<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 September 29, 1996
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
November 4, 1996:
Class Number of Shares
- -------------------------------------------------------------------------
Class A Common Stock, $.10 par value per share 18,369,893
Class B Common Stock, $.10 par value per share 2,975,190
<PAGE> 2
INTERFACE, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
Balance Sheets - September 29, 1996 and December 31, 1995 3
Statements of Income - Three Months and Nine Months
Ended September 29, 1996 and October 1, 1995 4
Statements of Cash Flows - Nine Months
Ended September 29, 1996 and October 1, 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in the Rights of the Company's Security
Holders 13
Item 3. Defaults by the Company on Its Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
</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)
- ---------------------------------------------- September 29, December 31,
ASSETS 1996 1995
- ---------------------------------------------- ------------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 154 $ 8,750
Accounts Receivable 164,866 111,386
Inventories 154,579 134,504
Deferred Tax Asset 4,662 3,998
Prepaid Expenses 22,021 15,748
-------- --------
TOTAL CURRENT ASSETS 346,282 274,386
PROPERTY AND EQUIPMENT, less
accumulated depreciation 202,253 183,299
EXCESS OF COST OVER NET ASSETS ACQUIRED 240,755 218,825
OTHER ASSETS 54,970 37,841
-------- --------
$844,260 $714,351
======== ========
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
- ----------------------------------------------
CURRENT LIABILITIES:
Notes Payable $ 5,650 $ 8,546
Accounts Payable 74,077 55,101
Accrued Expenses 69,947 50,148
Current Maturities of Long-Term Debt 2,127 1,560
-------- --------
TOTAL CURRENT LIABILITIES 151,801 115,355
LONG-TERM DEBT, less current maturities 266,307 199,022
SENIOR SUBORDINATED NOTES 125,000 125,000
DEFERRED INCOME TAXES 21,918 18,060
-------- --------
TOTAL LIABILITIES 565,026 457,437
-------- --------
Redeemable Preferred Stock 24,751 25,000
Common Stock:
Class A 2,127 1,903
Class B 298 300
Additional Paid-In Capital 114,271 96,863
Retained Earnings 159,507 147,039
Foreign Currency Translation Adjustment (3,974) 3,555
Treasury Stock, 3,600
Class A Shares, at Cost (17,746) (17,746)
-------- --------
$844,260 $714,351
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
INTERFACE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share amounts)
- --------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------- ------------------------
September 29, October 1, September 29, October 1,
1996 1995 1996 1995
------------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net Sales $275,041 $203,269 $717,546 $597,414
Cost of Sales 187,581 139,574 492,509 412,636
-------- -------- -------- --------
Gross Profit on Sales 87,460 63,695 225,037 184,778
Selling, General and Administrative Expenses 65,910 47,373 170,887 139,613
-------- -------- -------- --------
Operating Income 21,550 16,322 54,150 45,165
Other (Expense) Income - Net (9,105) (7,730) (25,683) (21,909)
-------- -------- -------- --------
Income before Taxes on Income 12,445 8,592 28,467 23,256
Taxes on Income 4,864 3,265 11,153 8,838
-------- -------- -------- --------
Net Income 7,581 5,327 17,314 14,418
Less: Preferred Dividends 433 438 1,299 1,312
-------- -------- -------- --------
Net Income Applicable to Common Shareholders $ 7,148 $ 4,889 $ 16,015 $ 13,106
======== ======== ======== ========
Primary Earnings Per Common Share $0.34 $0.27 $0.82 $0.72
======== ======== ======== ========
Weighted Average Common Shares Outstanding 20,935 18,252 19,604 18,237
======== ======== ======== ========
</TABLE>
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
-------------------------------
September 29, October 1,
(In thousands) 1996 1995
- -------------- ------------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $17,314 $14,418
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 25,041 21,285
Deferred income taxes 1,815
Cash provided by (used for):
Accounts receivable (20,461) 23,528
Inventories (9,671) 647
Prepaid and other (6,112) (2,057)
Accounts payable and accrued expenses 17,769 (3,818)
------- -------
23,880 55,818
------- -------
INVESTING ACTIVITIES:
Capital expenditures (27,795) (26,186)
Acquisitions of businesses (46,912) (15,203)
Other (3,354) (2,798)
------- -------
(78,061) (44,187)
------- -------
FINANCING ACTIVITIES:
Net borrowing (reduction) of long-term debt 49,638 (9,114)
Issuance of common stock 881 744
Dividends paid (4,839) (4,597)
------- -------
45,680 (12,967)
------- -------
Net cash provided by (used for) operating,
investing and financing activities (8,501) (1,336)
Effect of exchange rate changes on cash (95) (19)
------- -------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) during the period (8,596) (1,355)
Balance at beginning of period 8,750 4,389
------- -------
Balance at end of period $ 154 $ 3,034
======= =======
</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 December 31, 1995, as filed with the Securities and Exchange
Commission.
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.
NOTE 2 - INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
September 29, December 31,
1996 1995
-------- ---------
<S> <C> <C>
Finished Goods $ 85,218 $ 76,407
Work-in-Process 31,071 26,168
Raw Materials 38,290 31,929
-------- --------
$154,579 $134,504
======== ========
</TABLE>
NOTE 3 - BUSINESS ACQUISITIONS
During fiscal 1996, the Company has acquired, through merger and stock
purchases, thirteen commercial floorcovering contractors -- Landry's Commercial
Flooring Co., Inc., based in Oregon, Reiser Associates, Inc., based in Texas,
Earl W. Bentley Operating Co., Inc., based in Oklahoma, Quaker City
International, Inc., based in Pennsylvania, Superior Holding Inc., based in
Texas, Flooring Consultants, Inc., based in Arizona, ParCom, Inc., based in
Virginia, Congress Flooring Corp., based in Massachusetts, Southern Contract
Systems, Inc., based in Georgia, B. Shehadi & Sons, Inc., based in New Jersey,
A & F Installation, Inc., based in New Jersey, Lasher/White Carpet Co., Inc.,
based in New York and Oldtown Carpet Center, Inc.,
6
<PAGE> 7
INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
based in North Carolina -- for approximately $50,895,000, in the aggregate
(comprised of $32,888,000 in cash and $18,007,000 in Interface common stock).
All the acquisitions were accounted for as purchases with the exception of the
acquisition of B. Shehadi & Sons, Inc. which was accounted for under the pooling
of interests method of accounting; accordingly, the results of operations for
the acquired companies are included in the Company's consolidated financial
statements from the date of the acquisitions with the exception of the
acquisition of B. Shehadi & Sons results of operations which are included in the
Company's consolidated financial statements from the beginning of the year. The
excess of the purchase price over the fair value of the net liabilities was
approximately $29,149,000 and is being amortized over 25 years.
In February 1996, the Company acquired the outstanding common stock of
Renovisions, Inc., a nationwide installation services firm (based in Georgia)
that has pioneered a new method of carpet replacement, for approximately
$5,000,000 in cash. The acquisition was accounted for as a purchase and,
accordingly, the results of operations for Renovisions are included in the
Company's consolidated financial statements from the date of acquisition. The
excess of the purchase price over the fair value of net assets was approximately
$4,240,000, and is being amortized over 25 years.
In February 1996, the Company acquired the outstanding common stock of
C-Tec, Inc., a Michigan based producer of raised/access flooring systems, for
approximately $8,750,000 (comprised of $4,500,000 in cash and $4,250,000 in 6%
subordinated convertible notes). The acquisition was accounted for as a
purchase and, accordingly, the results of operations for C-Tec are included in
the Company's consolidated financial statements from the date of acquisition.
The excess of the purchase price over the fair value of net liabilities was
approximately $3,144,000, and is being amortized over 25 years.
NOTE 4 - EARNINGS PER SHARE AND DIVIDENDS
Earnings per share are computed by dividing net income applicable to common
shareholders by the combined weighted average number of shares of Class A and
Class B Common Stock outstanding during the particular reporting period. The
earnings computation does not give effect to the negligible dilutive impact of
outstanding stock options. The Series A Cumulative Convertible Preferred Stock
issued in June 1993 is not considered to be a common stock equivalent because at
the date of issuance the stated rate of interest was greater than 66 2/3% of the
AAA bond rate. In computing primary earnings per share, the preferred stock
dividend of 7% per annum 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).
7
<PAGE> 8
NOTE 5 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS
The Guarantor Subsidiaries, which consist of the Company's principal
domestic subsidiaries, are guarantors of the Company's 9.5% senior subordinated
notes due 2005. The Supplemental Guarantor Financial Statements are presented
herein pursuant to requirements of the Securities and Exchange Commission.
INTERFACE, INC. AND SUBSIDIARIES
Note 5 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
For the Nine Months Ended September 29, 1996
Consolidation
Non- Interface, Inc. and
Guarantor Guarantor (Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Totals
--------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net sales $472,106 $300,249 - $(54,809) $717,546
Cost of sales 332,946 214,372 - (54,809) 492,509
------- -------- ------- -------- --------
Gross profit on sales 139,160 85,877 - - 225,037
Selling, general and administrative expenses 98,580 60,545 11,762 - 170,887
------- -------- ------- -------- --------
Operating income 40,580 25,332 (11,762) - 54,150
------- -------- ------- -------- --------
Other expense (income)
Interest Expense 5,644 5,367 14,591 - 25,602
Other 1,861 1,246 (3,026) - 81
------- -------- ------- -------- --------
Total other expense 7,505 6,613 11,565 _ 25,683
------- -------- ------- -------- --------
Income before taxes on income and equity
in income of subsidiaries 33,075 18,719 (23,327) - 28,467
Taxes on income 13,798 6,763 (9,408) - 11,153
Equity in income of subsidiaries - - 31,233 (31,233) -
------- -------- ------- -------- --------
Net income 19,277 11,956 17,314 (31,233) 17,314
Preferred stock dividends - - 1,299 - 1,299
------- -------- ------- -------- --------
Net income applicable to common share holders $19,277 $ 11,956 $16,015 $(31,233) $ 16,015
======= ======== ======= ======== ========
</TABLE>
8
<PAGE> 9
INTERFACE, INC. AND SUBSIDIARIES
Note 5 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
September 29, 1996
Consolidation
Non- Interface, Inc. and
Guarantor Guarantor (Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Totals
---------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 947 $ 4,896 $(5,689) - $ 154
Accounts receivable 102,825 81,301 (19,260) - 164,866
Inventories 96,197 57,383 999 - 154,579
Miscellaneous 6,175 14,559 5,949 - 26,683
-------- -------- -------- --------- --------
Total current assets 206,144 158,139 (18,001) - 346,282
Property and equipment, less accumulated
depreciation 140,951 57,204 4,098 - 202,253
Investment in subsidiaries 108,977 17,746 331,921 (458,644) 0
Miscellaneous 134,876 35,419 416,027 (531,352) 54,970
Excess of cost over net assets acquired 148,804 88,462 3,489 - 240,755
-------- -------- -------- --------- --------
$739,752 $356,970 $737,534 $(989,996) $844,260
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 5,168 $ 482 - - $ 5,650
Accounts payable 47,961 25,743 373 - 74,077
Accrued expenses 40,982 29,558 (593) - 69,947
Current maturities of long-term debt 2,029 98 - - 2,127
-------- -------- -------- --------- --------
Total current liabilities 96,140 55,881 (220) - 151,801
Long-term debt, less current maturities 199,944 102,606 296,496 (332,739) 266,307
Senior subordinated notes - - 125,000 - 125,000
Deferred income taxes 16,063 582 5,273 - 21,918
-------- -------- -------- --------- --------
Total liabilities 312,147 159,069 426,549 (332,739) 565,026
Redeemable preferred stock 57,891 - 24,751 (57,891) 24,751
Common stock 84,834 98,526 2,425 (183,360) 2,425
Additional paid-in capital 167,307 21,480 114,272 (188,788) 114,271
Retained earnings 120,810 73,797 173,905 (209,005) 159,507
Foreign currency translation adjustment (3,237) 4,098 (4,368) (467) (3,974)
Treasury stock - - - (17,746) (17,746)
-------- -------- -------- --------- --------
$739,752 $356,970 $737,534 $(989,996) $844,260
======== ======== ======== ========= ========
</TABLE>
9
<PAGE> 10
INTERFACE, INC. AND SUBSIDIARIES
Note 5 - SUPPLEMENTAL GUARANTOR FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
For the Nine Months Ended September 29, 1996
Consolidation
Non- Interface, Inc. and
Guarantor Guarantor (Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Totals
----------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities $20,357 $26,721 $(23,198) - $23,880
------- ------- -------- ------ -------
Cash flows from investing activities:
Purchase of plant and equipment (16,488) (8,242) (3,065) - (27,795)
Acquisitions, net of cash acquired (46,912) - (46,912)
Other (3,354) - (3,354)
------- ------- -------- ------ -------
Net cash provided by (used in) investing
activities (16,488) (8,242) (53,331) - (78,061)
------- ------- -------- ------ -------
Cash flows from financing activities:
Net borrowings (repayments) (5,906) (18,626) 74,170 - 49,638
Proceeds from issuance of common stock 881 - 881
Cash dividends paid (4,839) - (4,839)
Other - -
------- ------- -------- ------ -------
Net cash provided by (used in) financing
activities (5,906) (18,626) 70,212 - 45,680
------- ------- -------- ------ -------
Effect of exchange rate change on cash - (95) - - (95)
------- ------- -------- ------ -------
Net increase (decrease) in cash (2,037) (242) (6,317) - (8,596)
Cash at beginning of year 2,984 5,138 628 - 8,750
------- ------- -------- ------ -------
Cash at end of year $ 947 $ 4,896 $ (5,689) - $ 154
======= ======= ======== ====== =======
</TABLE>
10
<PAGE> 11
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
September 29, 1996, the Company's net sales increased $71.8 million (35.3%) and
$120.1 (20.1%), respectively, compared with the same periods in 1995. The
increase was primarily attributable to (i) increased sales volume associated
with the acquisitions of the companies in the Company's newly formed U.S.
distribution network, Re:Source Americas, (ii) increased sales volume in the
Company's floorcoverings operations in the United States, Continental Europe and
Australia; (iii) increased sales volume in the Company's interior fabrics
operations associated with the acquisitions of Toltec Fabrics, Inc. in June
1995, and the Intek Division of Springs Industries in December 1995, and (iv)
increased sales volume in the Company's specialty resources division associated
with the acquisition of C-Tec, Inc. in February 1996. These increases were
offset somewhat by a weakening of the currencies of certain key markets
(particularly the British pound sterling, Dutch guilder and Japanese yen)
against the U.S. dollar, the Company's reporting currency.
Cost of sales, as a percentage of sales, decreased slightly to 68.2% and
68.6%, respectively, for the three month and nine month periods ended September
29, 1996, when compared to 68.7% and 69.1% for the same periods in 1995. The
Company recognized a decrease in manufacturing costs in its operations due to
continued implementation of its make-to-order production strategy and
"war-on-waste" initiative, which created manufacturing efficiencies as well as
a shift to higher margin products. In addition to the improved manufacturing
efficiencies, the Company achieved improved pricing in its floorcovering
operations. These benefits were somewhat offset by the acquisitions of Toltec,
Intek, C-Tec, and the companies comprising the Company's new distribution
network, which historically had higher cost of sales than the Company.
Selling, general and administrative expenses as a percentage of sales
increased slightly to 24.0% and 23.8%, respectively, for the three month and
nine month periods ended September 29, 1996, compared to 23.3% and 23.4% for the
same periods in 1995. The increase for the three month period was attributable
to (i) administrative expenses associated with building an infrastructure to
manage Re:Source Americas, (ii) increased marketing and sampling expenses
in the floorcovering operations associated with the introduction of new
products as the Company moves to implement a mass customization strategy in
its European and U.S. operations and (iii) the acquisitions of Toltec
Fabrics and Intek which, historically, had higher SG&A ratios than the Company.
For the three month and nine month periods ended September 29, 1996, the
Company's other expense increased $1.4 million and $3.8 million, respectively,
compared to the same periods in 1995, primarily due to an increase in bank debt
incurred as a result of the Company's acquisitions, as well as increased
interest rates associated with the issuance of the Company's senior subordinated
notes in November
11
<PAGE> 12
1995 and subsequent redemption of the Company's convertible subordinated
debentures.
As a result of the aforementioned factors, the Company's net income (after
adjustment for preferred dividends) increased 46.2% to $7.1 million and 22.2% to
$16.0 million, respectively, for the three month and nine month periods ended
September 29, 1996, compared to the same periods in 1995.
LIQUIDITY AND CAPITAL RESOURCES. The primary uses of cash during the nine
month period ended September 29, 1996 have been (i) $ 46.9 million associated
with acquisitions, (ii) $27.8 million for additions to property and equipment in
the Company's manufacturing facilities, and (iii) $3.4 million related to
various deposits and long-term note receivables. These uses were funded
primarily by $49.6 million from long-term financing and $23.8 million from
operating activities.
Cash provided by operating activities decreased to $23.8 million during
the nine month period ended September 29, 1996 from $55.8 million during the
corresponding period in the prior year. This decrease was caused primarily by
an increase in accounts receivable, subsequent to the Company's sale of $33.9
million of domestic receivables under a securitization program at the end of
fiscal year 1995.
The Company, as of September 29, 1996, recognized a $ 7.5 million decrease
in foreign currency translation adjustment compared to that of December 31,
1995. The decrease was associated primarily with the Company's investments in
subsidiaries located in the United Kingdom and Continental Europe. The
translation adjustment to shareholders' equity was converted by the guidelines
of the Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 52.
The Company employs a variety of off-balance sheet financial instruments,
including foreign currency swap agreements and foreign currency exchange
contracts, to reduce its exposure to adverse fluctuations in interest and
foreign currency exchange rates. At September 29, 1996, the Company had
approximately $64.3 million (notional amount) of foreign currency hedge
contracts outstanding, consisting principally of currency swap contracts to
hedge firmly committed Dutch guilder and Japanese yen currency revenues. At
September 29, 1996, the Company utilized interest rate swap agreements to
effectively convert approximately $73 million of variable rate debt to fixed
rate debt. The interest rate swap agreements have maturity dates ranging from
nine to twenty-four 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 currently anticipate nonperformance by
the counterparties.
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.
12
<PAGE> 13
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
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report:
Exhibit
Number Description of Exhibit
------- ----------------------
[S] [C]
3.1 Articles of Incorporation (composite as of September 8,
1988) (included as Exhibit 3.1 to the Company's annual
report on Form 10-K for the year ended January 3, 1993
previously filed with the Commission and incorporated
herein by reference) and Articles of Amendment (Series A
Preferred Stock Designation), dated June 17, 1993
(included as Exhibit 4.1 to the Company's current report
on Form 8-K, filed with the Commission on July 7, 1993
and incorporated herein by reference).
3.2 Bylaws, as amended (included as Exhibit 3.2 to the
Company's quarterly report on Form 10-Q for the quarter
ended April 1, 1990, previously filed with the Commission
and incorporated herein by reference).
4.1 See Exhibits 3.1 and 3.2 for provisions in the Company's
Articles of Incorporation, as amended, and Bylaws
13
<PAGE> 14
defining the rights of holders of Common Stock of the
Company.
4.2 Indenture governing the Company's 9.5% Senior
Subordinated Notes due 2005, dated as of November 15,
1995, among the Company, certain U.S. subsidiaries of the
Company, as Guarantors, and First Union National Bank of
Georgia, as Trustee (included as Exhibit 4.1 to the
Company's registration statement on Form S-4, File No.
33-65201, previously filed with the Commission and
incorporated herein by reference).
4.3 Registration Rights Agreement dated as of November 21,
1995, among the Company, certain subsidiaries of the
Company as Guarantors and the Initial Purchasers of the
Company's Notes (included as Exhibit 4.3 to the Company's
registration statement on Form S-4, File No. 33-65201,
previously filed with the Commission and incorporated
herein by reference).
4.4 Form of Exchange Note (included as part of Exhibit 4.2).
10.1 Fourth Amendment to Amended and Restated Credit
Agreement, dated as of July 30, 1996, among the Company
(and certain direct and indirect subsidiaries), SunTrust
Bank and The First National Bank of Chicago.
10.2 Sixth Amendment to Revolving Credit Loan Agreement, dated
as of August 5, 1996, between Interface Flooring Systems,
Inc. and SunTrust Bank.
10.3 Employment Agreement of Raymond S. Willoch, dated as of
August 1, 1996.
10.4 Agreement (Change in Control) of Raymond S. Willoch,
dated as of August 1, 1996.
27.1 Financial Data Schedule (for SEC use only).
(b) No reports on Form 8-K were filed during the quarter ended
September 29, 1996.
14
<PAGE> 15
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 11, 1996 By:/s/ Daniel T. Hendrix
-------------------------------
Daniel T. Hendrix
Senior Vice President
(Principal Financial Officer)
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT SEQUENTIAL
NUMBER PAGE NO.
<S> <C>
3.1 Articles of Incorporation (composite as of September 8, 1988)
(included as Exhibit 3.1 to the Company's annual report on Form
10-K for the year ended January 3, 1993 previously filed with the
Commission and incorporated herein by reference) and Articles of
Amendment (Series A Preferred Stock Designation), dated June 17,
1993 (included as Exhibit 4.1 to the Company's current report on
Form 8-K, filed with the Commission on July 7, 1993 and
incorporated herein by reference).
3.2 Bylaws, as amended (included as Exhibit 3.2 to the Company's
quarterly report on Form 10-Q for the quarter ended April 1, 1990,
previously filed with the Commission and incorporated herein by
reference).
4.1 See Exhibits 3.1 and 3.2 for provisions in the Company's Articles
of Incorporation, as amended, and Bylaws defining the rights of
holders of Common Stock of the Company.
4.2 Indenture governing the Company's 9.5% Senior Subordinated Notes
due 2005, dated as of November 15, 1995, among the Company, certain
U.S. subsidiaries of the Company, as Guarantors, and First Union
National Bank of Georgia, as Trustee (included as Exhibit 4.1 to
the Company's registration statement on Form S-4, File No.
33-65201, previously filed with the Commission and incorporated
herein by reference).
4.3 Registration Rights Agreement dated as of November 21, 1995, among
the Company, certain subsidiaries of the Company as Guarantors and
the Initial Purchasers of the Company's Notes (included as Exhibit
4.3 to the Company's registration statement on Form S-4, File No.
33-65201, previously filed with the Commission and incorporated
herein by reference).
4.4 Form of Exchange Note (included as part of Exhibit 4.2).
10.1 Fourth Amendment to Amended and Restated Credit Agreement, dated as
of July 30, 1996, among the Company (and certain direct and
indirect subsidiaries), SunTrust Bank and The First National Bank
of Chicago.
10.2 Sixth Amendment to Revolving Credit Loan Agreement, dated as of
August 5, 1996, between Interface Flooring Systems, Inc. and
SunTrust Bank.
10.3 Employment Agreement of Raymond S. Willoch, dated as of August 1,
1996.
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
10.4 Agreement (Change in Control) of Raymond S. Willoch, dated as of
August 1, 1996.
27.1 Financial Data Schedule
(for SEC use only)
</TABLE>
17
<PAGE> 1
Exhibit 10.1
- ------------
================================================================================
FOURTH AMENDMENT TO
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of July 30, 1996
among
INTERFACE, INC.,
INTERFACE SCHERPENZEEL B.V.,
INTERFACE EUROPE LIMITED,
THE LENDERS LISTED HEREIN,
SUNTRUST BANK, ATLANTA
(FORMERLY TRUST COMPANY BANK)
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Agents,
and
SUNTRUST BANK, ATLANTA
as Collateral Agent
===============================================================================
<PAGE> 2
FOURTH AMENDMENT TO
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Fourth Amendment") made and entered into as of July 30, 1996, by and
among INTERFACE, INC., a Georgia corporation ("Interface"), INTERFACE
SCHERPENZEEL B.V., a "besloten vennootschap met beperkte aansprakelijkheid"
(private company with limited liability) incorporated and existing under the
laws of The Netherlands with its registered seat in Scherpenzeel, Gld., The
Netherlands ("Scherpenzeel B.V."), INTERFACE EUROPE LIMITED, a private company
limited by shares organized and existing under the laws of England and Wales
("Europe Limited"; Interface, Scherpenzeel B.V. and Europe Limited referred to
collectively herein as the "Borrowers"), SUNTRUST BANK, ATLANTA (formerly Trust
Company Bank), a banking corporation organized under the laws of the State of
Georgia ("TCB"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association ("FNBC"), the other banks and lending institutions listed on the
signature pages hereof (TCB, FNBC, and such other banks and lending
institutions referred to collectively herein as the "Lenders"), SUNTRUST BANK,
ATLANTA (formerly Trust Company Bank), in its capacity as agent for those
Lenders having outstanding Domestic Syndicated Loan Commitments or having
outstanding Domestic Revolving Loans or Term Loans as provided in the Credit
Agreement defined below (the "Domestic Agent"), THE FIRST NATIONAL BANK OF
CHICAGO, in its capacity as agent for those Lenders having outstanding
Multicurrency Syndicated Loan Commitments or having outstanding Multicurrency
Revolving Loans as provided in the Credit Agreement defined below (the
"Multicurrency Agent"; the Domestic Agent and the Multicurrency Agent referred
to collectively herein as the "Co-Agents"), and SUNTRUST BANK, ATLANTA
(formerly Trust Company Bank), in its capacity as collateral agent for the
Co-Agents and the Lenders (the "Collateral Agent");
WITNESSETH:
WHEREAS, the Borrowers, the Co-Agents, the Collateral Agent,
and the Lenders are parties to a certain Credit Agreement dated as of January
9, 1995, as amended and restated by a certain Amended and Restated Credit
Agreement dated as of June 30, 1995, and as further amended by a certain First
Amendment to Amended and Restated Credit Agreement dated as of July 31, 1995,
by a certain Second Amendment to Amended and Restated Credit Agreement dated as
of November 21, 1995, and by a certain Third Amendment to Amended and Restated
Credit Agreement dated as of February 28, 1996 (as so amended and restated, the
"Credit Agreement");
WHEREAS, the Borrowers have requested that the maturity date
of the domestic and multicurrency revolving credit facilities under the Credit
Agreement be extended to December 31, 2001, that certain changes be made with
respect to the commitment fees and interest rates to be
<PAGE> 3
applicable to the revolving credit facilities and the term loan facility under
the Credit Agreement, that a change be made in the financial covenants required
to be satisfied by Interface after the date hereof, and that certain other
amendments to the Credit Agreement be made;
WHEREAS, the Lenders and the Co-Agents have agreed to amend
the Credit Agreement as requested by the Borrowers, subject to the terms,
conditions and requirements set forth in this Fourth Amendment;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the Borrowers, the Lenders, the Co-Agents
and the Collateral Agent agree as follows:
1. Defined Terms. Except as otherwise expressly defined herein, each
capitalized term used in this Fourth Amendment that is defined in the Credit
Agreement is used herein with the meaning assigned to such capitalized term in
the Credit Agreement.
2. Amendments to Section 1.01 ("Definitions").
(a) Section 1.01 of the Credit Agreement is hereby amended by
adding the following defined terms and definitions thereof in proper
alphabetical order:
"Applicable Commitment Fee Rate" shall mean the rate to be used to
calculate commitment fees payable by the Borrowers pursuant to Section 5.05(b)
and 5.05(c) during any of Interface's fiscal quarters from and after the Fourth
Amendment Effective Date, expressed as a percentage and determined for such
fiscal quarter from the chart set forth below based on Interface's Funded Debt
Coverage Ratio calculated as of the last day of the second fiscal quarter
immediately preceding the then current fiscal quarter:
<TABLE>
<CAPTION>
Funded Debt Applicable Commitment
Coverage Ratio Fee Rate
-------------- ---------------------
<S> <C>
Greater than or equal to 3.00 .25%
Less than 3.00, but greater than
or equal to 2.00 .20%
Less than 2.00 .15%
</TABLE>
provided, however, if Interface fails to deliver its financial statements for
such second preceding fiscal quarter pursuant to Section 8.07 prior to the
first day of the then-current fiscal quarter, the Applicable Commitment Fee
Rate during such current fiscal quarter shall be .25%.
- 2 -
<PAGE> 4
"Fourth Amendment to Credit Agreement" shall mean the Fourth
Amendment to Amended and Restated Credit Agreement dated as of July 30, 1996,
by and among the Borrowers, the Lenders, the Co-Agents, and the Collateral
Agent, together with all exhibits thereto.
"Fourth Amendment Effective Date" shall mean the date on which
the conditions to the effectiveness of the Fourth Amendment to Credit Agreement
have been satisfied, as set forth in paragraph 12 of the Fourth Amendment to
Credit Agreement.
(b) The defined terms and definitions thereof listed below that
appear in the Credit Agreement are hereby amended by deleting said defined
terms and definitions in their entirety and substituting in lieu thereof the
following defined terms and definitions:
"Applicable Margin" shall mean, with respect to all
outstanding Loans during any of Interface's fiscal quarters prior to the Fourth
Amendment Effective Date, the "Applicable Margin" as determined pursuant to
this Agreement prior to giving effect to the Fourth Amendment to Credit
Agreement, and with respect to all outstanding Loans during any of Interface's
fiscal quarters from and after the Fourth Amendment Effective Date, the
percentage determined for such fiscal quarter from the chart set forth below
based on Interface's Funded Debt Coverage Ratio determined as of the last day
of the second fiscal quarter immediately preceding the then current fiscal
quarter:
<TABLE>
<CAPTION>
Funded Debt
Coverage Ratio Applicable Margin
-------------- -----------------
<S> <C>
Greater than or equal to 4.00 1.00%
Less than 4.00, but greater than
or equal to 3.50 .875%
Less than 3.50, but greater than
or equal to 3.00 .750%
Less than 3.00, but greater than
or equal to 2.50 .600%
Less than 2.50, but greater than
or equal to 2.00 .400%
Less than 2.00 .350%
</TABLE>
- 3 -
<PAGE> 5
provided, however, if Interface fails to deliver its financial statements for
such second preceding fiscal quarter pursuant to Section 8.07 prior to the
first day of the then-current fiscal quarter, the Applicable Margin with
respect to Loans outstanding during such current fiscal quarter shall be 1.00%.
"Guarantors" shall mean, collectively, Interface, Guilford of
Maine, Inc., Guilford (Delaware), Inc., Interface Flooring Systems, Inc.,
Rockland React-Rite Inc., Interface Research Corporation, Interface Europe,
Inc., Pandel, Inc., Interface Asia-Pacific, Inc., Bentley, Prince Street,
Toltec Fabrics, Inc., Intek, Inc., C-Tec, Inc., and all other Material
Subsidiaries (excluding Interface SPC that are not Foreign Subsidiaries, and
their respective successors and permitted assigns.
"Pledged Stock" shall mean, collectively, (i) all issued and
outstanding capital stock, together with all warrants, stock options, and other
purchase and conversion rights with respect to such capital stock, of each of
Guilford of Maine, Inc., Guilford (Delaware), Inc., Interface Flooring Systems,
Inc., Interface Research Corporation, Rockland React-Rite, Inc., Pandel, Inc.,
Interface Europe, Inc., Interface Asia-Pacific, Inc., Bentley, Prince Street,
Toltec Fabrics, Inc., Intek, Inc., C-Tec, Inc., and all other Material
Subsidiaries of Interface organized in the United States other than Interface
SPC, and (ii) 66% of all issued and outstanding capital stock, together with
66% of all warrants, stock options, and other purchase and conversion rights
with respect to such capital stock, of Europe Limited, Interface Europe B.V.,
Interface Heuga Singapore Pte Ltd., Guilford of Maine (Canada), Inc., Interface
Flooring Systems (Canada), Inc., Interface Heuga Hong Kong Ltd., Interface
Heuga Australia Pty Limited, and all other Material Subsidiaries that are
Foreign Subsidiaries directly owned by Interface and/or one or more other
Subsidiaries organized in the United States.
"Revolver/Multicurrency Maturity Date" shall mean the
earlier of (i) December 31, 2001, and (ii) the date on which all amounts
outstanding under this Agreement have been declared or have automatically
become due and payable pursuant to the provisions of Article 10.
3. AMENDMENT TO SECTION 5.05 ("FEES"). Section 5.05 of the Credit Agreement is
hereby amended by deleting subsections (b) and (c) of said Section 5.05 in
their entirety and substituting in lieu thereof new subsections (b) and (c) as
follows:
(b) Interface shall pay to the Domestic Agent, for the
account of and distribution of the respective Pro Rata Shares to the Domestic
Syndicated Lenders, a commitment fee for the period commencing on the Initial
Closing Date to and including the Revolver/Multicurrency Maturity Date computed
at a per annum rate equal to (i) three-eighths of one percent (0.375%) prior
to the Fourth Amendment Effective Date, and (ii) the Applicable Commitment Fee
Rate on and after the Fourth Amendment Effective Date, in each case for each
fiscal quarter, calculated on the average daily unused portion of the Domestic
Syndicated Loan Commitments of such Domestic Syndicated Lenders, such fee being
payable quarterly in arrears on the last calendar day of each fiscal quarter of
Interface, and on the Revolver/Multicurrency Maturity Date. If any Letters of
Credit are or were
- 4 -
<PAGE> 6
outstanding at any time during such fiscal quarter, the average daily Aggregate
L/C Outstandings thereunder shall constitute a usage of the Domestic Syndicated
Loan Commitments (thereby reducing the unused portion of the Domestic
Syndicated Loan Commitments by a corresponding amount) for purposes of
calculating such commitment fee. Solely for purposes of calculating the fees
due under this Section 5.05(b), (i) no Domestic Bid Rate Loans shall constitute
a usage of any of the Domestic Syndicated Loan Commitments of the Domestic
Syndicated Lenders, and (ii) the aggregate principal amount of the Domestic
Swing Line Loans from time to time outstanding shall constitute a usage of the
Domestic Syndicated Loan Commitment only with respect to the Domestic Swing
Line Lender.
(c) The Multicurrency Borrowers shall pay to the
Multicurrency Agent, for the account of and distribution of the respective Pro
Rata Shares to the Multicurrency Syndicated Lenders, a commitment fee for the
period commencing on the Initial Closing Date to and including the
Revolver/Multicurrency Maturity Date computed at a per annum rate equal to (i)
three-eighths of one percent (0.375%) prior to the Fourth Amendment Effective
Date, and (ii) the Applicable Commitment Fee Rate on and after the Fourth
Amendment Effective Date, in each case for each fiscal quarter, calculated on
the average daily unused portion of the Multicurrency Syndicated Loan
Commitments of such Multicurrency Syndicated Lenders (based on the Dollar
Equivalent of such unused portion and calculated in the manner set forth in the
second sentence of Section 4.02(a)), such fee being payable quarterly in
arrears on the last calendar day of each fiscal quarter of Interface, and on
the Revolver/Multicurrency Maturity Date. Solely for purposes of calculating
the fees due under this Section 5.05(c), (i) no Multicurrency Bid Rate Loans
shall constitute a usage of any of the Multicurrency Syndicated Loan
Commitments of the Multicurrency Syndicated Lenders, and (ii) the aggregate
principal amount of the Multicurrency Swing Line Loans from time to time
outstanding shall constitute a usage of the Multicurrency Syndicated Loan
Commitment only with respect to the Multicurrency Swing Line Lender.
4. AMENDMENT TO SECTION 8.09 ("FINANCIAL COVENANTS"). Section 8.09 of the
Credit Agreement is hereby amended by deleting subsection (c) of said Section
8.09 in its entirety and substituting in lieu thereof a new subsection (c) as
follows:
(c) Funded Debt Coverage. Maintain as of the last day of
each fiscal quarter, a maximum Funded Debt Coverage Ratio as shown below for
each fiscal quarter ending during the periods indicated:
- 5 -
<PAGE> 7
<TABLE>
<CAPTION>
Maximum Funded
Debt Coverage
Period Ratio
------ --------------
<S> <C>
Initial Closing Date through
June 29, 1997 4.75:1.00
June 30, 1997 and thereafter 4.50:1.00
</TABLE>
5. AMENDMENT TO SECTION 12.06 ("BENEFIT OF AGREEMENT"). Subsection (c) of
Section 12.06 of the Credit Agreement is hereby amended by deleting the first
and third sentences of subsection (c) in their entirety and substituting in
lieu of the first sentence the following sentence:
Each Lender may assign all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of any of
its Commitments and the Loans at the time owing to it and the Notes
held by it) and the Letter of Credit Agreement to any Eligible
Assignee; provided, however, that (i) the Co-Agents and Interface must
give their prior written consent to such assignment (which consent
shall not be unreasonably withheld; it being agreed that, in the case
of any assignment of an L/C Subcommitment or other obligations under
the Letter of Credit Agreement, such consent will be properly withheld
if such assignee does not then possess the "Minimum Required Rating"
as provided in the Letter of Credit Agreement and has not been
approved by the L/C Issuer in its sole discretion), (ii) the aggregate
amount of the Commitments and outstanding Term Loans of the assigning
Lender that are subject to such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is
delivered to the Co-Agents) shall not be less than $5,000,000, (iii)
the assigning Lender retains after the consummation of such assignment
a minimum aggregate amount of Commitments and Term Loans of
$10,000,000, and (iv) the parties to each such assignment shall execute
and deliver to the Co-Agents an Assignment and Acceptance, together
with a Note or Notes subject to such assignment and a processing and
recordation fee of $2500 provided, further, that in the case of any
assignment made (x) at any time there exists an Event of Default
hereunder, (y) where such assigning Lender is assigning the entire
amount of its Commitments and Term Loans hereunder, or (z) where such
assigning Lender is assigning to one of its Affiliates or to a Person
that is already a Lender under this Agreement prior to giving effect
to such assignment, then and in any such assignment described in the
preceding clauses (x), (y), or (z), the minimum amounts specified in
clauses (ii) and (iii) in this sentence shall not be required.
- 6 -
<PAGE> 8
6. AMENDMENT FEE. Interface agrees to pay to the Domestic Agent, for the
account of each Lender, on or before the Fourth Amendment Effective Date, a fee
for each Lender in the amount of $5,000 in connection with this Fourth
Amendment.
7. REPRESENTATIONS AND WARRANTIES. Each of Interface (as to itself and
all other Consolidated Companies) and each of the other Borrowers (as to itself
and all of its Subsidiaries) represents and warrants to the Lenders as follows:
(a) All representations and warranties set forth in the Credit
Agreement are true and correct in all material respects with the same effect as
though such representations and warranties have been made on and as of the date
hereof (except that the representation and warranty set forth in Section 7.19
of the Credit Agreement shall not be deemed to relate to any time subsequent to
the date of the initial Loans under the Credit Agreement);
(b) No Default or Event of Default has occurred and is continuing
on the date hereof;
(c) Since the date of the most recent financial statements of the
Consolidated Companies submitted to the Lenders pursuant to Section 8.07(b),
there has been no change which has had or could reasonably be expected to have
a Materially Adverse Effect (whether or not any notice with respect to such
change has otherwise been furnished to the Lenders pursuant to Section 8.07);
(d) Each of the Borrowers and the Guarantors has the corporate
power and authority to make, deliver and perform their respective obligations
under this Fourth Amendment and the Third Master Amendment described in
paragraph 12 hereof (together, the "Fourth Amendment Documents") and has taken
all necessary corporate action to authorize the execution, delivery and
performance of the Fourth Amendment Documents. No consent or authorization of,
or filing with, any Person (including, without limitation, any governmental
authority), is required in connection with the execution, delivery or
performance by any Borrower or Guarantor, or the validity or enforceability
against any Borrower or Guarantor, of any of the Fourth Amendment Documents,
other than such consents, authorizations or filings which have been made or
obtained (including without limitation, any necessary consultations with any
Borrower's supervisory board, works council ("Ondernemingsraad") or similar
body);
(e) Each of the Fourth Amendment Documents has been duly executed
and delivered by each of the Borrowers and the Guarantors and constitutes the
legal, valid and binding obligations of the Borrowers and the Guarantors,
enforceable against the Borrowers and the Guarantors in accordance with their
respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
The execution, delivery and performance by the
- 7 -
<PAGE> 9
Borrowers and the Guarantors of the Fourth Amendment Documents will not violate
any Requirement of Law or cause a breach or default under any of their
respective contractual obligations; and
(f) The "Consolidated Fixed Charge Coverage Ratio" (as defined in
the Senior Subordinated Notes Indenture) of Interface is greater than 2.0 to
1.0 and, accordingly, the Senior Subordinated Notes Indenture does not restrict
or limit the amount of indebtedness that may be incurred by Interface or any of
its Subsidiaries, and all of the Obligations under the Credit Documents (as
amended on the date hereof) constitute "Senior Indebtedness" for all purposes
of the Senior Subordinated Notes Indenture.
8. REFERENCES TO CREDIT AGREEMENT. On and after the Fourth Amendment
Effective Date, each and every reference in the Credit Documents to the Credit
Agreement shall be deemed to refer to and mean the Credit Agreement as amended
by this Fourth Amendment. The parties further confirm and agree that (i)
except as expressly amended herein, the Credit Agreement remains in full force
and effect in accordance with its terms, and (ii) except as expressly amended
by the Third Master Amendment described in paragraph 12 hereof, all other
Credit Documents remain in full force and effect in accordance with their
respective terms.
9. AMENDMENT TO LETTER OF CREDIT AGREEMENT. Each of the Domestic
Syndicated Lenders, by its execution and delivery of this Fourth Amendment,
hereby confirms and agrees to the amendments to the Letter of Credit Agreement
effected by the Third Master Amendment described in paragraph 12 hereof and
agrees to be bound in all respects by the terms thereof.
10. COUNTERPARTS. This Fourth Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
11. CREDIT LYONNAIS. On and after the Fourth Amendment Effective Date,
each and every reference in the Credit Documents to "Credit Lyonnais Cayman
Island Branch" shall be deemed to refer to and mean "Credit Lyonnais Atlanta
Agency".
12. MISCELLANEOUS. This Fourth Amendment and the rights and obligations of
the parties hereunder shall be construed in accordance with and be governed by
the law (without giving effect to the conflict of law principles thereof) of
the State of Georgia. This Fourth Amendment shall be binding on and shall
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
- 8 -
<PAGE> 10
13. EFFECTIVE DATE OF FOURTH AMENDMENT. This Fourth Amendment (including,
without limitation, the change in the Applicable Margin with respect to
outstanding Term Loans and the Applicable Commitment Fee Rates pursuant to
Sections 5.05(b) and 5.05(c) of the Credit Agreement) shall become effective
upon (i) the execution and delivery to the Domestic Agent of counterparts
hereof (whether originals or facsimile transmissions thereof) of (A) this
Fourth Amendment on behalf of each of the Borrowers, the Co-Agents, the
Collateral Agent, and each of the Lenders, and (B) the Third Master Amendment
of Credit Documents of even date herewith on behalf of the Borrowers, the other
Credit Parties, the L/C Issuer and the Collateral Agent in the form of Exhibit
A attached to this Fourth Amendment (the "Third Master Amendment"), and (ii)
payment by Interface of the amendment fees to each of the Lenders as provided
in paragraph 6 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be duly executed and delivered in Atlanta, Georgia, by their duly
authorized officers as of the day and year first above written.
INTERFACE, INC.
By: /s/ Daniel T. Hendrix
------------------------
Daniel T. Hendrix
Vice President
INTERFACE SCHERPENZEEL,
B.V.
By: /s/ Daniel T. Hendrix
------------------------
Daniel T. Hendrix
Attorney-in-Fact
INTERFACE EUROPE LIMITED
By: /s/ Daniel T. Hendrix
------------------------
Daniel T. Hendrix
Attorney-in-Fact
- 9 -
<PAGE> 11
SUNTRUST BANK, ATLANTA
(FORMERLY TRUST COMPANY BANK),
AS DOMESTIC AGENT AND
COLLATERAL AGENT
By: /s/ Thomas R. Banks
------------------------------
Name: Thomas R. Banks
Title: Banking Officer
By:
------------------------------
Name:
Title:
- 1 -
<PAGE> 12
THE FIRST NATIONAL BANK
OF CHICAGO, As
Multicurrency Agent
By: /s/ Catherine V. Frank
------------------------------
Name: Catherine V. Frank
Title: Assistant Vice President
- 2 -
<PAGE> 13
Address for Notices: SUNTRUST BANK, ATLANTA
(FORMERLY TRUST COMPANY BANK)
One Park Place, N.E.
Atlanta, Georgia 30303
Attn: John K. Shoffner By: /s/ Thomas R. Banks
---------------------------
Name: Thomas R. Banks
Title: Banking Officer
Telex No.: 542210
Answerback: TRUSCO INT ATL
By:
---------------------------
Name:
Title:
Domestic Lending Office:
One Park Place, N.E.
Atlanta, Georgia 30303
Telex No.: 542210
Answerback: TRUSCO INT ATL
Eurocurrency Lending Office:
One Park Place, N.E.
Atlanta, Georgia 30303
Telex No.: 542210
Answerback: TRUSCO INT ATL
- 3 -
<PAGE> 14
Address for Notices: THE FIRST NATIONAL BANK
Mail Suite 0324 OF CHICAGO
One First National Plaza
Chicago, Illinois 60670-0324
Attention: Al R. Chircop
By: /s/ Catherine V. Frank
------------------------------
Name: Catherine V. Frank
Telex No.: 4330253 Title: Assistant Vice President
Answerback: FNBC UI
Telecopy No.: 312/732-3885
Administrative Office:
One First National Plaza
Chicago, Illinois 60670
Attention: Al R. Chircop
Payment Offices:
(See Schedule 4.01)
- 4 -
<PAGE> 15
Address for Notices: ABN AMRO BANK N.V.
Suite 1200, One Ravinia Drive
Atlanta, Georgia 30346
Attn: Mark Clegg By: /s/ Steven L. Hipsman
---------------------------
Name: Steven L. Hipsman
Telephone: 770/396-0066 Title: Vice President
Telecopy: 770/395-9188
Telex: 682 7258 By: /s/ Robert A. Budnek
Answerback: ABNBANKATL --------------------------
Name: Robert A. Budnek
Title: Assistant Vice President
Domestic Lending Office:
ABN AMRO Bank N.V., Atlanta Agency
Suite 1200, One Ravinia Drive
Atlanta, GA 30346
Eurocurrency Lending Office:
ABN AMRO Bank N.V., Atlanta Agency
Suite 1200, One Ravinia Drive
Atlanta, GA 30346
- 5 -
<PAGE> 16
Address for Notices: BANK SOUTH, A DIVISION OF
NATIONSBANK, N.A. (SOUTH)
600 Peachtree Street, 19th Floor (SUCCESSOR BY MERGER TO BANK SOUTH,
Atlanta, GA 30308-2214 N.A.)
Attention: George Hodges
Telephone: 404/607-4591 By: /s/ Nitesh A. Lala
Telecopy: 404/607-6323 -------------------------------
Name: Nitesh A. Lala
Title: Vice President
By:
-------------------------------
Name:
Title:
With a copy to:
c/o NationsBank, N.A.
100 North Tryon Street
Mail Code NC 1-007-08-11
Charlotte, NC 28255
Attention: Lance Walton
Domestic Lending Office:
600 Peachtree Street
19th Floor
Atlanta, GA 30308-2214
Eurodollar Lending Office:
600 Peachtree Street
19th Floor
Atlanta, GA 30308-2214
- 6 -
<PAGE> 17
Address for Notices: THE BANK OF TOKYO-MITSUBISHI,
LIMITED, ATLANTA AGENCY
5050 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303 By: /s/ Brandon A. Meyerson
-------------------------------
Attn: Gary L. England Name: Brandon A. Meyerson
Title: Assistant Vice President
Telephone: 404/577-2960
Telecopy: 404/577-1155
Telex No.: 6827300
Answerback: 6827300BOT ATL
Domestic Lending Office:
5050 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Eurodollar Lending Office:
5050 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
- 7 -
<PAGE> 18
Address for Notices: CIBC, INC.
Canadian Imperial Bank of
Commerce
Two Paces West By: /s/ William C. Humphries
2727 Paces Ferry Road, Suite 1200 ---------------------------------
Atlanta, Georgia 30339 Name: William C. Humphries
Attn: William C. Humphries Title: Director
Vice President
Telephone: 404/319-4999
Telecopy: 404/319-4950
Domestic Lending Office:
Canadian Imperial Bank of Commerce
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Eurocurrency Lending Office:
Canadian Imperial Bank of Commerce
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
- 8 -
<PAGE> 19
Address for Notices: CREDITANSTALT-BANKVEREIN
Two Ravinia Drive, Suite 1680
Atlanta, Georgia 30346
Attention: Carl Drake By: /s/ Carl G. Drake
----------------------------------
Name: Carl G. Drake
Telephone: 770/390-1850 Title: Senior Associate
Telecopy: 770/389-1851
By: /s/ Robert M. Biringer
----------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
Domestic Lending Office:
245 Park Avenue
New York, New York 10167
Eurodollar Lending Office:
245 Park Avenue
New York, New York 10167
- 9 -
<PAGE> 20
Address for Notices: CREDIT LYONNAIS NEW YORK BRANCH
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400 By: /s/ Robert Ivosevich
Atlanta, GA 30308 ------------------------------
Attn: David Cawrse Name: Robert Ivosevich
Title: Senior Vice President
Telephone: 404/524-3700
Telecopy: 404/584-5249
CREDIT LYONNAIS ATLANTA AGENCY
By: /s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
Domestic Lending Office:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
and/or
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400
Atlanta, GA 30308
Eurodollar Lending Office:
Credit Lyonnais Atlanta Agency
303 Peachtree Street, N.E.
Suite 4400
Atlanta, GA 30308
and/or
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
- 10 -
<PAGE> 21
Address for Notices: THE SUMITOMO BANK, LIMITED
(ASSIGNEE OF THE DAIWA BANK, LIMITED)
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606 By: /s/ E. B. Buchanan, Jr.
Attn: Operations Manager --------------------------------
Name: E. B. Buchanan, Jr.
Title: Vice President
Telephone: 312/876-0181
Telecopy: 312/876-1995
By: /s/ Sybil H. Weldon
--------------------------------
Name: Sybil H. Weldon
Title: Vice President & Manager
Domestic Lending Office:
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
Eurodollar Lending Office:
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
- 11 -
<PAGE> 22
Address for Notices: FIRST UNION NATIONAL
BANK OF GEORGIA
999 Peachtree Street, N.E.
6th Floor
Atlanta, Georgia 30309
Attn: Irene Barton By: /s/ Irene M. Barton
-----------------------------
Name: Irene M. Barton
Title: Vice President
Telephone: 404/827-7986
Telecopy: 404/827-7199
Domestic Lending Office:
999 Peachtree Street, N.E.
6th Floor
Atlanta, Georgia 30309
Eurodollar Lending Office:
999 Peachtree Street, N.E.
6th Floor
Atlanta, Georgia 30309
- 12 -
<PAGE> 23
Address for Notices: FLEET BANK OF MAINE
80 Exchange Street
Bangor, Maine 04401
Attn: Neil Buitenhuys By: /s/ Neil C. Buitenhuys
------------------------------
Name: Neil C. Buitenhuys
Title: Vice President
Telephone: 207/941-6140 or 6180
Telecopy: 207/941-6023
Domestic Lending Office:
511 Congress St., P.O. Box 1280
Portland, Maine 04104-5006
Eurodollar Lending Office:
511 Congress St., P.O. Box 1280
Portland, Maine 04104-5006
- 13 -
<PAGE> 24
Address for Notices: NATIONSBANK, N.A.
(FORMERLY KNOWN AS NATIONSBANK, N.A.
(CAROLINAS) AND NATIONSBANK OF NORTH
100 North Tryon Street CAROLINA, N.A.)
Mail Code NC1-007-08-11
Charlotte, NC 28255 By: /s/ Nitesh A. Lala
Attention: Lance Walton --------------------------------
Name: Nitesh A. Lala
Title: Vice President
Telephone: 704/386-6744
Telecopy: 704/386-1270
Domestic Lending Office:
One Independence Center
1O1 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, North Carolina 28255
Eurocurreny Lending Office:
One Independence Center
1O1 North Tryon Street
Mail Code NC1-001-15-03
Charlotte, North Carolina 28255
- 14 -
<PAGE> 25
Address for Notices: PNC BANK, N.A.
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Attn: Robert J. Mitchell, Jr. By: /s/ Robert J. Mitchell
-----------------------------------
Name: Robert J. Mitchell
Title: Vice President
Telephone: 412/762-6547
Telecopy: 412/762-6484
Domestic Lending Office:
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Eurodollar Lending Office:
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
- 15 -
<PAGE> 26
Address for Notices: WACHOVIA BANK OF GEORGIA, N.A.
191 Peachtree Street, N.E.
30th Floor
Atlanta, Georgia 30383
Attn: Doug Strickland By: /s/ Douglas W. Strickland
-------------------------------
Name: Douglas W. Strickland
Title: Vice President
By:
-------------------------------
Name:
Telecopy: 404/332-1382 Title:
Telex: 404/332-6920
Answerback: FNBAINTL
Domestic Lending Office:
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
Eurocurrency Lending Office:
191 Peachtree Street, N.E.
Atlanta, Georgia 30383
- 16 -
<PAGE> 1
Exhibit 10.2
- ------------
SIXTH AMENDMENT TO
REVOLVING CREDIT LOAN AGREEMENT
THIS SIXTH AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT dated as of
August 5, 1996 (the "Sixth Amendment") by and among INTERFACE FLOORING SYSTEMS,
INC., a corporation organized and existing under the laws of the State of
Georgia (the "Borrower"), INTERFACE, INC., a corporation organized and existing
under the laws of the State of Georgia ("Interface"), and SUNTRUST BANK,
ATLANTA (formerly Trust Company Bank), a Georgia banking corporation (the
"Bank").
W I T N E S S E T H:
WHEREAS, the Borrower and the Bank are parties to, and Interface
executed, for the purpose of acknowledging certain terms thereof, that certain
Revolving Credit Loan Agreement dated as of August 5, 1991, as amended by that
certain First Amendment to Revolving Credit Loan Agreement dated as of June 30,
1992, by that certain Second Amendment to Revolving Credit Loan Agreement dated
as of August 5, 1993, by that certain Third Amendment to Revolving Credit Loan
Agreement dated as of June 15, 1994, and by that certain Fourth Amendment to
Revolving Credit Loan Agreement dated as of August 5, 1994, with Interface
having joined as a party to the Revolving Credit Loan Agreement pursuant to
that certain Joinder Agreement and Fifth Amendment to Revolving Credit Loan
Agreement dated as of June 30, 1995 (as amended, the "Loan Agreement"; all
terms used herein without definition shall have the meanings set forth in the
Loan Agreement); and
WHEREAS, the Borrower and Interface have requested the Loan Agreement
be amended to extend the Commitment thereunder for an additional year, to
effect a reduction in certain interest rates and commitment fees applicable
under the Loan Agreement, and to make certain other conforming changes to the
Loan Agreement, and the Bank has agreed to such amendments, subject to the
terms and conditions of this Sixth Amendment;
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) paid in hand and for further good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. DEFINED TERMS. Except as otherwise expressly defined herein,
capitalized terms used in this Sixth Amendment that are defined in the Loan
Agreement are used herein with the respective meanings specified for such
capitalized terms in the Loan Agreement.
2. AMENDMENT TO SECTION 1.01 ("DEFINITIONS").
Section 1.01 of the Loan Agreement is hereby amended as follows:
<PAGE> 2
(a) by deleting the definition of "1995 Credit Agreement" in its
entirety and substituting the following in lieu thereof:
"1995 Credit Agreement" shall mean that certain Credit
Agreement dated as of January 9, 1995, among Interface, Interface
Scherpenzeel B.V., Interface Europe Limited, Trust Company Bank (now
SunTrust Bank, Atlanta), as Domestic Agent and Collateral Agent, The
First National Bank of Chicago, as Multicurrency Agent, and the
Lenders listed on the signature pages thereof and each other bank or
lending institution that has become a Lender thereunder, as amended
and restated by a certain Amended and Restated Credit Agreement dated
as of June 30, 1995, and as further amended by a certain First
Amendment to Amended and Restated Credit Agreement dated as of July
31, 1995, by a certain Second Amendment to Amended and Restated Credit
Agreement dated as of November 21, 1995, by a certain Third Amendment
to Amended and Restated Credit Agreement dated as of February 28,
1996, and by a certain Fourth Amendment to Amended and Restated Credit
Agreement dated as of July 30, 1996.
(b) by adding the following definition of "Maturity Date" in
appropriate alphabetical order:
"Maturity Date" shall mean August 5, 1997, or such later date
as the Bank and the Primary Credit Party may hereafter agree in
writing to be the "Maturity Date" for purposes of the Loan Agreement.
3. AMENDMENT TO SECTION 2.01 ("COMMITMENT AND REVOLVING CREDIT NOTE").
Section 2.01 of the Loan Agreement is hereby deleted in its entirety
and the following substituted in lieu thereof:
"SECTION 2.01. Commitment and Revolving Credit Note. Subject
to and upon the terms and conditions set forth in this Agreement, the
Bank establishes until the Maturity Date a revolving credit in favor
of the Primary Credit Party, jointly and severally, in aggregate
principal amount at any one time outstanding not to exceed $4,250,000
(the "Commitment"). Within the limits of the Commitment, the Primary
Credit Party may borrow, repay and reborrow under the terms of this
Agreement; provided, however, that the Primary Credit Party may
neither borrow nor reborrow should there exist a Default or an Event
of Default (which has not been waived in accordance with the terms of
this Agreement). All Borrowings under the Commitment shall be
evidenced by a single Revolving Credit Note payable to the Bank in the
form of Exhibit A attached hereto with appropriate insertions. The
Revolving Credit Note shall be dated the date hereof, shall be payable
to the order of the Bank in a principal amount equal to the
Commitment, shall bear interest as hereinafter provided and shall
mature on the Maturity Date or sooner should the principal and accrued
- 2 -
<PAGE> 3
interest thereon be declared immediately due and payable as provided
for hereinafter (the "Termination Date"). The aggregate principal
amount of each Borrowing under the Commitment shall be not less than
$100,000.00 and shall be in integral multiples of $50,000.00. The
Bank shall not have any obligation to advance funds in excess of the
amount of the Commitment."
4. AMENDMENT TO SECTION 2.02 ("INTEREST ON REVOLVING CREDIT NOTE").
Section 2.02 of the Loan Agreement is hereby amended by deleting clause (i)
thereof in its entirety and substituting in lieu thereof the following clause
(i):
(i) The Cost of Funds Rate quoted by the Bank and
accepted by the Borrower in accordance with Section 2.03 hereof plus
an additional nine-tenths of one percent (0.90%) per annum; or
The foregoing reduction in the rate of interest applicable under Section
2.02(i) shall take effect on August 5, 1996, with respect to all Cost of Funds
Rate Borrowings outstanding on or after August 5, 1996. All Cost of Funds Rate
Borrowings outstanding prior to August 5, 1996 shall bear interest until August
5, 1996, as the rate specified in Section 2.02(i) as in effect immediately
prior to this Sixth Amendment.
5. AMENDMENT TO SECTION 2.08 ("COMMITMENT FEE"). Section 2.08 of the
Loan Agreement is hereby amended by deleting the first sentence of Section 2.08
in its entirety and substituting in lieu thereof the following sentence:
The Primary Credit Party shall pay to the Bank a commitment
fee (i) from and after August 5, 1991 up to and including August 5,
1996, at the rate of three-eighths of one percent (0.375%) per annum,
and (ii) from and after August 5, 1996 up to and including the
Termination Date, at the rate of one quarter of one percent (0.250%)
per annum (in each case calculated on the basis of a year of 360 days
and payable for the actual number of days elapsed) on the average
daily balance of the unused portion of the Commitment (the "Commitment
Fee").
6. SUBSTITUTION OF EXHIBIT "A". Exhibit A to the Loan Agreement is
hereby deleted in its entirety and Exhibit A attached hereto and incorporated
herein by this reference is hereby substituted therefor.
- 3 -
<PAGE> 4
7. MISCELLANEOUS.
(a) This Sixth Amendment shall be effective upon the
receipt of the Bank of a duly executed counterpart of this Sixth Amendment in
its office in Atlanta, Georgia together with a duly executed revolving credit
note in the form of Exhibit A attached hereto. Upon such receipt all
references to the Loan Agreement shall mean the Loan Agreement as amended by
this Sixth Amendment, all references to the "Revolving Credit Note" or "Note"
shall mean the revolving credit note delivered pursuant hereto, and all
references to the "Termination Date" shall mean the Termination Date as defined
in this Sixth Amendment. Except as expressly provided in this Sixth Amendment,
the execution and delivery of this Sixth Amendment does not and will not amend,
modify or supplement any provision of, or constitute a consent to or waiver of
the noncompliance with the provisions of, the Loan Agreement and, except as
specifically provided in this Sixth Amendment, the Loan Agreement shall remain
in force and effect in accordance with its terms.
(b) This Sixth Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
(c) This Sixth Amendment shall be governed by and
construed in accordance with the laws of the State of Georgia without regard to
the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Sixth
Amendment to be executed and delivered by their duly authorized officers as of
the day and year first above written.
INTERFACE FLOORING SYSTEMS, INC.
By: /s/ Daniel T. Hendrix
--------------------------------
Name: Daniel T. Hendrix
Title: Vice President
Attest: /s/ Raymond S. Willoch
--------------------------------
Name: Raymond S. Willoch
Title: Assistant Secretary
- 4 -
<PAGE> 5
INTERFACE, INC.
By: /s/ Daniel T. Hendrix
--------------------------------
Name: Daniel T. Hendrix
Title: Senior Vice President
Attest: /s/ Raymond S. Willoch
--------------------------------
Name: Raymond S. Willoch
Title: Assistant Secretary
SUNTRUST BANK, ATLANTA
(FORMERLY TRUST COMPANY BANK)
By: /s/ Thomas R. Banks
--------------------------------
Name: Thomas R. Banks
Title: Banking Officer
By: /s/ John K. Shoffner
--------------------------------
Name: John K. Shoffner
Title: Group Vice President
- 5 -
<PAGE> 6
THE UNDERSIGNED GUARANTORS HEREBY CONSENT AND AGREE TO THE TERMS OF THE
FOREGOING SIXTH AMENDMENT AND HEREBY RATIFY AND CONFIRM THAT THE GUARANTY
AGREEMENT REMAINS IN FULL FORCE AND EFFECT AS OF THIS 5TH DAY OF AUGUST, 1996:
INTERFACE EUROPE, INC., FORMERLY
INTERFACE INTERNATIONAL, INC.
By: /s/ Daniel T. Hendrix
----------------------------
Title: Vice President
ROCKLAND REACT-RITE, INC.
By: /s/ Daniel T. Hendrix
----------------------------
Title: Vice President
INTERFACE RESEARCH CORPORATION
By: /s/ Daniel T. Hendrix
----------------------------
Title: Vice President
PANDEL, INC.
By: /s/ Daniel T. Hendrix
----------------------------
Title: Vice President
- 6 -
<PAGE> 1
Exhibit 10.3
- ------------
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 1st day of
August, 1996, by and between INTERFACE, INC., a corporation organized under the
laws of the State of Georgia, U.S.A. (the "Company"), and RAYMOND S. WILLOCH, 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 ("CEO") 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 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
(other than as a director of Georgia Duck & Cordage Mill) 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 ninety (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 subparagraph (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 (1/12) of the average ("Average Bonus") of the bonuses
paid to him for the two (2) 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
2
<PAGE> 3
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 for such coverages the Executive was paying 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 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 (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 subparagraph (v)
3
<PAGE> 4
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
(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 Section 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
4
<PAGE> 5
this sentence forfeit any rights in which he is vested at the time of
his death or disability.
(x) If Executive becomes entitled to compensation and benefits
under this Section 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, or (iv)
Executive's conviction of a felony or crime involving moral turpitude. A
termination of Executive for just cause based on clause (ii) or (iii) of the
preceding sentence shall take effect thirty (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).
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 CEO 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
5
<PAGE> 6
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 Product attached hereto as Exhibit "A", which is
acknowledged to have been effective since August 1, 1996, 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 twelve (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 (2) 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 Section 8 shall be for twenty-four
(24) months after such termination, rather than twelve (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
CEO, Chief Financial Officer, or General Counsel of the Company for
clarification and afford the Company at least ten (10) calendar
6
<PAGE> 7
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.
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 seven
(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: Raymond S. Willoch
at the last address shown
on the records of the Company
7
<PAGE> 8
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) 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.
8
<PAGE> 9
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
---------------------------------
Ray C. Anderson,
President
Attest: /s/ Raymond S. Willoch
-----------------------------
Secretary
[CORPORATE SEAL]
EXECUTIVE
/s/ Raymond S. Willoch
--------------------------------------
Raymond S. Willoch
9
<PAGE> 10
EXHIBIT "A"
EMPLOYEE AGREEMENT REGARDING CONFIDENTIALITY
AND WORK PRODUCT
During the course of my employment, the Company has furnished or
disclosed (or may furnish or disclose) to me certain Confidential Information
related to its business. I also may invent, develop, produce, write or
generate Confidential Information and Work Product which might be of great
value to its competitors. I acknowledge that the continuing ability of the
Company to engage successfully in its business and provide goods and services
on a competitive basis depends, in part, upon maintenance of the secrecy of the
Confidential Information and protection of its rights in Work Product.
Therefore, as part of the consideration for the compensation paid or
to be paid me for my services during the course of my employment, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, I covenant and agree with and in favor of the Company as
follows:
1. DEFINITIONS. The following terms, whenever used in this Agreement,
shall have the respective meanings set forth below:
COMPANY -- Interface, Inc. and its direct and indirect subsidiaries
and affiliated companies (including, without limitation, Interface
Flooring Systems, Inc.), individually and collectively. (References
herein to EMPLOYER shall mean the particular company by which I am
employed.)
CONFIDENTIAL INFORMATION -- (i) All Trade Secrets (as defined below),
and (ii) any other information that is material to the Company and not
generally available to the public, including, without limitation,
information concerning the Company's methods and plans of operation,
production processes, marketing and sales strategies, research and
development, know-how, computer programming, style and design
technology and plans, non-published product specifications, patent
applications, product and raw material costs, pricing strategies,
business plans, financial data, personnel records, suppliers and
customers (whether or not such information constitutes a Trade
Secret).
TRADE SECRET -- Information of or about the Company that would be
considered a trade secret under Georgia law; namely, that information
which (i) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable through proper
means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Such
information constituting Trade Secrets may include, but shall not be
limited to, technical or nontechnical data, a formula, pattern,
compilation, program, device, method, technique, drawing or process,
financial data or plans, product plans, or a list of actual or
potential customers or suppliers.
NONDISCLOSURE PERIOD -- (i) With respect to any Trade Secret, the
period of my employment with Employer and for so long afterwards as
the pertinent information or data remains a Trade Secret; and (ii)
with respect to Confidential Information that does not constitute a
Trade Secret, the period of my employment with Employer and for a
period of two years thereafter.
WORK PRODUCT -- (i) All writings, tapes, recordings, computer programs
and other works in any tangible medium of expression, regardless of
the form of medium, and (ii) all inventions or ideas in the nature of
a new design, machine, process, method of manufacture, composition of
matter or formula, or any new and useful improvements thereof, that
relate to the business conducted by the Company and have been or are
conceived, prepared or developed by me (in whole or in part, alone or
in conjunction with others) during the term of my employment with
Employer.
2. CONFIDENTIALITY. During the applicable Nondisclosure Period, I will
neither use (except as necessary to perform my obligations to Employer) nor
disclose to any other person or entity (except employees of the Company
authorized to receive such information) any Confidential Information without
the prior written consent of an executive officer of Employer to do so. The
foregoing obligations shall apply with regard to all Confidential Information
known to me, including such Confidential Information first disclosed to (or
known by) me prior to the date of this Agreement. The limited duration of the
Nondisclosure Period shall not operate or be construed as affording me any
right or license to use any Confidential Information (or Work Product) at the
end of such Nondisclosure Period, or as a waiver by the Company of the rights
and benefits available to it under laws governing the protection and
enforceability of patents, copyrights and other intellectual property.
A-1
<PAGE> 11
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
twenty (20) days (from the date of receipt of such request) to respond before
disclosing or personally using such information or data.
4. RIGHTS TO WORK PRODUCT. The Work Product, and all patents, copyrights
and other rights, titles and interests whatsoever in and to the Work Product,
shall be owned solely, irrevocably and exclusively throughout the world by
Employer as works made for hire. If and to the extent any court or agency
should conclude that the Work Product (or any portion thereof) does not
constitute or qualify as "work made for hire", I hereby (without further
consideration) assign, grant and deliver unto Employer (or its designee),
solely, irrevocably and exclusively throughout the world, all rights, titles
and interests whatsoever (whether presently in existence or arising in the
future) in and to the Work Product. I will execute and deliver such additional
grants, assignments, transfer instruments and other documents as Employer from
time to time (whether during or subsequent to my employment) reasonably may
request for the purpose of evidencing, perfecting, enforcing, registering or
defending its complete, exclusive, perpetual and worldwide ownership of all
such rights, titles and interest in and to the Work Product, or to effect the
transfer of any such rights, titles and interests to designees of Employer. I
hereby irrevocably constitute and appoint Employer as my agent and attorney-
in-fact (with full power of substitution) to execute and deliver, in my name,
place and stead, any and all such assignments or other instruments (including,
without limitation, applications for U.S. and foreign patents) which I shall
fail or refuse promptly to execute and deliver, this power and agency being
coupled with an interest and being irrevocable. Without limiting the preceding
provisions of this paragraph, I acknowledge and agree that the Company may
edit, modify, use, publish and exploit the Work Product (and any portion
thereof) in all media and in such manner as the Company in its discretion may
determine.
5. RETURN OF INFORMATION. Upon request by an executive officer of
Employer at any time, and in any event upon termination of my employment for
any reason, I will deliver to an executive officer of Employer all written
materials and records and all other tangible items (such as tools and devices)
in my possession or under my control that constitute or embody Confidential
Information or Work Product, or that otherwise are the property of the Company
or relate to the affairs of the Company, and will keep no copies or duplicates
thereof except as may be expressly authorized in writing at that time by an
executive officer of Employer.
6. INJUNCTIVE RELIEF. I acknowledge that any breach of the terms of this
Agreement would result in material damage to the Company, although it might be
difficult to establish the monetary value of the damage. I therefore agree
that the Company, in addition to any other rights and remedies available to it,
shall be entitled to injunctive relief by a court of appropriate jurisdiction
in the event of my breach or threatened breach of any term of this Agreement.
7. GENERAL MATTERS. (a) All rights and restrictions contained herein may
be exercised and shall be applicable and binding only to the extent that they
do not violate applicable law. If any term of this Agreement shall be held to
be illegal, invalid or unenforceable by a court of competent jurisdiction, the
remaining terms hereof shall remain in full force and effect. (b) This
Agreement does not create in me any rights of continued employment, and
whatever rights Employer may have to terminate my employment are not affected
hereby. (c) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia (USA). (d) The covenants and
agreements set forth herein shall inure to the benefit of the Company and its
successors and assigns, and shall be binding upon me and my heirs, personal
representatives and assigns.
I have executed this Agreement effective on the 1st day of August,
1996.
READ, UNDERSTOOD AND AGREED:
/s/ Raymond S. Willoch
----------------------
Raymond S. Willoch
A-2
<PAGE> 1
Exhibit 10.4
- ------------
AGREEMENT
THIS AGREEMENT (the "Agreement"), effective this 1st day of August, 1996,
by and between INTERFACE, INC., a Georgia corporation (the "Company"), and
RAYMOND S. WILLOCH (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.
- 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)(1) of the Code.
7. Present Value -- The term "Present Value" shall have the same meaning
as provided in Section 280G(d)(4) of the Code.
8. Reasonable Compensation -- The term "Reasonable Compensation" shall
have the same meaning as provided in Section 280G(b)(4) of the Code.
9. 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.
10. 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.
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 reduction
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<PAGE> 4
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 thirty (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 (1/12) of the average ("Average Bonus") of the bonuses paid to
him for the two (2) 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;
- 4 -
<PAGE> 5
provided, 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
- 6 -
<PAGE> 7
(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 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,
- 7 -
<PAGE> 8
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 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 -
<PAGE> 9
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.
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/ Raymond S. Willoch
-------------------------------
Secretary
EXECUTIVE
/s/ Raymond S. Willoch
----------------------------------------
Raymond S. Willoch
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 29, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> SEP-29-1996
<CASH> 154
<SECURITIES> 0
<RECEIVABLES> 170,736
<ALLOWANCES> 5,870
<INVENTORY> 154,579
<CURRENT-ASSETS> 346,282
<PP&E> 399,394
<DEPRECIATION> 197,141
<TOTAL-ASSETS> 844,260
<CURRENT-LIABILITIES> 151,801
<BONDS> 391,307
24,751
0
<COMMON> 2,425
<OTHER-SE> 252,058
<TOTAL-LIABILITY-AND-EQUITY> 844,260
<SALES> 717,546
<TOTAL-REVENUES> 717,546
<CGS> 492,509
<TOTAL-COSTS> 663,396
<OTHER-EXPENSES> 81
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,602
<INCOME-PRETAX> 28,467
<INCOME-TAX> 11,153
<INCOME-CONTINUING> 17,314
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,314
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.82
</TABLE>
