<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarterly Period Ended October 1, 1995
Commission File Number 0-12016
------------------------------
INTERFACE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-1451243
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2859 PACES FERRY ROAD, SUITE 2000, ATLANTA, GEORGIA 30339
---------------------------------------------------------
(Address of principal executive offices and zip code)
(770) 437-6800
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Shares outstanding of each of the registrant's classes of common stock at
October 18, 1995:
Class Number of Shares
- ---------------------------------------------- ----------------
Class A Common Stock, $.10 par value per share 15,274,659
Class B Common Stock, $.10 par value per share 2,994,694
Page 1 of _______ Pages
The Exhibit Index appears at page _____.
<PAGE> 2
INTERFACE, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
Balance Sheets - October 1, 1995 and January 1, 1995 3
Statements of Income - Three Months and Nine Months
Ended October 1, 1995 and October 2, 1994 4
Statements of Cash Flows -
Nine Months Ended October 1, 1995 and October 2, 1994 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in the Rights of the Company's Security
Holders 11
Item 3. Defaults by the Company on Its Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except share data)
- ------------------------------------------------ October 1, January 1,
ASSETS 1995 1995
- ------------------------------------------------ ---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 3,034 $ 4,389
Escrowed and Restricted Funds 2,413 2,663
Accounts Receivable 113,145 133,536
Inventories 138,801 132,650
Deferred Tax Asset 4,485 3,767
Prepaid Expenses 18,055 15,110
-------- --------
TOTAL CURRENT ASSETS 279,933 292,115
PROPERTY AND EQUIPMENT, less
accumulated depreciation 170,218 152,874
EXCESS OF COST OVER NET ASSETS ACQUIRED 212,446 202,852
OTHER ASSETS 43,155 40,093
-------- --------
$705,752 $687,934
======== ========
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
- -----------------------------------------------
CURRENT LIABILITIES:
Accounts Payable $ 54,673 $ 59,702
Accrued Expenses 55,892 56,940
Current Maturities of Long-Term Debt 1,550 853
-------- --------
TOTAL CURRENT LIABILITIES 112,115 117,495
LONG-TERM DEBT, less current maturities 207,979 209,663
CONVERTIBLE SUBORDINATED DEBENTURES 103,925 103,925
DEFERRED INCOME TAXES 19,635 17,761
-------- --------
TOTAL LIABILITIES 443,654 448,844
-------- --------
Redeemable Preferred Stock 25,000 25,000
Common Stock:
Class A 1,887 1,871
Class B 300 308
Additional Paid-In Capital 94,186 93,450
Retained Earnings 146,160 136,343
Foreign Currency Translation Adjustment 12,311 (136)
Treasury Stock, 3,600,000
Class A Shares, at Cost (17,746) (17,746)
-------- --------
$705,752 $687,934
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands except per share amounts)
- ---------------------------------------
Three Months Ended Nine Months Ended
---------------------------------------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
--------------------- ----------------------
<S> <C> <C> <C> <C>
Net Sales $203,269 $184,959 $597,414 $527,343
Cost of Sales 139,574 129,149 412,636 367,641
--------------------- ----------------------
Gross Profit on Sales 63,695 55,810 184,778 159,702
Selling, General and Administrative Expenses 47,373 42,246 139,613 123,559
--------------------- ----------------------
Operating Income 16,322 13,564 45,165 36,143
Other Expense - Net 7,730 6,930 21,909 19,316
--------------------- ----------------------
Income before Taxes on Income 8,592 6,634 23,256 16,827
Taxes on Income 3,265 2,387 8,838 6,057
--------------------- ----------------------
Net Income 5,327 4,247 14,418 10,770
Less: Preferred Dividends 438 438 1,312 1,313
--------------------- ----------------------
Net Income Applicable to Common Shareholders $ 4,889 $ 3,809 $ 13,106 $ 9,457
===================== ======================
Earnings Per Share
Primary $ 0.27 $ 0.21 $ 0.72 $ 0.53
===================== ======================
Fully Diluted* $ 0.26 $ 0.21 * $ 0.71 $ 0.53 *
===================== ======================
Weighted Average Common Shares Outstanding
Primary 18,252 18,191 18,237 17,953
===================== ======================
Fully Diluted 26,087 26,027 26,072 25,786
===================== ======================
</TABLE>
* For the three month and nine month periods ended October 2, 1994, earnings
per share on a fully dilutive basis were antidilutive.
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
October 1, October 2,
(In thousands) 1995 1994
- -------------- ---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 14,418 $ 10,770
Adjustment to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 21,285 22,047
Deferred income taxes 1,815 1,337
Cash provided by (used for):
Accounts receivable 23,528 2,552
Inventories 647 (12,989)
Prepaid and other (2,057) (647)
Accounts payable and accrued expenses (3,818) (16,325)
-------- --------
55,818 6,745
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (26,186) (14,071)
Acquisitions of businesses (15,203) (643)
Other (2,798) 1,547
-------- --------
(44,187) (13,167)
-------- --------
FINANCING ACTIVITIES:
Net borrowing (reduction) of long-term debt (9,114) 9,490
Issuance of common stock 744 453
Dividends paid (4,597) (4,544)
-------- --------
(12,967) 5,399
-------- --------
Net cash provided by operating,
investing and financing activities (1,336) (1,023)
Effect of exchange rate changes on cash (19) 406
-------- --------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) during the period (1,355) (617)
Balance at beginning of period 4,389 4,674
-------- --------
Balance at end of period $ 3,034 $ 4,057
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - CONDENSED FOOTNOTES
As contemplated by the Securities and Exchange Commission instructions to
Form 10-Q, the following footnotes have been condensed and, therefore, do not
contain all disclosures required in connection with annual financial
statements. Reference should be made to the notes to the Company's year-end
financial statements contained in its Annual Report to Shareholders for the
fiscal year ended January 1, 1995, as filed with the Securities and Exchange
Commission.
NOTE 2 - RECEIVABLES
During August 1995, the Company entered into an agreement with a
financial institution to sell up to $65 million of certain domestic accounts
receivable under a continuous sale program. Under this agreement, undivided
interests in designated receivable pools are sold to the purchaser with
recourse limited to the receivables purchased. Fees paid by the Company under
this agreement are based on certain variable rate indices and are recorded as
Other Expense. As of October 1, 1995 the Company had sold accounts receivable
under this agreement for which net proceeds of approximately $37.9 million were
received.
NOTE 3 - INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
October 1, January 1,
1995 1995
---------- ----------
<S> <C> <C>
Finished Goods $ 72,746 $ 74,542
Work-in-Process 28,561 20,250
Raw Materials 37,494 37,858
-------- --------
$138,801 $132,650
======== ========
</TABLE>
NOTE 4 - BUSINESS ACQUISITIONS
In June 1995, the Company acquired substantially all of the assets of
Toltec Fabrics, Inc., a North Carolina based company, for approximately
$13,280,000 (comprised of $7,530,000 in cash and $5,750,000 in notes). The
acquisition was accounted for as a purchase and, accordingly, the results of
operations are included in the Company's consolidated financial statements from
the date of acquisition.
6
<PAGE> 7
INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 5 - EARNINGS PER SHARE AND DIVIDENDS
Earnings per share are computed by dividing net income applicable to
common shareholders by the combined weighted average number of shares of Class
A and Class B Common Stock outstanding during the particular reporting period.
The computation does not include a negligible dilutive effect of outstanding
stock options. Neither the Convertible Subordinated Debentures issued in
September 1988 nor the Series A Cumulative Convertible Preferred Stock issued
during June 1993 were determined to be common stock equivalents. In computing
primary earnings per share, the preferred stock dividend reduces income
applicable to common shareholders. For the purposes of computing earnings per
share and dividends paid per share, the Company is treating as treasury stock
(and therefore not outstanding) the shares that are owned by a wholly-owned
subsidiary (3,600,000 Class A shares, recorded at cost).
__________________________________________
The financial information included in this report has been prepared by
the Company, without audit, and should not be relied upon to the same extent as
audited financial statements. In the opinion of management, the financial
information included in this report contains all adjustments (all of which are
normal and recurring) necessary for a fair presentation of the results for the
interim periods. Nevertheless, the results shown for interim periods are not
necessarily indicative of results to be expected for the full year.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS. For the three month and nine month periods ended
October 1, 1995, the Company's net sales increased $18.3 million (9.9%) and
$70.1 million (13.3%), respectively, compared with the same periods in 1994.
The increase was primarily attributable to (i) increased sales volume in the
Company's floorcoverings operations in the United States, United Kingdom,
Southeast Asia and Greater China, (ii) continued improvement in unit volume in
the Company's interior fabrics and chemical operations, (iii) sales generated
by Toltec Fabrics, Inc., which was acquired in June 1995, and, (iv) the
strengthening of certain key currencies (particularly the British pound
sterling, Dutch guilder and Japanese yen) against the U.S. dollar, the
Company's reporting currency. These increases were offset somewhat by a
decrease in floorcoverings sales volume in Japan, Australia and certain markets
within Continental Europe.
Cost of sales decreased as a percentage of sales for the three and nine
month periods ended October 1, 1995, compared with the same periods in 1994.
The decrease was due primarily to (i) a reduction of manufacturing costs in the
Company's carpet tile operations (particularly the U.S manufacturing facility)
as the Company implemented a make-to-order ("mass customization") production
strategy and "war-on-waste" initiative, leading to increased manufacturing
efficiencies, and an attendant shift in product mix to higher margin products,
(ii) the weakening of the U.S. dollar against certain key currencies which
lowered the cost of U.S. produced goods sold in export markets, and (iii)
decreased manufacturing costs in the Company's interior fabrics business as a
result of improved manufacturing efficiencies. These benefits were somewhat
offset by raw material price increases in the interior fabrics and chemical
operations, and the acquisitions of Prince Street Technologies, Ltd. and Toltec
Fabrics, which, historically, had higher cost of sales ratios than the Company.
Selling, general and administrative expenses as a percentage of sales
increased to 23.3% for the three month period, and remained flat at 23.4% for
the nine month period, ended October 1, 1995, compared to 22.8% and 23.4% for
the same periods in 1994. The increase for the three month period was
attributable to an increase in design, marketing and sampling costs for the
Company's floorcovering operations (principally the U.S. carpet tile
operation), and the acquisition of Toltec Fabrics which, historically, had a
higher S G & A ratio than the Company.
For the three month and nine month periods ended October 1, 1995, the
Company's other expense increased $0.8 million and $2.6 million, respectively,
compared to the same periods in 1994, primarily due to an increase in bank debt
and increased interest rates.
8
<PAGE> 9
As a result of the aforementioned factors, the Company's net income
(after adjustment for preferred dividends) increased 28.4% to $4.9 million and
38.6% to $13.1 million, respectively, for the three month and nine month
periods ended October 1, 1995, compared to the same periods in 1994.
LIQUIDITY AND CAPITAL RESOURCES. The primary uses of cash during the
nine months ended October 1, 1995 have been (i) $ 26.2 million for additions to
property and equipment in the Company's manufacturing facilities, including the
new carpet tile facility in Thailand (scheduled to become operational in early
1996) and new broadloom carpet facility for Prince Street in Atlanta (scheduled
to be operational in November 1995), (ii) $14.0 million associated with the
acquisition of Toltec Fabrics, (iii) $9.1 million for reduction of long-term
debt, (iv) $1.2 million for business acquisitions in the Company's
architectural resources unit, and (v) $4.6 million for dividends paid. These
uses were funded by $55.8 million in operating activities which includes $37.9
million from the sale of domestic receivables under the securitization program.
The Company, as of October 1, 1995, recognized a $12.4 million decrease
in foreign currency translation adjustment compared to that of January 1, 1995.
This improvement in translation adjustment was largely due to a significant
quarter-end strengthening of the British pound sterling and the Dutch guilder
compared to the U.S. dollar. The adjustment to shareholders' equity was
converted by the guidelines of the Financial Accounting Standards Board (FASB)
52.
The Company employs a variety of off-balance sheet financial instruments
to reduce its exposure to adverse fluctuations in interest and foreign currency
exchange rates, including foreign currency swap agreements and foreign currency
exchange contracts. At October 1, 1995, the Company had approximately $45.0
million (notional amount) of foreign currency hedge contracts outstanding,
consisting principally of forward exchange contracts. These contracts serve to
hedge firmly committed Dutch guilder, German mark, Japanese yen, French franc,
British pound sterling and other foreign currency revenues.
At October 1, 1995, 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 October
1, 1995, the weighted average fixed rate on the Dutch guilder and Japanese yen
borrowings was 7.43%. The interest rate and currency swap agreements have
maturity dates ranging from nine to twelve months.
The Company continually monitors its position with, and the credit
quality of, the financial institutions which are counterparties to its
off-balance sheet financial instruments and does not anticipate nonperformance
by the counterparties.
9
<PAGE> 10
In August 1995, the Company and certain of its domestic subsidiaries
entered into a continuous sale program (account receivable securitization
facility) with a financial institution that provides for the sale of up to $65
million of trade receivables. Under this agreement, undivided interests in
designated receivable pools are sold to the purchaser with recourse limited to
the receivables purchased. Fees paid by the Company under this agreement are
based on certain variable market rate indices and are recorded as Other
Expense. The Company had received approximately $37.9 million under the
arrangement as of October 1, 1995.
In January 1995, the Company amended its existing revolving credit and
term loan facilities. The amendment provided for, among other things, (i) an
increase in the revolving credit facility 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 term of the agreement has been extended to June 30, 1999 for
the revolving credit facilities, and December 31, 2001 for the term loans.
Management believes that the cash provided by operations and available
under long-term loan commitments will provide adequate funds for current
commitments and other requirements in the foreseeable future.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not aware of any material pending legal proceedings
involving it or any of its property.
ITEM 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS
None
ITEM 3. DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
The Company is actively seeking financing to fund a call for the
redemption of all its outstanding 8% Convertible Subordinated
Debentures Due 2013 (the "Convertible Debentures"). Under their
terms, the Convertible Debentures may be called for redemption at
any time upon 30 days' notice at a price of 102.4% of their
principal amount, plus accrued and unpaid interest. In the event
of a call, debenture holders would be entitled to convert all or a
portion of the principal amount into shares of Interface Class A
Common Stock, at a price of $16.9125 per share, at any time up to
two business days before the redemption date. Interface will not
call the Convertible Debentures unless and until it has obtained
financing that would cover the aggregate redemption price if 100%
of the Convertible Debentures are redeemed, as opposed to being
converted by their respective holders. An aggregate of
approximately $106.5 million will be required to redeem 100% of the
Convertible Debentures into shares of Interface Class A Common
Stock.
The Company has considered several options for obtaining the
financing necessary to redeem the Convertible Debentures, and has
commenced a private offering of senior subordinated notes to raise
$125 million. There is no assurance that the private offering will
be completed or that the financing necessary for a redemption of
the Convertible Debentures will be available from any source on
acceptable terms. Under applicable securities law requirements,
certain terms about the private offering that the Company has
commenced cannot be publicly disclosed unless and until the
transaction is consummated.
On October 31, 1995, the closing price of the Class A Common Stock
on the Nasdaq National Market was $15.125 per share. The closing
price of the Convertible Debentures on that date was $103.75.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
10.1 Agreement of Brian L. DeMoura (Change in Control)
10.2 Amendment No. 1 to the Employment Agreement of Brian L. DeMoura
10.3 Agreement of Charles R. Eitel (Change in Control)
10.4 Amendment No. 1 to the Employment Agreement of Charles R. Eitel
10.5 Agreement of F. Colville Harrell (Change in Control)
10.6 Employment Agreement of F. Colville Harrell
10.7 Agreement of Daniel T. Hendrix (Change in Control)
10.8 Employment Agreement of Daniel T. Hendrix
10.9 Agreement of David W. Porter (Change in Control)
10.10 Employment Agreement of David W. Porter
10.11 Agreement of Donald E. Russell (Change in Control)
10.12 Amendment No. 1 to the Employment Agreement of Donald E. Russell
10.13 Agreement of Gordon D. Whitener (Change in Control)
27 Financial Data Schedule (for SEC use only).
</TABLE>
(b) No reports on Form 8-K were filed during the quarter ended
October 1, 1995.
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERFACE, INC.
Date: November 1, 1995 By: /s/Daniel T. Hendrix
--------------------------------
Daniel T. Hendrix
Vice President
(Principal Financial Officer)
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT SEQUENTIAL
NUMBER PAGE NO.
<S> <C> <C>
10.1 Agreement of Brian L. DeMoura
(Change in Control)
10.2 Amendment No. 1 to the Employment
Agreement of Brian L. DeMoura
10.3 Agreement of Charles R. Eitel
(Change in Control)
10.4 Amendment No. 1 to the Employment
Agreement of Charles R. Eitel
10.5 Agreement of F. Colville Harrell
(Change in Control)
10.6 Employment Agreement of F. Colville Harrell
10.7 Agreement of Daniel T. Hendrix
(Change in Control)
10.8 Employment Agreement of Daniel T. Hendrix
10.9 Agreement of David W. Porter
(Change in Control)
10.10 Employment Agreement of David W. Porter
10.11 Agreement of Donald E. Russell
(Change in Control)
10.12 Amendment No. 1 to the Employment
Agreement of Donald E. Russell
10.13 Agreement of Gordon D. Whitener
(Change in Control)
27 Financial Data Schedule
(for SEC use only)
</TABLE>
14
<PAGE> 1
EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 8th day of Sept, 1995,
by and between INTERFACE, INC., a Georgia corporation (the "Company"), and
BRIAN L. DEMOURA (the "Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key employees of
continuity of management and objective judgment in the event of any Change in
Control of the Company, and to induce its key employees to remain employed by
the Company, and the Executive is a key employee of the Company and an
integral part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to
receive in the absence of a Change in Control of the Company, and this
Agreement accordingly will be operative only upon circumstances relating to a
Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by the
parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless, during the term of this Agreement, there has been a Change
in Control of the Company, as defined in Article III below. Immediately upon
such an occurrence, all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
<PAGE> 2
III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any
act that constitutes, on the part of the Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's material breach of this Agreement,
or (iii) Executive's conviction of a felony or crime involving moral
turpitude. A termination of Executive for "Cause" based on clause (i) or (ii)
of the preceding sentence shall take effect thirty (30) days after the Company
gives written notice of such termination to Executive specifying the conduct
deemed to qualify as Cause, unless Executive shall, during such 30-day period,
remedy the events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause (iii)
above shall take effect immediately upon giving of the termination notice.
mean:
4. Change in Control -- The term "Change in Control" as used
herein shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Ray C. Anderson; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist,
provided such conversion shall not constitute a Change in
Control so long as Ray C. Anderson remains satisfied with
the membership of a majority of the Board.
-2-
<PAGE> 3
5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially
perform his duties for the Company on a full-time basis for a period of six
(6) months.
6. Excess Severance Payment -- The term "Excess Severance Payment"
shall have the same meaning as the term "excess parachute payment" defined in
Section 280G(b)(l) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section 280G(b)(2)
of the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term "Voting Agreement" shall mean the
agreement, dated April 13, 1993, among certain holders of the Company's Class
B Common Stock that provides that their shares will be voted as a block, as it
may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination -- If a Change in Control occurs during the term of
this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or (ii)
within six (6) months prior to the date of the Change in Control and is
related to such Change in Control, and in either case (i) or (ii) such
termination is a result of Involuntary Termination or Voluntary Termination, as
defined below, then the benefits described in Section 2 below shall be paid or
provided to the Executive:
(a) Involuntary Termination -- For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability, the voluntary election of the Executive to
retire (including early retirement) within the meaning of the
Company's Retirement Plan, or death.
(b) Voluntary Termination -- For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary
on the part of the Executive, and, in the judgment of the Executive,
is due to (i) a reduction of the Executive's responsibilities, title
or status resulting from a formal change in such title or status, or
from the assignment to the Executive of any duties inconsistent with
his title, duties or responsibilities in effect within the year prior
to the Change in Control; (ii) a
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<PAGE> 4
reduction in the Executive's compensation or benefits, or (iii) a
Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to
the extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b),
(c), (d) and (e) of this Section 2 pursuant to the terms of an employment
agreement with the Company or as a result of a breach by the Company of the
employment agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are actually
paid or provided under this Agreement, the benefits shall be provided in lump
sum payments where specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in Section 2(c) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination; provided,
however, that the salary payments provided for hereunder shall be
paid in a single lump sum payment, to be paid not later than 30 days
after his termination of employment; provided, further, that the
amount of such lump sum payment shall be determined by taking the
salary payments to be made and discounting them to their Present Value
(as defined in Section III.8) on the date Executive's employment is
terminated. For purposes hereof, the Executive's "current salary"
shall be the highest rate in effect during the six-month period prior
to the Executive's termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus multiplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein
shall be paid in a single lump sum payment, to be paid not later than
30 days after termination of employment; provided,
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<PAGE> 5
further, that the amount of such lump sum payment shall be determined
by taking the bonus payments (as of the payment date) to be
made and discounting them to their Present Value (as defined
in Section III.8) on the date Executive's employment is
terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
Section shall be applied against and reduce the period for which
COBRA will be provided. If the Executive is covered by a split-dollar
or similar life insurance program at the date of termination, he
shall have the option in his sole discretion to have such policy
transferred to him upon termination, provided that the Company is paid
for its interest in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax-qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface,
Inc. (or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans.
For purposes of the Savings Plan, the Executive will be credited with
an amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully
vested under such plans. If continued participation in any plan is
not permitted or if Executive's benefits are not fully vested, the
Company shall pay to the Executive and, if applicable, his
beneficiary, a supplemental benefit equal to the present value on the
date of termination of employment (calculated as provided in the plan)
of the excess of (i) the benefit the Executive would have been paid
under such plan if he had continued to be covered for the 24-month
period (less any amounts he would have been required to contribute)
and been treated as fully vested, over (ii) the benefit actually
payable under such plan. The Company shall pay such additional
benefits (if any) in a lump sum.
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<PAGE> 6
(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Salary Continuation Agreement -- On his date of termination,
the Executive shall be entitled to a benefit equal to the greater of:
(i) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with
the terms of such agreement; or
(ii) a fully vested benefit computed in the same manner as
his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement).
The benefit under this section cannot exceed 40% of
the Executive's average compensation. The benefit
shall be payable commencing at age 65 in the same
manner and over the same period as provided in the
Salary Continuation Agreement, provided that the
Executive may elect to commence his benefit at any
time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his
benefit commences.
(g) Effect of Lump Sum Payment -- The lump sum payment under (a) or
(b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFITS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation
and benefits payable or to be provided to Executive under this Agreement that
are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount,
the parties shall take into account all provisions of Code Section 280G, and
the regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Section V.1 shall be made by the Company's
independent accountants within thirty (30) days of the Executive's termination
of
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<PAGE> 7
employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Article, the Executive shall direct which Severance Payments are to be
modified or reduced; provided, however, that no increase in the amount of any
payment shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be interpreted
so as to avoid the imposition of excise taxes on the Executive under Section
4999 of the Code or the disallowance of a deduction to the Company pursuant to
Section 280G(a) of the Code with respect to amounts payable under this
Agreement. In connection with any Internal Revenue Service examination, audit
or other inquiry, the Company and Executive agree to take action to provide,
and to cooperate in providing, evidence to the Internal Revenue Service (and,
if applicable, the state revenue department) that the compensation and
benefits provided under this Agreement do not result in the payment of Excess
Severance Payments.
4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered
and shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return
receipt requested), to such party at such party's address as specified below,
or at such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 2859 Paces Ferry Road, Suite
2000, Atlanta, Georgia 30339, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets 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
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<PAGE> 8
successor. If Executive shall die while any amount would still be payable to
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of Executive) if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to the executors, personal representatives or administrators
of Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to Executive for a review of a decision denying a claim
and shall further allow Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration award shall be
final and binding upon the parties and judgment upon the award may be entered
in any court having jurisdiction. In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay Executive's reasonable legal fees
and expenses incurred in enforcing this Agreement and the fees of the
arbitrator. Except to the extent provided in the preceding sentence, each
party shall pay its own legal fees and other expenses associated with any
dispute, provided that the fee for the arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substantially identical to the compensation
and benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to
this Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
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<PAGE> 9
9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
------------------------------------
Ray C. Anderson
Title: Chairman and Chief Executive Officer
(Corporate Seal)
Attest: /s/ David W. Porter
------------------------
Secretary
EXECUTIVE
/s/ Brian L. DeMoura
--------------------------------------
Brian L. DeMoura
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<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1
TO THE
EMPLOYMENT AGREEMENT
THIS AMENDMENT is made and entered into the 8th day of Sept, 1995, by
and between GUILFORD OF MAINE, INC., a corporation organized under the laws of
the State of Delaware, U.S.A. (the "Company"), and BRIAN L. DEMOURA (the
"Employee").
WITNESSETH:
WHEREAS, the Company and the Employee have previously entered into an
agreement for the employment of the Employee by the Company (the "Employment
Agreement");
WHEREAS, the Company and the Employee have agreed to amend the terms
of such Employment Agreement as provided herein;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration,
the Employment Agreement is hereby amended as follows:
1.
Paragraph 5(c) of the Employment Agreement is hereby amended by
adding the following paragraph at the end of the current Paragraph:
"Notwithstanding any provision of this Agreement to the
contrary, if Employee's employment is terminated (whether by the
Company or by Employee) under circumstances that would entitle him to
receive benefits under his agreement with the Company providing
compensation and benefits for terminations following a "change in
control" of the Company (as defined in such agreement), then any such
termination shall be treated under this Agreement as a termination by
the Company without Cause and the Employee shall be entitled to the
compensation and benefits set forth above for the time periods
provided in this Paragraph 5(c). If Employee becomes entitled to
compensation and benefits under this Paragraph 5(c) and such payments
are considered to be severance payments contingent upon a change in
control under Internal Revenue Code Section 280G, Employee shall be
required to be willing to perform the duties and job he was
performing under this Agreement at the time of the change in control
and, if such offer is rejected, to mitigate damages (but only with
respect to amounts that would be treated as severance payments) by
reducing the amount of severance payments he is entitled to receive by
any compensation and benefits he earns from subsequent employment
(but shall not be
<PAGE> 2
shall not be required to seek such employment) during the 24-month
period after termination (or such lesser period as he is entitled to
compensation and benefits under this Agreement)."
2.
This Amendment No. 1 is effective as of the date first written above.
Except as hereby amended, the provisions of the Employment Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this amendment to be
executed by its duly authorized officer, and the Employee has executed this
Agreement, all as of the date first written above.
GUILFORD OF MAINE, INC.
By: /s/ Ray C. Anderson
-------------------------------
Name: RAY C. ANDERSON
Title: CHAIRMAN
EMPLOYEE
/s/ Brian L. DeMoura
-----------------------------------
Brian L. DeMoura
2
<PAGE> 1
EXHIBIT 10.3
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 25th day of July,
1995, by and between INTERFACE, INC., a Georgia corporation (the "Company") and
CHARLES R. EITEL (the "Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control of the Company, and to induce its key employees to
remain employed by the Company, and the Executive is a key employee of the
Company and an integral part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to
receive in the absence of a Change in Control of the Company, and this
Agreement accordingly will be operative only upon circumstances relating to a
Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by
the parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless, during the term of this Agreement, there has been a Change
in Control of the Company, as defined in Article III below. Immediately upon
such an occurrence, all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
<PAGE> 2
III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any
act that constitutes, on the part of the Executive, (A) fraud, dishonesty,
gross negligence, or willful misconduct and (B) that directly results in
material injury to the Company, or (ii) Executive's material breach of this
Agreement, or (iii) Executive's conviction of a felony or crime involving
moral turpitude. A termination of Executive for "Cause" based on clause (i) or
(ii) of the preceding sentence shall take effect thirty (30) days after the
Company gives written notice of such termination to Executive specifying the
conduct deemed to qualify as Cause, unless Executive shall, during such 30-day
period, remedy the events or circumstances constituting cause to the
reasonable satisfaction of the Company. A termination for Cause based on clause
(iii) above shall take effect immediately upon giving of the termination
notice.
4. Change in Control -- The term "Change in Control" as used
herein shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Ray C. Anderson; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist,
provided such conversion shall not constitute a Change in
Control so long as Ray C. Anderson remains satisfied with
the membership of a majority of the Board.
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<PAGE> 3
5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially
perform his duties for the Company on a full-time basis for a period of six (6)
months.
6. Excess Severance Payment -- The term "Excess Severance Payment"
shall have the same meaning as the term "excess parachute payment" defined in
Section 280G(b)(l) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section 280G(b)(2)
of the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term " Voting Agreement" shall mean the
agreement, dated April 13, 1993, among certain holders of the Company's Class
B Common Stock that provides that their shares will be voted as a block, as it
may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination -- If a Change in Control occurs during the term of
this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or (ii)
within six (6) months prior to the date of the Change in Control and is
related to such Change in Control, and in either case (i) or (ii) such
termination is a result of Involuntary Termination or Voluntary Termination, as
defined below, then the benefits described in Section 2 below shall be paid or
provided to the Executive:
(a) Involuntary Termination -- For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability, the voluntary election of the Executive to
retire (including early retirement) within the meaning of the
Company's Retirement Plan, or death.
(b) Voluntary Termination -- For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary
on the part of the Executive, and, in the judgment of the Executive,
is due to (i) a reduction of the Executive's responsibilities, title
or status resulting from a formal change in such title or status, or
from the assignment to the Executive of any duties inconsistent with
his title, duties or responsibilities in effect within the year prior
to the Change in Control; (ii) a
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<PAGE> 4
reduction in the Executive's compensation or benefits, or (iii) a
Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to
the extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b),
(c), (d) and (e) of this Section 2 pursuant to the terms of an employment
agreement with the Company or as a result of a breach by the Company of the
employment agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are actually
paid or provided under this Agreement, the benefits shall be provided in lump
sum payments where specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in Section 2(c) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination; provided,
however, that the salary payments provided for hereunder shall be
paid in a single lump sum payment, to be paid not later than 30 days
after his termination of employment; provided, further, that the
amount of such lump sum payment shall be determined by taking the
salary payments to be made and discounting them to their Present Value
(as defined in Section III.8) on the date Executive's employment is
terminated. For purposes hereof, the Executive's "current salary"
shall be the highest rate in effect during the six-month period prior
to the Executive's termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus multiplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein
shall be paid in a single lump sum payment, to be paid not later than
30 days after termination of employment; provided,
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<PAGE> 5
further, that the amount of such lump sum payment shall be determined
by taking the bonus payments (as of the payment date) to be made and
discounting them to their Present Value (as defined in Section III.8)
on the date Executive's employment is terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
Section shall be applied against and reduce the period for which
COBRA will be provided. If the Executive is covered by a split-dollar
or similar life insurance program at the date of termination, he
shall have the option in his sole discretion to have such policy
transferred to him upon termination, provided that the Company is paid
for its interest in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface,
Inc. (or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans.
For purposes of the Savings Plan, the Executive will be credited with
an amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully
vested under such plans. If continued participation in any plan is
not permitted or if Executive's benefits are not fully vested, the
Company shall pay to the Executive and, if applicable, his
beneficiary, a supplemental benefit equal to the present value on the
date of termination of employment (calculated as provided in the plan)
of the excess of (i) the benefit the Executive would have been paid
under such plan if he had continued to be covered for the 24-month
period (less any amounts he would have been required to contribute)
and been treated as fully vested, over (ii) the benefit actually
payable under such plan. The Company shall pay such additional
benefits (if any) in a lump sum.
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<PAGE> 6
(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Salary Continuation Agreement -- On his date of termination,
the Executive shall be entitled to a benefit equal to the greater of:
(i) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with
the terms of such agreement; or
(ii) a fully vested benefit computed in the same manner as
his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement).
The benefit under this section cannot exceed 40% of
the Executive's average compensation. The benefit
shall be payable commencing at age 65 in the same
manner and over the same period as provided in the
Salary Continuation Agreement, provided that the
Executive may elect to commence his benefit at any
time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his
benefit commences.
(g) Effect of Lump Sum Payment -- The lump sum payment under (a) or
(b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFITS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation
and benefits payable or to be provided to Executive under this Agreement that
are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount,
the parties shall take into account all provisions of Code Section 280G, and
the regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Section V.1 shall be made by the Company's
independent accountants within thirty (30) days of the Executive's termination
of
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<PAGE> 7
employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Article, the Executive shall direct which Severance Payments are to be
modified or reduced; provided, however, that no increase in the amount of any
payment shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be interpreted
so as to avoid the imposition of excise taxes on the Executive under Section
4999 of the Code or the disallowance of a deduction to the Company pursuant to
Section 280G(a) of the Code with respect to amounts payable under this
Agreement. In connection with any Internal Revenue Service examination, audit
or other inquiry, the Company and Executive agree to take action to provide,
and to cooperate in providing, evidence to the Internal Revenue Service (and,
if applicable, the state revenue department) that the compensation and
benefits provided under this Agreement do not result in the payment of Excess
Severance Payments.
4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered
and shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return
receipt requested), to such party at such party's address as specified below,
or at such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 2859 Paces Ferry Road, Suite
2000, Atlanta, Georgia 30339, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets 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
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<PAGE> 8
successor. If Executive shall die while any amount would still be payable to
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of Executive) if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to the executors, personal representatives or administrators
of Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to Executive for a review of a decision denying a claim
and shall further allow Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration award shall be
final and binding upon the parties and judgment upon the award may be entered
in any court having jurisdiction. In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay Executive's reasonable legal fees
and expenses incurred in enforcing this Agreement and the fees of the
arbitrator. Except to the extent provided in the preceding sentence, each
party shall pay its own legal fees and other expenses associated with any
dispute, provided that the fee for the arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substantially identical to the compensation
and benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to
this Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
-8-
<PAGE> 9
9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
---------------------------------
Ray C. Anderson
Title: Chairman and Chief Executive Officer
(Corporate Seal)
Attest: /s/ David W. Porter
------------------------
Secretary
EXECUTIVE
/s/ Charles R. Eitel
-------------------------------
Charles R. Eitel
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<PAGE> 1
EXHIBIT 10.4
AMENDMENT NO. 1
TO THE
EMPLOYMENT AGREEMENT
THIS AMENDMENT is made and entered into the 25th day of July, 1995, by and
between INTERFACE, INC., a corporation organized under the laws of the State
of Georgia, U.S.A. (the "Company"), and CHARLES R. EITEL (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive have previously entered into an
agreement for the employment of the Executive by the Company (the "Employment
Agreement");
WHEREAS, the Company and the Executive have agreed to amend the terms of
such Employment Agreement as provided herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
Employment Agreement is hereby amended as follows:
1.
Section 5.3 of the Employment Agreement is hereby amended by adding the
following new subsections (e) and (f) at the end of the present section:
"(e) Notwithstanding any provision of this Agreement to the contrary
(including (d) above), if Executive's employment is terminated (whether
by the Company or by Executive) under circumstances that would entitle
him to receive benefits under his agreement with the Company providing
compensation and benefits for terminations following a "change in
control" of the Company (as defined in such agreement), then any such
termination shall be treated under this Agreement as a termination by the
Company without Cause and the Executive shall be entitled to the
compensation and benefits set forth in (a) through (c) above for the
time periods provided in this Section 5.3.
(f) If Executive becomes entitled to compensation and benefits under
this Section 5.3 and such payments are considered to be severance
payments contingent upon a change in control under Internal Revenue Code
Section 280G, Executive shall be required to be willing to perform the
duties and job he was performing under this Agreement at the time of the
change in control and, if such offer is rejected, to mitigate damages (but
only with respect to amounts that would be treated as
<PAGE> 2
severance payments) by reducing the amount of severance payments he is
entitled to receive by any compensation and benefits he earns from
subsequent employment (but shall not be required to seek such employment)
during the 24-month period after termination (or such lesser period as
he is entitled to compensation and benefits under this Agreement)."
2.
This Amendment No. 1 is effective as of the date first written above.
Except as hereby amended, the provisions of the Employment Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this amendment to be executed
by its duly authorized officer, and the Executive has executed this Agreement,
all as of the date first written above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
------------------------
Name: Ray C. Anderson
Title: Chairman
EXECUTIVE
/s/ Charles R. Eitel
-----------------------------
Charles R. Eitel
2
<PAGE> 3
CHARLES R. EITEL
SUMMARY OF CHANGE IN CONTROL AGREEMENT ("AGREEMENT")
I. Purpose and Design of Agreement
A. The Agreement provides benefits in the event your employment with
Interface, Inc. (the "Company") is terminated without cause in
connection with a change in control.
B. The tax laws restrict the amount of compensation and benefits that
can be paid to you as severance payments after a change in
control. However, these limits do not apply to payments or
benefits received as damages for premature termination under an
employment agreement.
C. This Agreement is coordinated with your Employment Agreement which
is being amended to provide that payments made to you upon your
termination of employment will be treated as damages, not subject
to the tax limitation referred to in I.B. above. However, if the
Internal Revenue Service classifies any of such payments as
severance payments, rather than damages, your compensation and
benefits under this Agreement may be reduced to comply with the
tax limit.
II. Term of Agreement -- The term of the Agreement will, at all times, be
two years, unless the Company gives you notice that it ceases to
automatically extend the term of the Agreement. If the Company gives
you such notice, the term of the Agreement will be two years from the
date of such notice.
III. Operation of Agreement
A. You will be entitled to benefits under the Agreement if you are
terminated within 24 months after or 6 months prior to the date
of the Change in Control, if your termination is related to such
Change in Control, and if your termination meets the definition
of either an "Involuntary Termination" or a "Voluntary
Termination" as defined in Section IV.1 of the Agreement.
Generally, these definitions allow you to receive benefits
under the Agreement if you are involuntarily terminated or
constructively terminated without cause as a result of the
Change in Control.
B. "Change in Control" is defined in the Agreement in Section III.4
and includes certain mergers, consolidations, and business
combinations; the termination of the Voting Agreement (as
defined in Section III.ll); the death of Ray C. Anderson; and the
elimination of the Company's Class B Common Stock or the
conversion of such stock into Class A Common Stock.
IV. Benefits Provided Under the Agreement -- If you are entitled to
benefits under the Agreement, you will be entitled to the following
compensation and benefits, reduced by any compensation and benefits
actually paid to you under your Employment Agreement.
<PAGE> 4
A. Salary -- You will receive your current salary (subject to
withholding of all applicable taxes) for a period of 24
months from your date of termination. You will be paid the
present value of these salary payments in a lump sum payment
no later than 30 days after your termination of employment.
B. Bonuses and Incentives -- You will receive bonus payments for
the 24 months following the month you terminate in an amount
for each month equal to l/12th of the average of your bonuses
paid to you for the previous two calendar years. You will be
paid the present value of these bonus payments in a lump sum
payment no later than 30 days after your termination of
employment.
C. Health and Life Insurance Coverage -- You will continue to
receive any health and life insurance benefits provided to
you as of your date of termination for a period of 24 months
from such termination date. Such coverages will be continued
at the same level and in the same manner as if your
employment had not terminated (subject to the customary
changes in such coverages if you retire, reach age 65 or
similar events). If you were paying any costs for such
coverages or additional coverages, such as dependent
coverage, you must continue to pay such costs to maintain
such coverages.
D. Employee Retirement Plans -- If permitted by the applicable
retirement plans, you will be entitled to continue to
participate in the tax qualified retirement plans maintained
by the Company for a period of 24 months from the date of your
termination of employment. You will also be considered fully
vested in such plans. If continued participation or full
vesting is not permited under any such plan, you will be paid
a lump sum supplemental benefit equal to the present value of
the difference between the benefit you would have received
had you participated for the full 24 months and been fully
vested and the benefit you actually receive.
E. Stock Options -- As of your date of termination, you will be
fully vested in all outstanding stock options granted to you
under the Interface, Inc. Key Employee Stock Option Plan
(1993), the Interface, Inc. Offshore Stock Option Plan and the
Interface Flooring Systems, Inc. Key Employee Stock Option
Plan.
F. Salary Continuation Agreement -- You will be entitled to a
benefit under your Salary Continuation Agreement equal to the
greater of the benefit calculated in accordance with its
terms, or the benefit calculated under a formula provided in
the Agreement.
G. The tax laws restrict the amount of compensation and benefits
that can be paid to an you as severance payments after a
change in control. This limit is 2.99 times your "base year"
compensation, which is defined as the annual average of your
W-2 compensation for the five years preceding the year of the
change in control. If this limit is exceeded, significant
adverse tax consequences will occur. Because of these adverse
tax consequences, the Agreement limits the compensation and
benefits to which you are entitled under the Agreement so
that any payments which would cause this limit to be exceeded
will not be made under the Agreement.
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<PAGE> 1
EXHIBIT 10.5
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 9th day of August, 1995,
by and between INTERFACE, INC., a Georgia corporation (the "Company"), and F.
COLVILLE HARRELL (the "Executive").
WITNESSTH:
WHEREAS, the Company wishes to assure both itself and its key employees of
continuity of management and objective judgment in the event of any Change in
Control of the Company, and to induce its key employees to remain employed by
the Company, and the Executive is a key employee of the Company and an integral
part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to receive
in the absence of a Change in Control of the Company, and this Agreement
accordingly will be operative only upon circumstances relating to a Change in
Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by the
parties hereto, but anything in this Agreement to the contrary notwithstanding,
neither this Agreement nor any provision hereof shall be operative unless,
during the term of this Agreement, there has been a Change in Control of the
Company, as defined in Article III below. Immediately upon such an occurrence,
all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
<PAGE> 2
III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same meaning
as ascribed to it under Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any act
that constitutes, on the part of the Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's material breach of this Agreement,
or (iii) Executive's conviction of a felony or crime involving moral turpitude.
A termination of Executive for "Cause" based on clause (i) or (ii) of the
preceding sentence shall take effect thirty (30) days after the Company gives
written notice of such termination to Executive specifying the conduct deemed
to qualify as Cause, unless Executive shall, during such 30-day period, remedy
the events or circumstances constituting cause to the reasonable satisfaction
of the Company. A termination for Cause based on clause (iii) above shall take
effect immediately upon giving of the termination notice.
4. Change in Control -- The term "Change in Control" as used herein
shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Ray C. Anderson; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist,
provided such conversion shall not constitute a Change in
Control so long as Ray C. Anderson remains satisfied with
the membership of a majority of the Board.
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<PAGE> 3
5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially
perform his duties for the Company on a full-time basis for a period of six
(6) months.
6. Excess Severance Payment -- The term "Excess Severance Payment"
shall have the same meaning as the term "excess parachute payment" defined in
Section 280G(b)(l) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have the
same meaning as the term "parachute payment" defined in Section 280G(b)(2) of
the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term "Voting Agreement" shall mean the
agreement, dated April 13, 1993, among certain holders of the Company's Class
B Common Stock that provides that their shares will be voted as a block, as it
may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination - If a Change in Control occurs during the term of
this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or (ii)
within six (6) months prior to the date of the Change in Control and is
related to such Change in Control, and in either case (i) or (ii) such
terrnination is a result of Involuntary Termination or Voluntary Termination,
as defined below, then the benefits described in Section 2 below shall be paid
or provided to the Executive:
(a) Involuntary Termination - For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is
involuntary on the part of the Executive and that occurs for reasons
other than for Cause, Disability, the voluntary election of the
Executive to retire (including early retirement) within the meaning of
the Company's Retirement Plan, or death.
(b) Voluntary Termination - For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary
on the part of the Executive, and, in the judgment of the Executive,
is due to (i) a reduction of the Executive's responsibilities, title
or status resulting from a formal change in such title or status, or
from the assignment to the Executive of any duties inconsistent with
his title, duties or responsibilities in effect within the year prior
to the Change in Control; (ii) a
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<PAGE> 4
reduction in the Executive's compensation or benefits, or (iii) a
Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to the
extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b), (c),
(d) and (e) of this Section 2 pursuant to the terms of an employment agreement
with the Company or as a result of a breach by the Company of the employment
agreement; and provided, however, that notwithstanding contrary provisions in
the employment agreement, to the extent benefits are actually paid or provided
under this Agreement, the benefits shall be provided in lump sum payments where
specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in Section 2(c) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination; provided,
however, that the salary payments provided for hereunder shall be paid
in a single lump sum payment, to be paid not later than 30 days after
his termination of employment; provided, further, that the amount of
such lump sum payment shall be determined by taking the salary
payments to be made and discounting them to their Present Value (as
defined in Section III.8) on the date Executive's employment is
terminated. For purposes hereof, the Executive's "current salary" shall
be the highest rate in effect during the six-month period prior to
the Executive's termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus muldplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein
shall be paid in a single lump sum payment, to be paid not later than
30 days after termination of employment; provided,
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further, that the amount of such lump sum payment shall be determined
by taking the bonus payments (as of the payment date) to be made and
discounting them to their Present Value (as defined in Section III.8)
on the date Executive's employment is terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
Secdon shall be applied against and reduce the period for which COBRA
will be provided. If the Executive is covered by a split-dollar or
similar life insurance program at the date of termination, he shall
have the option in his sole discretion to have such policy transferred
to him upon termination, provided that the Company is paid for its
interest in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax-qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface, Inc.
(or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans.
For purposes of the Savings Plan, the Executive will be credited with
an amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully vested
under such plans. If continued participation in any plan is not
permitted or if Executive's benefits are not fully vested, the
Company shall pay to the Executive and, if applicable, his
beneficiary, a supplemental benefit equal to the present value on the
date of termination of employment (calculated as provided in the
plan) of the excess of (i) the benefit the Executive would have been
paid under such plan if he had continued to be covered for the
24-month period (less any amounts he would have been required to
contribute) and been treated as fully vested, over (ii) the benefit
actually payable under such plan. The Company shall pay such
additional benefits (if any) in a lump sum.
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(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Effect of Lump Sum Payment -- The lump sum payment under (a) or
(b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFITS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation and
benefits payable or to be provided to Executive under this Agreement that are
treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount, the
parties shall take into account all provisions of Code Section 280G, and the
regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Secdon V.1 shall be made by the Company's independent
accountants within thirty (30) days of the Executive's termination of
employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Ardcle, the Executive shall direct which Severance Payments are to be modified
or reduced; provided, however, that no increase in the amount of any payment
shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be interpreted
so as to avoid the imposition of excise taxes on the Executive under Section
4999 of the Code or the disallowance of a deduction to the Company pursuant to
Section 280G(a) of the Code with respect to amounts payable under this
Agreement. In connecdon with any Internal Revenue Service examination, audit or
other inquiry, the Company and Executive agree to take action to provide, and
to cooperate in providing, evidence to the Internal Revenue Service (and, if
applicable, the state revenue department) that the compensadon and benefits
provided under this Agreement do not result in the payment of Excess Severance
Payments.
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4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered and
shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return
receipt requested), to such party at such party's address as specified below,
or at such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 2859 Paces Ferry Road, Suite
2000, Atlanta, Georgia 30339, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets 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. If Executive
shall die while any amount would still be payable to Executive hereunder (other
than amounts which, by their terms, terminate upon the death of Executive) if
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be
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<PAGE> 8
delivered to Executive in writing and shall set forth the specific reasons for
the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to Executive for a review of a
decision denying a claim and shall further allow Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that Executive's claim has been denied. Any further dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Atlanta, Georgia, in accordance with the
commercial arbitration rules of the American Arbitration Association then in
effect. The arbitration award shall be final and binding upon the parties and
judgment upon the award may be entered in any court having jurisdiction. In
the event the Executive incurs legal fees and other expenses in seeking to
obtain or to enforce any rights or benefits provided by this Agreement and is
successful, in whole or in part, in obtaining or enforcing any such rights or
benefits through settlement, arbitration or otherwise, the Company shall
promptly pay Executive's reasonable legal fees and expenses incurred in
enforcing this Agreement and the fees of the arbitrator. Except to the extent
provided in the preceding sentence, each party shall pay its own legal fees and
other expenses associated with any dispute, provided that the fee for the
arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substandally identical to the compensation and
benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
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<PAGE> 9
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
--------------------------------------
Ray C. Anderson
Title: Chairman and Chief Executive
Officer
(Corporate Seal)
Attest: /s/ David W. Porter
----------------------
Secretary
EXECUTIVE
/s/ F. Colville Harrell
------------------------
F. Colville Harrell
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<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 9th day of
August, 1995, by and between INTERFACE, INC., a corporation organized under
the laws of the State of Georgia, U.S.A. (the "Company"), and F. COLVILLE
HARRELL (the "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 Vice President of
Planning and Analysis, 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 may be relocated, his titles and
duties may be changed, and he may be promoted to a higher position within the
Company, but he will not be demoted or given lesser titles.
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 this Agreement shall be for a rolling, two
(2) year term commencing on the date hereof, and shall be deemed automatically
(without further action by either the Company or the Executive) to extend each
day for an additional day such that the remaining term of the Agreement shall
continue to be two (2) years; provided, however, that on Executive's 63rd
birthday this Agreement shall cease to extend automatically and, on such date,
the remaining "term" of this Agreement shall be two (2) years; provided
further, that the Company may, by notice to the Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the "Term"
of this Agreement shall be two (2) years following such notice.
<PAGE> 2
5. Termination. Executive's employment with the Company may be
termination follows:
(a) Executive may voluntarily terminate his employment hereunder at
any time, effective 90 days after delivery to the Company of his signed,
written resignation; Company may accept said resignation and pay Executive in
lieu of waiting for passage of the notice period.
(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 (as defined in Paragraph 5(d)
below), at any time upon written notice to Executive.
(c) If, prior to the end of the Term of this Agreement, the Company
terminates Executive's employment without just cause (as defined in Paragraph
5(d) below), the Executive shall be entitled to receive the compensation and
benefits set forth in (i) through (v) below. The time periods in (i) through
(iv) below shall be the lesser of the 24-month period stated therein or the
time period remaining from the date of Executive's termination to the end of
the Term of this Agreement.
(i) The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in paragraph (iii) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination. For
purposes hereof, the Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to the
Executive's termination.
(ii) The Executive shall receive bonus payments from the
Company for the twenty-four (24) months following the month in which
his employment is terminated in an amount for each such month equal
to one-twelfth of the average ("Average Bonus") of the bonuses paid
to him for the two calendar years immediately preceding the year in
which such termination occurs. Executive shall also receive a
prorated bonus for the year in which he terminates equal to the
Average Bonus multiplied by the number of days he worked in such year
divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus.
(iii) The health and life insurance benefits coverage
(including any executive medical plan) provided to the Executive at
his date of termination shall be continued by the Company at its
expense at the same level and in the same manner as if his employment
had not terminated (subject to the customary changes in such
coverages if the Executive retires, reaches age 65 or similar
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events), beginning on the date of such termination and ending on the
date twenty-four (24) months from the date of such termination. Any
additional coverages the Executive had at termination, including
dependent coverage, will also be continued for such period on the
same terms, to the extent permitted by the applicable policies or
contracts. Any costs the Executive was paying for such coverages at
the time of termination shall be paid by the Executive by separate
check payable to the Company each month in advance. If the terms of
any benefit plan referred to in this paragraph do not permit continued
participation by the Executive, then the Company will arrange for
other coverage at its expense providing substantially similar
benefits. The coverages provided for in this paragraph shall be
applied against and reduce the period for which COBRA will be
provided.
(iv) To the extent permitted by the applicable plan, the
Executive will be entitled to continue to participate, consistent
with past practices, in the taxqualified employee retirement plans
maintained by the Company in effect as of his date of termination,
including, to the extent such plans are still maintained by the
Company, the Interface Flooring Systems, Inc. Retirement Plan and
Trust ("Retirement Plan") and the Interface, Inc. Savings Investment
Plan and Trust ("Savings Plan"). The Executive's participation in
such retirement plans shall continue for a period of twenty-four (24)
months from the date of termination of his employment (at which point
he will be considered to have terminated employment within the
meaning of the plans) and the compensation payable to the Executive
under (a) and (b) above shall be treated (unless otherwise excluded)
as compensation under the plan. For purposes of the Savings Plan, the
Executive will be credited with an amount equal to the Company's
contribution to the Plan, assuming Executive had participated in such
Plan at the maximum permissible contribution level. The Executive
shall also be considered fully vested under such plans. If continued
participation in any plan is not permitted or if Executive's benefits
are not fully vested, the Company shall pay to the Executive and, if
applicable, his beneficiary, a supplemental benefit equal to the
present value on the date of termination of employment (calculated as
provided in the plan) of the excess of (A) the benefit the Executive
would have been paid under such plan if he had continued to be
covered for the 24-month period (less any amounts he would have been
required to contribute) and been treated as fully vested, over (B) the
benefit actually payable under such plan. The Company shall pay such
additional benefits (if any) in a lump sum.
(v) As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this paragraph (v) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
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<PAGE> 4
(vi) The benefits payable or to be provided under (i),
(ii), (iii) or (iv) of this Paragraph 5(c) of this Agreement shall
cease in the event of the Executive's death or election to commence
retirement benefits under the Company's Retirement Plan.
(vii) 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.
(viii) Executive hereby agrees and acknowledges that if he
voluntarily resigns from his employment, or is terminated for just
cause, prior to the end of the Term of this Agreement, then he shall
be entitled to no payment or compensation whatsoever from the Company
under this Agreement, other than as may be due him through his last
day of employment. 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.
(ix) Notwithstanding any provision of this Agreement to
the contrary, if Executive's employment is terminated (whether by the
Company or by Executive) under circumstances that would entitle him
to receive benefits under his agreement with the Company providing
compensation and benefits for terminations following a "change in
control" of the Company (as defined in such agreement), then any such
termination shall be treated under this Agreement as a termination by
the Company without just cause and the Executive shall be entitled to
the compensation and benefits set forth in (i) through (v) above for
the time periods provided in this subsection (c).
(x) If Executive becomes entitled to compensation and
benefits under this Paragraph 5(c) and such payments are considered
to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to be
willing to perform the duties and job he was performing under this
Agreement at the time of the change in control and, if such offer is
rejected, to mitigate damages (but only with respect to amounts that
would be treated as severance payments) by reducing the amount of
severance payments he is entitled to receive by any compensation and
benefits he earns from subsequent employment (but shall not be
required to seek such employment) during the 24-month period after
termination (or such lesser period as he is entitled to compensation
and benefits under this Agreement).
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<PAGE> 5
(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 material fraud, malfeasance, gross negligence, or willful
misconduct with respect to business affairs of the Company, (ii) Executive's
refusal or repeated failure to follow the established reasonable and lawful
policies of the Company applicable to persons occupying the same or similar
position, (iii) Executive's material breach of this Agreement, (iv)
Executive's conviction of a felony or crime involving moral turpitude, or (v)
Executive's refusal or repeated failure to follow the reasonable lawful
directions of the Company. A termination of Executive for just cause based on
clause (ii), (iii) or (v) 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 for just 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). Notwithstanding any other provision in this
Agreement, subparagraph (d)(v) of this Paragraph 5 shall be void and of no
effect in the event that a "change in control" of the Company occurs, as that
term is defined in Executive's change in control agreement dated of even date
herewith.
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 salary and shall
continue to receive his current benefits and such bonus as the Chief Executive
Officer or Board of Directors (or Committee of the Board) shall deem
appropriate, subject to such increases as are determined from time to time;
(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.
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
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<PAGE> 6
Product attached hereto as Exhibit "A", which is acknowledged to have been
effective since 28 August, 1986 and is hereby made a part of this Agreement.
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 further acknowledges and agrees
that the covenants contained herein are reasonable and necessary to protect
the legitimate business interests of the Company.
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 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.
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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 Fulton 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:
To The Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/437-6822
Attn: President and CEO
With A Copy To: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/319-6270
Attn. General Counsel
To Executive: F. Colville Harrell
at the last address shown
on the records of the Company
The Executive shall be responsible for providing the Company with a current
address. 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.
14. Entire Agreement. This Agreement (together with the Exhibits
hereto)
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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.
INTERFACE, INC.
By: /s/ Ray C. Anderson [SEAL]
--------------------------
Ray C. Anderson, President
Attest: /s/ David W. Porter [SEAL]
-----------------------
Secretary
EXECUTIVE
/s/ F. Colville Harrell [SEAL]
-------------------------------
F. Colville Harrell
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<PAGE> 9
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
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<PAGE> 10
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.
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 28th day of August,
1986.
READ, UNDERSTOOD AND AGREED:
/s/ F. Colville Harrell
----------------------------
F. Colville Harrell
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<PAGE> 1
EXHIBIT 1O.7
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 30th day of
August, l995, by and between INTERFACE, INC., a Georgia corporation (the
"Company"), and DANIEL T. HENDRIX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control of the Company, and to induce its key employees to remain
employed by the Company, and the Executive is a key employee of the Company and
an integral part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to
receive in the absence of a Change in Control of the Company, and this
Agreement accordingly will be operative only upon circumstances relating to a
Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by the
parties hereto, but anything in this Agreement to the contrary notwithstanding,
neither this Agreement nor any provision hereof shall be operative unless,
during the term of this Agreement, there has been a Change in Control of the
Company, as defined in Article III below. Immediately upon such an occurrence,
all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
<PAGE> 2
III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any
act that constitutes, on the part of the Executive, (A) fraud, dishonesty,
gross negligence, or willful misconduct and (B) that directly results in
material injury to the Company, or (ii) Executive's material breach of this
Agreement, or (iii) Executive's conviction of a felony or crime involving moral
turpitude. A termination of Executive for "Cause" based on clause (i) or (ii)
of the preceding sentence shall take effect thirty (30) days after the Company
gives written notice of such termination to Executive specifying the conduct
deemed to qualify as Cause, unless Executive shall, during such 30-day period,
remedy the events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause (iii)
above shall take effect immediately upon giving of the termination notice.
4. Change in Control -- The term "Change in Control" as used
herein shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Ray C. Anderson; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist,
provided such conversion shall not constitute a Change in
Control so long as Ray C. Anderson remains satisfied with the
membership of a majority of the Board.
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<PAGE> 3
5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially
perform his duties for the Company on a full-time basis for a period of six
(6) months.
6. Excess Severance Payment -- The term "Excess Severance
Payment" shall have the same meaning as the term "excess parachute payment"
defined in Section 280G(b)(l) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section 280G(b)(2)
of the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term "Voting Agreement" shall mean
the agreement, dated April 13, 1993, among certain holders of the Company's
Class B Common Stock that provides that their shares will be voted as a block,
as it may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination -- If a Change in Control occurs during the term
of this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or (ii)
within six (6) months prior to the date of the Change in Control and is related
to such Change in Control, and in either case (i) or (ii) such termination is
a result of Involuntary Termination or Voluntary Termination, as defined
below, then the benefits described in Section 2 below shall be paid or provided
to the Executive:
(a) Involuntary Termination -- For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability, the voluntary election of the Executive to
retire (including early retirement) within the meaning of the Company's
Retirement Plan, or death.
(b) Voluntary Termination -- For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary on
the part of the Executive, and, in the judgment of the Executive, is
due to (i) a reduction of the Executive's responsibilities, title or
status resulting from a formal change in such title or status, or from
the assignment to the Executive of any duties inconsistent with his
title, duties or responsibilities in effect within the year prior to
the Change in Control; (ii) a
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reduction in the Executive's compensation or benefits, or (iii)
a Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to the
extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b),
(c), (d) and (e) of this Section 2 pursuant to the terms of an employment
agreement with the Company or as a result of a breach by the Company of the
employment agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are actually
paid or provided under this Agreement, the benefits shall be provided in lump
sum payments where specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive
his current salary (subject to withholding of all applicable taxes
and any amounts referred to in Section 2(c) below) for a period of
twenty-four (24) months from his date of termination in the same manner
as it was being paid as of the date of termination; provided, however,
that the salary payments provided for hereunder shall be paid in a
single lump sum payment, to be paid not later than 30 days after his
termination of employment; provided, further, that the amount of such
lump sum payment shall be determined by taking the salary payments to
be made and discounting them to their Present Value (as defined in
Section III.8) on the date Executive's employment is terminated. For
purposes hereof, the Executive's "current salary" shall be the highest
rate in effect during the six-month period prior to the Executive's
termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus multiplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein
shall be paid in a single lump sum payment, to be paid not later than
30 days after termination of employment; provided,
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further, that the amount of such lump sum payment shall be
determined by taking the bonus payments (as of the payment date) to be
made and discounting them to their Present Value (as defined in Section
III.8) on the date Executive's employment is terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
Section shall be applied against and reduce the period for which
COBRA will be provided. If the Executive is covered by a split-dollar
or similar life insurance program at the date of termination, he shall
have the option in his sole discretion to have such policy transferred
to him upon termination, provided that the Company is paid for its
interest in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax-qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface,
Inc. (or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans.
For purposes of the Savings Plan, the Executive will be credited with
an amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully
vested under such plans. If continued participation in any plan is
not permitted or if Executive's benefits are not fully vested, the
Company shall pay to the Executive and, if applicable, his
beneficiary, a supplemental benefit equal to the present value on the
date of termination of employment (calculated as provided in the plan)
of the excess of (i) the benefit the Executive would have been paid
under such plan if he had continued to be covered for the 24-month
period (less any amounts he would have been required to contribute)
and been treated as fully vested, over (ii) the benefit actually
payable under such plan. The Company shall pay such additional
benefits (if any) in a lump sum.
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(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Salary Continuation Agreement -- On his date of termination,
the Executive shall be entitled to a benefit equal to the greater of:
(i) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with
the terms of such agreement; or
(ii) a fully vested benefit computed in the same manner as
his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment
(as determined under the Salary Continuation
Agreement). The benefit under this section cannot
exceed 40% of the Executive's average compensation.
The benefit shall be payable commencing at age 65 in
the same manner and over the same period as provided
in the Salary Continuation Agreement, provided that
the Executive may elect to commence his benefit at
any time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his
benefit commences.
(g) Effect of Lump Sum Payment -- The lump sum payment under (a)
or (b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFITS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation
and benefits payable or to be provided to Executive under this Agreement that
are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount, the
parties shall take into account all provisions of Code Section 280G, and the
regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Section V.1 shall be made by the Company's independent
accountants within thirty (30) days of the Executive's termination of
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employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Article, the Executive shall direct which Severance Payments are to be modified
or reduced; provided, however, that no increase in the amount of any payment
shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be
interpreted so as to avoid the imposition of excise taxes on the Executive
under Section 4999 of the Code or the disallowance of a deduction to the
Company pursuant to Section 280G(a) of the Code with respect to amounts
payable under this Agreement. In connection with any Internal Revenue Service
examination, audit or other inquiry, the Company and Executive agree to take
action to provide, and to cooperate in providing, evidence to the Internal
Revenue Service (and, if applicable, the state revenue department) that the
compensation and benefits provided under this Agreement do not result in the
payment of Excess Severance Payments.
4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered
and shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return receipt
requested), to such party at such party's address as specified below, or at
such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 2859 Paces Ferry Road, Suite
2000, Atlanta, Georgia 30339, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets 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
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successor. If Executive shall die while any amount would still be payable to
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of Executive) if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to Executive for a review of a decision denying a claim
and shall further allow Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration award shall be
final and binding upon the parties and judgment upon the award may be entered
in any court having jurisdiction. In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay Executive's reasonable legal fees and
expenses incurred in enforcing this Agreement and the fees of the arbitrator.
Except to the extent provided in the preceding sentence, each party shall pay
its own legal fees and other expenses associated with any dispute, provided
that the fee for the arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substantially identical to the compensation
and benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to
this Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
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9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
----------------------------------
Ray C. Anderson
Title: Chairman and Chief Executive
(Corporate Seal)
Attest: /s/ David W. Porter
----------------------------
Secretary
EXECUTIVE
/s/ Daniel T. Hendrix
------------------------------------
Daniel T. Hendrix
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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 30th day of
August, 1995, by and between INTERFACE, INC., a corporation organized
under the laws of the State of Georgia, U.S.A. (the "Company"), and DANIEL T.
HENDRIX, a U.S. citizen currently residing in Atlanta, Georgia (the
"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 Vice President,
Treasurer and Chief Financial Officer of the Company, 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 may be
relocated, his titles and duties may be changed, and he may be promoted to a
higher position within the Company, but he will not be demoted or given lesser
titles.
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 this Agreement shall be for a rolling,
two (2) year term commencing on the date hereof, and shall be deemed
automatically (without further action by either the Company or the Executive)
to extend each day for an additional day such that the remaining term of the
Agreement shall continue to be two (2) years; provided, however, that on
Executive's 63rd birthday this Agreement shall cease to extend automatically
and, on such date, the remaining "term" of this Agreement shall be two (2)
years; provided further, that the Company may, by notice to the Executive,
cause this Agreement to cease to extend automatically and, upon such notice,
the "Term" of this Agreement shall be two (2) years following such notice.
<PAGE> 2
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 90 days after delivery to the Company of his signed,
written resignation; Company may accept said resignation and pay Executive in
lieu of waiting for passage of the notice period.
(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 (as defined in Paragraph 5(d)
below), at any time upon written notice to Executive.
(c) If, prior to the end of the Term of this Agreement, the
Company terminates Executive's employment without just cause (as defined in
Paragraph 5(d) below), the Executive shall be entitled to receive the
compensation and benefits set forth in (i) through (vi) below. The time periods
in (i) through (iv) below shall be the lesser of the 24-month period stated
therein or the time period remaining from the date of Executive's termination
to the end of the Term of this Agreement.
(i) The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in paragraph (iii) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination. For
purposes hereof, the Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to the
Executive's termination.
(ii) The Executive shall receive bonus payments from the
Company for the twenty-four (24) months following the month in which
his employment is terminated in an amount for each such month equal to
one-twelfth of the average ("Average Bonus") of the bonuses paid to
him for the two calendar years immediately preceding the year in
which such termination occurs. Executive shall also receive a prorated
bonus for the year in which he terminates equal to the Average Bonus
multiplied by the number of days he worked in such year divided by
365 days. Any bonus amounts that the Executive had previously earned
from the Company but which may not yet have been paid as of the date
of termination shall not be affected by this provision; provided,
that if the amount of the bonus for such prior year has not yet been
determined, the bonus shall be an amount not less than the Average
Bonus.
(iii) The health and life insurance benefits coverage
(including any executive medical plan) provided to the Executive at
his date of termination shall be continued by the Company at its
expense at the same level and in the same manner as if his employment
had not terminated (subject to the customary changes in such coverages
if the Executive retires, reaches age 65 or similar events), beginning
on the date of such termination and ending on the date twenty-four
(24) months from the date of such termination. Any additional
coverages the Executive
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<PAGE> 3
had at termination, including dependent coverage, will also be
continued for such period on the same terms, to the extent permitted
by the applicable policies or contracts. Any costs the Executive was
paying for such coverages at the time of termination shall be paid by
the Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this
paragraph do not permit continued participation by the Executive, then
the Company will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
paragraph shall be applied against and reduce the period for which
COBRA will be provided.
(iv) To the extent permitted by the applicable plan, the
Executive will be entitled to continue to participate, consistent
with past practices, in the tax-qualified employee retirement plans
maintained by the Company in effect as of his date of termination,
including, to the extent such plans are still maintained by the
Company, the Interface Flooring Systems, Inc. Retirement Plan and
Trust ("Retirement Plan") and the Interface, Inc. Savings Investment
Plan and Trust ("Savings Plan"). The Executive's participation in such
retirement plans shall continue for a period of twenty-four (24)
months from the date of termination of his employment (at which point
he will be considered to have terminated employment within the meaning
of the plans) and the compensation payable to the Executive under (a)
and (b) above shall be treated (unless otherwise excluded) as
compensation under the plan. For purposes of the Savings Plan, the
Executive will be credited with an amount equal to the Company's
contribution to the Plan, assuming Executive had participated in such
Plan at the maximum permissible contribution level. The Executive
shall also be considered fully vested under such plans. If continued
participation in any plan is not permitted or if Executive's benefits
are not fully vested, the Company shall pay to the Executive and, if
applicable, his beneficiary, a supplemental benefit equal to the
present value on the date of termination of employment (calculated as
provided in the plan) of the excess of (A) the benefit the Executive
would have been paid under such plan if he had continued to be covered
for the 24-month period (less any amounts he would have been required
to contribute) and been treated as fully vested, over (B) the benefit
actually payable under such plan. The Company shall pay such
additional benefits (if any) in a lump sum.
(v) As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this paragraph (v) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(vi) On his date of termination, the Executive shall be
entitled to a benefit equal to the greater of:
(A) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with the terms
of such agreement; or
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<PAGE> 4
(B) a fully vested benefit computed in the same
manner as his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement). The
benefit under this section cannot exceed 40% of the
Executive's average compensation. The benefit shall be
payable commencing at age 65 in the same manner and over the
same period as provided in the Salary Continuation Agreement,
provided that the Executive may elect to commence his benefit
at any time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his benefit
commences.
(vii) The benefits payable or to be provided under (i),
(ii), (iii) or (iv) of this Paragraph 5(c) of this Agreement shall
cease in the event of the Executive's death or election to commence
retirement benefits under the Company's Retirement Plan.
(viii) 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.
(ix) Executive hereby agrees and acknowledges that if he
voluntarily resigns from his employment, or is terminated for just
cause, prior to the end of the Term of this Agreement, then he shall
be entitled to no payment or compensation whatsoever from the Company
under this Agreement, other than as may be due him through his last
day of employment. 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.
(x) Notwithstanding any provision of this Agreement to
the contrary, if Executive's employment is terminated (whether by the
Company or by Executive) under circumstances that would entitle him to
receive benefits under his agreement with the Company providing
compensation and benefits for terminations following a "change in
control" of the Company (as defined in such agreement), then any such
termination shall be treated under this Agreement as a termination by
the Company without just cause and the Executive shall be entitled to
the compensation and benefits set forth in (i) through (vi) above for
the time periods provided in this subsection (c).
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<PAGE> 5
(xi) If Executive becomes entitled to compensation and
benefits under this Paragraph 5(c) and such payments are considered
to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to be
willing to perform the duties and job he was performing under this
Agreement at the time of the change in control and, if such offer is
rejected, to mitigate damages (but only with respect to amounts that
would be treated as severance payments) by reducing the amount of
severance payments he is entitled to receive by any compensation and
benefits he earns from subsequent employment (but shall not be
required to seek such employment) during the 24-month period after
termination (or such lesser period as he is entitled to compensation
and benefits under this Agreement).
(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 material fraud, malfeasance, gross negligence, or
willful misconduct with respect to business affairs of the Company, (ii)
Executive's refusal or repeated failure to follow the established reasonable
and lawful policies of the Company applicable to persons occupying the same or
similar position, (iii) Executive's material breach of this Agreement, (iv)
Executive's conviction of a felony or crime involving moral turpitude, or (v)
Executive's refusal or repeated failure to follow the reasonable lawful
directions of the Company. A termination of Executive for just cause based on
clause (ii), (iii) or (v) 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 for just 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). Notwithstanding any other provision in this Agreement, subparagraph
(d)(v) of this Paragraph 5 shall be void and of no effect in the event that a
"change in control" of the Company occurs, as that term is defined in
Executive's change in control agreement dated of even date herewith.
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 salary and shall
continue to receive his current benefits and such bonus as the Chief Executive
Officer or Board of Directors (or Committee of the Board) shall deem
appropriate, subject to such increases as are determined from time to time;
(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
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<PAGE> 6
(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.
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 _______________________, 19_, and is
hereby made a part of this Agreement.
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 further acknowledges and agrees
that the covenants contained herein are reasonable and necessary to protect
the legitimate business interests of the Company.
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
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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 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 Fulton 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:
To The Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/437-6822
Attn: President and CEO
With A Copy To: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/319-6270
Attn: General Counsel
To Executive: Daniel T. Hendrix
at the last address shown
on the records of the Company
The Executive shall be responsible for providing the Company with a current
address. 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
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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.
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.
INTERFACE, INC.
By: /s/ Ray C. Anderson [SEAL]
--------------------------
Ray C. Anderson, President
Attest: /s/ David W. Porter [SEAL]
----------------------
Secretary
EXECUTIVE
/s/ Daniel T. Hendrix [SEAL]
-----------------------------
Daniel T. Hendrix
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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
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<PAGE> 10
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.
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 3rd day of April, 1983.
READ, UNDERSTOOD AND AGREED:
/s/ Daniel T. Hendrix
-----------------------------------
Daniel T. Hendrix
A-2
<PAGE> 1
EXHIBIT 10.9
AGREEMENT
THIS, AGREEMENT (the "Agreement"), effective this, 30th day of July,
1995, by and between INTERFACE, INC., a Georgia corporation (the "Company"),
and DAVID W. PORTER (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control of the Company, and to induce its key employees to
remain employed by the Company, and the Executive is a key employee of the
Company and an integral part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to
receive in the absence of a Change in Control of the Company, and this
Agreement accordingly will be operative only upon circumstances relating to a
Change in Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by
the parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless, during the term of this Agreement, there has been a Change
in Control of the Company, as defined in Article III below. Immediately upon
such an occurrence, all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
<PAGE> 2
III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any
act that constitutes, on the part of the Executive, (A) fraud, dishonesty, gross
negligence, or willful misconduct and (B) that directly results in material
injury to the Company, or (ii) Executive's material breach of this Agreement,
or (iii) Executive's conviction of a felony or crime involving moral
turpitude. A termination of Executive for "Cause" based on clause (i) or (ii)
of the preceding sentence shall take effect thirty (30) days after the Company
gives written notice of such termination to Executive specifying the conduct
deemed to qualify as Cause, unless Executive shall, during such 30-day period,
remedy the events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause (iii)
above shall take effect immediately upon giving of the termination notice.
4. Change in Control -- The term "Change in Control" as used
herein shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Ray C. Anderson; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist,
provided such conversion shall not constitute a Change in
Control so long as Ray C. Anderson remains satisfied with
the membership of a majority of the Board.
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<PAGE> 3
5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially
perform his duties for the Company on a full-time basis for a period of six
(6) months.
6. Excess Severance Payment -- The term "Excess Severance Payment"
shall have the same meaning as the term "excess parachute payment" defined in
Section 280G(b)(1) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section 280G(b)(2)
of the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term n Voting Agreement" shall mean the
agreement, dated April 13, 1993, among certain holders of the Company's Class
B Common Stock that provides that their shares will be voted as a block, as it
may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination -- If a Change in Control occurs during the term of
this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or (ii)
within six (6) months prior to the date of the Change in Control and is
related to such Change in Control, and in either case (i) or (ii) such
termination is a result of Involuntary Termination or Voluntary Termination, as
defined below, then the benefits described in Section 2 below shall be paid or
provided to the Executive:
(a) Involuntary Termination -- For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability, the voluntary election of the Executive to
retire (including early retirement) within the meaning of the
Company's Retirement Plan, or death.
(b) Voluntary Termination -- For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary
on the part of the Executive, and, in the judgment of the Executive,
is due to (i) a reduction of the Executive's responsibilities, title
or status resulting from a formal change in such title or status, or
from the assignment to the Executive of any duties inconsistent with
his title, duties or responsibilities in effect within the year prior
to the Change in Control; (ii) a
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<PAGE> 4
reduction in the Executive's compensation or benefits, or (iii) a
Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to
the extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b),
(c), (d) and (e) of this Section 2 pursuant to the terms of an employment
agreement with the Company or as a result of a breach by the Company of the
employment agreement; and provided, however, that notwithstanding contrary
provisions in the employment agreement, to the extent benefits are actually
paid or provided under this Agreement, the benefits shall be provided in lump
sum payments where specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in Section 2(c) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination; provided,
however, that the salary payments provided for hereunder shall be
paid in a single lump sum payment, to be paid not later than 30 days
after his termination of employment; provided, further, that the
amount of such lump sum payment shall be determined by taking the
salary payments to be made and discounting them to their Present Value
(as defined in Section III.8) on the date Executive's employment is
terminated. For purposes hereof, the Executive's "current salary"
shall be the highest rate in effect during the six-month period prior
to the Executive's termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus multiplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein
shall be paid in a single lump sum payment, to be paid not later than
30 days after termination of employment; provided,
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<PAGE> 5
further, that the amount of such lump sum payment shall be determined
by taking the bonus payments (as of the payment date) to be made and
discounting them to their Present Value (as defined in Section III.8)
on the date Executive's employment is terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
Section shall be applied against and reduce the period for which
COBRA will be provided. If the Executive is covered by a split-dollar
or similar life insurance program at the date of termination, he
shall have the option in his sole discretion to have such policy
transferred to him upon termination, provided that the Company is paid
for its interest in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax-qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface,
Inc. (or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans.
For purposes of the Savings Plan, the Executive will be credited with
an amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully
vested under such plans. If continued participation in any plan is
not permitted or if Executive's benefits are not fully vested, the
Company shall pay to the Executive and, if applicable, his
beneficiary, a supplemental benefit equal to the present value on the
date of termination of employment (calculated as provided in the plan)
of the excess of (i) the benefit the Executive would have been paid
under such plan if he had continued to be covered for the 24-month
period (less any amounts he would have been required to contribute)
and been treated as fully vested, over (ii) the benefit actually
payable under such plan. The Company shall pay such additional
benefits (if any) in a lump sum.
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<PAGE> 6
(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Salary Continuation Agreement -- On his date of termination,
the Executive shall be entitled to a benefit equal to the greater of:
(i) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with
the terms of such agreement; or
(ii) a fully vested benefit computed in the same manner as
his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement).
The benefit under this section cannot exceed 40% of
the Executive's average compensation. The benefit
shall be payable commencing at age 65 in the same
manner and over the same period as provided in the
Salary Continuation Agreement, provided that the
Executive may elect to commence his benefit at any
time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his
benefit commences.
(g) Effect of Lump Sum Payment -- The lump sum payment under (a) or
(b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFITS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation
and benefits payable or to be provided to Executive under this Agreement that
are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount,
the parties shall take into account all provisions of Code Section 280G, and
the regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Section V.1 shall be made by the Company's
independent accountants within thirty (30) days of the Executive's termination
of
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employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Article, the Executive shall direct which Severance Payments are to be
modified or reduced; provided, however, that no increase in the amount of any
payment shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be interpreted
so as to avoid the imposition of excise taxes on the Executive under Section
4999 of the Code or the disallowance of a deduction to the Company pursuant to
Section 280G(a) of the Code with respect to amounts payable under this
Agreement. In connection with any Internal Revenue Service examination, audit
or other inquiry, the Company and Executive agree to take action to provide,
and to cooperate in providing, evidence to the Internal Revenue Service (and,
if applicable, the state revenue department) that the compensation and
benefits provided under this Agreement do not result in the payment of Excess
Severance Payments.
4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered
and shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return
receipt requested), to such party at such party's address as specified below,
or at such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 2859 Paces Ferry Road, Suite
2000, Atlanta, Georgia 30339, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets 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
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<PAGE> 8
successor. If Executive shall die while any amount would still be payable to
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of Executive) if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to the executors, personal representatives or administrators
of Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to Executive for a review of a decision denying a claim
and shall further allow Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration award shall be
final and binding upon the parties and judgment upon the award may be entered
in any court having jurisdiction. In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay Executive's reasonable legal fees
and expenses incurred in enforcing this Agreement and the fees of the
arbitrator. Except to the extent provided in the preceding sentence, each
party shall pay its own legal fees and other expenses associated with any
dispute, provided that the fee for the arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substantially identical to the compensation
and benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to
this Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
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9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
---------------------------------------
Ray C. Anderson
Title: Chairman and Chief Executive Officer
(Corporate Seal)
Attest: /s/ David W. Porter
---------------------------
Secretary
EXECUTIVE
/s/ David W. Porter
-------------------------------------------
David W. Porter
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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 30th day
of July, 1995, by and between INTERFACE, INC., a corporation organized under
the laws of the State of Georgia, U.S.A. (the "Company"), and DAVID W. PORTER,
a U.S. citizen currently residing in Atlanta, Georgia (the "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 Vice President,
General Counsel and Secretary of the Company, 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 may be
relocated, his titles and duties may be changed, and he may be promoted to a
higher position within the Company, but he will not be demoted or given lesser
titles.
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 this Agreement shall be for a rolling, two
(2) year term commencing on the date hereof, and shall be deemed automatically
(without further action by either the Company or the Executive) to extend each
day for an additional day such that the remaining term of the Agreement shall
continue to be two (2) years; provided, however, that on Executive's 63rd
birthday this Agreement shall cease to extend automatically and, on such date,
the remaining "term" of this Agreement shall be two (2) years; provided
further, that the Company may, by notice to the Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the "Term"
of this Agreement shall be two (2) years following such notice.
<PAGE> 2
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 90 days after delivery to the Company of his signed,
written resignation; Company may accept said resignation and pay Executive in
lieu of waiting for passage of the notice period.
(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 (as defined in Paragraph 5(d) below), at
any time upon written notice to Executive.
(c) If, prior to the end of the Term of this Agreement, the Company
terminates Executive's employment without just cause (as defined in Paragraph
5(d) below), the Executive shall be entitled to receive the compensation and
benefits set forth in (i) through (vi) below. The time periods in (i) through
(iv) below shall be the lesser of the 24-month period stated therein or the
time period remaining from the date of Executive's termination to the end of
the Term of this Agreement.
(i) The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any
amounts referred to in paragraph (iii) below) for a period of
twenty-four (24) months from his date of termination in the same
manner as it was being paid as of the date of termination. For
purposes hereof, the Executive's "current salary" shall be the
highest rate in effect during the six-month period prior to the
Executive's termination.
(ii) The Executive shall receive bonus payments from the
Company for the twenty-four (24) months following the month in which
his employment is terminated in an amount for each such month equal
to one-twelfth of the average ("Average Bonus") of the bonuses paid
to him for the two calendar years immediately preceding the year in
which such termination occurs. Executive shall also receive a
prorated bonus for the year in which he terminates equal to the
Average Bonus multiplied by the number of days he worked in such year
divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus.
(iii) The health and life insurance benefits coverage
(including any executive medical plan) provided to the Executive at
his date of termination shall be continued by the Company at its
expense at the same level and in the same manner as if his employment
had not terminated (subject to the customary changes in such coverages
if the Executive retires, reaches age 65 or similar events),
beginning on the date of such termination and ending on the date
twenty-four (24) months from the date of such termination. Any
additional coverages the Executive
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<PAGE> 3
had at termination, including dependent coverage, will also be
continued for such period on the same terms, to the extent permitted
by the applicable policies or contracts. Any costs the Executive was
paying for such coverages at the time of termination shall be paid by
the Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this
paragraph do not permit continued participation by the Executive, then
the Company will arrange for other coverage at its expense providing
substantially similar benefits. The coverages provided for in this
paragraph shall be applied against and reduce the period for which
COBRA will be provided.
(iv) To the extent permitted by the applicable plan, the
Executive will be entitled to continue to participate, consistent
with past practices, in the taxqualified employee retirement plans
maintained by the Company in effect as of his date of termination,
including, to the extent such plans are still maintained by the
Company, the Interface Flooring Systems, Inc. Retirement Plan and
Trust ("Retirement Plan") and the Interface, Inc. Savings Investment
Plan and Trust ("Savings Plan"). The Executive's participation in
such retirement plans shall continue for a period of twenty-four (24)
months from the date of termination of his employment (at which point
he will be considered to have terminated employment within the
meaning of the plans) and the compensation payable to the Executive
under (a) and (b) above shall be treated (unless otherwise excluded)
as compensation under the plan. For purposes of the Savings Plan, the
Executive will be credited with an amount equal to the Company's
contribution to the Plan, assuming Executive had participated in such
Plan at the maximum permissible contribution level. The Executive
shall also be considered fully vested under such plans. If continued
participation in any plan is not permitted or if Executive's benefits
are not fully vested, the Company shall pay to the Executive and, if
applicable, his beneficiary, a supplemental benefit equal to the
present value on the date of termination of employment (calculated as
provided in the plan) of the excess of (A) the benefit the Executive
would have been paid under such plan if he had continued to be
covered for the 24-month period (less any amounts he would have been
required to contribute) and been treated as fully vested, over (B) the
benefit actually payable under such plan. The Company shall pay such
additional benefits (if any) in a lump sum.
(v) As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this paragraph (v) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(vi) On his date of termination, the Executive shall be
entitled to a benefit equal to the greater of:
(A) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with the terms
of such agreement; or
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<PAGE> 4
(B) a fully vested benefit computed in the same
manner as his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement). The
benefit under this section cannot exceed 40% of the
Executive's average compensation. The benefit shall be
payable commencing at age 65 in the same manner and over the
same period as provided in the Salary Continuation Agreement,
provided that the Executive may elect to commence his benefit
at any time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his benefit
commences.
(vii) The benefits payable or to be provided under (i),
(ii), (iii) or (iv) of this Paragraph 5(c) of this Agreement shall
cease in the event of the Executive's death or election to commence
retirement benefits under the Company's Retirement Plan.
(viii) 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.
(ix) Executive hereby agrees and acknowledges that if he
voluntarily resigns from his employment, or is terminated for just
cause, prior to the end of the Term of this Agreement, then he shall
be entitled to no payment or compensation whatsoever from the Company
under this Agreement, other than as may be due him through his last
day of employment. 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.
(x) Notwithstanding any provision of this Agreement to
the contrary, if Executive's employment is terminated (whether by the
Company or by Executive) under circumstances that would entitle him
to receive benefits under his agreement with the Company providing
compensation and benefits for terminations following a "change in
control" of the Company (as defined in such agreement), then any such
termination shall be treated under this Agreement as a termination by
the Company without just cause and the Executive shall be entitled to
the compensation and benefits set forth in (i) through (vi) above for
the time periods provided in this subsection (c).
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<PAGE> 5
(xi) If Executive becomes entitled to compensation and
benefits under this Paragraph 5(c) and such payments are considered
to be severance payments contingent upon a change in control under
Internal Revenue Code Section 280G, Executive shall be required to be
willing to perform the duties and job he was performing under this
Agreement at the time of the change in control and, if such offer is
rejected, to mitigate damages (but only with respect to amounts that
would be treated as severance payments) by reducing the amount of
severance payments he is entitled to receive by any compensation and
benefits he earns from subsequent employment (but shall not be
required to seek such employment) during the 24-month period after
termination (or such lesser period as he is entitled to compensation
and benefits under this Agreement).
(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 material fraud, malfeasance, gross negligence, or willful
misconduct with respect to business affairs of the Company, (ii) Executive's
refusal or repeated failure to follow the established reasonable and lawful
policies the Company applicable to persons occupying the same or similar
position, (iii) Executive's material breach of this Agreement, (iv)
Executive's conviction of a felony or crime involving moral turpitude, or (v)
Executive's refusal or repeated failure to follow the reasonable lawful
directions of the Company. A termination of Executive for just cause based on
clause (ii), (iii) or (v) 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 for just 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). Notwithstanding any other provision in this
Agreement, subparagraph (d)(v) of this Paragraph 5 shall be void and of no
effect in the event that a "change in control" of the Company occurs, as that
term is defined in Executive's change in control agreement dated of even date
herewith.
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 salary and shall
continue to receive his current benefits and such bonus as the Chief Executive
Officer or Board of Directors (or Committee of the Board) shall deem
appropriate, subject to such increases as are determined from time to time;
(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
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<PAGE> 6
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.
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 July 30, l995, and is hereby made a
part of this Agreement.
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 further acknowledges and agrees
that the covenants contained herein are reasonable and necessary to protect
the legitimate business interests of the Company.
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
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<PAGE> 7
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 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 Fulton 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:
To The Company: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/437-6822
Attn: President and CEO
With A Copy To: Interface, Inc.
2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
Fax No.: 404/319-6270
Attn: General Counsel
To Executive: David W. Porter
at the last address shown
on the records of the Company
The Executive shall be responsible for providing the Company with a current
address. 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
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<PAGE> 8
by and shall adopt and assume this Agreement and the Company shall obtain the
assumption of this Agreement by such successor.
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.
INTERFACE, INC.
By: /s/ Ray C. Anderson [SEAL]
-----------------------------------
Ray C. Anderson, President
Attest: /s/ David W. Porter [SEAL]
--------------------------------
Secretary
EXECUTIVE
/s/ David W. Porter [SEAL]
---------------------------------------
David W. Porter
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<PAGE> 9
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
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<PAGE> 10
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.
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 30th day of July, 1995.
READ, UNDERSTOOD AND AGREED:
/s/ David W. Porter
-------------------
David W. Porter
A-2
<PAGE> 1
Exhibit 10.11
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 25th day of July,
1995, by and between INTERFACE, INC., a Georgia corporation (the "Company", and
DON E. RUSSELL (the "Executive").
WITNESSETH:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control of the Company, and to induce its key employees to remain
employed by the Company, and the Executive is a key employee of the Company and
an integral part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to receive
in the absence of a Change in Control of the Company, and this Agreement
accordingly will be operative only upon circumstances relating to a Change in
Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by
the parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless, during the term of this Agreement, there has been a Change in
Control of the Company, as defined in Article III below. Immediately upon such
an occurrence, all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
<PAGE> 2
III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal Revenue Code
of 1986, as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any
act that constitutes, on the part of the Executive, (A) fraud, dishonesty,
gross negligence, or willful misconduct and (B) that directly results in
material injury to the Company, or (ii) Executive's material breach of this
Agreement, or (iii) Executive's conviction of a felony or crime involving moral
turpitude. A termination of Executive for "Cause" based on clause (i) or (ii)
of the preceding sentence shall take effect thirty (30) days after the Company
gives written notice of such termination to Executive specifying the conduct
deemed to qualify as Cause, unless Executive shall, during such 30-day period,
remedy the events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause (iii)
above shall take effect immediately upon giving of the termination notice.
4. Change in Control -- The term "Change in Control" as used
herein shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Ray C. Anderson; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist,provided
such conversion shall not constitute a Change in Control so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board.
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<PAGE> 3
5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially
perform his duties for the Company on a full-time basis for a period of six (6)
months.
6. Excess Severance Payment -- The term "Excess Severance
Payment" have the same meaning as the term "excess parachute payment" defined
in Section 280G(b)(l) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section 280G(b)(2)
of the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term "Voting Agreement" shall mean the
agreement, dated April 13, 1993, among certain holders of the Company's Class B
Common Stock that provides that their shares will be voted as a block, as it
may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.
1. Termination -- If a Change in Control occurs during the term
of this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or
(ii) within six (6) months prior to the date of the Change in Control and is
related to such Change in Control, and in either case (i) or (ii) such
termination is a result of Involuntary Termination or Voluntary Termination, as
defined below, then the benefits described in Section 2 below shall be paid or
provided to the Executive:
(a) Involuntary Termination -- For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary on the
part of the Executive and that occurs for reasons other than for Cause,
Disability, the voluntary election of the Executive to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or death.
(b) Voluntary Termination -- For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary on the
part of the Executive, and, in the judgment of the Executive, is due to
(i) a reduction of the Executive's responsibilities, title or status resulting
from a formal change in such title or status, or from the assignment to the
Executive of any duties inconsistent with his title, duties or responsibilities
in effect within the year prior to the Change in Control; (ii) a
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<PAGE> 4
reduction in the Executive's compensation or benefits, or (iii) a
Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to the
extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b), (c),
(d) and (e) of this Section 2 pursuant to the terms of an employment agreement
with the Company or as a result of a breach by the Company of the employment
agreement; and provided, however, that notwithstanding contrary provisions in
the employment agreement, to the extent benefits are actually paid or provided
under this Agreement, the benefits shall be provided in lump sum payments where
specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any amounts
referred to in Section 2(c) below) for a period of twenty-four (24)
months from his date of termination in the same manner as it was being
paid as of the date of termination; provided, however, that the salary
payments provided for hereunder shall be paid in a single lump sum
payment, to be paid not later than 30 days after his termination of
employment; provided, further, that the amount of such lump sum
payment shall be determined by taking the salary payments to be made
and discounting them to their Present Value (as defined in Section
III.8) on the date Executive's employment is terminated. For purposes
hereof, the Executive's "current salary" shall be the highest rate in
effect during the six-month period prior to the Executive's
termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus multiplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein shall
be paid in a single lump sum payment, to be paid not later than 30
days after termination of employment; provided,
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<PAGE> 5
further, that the amount of such lump sum payment shall be determined
by taking the bonus payments (as of the payment date) to be made and
discounting them to their Present Value (as defined in Section III.8)
on the date Executive's employment is terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this Section shall be
applied against and reduce the period for which COBRA will be
provided. If the Executive is covered by a split-dollar or similar
life insurance program at the date of termination, he shall have the
option in his sole discretion to have such policy transferred to him
upon termination, provided that the Company is paid for its interest
in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax-qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface, Inc.
(or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans. For
purposes of the Savings Plan, the Executive will be credited with an
amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully
vested under such plans. If continued participation in any plan is not
permitted or if Executive's benefits are not fully vested, the Company
shall pay to the Executive and, if applicable, his beneficiary, a
supplemental benefit equal to the present value on the date of
termination of employment (calculated as provided in the plan) of the
excess of (i) the benefit the Executive would have been paid under
such plan if he had continued to be covered for the 24-month period
(less any amounts he would have been required to contribute) and been
treated as fully vested, over (ii) the benefit actually payable under
such plan. The Company shall pay such additional benefits (if any) in
a lump sum.
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<PAGE> 6
(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Salary Continuation Agreement -- On his date of termination,
the Executive shall be entitled to a benefit equal to the greater of:
(i) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with
the terms of such agreement; or
(ii) a fully vested benefit computed in the same manner as
his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement).
The benefit under this section cannot exceed 40% of
the Executive's average compensation. The benefit
shall be payable commencing at age 65 in the same
manner and over the same period as provided in the
Salary Continuation Agreement, provided that the
Executive may elect to commence his benefit at any
time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his
benefit commences.
(g) Effect of Lump Sum Payment -- The lump sum payment under (a)
or (b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFlTS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation
and benefits payable or to be provided to Executive under this Agreement that
are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount, the
parties shall take into account all provisions of Code Section 280G, and the
regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Section V.l shall be made by the Company's independent
accountants within thirty (30) days of the Executive's termination of
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<PAGE> 7
employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Article, the Executive shall direct which Severance Payments are to be modified
or reduced; provided, however, that no increase in the amount of any payment
shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be
interpreted so as to avoid the imposition of excise taxes on the Executive
under Section 4999 of the Code or the disallowance of a deduction to the
Company pursuant to Section 280G(a) of the Code with respect to amounts payable
under this Agreement. In connection with any Internal Revenue Service
examination, audit or other inquiry, the Company and Executive agree to take
action to provide, and to cooperate in providing, evidence to the Internal
Revenue Service (and, if applicable, the state revenue department) that the
compensation and benefits provided under this Agreement do not result in the
payment of Excess Severance Payments.
4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered
and shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return receipt
requested), to such party at such party's address as specified below, or at
such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 2859 Paces Ferry Road, Suite
2000, Atlanta, Georgia 30339, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets 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
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<PAGE> 8
successor. If Executive shall die while any amount would still be payable to
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of Executive) if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to Executive for a review of a decision denying a claim
and shall further allow Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration award shall be
final and binding upon the parties and judgment upon the award may be entered
in any court having jurisdiction. In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any such rights or benefits through settlement, arbitration or
other vise, the Company shall promptly pay Executive's reasonable legal fees
and expenses incurred in enforcing this Agreement and the fees of the
arbitrator. Except to the extent provided in the preceding sentence, each party
shall pay its own legal fees and other expenses associated with any dispute,
provided that the fee for the arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substantially identical to the compensation
and benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
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<PAGE> 9
9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
---------------------------------------
Ray C. Anderson
Title: Chairman and Chief Executive Officer
(Corporate Seal)
Attest: /s/ David W. Porter
----------------------
Secretary
EXECUTIVE
/s/ Donald E. Russell
---------------------
Don E. Russell
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<PAGE> 1
EXHIBIT 10.12
AMENDMENT NO. 1
TO THE
EMPLOYMENT AGREEMENT
THIS AMENDMENT is made and entered into the 25th day of July, 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 (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive have previously entered into an
agreement for the employment of the Executive by the Company (the "Employment
Agreement");
WHEREAS, the Company and the Executive have agreed to amend the terms
of such Employment Agreement as provided herein;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration,
the Employment Agreement is hereby amended as follows:
1.
Paragraph 5(c) of the Employment Agreement is hereby amended by adding
the following paragraph at the end of the present Paragraph:
"Notwithstanding any provision of this Agreement to the
contrary, if Executive's employment is terminated (whether by the
Company or by Executive) under circumstances that would entitle him to
receive benefits under his agreement with the Company providing
compensation and benefits for terminations following a "change in
control" of the Company (as defined in such agreement), then any such
termination shall be treated under this Agreement as a termination by
the Company without Cause and the Executive shall be entitled to the
compensation and benefits set forth above for the time periods
provided in this Paragraph 5(c). If Executive becomes entitled to
compensation and benefits under this Paragraph 5(c) and such payments
are considered to be severance payments contingent upon a change in
control under Internal Revenue Code Section 280G, Executive shall be
required to be willing to perform the duties and job he was performing
under this Agreement at the time of the change in control and, if such
offer is rejected, to mitigate damages (but only with respect to
amounts that would be treated as severance payments) by reducing the
amount of severance payments he is entitled to receive by any
compensation and benefits he earns from subsequent employment (but
<PAGE> 2
shall not be required to seek such employment) during the 24-month
period after termination (or such lesser period as he is entitled to
compensation and benefits under this Agreement)."
2.
This Amendment No. 1 is effective as of the date first written above.
Except as hereby amended, the provisions of the Employment Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this amendment to be
executed by its duly authorized officer, and the Executive has executed this
Agreement, all as of the date first written above.
INTERFACE, INC.
By: /s/ Ray C. Anderson
-------------------
Name: Ray C. Anderson
Title: Chairman
EXECUTIVE
/s/ Donald S. Russell
---------------------
Donald S. Russell
2
<PAGE> 1
EXHIBIT 10.13
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 25th day of
July, 1995, by and between INTERFACE, INC., a Georgia corporation (the
"Company"),(and GORDON D. WHITENER (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to assure both itself and its key
employees of continuity of management and objective judgment in the event of
any Change in Control of the Company, and to induce its key employees to remain
employed by the Company, and the Executive is a key employee of the Company and
an integral part of its management; and
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive reasonably could expect to receive
in the absence of a Change in Control of the Company, and this Agreement
accordingly will be operative only upon circumstances relating to a Change in
Control of the Company, as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
I. OPERATION OF AGREEMENT.
This Agreement shall be effective immediately upon its execution by
the parties hereto, but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless, during the term of this Agreement, there has been a Change in
Control of the Company, as defined in Article III below. Immediately upon such
an occurrence, all of the provisions hereof shall become operative.
II. TERM OF AGREEMENT.
The term of this Agreement shall be for a rolling, two (2) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for
an additional day such that the remaining term of the Agreement shall continue
to be two (2) years; provided, however, that on Executive's 63rd birthday this
Agreement shall cease to extend automatically and, on such date, the remaining
"term" of this Agreement shall be two (2) years; provided further, that the
Company may, by notice to the Executive, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be two (2) years following such notice.
<PAGE> 2
III. DEFINITIONS.
1. Base Amount -- The term "Base Amount" shall have the same
meaning as ascribed to it under Section 280G(b)(3) of the Internal Revenue Code
of 1986, as amended (the "Code").
2. Board or Board of Directors -- The Board of Directors of
Interface, Inc., or its successor.
3. Cause -- The Term "Cause" as used herein shall mean: (i) any
act that constitutes, on the part of the Executive, (A) fraud, dishonesty,
gross negligence, or willful misconduct and (B) that directly results in
material injury to the Company, or (ii) Executive's material breach of this
Agreement, or (iii) Executive's conviction of a felony or crime involving moral
turpitude. A termination of Executive for "Cause" based on clause (i) or (ii)
of the preceding sentence shall take effect thirty (30) days after the Company
gives written notice of such termination to Executive specifying the conduct
deemed to qualify as Cause, unless Executive shall, during such 30-day period,
remedy the events or circumstances constituting cause to the reasonable
satisfaction of the Company. A termination for Cause based on clause (iii)
above shall take effect immediately upon giving of the termination notice.
4. Change in Control -- The term "Change in Control" as used
herein shall mean:
(i) consummation of (A) a merger, consolidation or other business
combination of the Company with any other "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other
than a merger, consolidation or business combination which
would result in the outstanding common stock of the Company
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate thereof) at
least fifty percent (50%) of the outstanding common stock of
the Company or such surviving entity (or parent or affiliate
thereof) outstanding immediately after such merger,
consolidation or business combination, or (B) a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets; or
(ii) the termination of the Voting Agreement, provided that such
termination shall not constitute a Change in Control for so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board; or
(iii) the death of Ray C. Anderson; or
(iv) if the Company's Class B Common Stock has all been converted
to Class A Common Stock or otherwise ceased to exist, provided
such conversion shall not constitute a Change in Control so
long as Ray C. Anderson remains satisfied with the membership
of a majority of the Board.
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<PAGE> 3
5. Disability -- The term "Disability" shall mean the Executive's
inability as a result of physical or mental incapacity to substantially perform
his duties for the Company on a full-time basis for a period of six (6) months.
6. Excess Severance Payment -- The term "Excess Severance
Payment" shall have the same meaning as the term "excess parachute payment"
defined in Section 280G(b)(1) of the Code.
7. Severance Payment -- The term "Severance Payment" shall have
the same meaning as the term "parachute payment" defined in Section 280G(b)(2)
of the Code.
8. Present Value -- The term "Present Value" shall have the same
meaning as provided in Section 280G(d)(4) of the Code.
9. Reasonable Compensation -- The term "Reasonable Compensation"
shall have the same meaning as provided in Section 280G(b)(4) of the Code.
10. Retirement Plan -- The term "Retirement Plan" shall mean the
Interface Flooring Systems, Inc. Retirement Plan and Trust, as it may be
amended, or a successor or replacement plan to such Retirement Plan.
11. Voting Agreement -- The term "Voting Agreement" shall mean the
agreement, dated April 13, 1993, among certain holders of the Company's Class B
Common Stock that provides that their shares will be voted as a block, as it
may be amended.
IV. BENEFITS UPON TERMINATION FOLLOWlNG A CHANGE IN CONTROL.
1. Termination -- If a Change in Control occurs during the term
of this Agreement and the Executive's employment is terminated (i) within
twenty-four (24) months following the date of the Change in Control, or (ii)
within six (6) months prior to the date of the Change in Control and is related
to such Change in Control, and in either case (i) or (ii) such termination is a
result of Involuntary Termination or Voluntary Termination, as defined below,
then the benefits described in Section 2 below shall be paid or provided to the
Executive:
(a) Involuntary Termination -- For purposes hereof, "Involuntary
Termination" shall mean termination of employment that is involuntary
on the part of the Executive and that occurs for reasons other than
for Cause, Disability, the voluntary election of the Executive to
retire (including early retirement) within the meaning of the
Company's Retirement Plan, or death.
(b) Voluntary Termination -- For purposes hereof, "Voluntary
Termination" shall mean termination of employment that is voluntary on
the part of the Executive, and, in the judgment of the Executive, is
due to (i) a reduction of the Executive's responsibilities, title or
status resulting from a formal change in such title or status, or from
the assignment to the Executive of any duties inconsistent with his
title, duties or responsibilities in effect within the year prior to
the Change in Control; (ii) a
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<PAGE> 4
reduction in the Executive's compensation or benefits, or (iii) a
Company-required involuntary relocation of Executive's place of
residence or a significant increase in the Executive's travel
requirements. A termination shall not be considered voluntary within
the meaning of this Agreement if such termination is the result of
Cause, Disability, a voluntary election to retire (including early
retirement) within the meaning of the Company's Retirement Plan, or
death of the Executive; provided, however, the fact that Executive is
eligible for retirement (including early retirement) under the
Retirement Plan at the time of his termination due to the reasons in
(b)(i), (ii) or (iii) above shall not make him ineligible to receive
benefits under this Agreement.
2. Benefits to be Provided -- If the Executive becomes eligible
for benefits under Section 1 above, the Company shall pay or provide to
Executive the compensation and benefits set forth in this Section 2; provided,
however, that the compensation and benefits to be paid or provided pursuant to
paragraphs (a), (b), (c), (d) and (e) of this Section 2 shall be reduced to the
extent that the Executive receives or is entitled to receive upon his
termination the compensation and benefits (but only to the extent he actually
receives such compensation and benefits) described in paragraphs (a), (b), (c),
(d) and (e) of this Section 2 pursuant to the terms of an employment agreement
with the Company or as a result of a breach by the Company of the employment
agreement; and provided, however, that notwithstanding contrary provisions in
the employment agreement, to the extent benefits are actually paid or provided
under this Agreement, the benefits shall be provided in lump sum payments where
specified in paragraphs (a), (b), and (d) below.
(a) Salary -- The Executive will continue to receive his current
salary (subject to withholding of all applicable taxes and any amounts
referred to in Section 2(c) below) for a period of twenty-four (24)
months from his date of termination in the same manner as it was being
paid as of the date of termination; provided, however, that the
salary payments provided for hereunder shall be paid in a single lump
sum payment, to be paid not later than 30 days after his termination
of employment; provided, further, that the amount of such lump sum
payment shall be determined by taking the salary payments to be made
and discounting them to their Present Value (as defined in Section
III.8) on the date Executive's employment is terminated. For purposes
hereof, the Executive's "current salary" shall be the highest rate in
effect during the six-month period prior to the Executive's
termination.
(b) Bonuses and Incentives -- The Executive shall receive bonus
payments from the Company for the twenty-four (24) months following
the month in which his employment is terminated in an amount for each
month equal to one-twelfth of the average ("Average Bonus") of the
bonuses paid to him for the two calendar years immediately preceding
the year in which such termination occurs. Executive shall also
receive a prorated bonus for the year in which he terminates equal to
the Average Bonus multiplied by the number of days he worked in such
year divided by 365 days. Any bonus amounts that the Executive had
previously earned from the Company but which may not yet have been
paid as of the date of termination shall not be affected by this
provision; provided, that if the amount of the bonus for such prior
year has not yet been determined, the bonus shall be an amount not
less than the Average Bonus. The bonus amounts determined herein shall
be paid in a single lump sum payment, to be paid not later than 30
days after termination of employment; provided,
-4-
<PAGE> 5
further, that the amount of such lump sum payment shall be determined
by taking the bonus payments (as of the payment date) to be made and
discounting them to their Present Value (as defined in Section III.8)
on the date Executive's employment is terminated.
(c) Health and Life Insurance Coverage -- The health and life
insurance benefits coverage (including any executive medical plan)
provided to the Executive at his date of termination shall be
continued by the Company at its expense at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive retires, reaches
age 65 or similar events), beginning on the date of such termination
and ending on the date twenty-four (24) months from the date of such
termination. Any additional coverages the Executive had at
termination, including dependent coverage, will also be continued for
such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs the Executive was paying
for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section
do not permit continued participation by the Executive, the Company
will arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this Section shall be
applied against and reduce the period for which COBRA will be
provided. If the Executive is covered by a split-dollar or similar
life insurance program at the date of termination, he shall have the
option in his sole discretion to have such policy transferred to him
upon termination, provided that the Company is paid for its interest
in the policy upon such transfer.
(d) Employee Retirement Plans -- To the extent permitted by the
applicable plan, the Executive will be entitled to continue to
participate, consistent with past practices, in the tax-qualified
employee retirement plans maintained by the Company in effect as of
his date of termination, including, to the extent such plans are still
maintained by the Company, the Retirement Plan and the Interface, Inc.
(or Interface Flooring Systems, Inc.) Savings Investment Plan and
Trust, or successor plans ("Savings Plan"). The Executive's
participation in such retirement plans shall continue for a period of
twenty-four (24) months from the date of termination of his employment
(at which point he will be considered to have terminated employment
within the meaning of the plans) and the compensation payable to the
Executive under (a) and (b) above shall be treated (unless otherwise
excluded) as compensation when computing benefits under the plans. For
purposes of the Savings Plan, the Executive will be credited with an
amount equal to the Company's contribution to the Plan, assuming
Executive had participated in such Plan at the maximum permissible
contribution level. The Executive shall also be considered fully
vested under such plans. If continued participation in any plan is not
permitted or if Executive's benefits are not fully vested, the Company
shall pay to the Executive and, if applicable, his beneficiary, a
supplemental benefit equal to the present value on the date of
termination of employment (calculated as provided in the plan) of the
excess of (i) the benefit the Executive would have been paid under
such plan if he had continued to be covered for the 24-month period
(less any amounts he would have been required to contribute) and been
treated as fully vested, over (ii) the benefit actually payable under
such plan. The Company shall pay such additional benefits (if any) in
a lump sum.
-5-
<PAGE> 6
(e) Stock Options -- As of Executive's date of termination, all
outstanding stock options granted to Executive under the Interface,
Inc. Key Employee Stock Option Plan (1993), the Interface, Inc.
Offshore Stock Option Plan and the Interface Flooring Systems, Inc.
Key Employee Stock Option Plan shall become 100% vested and
immediately exercisable. The provisions of this subsection (e) shall
constitute an amendment of the Executive's stock option agreements
under the Stock Option Plans.
(f) Salary Continuation Agreement -- On his date of termination,
the Executive shall be entitled to a benefit equal to the greater of:
(i) the benefit he is entitled to under his Salary
Continuation Agreement, payable in accordance with
the terms of such agreement; or
(ii) a fully vested benefit computed in the same manner as
his benefit under his Salary Continuation Agreement
commencing at age 65 equal to 2.67% of his average
compensation (as defined in the Salary Continuation
Agreement) multiplied by his years of employment (as
determined under the Salary Continuation Agreement).
The benefit under this section cannot exceed 40% of
the Executive's average compensation. The benefit
shall be payable commencing at age 65 in the same
manner and over the same period as provided in the
Salary Continuation Agreement, provided that the
Executive may elect to commence his benefit at any
time after he attains age 55, in which event the
Executive's benefit shall be reduced 5% for each year
(prorated for partial years) prior to age 65 that his
benefit commences.
(g) Effect of Lump Sum Payment -- The lump sum payment under (a)
or (b) above shall not alter the amounts Executive is entitled to
receive under the benefit plans described in (c) and (d) above.
Benefits under such plans shall be determined as if Executive had
remained employed and received such payments without reduction for
their Present Value over a period of twenty-four (24) months.
V. LIMITATION OF BENEFITS.
1. Limitation of Amount -- Notwithstanding anything in this
Agreement to the contrary, if any of the compensation or benefits payable, or
to be provided, to the Executive by the Company under this Agreement are
treated as Excess Severance Payments (whether alone or in conjunction with
payments or benefits outside of this Agreement), the compensation and benefits
provided under this Agreement shall be modified or reduced in the manner
provided in Section 2 below to the extent necessary so that the compensation
and benefits payable or to be provided to Executive under this Agreement that
are treated as Severance Payments, as well as any compensation or benefits
provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount, the
parties shall take into account all provisions of Code Section 280G, and the
regulations thereunder, including making appropriate adjustments to such
calculation for amounts established to be Reasonable Compensation. The
calculations under this Section V.1 shall be made by the Company's independent
accountants within thirty (30) days of the Executive's termination of
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<PAGE> 7
employment; provided, however, if the Executive disputes such accountants'
calculations, the dispute shall be resolved in accordance with Section VI.5.
2. Modification of Amount -- In the event that the amount of any
Severance Payments which would be payable to or for the benefit of the
Executive under this Agreement must be modified or reduced to comply with this
Article, the Executive shall direct which Severance Payments are to be modified
or reduced; provided, however, that no increase in the amount of any payment
shall be made without the consent of the Company.
3. Avoidance of Penalty Taxes -- This Article shall be
interpreted so as to avoid the imposition of excise taxes on the Executive
under Section 4999 of the Code or the disallowance of a deduction to the
Company pursuant to Section 280G(a) of the Code with respect to amounts payable
under this Agreement. In connection with any Internal Revenue Service
examination, audit or other inquiry, the Company and Executive agree to take
action to provide, and to cooperate in providing, evidence to the Internal
Revenue Service (and, if applicable, the state revenue department) that the
compensation and benefits provided under this Agreement do not result in the
payment of Excess Severance Payments.
4. Additional Limitation -- In addition to the limits otherwise
provided in this Article, to the extent permitted by law the Executive may in
his sole discretion elect to reduce (or change the timing of) any payments he
may be eligible to receive under this Agreement to prevent the imposition of
excise taxes on the Executive under Section 4999 of the Code or otherwise
reduce or delay liability for taxes owed under the Code.
VI. MISCELLANEOUS.
1. Notices -- Any notice to a party required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered
and shall be hand delivered, sent by facsimile transmission with request for
confirmation of receipt, or mailed registered or certified mail (return receipt
requested), to such party at such party's address as specified below, or at
such other address as such party shall specify by notice to the other.
If to the Company, to Interface, Inc., 2859 Paces Ferry Road, Suite
2000, Atlanta, Georgia 30339, Attn: Chairman of the Board with a copy to
General Counsel at that address.
If to the Executive, to his last address shown on the records of the
Company. The Executive shall be responsible for providing the Company with a
current address.
2. Assignment -- This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives and successors, but, except as
hereinafter provided, neither this Agreement nor any right hereunder may be
assigned or transferred by either party thereto, or by any beneficiary or any
other person, nor be subject to alienation, anticipation, sale, pledge,
encumbrance, execution, levy or other legal process of any kind against the
Executive, his beneficiary or any other person. Notwithstanding the foregoing,
any person or business entity succeeding to substantially all of the business
of the Company by purchase, merger, consolidation, sale of assets 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
-7-
<PAGE> 8
successor. If Executive shall die while any amount would still be payable to
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of Executive) if Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
Executive's estate.
3. No Obligation to Fund -- The agreement of the Company (or its
successor) to make payments to the Executive hereunder shall represent solely
the unsecured obligation of the Company (and its successor), except to the
extent the Company (or its successors) in its sole discretion elects in whole
or in part to fund its obligations under this Agreement pursuant to a trust
arrangement or otherwise.
4. Applicable Law -- This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia.
5. Arbitration of Disputes: Expenses -- All claims by Executive
for compensation and benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a
claim for benefits under this Agreement shall be delivered to Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to Executive for a review of a decision denying a claim
and shall further allow Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Atlanta, Georgia, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration award shall be
final and binding upon the parties and judgment upon the award may be entered
in any court having jurisdiction. In the event the Executive incurs legal fees
and other expenses in seeking to obtain or to enforce any rights or benefits
provided by this Agreement and is successful, in whole or in part, in obtaining
or enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay Executive's reasonable legal fees and
expenses incurred in enforcing this Agreement and the fees of the arbitrator.
Except to the extent provided in the preceding sentence, each party shall pay
its own legal fees and other expenses associated with any dispute, provided
that the fee for the arbitrator shall be shared equally.
6. Conversion To Employment Agreement -- The Company reserves the
right at any time in its sole discretion to convert all or any part of its
obligations under this Agreement and restate them in an employment agreement
with the Executive, provided that such employment agreement provides
compensation and benefits to the Executive upon the basis and for the reasons
stated in this Agreement that are substantially identical to the compensation
and benefits provided under this Agreement.
7. Amendment -- This Agreement may only be amended by a written
instrument signed by the parties hereto, which makes specific reference to this
Agreement.
8. Severability -- If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof.
-8-
<PAGE> 9
9. Other Benefits -- Nothing in this Agreement shall limit or
replace the compensation or benefits payable to Executive, or otherwise
adversely affect Executive's rights, under any other benefit plan, program or
agreement to which Executive is a party.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officers and the Executive has
hereunder set his hand, as of the date first above written.
INTERFACE, INC.
By: /s/ Ray C. Anderson
------------------------
Ray C. Anderson
Title: Chairman and Chief Executive Officer
(Corporate Seal)
Attest: /s/ David W. Porter
--------------------
Secretary
EXECUTIVE
/s/ Gordon D. Whitener
----------------------------
Gordon D. Whitener
-9-
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 1, 1995, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> OCT-01-1995
<CASH> 5,447
<SECURITIES> 0
<RECEIVABLES> 119,646
<ALLOWANCES> 6,501
<INVENTORY> 138,801
<CURRENT-ASSETS> 279,933
<PP&E> 359,950
<DEPRECIATION> 189,732
<TOTAL-ASSETS> 705,752
<CURRENT-LIABILITIES> 112,115
<BONDS> 311,904
<COMMON> 2,187
25,000
0
<OTHER-SE> 252,657
<TOTAL-LIABILITY-AND-EQUITY> 705,752
<SALES> 597,414
<TOTAL-REVENUES> 597,414
<CGS> 412,636
<TOTAL-COSTS> 552,249
<OTHER-EXPENSES> (715)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (21,194)
<INCOME-PRETAX> 23,256
<INCOME-TAX> 8,838
<INCOME-CONTINUING> 14,418
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,418
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.71
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