf of any
other person or entity:
(i) Solicit the patronage or business of any person or entity
located within the geographical area served by the Company's
subsidiary over which Executive exerted control ("Protected
Customers") and which was a customer of the Company during the term of
Executive's employment, or of any of the prospective Protected
Customers of the Company solicited or called upon by the Company
within two years prior to the termination of Executive's employment,
for the purpose of selling or providing (or attempting to sell or
provide) to any such Protected Customer or prospective Protected
Customer any product or service substantially similar to or
competitive with any product or service sold or offered by the Company
during the term of Executive's employment by the Company; or
(ii) Solicit for employment or hire any person who is then
employed by the Company (whether such employment is pursuant to a
written contract with the Company or otherwise), or induce or attempt
to induce any such person to leave the employment of the Company for
any reason.
If Executive's employment is terminated by the Company for just cause,
the term of the covenants contained in this Paragraph 8 shall be for 24 months
after such termination, rather than 12 months.
If Executive has any doubts as to whether a person or entity is a
customer or prospective customer which he is restricted from soliciting as
provided in covenant (i) above, Executive will submit a written request to the
Chief Executive Officer, Chief Financial Officer, or General Counsel of the
Company for clarification and afford the Company at least 10 calendar days
(from the receipt of such request) to respond before taking any action with
respect to such person or entity. Executive agrees that any violation by him
of one or both of covenants (i) and (ii) above shall automatically toll the
post-termination time period relating to such covenant(s) for the amount of
time that the violation continues. Executive further acknowledges and agrees
that the covenants contained herein are reasonable and necessary to protect the
legitimate business interests of the Company.
Notwithstanding any contrary provision in this Agreement, the benefits
and obligations of each of the parties arising under Executive's Company
pension plan and salary continuation plan shall not be affected by this
Agreement.
9. Injunctive Relief. Executive acknowledges that any breach of
the terms of Paragraphs 7 (including Exhibit "A") or 8 hereof would result in
material damage to the Company, although it might be difficult to establish the
monetary value of the damage. Executive therefore agrees that the Company, in
addition to any other rights and remedies available to it, shall be entitled to
obtain an immediate injunction (whether temporary or permanent) from any court
of appropriate jurisdiction in the event of any
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<PAGE> 5
such breach thereof by Executive, or threatened breach which the Company in
good faith believes will or is likely to result in irreparable harm to Company.
10. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia and
the federal laws of the United States of America, without regard to rules
relating to the conflict of laws. Executive hereby consents to the
jurisdiction of the Superior Court of Troup County, Georgia and the U.S.
District Court in Atlanta, Georgia and hereby waives any objection he might
otherwise have to jurisdiction and venue in such courts in the event either is
requested to resolve a dispute between the parties.
11. Notices. All notices, consents and other communications
required or authorized to be given by either party to the other under this
Agreement shall be in writing and shall be deemed to have been given or
submitted upon actual receipt if delivered in person or by facsimile
transmission, and upon the earlier of actual receipt or the expiration of 7
days after mailing if sent by registered or certified mail, (express delivery)
postage prepaid to the parties at the following addresses:
<TABLE>
<S> <C>
To The Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/956-9764
Attn: Ray C. Anderson
With A Copy To: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/956-9764
Attn: David W. Porter
To Executive: Donald E. Russell
132 Windridge
LaGrange, Georgia 30240
</TABLE>
Either party may change its address (and fax number) for purposes of notices
under this Agreement by providing notice to the other party in the manner set
forth above.
12. Failure to Enforce. The failure of either party hereto at any
time, or for any period of time, to enforce any of the provisions of this
Agreement shall not be construed as a waiver of such provision(s) or of the
right of such party thereafter to enforce each and every such provision.
13. Binding Effect. This Agreement shall inure to the benefit of,
and be binding upon, the Company and its successors and assigns, and Executive
and his heirs and personal representatives. Any business entity or person
succeeding to substantially all of the business of the Company by purchase,
merger, consolidation, sale of asset, or otherwise shall be bound by and shall
adopt and assume this Agreement and the Company shall obtain the assumption of
this Agreement by such successor.
- 5 -
<PAGE> 6
14. Entire Agreement. This Agreement (together with the Exhibits
hereto) supersedes all prior discussions and agreements between the parties and
constitutes the sole and entire agreement between the Company and Executive
with respect to the subject matter hereof. This Agreement shall not be
modified or amended except pursuant to a written document signed by the parties
hereto.
15. Severability. Executive acknowledges and agrees that the
Company's various rights and remedies referenced in this Agreement are
cumulative and nonexclusive of one another, and that Executive's covenants and
agreements contained herein are severable and independent of one another.
Executive agrees that the existence of any claim by him 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 such covenants or
agreements of Executive hereunder. If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable by a court of competent
jurisdiction, it is the intention of the parties that the remaining provisions
shall constitute their agreement with respect to the subject matter hereof, and
all such remaining provisions shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their respective names as of the date first written above.
<TABLE>
<S> <C>
INTERFACE, INC.
By: /s/ Ray C. Anderson
-------------------------------- [SEAL]
Ray C. Anderson
President
Attest:
----------------------------- [SEAL]
Secretary
</TABLE>
<TABLE>
<S> <C>
WITNESS: EXECUTIVE
---------------------------- /s/ Donald E. Russell
[Signature] ----------------------------------- [SEAL]
Donald E. Russell
----------------------------
[Print Name]
----------------------------
[Print Address]
----------------------------
----------------------------
</TABLE>
- 6 -
<PAGE> 7
EXHIBIT "A"
EMPLOYEE AGREEMENT REGARDING CONFIDENTIALITY
AND WORK PRODUCT
During the course of my employment, the Company has furnished or
disclosed (or may furnish or disclose) to me certain Confidential Information
related to its business. I also may invent, develop, produce, write or
generate Confidential Information and Work Product which might be of great
value to its competitors. I acknowledge that the continuing ability of the
Company to engage successfully in its business and provide goods and services
on a competitive basis depends, in part, upon maintenance of the secrecy of the
Confidential Information and protection of its rights in Work Product.
Therefore, as part of the consideration for the compensation paid or
to be paid me for my services during the course of my employment, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, I covenant and agree with and in favor of the Company as
follows:
1. DEFINITIONS. The following terms, whenever used in this Agreement,
shall have the respective meanings set forth below:
COMPANY -- Interface, Inc. and its direct and indirect subsidiaries
and affiliated companies (including, without limitation, Interface
Flooring Systems, Inc.), individually and collectively. (References
herein to EMPLOYER shall mean the particular company by which I am
employed.)
CONFIDENTIAL INFORMATION -- (i) All Trade Secrets (as defined below),
and (ii) any other information that is material to the Company and not
generally available to the public, including, without limitation,
information concerning the Company's methods and plans of operation,
production processes, marketing and sales strategies, research and
development, know-how, computer programming, style and design
technology and plans, non-published product specifications, patent
applications, product and raw material costs, pricing strategies,
business plans, financial data, personnel records, suppliers and
customers (whether or not such information constitutes a Trade
Secret).
TRADE SECRET --Information of or about the Company that would be
considered a trade secret under Georgia law; namely, that information
which (i) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable through proper
means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Such
information constituting Trade Secrets may include, but shall not be
limited to, technical or nontechnical data, a formula, pattern,
compilation, program, device, method, technique, drawing or process,
financial data or plans, product plans, or a list of actual or
potential customers or suppliers.
NONDISCLOSURE PERIOD -- (i) With respect to any Trade Secret, the
period of my employment with Employer and for so long afterwards as
the pertinent information or data remains a Trade Secret; and (ii)
with respect to Confidential Information that does not constitute a
Trade Secret, the period of my employment with Employer and for a
period of two years thereafter.
WORK PRODUCT -- (i) All writings, tapes, recordings, computer programs
and other works in any tangible medium of expression, regardless of
the form of medium, and (ii) all inventions or ideas in the nature of
a new design, machine, process, method of manufacture, composition of
matter or formula, or any new and useful improvements thereof, that
relate to the business conducted by the Company and have been or are
conceived, prepared or developed by me (in whole or in part, alone or
in conjunction with others) during the term of my employment with
Employer.
2. CONFIDENTIALITY. During the applicable Nondisclosure Period, I will
neither use (except as necessary to perform my obligations to Employer) nor
disclose to any other person or entity (except employees of the Company
authorized to receive such information) any Confidential Information without
the prior written consent of an executive officer of Employer to do so. The
foregoing obligations shall apply with regard to all Confidential Information
known to me, including such Confidential Information first disclosed to (or
known by) me prior to the date of this Agreement. The limited duration of the
Nondisclosure Period shall not operate or be construed as affording me any
right or license to use any Confidential Information (or Work Product) at the
end of such Nondisclosure Period, or as a waiver by the Company of the rights
and benefits available to it under laws governing the protection and
enforceability of patents, copyrights and other intellectual property.
A-1
<PAGE> 8
3. EXCEPTIONS. The foregoing confidentiality obligations shall not apply
to: (i) any information that, through no fault of mine, shall have become
disclosed in the public domain through publications of general circulation,
(ii) any information received by me in good faith from a third party who has
the legitimate possession of and unrestricted right to disclose such
information, and (iii) any information that I can demonstrate through prior
written records to have been within my legitimate possession prior to the time
of my first employment with Employer. If I am unsure as to whether any
particular information or data constitutes Confidential Information, or as to
the applicable Nondisclosure Period, I will submit a written request to an
executive officer of Employer for clarification and afford Employer at least 20
days (from the date of receipt of such request) to respond before disclosing or
personally using such information or data.
4. RIGHTS TO WORK PRODUCT. The Work Product, and all patents, copyrights
and other rights, titles and interests whatsoever in and to the Work Product,
shall be owned solely, irrevocably and exclusively throughout the world by
Employer as works made for hire. If and to the extent any court or agency
should conclude that the Work Product (or any portion thereof) does not
constitute or qualify as "work made for hire", I hereby (without further
consideration) assign, grant and deliver unto Employer (or its designee),
solely, irrevocably and exclusively throughout the world, all rights, titles
and interests whatsoever (whether presently in existence or arising in the
future) in and to the Work Product. I will execute and deliver such additional
grants, assignments, transfer instruments and other documents as Employer from
time to time (whether during or subsequent to my employment) reasonably may
request for the purpose of evidencing, perfecting, enforcing, registering or
defending its complete, exclusive, perpetual and worldwide ownership of all
such rights, titles and interest in and to the Work Product, or to effect the
transfer of any such rights, titles and interests to designees of Employer. I
hereby irrevocably constitute and appoint Employer as my agent and attorney-
in-fact (with full power of substitution) to execute and deliver, in my name,
place and stead, any and all such assignments or other instruments (including,
without limitation, applications for U.S. and foreign patents) which I 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 paragraph, I acknowledge and agree that the Company may
edit, modify, use, publish and exploit the Work Product (and any portion
thereof) in all media and in such manner as the Company in its discretion may
determine.
5. RETURN OF INFORMATION. Upon request by an executive officer of
Employer at any time, and in any event upon termination of my employment for
any reason, I will deliver to an executive officer of Employer all written
materials and records and all other tangible items (such as tools and devices)
in my possession or under my control that constitute or embody Confidential
Information or Work Product, or that otherwise are the property of the Company
or relate to the affairs of the Company, and will keep no copies or duplicates
thereof except as may be expressly authorized in writing at that time by an
executive officer of Employer.
6. INJUNCTIVE RELIEF. I acknowledge that any breach of the terms of this
Agreement would result in material damage to the Company, although it might be
difficult to establish the monetary value of the damage. I therefore agree
that the Company, in addition to any other rights and remedies available to it,
shall be entitled to injunctive relief by a court of appropriate jurisdiction
in the event of my breach or threatened breach of any term of this Agreement.
7. GENERAL MATTERS. (a) All rights and restrictions contained herein may
be exercised and shall be applicable and binding only to the extent that they
do not violate applicable law. If any term of this Agreement shall be held to
be illegal, invalid or unenforceable by a court of competent jurisdiction, the
remaining terms hereof shall remain in full force and effect. (b) This
Agreement does not create in me any rights of continued employment, and
whatever rights Employer may have to terminate my employment are not affected
hereby. (c) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia (USA). (d) The covenants and
agreements set forth herein shall inure to the benefit of the Company and its
successors and assigns, and shall be binding upon me and my heirs, personal
representatives and assigns.
I have executed this Agreement effective on the 1st day of January,
1987
READ, UNDERSTOOD AND AGREED:
____________________________________
Donald E. Russell
<PAGE> 1
EXHIBIT 13
FINANCIALS
RESULTS OF OPERATIONS
DURING 1994, THE COMPANY EXPERIENCED OVERALL SALES GROWTH AS A RESULT OF THE
ACQUISITIONS OF BENTLEY MILLS, INC. AND PRINCE STREET TECHNOLOGIES, LTD., IN
JUNE 1993 AND MARCH 1994, RESPECTIVELY, INCREASED SALES BY ALL DIVISIONS
(FLOORCOVERINGS, INTERIOR FABRICS, AND CHEMICALS AND SPECIALTY SURFACES), AND A
POSITIVE IMPACT FROM THE STRENGTHENING OF CURRENCIES IN SEVERAL OF THE
COMPANY'S MAJOR MARKETS COMPARED WITH THE U.S. DOLLAR. THESE SALES INCREASES
WERE ADVERSELY IMPACTED BY THE RECESSIONARY CLIMATE IN EUROPE, WHERE A MODEST
SALES GROWTH WAS ACHIEVED, AND IN JAPAN AND AUSTRALIA, WHICH EXPERIENCED A
SALES DECLINE.
DURING 1994, THE COMPANY EXPERIENCED AN INCREASE IN COST OF SALES AS A
PERCENTAGE OF SALES DUE IN LARGE PART TO THE ACQUISITION OF BENTLEY MILLS, AND
MARGIN DECLINES IN THE INTERIOR FABRICS BUSINESS RESULTING FROM COMPETITIVE
PRESSURES AND A SHIFT IN PRODUCT MIX.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------
1/1/95 1/2/94 1/3/93
-----------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES 100.0% 100.0% 100.0%
Cost of sales 69.5 68.4 68.0
----------------------------
GROSS PROFIT ON SALES 30.5 31.6 32.0
Selling, general, and administrative expenses 23.5 24.2 25.2
----------------------------
OPERATING INCOME 7.0 7.4 6.8
----------------------------
Other expenses, net 3.5 4.0 3.7
----------------------------
INCOME BEFORE TAXES 3.5 3.4 3.1
Taxes on Income 1.2 1.2 1.0
----------------------------
NET INCOME 2.3 2.2 2.1
Preferred dividends .3 .1 --
----------------------------
INCOME APPLICABLE TO COMMON SHAREHOLDERS 2.0% 2.1% 2.1%
-----------------------------------------------------------------------------
</TABLE>
INTERFACE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
35
<PAGE> 2
Throughout 1994, the Company continued to reduce selling, general, and
administrative expenses through strict cost control measures begun three years
ago in response to the general worldwide recession, and as a result of the
acquisition of Bentley Mills. These factors more than offset the impact of
costs associated with the reorganization of Interface Americas and new product
development and introductions. The Company plans to continue its cost
containment efforts while making selective expenditure increases (new products,
emerging markets, employee training, and quality improvement) aimed at further
enhancing the Company's position as a leader in the commercial interiors areas
of style, service, and quality.
The capital expenditures program will focus on (i) new and expanded operating
facilities, (ii) product innovation and development, which has been designed to
address the market's requirement for increased product flexibility
(particularly, in the case of the interior fabrics business, in low weight
fabrics) while also reducing product costs, (iii) efficiency, and (iv) reducing
costs. These initiatives should bolster the Company's quick responsiveness to
the continually changing demands of the global market. In addition, the
strength of the Japanese yen against the U.S. dollar has contributed to giving
the Company a competitive advantage in the Japanese floorcoverings market.
The table on page 35 shows, as a percentage of net sales, certain items
included in the Company's consolidated statements of income for each of the
three years through the period ended January 1, 1995.
FISCAL 1994 COMPARED WITH FISCAL 1993
In fiscal 1994, the Company's net sales increased $100 million (16.0%) compared
with fiscal 1993. The increase was due in substantial part to the June 1993
acquisition of Bentley Mills, which had sales of $127 million for fiscal 1993,
and the March 1994 acquisition of Prince Street Technologies, which had sales
of $31 million for fiscal 1993. The Company also achieved a unit volume
increase of approximately 4% and 6%, respectively, in its interior fabrics and
chemical and specialty surfaces operations. Despite adverse economic conditions
in Japan and Europe, the Company also generated an overall increase in net
sales for the floorcoverings operations due to the strengthening of the major
currencies of its foreign markets compared to the U.S. dollar, the Company's
reporting currency, which caused net sales to be 1.0% higher than otherwise
would have been the case. In addition, the Company achieved a price increase in
floorcoverings of approximately 4%.
Cost of sales as a percentage of net sales increased slightly to 69.5% in 1994,
compared with 68.4% in 1993, primarily because of margin decline in the
interior fabrics area due to competitive pressures and a shift in product mix
to lower weight, less expensive products which resulted in reduced efficiency.
This product mix shift is being addressed in 1995 through an aggressive
modernization program. In addition, the acquisition of Bentley Mills also
contributed to the increased cost of sales due to Bentley's historical cost of
sales having been 7.0% higher than the Company's.
Selling, general, and administrative expenses as a percentage of sales
decreased to 23.5% in 1994 from 24.2% in 1993 primarily as a result of
continued strict cost control efforts, particularly in Europe, in the area of
discretionary marketing cost and fixed overhead expenditures. In addition, the
acquisition of Bentley Mills also contributed to reduced selling, general, and
administrative costs, due to Bentley's historical costs as a percentage of
sales having been 10% less than the Company's. These factors combined to more
than offset the increase in costs associated with the reorganization of
Interface Americas and development and introduction of new products.
Other expense increased $231,000 in 1994, due to the impact of higher interest
rates and a slight increase in bank debt.
During fiscal 1994, the Company's effective tax rate increased to 36.0% from
35.0% in 1993, primarily because in 1994 there was no utilization of excess
foreign tax credit carryovers as compared with $1.5 million utilized in 1993.
The lack of excess foreign tax credit usage was partially offset by the
utilization of subsidiary net operating loss carryforwards.
As a result of the aforementioned factors, the Company's net income increased
18.8% to $16.5 million in 1994 compared to $13.8 million in 1993.
36
<PAGE> 3
FISCAL 1993 COMPARED WITH FISCAL 1992
In fiscal 1993, the Company's net sales increased $31 million (5.2%) compared
with fiscal 1992. The increase was due in substantial part to the June 1993
acquisition of Bentley Mills, which had sales of $112 million for fiscal 1992.
The Company also achieved a unit volume increase of approximately 6% in its
interior fabrics and chemical operations. The increase in net sales was offset
somewhat by a strengthening U.S. dollar, the Company's reporting currency,
against the major currencies of its European operation, which caused net sales
to be 5.1% lower than otherwise would have been the case.
Cost of sales as a percentage of net sales increased slightly to 68.4% in 1993,
compared with 68.0% in 1992, primarily because of reduced efficiencies in the
carpet tile manufacturing operations as a result of a 1.2 million square yard
decline in unit volume. In addition, the acquisition of Bentley Mills also
contributed to the increased cost of sales due to Bentley's historical cost of
sales having been 75.0% in 1992, compared with 68.0% in 1992 for the Company.
Selling, general, and administrative expenses as a percentage of sales
decreased to 24.2% in 1993 from 25.2% in 1992 primarily as a result of the
acquisition of Bentley Mills in 1993. Bentley's selling, general, and
administrative costs as a percentage of sales were 15.7%, compared with 25.2%
for the Company in 1992. The decline was also the result of cost controls
initiated in 1991 which reduced discretionary marketing cost and fixed overhead
expenditures.
Other expense increased $2.9 million in 1993, primarily because of increased
bank debt of $60.0 million related to the acquisition of Bentley Mills in June
1993.
During fiscal 1993, the Company's effective income tax rate increased to 35.0%
from 33.9% in 1992, primarily because of an increase in the U.S. statutory rate
to 35.0%. In 1993, there was no utilization of net operating loss carryforwards
as compared with $2.6 million utilized in 1992. The rate increase was offset
somewhat by the utilization of excess foreign tax credit carryovers of $1.5
million in 1993.
As a result of the aforementioned factors, the Company's net income increased
13.1% to $13.8 million in 1993 from $12.3 million in 1992.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash over the last three fiscal years have
been funds provided by operating activities and proceeds from additional long
term debt. In 1994, operating activities generated $33.4 million of cash
compared with $40.6 million and $41.7 million in 1993 and 1992, respectively.
The reduction in 1994 operating cash flows compared with 1993 was caused
primarily by inventory increases to improve service not offset by accounts
payable increases.
The primary uses of cash during the three years ended January 1, 1995 have been
(i) additions to property and equipment at all of the Company's manufacturing
facilities, (ii) acquisitions of businesses, and (iii) cash dividends. The
addition to property and equipment required cash outlays of $56.4 million,
while the acquisitions of businesses required $16.6 million, and dividends
required $15.3 million. Management believes these capital investments will
result in an expanded market presence and improved efficiency in the Company's
production and distribution.
37
<PAGE> 4
In March 1994, the Company issued 674,953 shares of Class A Common Stock valued
at $8.9 million in conjunction with the purchase of Prince Street Technologies.
In January 1995, the Company amended and restated its existing revolving credit
and term loan facilities. The amendment, among other things, (i) increased the
revolving credit facility by $75.0 million (including a letter of credit
facility of $40.0 million), (ii) reduced the secured term loans by
approximately $85.0 million, and (iii) provided for a new accounts receivable
securitization facility of up to $100.0 million. Utilization of a significant
portion of the accounts receivable facility is expected to occur during the
second quarter of 1995. Additionally, the term has been extended to June 30,
1999 for the revolving credit facilities, and December 31, 2001 for the term
loans. As of January 1, 1995, the Company had long term debt of $156.2 million
under its $200.0 million revolving lines of credit, $54.3 million of term debt
and $103.9 million in convertible subordinated debt. The Company believes that
it has minimized its exposure to interest rate increases because over one-half
of its debt is at fixed interest rates.
At the end of fiscal 1994, the Company estimated capital expenditure
requirements of approximately $28 million for 1995, and had purchase
commitments of $12 million. Management believes that the cash provided by
operations and long term borrowing arrangements will provide adequate funds for
current commitments and other requirements in the foreseeable future.
The Company utilizes foreign hedging contracts in order to match anticipated
cash flows from foreign operations with local currency debt obligations.
Because of the strengthening of the Dutch guilder and the British pound
sterling against the U.S. dollar, the Company, as of January 1, 1995,
recognized a $12.3 million increase in its foreign translation adjustment
account.
Bentley Mills' City of Industry, California plant is located in the San Gabriel
Valley, which has been generally designated as a Superfund site. Neither the
Environmental Protection Agency nor the potentially responsible party ("PRP")
group has asserted that Bentley is a PRP in connection with such Superfund
site.
IMPACT OF INFLATION
Petroleum-based products comprise approximately 90% of the cost of raw
materials used by the Company in manufacturing. The Company historically has
been able to offset increases in the cost of such petroleum-based products with
finished product price increases. Management cannot predict with certainty the
extent to which it will be able to pass through any future cost increases.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 112, "Employer's Accounting for
Post-employment Benefits." This new statement establishes accounting standards
for employers who provide benefits to former or inactive employees after
employment but before retirement. The Company currently has no obligation to
provide post-employment benefits, as contemplated under this standard.
The FASB has also issued SFAS Nos. 114 and 118 related to accounting by
creditors for the impairment of a loan. These statements, adopted in January
1995, are not expected to have a material impact on the Company.
The FASB has also issued SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." This statement did not have a material impact on
the Company when it was adopted in 1994.
The FASB has also issued SFAS No. 119, "Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments," which requires enhanced
disclosures about the amounts, nature, and terms of derivative financial
instruments. This statement was adopted by the Company in 1994, and the related
disclosures are included in Note 12 to the accompanying consolidated financial
statements.
38
<PAGE> 5
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE DATA) 1/1/95 1/2/94 1/3/93
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $ 725,283 $ 625,067 $ 594,078
Cost of sales 504,098 427,321 404,130
---------------------------------
GROSS PROFIT ON SALES 221,185 197,746 189,948
Selling, general, and administrative expenses 170,375 151,576 149,509
---------------------------------
OPERATING INCOME 50,810 46,170 40,439
---------------------------------
Other expense:
Interest expense 24,094 22,840 21,894
Other (income) 1,003 2,026 (16)
---------------------------------
TOTAL OTHER EXPENSE 25,097 24,866 21,878
---------------------------------
NET INCOME BEFORE TAXES ON INCOME 25,713 21,304 18,561
Taxes on income 9,257 7,455 6,311
---------------------------------
NET INCOME 16,456 13,849 12,250
Preferred stock dividends 1,750 913 --
---------------------------------
INCOME APPLICABLE TO COMMON SHAREHOLDERS $ 14,706 $ 12,936 $ 12,250
---------------------------------
PRIMARY EARNINGS PER COMMON SHARE $ 0.82 $ 0.75 $ 0.71
------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
39
<PAGE> 6
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE DATA) 1/1/95 1/2/94
------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 4,389 $ 4,674
Escrowed and restricted funds 2,663 4,015
Accounts receivable 133,536 124,170
Inventories 132,650 116,041
Prepaid expenses 15,110 15,078
Deferred income taxes 3,767 2,539
----------------------
TOTAL CURRENT ASSETS 292,115 266,517
Property and equipment, less accumulated depreciation 152,874 145,125
Miscellaneous 31,895 35,534
Deferred income taxes 8,198 5,976
Excess of cost over net assets acquired 202,852 189,167
----------------------
$ 687,934 $ 642,319
----------------------
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Current
Accounts payable $ 59,702 $ 56,043
Accrued expenses 56,940 52,744
Current maturities of long term debt 853 17,155
----------------------
TOTAL CURRENT LIABILITIES 117,495 125,942
Long term debt, less current maturities 209,663 187,712
Convertible subordinated debentures 103,925 103,925
Deferred income taxes 17,761 17,856
----------------------
TOTAL LIABILITIES 448,844 435,435
Redeemable preferred stock 25,000 25,000
Common stock 2,179 2,104
Additional paid-in-capital 93,450 83,989
Retained earnings 136,343 125,960
Foreign currency translation adjustment (136) (12,423)
Treasury stock, 3,600,000 Class A shares, at cost (17,746) (17,746)
----------------------
$ 687,934 $ 642,319
------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
40
<PAGE> 7
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(IN THOUSANDS) 1/1/95 1/2/94 1/3/93
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 16,456 $ 13,849 $ 12,250
Adjustments to reconcile net income
to cash provided by operating activities
Depreciation and amortization 28,180 24,512 22,257
Deferred income taxes (2,650) (8,465) (9,059)
Other -- -- (2,315)
Cash provided by (used for)
Accounts receivable (2,788) (1,569) 8,324
Inventories (6,849) 3,147 8,976
Prepaid expenses and other (1,015) (3,762) (848)
Accounts payable and accrued expenses 2,061 12,870 2,111
--------------------------------
33,395 40,582 41,696
--------------------------------
INVESTING ACTIVITIES
Capital expenditures (21,315) (20,639) (14,476)
Acquisitions of businesses (1,409) (15,209) --
Changes in escrowed and restricted funds 1,352 404 (560)
Other (5,030) (7,039) (2,980)
--------------------------------
(26,402) (42,483) (18,016)
--------------------------------
FINANCING ACTIVITIES
Principal payments on long term debt 75,011 (11,500) (12,438)
Net borrowing (repayments) under lines-of-credit (75,233) 15,572 (6,171)
Proceeds from issuance of common stock 678 1,898 344
Dividends paid (6,073) (5,063) (4,142)
Other (2,026) -- (1,562)
--------------------------------
(7,643) 907 (23,969)
--------------------------------
Net cash used for operating,
investing, and financing activities (650) (994) (289)
Effect of exchange rate changes on cash 365 (156) (404)
--------------------------------
CASH AND CASH EQUIVALENTS
Net decrease (285) (1,150) (693)
Balance, beginning of year 4,674 5,824 6,517
--------------------------------
BALANCE, END OF YEAR $ 4,389 $ 4,674 $ 5,824
-----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
41
<PAGE> 8
INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Interface, Inc.
("the Company") and its subsidiaries. All material intercompany accounts and
transactions are eliminated.
INVENTORIES
Inventories are valued at the lower of cost (standards which approximate actual
cost on a first-in, first-out basis) or market. Maintenance, operating, and
office supplies are generally not inventoried.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is computed using the
straight-line method over the following estimated useful lives: buildings and
improvements--ten to fifty years; furniture and equipment--three to twelve
years.
EXCESS OF COST OVER NET ASSETS ACQUIRED
The excess of purchase price over fair value of net assets of acquired
businesses arises in connection with business combinations accounted for as
purchases and is amortized on a straight-line basis generally over forty years.
Accumulated amortization amounted to approximately $27,101,000 and $20,302,000
at January 1, 1995 and January 2, 1994, respectively.
The Company's operational policy for the assessment and measurement of any
impairment in the value of excess of cost over net assets acquired which is
other than temporary is to evaluate the recoverability and remaining life of
its goodwill and determine whether the goodwill should be completely or
partially written off or the amortization period accelerated. The Company will
recognize an impairment of goodwill if undiscounted estimated future operating
cash flows of the acquired business are determined to be less than the carrying
amount of goodwill. If the Company determines that goodwill has been impaired,
the measurement of the impairment will be equal to the excess of the carrying
amount of the goodwill over the amount of the undiscounted estimated operating
cash flows. If an impairment of goodwill were to occur, the Company would
reflect the impairment through a reduction in the carrying value of goodwill.
TAXES ON INCOME
Income taxes are calculated using the liability method specified by Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
EARNINGS PER COMMON SHARE AND DIVIDENDS
Earnings per common 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 common stock options. Neither the
Convertible Debentures nor the Preferred Stock were determined to be common
stock equivalents. In computing primary earnings per share, the preferred stock
dividend reduces income applicable to common shareholders. Primary earnings per
share are based upon 18,012,722 shares, 17,302,000 shares, and 17,253,000
shares for the years ended January 1, 1995, January 2, 1994, and January 3,
1993, respectively. For fiscal 1994, 1993, and 1992 fully diluted earnings per
common share were antidilutive. For the purposes of computing earnings per
common share and dividends paid per common 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).
TRANSLATION OF FOREIGN CURRENCIES
The financial position and results of operations of the Company's foreign
subsidiaries are measured generally using local currencies as the functional
currency. Assets and liabilities of these subsidiaries are translated into U.S.
dollars at the exchange rate in effect at each year end. Income statement items
are translated at the average rate of exchange prevailing during the year. The
resulting translation adjustments are recorded in the foreign currency
translation adjustment account. In the event of a divestiture of a foreign net
investment or an investment being no longer considered long term in nature, the
related foreign currency translation results are reversed from equity to
income. Other foreign currency transaction gains and losses are also included
in income. Exchange gains and losses are not material in amount in any year.
42
<PAGE> 9
DERIVATIVES
Gains and losses on hedges of existing assets or liabilities are included in
the carrying amounts of those assets or liabilities and are ultimately
recognized in income as part of those carrying amounts. Gains or losses related
to qualifying hedges of firm commitments or anticipated transactions also are
deferred and are recognized in income or as adjustments of carrying amounts
when the hedged transaction occurs.
FISCAL YEAR
The Company's fiscal year ends on the Sunday nearest December 31. The fiscal
years ended January 1, 1995 and January 2, 1994 comprised 52 weeks, and the
fiscal year ended January 3, 1993 comprised 53 weeks.
NOTE 2 - BUSINESS ACQUISITIONS
In March 1994, the Company acquired 100% of the outstanding capital stock of
Prince Street Technologies, Ltd. ("PST"), a broadloom carpet producer located
in Atlanta, Georgia. As consideration the Company issued 674,953 shares of
Class A common stock valued at approximately $8.9 million. The transaction was
accounted for as a purchase. At the acquisition date, the fair value of the net
liabilities of PST exceeded the fair value of the net assets by approximately
$0.6 million. Accordingly, the excess of the purchase price ($9.3 million) over
the fair value of the net liabilities was approximately $9.9 million and is
being amortized over 40 years. The results of the operations of PST have been
included within the consolidated financial statements since the acquisition
date.
The Company, through a series of stock purchases in June 1993, acquired 100% of
the outstanding capital stock of Bentley Mills, Inc. ("Bentley"), a U.S.
company engaged in the manufacturing and distribution of broadloom and modular
carpet, for the aggregate consideration of approximately $34.0 million, which
was comprised of $9.0 million in cash and $25.0 million of newly issued Series
A Cumulative Convertible Preferred Stock. The results of the operations of
Bentley have been included within the consolidated financial statements since
the acquisition date.
In February 1993, the Company acquired the assets of the fabric division of
Stevens Linen Associates, Inc., based in Dudley, Massachusetts, for
approximately $4.9 million.
NOTE 3 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1/1/95 1/2/94
--------------------------------------------------------------------------------
<S> <C> <C>
Cash $3,496 $4,045
Cash equivalents 893 629
--------------------------------------------------------------------------------
$4,389 $4,674
--------------------------------------------------------------------------------
</TABLE>
Cash equivalents, carried at costs which approximate market, consist of short
term, highly liquid investments which are readily convertible into cash and
have initial maturities of three months or less. The Company does not believe
it is exposed to any significant credit risk on cash and cash equivalents.
Under the Company's cash management program, checks in transit are not
considered reductions of cash or accounts payable until presented to the bank
for payment. At January 1, 1995 and January 2, 1994, checks not yet presented
to the bank totaled approximately $6.3 million and $9.7 million, respectively.
In accordance with a Workers' Compensation self-insurance arrangement in the
State of Maine, the Company is required by state law to maintain a trust
account to pay Workers' Compensation claims. At January 1, 1995 and January 2,
1994, the trust account had balances of approximately $2.4 million and $4.0
million, respectively, and was segregated from cash and cash equivalents and
reflected as escrowed and restricted funds. Cash payments for interest amounted
to approximately $24.0 million, $23.4 million, and $21.1 million for the years
ended January 1, 1995, January 2, 1994, and January 3, 1993, respectively.
Income tax payments amounted to approximately $6.5 million, $16.3 million, and
$8.9 million for the years ended January 1, 1995, January 2, 1994, and January
3, 1993, respectively.
43
<PAGE> 10
NOTE 4 - INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1/1/95 1/2/94
--------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 74,542 $ 64,497
Work-in-process 20,250 20,010
Raw materials 37,858 31,534
--------------------------------------------------------------------------------
$132,650 $116,041
--------------------------------------------------------------------------------
</TABLE>
NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1/1/95 1/2/94
-------------------------------------------------------------------------------
<S> <C> <C>
Land $ 8,623 $ 7,917
Buildings 71,752 66,182
Equipment 200,937 162,985
Construction-in-process 6,283 4,717
-------------------------------------------------------------------------------
287,595 241,801
Accumulated depreciation (134,721) (96,676)
-------------------------------------------------------------------------------
$ 152,874 $ 145,125
-------------------------------------------------------------------------------
</TABLE>
NOTE 6 - ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1/1/95 1/2/94
--------------------------------------------------------------------------------
<S> <C> <C>
Taxes $17,989 $ 9,846
Compensation 12,312 14,209
Interest 3,200 3,437
Other 23,439 25,252
--------------------------------------------------------------------------------
$56,940 $52,744
--------------------------------------------------------------------------------
</TABLE>
NOTE 7 - LONG TERM DEBT
Long term debt consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1/1/95 1/2/94
-------------------------------------------------------------------------------
<S> <C> <C>
Secured term loans $ 50,000 $ 121,500
Revolving credit agreements 156,165 79,260
Other 4,351 4,107
-------------------------------------------------------------------------------
Total long term debt 210,516 204,867
Less current maturities (853) (17,155)
-------------------------------------------------------------------------------
$ 209,663 $ 187,712
-------------------------------------------------------------------------------
</TABLE>
During January 1995, the Company entered into an agreement to amend and restate
its revolving credit and term loan facilities. The amendment provides for,
among other things, (i) an increase in the revolving credit facilities from
$125 million to $200 million (including a letter of credit facility of up to
$40 million), (ii) a decrease in the secured term loans from approximately $135
million to $50 million, and (iii) a new accounts receivable securitization
facility of up to $100 million. Additionally, the agreement, which originally
was to expire during 1996, has been extended to June 30, 1999 for the revolving
credit facilities and December 31, 2001 for the term loans. The current and
future maturities of long term debt, as disclosed herein, reflect the payment
terms established by the amendment.
The amended and restated revolving credit and secured term loans are
collateralized by substantially all of the outstanding stock of the Company's
operating subsidiaries (except certain foreign subsidiaries, for which only 66%
of the outstanding stock was pledged). The secured term loans are payable in
two equal installments of $25 million at December 29, 2000 and December 31,
2001, plus accrued interest. Interest is charged, at the Company's option, at a
rate based on either the bank's certificate of deposit rate or LIBOR, plus an
applicable margin of 3/8% to 1 1/4%, depending upon the Company's ability to
meet certain performance criteria; or the bank's prime lending rate (8.5% at
January 1, 1995). The Company is also required to pay a commitment fee of 3/8%
per annum on the unused portion of the revolving credit loans depending upon
the Company's ability to meet certain performance criteria. The agreements
require prepayment from specified excess cash flows or proceeds from certain
asset sales and provide for restrictions which, among other things, require
maintenance of certain financial ratios, restrict encumbrance of assets, limit
the payment of dividends, and prohibit the
44
<PAGE> 11
retirement of its Convertible Subordinated Debentures. At January 1, 1995,
approximately $16.0 million of the Company's retained earnings were
unrestricted and available for payment of dividends under the most restrictive
terms of the agreement.
Future maturities of long term debt based on fixed
payments (amounts could be higher if excess cash flows or asset sales require
prepayment of debt under the credit agreements) are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR (IN THOUSANDS)
-------------------------------------------------------------------------------
<S> <C>
1995 $ 853
1996 400
1997 400
1998 400
1999 156,565
Thereafter 51,898
-------------------------------------------------------------------------------
$210,516
-------------------------------------------------------------------------------
</TABLE>
Additionally, the Company maintains approximately $38 million in revolving
lines of credit through several of its subsidiaries. Interest is generally
charged at the prime lending rate. Approximately $7.7 million was outstanding
under these lines and is included within accounts payable in the consolidated
balance sheets at January 1, 1995 and January 2, 1994, respectively.
NOTE 8 - CONVERTIBLE SUBORDINATED DEBENTURES
The Company has $103,925,000 aggregate principal amount of Convertible
Subordinated Debentures ("Debentures") maturing in 2013 which were sold in a
public offering. The Debentures are unsecured obligations of the Company and
bear interest, payable semi-annually, at 8%. They are convertible into shares
of the Company's Class A Common Stock at a conversion price of approximately
$16.92 per share. The Debentures are redeemable, at the option of the Company,
at a price of 102.4% during fiscal 1995, and are redeemable at decreasing
prices thereafter. Sinking fund payments starting in 1999 are required to
retire 70% of the Debentures prior to maturity. Since issuance, no Debentures
have been converted or redeemed.
NOTE 9 - REDEEMABLE PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of $1.00 par value
Preferred Stock. In conjunction with the Bentley acquisition, the Company
issued 250,000 shares of Series A Cumulative Convertible Preferred Stock with a
face value of $100 per share. The Series A Preferred Stock is entitled to a 7%
annual cumulative cash dividend ($7.00 per preferred share) that is payable
quarterly. Series A Preferred Stock is non-voting, except as required by law or
in limited circumstances to protect its preferential rights. The Series A
Preferred Stock is convertible into shares of the Company's Class A Common
Stock at the rate of one share of Class A Common Stock for each $14.79 face
value thereof plus the amount of any accrued but unpaid dividends. At January
1, 1995, the Series A Preferred Stock was convertible into 1,720,204 shares of
Class A Common Stock.
The Company, at its sole option, may redeem any of the then outstanding Series
A Preferred Stock by paying in cash for each share redeemed the face value
thereof, plus all accrued but unpaid dividends. No such redemption is permitted
before June 1, 1995. Between June 1, 1995 and May 31, 1996, such redemption is
allowable if the market price of Class A Common Stock exceeds approximately
$17.75. No limitations exist as to redemption subsequent to May 31, 1996.
Upon any liquidation, dissolution, or winding up of the Company, record holders
of Series A Preferred Stock are entitled to receive out of the assets of the
Company, an amount in cash equal to the face value per share of outstanding
Series A Preferred Stock plus the amount of accrued but unpaid dividends
accumulated thereon, if any, to the date of payment of such liquidating
distribution.
Preferred shareholders have the right to redeem after May 31, 2003, the then
outstanding shares of Series A Preferred Stock at face value plus all accrued
but unpaid dividends. The Company is not required to establish any sinking or
retirement fund with respect to the shares of Series A Preferred Stock. During
the year ended January 1, 1995, the Company paid cash dividends of
approximately $7.00 per preferred share.
45
<PAGE> 12
NOTE 10 - COMMON STOCK AND STOCK OPTIONS
The Company is authorized to issue 40,000,000 shares of $.10 par value Class A
Common Stock and 40,000,000 shares of $.10 par value Class B Common Stock.
Class A and Class B Common Stock have identical voting rights except for the
election or removal of directors. Holders of Class B Common Stock are entitled
as a class to elect a majority of the Board of Directors. The Company's Class A
Common Stock is traded in the over-the-counter market under the symbol IFSIA
and is quoted on the NASDAQ National Market System. The Company's Class B
Common Stock and Series A Cumulative Convertible Preferred Stock are not
publicly traded. Class B Common Stock is convertible into Class A Common Stock
on a one-for-one basis. Both classes of Common Stock share in dividends
available to common shareholders and the Series A Preferred Stock carries a 7%
dividend rate (see Note 7 for discussion of restrictions on the payment of
dividends). Cash dividends on Common Stock were $.24 per share for the years
ended January 1, 1995, January 2, 1994, and January 3, 1993.
Changes in common shareholders' equity were:
<TABLE>
<CAPTION>
COMMON STOCK FOREIGN
----------------------------------------- ADDITIONAL CURRENCY
CLASS A CLASS B PAID-IN RETAINED TRANSLATION
(IN THOUSANDS) SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE 12/29/91 17,355 $ 1,736 3,466 $ 346 $ 81,769 $109,066 $ 23,805
Net income 12,250
Conversion of common stock 172 17 (172) (17)
Issuance of common stock 33 3 341
Cash dividends paid (4,142)
Foreign currency translation
adjustment (21,080)
------------------------------------------------------------------------------------------------------------------
BALANCE 1/3/93 17,560 1,756 3,294 329 82,110 117,174 2,725
Net income 13,849
Conversion of common stock 173 17 (173) (17)
Issuance of common stock 185 19 1,879
Cash dividends paid (5,063)
Foreign currency translation
adjustment (15,148)
------------------------------------------------------------------------------------------------------------------
BALANCE 1/2/94 17,918 1,792 3,121 312 83,989 125,960 (12,423)
Net income 16,456
Conversion of common stock 44 4 (44) (4)
Issuance of common stock 753 75 9,461
Cash dividends paid (6,073)
Foreign currency translation
adjustment 12,287
------------------------------------------------------------------------------------------------------------------
BALANCE 1/1/95 18,715 $ 1,871 3,077 $ 308 $ 93,450 $136,343 $ (136)
------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 13
The Company has Key Employee Stock Option Plans ("the 1983 Plan" and "the 1993
Plan") and an Offshore Stock Option Plan ("Offshore Plan"), under which a
committee of the Board of Directors is authorized to grant key employees,
including officers, options to purchase the Company's Common Stock. Options
granted pursuant to the 1993 Plan are exercisable for shares of Class A or
Class B Common Stock at a price not less than 100% of the fair market value on
the date of grant. The options are generally exercisable 20% per year for five
years from the date of the grant and the options generally expire ten years
from the date of the grant. An aggregate of 1,050,000 shares of Common Stock
(Class A or Class B) have been reserved for issuance under the 1993 Plan. No
options are available to be granted under the 1983 Plan. An aggregate of
830,674 shares of Class A Common Stock have been reserved for issuance under
the 1983 Plan. Options are granted pursuant to the Offshore Plan to key
employees and the directors of the Company's foreign subsidiaries. These
options may be exercised for shares of Class A or Class B Common Stock as
determined by the Compensation Committee of the Board of Directors. An
aggregate of 1,000,000 shares of Common Stock (Class A or Class B) have been
reserved for issuance under this Plan. As of January 1, 1995, the following
stock options were outstanding under these Plans:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
YEAR OF NUMBER
GRANT OF SHARES OPTION PRICE
--------------------------------------------------------------------------------
<S> <C> <C> <C>
1985 30,000 $ 6.50
1987 80,000 $10.50
1988 337,500 $ 9.00 - $16.25
1990 15,000 $18.63
1991 165,000 $ 11.88 - $13.00
1992 261,000 $ 11.50 - $13.75
1993 297,143 $ 11.00 - $14.75
1994 622,500 $ 10.31 - $16.63
--------------------------------------------------------------------------------
1,808,143
--------------------------------------------------------------------------------
</TABLE>
During the year ended January 1, 1995, 4,000, 7,500, 20,000, and 46,666 options
were exercised at option prices of $12.625, $9.00, $10.50, and $7.50,
respectively. Additionally, approximately 83,000 options were forfeited or
cancelled. At January 1, 1995 and January 2, 1994, respectively, approximately
731,000 and 679,000 options were exercisable at amounts ranging from $6.50 to
$18.63.
NOTE 11 - TAXES ON INCOME
Provisions for federal, foreign, and state income taxes in the consolidated
statements of income consisted of the following components:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
(IN THOUSANDS) 1/1/95 1/2/94 1/3/93
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 4,878 $ 6,115 $ 4,880
Foreign 4,660 6,028 3,196
State 1,713 1,165 1,352
-------------------------------------------------------------------------------
11,251 13,308 9,428
-------------------------------------------------------------------------------
Deferred (reduction):
Federal (445) (1,271) (2,606)
Foreign (674) (4,340) (15)
State (875) (242) (496)
-------------------------------------------------------------------------------
(1,994) (5,853) (3,117)
-------------------------------------------------------------------------------
$ 9,257 $ 7,455 $ 6,311
-------------------------------------------------------------------------------
</TABLE>
Income before taxes on income consisted of the following:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
(IN THOUSANDS) 1/1/95 1/2/94 1/3/93
--------------------------------------------------------------------------------
<S> <C> <C> <C>
U. S. Operations $18,072 $17,714 $ 8,793
Foreign Operations 7,641 3,587 9,768
--------------------------------------------------------------------------------
$25,713 $21,301 $18,561
--------------------------------------------------------------------------------
</TABLE>
Deferred income taxes for the years ended January 1, 1995, and January 2, 1994,
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.
47
<PAGE> 14
The sources of the temporary differences and their effect on the net deferred
tax liability at January 1, 1995 and January 2, 1994, are as follows:
<TABLE>
<CAPTION>
1/1/95 1/2/94
(IN THOUSANDS) ASSETS LIABILITIES ASSETS LIABILITIES
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basis difference
of property
and equipment $ -- $ 17,761 $ -- $ 17,553
Net operating loss
carryforwards 12,720 -- 9,135 --
Other differences
in bases of assets
and liabilities 4,252 -- 2,539 303
Valuation Allowance (5,007) -- (3,159) --
--------------------------------------------------------------------------------
$ 11,965 $ 17,761 $ 8,515 $ 17,856
--------------------------------------------------------------------------------
</TABLE>
During the year ended January 1, 1995, the valuation allowance increased
approximately $1.8 million. For the year ended January 2, 1994, the valuation
allowance increased approximately $417,000. At January 1, 1995, the Company had
approximately $30.1 million in net operating losses within foreign subsidiaries
available for carryforward. Of this amount, $21.6 million is available for an
unlimited period while $8.5 million expires at various times through 1999.
Additionally, the Company had approximately $28.8 million in state net
operating losses expiring at various times through 2009.
The effective tax rate on income before taxes differs from the United States
statutory rate. The following summary reconciles taxes at the United States
statutory rate with the effective rates:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
1/1/95 1/2/94 1/3/93
----------------------------------------------------------------------------
<S> <C> <C> <C>
TAXES ON INCOME AT
U.S. STATUTORY RATE 35% 35% 34%
Increase(reduction) in taxes
resulting from:
State income taxes, net
of federal benefit 2.2 2.8 3.0
Amortization of
excess of cost
over net assets
acquired and
related purchase
accounting adjustments 4.5 3.9 2.5
Foreign and U.S. tax effects
attributable to foreign operations (4.7) (5.2) (4.6)
Other (1.0) (1.5) (1.0)
----------------------------------------------------------------------------
TAXES ON INCOME AT
EFFECTIVE RATES 36.0% 35.0% 33.9%
----------------------------------------------------------------------------
</TABLE>
Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $58.7 million at January 1, 1995. Those earnings are considered
to be indefinitely reinvested and, accordingly, no provision for United States
federal and state income taxes has been provided thereon. Upon distribution of
those earnings in the form of dividends or otherwise, the Company would be
subject to both United States income taxes (subject to an adjustment for
foreign tax credits) and withholding taxes payable to the various foreign
countries. Determination of the amount of unrecognized deferred United States
income tax liability is not practicable because of the complexities associated
with its hypothetical calculation. Withholding taxes of approximately $2.9
million would be payable upon remittance of all previously unremitted earnings
at January 1, 1995.
48
<PAGE> 15
NOTE 12 - HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company employs the use of derivative financial instruments for the purpose
of reducing its exposure to adverse fluctuations in interest and foreign
currency exchange rates. While these hedging instruments are subject to
fluctuations in value, such fluctuations are generally offset by the value of
the underlying exposures being hedged. The Company does not hold or issue
derivative financial instruments for trading purposes. The Company effectively
monitors the use of these derivative financial instruments through the use of
objective measurable systems, well-defined market and credit risk limits, and
timely reports to senior management according to prescribed guidelines. The
Company has established strict counterparty credit guidelines and only enters
into transactions with financial institutions of investment grade or better. As
a result, the Company considers the risk of counterparty default to be minimal.
INTEREST RATE MANAGEMENT
Management of the Company has developed and implemented a policy to maintain
the percentage of fixed and variable rate debt within certain parameters. The
Company enters into interest rate swap agreements, which maintain the
fixed/variable mix within these defined parameters. In these swaps, the Company
agrees to exchange, at specified intervals, the difference between fixed and
variable interest amounts calculated by reference to an agreed-upon notional
principal linked to LIBOR (London Interbank Offered Rate). Any differences paid
or received on interest rate swap agreements are recognized as adjustments to
interest expense over the life of each swap, thereby adjusting the effective
interest rate on the underlying obligation.
FOREIGN CURRENCY EXCHANGE RATE MANAGEMENT
The purpose of the Company's foreign currency hedging activities is to reduce
the risk that the eventual net dollar inflows resulting from sales to foreign
customers will be adversely affected by changes in exchange rates.
The Company enters into forward exchange contracts and currency swap contracts
to hedge certain firm sales commitments denominated in foreign currencies
(principally European currencies and Japanese yen). Net deferred realized gains
and losses are recognized in income, along with unrealized gains and losses, in
the same period as the hedged transaction. Net deferred gains/losses from
hedging anticipated but not yet firmly committed transactions were not material
at January 1, 1995 or January 2, 1994.
The estimated fair values of derivatives used to hedge or modify the Company's
risks will fluctuate over time. These fair value amounts should not be viewed
in isolation, but rather in relation to the fair values of the underlying
hedged transactions and investments and the overall reduction in the Company's
exposure to adverse fluctuations in interest and foreign exchange rates.
The notional amounts of the derivative financial instruments do not necessarily
represent amounts exchanged by the parties and, therefore, are not a direct
measure of the exposure of the Company through its use of derivatives. The
amounts exchanged are calculated on the basis of the notional amounts and the
other terms of the derivatives, which relate to interest rates or other
financial indices.
The following table represents the aggregate notional amounts, fair values, and
maturities of the Company's derivative financial instruments outstanding at
January 1, 1995:
<TABLE>
<CAPTION>
NOTIONAL FAIR
(IN THOUSANDS) AMOUNTS VALUES MATURITY
--------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST RATE MANAGEMENT
Swap agreement:
Liabilities $23,000 $ (17) 1996
FOREIGN CURRENCY MANAGEMENT
Forward contracts:
Assets 6,499 (367) 1995
Liabilities 23,423 (29) 1995
Swap agreement:
Liabilities 35,000 (5,504) 1996
--------------------------------------------------------------------------------
</TABLE>
49
<PAGE> 16
At January 2, 1994 interest rate and currency swap agreements related to
certain foreign currency denominated promissory notes effectively converted
approximately $29 million of variable rate debt to fixed rate debt. At January
2, 1994, the weighted average fixed rate on the Dutch guilder and Japanese yen
borrowings was 7.43%. The interest rate and currency swaps have maturity dates
ranging from six months to two years.
At January 2, 1994, the Company had approximately $43 million (notional amount)
of foreign currency hedge contracts outstanding, consisting principally of
forward exchange contracts and call options. The contracts and options served
to hedge firmly committed Dutch guilder, German mark, Japanese yen, French
franc, British pound sterling, and other foreign currency revenues. The
contract and options generally have maturity dates of six to nine months.
NOTE 13 - COMMITMENTS AND CONTINGENCIES
The Company leases certain marketing locations, distribution facilities, and
equipment. At January 1, 1995 aggregate minimum rent commitments under
operating leases with initial or remaining terms of one year or more consisted
of the following:
<TABLE>
<CAPTION>
FISCAL YEAR (IN THOUSANDS)
-------------------------------------------------------------------------------
<S> <C>
1995 $ 6,851
1996 4,849
1997 3,709
1998 1,784
1999 747
Thereafter 458
-------------------------------------------------------------------------------
$18,398
-------------------------------------------------------------------------------
</TABLE>
Rental expense amounted to approximately $11.8 million, $10.2 million, and
$10.3 million for the fiscal years ended January 1, 1995, January 2, 1994, and
January 3, 1993, respectively.
Bentley Mills' City of Industry, California plant is located in the San Gabriel
Valley, which has been generally designated as a Superfund site. Neither the
Environmental Protection Agency nor the potentially responsible party ("PRP")
group has asserted that Bentley is a PRP in connection with such Superfund site.
NOTE 14 - EMPLOYEE BENEFIT PLANS
The Company and its subsidiaries have trusteed defined benefit retirement plans
("Plans") which cover substantially all of their employees except those of
Guilford, which has its own 401(k) retirement investment plan. The benefits are
generally based on years of service and the employee's average monthly
compensation. Pension expense was $0.8 million, $1.5 million, and $1.7 million
for the years ended January 1, 1995, January 2, 1994, and January 3, 1993,
respectively. Assets exceeded accumulated benefits in certain plans and
accumulated benefits exceeded assets in others during the years ended January
1, 1995 and January 2, 1994.
The ranges of assumptions used for the actuarial determinations reflect the
different economic environments within the various countries where the Plans
exist. In fiscal 1994, the assumed rates of return on plan assets ranged from
5% to 10%, the measurement of the projected benefit obligation was based on
assumed discount rates ranging from 7% to 10% and assumed long term rates of
compensation increases ranging from 4% to 8%. During the year, assets and
obligations related to a contributory profit sharing plan were combined with
the trusteed defined benefit retirement plans in Interface Europe B.V. The
impact upon the accumulated benefit obligation and the projected benefit
obligation was immaterial, however, the plan assets increased $10.0 million. In
fiscal 1993, the assumed rates of return on plan assets ranged from 6% to 8.5%,
the measurement of the projected benefit obligation was based on assumed
discount rates ranging from 6% to 7.5% and assumed long term rates of
compensation increases ranging from 4% to 5.5%.
The Company has 401(k) retirement investment plans ("401(k) Plans"), which are
open to all its U.S. employees with one or more years of service. The 401(k)
Plans call for Company contributions on a sliding scale based on the level of
the employee's contribution. Approximately 70% of eligible employees are
enrolled in the 401(k) Plans. The Company's contributions are funded monthly by
payment to the 401(k) Plan administrators. Company contributions totalled
$557,000, $492,000, and $474,000 for the years ended January 1, 1995, January
2, 1994, and January 3, 1993, respectively.
50
<PAGE> 17
The table presented below sets forth the funded status of the Company's defined
benefit plans and amounts recognized in the consolidated financial statements.
All of the Company's significant domestic and foreign plans are reflected in
the table for each year presented.
<TABLE>
<CAPTION>
1/1/95 1/2/94
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS ACCUMULATED BENEFITS
(IN THOUSANDS) BENEFITS EXCEED ASSETS BENEFITS EXCEED ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Plan assets at fair value, primarily
insurance contracts $ 49,741 $ 4,097 $ 35,537 $ 5,401
-----------------------------------------------------
Actuarial present value of benefit obligations:
Vested benefits 34,536 3,145 31,920 5,085
Nonvested benefits 836 151 1,137 828
-----------------------------------------------------
Accumulated benefit obligation 35,372 3,296 33,057 5,913
Effect of projected future salary increases 2,644 1,169 105 3,082
-----------------------------------------------------
Projected benefit obligation 38,016 4,465 33,162 8,995
-----------------------------------------------------
Plan assets in excess of (lesser than)
projected benefit obligation 11,725 (368) 2,375 (3,594)
Unrecognized net gain from past
experience different from that assumed (11,112) 518 (2,880) 314
Unrecognized prior service cost 421 6 437 172
Unrecognized net asset existing at
the date of initial application of SFAS 87 1,670 0 (344) 1,887
-----------------------------------------------------
Prepaid (accrued) pension cost $ 2,704 $ 156 $ (412) $ (1,221)
-----------------------------------------------------
Net pension cost included the
following components:
Service cost - benefits earned
during the period $ 1,022 $ 502 $ 716 $ 739
Interest cost on projected benefit obligation 3,401 420 2,540 613
Actual return on plan assets 1,703 184 (8,196) (389)
Net amortization and deferral (5,824) (611) 5,316 145
-----------------------------------------------------
Net pension cost (credit) $ 302 $ 495 $ 376 $ 1,108
------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE> 18
NOTE 15 - BUSINESS AND FOREIGN OPERATIONS
The Company and its subsidiaries are engaged predominantly in the manufacture
and sale of commercial and institutional interior finishings. Financial
information by geographic area for the years ended January 1, 1995, January 2,
1994, and January 3, 1993 were as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
(IN THOUSANDS) 1/1/95 1/2/94 1/3/93
--------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES TO UNAFFILIATED CUSTOMERS
United States $ 426,179 $ 336,470 $ 255,476
Americas, excluding the United States 14,504 13,054 17,268
Europe 250,102 232,385 273,665
Asia-Pacific 34,498 43,158 47,669
-----------------------------------
TOTAL $ 725,283 $ 625,067 $ 594,078
-----------------------------------
OPERATING INCOME
United States $ 37,456 $ 41,052 $ 29,016
Americas, excluding the United States 240 (322) 572
Europe 25,131 16,866 20,099
Asia-Pacific (3,425) (2,929) (1,579)
Corporate overhead (8,592) (8,497) (7,669)
-----------------------------------
TOTAL $ 50,810 $ 46,170 $ 40,439
-----------------------------------
IDENTIFIABLE ASSETS
United States $ 337,179 $ 322,379 $ 240,799
Americas, excluding the United States 7,951 9,262 13,141
Europe 304,894 274,928 242,020
Asia-Pacific 37,910 35,750 38,160
-----------------------------------
TOTAL $ 687,934 $ 642,319 $ 534,120
--------------------------------------------------------------------------------
</TABLE>
52
<PAGE> 19
NOTE 16 - QUARTERLY DATA AND SHARE INFORMATION (UNAUDITED)
The following table sets forth, for the fiscal periods indicated, selected
consolidated financial data and information regarding the market price per
share of the Company's Class A Common Stock. The prices represent the reported
high and low closing sale prices.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
(IN THOUSANDS EXCEPT SHARE AMOUNTS) QUARTER QUARTER QUARTER QUARTER
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL YEAR ENDED JANUARY 1,1995
Net sales $160,219 $181,665 $184,959 $196,940
Gross profit 48,344 55,548 55,810 61,483
Net income 2,812 3,711 4,247 5,686
Net income applicable to
common shareholders 2,374 3,274 3,809 5,249
Primary earnings per common share * 0.14 0.18 0.21 0.29
Share prices:
High 16 1/8 14.... 13 5/8 13 3/8
Low 12 1/2 11 1/4 11 1/8 9 3/4
Dividends per common share 0.06 0.06 0.06 0.06
--------------------------------------------------------------------------------------------
FISCAL YEAR ENDED JANUARY 2,1994
Net sales $135,041 $150,045 $167,586 $172,395
Gross profit 41,236 47,443 54,556 54,511
Net income 2,204 2,797 3,870 4,978
Net income applicable to
common shareholders 2,204 2,744 3,447 4,541
Primary earnings per common share * 0.13 0.16 0.20 0.26
Share prices:
High 14 1/4 13.... 12.... 15 1/2
Low 11 1/2 9 7/8 9 3/4 10 5/8
Dividends per common share 0.06 0.06 0.06 0.06
--------------------------------------------------------------------------------------------
</TABLE>
* For the fiscal years ended January 1, 1995 and January 2, 1994, earnings per
share on a fully diluted basis were antidilutive.
53
<PAGE> 20
INTERFACE, INC. AND SUBSIDIARIES
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS,
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The management of Interface, Inc. is responsible for the accuracy and
consistency of all the information contained in the annual report, including
the accompanying consolidated financial statements. The statements have been
prepared to conform with generally accepted accounting principles appropriate
to the circumstances of the Company. The statements include amounts based on
estimates and judgments as required.
Interface, Inc. maintains internal accounting controls designed to provide
reasonable assurance that the financial records are accurate, that the assets
of the Company are safeguarded, and that the financial statements present
fairly the consolidated financial position, results of operations, and cash
flows of the Company.
The Audit Committee of the Board Directors reviews the scope of the audits and
the findings of the independent certified public accountants. The auditors meet
regularly with the Audit Committee to discuss audit and financial reporting
issues, with and without management present.
BDO Seidman, the Company's independent certified public accountants, has
audited the financial statements prepared by management. Their opinion on the
statements is presented as follows.
Ray C. Anderson
---------------
Ray C. Anderson
Chairman of the Board, President, and
Chief Executive Officer
Daniel T. Hendrix
-----------------
Daniel T. Hendrix
Vice President, Chief Financial Officer, and Treasurer
Atlanta, Georgia
February 22, 1995
Board of Directors and Shareholders of Interface, Inc.
Atlanta, Georgia
We have audited the accompanying consolidated balance sheets of Interface, Inc.
and subsidiaries as of January 1, 1995 and January 2, 1994, and the related
consolidated statements of income and cash flows for each of the three years in
the period ended January 1, 1995. The financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Interface, Inc.
and its subsidiaries as of January 1, 1995 and January 2, 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 1, 1995, in conformity with generally
accepted accounting principles.
BDO Seidman
Atlanta, Georgia
February 22, 1995
(BDO LOGO)
54
<PAGE> 21
INTERFACE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS,
EXCEPT SHARE DATA) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL OPERATING DATA
Net sales $725,283 $625,067 $594,078 $581,786 $623,467 $581,756 $396,651 $267,008 $137,410 $123,430
Cost of sales 504,098 427,321 404,130 393,733 410,652 382,455 263,508 176,813 87,783 79,561
Selling, general, and
administrative expenses 170,375 151,576 149,509 150,100 153,317 135,468 87,445 56,884 36,186 32,610
Other expense (income) 25,097 24,806 21,878 23,623 21,818 23,202 11,587 7,589 (2,122) 3,002
Income before taxes
on income 25,713 21,304 18,561 14,330 37,680 40,631 34,111 25,722 16,823 12,697
Taxes on income 9,257 7,455 6,311 5,409 14,078 16,084 13,926 11,742 6,315 4,679
Net income 16,456 13,849 12,250 8,921 23,602 24,547 20,185 13,700 8,576 8,018
Earnings per common share
Primary .82 .75 .71 .52 1.37 1.43 1.18 .87 .68 .59
Fully diluted * * * * 1.24 1.27 1.15 N/A N/A N/A
Dividends
Cash dividends paid (A) 6,073 5,063 4,142 4,136 4,133 3,600 2,649 2,081 1,404 1,035
Cash dividends per
common share .24 .24 .24 .24 .24 .21 .16 .13 .11 .09
Property additions (B) 24,376 28,829 14,476 15,375 23,705 25,333 49,261 14,152 40,941 9,092
Depreciation and amortization 28,180 24,512 22,257 19,723 21,570 17,243 11,621 8,270 3,187 2,547
WEIGHTED AVERAGE SHARES
OUTSTANDING
Primary 18,013 17,302 17,253 17,230 17,214 17,146 17,109 15,740 12,561 13,531
Fully diluted 25,848 24,352 23,398 23,375 23,359 23,291 18,726 N/A N/A N/A
AT YEAR END
Working capital 174,620 140,575 138,834 150,541 156,638 131,953 127,328 55,586 44,720 34,600
Current ratio 2.5 2.1 2.5 2.3 2.4 2.2 2.3 2.2 2.3 2.5
Net property and
equipment 152,874 145,125 137,605 139,406 141,125 126,917 119,006 72,818 63,490 25,400
Total assets 687,934 642,319 534,120 569,438 582,371 525,814 493,371 233,165 197,263 92,680
Total long term debt 314,441 291,637 235,488 240,137 254,578 244,158 249,136 62,949 96,468 14,986
Redeemable preferred stock 25,000 25,000 -- -- -- -- -- -- -- --
Common shareholders' equity 214,090 181,884 186,349 198,977 198,409 157,001 135,985 115,990 51,731 43,770
Book value per common share 11.89 10.42 10.79 11.55 11.52 9.14 7.94 6.80 4.21 3.48
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*For fiscal years 1994, 1993, 1992, and 1991, fully diluted earnings per common
share were antidilutive.
(A) Includes preferred stock dividends of $1,750,000 and $913,000 in 1994 and
1993, respectively.
(B) Includes property and equipment obtained in acquisitions of businesses.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K, filed each year with the
Securities and Exchange Commission, may be obtained by shareholders without
charge by writing to:
Mr. Daniel T. Hendrix
Vice President-Finance
Interface, Inc.
2859 Paces Ferry Road
Suite 2000
Atlanta, Georgia 30339
ANNUAL MEETING
The annual meeting of shareholders will be at 10:00 a.m. on May 18, 1995, at
the Company's office located at:
Orchard Hill Road
LaGrange, Georgia 30240
TRANSFER AGENT DIVIDEND DISBURSING AGENT
Wachovia Bank and Trust Company, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, NC 27102
NUMBER OF SHAREHOLDERS OF RECORD AT MARCH 22, 1995
Class A - 569
Class B - 53
CHANGE OF ADDRESS
Please direct all changes of address or inquiries as to how your account is
listed to:
Registrar
Wachovia Bank and Trust
Company N.A.
P.O. Box 3001
Winston-Salem, NC 27108
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman
Atlanta, Georgia
LEGAL COUNSEL
Kilpatrick & Cody
Atlanta, Georgia
CORPORATE ADDRESS
Interface, Inc.
2859 Paces Ferry Road
Suite 2000
Atlanta, Georgia 30339
Tel. (404) 437-6800
55
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF INTERFACE, INC.
<TABLE>
<CAPTION>
JURISDICTION OF
SUBSIDIARY ORGANIZATION
---------- --------------
<S> <C>
Interface Americas, Inc. Georgia (USA)
Interface Flooring Systems, Inc. Georgia (USA)
Interface Research Corporation Georgia (USA)
Rockland React-Rite, Inc. Georgia (USA)
Pandel, Inc. Georgia (USA)
Interface Asia-Pacific, Inc.(1) Georgia (USA)
Interface Service Management, Inc. Georgia (USA)
Prince Street Technologies, Ltd. Georgia (USA)
Bentley Mills, Inc. Delaware (USA)
Interface Europe, Inc. Delaware (USA)
Guilford of Maine, Inc.(2) Delaware (USA)
Guilford (Delaware), Inc. Delaware (USA)
Interface International (Barbados), Inc. Barbados
Interface Flooring Systems (Canada), Inc. Canada
Interface Europe, Ltd.(3) United Kingdom
Interface Europe B.V.(4) Netherlands
</TABLE>
____________________________________________
(1) Interface Asia-Pacific, Inc. is the parent of six subsidiaries organized
and operating in Australia, Japan, Hong Kong, Singapore and Thailand.
(2) Guilford of Maine, Inc. is the parent of two subsidiaries organized and
operating in Canada and the United States. Another fabric subsidiary
operating in the United Kingdom, Guilford of Maine (U.K.) Ltd., is now
grouped as a subsidiary of Interface Europe, Ltd.
(3) Interface Europe, Ltd. (formerly Interface Flooring Systems, Ltd.) is the
parent of three subsidiaries organized and operating in the United
Kingdom and Hong Kong.
(4) Interface Europe B.V. (formerly Interface Heuga B.V.) is the parent of
six subsidiaries organized and operating in the Netherlands, and 12
subsidiaries organized and operating outside of the Netherlands (none of
which are organized or operating in the United States).
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Interface, Inc.
Atlanta, Georgia
We hereby consent to the incorporation by reference in the Prospectuses
constituting a part of the Company' Registration Statements on Form S-8 (File
Numbers 33-28305 and 33-28307) and on Form S-3 (File Number 33-74076) of our
reports dated February 22, 1995, relating to the consolidated financial
statements and schedules of Interface, Inc. appearing in the Company's Form
10-K, for the year ended January 1, 1995.
We also consent to the reference to us under the caption "Experts" in the
Prospectuses.
BDO SEIDMAN
Atlanta, Georgia
March 30, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K OF
INTERFACE, INC. FOR THE PERIOD ENDED JANUARY 1, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-1-1995
<PERIOD-END> JAN-1-1995
<CASH> 4,389
<SECURITIES> 0
<RECEIVABLES> 139,277
<ALLOWANCES> 5,741
<INVENTORY> 132,650
<CURRENT-ASSETS> 292,115
<PP&E> 287,595
<DEPRECIATION> 134,721
<TOTAL-ASSETS> 687,934
<CURRENT-LIABILITIES> 117,495
<BONDS> 313,588
<COMMON> 2,179
25,000
0
<OTHER-SE> 236,911
<TOTAL-LIABILITY-AND-EQUITY> 687,934
<SALES> 725,283
<TOTAL-REVENUES> 725,283
<CGS> 504,098
<TOTAL-COSTS> 674,473
<OTHER-EXPENSES> (1,003)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,094
<INCOME-PRETAX> 25,713
<INCOME-TAX> 9,257
<INCOME-CONTINUING> 16,456
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,456
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
</TABLE>
